Deck 3: Designing a Competitive Business Model and Building a Solid Strategic Plan

Question 1

An ________ competitor offers the same or similar products of services only in a small number of areas, and their target customers seldom overlap yours.

A) indirect competitor
B) direct
C) parallel
D) divergent

Answer 1

A

Question 2

Your ________ competitors offer the same products and services, and customers often compare prices, features, and deals from these competitors as they shop.

A) significant
B) direct
C) indirect
D) All of the above

Answer 2

B

Question 3

Strengths and weaknesses are ________ to the organization.

A) internal factors
B) external factors
C) internal and/or external factors
D) factors not belonging

Answer 3

A

Question 4

________ are positive internal factors that contribute toward accomplishing the company's mission, goals, and objectives, while ________ are negative internal factors that inhibit the accomplishment of a firm's mission, goals, and objectives.

A) Strengths; weaknesses
B) Weaknesses; strengths
C) Opportunities; threats
D) Threats; opportunities

Question 5

The relationship between core competencies and competitive advantage is best described by which statement?

A) Strengthening a company's competitive advantage strengthens its core competencies.
B) A company's core competencies become the nucleus of its competitive advantage.
C) As a company's core competencies become stronger, its competitive advantage becomes weaker.
D) There is no relationship between core competencies and competitive advantage.

Question 6

Every business is characterized by a set of controllable variables that determines the relative success (or lack of it) of market participants called:

A) distinctive competencies.
B) key success factors.
C) opportunities and threats.
D) competitive edge.

Question 7

Maria Sanchez is the owner of the Main Street Café and a new restaurant opens a few blocks away. From Maria's perspective, this new restaurant constitutes a(n):

A) strength.
B) weakness.
C) threat.
D) opportunity.

Question 8

A clearly defined vision helps a company in which of the following ways?

A) Provides direction
B) Determines decisions
C) Motivates people
D) All of the above

Question 9

________ are a unique set of capabilities that a company develops in key operational areas-such as service, innovation, and others-that allow it to potentially vault past its competitors.

A) Core competencies
B) Opportunities
C) Key success factors
D) Mission statements

Question 10

The aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market, superior to its competition, is its:

A) mission statement.
B) competitive advantage.
C) competitive profile.
D) strategic plan.

Question 11

A strategic plan serves as a blueprint to help a company to:

A) match their company's strengths and weaknesses to the environment's opportunities and threats.
B) accomplish its mission, goals, and objectives.
C) identify a company's competitive advantage and set it apart from its competition with a unique position in the market.
D) All of the above

Question 12

The key to entrepreneurial success over time is to build a ________ competitive advantage.

A) defensible
B) sustainable
C) coherent
D) random

Question 13

When developing a company's mission statement, an entrepreneur should remember to:

A) write the statement alone without anyone else's interference.
B) omit statements about her values because they may turn some stakeholders off.
C) keep it short and simple.
D) All of the above

Question 14

Kevin Abt noticed that people were cooking meals in their homes less often but wanted to avoid the hassle of going out to eat. They wanted to "eat in" without cooking. Abt launched a company, Takeout Taxi, that delivers restaurant-prepared food to his customers' homes and businesses. Takeout Taxi is the result of a(n):

A) strength.
B) weakness.
C) opportunity.
D) threat.

Question 15

Gathering competitive intelligence, such as "dumpster diving" in a competitors trash, may raise questions regarding:

A) the integrity of the data.
B) the competitive profile matrix.
C) a cost benefit analysis.
D) ethical standards.

Question 16

________ involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives to keep it on its desired course.

A) Competitive advantage
B) Mission
C) Strategic management
D) Market segmentation

Question 17

Which of the following was not identified as a way for the typical small business to establish a competitive advantage?

