Deck 6: Strengthening a Companys Competitive Position

Question 1

Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT

A)focusing relentlessly on building a competitive advantage.
B)applying resources where rivals are least able to defend themselves.
C)using a strategic offensive to allow the company to leverage its weaknesses to strengthen operating vulnerabilities.
D)employing the elements of surprise as opposed to doing what rivals expect and are prepared for.
E)displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

Answer 1

C

Question 2

Strategic offensives should, as a general rule, be based on

A)exploiting a company's strongest competitive assets-its most valuable resources and capabilities.
B)instigating and executing the chosen strategy efficiently and effectively.
C)scoping and scaling an organization's internal and external situation.
D)molding an organization's character and identity.
E)satisfying the buyer's needs that the company seeks to meet.

Answer 2

A

Question 3

The worst targets for an offensive-minded company to target are

A)market leaders that are strong.
B)runner-up firms with strengths in areas where the offensive-minded challenger is weaker.
C)large multinational companies with vast capabilities and resources.
D)runner-up firms that have amassed sufficient resources and capabilities to place them on the verge of becoming market leaders.
E)other offensive-minded companies that possess a sizable war chest of cash and marketable securities.

Answer 3

E

Question 4

An example of a company that does not use blue-ocean market strategy is

A)eBay in the online auction industry
B)Tune Hotels in the lodging industry
C)Uber and Lyft in the ridesharing industry
D)Cirque du Soleil in the live entertainment industry
E)Walmart's logistics and distribution in the retail industry

Question 5

Offensive strategic moves involve all of the following except

A)leapfrogging competitors by being first to market with next-generation products.
B)using hit-and-run or guerrilla warfare tactics to grab sales and market share.
C)launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating.
D)pursuing continuous product innovation to draw sales and market share away from rivals.
E)blocking the avenues open to challengers.

Question 6

The purposes of a defensive strategy do not include

A)increasing the risk of having to defend an attack.
B)weakening the impact of any attack that occurs.
C)pressuring challengers to aim their efforts at other rivals.
D)helping protect a competitive advantage.
E)decreasing the risk of being attacked.

Question 7

Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, except whether to

A)focus on building competitive advantages.
B)employ the element of surprise as opposed to doing what rivals expect and are prepared for.
C)display a strong bias for swift, decisive, and overwhelming actions to overpower rivals.
D)create and deploy company resources to cause rivals to defend themselves.
E)pay special attention to buyer segments that a rival is already serving.

Question 8

As general manager of a local restaurant chain, you have been asked to develop defensive moves to protect your company's market position and restrict any challenger's options for initiating a competitive attack. You would present all but ONE of the following strategic options to your executive team.

A)Challenge struggling runner-up restaurants that are on the verge of going under.
B)Grant volume discounts or better financing terms to dealers/distributors and provide discount coupons to customers to help discourage them from frequenting other local restaurants.
C)Signal to challengers and new entrants in the local restaurant industry that retaliation is likely in the event they launch an attack.
D)Publicly commit your restaurant chain to a policy of matching a competitor's terms or prices or breadth of menu items.
E)Maintain a war chest of cash and/or marketable securities.

Question 9

Companies like Amazon, Apple, Facebook, and Google employ all but ONE of the following offensive actions to complement and supplement the choice of one of the five generic competitive strategies. Which is not an example of an offensive move?

A)focusing on building competitive advantages
B)employing the element of surprise as opposed to doing what rivals expect and are prepared for
C)pursuing a market share leadership strategy
D)displaying a strong bias for swift, decisive, and overwhelming actions to overpower
E)creating and deploying company resources to cause rivals to defend themselves

Question 10

To fend off a competitive attack, defensive-minded companies

A)remain steadfast to current product features and models to ensure resources are not diverted toward unproductive efforts.
B)avoid giving suppliers volume discounts or providing them with better financing terms from the strategic response in order to maintain current profitability levels.
C)use innovation and intellectual property protection to obtain product line exclusivity to force competitors to use other distributors.
D)void all lengthy warranties to save money.
E)avoid competitor's clients since their loyalty will not allow them to switch.

