Deck 6: Section 1: Organizational Strategy

Question 1

Industry-level strategy is a corporate strategy that addresses the question "How should we compete against a particular firm in our industry?"

Answer 1

False

Question 2

Strategic dissonance is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management.

Answer 2

True

Question 3

There are four conditions that must be met if a firm's resources are to be used to achieve a sustainable competitive advantage. The resources must be valuable, rare, imperfectly imitable, and nonsubstitutable.

Answer 3

True

Question 4

Bargaining power of buyers tends to be higher when a company sells a popular product to multiple buyers than when a company is dependent on just a few high-volume buyers.

Question 5

Based on the research evidence, related diversification appears to be a better strategy for portfolio management than unrelated diversification.

Question 6

Companies often choose a stability strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.

Question 7

A strategic group is a group of other companies, within an industry, that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities.

Question 8

The three positioning strategies are cost leadership, differentiation, and focus.

Question 9

Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.

Question 10

A competitive advantage becomes a sustainable competitive advantage when other companies have found it very expensive to duplicate the what the firm is providing to customers.

Question 11

The threat of substitute products or services is a measure of the ease with which customers can find substitutes for an industry's goods or services.

Question 12

Companies face very little uncertainty in their strategic business environments.

Question 13

Companies that succeed are often constantly re-examining strategies or competitive practices that have been successful in the past in order to ascertain their probable future success.

Question 14

Corporate-level strategy is the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"

Question 15

The three steps of the strategy-making process are (1) assess the need for strategic change, (2) conduct a situational analysis, and (3) choose the strategic alternatives.

Question 16

Character of the rivalry is a measure of the intensity of competitive behavior between companies in an industry.

Question 17

An analysis of an organization's external environment begins with an assessment of the company's distinctive competencies and core capabilities.

Question 18

If retrenchment works, it is typically followed by a stability strategy.

Question 19

When companies are performing above or better than their strategic reference points, top management is more likely to choose a daring, risk-taking strategy.

Question 20

Companies use their resources to improve organizational efficiency and effectiveness.

Question 21

According to the text, valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage only if they are_____________ resources.

A) nonsubstitutable
B) substitutable
C) reliable
D) expensive
E) imitable

Question 22

The only kinds of adaptive strategies are defending, analyzing, and reacting.

Question 23

A sustainable competitive advantage exists for an organization when other companies have tried unsuccessfully to duplicate the advantage and____________ .

A) those companies have been prohibited from duplicating the advantage by federal law
B) those companies have, for the moment, stopped trying to duplicate the advantage
C) the organization is able to implement exclusive distribution
D) the organization operates in the international marketplace
E) the organization has a follower strategic stance

Question 24

A(n)____________ resource is a resource that is not controlled or possessed by many competing firms.

A) rare
B) imperfectly imitable
C) nonsubstitutable
D) strategically dissonant
E) permanent

Question 25

The greater the market commonality, the less intense the direct competition between two companies.

Question 26

__________are the assets, capabilities, processes, information, and knowledge that an organization uses to improve its effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem.

A) grand strategies
B) distinctive competencies
C) competitive advantages
D) resources
E) strategic stances

Question 27

The two factors that determine the extent to which firms will be in direct competition with each other are market commonality and resource similarity

Question 28

Differentiation is the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors.

Question 29

From a competitive standpoint, resource similarity means that the strategic actions your company takes could probably be matched by your direct competitors.

Question 30

A(n)___________ is a resource that is impossible or extremely costly or difficult for other firms to duplicate.

A) rare
B) imperfectly imitable
C) nonsubstitutable
D) strategically dissonant
E) reliable

Question 31

Top-Flite manufactures Strata golf balls and prices these balls at about three times what ordinary golf balls cost. The Strata ball sells exceptionally well because customers perceive its patented three-layer construction to improve handling and increase distance. The patent on these golf balls gives Top-Flite a(n)__________ .

A) sustainable competitive advantage
B) aggregate marketing strategy
C) reliable differentiation
D) strategic stance
E) differential stance

Question 32

Reactors follow the consistent strategy of anticipating and reacting to potential external opportunities and threats prior to their occurrence.

