Question 1

Which of the following is one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability?

Accepted Answer

The threat of substitute products is one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability. It refers to the availability and closeness of alternative products that may affect the demand and pricing of the existing products in the industry. Choices A, B, and C are not part of the five industry forces, which are (1) threat of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threat of substitute products, and (5) intensity of competitive rivalry.

Question 2

When The Home Depot opened stores in Canada,it ran a series of ads featuring an animated hammer that was busily reducing prices to show the U.S.-based home improvement store had the lowest prices. According to Michael Porter's ideas,which positioning strategy did The Home Depot adopt to deal with existing Canadian stores that sold similar products?

Accepted Answer

The Home Depot adopted a cost leadership strategy by emphasizing that it had the lowest prices, which is a clear example of cost leadership in Michael Porter's framework.

Question 3

What are the positioning strategies identified by Michael Porter?

Accepted Answer

Michael Porter identified three positioning strategies: focus, cost leadership, and differentiation. The focus strategy involves targeting a specific market segment or niche and serving it exceptionally well. The cost leadership strategy involves achieving low production costs and offering products at lower prices than competitors. The differentiation strategy involves offering unique or superior products or services to create a competitive advantage.

Question 4

What strategy is characterized by significant cost reductions,the layoffs of employees,the closing of poorly performing stores,offices,or manufacturing plants,or the closing or selling of entire lines of products or services?

Accepted Answer

The strategy characterized by significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or the closing or selling of entire lines of products or services is retrenchment. Retrenchment is a defensive strategy that aims to improve a firm's financial performance and strengthen its competitiveness by reducing its costs and streamlining its operations.

Question 5

Apple and Samsung lead the cellphone industry and usually one or the other company leads the industry in phone sales. Which of Porter's five industry forces is this an example of?

Accepted Answer

This is an example of the "character of the rivalry" force. The rivalry between Apple and Samsung is a key factor in shaping the industry, as they are the two dominant players and compete fiercely for market share.

Question 6

Which of the following is determined by Michael Porter's five industry forces?

Accepted Answer

Michael Porter's five industry forces determine the potential for long-term profitability in an industry. These forces include the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of competitive rivalry. The analysis of these forces can help companies understand the dynamics of their industry and make strategic decisions to increase their profitability in the long term.

Question 7

Which type of strategy do companies often choose when their external environment doesn't change much or when they have struggled with periods of explosive growth?

Accepted Answer

When the external environment is relatively stable, companies often choose a stability strategy to maintain their current business operations and avoid major changes. This is also true for companies that have struggled with periods of explosive growth and may need to consolidate their gains before pursuing further growth. The stability strategy involves maintaining current products or services, focusing on efficiency and cost control, and limited investments in new growth opportunities.

Question 8

Ads for the Hudson's Bay Company are highlighting the company's longevity and symbiotic relationship with Canada's history. Which type of positioning strategy is Hudson's Bay more than likely using?

Accepted Answer

Hudson's Bay is emphasizing its unique history and long-standing relationship with Canada, positioning itself as a distinct and established retailer in the market. This is a prime example of a differentiation strategy, which involves emphasizing unique qualities or features to set oneself apart from competitors.

Question 9

Which strategy,if successful,is often followed by a growth strategy?

Accepted Answer

Retrenchment strategy, when successful, often precedes a growth strategy because it involves cutting costs, focusing on core competencies, and restructuring the organization to make it more efficient and competitive, thereby setting a solid foundation for future growth.

Question 10

Which of the following strategies is analogous to pruning roses?

Accepted Answer

Pruning roses involves selectively cutting back parts of the plant to promote healthy growth and remove diseased or dead branches. Similarly, retrenchment/recovery strategy involves selectively cutting back on certain business activities or products to focus on core strengths and promote financial health.

Question 11

What type of strategy are companies most likely following when they are trying to improve the way in which they sell the same goods or services to the same customers?

Accepted Answer

When companies are trying to improve the way in which they sell the same goods or services to the same customers, they are most likely following a stability strategy. This strategy focuses on maintaining the status quo and improving efficiencies in order to remain competitive and profitable.

Question 12

Which of the following will most likely be characteristic of companies when the bargaining power of suppliers and buyers is high?

Accepted Answer

When the bargaining power of suppliers and buyers is high, it often means that these groups can exert significant pressure on companies in terms of pricing and terms of business. This can make it harder for companies to be profitable as they may need to accept lower margins or face higher costs from suppliers. As a result, companies may need to find ways to cut costs or improve operational efficiency in order to maintain profitability.

Question 13

By which of the following actions can companies achieve growth?

Accepted Answer

Direct expansion of operations, such as opening new locations, launching new products or services, and entering new markets, is a common way for companies to achieve growth. Shrinking the scope of the business or deleting cash cows will likely lead to a reduction in revenue and profitability, while maintaining only stars may limit the potential for future growth.

Question 14

What strategy is used to turn around very poor company performance by shrinking the size or scope of the business?

Accepted Answer

Retrenchment strategy is used to turn around very poor company performance by shrinking the size or scope of the business. This may include selling assets, reducing staff, closing unprofitable locations or product lines, and cutting costs. The idea is to focus on the core business and eliminate anything that is not contributing to profitability. Growth strategy involves expanding the size or scope of the business, stability strategy involves maintaining the current size or scope of the business, and repositioning strategy involves changing the company's position in the market.

Question 15

Which of the following is one of the five forces Michael Porter identified as being the ones to determine an industry's overall attractiveness and potential for long-term profitability?

Accepted Answer

Michael Porter identified five forces that determine an industry's overall attractiveness and potential for long-term profitability. The five forces are the bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitute products or services, and competitive rivalry. The existence of complementary products, organizational structure, and existing benchmarks are not part of the five forces.

Question 16

Cost leadership,differentiation,and focus are discussed in the text. Which of the following defines these three types of strategies?

Accepted Answer

Cost leadership, differentiation, and focus are all types of positioning strategies. Cost leadership involves being the lowest cost producer in a particular industry or market segment. Differentiation involves offering unique or superior products or services that are valued by customers. Focus involves targeting a specific customer group or market segment with a particular product or service. All three of these strategies involve positioning a company relative to its competitors in order to gain a competitive advantage.

Question 17

Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who is considering developing and marketing a new brand of bleach. Which one of Michael Porter's five industry forces should you be most concerned about?

Accepted Answer

The character of the rivalry is the most concerning factor because entering a market where a single company controls a significant portion indicates a high level of competition. This dominance by Clorox suggests intense rivalry for any new entrants trying to gain market share.

Question 18

Calgary-based recruiting firm S.i. Systems specializes in information technology staffing in key markets across Canada. Which type of positioning strategy does S.i. use?

Accepted Answer

S.i. Systems is using a focus positioning strategy by specializing in information technology staffing in key markets across Canada.

Question 19

In an attempt to minimize its expenses,Toyota Canada discontinued the Scion brand in 2016. Which type of strategy will Toyota Canada more than likely implement in the near term as it continues to integrate the Scion brand into its Canadian operations?

Accepted Answer

The answer of In an attempt to minimize its expenses,Toyota...

Question 20

Which corporate strategy addresses the question "How should we compete in this industry"?

Accepted Answer

The industry-level strategy focuses on how a company should compete in a specific industry. Corporate-level strategy looks at overall goals and direction, while firm-level strategy is more concerned with specific functions and operations within the company. Niche-specific strategy deals with a specific segment of the market, not necessarily the industry as a whole. Therefore, the best answer is industry-level strategy.

Quiz 5: Organizational Strategy