Question 11

Bumble, a digital dating site where women make the first move, specifically uses which strategic weapon in its offensive arsenal?

A)pursuing disruptive product innovations to create new markets
B)adopting and improving on the good ideas of other companies or rival firms
C)using hit-and-run guerilla warfare tactics to grab market share from distracted or complacent rivals
D)launching a preemptive strike to capture an industry's limited resources or capture a rare opportunity
E)offering an equally good or better product at a lower price than rivals

Question 12

A signal that would not warn challengers that strong retaliation is likely is

A)publicly announcing management's commitment to maintain market share.
B)publicly committing to a company policy of matching competitors' terms or pricing.
C)maintaining a war chest of cash and marketable securities.
D)making a strong counter-response to the moves of weak competitors.
E)publicly announcing strong quarterly earnings potential to financial analysts.

Question 13

A hit-and-run or guerrilla warfare type offensive strategy

A)involves random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals.
B)involves undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position.
C)works best if the guerrilla is the industry's low-cost leader.
D)involves pitting a small company's own competitive strengths head-on against the strengths of much larger rivals.
E)involves unexpected attacks (usually by a small-to-medium size competitor)to grab sales and market share from complacent or distracted rivals.

Question 14

A good example of blue-ocean type of offensive strategy is

A)a company like EERO that leapfrogged rivals in innovation in the home Wi-Fi market.
B)a company like EasyJet that developed a cost advantage to undercut its rivals in passenger airlines
C)a company like Home Depot that adopted and improved on the good ideas of other companies.
D)a company like Australian winemaker Casella Wines that created a Yellow Tail brand designed to appeal to a wider market, one that also includes consumers of other alcoholic beverages.
E)a company like Google that plays hardball, aggressively pursuing competitive advantage and trying to reap the benefits a competitive edge offers-a leading market share, excellent profit margins, and rapid growth.

Question 15

Bonobos's Guideshop store concept allows men to have a personalized shopping experience, where they can try on clothing in any size or color, and then have it delivered the next day to their home or office. This fashion retail concept is a good example of

A)an offensive strategy to leapfrog competitors by being the first adopter of next-generation technologies or being first to market with next-generation products.
B)an offensive strategy to offer an equally good or better product at a lower price.
C)an offensive strategy to seek uncharted waters and compete in blue oceans.
D)a defensive strategy to minimize the competitive advantages of rivals.
E)a defensive strategy to capture occupied territory by maneuvering around rivals.

Question 16

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?

A)to alleviate their fears by committing to reduce the costs of value chain activities
B)to cause the challenger to begin the attack instead of waiting
C)to dissuade challengers from attacking or diverting them into using less-threatening options
D)to create collaborative relationships with challengers
E)to insulate other firms from adverse impacts resulting from the challenge

Question 17

A blue-ocean strategy

A)is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability.
B)involves an unexpected (out-of-the-blue)preemptive strike to secure an advantageous position in a fast-growing market segment.
C)works best when a company is the industry's low-cost leader.
D)involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.
E)involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

Question 18

The principal offensive strategy options include all of the following except

A)offering an equally good or better product at a lower price.
B)using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent or distracted rivals.
C)launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating.
D)pursuing continuous product innovation to draw sales and market share away from less innovative rivals.
E)initiating a market threat and counterattack simultaneously to effect a distraction.

Question 19

Launching a preemptive strike type of offensive strategy entails

A)sapping the rival's financial strength and competitive position.
B)weakening the rival's resolve.
C)moving first to secure advantageous competitive assets that rivals can't readily match or duplicate.
D)threatening the rival's overall survival in the market.
E)using hit-and-run tactics to grab sales and market share away from complacent or distracted rivals.

Question 20

An offensive to yield good results can be short if

A)buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign).
B)competition creates an appealing new product.
C)the technology needs debugging.
D)new production capacity needs to be installed.
E)consumer acceptance of an innovative product takes time.

Question 21

________ is the extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system.

A)Horizontal scale
B)Vertical scope
C)Outsourcing scope
D)Cooperative scaled scope
E)Focal scope

Question 22

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when

A)new industry or market segments are yet to be developed and create altogether new consumer demand.
B)fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own.
C)the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first mover.
D)entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices.
E)there are nearly always big advantages to being a slow mover rather than an early mover, especially in regard to avoiding the "mistakes" of first or early movers.

