Deck 6: Strategy Formulation: Business Strategy

Question 1

The matrix that summarizes an organization's strategic factors by combining the external factors from the EFAS Table with the internal factors from the IFAS Table is called a(n)

A) Total Weighted Score.
B) SWOT Matrix.
C) SFAS Matrix.
D) TOWS Matrix.
E) Issues Priority Matrix.

Answer 1

C

Question 2

According to the text,unique market opportunities that are available for only a particular time are called

A) situational occasions.
B) critical openings.
C) strategy implementation.
D) strategic windows.
E) trigger points.

Answer 2

D

Question 3

One company that has successfully found a propitious niche is

A) Coca-Cola.
B) PepsiCo.
C) Frank J. Zamboni & Company.
D) Walmart.
E) Disney.

Answer 3

C

Question 4

In a SFAS Matrix,

A) all strategic factors are weighted equally.
B) the number of strategic factors can become unmanageable.
C) the same criticisms found in the SWOT Matrix are replicated.
D) a factor may be listed as both a strength and a weakness.
E) only internal strategic factors are included.

Question 5

The text authors note that the essence of strategy is

A) opportunity divided by capacity.
B) strength divided by opportunity.
C) threat divided by capacity.
D) threat divided by opportunity.
E) opportunity divided by threat.

Question 6

All of the following reflect criticisms of the SWOT analysis EXCEPT

A) it is simply the opinions of those filling out the boxes.
B) virtually everything that is a strength is also a weakness.
C) it provides a rational link to strategy implementation.
D) virtually everything that is an opportunity is also a threat.
E) there is no tie to the view from the customer.

Question 7

One company that has successfully found a propitious niche (extremely favorable niche)is Frank J.Zamboni & Company,the manufacturer of the machines that smooth the ice at ice skating rinks.

Question 8

The first firm through a strategic window can occupy an extremely favorable niche and discourage competition (if the firm has the required internal strengths).

Question 9

If a mission does not provide a common thread for a corporation's businesses,managers might be unclear about where the company is heading.

Question 10

Niches can grow and change over time.

Question 11

SO strategies attempt to take advantage of opportunities by overcoming weaknesses.

Question 12

The T in SWOT represents

A) threat.
B) tactic.
C) technique.
D) task.
E) time.

Question 13

The goal of strategy is to find a(n)________ that is so well suited to the firm's competitive advantages that other organizations are not likely to challenge or dislodge it.

A) strategic fit.
B) propitious niche.
C) common thread.
D) business screen.
E) implicit strategy.

Question 14

The goal of strategy is to find an extremely favorable niche so well suited to the firm's internal and external environment that other corporations are not likely to challenge or dislodge it.

Question 15

An acronym for the assessment of the external and internal environments of the business corporation in the process of strategy formulation/strategic planning is

A) PET.
B) MBO.
C) SWOT.
D) SBU.
E) ROI.

Question 16

Strategy formulation or strategic planning begins with a(n)________,which is the process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses.

A) environmental analysis.
B) position analysis.
C) strategic evaluation.
D) objective analysis.
E) situation analysis.

Question 17

SWOT is an acronym that stands for Strategy,Weaknesses,Opportunities,and Threats.

Question 18

One desired outcome of analyzing strategic factors is identifying niches where an organization can use its ________ to take advantage of a particular market opportunity.

A) differentiating capabilities.
B) distinctive competencies.
C) situational proficiency.
D) core competencies.
E) distinctive characteristics.

Question 19

Populating a SWOT chart,by itself,is just the start of a strategic analysis.

Question 20

In the development of an SFAS matrix,the first step is to

A) enter the ratings of how the company's management is responding to each of the strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.

Question 21

Orphagenix,a small biotech firm,avoids head-to-head competition with large pharmaceutical companies by developing orphan drugs to target diseases that affect fewer than 200,000 people.This is an example of which of Porter's generic strategies?

A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus

Question 22

One of the first steps in good strategy design should include crafting the mission statement for the organization.

