Question 1

The text authors note that the essence of strategy is
A) opportunity divided by strengths minus weaknesses.
B) strength divided by opportunity.
C) threat divided by capacity.
D) threat divided by opportunity.
E) opportunity divided by threat.

Accepted Answer

The essence of strategy is opportunity divided by strengths minus weaknesses.

Question 2

The particular capabilities and resources a firm possesses and the superior way in which they are used is called
A) differentiating capabilities.
B) distinctive competencies.
C) situational proficiency.
D) core competencies.
E) distinctive characteristics.

Accepted Answer

Distinctive competencies refer to the unique capabilities and resources a firm possesses and the superior way in which they are used to achieve competitive advantage.

Question 3

The concept that advocates management's attempt to find a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses is called
A) environmental analysis.
B) position analysis.
C) strategic evaluation.
D) objective analysis.
E) situation analysis.

Accepted Answer

The concept described in the question is known as situation analysis. It involves evaluating the external opportunities and threats as well as internal strengths and weaknesses to determine the organization's strategic fit. This analysis helps management develop effective strategies to overcome weaknesses and threats while capitalizing on strengths and opportunities.

Question 4

Those companies using cooperative strategies are generally not able to gain a competitive advantage.

Accepted Answer

Cooperative strategies can lead to a competitive advantage by combining resources, expertise, and knowledge with other companies to achieve shared goals. These strategies can also provide access to new markets, reduce costs, and increase efficiency. Therefore, companies using cooperative strategies can indeed gain a competitive advantage.

Question 5

A value chain partnership is a loose alliance with several distributors for the short term.

Accepted Answer

A value chain partnership is a long-term strategic alliance between different companies or stakeholders involved in different stages of a product or service's production process. It aims to create mutual benefits and value for all parties involved by optimizing the overall efficiency, effectiveness, and competitiveness of the value chain. It is not a loose or short-term partnership with several distributors.

Question 6

Alliances take more financial resources and involve more risk than do acquisitions and going it alone.

Accepted Answer

Alliances typically require fewer financial resources and involve less risk compared to acquisitions, as they allow companies to share resources and risks with partners.

Question 7

Too much partnering experience with the same strategic partners generates diminishing returns over time and leads to reduced performance.

Accepted Answer

Over time, partnering with the same strategic partners can lead to a lack of innovation and reduced performance due to the familiarity and routine nature of the relationship. It is important for companies to regularly seek out new partnerships to stay competitive and drive growth.

Question 8

The T in SWOT represents
A) threat.
B) tactic.
C) tautology.
D) task.
E) time.

Accepted Answer

The T in SWOT represents threat.

Question 9

All of the following reflect criticisms of the SWOT analysis EXCEPT
A) it uses no weights to reflect priorities.
B) it only requires a single level of analysis.
C) it provides a rational link to strategy implementation.
D) it uses ambiguity in words and phrases.
E) it generates lengthy lists.

Accepted Answer

The SWOT analysis has been criticized for its lack of weighting priorities and generating lengthy lists, the use of ambiguity in words and phrases, and its single level of analysis. However, it can still provide a rational link to strategy implementation.

Question 10

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

Accepted Answer

While marketing is important for any business strategy, the cost leadership strategy focuses on offering the lowest cost possible, which may not require extensive marketing efforts. Instead, the strategy relies on operational efficiency and cost control measures to achieve cost savings.

Question 11

A licensing arrangement is an agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a product.

Accepted Answer

This is a definition of a licensing arrangement.

Question 12

In the development of a 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.

Accepted Answer

The first step in developing a SFAS matrix is to list the most important external factors analysis summary (EFAS) and internal factors analysis summary (IFAS) items. This involves identifying the key factors that affect the company's strategic position, such as industry trends, market share, and competitive advantage. Once these factors are identified, they can be assigned a weight based on their relative importance to the company's success. The ratings and weights are then used to calculate the weighted score for each factor, which is used to construct the SFAS matrix.

Question 13

The two general types of cooperative strategies are collusion and strategic alliances.

Accepted Answer

Collusion involves secretly working together to achieve a goal, while strategic alliances are openly planned partnerships between businesses.

Question 14

The only way to gain competitive advantage within an industry is to use a competitive strategy.

Accepted Answer

While a competitive strategy can certainly help a company gain a competitive advantage, there are other ways to do so as well. For example, a company could innovate a new product or service, reduce costs through operational efficiency, or develop a unique brand or reputation. Additionally, some industries may have limited competition or barriers to entry, allowing for easier differentiation and advantage without a specific strategy in place.

Question 15

A corporation's specific competitive role which is so well-suited to the firm's internal and external environment that other corporations are NOT likely to challenge or dislodge it.
A) strategic fit
B) propitious niche
C) common thread
D) business screen
E) implicit strategy

Accepted Answer

The definition provided perfectly fits the concept of a propitious niche. Option A, strategic fit, refers to alignment between a company's goals and resources, as well as industry trends. Option C refers to a commonality that runs through a firm's products or services. Option D, business screen, refers to the criteria used to evaluate potential investments or projects. Option E, implicit strategy, refers to a firm's underlying approach to doing business that may not be explicitly stated.

Question 16

One success factor to a strategic alliance is the ability to identify likely partnering risks and deal with them when the alliance is formed.

Accepted Answer

Identifying and addressing risks is an important part of forming a successful strategic alliance. By doing so, potential issues can be addressed before they become major problems and increase the likelihood of a successful partnership.

Question 17

Collusion is the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand.

Accepted Answer

Collusion involves firms working together to manipulate the market in their favor, resulting in higher prices and reduced output. This is done to increase profits and avoid the competitive pressures of a free market economy.

Question 18

In tacit collusion, there is no direct communication among competing firms.

Accepted Answer

In tacit collusion, firms coordinate their actions without explicitly communicating with each other. They may rely on observable market behavior and industry norms to align their strategies and avoid competition.

Question 19

Tight cost control is an organizational requirement for a cost leadership strategy.

Accepted Answer

A cost leadership strategy focuses on reducing costs in all areas of the business to offer products or services at a lower price than competitors. To achieve this, tight cost control is necessary to identify areas where costs can be reduced and implement cost-saving measures.

Question 20

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.

Accepted Answer

The acronym for the assessment of the external and internal environments of the business corporation in the process of strategy formulation/strategic planning is SWOT, which stands for Strengths, Weaknesses, Opportunities, and Threats. PET stands for Positron Emission Tomography, which is a medical imaging technique. MBO stands for Management by Objectives, which is a management philosophy. SBU stands for Strategic Business Unit, which is a business division that has a separate mission and objectives. ROI stands for Return on Investment, which is a financial ratio used to measure the profitability of an investment.

Quiz 6: Strategy Formulation: Situation Analysis and Business Strategy

The text authors note that the essence of strategy is

The particular capabilities and resources a firm possesses and the superior way in which they are used is called

The concept that advocates management's attempt to find a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses is called