A) Lowering prices
B) Providing higher quality goods or services
C) Improving customer service
D) Doing whatever the company does for its customers better than its competitors

Question 18

A small company's mission statement:

A) establishes its purpose in writing.
B) gives the business and everyone in it a sense of direction.
C) defines what the company is, why it exists, and its reason for being.
D) All of the above

Question 19

Which of the following is NOT a characteristic of the strategic management procedure for a small company?

A) It should use a relatively short planning horizon-two years or less, typically.
B) It should begin with an extensive objective-setting session.
C) It should encourage the participation of employees and even outsiders to improve the reliability and creativity of the resulting plan.
D) It should allow for flexibility and not be overly structured.

Question 20

Which of the following is not one of the three components of intellectual capital?

A) Human
B) Structural
C) Competitor
D) Customer

Question 21

A ________ is a road map of the tactics and actions an entrepreneur draws up to fulfill the company's mission, goals, and objectives.

A) mission
B) strategy
C) competitive edge
D) core competency

Question 22

For the question(s) below, consider the following competitive profile matrix:

Which of the following statements is true?

A) Overall, Competitor 2 is the strongest of these three companies.
B) Your company's most serious weakness is its poor quality.
C) Your company's most vulnerable point against these two competitors is in the area of on-time delivery.
D) The most important of the key success factors is location.

Question 23

Which key success factor does the entrepreneur who built this table believe is most important?

A) Quality
B) Service and on-time delivery
C) Convenience
D) Location

Question 24

A cost-leadership strategy:

A) enables companies to concentrate on a niche within the overall market.
B) is built on differences among market segments.
C) works best when buyers' primary purchase criterion is price.
D) All of the above

Question 25

In terms of quality, which company has the weakest competitive position?

A) Your company
B) Competitor 1
C) Competitor 2
D) Impossible to tell from the information given

Question 26

________ spell(s) out the "ends" an organization is to achieve; ________ define(s) the "means" for achieving the ends.

A) Mission, goals, and objectives; strategy
B) Key success factors; strategy
C) Strategy; mission, goals, and objectives
D) Strategy; vision

Question 27

Which of the following is an effective method of collecting information about competitors?

A) Ask customers and suppliers what competitors are doing.
B) Talk to employees, especially sales representatives and purchasing agents, about competitors.
C) Attend trade shows and collect competitors' sales literature.
D) All of the above

Question 28

For the question(s) below, consider the following competitive profile matrix:

Which of the following statements is true?

A) Overall, Competitor 2 is the strongest of these three companies.
B) Your company's most serious weakness is its poor quality.
C) Your company's most vulnerable point against these two competitors is in the area of on-time delivery.
D) The most important of the key success factors is location.

Question 29

For the question(s) below, consider the following competitive profile matrix:

Which company has the strongest competitive position?

A) Your company
B) Competitor 1
C) Competitor 2
D) Impossible to tell from the information given

Question 30

A cost-leadership strategy works well when:

A) buyers are sensitive to price changes.
B) competing firms sell the same commodity products.
C) a company can reap savings from economies of scale.
D) All of the above

Question 31

Which of the following is not a recommended method of collecting competitive intelligence?

A) Attend trade shows and collect competitors' sales literature.
B) Buy competitors' products or services and assess their quality and features, benchmarking their products and services against yours.
C) Pay competitors' employees to become informants about their companies' strategies, markets, and trade secrets.
D) Watch for employment ads from competitors to determine the types of workers they are hiring.

Question 32

A competitive profile matrix:

A) identifies a firm's core competencies.
B) permits the small business owner to divide a mass market into smaller, more manageable segments.
C) allows the small business owner to evaluate her firm against competitors on the key success factors for the industry.
D) creates a road map of action for the entrepreneur in order to fulfill her company's mission, goals, and objectives.

Question 33

Which of the following is not a characteristic of a well-written objective?

A) Realistic, yet challenging
B) Measurable
C) General
D) Timely

Question 34

________ are the broad, long-range attributes the small business seeks to accomplish; ________ are the more specific targets for performance.