Question 23

Because the timing of a strategic move can be just as important as the choice of move to make, a company's best option with respect to timing of an action is

A)to be the first mover.
B)to be a fast follower.
C)to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer-first-mover disadvantages usually overwhelm first-mover advantages).
D)to be the last mover-playing catch-up is usually fairly easy and almost always is much cheaper than any other option.
E)to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

Question 24

Choose the intended outcome that did not happen with Expedia's merger and acquisition of HomeAway, Inc.

A)Expedia's geographic coverage expanded.
B)Expedia was provided with quick access to new technologies or complementary resources and capabilities.
C)Expedia was able to lead the convergence of the travel and vacation rental industries, whose boundaries are being blurred by changing technologies and new market opportunities.
D)Expedia's business extended into new product categories.
E)Expedia suppressed its rival company Orbitz's breakthroughs in management or technology.

Question 25

For every emerging opportunity, there exists a(n)

A)market penetration curve, and this typically has an inflection point where the business model falls into place.
B)opportunity to achieve first-mover status, which depends on analyzing the competitive status curve where all the potential rivals are encoded.
C)emerging pitfall that is a counterpoint to the intended growth.
D)normal curve scenario which signifies the average growth curve will be opportunistic.
E)intense competition that constrains the company's prospects for rapid growth and superior profitability.

Question 26

In the face of strong competition from Amazon, Walmart's 2016 acquisition of Jet. com was driven by a strategic objective, such as

A)expanding its geographic coverage or extending its business into new product categories.
B)reducing the number of industry key success factors.
C)reducing the number of strategic groups in the industry.
D)facilitating its shift from a low-cost leadership strategy to a focused low-cost strategy.
E)lengthening its value chain and thereby putting it in a better position to deliver superior value to buyers.

Question 27

Late-mover advantages (or first-mover disadvantages)are not likely to arise when

A)the costs of pioneering are much higher than being a follower and only negligible learning/experience benefits accrue to the pioneer.
B)the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first mover.
C)the pioneer's products are somewhat primitive and are easily bested by late movers.
D)opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand.
E)technological change is rapid, and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own.

Question 28

Merger and acquisition strategies

A)are nearly always superior alternatives to forming alliances or partnerships with these same companies.
B)may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry.
C)are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy.
D)seldom are superior alternatives to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition.
E)are one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

Question 29

________ is the range of product and service segments that the firm serves within its market.

A)Horizontal scope
B)Vertical integration
C)Vertical scope
D)Product outsourcing
E)Joint venture partnership

Question 30

First-mover advantages are unlikely to be present when

A)pioneering helps build a firm's image and reputation with buyers.
B)rapid market evolution (due to fast-paced changes in technology or buyer preferences)presents opportunities to leapfrog a first-mover's products with more attractive next-version products.
C)early commitments to new technologies, new-style components, new or emerging distribution channels, and so on, can produce an absolute cost advantage over rivals.
D)moving first can constitute a preemptive strike, making imitation extra hard or unlikely.
E)first-time customers remain strongly loyal to pioneering firms in making repeat purchases.

Question 31

Market conditions and factors that tend not to favor first movers include

A)buyer behavior that is readily attracted to new technology or product features.
B)conditions that make imitation difficult and absolute cost advantages that accrue to those who make early commitments to new technologies, components, or distribution channels.
C)quick market penetration and strong loyalty among first-time customers.
D)growth in demand that depends on the development of complementary products or services that are not currently available and new-industry infrastructure that is needed before buyer demand can surge.
E)pouring too few resources into getting ahead of the market opportunity.

Question 32

First-mover disadvantages (or late-mover advantages)rarely arise when

A)the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer.
B)rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own.
C)the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products.
D)the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first mover.
E)the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

Question 33

A primary reason why mergers and acquisitions sometimes fail is due to the

A)misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.
B)execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue.
C)development of effective integration plans conducive to employee satisfaction.
D)advertising message detailing the merger announcement.
E)creation of management-employee programs in order to foster better communication.