Question 23

What are the common elements of a well-crafted mission statement?

Question 24

What are the three generic competitive strategies that Porter promotes as the means for outperforming other corporations in a particular industry?

A) competitive scope, differentiation, and focus
B) diversification, concentration, and competitive scope
C) cost, competitive scope, and focus
D) concentration, cost leadership, and differentiation
E) cost leadership, differentiation, and focus

Question 25

According to Porter,the generic competitive strategy that reflects the ability to provide unique and superior value to the buyer in terms of product quality,special features,or after-sale service is called

A) competitive scope.
B) differentiation.
C) focus.
D) diversification.
E) cost leadership.

Question 26

The SFAS Matrix summarizes an organization's strategic factors by combining the external factors from the IFAS Table with the internal factors from the EFAS Table.

Question 27

Business strategy is composed of

A) corporate and competitive strategy.
B) functional and divisional strategy.
C) competitive and cooperative strategy.
D) corporate and cooperative strategy.
E) divisional and competitive strategy.

Question 28

Which of the following is true of an organization's mission statement?

A) should be crafted late in the strategic implementation stage
B) articulates how the organization will take advantage of opportunities by overcoming weaknesses
C) does not have to be unique to the organization
D) should be short so every employee can remember it
E) does not provide direction for employees, but rather informs outsiders of what the organization does

Question 29

An effective mission statement not only needs to be specific to that organization; it must enable a common thread to highlight and focus the energy of everyone in the organization in the direction that the top management team believes is best for the business.

Question 30

According to Porter,the term that applies to the breadth of a company's or business unit's target market is called

A) competitive scope.
B) differentiation.
C) focus.
D) diversification.
E) cost leadership.

Question 31

In manufacturing toilet paper for grocery store chains (and avoiding competing directly against Charmin),Potlach has followed which of Porter's generic competitive strategies?

A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus

Question 32

Which of Porter's competitive strategies concentrates on seeking differentiation in a particular buyer group,product line segment,or geographic market?

A) segmentation focus
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus

Question 33

According to Porter,the generic competitive strategy that reflects the ability of the corporation or its business unit to design,produce,and market a comparable product more efficiently than its competitors is called

A) competitive scope.
B) differentiation.
C) cost leadership.
D) diversification.
E) focus.

Question 34

Which of Porter's competitive strategies recommends that a company emphasize a particular buyer group or geographic market and attempts to seek a cost advantage in its targeted segment?

A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus

Question 35

Which of the following is not cited as one of the questions that development of a competitive strategy should raise?

A) Should we compete on the basis of lower cost?
B) Should we compete head-to-head with major competitors?
C) Should we differentiate our products or services on some basis other than cost?
D) Should we compete by garnering political support of influential leaders?
E) Should we compete in a niche market that we can satisfy which is superior to that of the competition?

Question 36

Walmart,as a discount retailer,is an example of a company following which of Porter's competitive strategies?

A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus

Question 37

What is a propitious niche? Provide an example of a firm that has been able to occupy a propitious niche successfully.

Question 38

Business strategy focuses on

A) ensuring that the company maintains the existing market share that it has historically enjoyed.
B) improving the competitive position of a corporation's products or services within the industry or market segment served.
C) providing adequate shareholders' return on investment.
D) preventing the competition from gaining a competitive edge by undermining their marketing plan.
E) recovering the competitive lead by using all available resources that the company can provide.

Question 39

Apple is an example of a company following which of Porter's generic competitive strategies?

A) cost leadership
B) differentiation
C) cost focus
D) competitive scope
E) diversification

Question 40

Which strategy raises the questions of whether to compete on the basis of lower cost or differentiation and whether to compete for the biggest market or a niche market?

A) business
B) corporate
C) competitive
D) functional
E) focus

Question 41

According to D'Aveni's book,Hypercompetition,which of the following statements is true?

