Deck 6: Organizational Strategy

Question 1

Companies face very little uncertainty in their strategic business environments.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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.

Answer 3

False

Question 4

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

Question 5

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

Question 6

Strategic dissonance is a discrepancy between management's intended strategy and the strategy actually implemented by the managers.

Question 7

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 8

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

Question 9

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 10

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

Question 11

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

Question 12

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.

Question 13

A competitive advantage becomes a sustainable competitive advantage when other companies cannot duplicate the value a firm is providing to customers.

Question 14

Companies use their resources to improve organizational efficiency and effectiveness.

Question 15

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 16

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 17

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 18

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

Question 19

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

Question 20

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 21

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

Question 22

One of the important conditions that a firm must meet in order to gain a sustainable competitive advantage with its capital is:

A)the firm's overhead costs must be high.
B)the firm's resources must be imperfectly imitable.
C)the firm's production technology should be obsolete.
D)the firm's product prices must be high.
E)the firm's organization must be highly centralized.

Question 23

CLM is a big cable company. 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)Eliminating impediments
C)Refreezing change
D)Freezing the strategic change
E)Conducting a situation analysis

Question 24

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

Question 25

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

Question 26

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 27

A _____ resource is a resource that is not controlled or possessed by many competing firms.

A)rare
B)perfectly imitable
C)substitutable
D)capital
E)slack

Question 28

When making travel plans, most tourists select the company Travel Book because they perceive that no other tour company can duplicate the customer service and satisfaction that Travel Book has provided over its years of operation. Travel Book uses a very efficient software that allows customers to quickly make or change their travel bookings. Travel Book has apparently created a sustainable competitive advantage by using _____ resources.

A)obsolete
B)slack
C)expensive
D)imitable
E)​nonsubstitutable

Question 29

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

Question 30

Sivinch is a manufacturer and marketer of cosmetics, perfumes, hair-care, and skin-care products. To differentiate its products from other similar brands, Sivinch focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. This has helped Sivinch gain _____.

A)a process advantage
B)a technological lockout
C)customer defections
D)a competitive inertia
E)a competitive advantage

Question 31

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

Question 32

​Organizations can achieve a _____ by using their resources to provide greater value for customers than competitors can.

A)​distinctive competence
B)​strategic dissonance
C)​competitive inertia
D)​competitive advantage
E)​strategic reference point

Question 33

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

Question 34

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

Question 35

The strategy-making process begins with:

A)the assessment of the need for strategic change.
B)a situation analysis.
C)the finalization of strategic alternatives.
D)the evaluation of alternatives.
E)satisficing.

Question 36

Valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage only if they are _____ resources.

A)nonsubstitutable
B)slack
C)duplicable
D)expensive
E)obsolete

Question 37

______ 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 38

BallGame manufactures A1 golf balls and prices these balls at about three times what ordinary golf balls cost. The A1 ball sells exceptionally well because customers perceive its patented three-layer construction to improve handling and increase distance. None of the other golf ball manufacturers can produce the same quality. The patent on these golf balls gives BallGame a(n) _____.

A)sustainable competitive advantage
B)aggregate marketing strategy
C)anticompetitive advantage
D)technological lockout
E)customer defection

Question 39

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

A)The resources must be easily available.
B)The resources must be rare.
C)The resources must be obsolete.
D)The resources must be duplicable.
E)The resources must be substitutable.

Question 40

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

A)accessible
B)imperfectly imitable
C)nonsubstitutable
D)obsolete
E)slack

Question 41

​_____ are the central companies in a strategic group.

A)​Dogs
B)​Cash cows
C)​Core firms
D)​Secondary firms
E)​Question marks

Question 42

A _____ 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)firm­level strategy
C)competitive deskilling
D)differentiation analysis
E)situational analysis

Question 43

Which of the following is an example of core capabilities of an organization?

A)The organization's balance sheet.
B)The organization's overhead costs.
C)The popularity of products and services sold by the organization
D)The organization's customer share.
E)The organization's skill in maintaining large inventories effectively.

Question 44

Aries Inc. is a large a computer manufacturer which has been in the market for several years. Many other companies have started manufacturing compact, portable gadgets to keep up with the new technological developments. Aries, however, has been reluctant to adopt these changes because it thinks that its products are already popular. Which of the following concepts is illustrated in the scenario?

A)Competitive dissonance
B)Anti­competitiveness
C)Competitive inertia
D)Customer inertia
E)Opportunism

Question 45

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)customer inertia
C)competitive dissonance
D)competitive inertia
E)sustained competitive advantage

Question 46

A(n) ​_____ is a committee within a company that analyzes the company's own weaknesses to determine how competitors could exploit them for competitive advantage.

A)​core firm
B)​analyzer
C)​prospector
D)​strategic group
E)​shadow­strategy task force

Question 47

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)non­industry 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 48

_____ 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 design iterations
C)Differentiation targets
D)Imperfectly imitable resources
E)Strategic monitors

Question 49

Libra Travels regularly checks the prices at which other travel agencies sell their services to evaluate its position. Libra Travels uses a _____ to measure its competencies.