Question 34

A strategic objective that is highly UNLIKELY to drive a mergers and acquisition strategy is

A)to gain quick access to new technologies or other resources and capabilities.
B)to create a more cost-efficient operation out of the combined companies.
C)to expand a company's geographic coverage.
D)to facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy.
E)to extend a company's business into new product categories.

Question 35

The difference between a merger and an acquisition is that

A)a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock.
B)a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer)purchasing and absorbing the operations of another company (the acquired).
C)in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company.
D)a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies.
E)a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

Question 36

The difference between a merger and an acquisition relates to

A)strategy and competitive advantage.
B)the presence of available resources and competitive capabilities.
C)whether the end result is related to horizontal or vertical scope.
D)creating a more cost-efficient operation out of the combined companies.
E)the details of ownership, management control, and the financial arrangements.

Question 37

What does the scope of the firm refer to?

A)the range of activities the firm performs externally and its social responsibility activities
B)to gain competitive advantage based on where it locates its various value chain activities
C)the firm's capability to employ vertical integration strategies
D)the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses
E)to prevent foreign competition from affecting the market

Question 38

Being a first mover is not particularly advantageous under which circumstance?

A)when moving first with a preemptive strike makes imitation difficult or unlikely
B)when first-time buyers remain strongly loyal to pioneering firms in making repeat purchases
C)when early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals
D)when markets are slow to accept the innovative product offering of a first mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover
E)when being a pioneer helps build a firm's image and reputation with buyers

Question 39

Tinder's first-mover strategic thrust into the online dating industry resulted in a high payoff in all of the following except

A)pioneering rollout of the dating app on college campuses helped build up the firm's image and reputation and created strong brand loyalty.
B)users remained strongly loyal to Tinder because of incentives and switching cost barriers.
C)learning how to use Tinder was kept proprietary.
D)moving first constituted a preemptive strike, making competitive imitation very difficult or unlikely for rivals.
E)market uncertainties made it difficult for Tinder's founding team to ascertain whether or not the dating app would eventually succeed.

Question 40

Mergers and acquisitions

A)are nearly always successful in achieving their desired purpose.
B)frequently do not produce the hoped-for outcomes.
C)are generally less effective than forming alliances or partnerships with these same companies.
D)are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition.
E)are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

Question 41

The best example of forward vertical integration is

A)Amazon Studios and Netflix Originals that produce high-quality original content for their digital streaming services.
B)Harley-Davidson and Ducati's own-branded stores that sell motorcycles and related memorabilia.
C)Spanish clothing maker Inditex's textile design and manufacturing capabilities for its Zara brand.
D)Apple Inc.'s advanced semiconductor design and manufacturing capabilities for its iPhones.
E)International Paper's investments into pulp mills near its paper mills.

Question 42

Why do mergers and acquisitions sometimes fail to produce anticipated results?

A)The hoped for outcomes and changes to existing operations may not eventuate.
B)Cost savings are equal or better than expected.
C)Gains in competitive capabilities quickly materialize.
D)Efforts to mesh corporate cultures go smoothly.
E)Key employees at the acquired company can quickly become disenchanted and leave.

Question 43

A good example of vertical integration is a

A)global public accounting firm acquiring a small local or regional public accounting firm.
B)large supermarket chain getting into convenience food stores.
C)crude oil refiner purchasing a firm engaged in drilling and exploring for oil.
D)hospital opening up a nursing home for the aged.
E)railroad company acquiring a trucking company specializing in long-haul freight.

Question 44

A strategy of vertical integration can have substantial drawbacks, including

A)whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation.
B)raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities.
C)the environmental costs of coordinating operations across vertical chain activities.
D)loss of technological know-how.
E)the difficulties faced in entering outside vertical and horizontal markets.

Question 45

Outsourcing strategies

A)are nearly always a more attractive strategic option than merger and acquisition strategies.
B)carry the substantial risk of raising a company's costs.
C)carry the substantial risk of making a company overly dependent on its suppliers.
D)increase a company's risk exposure to changing technology and/or changing buyer preferences.
E)involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.

