Question 1

According to Michael Porter's theory,it is possible for managers to pursue both a low-cost strategy and a differentiation strategy at the same time.

Accepted Answer

According to Porter's theory, managers cannot simultaneously pursue both a low-cost strategy and a differentiation strategy.

Question 2

Synergy is obtained by apportioning financial resources among divisions to increase financial returns or spread risks among different businesses.

Accepted Answer

Portfolio strategy is apportioning financial resources among divisions to increase financial returns or spread risks among different businesses, much as individual investors do with their own portfolios.

Question 3

A strategic alliance can take the form of a written contract between two or more companies to exchange resources,or it can result in the creation of a new organization.

Accepted Answer

A strategic alliance can take the form of a written contract between two or more companies to exchange resources, or it can result in the creation of a new organization.

Question 4

Scenario planning is often used to strengthen SWOT analysis.

Accepted Answer

Scenario planning is often used to strengthen SWOT analysis.

Question 5

While conducting a SWOT analysis,the strengths and weaknesses are considered the external environment factors affecting an organization.

Accepted Answer

SWOT analysis is a planning exercise in which managers identify internal organizational strengths (S) and weaknesses (W) and external environmental opportunities (O) and threats (T).

Question 6

Managers pursuing a focused differentiation strategy serve just one or a few segments of the market and aim to make their organization the most differentiated company serving that segment.

Accepted Answer

Managers pursuing a focused low-cost strategy serve one or a few segments of the overall market and aim to make their organization the lowest-cost company serving that segment. By contrast, managers pursuing a focused differentiation strategy serve just one or a few segments of the market and aim to make their organization the most differentiated company serving that segment.

Question 7

In a strategic alliance,managers share their organization's resources and know-how with those of a foreign company,and the two organizations share the rewards or risks of starting a new venture in a foreign country.

Accepted Answer

One way to overcome the loss-of-control problems associated with exporting, licensing, and franchising is to expand globally by means of a strategic alliance. In a strategic alliance, managers pool or share their organization's resources and know-how with those of a foreign company, and the two organizations share the rewards or risks of starting a new venture in a foreign country.

Question 8

When a company is successful in pursuing the strategy of concentration on a single industry,it uses its divisional skills to develop new products or expand its locations.

Accepted Answer

When a company is successful in pursuing the strategy of concentration on a single industry, it uses its functional skills to develop new kinds of products, or it expands the number of locations in which it uses those skills.

Question 9

Organizational goals should be both challenging and realistic.

Accepted Answer

Although organizational goals should be challenging, they should also be realistic. Challenging goals give managers at all levels an incentive to look for ways to improve organizational performance, but a goal that is clearly unrealistic and impossible to attain may prompt managers to give up.

Question 10

Achievement of goals does not have any time constraints.

Accepted Answer

Time constraints are important because they emphasize that a goal must be attained within a reasonable period; they inject a sense of urgency into goal attainment and act as a motivator.

Question 11

The reason managers pursue vertical integration is that it allows them either to add value to their products by making them unique or to lower the costs of making and selling them.

Accepted Answer

Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products or forward into a new industry that uses, distributes, or sells the company's products. The reason managers pursue vertical integration is that it allows them either to add value to their products by making them special or unique or to lower the costs of making and selling them.

Question 12

Strategy formulation begins with managers systematically analyzing the factors inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.

Accepted Answer

In strategy formulation, managers work to develop the set of strategies that will allow an organization to accomplish its mission and achieve its goals. Strategy formulation begins with managers systematically analyzing the factors or forces inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.

Question 13

According to Michael Porter's five forces model,the more that companies compete against one another for customers,the higher is the level of industry profits.

Accepted Answer

According to Michael Porter's five forces model, the more that companies compete against one another for customers, for example, by lowering the prices of their products or by increasing advertising, the lower is the level of industry profits (low prices mean less profit).

Question 14

With a multidomestic strategy,managers decide to sell the same product with the same marketing approach in all of the countries in which the product is sold.

Accepted Answer

When managers decide to customize products and marketing strategies to specific national conditions, they adopt a multidomestic strategy.

Question 15

The most complex global operations are exporting and importing.

Accepted Answer

The least complex global operations are exporting and importing. A company engaged in exporting makes products at home and sells them abroad. A company engaged in importing sells products at home that are made abroad.

Question 16

Corporate-level strategy involves choosing the industry in which a company will compete.

Accepted Answer

Corporate-level strategy is a plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its mission and goals.

Question 17

Franchising is pursued primarily by manufacturing companies.

Accepted Answer

Licensing is pursued primarily by manufacturing companies, whereas franchising is pursued primarily by service organizations.

Question 18

Managers of Matrix Ltd.attempted to give the organization a competitive advantage by driving the production costs to as low a level as possible.We can say that the organization is pursuing a differentiation strategy.

Accepted Answer

With a low-cost strategy, managers try to gain a competitive advantage by focusing the energy of all the organization's functions on driving the company's costs down below the costs of its industry rivals. With a differentiation strategy, managers try to gain a competitive advantage by focusing all the energies of the organization's functions on distinguishing the organization's products from those of competitors on one or more important dimensions.

Question 19

Organizations that use a global strategy typically customize the product to meet the needs of customers in different countries.

Accepted Answer

When managers decide that their organization should sell the same standardized product in each national market in which it competes, and use the same basic marketing approach, they adopt a global strategy.

Question 20

The major advantage of a multidomestic strategy is that managers may be able to gain market share or charge higher prices for their products.

Accepted Answer

The major advantage of a multidomestic strategy is that by customizing product offerings and marketing approaches to local conditions, managers may be able to gain market share or charge higher prices for their products.

Quiz 6: Planning, Strategy, and Competitive Advantage

According to Michael Porter's theory,it is possible for managers to pursue both a low-cost strategy and a differentiation strategy at the same time.

Synergy is obtained by apportioning financial resources among divisions to increase financial returns or spread risks among different businesses.

A strategic alliance can take the form of a written contract between two or more companies to exchange resources,or it can result in the creation of a new organization.

Scenario planning is often used to strengthen SWOT analysis.

While conducting a SWOT analysis,the strengths and weaknesses are considered the external environment factors affecting an organization.

Managers pursuing a focused differentiation strategy serve just one or a few segments of the market and aim to make their organization the most differentiated company serving that segment.

In a strategic alliance,managers share their organization's resources and know-how with those of a foreign company,and the two organizations share the rewards or risks of starting a new venture in a foreign country.

When a company is successful in pursuing the strategy of concentration on a single industry,it uses its divisional skills to develop new products or expand its locations.

Organizational goals should be both challenging and realistic.

Achievement of goals does not have any time constraints.

The reason managers pursue vertical integration is that it allows them either to add value to their products by making them unique or to lower the costs of making and selling them.

Strategy formulation begins with managers systematically analyzing the factors inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.

According to Michael Porter's five forces model,the more that companies compete against one another for customers,the higher is the level of industry profits.

With a multidomestic strategy,managers decide to sell the same product with the same marketing approach in all of the countries in which the product is sold.

The most complex global operations are exporting and importing.

Corporate-level strategy involves choosing the industry in which a company will compete.

Franchising is pursued primarily by manufacturing companies.

Managers of Matrix Ltd.attempted to give the organization a competitive advantage by driving the production costs to as low a level as possible.We can say that the organization is pursuing a differentiation strategy.

Organizations that use a global strategy typically customize the product to meet the needs of customers in different countries.

The major advantage of a multidomestic strategy is that managers may be able to gain market share or charge higher prices for their products.