Strengthening a Company’s Competitive Position: Strategic
Moves, Timing, and Scope of Operations – CH6
1 Which of the following is not one of the
principal offensive strategy options?
A) Adopting and improving on the good ideas of
other companies.
B) Launching preemptive strikes.
C) Blocking the avenues open to challengers.
D) Attacking competitors’ weaknesses.
E) Offering an equal or better product at a
lower price.
2 A blue ocean type of offensive strategy
_______________
A) is a preemptive strike type of
price-cutting offensive used by a market leader to steal customers away from
higher-priced rivals.
B) involves deliberately attacking those
market segments where a key rival makes big profits.
C) involves abandoning efforts to beat out
competitors in existing markets and, instead, inventing a new industry or
distinctive market segment that renders existing competitors largely irrelevant
and allows a company to create and capture altogether new demand.
D) involves using innovative advertising and
deep price discounts to grab sales and market share from complacent or
distracted rivals.
E) employs highly creative, never-used-before
strategic moves to attack the competitive weaknesses of rivals.
3 A hit-and-run or guerrilla warfare type of
offensive strategy involves _______________
A) random offensive attacks used by a market
leader to steal customers away from unsuspecting smaller rivals.
B) 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) tactics that work best if the guerrilla is
the industry’s low-cost leader.
D) pitting a small company’s own competitive
strengths head-on against the strengths of much larger rivals.
E) surprising moves by small challengers that
have neither the resources nor the market visibility to mount a full-fledged attack
on industry leaders.
4 Which one of the following is not a good type
of rival for an offensive-minded company to target?
A) Market leaders that are vulnerable.
B) Runner-up firms with weaknesses in areas
where the challenger is strong.
C) Small local and regional companies with
limited capabilities.
D) Other offensive-minded companies with a
sizable war chest of cash and marketable securities.
E) Struggling enterprises that are on the
verge of going under.
5 The purposes of defensive strategies are to
_______________
A) aggressively retaliate against rivals
pursuing offensive strategies and prevent price wars.
B) restrict a competitive attack by a
challenger, weaken the impact of any attack that occurs, and influence
challengers to aim their offensive efforts at other rivals.
C) guard against adverse changes in the
company’s macro-environment and insulate the company from the impact of
industry-driving forces.
D) strengthen a company’s competitive
advantage and reduce its exposure to business risk.
E) eliminate a company’s resource weaknesses
and competitive deficiencies, thereby making it invulnerable to competitive
attack from would-be challengers.
6 Being first to initiate a particular move can
have a high payoff when _______________
A) pioneering helps build up a firm’s image
and reputation with buyers.
B) early commitments to new technologies,
new-style components, new or emerging distribution channels, and so on, can
produce an absolute cost advantage over rivals.
C) first-time customers remain strongly loyal
to pioneering firms in making repeat purchases.
D) moving first constitutes a preemptive
strike, making imitation extra hard or unlikely.
E) All of these.
7 In which of the following situations is being
first to initiate a particular move not likely to result in a positive payoff?
A) When potential buyers are skeptical about
the benefits of a new technology or product being pioneered by a first mover.
B) When pioneering helps build up a firm’s
image and reputation with buyers.
C) When first-time buyers remain strongly
loyal to a pioneering firm in making repeat purchases.
D) When moving first can constitute a
preemptive strike, making imitation extra hard or unlikely.
E) When moving first can result in a cost
advantage over rivals.
8 In which of the following cases are
first-mover disadvantages not likely to arise?
A) When the costs of pioneering are much
higher than being a follower and only negligible buyer loyalty or cost savings
accrue to the pioneer.
B) When new infrastructure is needed before
market demand can surge.
C) When the pioneer’s skills, know-how, and
products are easily copied or even bested by late movers.
D) When customer loyalty to the pioneer is
low.
E) When technological change is rapid and
following rivals find it easy to leapfrog the pioneer with next-generation
products of their own.
9 Mergers and acquisitions are a popular
strategy because they are an effective means of _______________
A) revamping a company’s value chain.
B) facilitating the employment of both
offensive and defensive strategies.
C) creating a more cost-efficient operation,
expanding a company’s geographic coverage, and extending a company’s business
into new product categories.
D) gaining quick access to new technologies or
other resources and competitive capabilities and leading the convergence of
industries whose boundaries are being blurred by changing technologies and new
market opportunities.
E) Both C and D.
10 Which one of the following statements about
merger and acquisition strategies is true?
A) Merger and acquisition strategies are
nearly always a superior strategic alternative to forming alliances or
partnerships with these same companies.
B) Merger and acquisition strategies tend to
be far more successful than forming strategic alliances and cooperative
partnerships with other companies.
C) Mergers and acquisitions do not always
produce the hoped for outcomes. Cost savings may prove smaller than expected.
Gains in competitive capabilities may take substantially longer to realize or
may never materialize. Efforts to mesh the corporate cultures can stall due to
formidable resistance from organization members.