Question 46

Backward vertical integration can produce a

A)full integration when activities remain the domain of key suppliers.
B)tapered integration if the firm consolidates all activities in-house.
C)differentiation-based competitive advantage when activities enhance the performance of the final product.
D)focused differentiation strategy when the market is broad and the product is a commodity.
E)lower degree of flexibility in accommodating shifting buyer preferences.

Question 47

Vertical integration strategies

A)extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain.
B)are one of the best strategic options for helping companies win the race for global market leadership.
C)offer good potential to expand a company's lineup of products and services.
D)are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries.
E)are a good strategy option for helping a company revamp its value chain and bypass low value-added activities.

Question 48

A strategic disadvantage of vertical integration is

A)to boost a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later.
B)to impair a company's operating flexibility when it comes to changing out the use of certain parts and components.
C)to impair a company's flexibility in accommodating shifting buyer preferences.
D)to require radically different skills and business capabilities than the firm possesses.
E)to speed up the company's adoption of technological advances.

Question 49

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

A)reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users.
B)can result in better coordination of the firm's direct sales activity to wholesalers and distributors.
C)can establish a retail frontal attack while efficiently managing its backward (defensive)sales orientation.
D)combines the best of all sales channels and provides financial support to distribution allies.
E)creates a channel conflict, thereby providing competitive improvisation.

Question 50

The potential advantages of Tesla's backward vertical integration strategy include

A)increased vulnerability to Tesla from powerful suppliers (who may be inclined to raise prices at every opportunity).
B)moderately increased risks to Tesla of disruptions in obtaining crucial components or support services.
C)reduced costs.
D)increased business risk for Tesla because it can control a larger portion of the overall industry value chain.
E)enhancement of Tesla's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

Question 51

The two most compelling reasons for a company to pursue vertical integration (either forward or backward)are to

A)strengthen the company's competitive position and/or boost its profitability.
B)achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs.
C)broaden the firm's product line and/or avoid the need for outsourcing.
D)expand into foreign markets and/or control more of the industry value chain.
E)enable use of offensive strategies and/or gain a first-mover advantage over rivals in revamping the industry value chain.

Question 52

The two big drivers of outsourcing are

A)an increased ability to cut R&D expenses and an increased ability to avoid the problems of strategic alliances.
B)that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).
C)a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities.
D)the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences.
E)that a smaller in-house workforce and a low investment in intellectual capital will produce cost savings.

Question 53

A vertical integration strategy can expand the firm's range of activities

A)backward into sources of supply and/or forward toward end users.
B)backward into other industry business lines and/or forward to suppliers of raw materials.
C)to enable the supply chain the opportunity for expansion.
D)to complement the industry's horizontal value chain line of profitability.
E)to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

Question 54

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company

A)must first be a proficient manufacturer.
B)must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality.
C)must have excess production capacity so that it has an ample in-house ability to undertake additional production activities.
D)needs to have a wide product line, so it can supply parts and components for many products.
E)should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

Question 55

The strategic impetus for Tesla's forward vertical integration into dealerships and charging stations is

A)being able to control the wholesale/retail portion of the automobile industry value chain.
B)experiencing fewer disruptions in the delivery of the company's vehicles to end users.
C)gaining better access to Tesla's end users and better market visibility.
D)broadening Tesla's product line.
E)providing Tesla with access to resources and capabilities to achieve greater economies of scale.

Question 56

The best reason for investing company resources in vertical integration (either forward or backward)is to

A)expand into foreign markets and/or control more of the industry value chain.
B)broaden the firm's product line and/or avoid the need for outsourcing.
C)gain a first-mover advantage over rivals in revamping the industry value chain.
D)add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability.
E)achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.

Question 57

For a backward vertical integration strategy into the business of suppliers to be viable and profitable, a company must possess

A)the capability to achieve the same scale economies as outside suppliers and also match or beat suppliers' production efficiency with no drop in quality.
B)considerable expertise in supply chain management, transportation logistics, and inventory control techniques.
C)large state-of-the-art production facilities so that it can fully capture all economies of scale in producing parts and components.
D)a distinctive competence in production process technology and at least a core competence in manufacturing R&D.
E)excess production capacity so that it has an ample in-house ability to undertake additional production activities.