Question 33

Aveda is a manufacturer and marketer of cosmetics, perfumes, hair-care, and skin-care products. To differentiate its products from other similar brands, Aveda focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. Aveda has used customer education and employee training to_____________ .

A) create synergy through relationship marketing
B) prevent product duplication
C) make efficient use of imitative resources
D) eliminate the need for nonsubstitutable resources
E) create a competitive advantage

Question 34

NTL is the largest cable company in the United Kingdom. The company has recently declared bankruptcy and needs to engage in restructuring in order to give it more flexibility and allow it to raise capital. Since it has identified the need for strategic change, what would be the organization's next step in this strategy-making process?

A) finding the optimal strategic solution
B) brainstorming
C) conducting focus groups
D) assessing the need for strategic change
E) conducting a situation analysis

Question 35

Which of the following must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?

A) differentiation
B) imperfectly imitable resources
C) related diversification
D) unrelated diversification
E) a matrix organizational structure

Question 36

Deutsche Bank is the largest bank in the world. Would this give it a sustainable competitive advantage?

A) yes, because it would make its operations synergistic
B) no, because size is not a criteria for sustainable competitive advantage
C) no, because large institutions make more effective use of resources
D) no, because large organizations are always targeted for anti-trust activities
E) yes, because size is directly and positively related to efficiency

Question 37

Most companies compete directly with all the firms in their industry.

Question 38

When making travel plans, many tourists have selected Thomas Cook, a British tour operation, because they perceive that no other tour company can duplicate the customer service and satisfaction that Thomas Cook has provided over its years of operation. Thomas Cook has apparently created a sustainable competitive advantage by using _____________resources.

A) synergistic
B) valuable
C) tangible
D) nonsubstitutable
E) rare

Question 39

The first step in the strategy-making process is to________ .

A) assess the need for strategic change
B) conduct a situation analysis
C) choose strategic alternatives
D) evaluate the impact of changes on the internal environment
E) create a strategic budget

Question 40

A focus strategy entails using either a cost leadership or a differentiation approach to producing a good or service.

Question 41

The highly fragmented chemical industry in Europe has experienced decreasing profits in an industry reluctance to change the way it conducts business, especially in how it competes against lower-priced U.S. imports. This is an example of _________.

A) competitive dissonance
B) strategic apathy
C) competitive inertia
D) strategic inertia
E) competitive apathy

Question 42

An organization is experiencing__________ when there is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management.

A) horizontal conflict
B) character of the rivalry
C) strategic dissonance
D) competitive inertia
E) an organizational roadblock

Question 43

While _________are tangible, __________are not.

A) core capabilities; distinctive competencies
B) competitive advantages; differential advantages
C) strengths and weaknesses; opportunities and threats
D) opportunities and threats; strengths and weaknesses
E) distinctive competencies; core capabilities

Question 44

Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. It is recognized worldwide for its ability to design and produce superior mountain bikes. This ability is its___________- .

A) customer sustainability
B) organizational advantage
C) relative competence
D) distinctive competence
E) superlative advantage

Question 45

Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Since then, the company has maintained a technological leadership in the production of bike and bike accessories and an organizational culture that encourages innovation. Technological leadership, as well as its organizational culture, are the company's____________ .

A) customer sustainabilities
B) organizational advantages
C) relative competencies
D) core capabilities
E) superlative advantages

Question 46

Which of the following is a mechanism used to examine external threats and opportunities facing a firm as well as its internal strengths and weaknesses?

A) organizational scanning
B) internal marketing
C) corporate strategy
D) benchmarking
E) a situational analysis

Question 47

A situational analysis for a manufacturer of pet food might reveal which of the following facts___________ .

A) a growing dog and cat population in the United States
B) scientific research that indicates dogs need less calcium in their diet
C) a less expensive, more nutritious imported brand of pet food
D) a growing demand for gourmet pet food
E) all of these

Question 48

For companies whose main products will not be seen by consumers and whose skills lie in productivity anonymity, a ___________could be to create a brand image to create a distinctive competence.