D) Mergers and acquisiion strategies are a
very high-risk strategy because of the financial drain of using the company’s
cash resources to accomplish the merger or acquisition.
E) Merger and acquisition strategies are one
of the best ways for helping a company strengthen its brand image.
11 Which of the following is typically the
strategic impetus for forward vertical integration?
A) To charge lower retail prices and thereby
attract a bigger, more loyal clientele of customers.
B) To make it easier to expand the company’s
product line.
C) To gain better access to end users and
better market visibility.
D) To achieve greater control over advertising
and in-store retail merchandising.
E) To gain better access to greater economies
of scale.
12 Which of the following is not a strategic
disadvantage of vertical integration?
A) It greatly reduces the opportunity for
capturing maximum scale economies and achieving the lowest possible operating
costs.
B) Vertical integration increases a firm’s
capital investment in the industry.
C) Integrating into more industry value chain
segments increases business risk if industry growth and profitability sour.
D)Vertically integrated companies are often
slow to embrace technological advances or more efficient production methods
when they are saddled with older technology or facilities.
E) Integrating backward potentially results in
less flexibility in accommodating shifting buyer preferences when a new product
design doesn’t include parts and components that the company makes in-house.
13 Which of the following is not a potential
advantage of backward vertical integration?
A) Adding to a company’s differentiation
capabilities and perhaps achieving a differentiation-based competitive
advantage.
B) Lessening a company’s vulnerability to
powerful suppliers inclined to raise prices at every opportunity.
C) Spares a company the uncertainty of being
dependent on suppliers for crucial components or support services.
D) Enhanced R&D capability, better
opportunity to establish a core competence in supply chain management, more
flexibility in incorporating state-of-the-art parts and components, and better
overall product quality.
E) Contributes to a better-quality
product/service offering.
14 Which of the following is not an advantage of
outsourcing the performance of certain value chain activities to outsiders?
A) Being able to reduce distribution costs by
eliminating the use of wholesale distributors and retail dealers and, instead,
selling direct to end-users at the company’s website.
B) Allowing a company to reduce costs if the
activity is not crucial to the firm’s ability to achieve sustainable
competitive advantage and won’t hollow out its capabilities, core competencies,
or technical know-how.
C) Improving organizational flexibility and
speeding time to market.
D) Allowing a company to concentrate on its
core business, leverage its key resources and core competencies, and do even
better what it already does best.
E) Being able to reduce the company’s risk
exposure to changing technology and/or buyer preferences.
15 Which one of the following is not a strategic
choice that a company must make to complement and supplement its choice of one
of the five generic competitive strategies?
A) Whether and when to go on the offensive and
initiate aggressive strategic moves to improve the company’s market position.
B) Which value chain activities, if any,
should be outsourced.
C) Whether to employ a low-end strategy or a
middle-of-the-road strategy or a high-end strategy.
D) Whether to integrate forward or backward
into more stages of the industry value chain.
E) Whether to enter into strategic alliances
or collaborative partnerships.
16 Strategic alliances _______________
A) are the cheapest means of developing new
technologies and getting new products to market quickly.
B) are a proven means of reducing the costs of
performing value chain activities.
C) are best used to insulate a company from
the impact of the five competitive forces.
D) help insulate a firm from the adverse
impacts of industry driving forces.
E) are formal agreements between two or more
companies to work cooperatively toward some common objective.
17 Companies are motivated to enter into
strategic alliances or cooperative arrangements _______________
A) to expedite the development of promising
new technologies or products.
B) to overcome deficits in their own technical
and manufacturing expertise.
C) to bring together the personnel and
expertise needed to create desirable new skill sets and capabilities.
D) to acquire or improve market access.
E) All of these.
18 The most long-lasting strategic alliances
_______________
A) aim at teaming up with world-class
suppliers or else companies with world-class know-how in product innovation.
B) are those whose purpose is helping a
company master a new technology.
C)are those formed to enable the partners to
be consistent first movers or fast followers.
D)(1) involve collaboration with suppliers or
distribution allies, or (2) conclude that continued collaboration is in their
mutual interest, perhaps because new opportunities for learning are emerging.
E) aim at insulating the partners against the
impacts of the five competitive forces and industry driving forces.
19 Experience indicates that strategic alliances
_______________
A) have a high “divorce rate.“
B) are generally successful.
C) work well in cooperatively developing new
technologies and new products but seldom work well in promoting greater supply
chain efficiency.
D) work best when they are aimed at achieving
a mutually beneficial competitive advantage for the allies.
E) are rarely useful in helping a company win
the race for global industry leadership and in establishing positions in
industries of the future.
20 Which of the following is not a typical reason
that many alliances prove unstable or break apart?
A) Inability to work well together.
B) The emergence of more attractive
technological paths.
C) Changing conditions make the purpose of the
alliance obsolete.
D) Disagreement over how to divide the added
market share and profits gained from joint collaboration.
E) Diverging objectives and priorities.