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Self-Graded Chapter Quiz
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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)Which value chain activities, if any, should be outsourced
B)Whether to bolster the company's market position and competitiveness via acquisition or merger
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
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 collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes.
Companies are motivated to enter into strategic alliances or cooperative arrangements
A)to expedite the development of promising new technologies or products.
B)to bring together the personnel and expertise needed to create desirable new skill sets and capabilities to improve supply chain efficiency, and/or gain economies of scale in production and/or marketing.
C)to acquire or improve market access through joint marketing agreements.
D)to overcome deficits in their own technical and manufacturing expertise.
E)All of these.
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 distributors, or (2) occur when both parties conclude that continued collaboration is in their mutual interest.
E)aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.
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 than in establishing positions in industries of the future.
Which of the following is not a typical reason that many alliances prove unstable or break apart?
A)Inability to work well together
B)Mounting competition between one or more allies in the marketplace
C)Changing conditions that render the purpose of the alliance obsolete and the emergence of more attractive technological paths
D)Disagreement over how to divide the added market share and profits gained from joint collaboration
E)Diverging objectives and strategic priorities
Mergers and acquisitions are a much used 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 trying to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
E)Both C and D.
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 that forming strategic alliances and cooperative partnerships with other companies.
C)Merger and acquisition strategies often do not produce the hoped-for outcomes—examples of mergers/acquisitions where the results have been disappointing include the merger of Sprint and Nextel, the merger of Daimler Benz and Chrysler, FedEx's acquisition of Kinkos, Ford's acquisitions of Jaguar and Land Rover, and eBay's acquisition of Skype.
D)Mergers and acquisition 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.
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)Reduced risk of disruptions in the supply and delivery of crucial materials and components
C)Reduced costs for items purchased from suppliers (if internal manufacture is more economical than buying from powerful suppliers who have big profit margins and provided entry barriers into a supplier's business are low or can be hurdled)
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)Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity)
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
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 poses all kinds of capacity-matching problems.
C)It boosts a firm's capital investment in the industry and thus increases business risk if the industry becomes unattractive later.
D)Integrating forward or backward can entail taking on the performance of value chain activities that require radically different skills and business capabilities than the firm possesses.
E)Vertical integration backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components (it is easier to change out parts and components made by outside suppliers than those made in-house).
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 Web site.
B)Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best
C)Improving the company's ability to innovate by allying with "world-class" suppliers who have cutting edge intellectual capital and are first-to-market with next-generation parts and components
D)Being able to speedily and efficiently assemble diverse kinds of competitively valuable expertise
E)Obtaining higher quality and/or cheaper components or services
Which of the following is not one of the principal offensive strategy options?
A)Leapfrogging competitors by being the first adopter of next-generation technologies
B)Offering an equally good or better product at a lower price
C)Blocking the avenues open to challengers
D)Attacking the competitive weakness of rivals
E)Attacking market segments where key rivals earn big profits
A blue ocean type of offensive strategy
A)is a pre-emptive 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 new 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.
A hit-and-run or guerilla 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 guerilla signals rivals that it will use deep price cuts to defend its newly-won position.
C)work best if the guerilla 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)random raids by a small competitor to grab sales and market share from complacent or distracted rivals.
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
The purposes of defensive strategies are to
A)aggressively retaliate against rivals pursuing offensive strategies and prevent against price wars.
B)lower the risk of being attacked by rivals, 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.
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)first-time buyers remain strongly loyal to pioneering firms in making repeat purchases.
C)moving first can result in a cost advantage over rivals.
D)moving first can constitute a preemptive strike, making imitation extra hard or unlikely.
E)All of these.
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff?
A)When late movers can copy a successful pioneer's moves quickly and at lower cost
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
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

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