A) Goals; objectives
B) Goals; strategies
C) Objectives; goals
D) Strategies; goals

Question 35

For the question(s) below, consider the following competitive profile matrix:

Which company has the worst location?

A) Your company
B) Competitor 1
C) Competitor 2
D) Impossible to tell from the information given

Question 36

Small firms pursuing a cost-leadership strategy have an advantage in reaching customers whose primary purchase criterion is:

A) quality.
B) constant innovation.
C) price.
D) customer service.

Question 37

The relationship between a company's mission, goals, and objectives and its strategy is best described by which of the following statements?

A) Developing a company's strategy lays the groundwork for creating its mission, goals, and objectives.
B) The mission, goals, and objectives spell out the ends the company wants to achieve, and the strategy defines the means for reaching them.
C) Although managers must change a company's mission, goals, and objectives as competitive conditions change, they should avoid adjusting the company's strategy to prevent the company from losing its focus and momentum.
D) There is no real link between a company's mission, goals, and objectives and its strategy.

Question 38

Which of the following is true about the information-gathering process in competitive analysis?

A) It is an expensive process which only large companies can afford.
B) It can be relatively inexpensive and easy for the small business owner to conduct.
C) It is a process closely regulated by various federal laws which prohibit doing things like purchasing competitive products and analyzing them.
D) It is a process that requires expert help and is relatively expensive.

Question 39

The focal point of any company's strategy, whatever it may be, should be:

A) its product or service.
B) its competition.
C) its customers.
D) its strengths and weaknesses.

Question 40

A strategy should:

A) be comprehensive and well integrated.
B) focus on establishing for the firm the key success factors in the industry.
C) identify how the firm will accomplish its mission, goals, and objectives.
D) All of the above

Question 41

Shere Vincente operates a travel service that specializes in arranging trips for women, giving special attention to their needs and preferences, from security and comfort to activities and events designed to appeal to her target customers. Vincente is pursuing a ________ strategy.

A) cost-leadership
B) differentiation
C) focus
D) positioning

Question 42

Skatell's, a small jewelry store with three locations, designs and manufactures much of its own jewelry while its competitors (many of them large department stores) sell standard, "off-the-shelf" jewelry. As a result, Skatell's has developed a loyal customer base of people who seek unique pieces of jewelry. Skatell's reputation for selling unique and custom-designed jewelry allows them to benefit from a:

A) cost-leadership strategy.
B) differentiation strategy.
C) focus strategy.
D) competitive strategy.

Question 43

The three components of intellectual capital are human, structural, and customer.

Question 44

In order for the control process to work, the business owner must:

A) make as few changes and modifications in the operational plans as possible.
B) concentrate on competitive information.
C) identify and track key performance indicators.
D) maintain control and delegate as little authority and responsibility as possible.

Question 45

A company that offers superior product quality, extra customer service, and fast delivery times is pursuing a:

A) cost-leadership strategy.
B) differentiation strategy.
C) concentration strategy.
D) strategic alliance.

Question 46

Which of the following is a danger in choosing a differentiation strategy?

A) Focusing only on physical characteristics of a product or service and ignoring important psychological factors, such as status, prestige, image, and customer service
B) Choosing a market that is not large enough to be profitable
C) Misunderstanding the firm's true cost drivers
D) All of the above

Question 47

With the growth of the Internet, cloud computing, globalization, and increased competition, the business environment has become more turbulent and challenging.

Question 48

Rather than attempting to serve the total market, the small firm pursuing a ________ strategy specializes in serving a specific target segment.

A) cost-leadership
B) differentiation
C) focus
D) head-to-head

Question 49

The most effective way for a small business to establish a competitive advantage is by offering lower prices.

Question 50

Small companies' core competencies are often the result of benefits such as agility, speed, closeness to customers, superior service, and innovative ability-all of which are size advantages that allow them to do things that their larger competitors cannot.