A) strategic reference point
B) tactical benchmark
C) strategic mission
D) core advantage
E) competitive sustainability

Question 49

An organization is experiencing ____________when it is reluctant to change strategies or competitive practices that have been successful in the past.

A) strategic dissonance
B) strategic inertia
C) competitive dissonance
D) competitive inertia
E) sustained competitive disarray
When it is reluctant to change strategies or competitive practices that have

Question 50

The term__________ refers to the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"

A) firm-level strategy
B) corporate-level strategy
C) industry-level strategy
D) portfolio strategy
E) vision

Question 51

Imagine Dow Chemical is conducting a situational analysis. According to its sales, Dow is the second largest chemical company in the world. BASF is the largest. Both companies use a similar strategy. Within Dow's situational analysis, BASF would be classified as a____________ .

A) cash cow
B) primary firms
C) unrelated firm
D) core firm
E) secondary firm

Question 52

In a situational analysis, a strategic group is a group of_________ that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities.

A) non-industry specific companies
B) expert managers
C) trade journals and other relevant periodicals
D) other firms within an industry
E) consulting firms that use the Delphi technique

Question 53

Which of the following statements about the strategic reference point theory is true?

A) The theory does not consider risk factors.
B) The theory is deterministic.
C) The theory may lead to bureaucratic management.
D) This theory recommends that managers do not change strategic reference points.
E) None of these statements about the Strategic Reference Point Theory is true.

Question 54

According to strategic reference point theory, managers have two basic strategic alternatives. They are_____________ .

A) risk-avoiding strategy and pioneering strategy
B) risk-maintenance strategy and conflict-avoidance strategy
C) risk-avoiding strategy and risk-seeking strategy
D) frontal attack strategy and guerilla strategy
E) none of these

Question 55

The two major approaches to corporate-level strategy are______________ .

A) portfolio strategies and secondary strategies
B) grand strategies and temporal strategies
C) grand strategies and the portfolio strategy
D) the Boston matrix strategy and the Maslow strategy
E) major strategies and minor strategies

Question 56

______________are the targets that managers use to measure whether their firm has developed the core competencies that it needs to achieve a sustainable competitive advantage.

A) Strategic reference points
B) Strategic focus points
C) Differentiation targets
D) Imperfectly imitable resources
E) Strategic monitors

Question 57

A ___________, also called a SWOT analysis for strengths, weaknesses, opportunities, and threats, is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.

A) market audit
B) firm-level strategy
C) competitive advantage
D) differentiation analysis
E) situational analysis

Question 58

In any organization, the______________ are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs.

A) imperfectly imitable resources
B) valuable resources
C) distinctive competencies
D) core capabilities
E) sources of innovation

Question 59

When doing an analysis of strategic groups to assess external environmental threats and opportunities,___________ firms are firms that use related but somewhat different strategies than________firms.

A) secondary; pioneering
B) secondary; core
C) transient; core
D) pioneering; secondary
E) core; transient

Question 60

While________ is a problem strongly associated with top managers, ___________is a problem more likely to be associated with middle and lower-level managers.

A) competitive dissonance; strategic inertia
B) differentiation discrepancy; strategic dissonance
C) strategic inertia; competitive dissonance
D) strategic dissonance; competitive discrepancy
E) competitive inertia; strategic dissonance

Question 61

McDonald's uses a____________ strategy (a kind of grand strategy) as it increases its profits in France by offering uniquely French products such as Croque McDo, the McDonald's version of a popular French grilled sandwich.

A) growth
B) decline
C) retrenchment/recovery
D) repositioning
E) pioneering

Question 62

Deutsche Bank became the world's largest bank through mergers with Bankers Trust, a transatlantic banking operation. Since both banking companies had similar core capabilities, this would be classified as an example of ____.

A) related differentiation
B) related diversification
C) an integrated acquisition
D) competency acquisition
E) unrelated diversification

Question 63

When Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce; it was an example of____________ .