Question 58

An outsourcing strategy

A)is nearly always a more attractive strategic option than merger and acquisition strategies.
B)carries the substantial risk of raising a company's costs.
C)carries the substantial risk of making a company overly dependent on its suppliers.
D)increases a company's risk exposure to changing technology and/or changing buyer preferences.
E)involves farming out certain value chain activities presently performed in-house to outside vendors.

Question 59

The hallmarks of Tesla's vertical integration strategy do not include

A)investments in a "gigafactory" that manufactures the batteries that are essential for a long-lasting Tesla electric vehicle.
B)research and development and rapid deployments of Tesla's control integration systems (creating control factors across its entire value chain).
C)in-house manufacturing of key components and new parts that require frequent updates resulting in a shorter learning curve and more rapid new Tesla vehicle development
D)fostering closer relationships between Tesla engineering and manufacturing departments to provide greater control over product design.
E)a network of dealerships that allows Tesla to sell directly to consumers and handle maintenance needs without relying on third parties that sometimes have competing priorities

Question 60

The strategic impetus for forward vertical integration is to

A)gain better access to end users and better market visibility.
B)achieve the same scale economies as wholesale distributors and/or retail dealers.
C)control price at the retail level.
D)bypass distributors and dealers and sell direct to consumers at the company's website.
E)build a core competence in mass merchandising.

Question 61

Why might a company not choose to outsource certain value chain activities presently performed in-house?

A)because it streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace
B)because it allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best
C)because it helps the company assemble diverse kinds of expertise speedily and efficiently
D)because it enables a company to gain better access to end users and better market visibility
E)because it improves a company's ability to innovate

Question 62

The following are good examples of outsourcing some value chain activities that were formerly performed in-house except

A)IBM performs information technology services for Colgate-Palmolive.
B)Luxottica manufactures glasses for Dolce & Gabbana.
C)Nordstrom retails certain products for Coach Inc.
D)Foxconn manufactures the iPad and iPhone for Apple Inc.
E)Paychex performs HR services for Robert Half Financial & Accounting.

Question 63

Strategic alliances are more likely to be long lasting when they involve

A)partners that respectively have considerable resource weaknesses in the marketplace.
B)partners that are not only experienced with strategic alliances, but who also routinely enter into collaborative agreements with firms in peripheral industries.
C)partners based in countries with distinctly different cultures and consumer buying habits and preferences.
D)joining forces in R&D to develop new technologies cheaper than a company could develop the technology on its own.
E)collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

Question 64

What might not be considered as a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products?

A)to improve access to new markets
B)to expedite the development of promising new technologies or products
C)to enable greater opportunities for employee advancement
D)to improve supply chain efficiency
E)to overcome disadvantages of small production volumes that limit scale economies and low production costs

Question 65

Carlos, the CEO of a local HR recruiting and staffing company, is considering a strategic alliance with a local payroll company. What would not likely be a consideration for Carlos with respect to whether the proposed alliance could become successful and realize its intended benefits?

A)picking a good partner
B)recognizing that the alliance must benefit both sides
C)minimizing the amount of resources that the partners commit to the alliance
D)ensuring that both parties live up to their commitments
E)structuring the decision-making process so actions can be taken swiftly when needed

Question 66

A formal agreement, or ________, is between two or more separate companies in which they agree to work cooperatively toward some common objective.

A)joint venture
B)vertical integration
C)strategic alliance
D)forward integration
E)outsourcing

Question 67

Microsoft's alliance with immuno-sequencing company Adaptive Biotechnologies can be called "strategic" because it serves all of the following strategic purposes except

A)builds, sustains, or enhances Microsoft's core competence in artificial intelligence.
B)blocks a competitive threat from Amazon to become a healthcare industry player.
C)accelerates drug development and bring new therapies to patients sooner than if each party had "gone it alone."
D)opens up important new healthcare market opportunities for both alliance members.
E)contracts out certain value chain activities by both parties to outside vendors.