Question 51

The balanced scorecard ideally looks at a business from four important perspectives relating to:

A) low-cost, differentiation, focus, and initiative.
B) customers, buyers, suppliers, and substitute products.
C) customers, internal factors, capital, and human resources.
D) customers, internal factors, innovation, and finances.

Question 52

Cost-leadership may have which of the following inherent dangers?

A) What is chosen to distinguish the product does not boost its performance.
B) An over-focus on the physical characteristics of the product
C) The identified niche is not large enough to be profitable.
D) An overemphasis on costs to the elimination of other strategies

Question 53

The principle behind a ________ strategy is to select one or more market segments, identify customers' special needs, and approach them with a good or service designed to excel in meeting these needs.

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

Question 54

A small company following a ________ strategy seeks to build customer loyalty by positioning its goods and services in a unique fashion.

A) differentiation
B) cost-leadership
C) focus
D) niche

Question 55

Narrower product lines, smaller customer bases, and more limited geographic areas give small companies a natural advantage over large businesses when preparing a strategic plan.

Question 56

One of the biggest changes entrepreneurs face is the shift in the economy from a base of financial to intellectual capital.

Question 57

A differentiation strategy:

A) seeks to build customer loyalty by positioning goods or services in a unique fashion.
B) is built on a company's core competence.
C) must create the perception of value in the customer's eyes.
D) All of the above

Question 58

Large companies have a natural advantage over small firms when it comes to preparing a strategic plan.

Question 59

Small companies must develop strategies that exploit all of the competitive advantages of their size by:

A) responding quickly to customers' needs.
B) remaining flexible and willing to change.
C) constantly innovating.
D) All of the above

Question 60

Which of the following is NOT one of the four important perspectives a balanced scorecard should look at a business from?

A) Competitor perspective
B) Internal business perspective
C) Innovation and learning perspective
D) Financial perspective

Question 61

The ideal strategic planning process for a small company should start with setting objectives.

Question 62

Weaknesses are negative external forces that inhibit the firm's ability to achieve its mission, goals, and objectives.

Question 63

The most effective way to communicate the values of a company to everyone it touches is to formulate an effective mission statement.

Question 64

A small business owner can collect a great deal of information about competitors through a number of low-cost competitive intelligence methods.

Question 65

The mission statement addresses the first question of any business venture: "What business am I in?"

Question 66

Threats are negative external forces that inhibit a company's ability to achieve its mission, goals, and objectives.

Question 67

A company's mission statement should be lengthy and use fancy jargon to impress outsiders.

Question 68

After a company's strengths and weaknesses are assessed, the strategic planning process should identify opportunities and threats facing the company and should isolate the key factors for success in business.

Question 69

"Big box retailers" present an opportunity for many small business owners.

Question 70

As business and competitive conditions change, so should a small company's mission statement.

Question 71

A firm's strategy must focus on establishing for the firm the key success factors the entrepreneur has identified for the industry.

Question 72

The ideal strategic planning procedure for a small company should be formal and highly structured.

Question 73

Conducting a SWOT analysis for her own business and for her key competitors allows an entrepreneur to gain a competitive edge by matching her company's strengths against her competitors' weaknesses.

Question 74

To be effective, the small business owner should limit strategic analysis to only the two or three most significant opportunities facing the firm.

Question 75

Experts estimate that 70 to 90 percent of the competitive information a company needs already resides with employees who collect it in their daily dealings with suppliers, customers, and other industry contacts.

Question 76

Strengths are positive internal factors that contribute towards accomplishing the company's mission, goals, and objectives.

Question 77

A competitor analysis should include an analysis of direct competitors as well as significant and indirect competitors.

Question 78

Although developing a strategic plan is important for large companies, it is not essential to managing a small company successfully because of its limited resources.

Question 79

A company's mission statement defines what it stands for, why it exists, and its reason for being.

Question 80

Significant competitors are those that offer the same products and services your company offers, and customers often compare prices, features, and deals from these competitors as they shop.