A) internal growth
B) a stability strategy
C) a pioneering strategy
D) external growth
E) a repositioning strategy

Question 64

Which of the following statements is true about how the portfolio strategy can be used to help managers acquire companies that fit well with the rest of their corporate portfolio?

A) The fewer businesses in which a corporation competes, the smaller its overall chances of failing.
B) Risk can be reduced through related diversification (creating or acquiring companies in related businesses).
C) Invest the profits and cash from mature, slow-growth businesses into newer, faster growing businesses.
D) The most significant advantage of the portfolio strategy is the ability to categorize businesses as stars, exclamation points, question marks, and dogs.
E) All of these statements about how the portfolio strategy can be used to help managers acquire companies that fit well with the rest of their corporate portfolio are true.

Question 65

The______________ is a portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share. This strategy helps them to decide how to invest corporate funds.

A) investment matrix
B) SWOT matrix
C) BCG matrix
D) portfolio management matrix
E) Maslow grid

Question 66

Starbucks, the operator of Starbucks coffeehouses, also markets a line of compilation CDs and other non-coffee items. The making and marketing of the CDs and other non-coffee products would be an example of___________ .

A) related differentiation
B) related diversification
C) an integrated acquisition
D) competency acquisition
E) unrelated diversification

Question 67

In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital-intensive, less cyclical business. What type of a grand strategy was ICI using?

A) retrenchment
B) stability
C) growth
D) maturity
E) cutback

Question 68

The research on diversification in portfolio management indicates that the best approach is probably______________ .

A) related differentiation
B) related diversification
C) unrelated diversification
D) repositioning
E) no diversification

Question 69

Significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or closing or selling entire lines of products or services would be characteristic of a __________strategy.

A) portfolio
B) retrenchment
C) stability
D) firm-level
E) grand

Question 70

Which of the following is an example of a common approach to corporate-level strategy?

A) positioning strategies
B) adaptive strategies
C) ROI strategies
D) grand strategies
E) none of these

Question 71

Companies can achieve growth mainly by__________ .

A) shrinking the scope of their business
B) growing internally through direct expansion or creating new businesses
C) deleting all cash cows from their portfolios
D) only maintaining stars in their portfolios
E) doing all of these

Question 72

Companies often choose a __________strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.

A) stability
B) growth
C) pioneering
D) portfolio
E) retrenchment

Question 73

A _______________strategy is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use.

A) grand
B) growth
C) stability
D) retrenchment/recovery
E) repositioning.

Question 74

Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. Specialized bikes have a large share of a fast-growing market. According to the BCG matrix, specialized mountain bikes would be classified as__________ .

A) problem children
B) cash cows
C) exclamation points
D) stars
E) question marks

Question 75

Companies that are following a_________ strategy would be most likely to try to improve the way in which they sell the same goods or services to the same customers.

A) growth
B) pioneering
C) retrenchment/recovery
D) portfolio
E) stability

Question 76

The purpose of a___________strategy is to turn around very poor company performance by shrinking the size or scope of the business.

A) growth
B) stability
C) retrenchment
D) maturity
E) repositioning
Strategy is to turn around very poor company performance by shrinking the size or scope of

Question 77

When Coca-Cola acquired a water-treatment and bottling plant so it could produce and market Dasani brand bottled water, it was an example of___________ .

A) a repositioning strategy
B) external growth
C) niche marketing
D) a retrenchment strategy
E) internal growth

Question 78

When Clorox Corporation, a manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce; it was an example of______________.

A) related differentiation
B) related diversification
C) an integrated acquisition
D) competency acquisition
E) unrelated diversification

Question 79

The __________strategy is analogous to pruning flowers.

A) growth
B) stability
C) retrenchment/recovery
D) portfolio
E) repositioning

Question 80

Which of the following statements about portfolio strategy is true?

A) The evidence supports the usefulness of acquiring unrelated businesses.
B) Dysfunctional consequences can occur when companies are categorized.
C) The strategy may weaken the strongest performer in the corporate portfolio, the problem child.
D) Labeling a top performer as a cash cow will strengthen employee morale.
E) Maslow's hierarchy can be used to determine the level of motivation needed to acquire and make a success of portfolio strategy.