A) Except for a few stable industries, strategy initiatives do not provide sustainable competitive advantage.
B) Hypercompetition is rare.
C) It is enough to gain competitive advantage by being the lowest cost competitor.
D) The theory of hypercompetition is not supported by any research.
E) The American home appliance industry was immune to hypercompetition.

Question 42

The book Hypercompetition was written by

A) Porter.
B) D'Aveni.
C) Mintzberg.
D) Maslow.
E) Drucker.

Question 43

Which of the following is not one of the risks of a cost leadership strategy?

A) The technology that the organization has been using changes.
B) Pricing for higher quality that is too far above the price of the competition.
C) Competitors can achieve viable imitations.
D) Other bases for cost leadership erode.
E) Proximity in differentiation is lost.

Question 44

The focus strategies will likely predominate when many small- and medium-sized local companies compete for relatively small shares of the total market in a(n)

A) united industry.
B) fragmented industry.
C) consolidated industry.
D) isolated industry.
E) integrated industry.

Question 45

Morgan Motor Car Company manufactures classic British sports cars.Which of Porter's strategies is this company following?

A) differentiation focus
B) cost leadership
C) stuck in the middle
D) differentiation
E) cost focus

Question 46

According to Porter,a business unit in a competitive marketplace with no generic competitive strategy is

A) achieving synergy.
B) practicing innovative leadership.
C) stuck in the middle.
D) not goal directed.
E) last in line.

Question 47

Research suggests that a differentiation strategy is more likely to generate higher profits than a lower cost strategy because differentiation creates

A) a better entry barrier.
B) a better exit barrier.
C) a better niche market.
D) a more sustainable competitive advantage.
E) no clear long-term strategy.

Question 48

As an industry matures while overcoming fragmentation and becomes dominated by a small number of large companies,it tends to become a(n)

A) united industry.
B) fragmented industry.
C) consolidated industry.
D) isolated industry.
E) integrated industry.

Question 49

Differentiation is a viable strategy for earning above-average returns in a specific business because the resulting increased value to the customer

A) lowers costs.
B) lowers price sensitivity.
C) lowers customer loyalty.
D) lowers market share.
E) lowers entry barriers.

Question 50

Which strategy is a firm following if it provides a unique and superior value in a narrow market?

A) differentiation focus
B) cost leadership
C) differentiation
D) cost focus
E) stuck in the middle

Question 51

Which of Porter's broad mass market competitive strategies requires tight cost control,frequent detailed control reports,and cost minimization in areas like R&D,service and advertising?

A) focus
B) differentiation
C) cost leadership
D) focus differentiation
E) concentration

Question 52

Competitive scope is

A) the breadth of the company's target market.
B) a business strategy.
C) the common thread found in the firm's mission statement.
D) the foundation of the choice between cost leadership and differentiation strategies.
E) an element of the marketing mix.

Question 53

As an industry becomes hypercompetitive,firms initially respond by

A) raising entry barriers.
B) moving into untapped markets.
C) attacking the strongholds of other firms.
D) competing on cost and quality.
E) working their way to a situation of perfect competition.

Question 54

When a company is concerned that the higher price it charges for its higher quality is too far above the price of the competition,the company is likely addressing a risk of following which competitive strategy?

A) cost leadership
B) focus
C) stuck-in-the-middle
D) differentiation
E) competitive scope

Question 55

A method developed in the mid-1990s as an efficient means to quickly consolidate a fragmented industry can be referred to as a

A) merger.
B) strategic rollup.
C) cost strategy.
D) differentiation strategy.
E) focus strategy.

Question 56

The last stage of a hypercompetitive industry is reached when the remaining large global competitors

A) raise entry barriers.
B) move into untapped markets.
C) attack the strongholds of other firms.
D) compete on cost and quality.
E) work their way to a situation of perfect competition in which no one has any advantage and profits are minimal.

Question 57

Most entrepreneurial ventures follow

A) differentiation strategies.
B) focus strategies.
C) no strategies.
D) cost leadership strategies.
E) stuck in the middle strategies.