Question 68

Entering into strategic alliances and collaborative partnerships can be competitively valuable because

A)working closely with outsiders is essential in developing new technologies and new products in virtually every industry.
B)cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.
C)they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages.
D)they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations.
E)they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

Question 69

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to

A)combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals.
B)help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers.
C)get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.
D)help wage price wars against foreign competitors.
E)exercise better control over efforts to revamp the global industry value chain.

Question 70

Experience indicates that strategic alliances

A)are generally successful.
B)work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency.
C)work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies.
D)can suffer culture clash and integration problems due to different management styles and business practices.
E)are rarely useful in helping a company win the race for global industry leadership.

Question 71

Outsourcing strategies can offer such advantages as

A)increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy.
B)obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.
C)speeding a company's entry into foreign markets.
D)permitting greater use of strategic alliances and collaborative partnerships.
E)giving a firm more direct control over the costs of value chain activities.

Question 72

The best strategic alliances

A)are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit.
B)are those whose purpose is to create an industry key success factor.
C)are those that help a company move quickly from one strategic group to another.
D)involve joining forces in R&D to develop new technologies cheaper than a company could develop the technology on its own.
E)aim at raising an industry's barriers to entry.

Question 73

If you were advising Hoffmann-LaRoche, which set up Roche Partnering to manage more than 190 alliances in the healthcare industry, what might not be a reason why some of those alliances could prove to be unstable or break apart?

A)Anticipated gains may fail to materialize for Roche Partnering due to an overly optimistic view of the synergies.
B)Anticipated gains for Roche Partnering may fail to materialize due to a poor fit in terms of the combination of resources and capabilities.
C)One or more of the 190 partners in Roche Partnering could gain access to another company's proprietary knowledge base, technologies, or trade secrets.
D)The partners may disagree among themselves over how to divide the profits gained from joint collaboration.
E)There is a risk for any or all of the 190 partners in Roche Partnering to become overly dependent on other companies within the partnership.

Question 74

Daimler's 2017 agreement with automotive supplier Robert Bosch GmbH to develop self-driving taxis that customers can hail with a smartphone app is called a

A)joint venture.
B)joint liability company.
C)partnership.
D)dual proprietorship.
E)double-S corporation.

Question 75

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to

A)discourage rival companies from merging with or acquiring the very companies that it is partnering with.
B)reduce overall business risk and raise entry barriers into the newly emerging industry.
C)help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry.
D)help defeat competitors that are employing broad differentiation strategies.
E)enhance its chances of achieving global low-cost leadership.

Question 76

Relying on outsiders to perform certain value chain activities offers such strategic advantages as

A)ensuring more costly components or services.
B)improving the company's inability to innovate by allying with "best-in-class" suppliers.
C)reducing the company's risk exposure to changing technology and/or changing buyer preferences.
D)increasing the firm's inability to assemble diverse kinds of expertise speedily and efficiently.
E)reducing its information technology and operational costs so that organizational flexibility is maintained.

Question 77

The big risk of employing an outsourcing strategy is

A)causing the company to become partially integrated instead of being fully integrated.
B)hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.
C)hurting a company's R&D capability.
D)putting the company in the position of being a late mover instead of an early mover.
E)increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

Question 78

Strategic alliances are

A)the cheapest means of developing new technologies and getting new products to market quickly.
B)collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective.
C)a proven means of reducing the costs of performing value chain activities.
D)best used to insulate a company from the impact of the five competitive forces.
E)the best way to help insulate a firm from the adverse impacts of industry driving forces.

Question 79

Under which circumstance can an alliance be considered just a convenient business arrangement rather than "strategic"?

A)The alliance is critical to the company's achievement of an important objective.
B)The alliance helps block a competitive threat.
C)The alliance helps open up important new market opportunities.
D)The alliance helps build, enhance, or sustain a core competence or competitive advantage.
E)The alliance helps the company obtain additional financing on better credit terms.

Question 80

What might be considered to be a major drawback of employing an outsourcing strategy?

A)It allows a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best.
B)It can hollow out a firm's own capabilities and cause it to lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.
C)It reduces the company's risk exposure to changing technology and/or buyer preferences.
D)It improves organizational flexibility and speeds time to market.
E)It involves an activity that can be performed better or more cheaply by outside specialists.