A)strategic reference point
B)cognitive dissonance
C)balance sheet
D)customer inertia
E)customer defection

Question 50

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

A)Industry
B)Grand
C)Portfolio
D)Divesting
E)Deskilling

Question 51

In the context of the strategic reference point theory, the _____ strategy aims to protect an existing competitive advantage.

A)deskilling
B)risk­seeking
C)risk­avoiding
D)divesting
E)risk­extension

Question 52

_____ is a discrepancy between a company's intended strategy and the strategic actions managers take when actually implementing that strategy.

A)Competitive inertia
B)Differentiation discrepancy
C)Competitive dissonance
D)Cstomer inertia
E)Strategic dissonance

Question 53

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)Focus strategies

Question 54

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)firm­level strategy
B)corporate­level strategy
C)industry­level strategy
D)portfolio strategy
E)operations strategy

Question 55

_____ are the firms in a strategic group that follow strategies related to but somewhat different from those of the core firms.

A)Complementary firms
B)Secondary firms
C)Supplier firms
D)Pioneering firms
E)Industry regulators

Question 56

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)standing plans

Question 57

SpokedWheels Inc. introduced a specialized mountain bike to the market. 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 that are tough, durable, and reliable. This ability is the company's _____.

A)competitive inertia
B)strategic dissonance
C)anti­comeptitiveness
D)distinctive competence
E)customer defection

Question 58

Gemini Inc. decided to decrease its product prices to respond to its competitors. To achieve this, the company needed to lower its costs so as to maintain profitability. The managers at Gemini, however, have been buying expensive raw materials and hiring many employees. Which of the following is most likely to be happening in Gemini?

A)Synergy
B)Customer inertia
C)Strategic dissonance
D)Competitive inertia
E)Job deskilling

Question 59

​_____ is a strategy for reducing risk by buying a variety of items so that the failure of one stock or one business does not doom the entire portfolio.

A)​Recovery
B)​Acquisition
C)​Diversification
D)​Differentiation
E)​Strategic dissonance

Question 60

​_____ is defined as the purchase of a company by another company.

A)​Downsizing
B)​Recovery
C)​Acquisition
D)​Diversification
E)​Differentiation

Question 61

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 62

Companies can achieve growth mainly by _____.

A)shrinking the scope of their business
B)​growing internally through direct expansion or creating new businesses
C)removing all cash cows from their portfolios
D)only maintaining dogs in their portfolios
E)increasing the number of question marks and dogs in their portfolio

Question 63

_____ are companies that have a small share of a slow-growing market.

A)Stars
B)Dogs
C)Cash cows
D)Question marks
E)Core firms

Question 64

When Klonorox Corporation, a manufacturer of bleach and bleach-based cleaning products, acquired Masterssauce brand steak sauce; it was an example of _____.

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

Question 65

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 66

A _____ is a company with a large share of a slow growing market.

A)dog
B)cash cow
C)question mark
D)star
E)core firm

Question 67

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

Question 68

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

A)Retrenchment
B)Stability
C)Growth
D)Maturity
E)Acquisition

Question 69

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)divestiture

Question 70

_____ consists of the strategic actions that a company takes to return to a growth strategy.

A)Stability
B)​Recovery
C)Portfolio
D)Focus
E)Differentiation

Question 71

AlphaWheels Inc. sell a range high-end bikes. Two-thirds of its profits come from the sale of these bikes. The bikes have a large share of a fast- growing market. According to the BCG matrix, the range of high-end bikes would be classified as a(n) _____.

A)problem child
B)cash cow
C)exclamation point
D)star
E)question mark

Question 72

The purpose of a _____ strategy is to increase profits, revenues, market sh are, or the number of places (stores, offices, locations) in which the company does business.

A)divestment
B)growth
C)niche
D)retrenchment
E)recovery

Question 73

In the context of BCG matrix, ​_____ are companies that have a large share of a fast-growing market.

A)​Dogs
B)​Stars
C)​Cash cows
D)​Core firms
E)​Question marks

Question 74

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)stability
C)firm­level
D)​retrenchment
E)growth

Question 75

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 76

Wisher Technologies became a large software development company through a merger with Ringus Tech., a growing software solutions firm. Since both the 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 77

A(n) _____ 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)regulation
C)utilitarian
D)distributive
E)industry

Question 78

​_____ are companies that have a small share of a fast-growing market.

A)​Dogs
B)​​Question marks
C)​Secondary firms
D)​Stars
E)​Cash cows

Question 79

In an attempt to stop declining profitability, Quint Cement Co., a construction material manufacturer, stopped manufacturing other kinds of cement products and concentrated on special anti corrosion cement. If Quint Cement Co. is successful in making the needed changes, it will more than likely implement a _____ strategy.

A)harvesting
B)retrenchment
C)diversification
D)divestment
E)recovery

Question 80

Samantha's, a chain of 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)divestiture
C)an integrated acquisition
D)competency acquisition
E)unrelated diversification