Question 58

Walt Disney Company competes successfully in the entertainment industry using which of Porter's competitive strategies?

A) differentiation focus
B) stuck in the middle
C) cost leadership
D) differentiation
E) cost focus

Question 59

Which of Porter's competitive strategies is likely to predominate in a fragmented industry?

A) cost leadership
B) differentiation
C) cost focus
D) stuck in the middle
E) cooperative

Question 60

Strict targets to improve efficiency are likely to be found in organizations following which of Porter's generic competitive strategies?

A) cost leadership
B) differentiation
C) stuck in the middle
D) differentiation focus
E) cooperative

Question 61

An example of a company following a cost focus strategy is Potlach Corporation,which makes house brands of toilet paper for Safeway and other grocery store chains.

Question 62

Incentives based on meeting strict quantitative targets are a common organizational requirement for which of Porter's generic competitive strategies?

A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Question 63

According to Barney,under which condition would tacit collusion most likely be successful?

A) There is a large number of identifiable competitors.
B) Costs vary among firms.
C) One firm tends to act as the price leader.
D) Sales are characterized by a low frequency of large orders.
E) There are low barriers to entry in the industry.

Question 64

An example of a company that was "stuck in the middle" was K-Mart as the company tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy.

Question 65

Tacit collusion

A) involves direct communication among competing firms.
B) is most likely to be successful if there are many competitors.
C) is seen with conscious parallelism as practiced by GE and Westinghouse in the pricing of turbine engines.
D) is not illegal.
E) is most effective when the industry does not have a firm that acts as a price leader.

Question 66

A secret salary cap was the contention in a 2012 collusion lawsuit filed against

A) KFC.
B) The National Football League.
C) GE.
D) Major League Baseball.
E) ESPN.

Question 67

When firms follow each other's lead to reduce the level of competition such as GE and Westinghouse did in steam turbines,it is referred to as

A) explicit collusion.
B) a strategic alliance.
C) a mutual service consortium.
D) conscious parallelism.
E) partnering.

Question 68

Collusion

A) may be explicit or tacit.
B) may be tacit and therefore legal.
C) is rarely practiced by competing firms.
D) cannot occur without direct communication among firms.
E) is a popular competitive strategy.

Question 69

One skill required of the cost leadership strategy is a strong marketing ability.

Question 70

One risk of a cost leadership strategy is that the technology for production or of products may change.

Question 71

The two general types of cooperative strategies are

A) competitive and functional.
B) collusion and competitive.
C) strategic alliances and collusion.
D) strategic alliances and competitive.
E) competitive and collusive alliances.

Question 72

Product engineering,creative flair,and strong cooperation from channels are commonly required skills and resources for which of Porter's generic strategies?

A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Question 73

Intense supervision of labor,sustained capital investment and access to capital are commonly required skills and resources for which of Porter's generic competitive strategies?

A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Question 74

If it is to be successful,Porter advises that a division possess strong marketing abilities,product engineering,a creative flair,strong capability in basic research and a corporate reputation for quality or technological leadership,for which one of the following generic competitive strategies?

A) focus
B) differentiation
C) overall cost leadership
D) vertical growth
E) concentration

Question 75

Cost leadership is the ability of a company or business unit to design,produce,and market a comparable product more efficiently than its competitors.

Question 76

When a company following a differentiation strategy ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition,the company is using the process of

A) low-cost differentiation.
B) cost leadership.
C) cost proximity.
D) basic differentiation.
E) price fixing.

Question 77

A cost leader's lower costs allow it to continue to earn profits during times of heavy competition.

Question 78

Business strategy focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves.

Question 79

The active cooperation of firms within an industry to reduce output and raise prices to get around the normal law of supply and demand is referred to as

A) a strategic alliance.
B) collusion.
C) a strategic roll up.
D) a merger.
E) licensing.

Question 80

Amenities to attract highly skilled labor,scientists,or creative people are a common organizational requirement for which of Porter's generic competitive strategies?

A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion