ORGANIZATIONAL STRATEGY COURSE – REVISION

1. Every strategy needs

A. a distinctive element that attracts customers and produces a competitive edge
B. to include similar characteristics to rival company strategies
C. to pursue conservative growth built on historical strengths
D. to mimic the plans of the industry's most successful companies.

2. A company's strategy stands a better chance of succeeding when

A. managers employ conservative strategic moves based on past experience and form an
underlying basis of control
B. it relies on competitive moves aimed at attracting buyers in ways that set the company
apart from rivals
C. managers copy the strategic moves of successful companies in its industry
D. managers focus on meeting or beating shareholder expectations

3. A company achieves a competitive advantage when it

A. provides buyers with superior value compared to rival sellers or offers the same value
at a lower cost
B. has a profitable business model
C. is able to maximize shareholder wealth
D. is consistently able to achieve both its strategic and financial objectives
E. has a strategy well-matched to its business model

4. To improve performance, there are many different ways for outcompeting rivals such as
A. realizing a higher cost structure and lower operating profit margins than rivals in order
to drive sales growth
B. creating products similar to those of competitors so as to be competitive in the same
markets
C. pursuing similar personalized customer service or quality dimensions as rivals
D. being undecided whether or not to concentrate operations on local versus global
markets
E. strengthening competitiveness by pursuing strategic alliances and collaborative
partnerships

5. When companies adopt the strategy-making and strategy-execution process, it requires they
start by
A. developing a strategic vision, mission, and values
B. developing a business model, crafting a strategy, and deciding how much of the
company's resources to employ in the pursuit of sustainable competitive advantage
C. coming up with a statement of the company's mission and communicating it to all
employees, selecting a business model
D. deciding on the company's board of directors, setting financial objectives, crafting a
strategy, and choosing what business approaches and operating practices to employ

6. Managers must chart a company's strategy by

A. focusing on the local environment in which they are operating
B. ensuring excess production capacity and/or inventory
C. competing fiercely at any costs for a share in the market

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 D. developing a thorough understanding of the company's external and internal
environment

7. Which of the following is NOT one of the principal components of strategic significance in the
PESTEL analysis?
A. political factors including the extent to which government intervenes in the economy
B. economic conditions that include the general economic climate and specific factors
such as interest rates, inflation rate, and unemployment rate, etc.
C. sociocultural forces including societal values, attitudes, cultural factors, and lifestyles
that impact business
D. technological factors that include the pace of change and technical developments that
have the potential for impacting society
E. environmental forces that include the competitive structure, the degree of industry
fragmentation, and the mobility barriers that inhibit business

8. The competitive pressures on companies within an industry come from all of the following,
EXCEPT
A. those associated with the market maneuvering and jockeying for buyer patronage that
goes on among rival firms in the industry
B. those companies in other industries attempting to win buyers over to their substitute
products
C. those associated with the threat of new entrants into the marketplace
D. those associated with the bargaining power of suppliers and customers
E. those associated with environmental factors such as water shortages

9. Rivalry among competing sellers decreases

A. when buyer demand is growing rapidly
B. as it becomes less costly for buyers to switch brands
C. as the products of rival sellers become commoditized
D. as the number of competitors increases

10. Which of the following is generally NOT considered a barrier to entry?

A. restrictive regulatory policies
B. high capital requirements
C. weak brand preferences
D. many industry patents in place
E. difficulties in building a network of distributors/dealers

11. Which of the following is NOT a good example of a substitute product that triggers stronger
competitive pressures?
A. a salad as a substitute for French fries
B. wireless phones as a substitute for wired telephones
C. Coca-Cola as a substitute for Pepsi
D. snowboards as a substitute for snow skis

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12. The lower the user's switching costs, the
A. harder it is for the sellers of attractive substitutes to lure buyers to their offering
B. more intense the competitive pressures posed by substitute products
C. less intense the competitive pressures posed by substitute products.
D. greater the bargaining power from both suppliers and influential customers
E. lesser the bargaining power from both suppliers and influential customers

13. Which of the following is NOT a factor that causes buyer bargaining power to be stronger?
A. Some buyers are a threat to integrate backward into the business of sellers and become
an important competitor
B. Buyers are small and numerous relative to sellers
C. Buyers have considerable discretion over whether and when they purchase the product
D. Buyers are well-informed about sellers' products, prices, and costs
E. The costs incurred by buyers in switching to competing brands or to substitute products
are relatively low

14. Competitive pressures stemming from buyer bargaining power tend to be weakest in which of
the following circumstances?
A. Most consumers vary the brands they choose for their cookware and kitchen gadgets
B. There is a global decline in the demand for cable television services
C. The commercial jet aviation manufacturing industry offers highly differentiated
products
D. The Internet offers a huge amount of information on a variety of products

15. High exit costs from an industry tend to reduce the intensity of rivalry.
a. True b. False

16. Substantial switching costs reduce the threat of potential entry.

a. True b. False

17. The threat of substitutes is greater if there are low switching costs.
a. True b. False

18. The five forces model overemphasizes threats and downplays opportunities.
a. True b. False

19. Strategic group mapping is a visual technique for displaying

A. how many rivals are pursuing each type of strategy
B. which companies have the biggest market share and who the industry leader really is
C. the different market or competitive positions that rival firms occupy in an industry and
for identifying each rival's closest competitors
D. which companies have the highest degrees of brand loyalty
E. which companies have failing business models

20. When strategic managers assess the competitive power of company resources, what matters
is
A. whether it helps differentiate a company's product offering from the product offerings
of rival firms

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 B. whether the resource is really competitively valuable, if it is rare and something
competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the
substitute resource strengths and competitive capabilities of rivals
C. whether customers are aware of the resource and view it positively enough to boost the
company's brand name reputation
D. whether the resource is something rivals are unable to perform, if it is an important
differentiating product or service feature, how strongly it contributes to the company's brand
image, and if it is the foundation of a cost-based advantage
E. whether the resource is technology-based or based on superior marketing know-how

21. The difference between a resource and a capability is

A. a resource is a productive input or competitive asset, whereas a capability is the
capacity of the firm to perform some internal activity competently
B. a resource is a reserve supply or back-up supply function, whereas a capability is the
ability to manage the resource function
C. a resource is a mechanism used for carrying out some responsibility, whereas a
capability possesses the ability to monitor the resource
D. a resource represents the firm's fixed assets, whereas a capability defines whether the
firm is competent to perform some function with these assets
E. a resource represents the firm's human assets, whereas a capability defines the skills and
knowledge of these human resources

22. When an activity becomes something a company has learned to perform proficiently and
capably, the company is said to have a
A. competence
B. competitive advantage over rivals
C. key value chain proficiency
D. distinctive capability
E. resource advantage

23. To build a competitive advantage by out-performing rivals in value chain activities, a

company must
A. position itself in the industry's more favorably situated strategic group
B. develop resource strengths that will enable it to pursue the industry's most attractive
opportunities
C. develop core competencies and maybe a distinctive competence that rivals don't have or
can't quite match and that are instrumental in helping it deliver attractive value to customers
D. outsource all of its value chain activities to world-class vendors and suppliers

24. While there are many routes to competitive advantage, the two biggest factors that distinguish
one competitive strategy from another are
A. whether a company can build a brand name and an image that buyers trust
B. whether a company's target market is broad or narrow and whether the company is
pursuing a low cost or differentiation strategy
C. whether a company can achieve lower costs than rivals and whether the company is
pursuing the industry's sales and market share leader's role
D. whether a company can offer the lowest possible prices and whether the company can
get the best suppliers in the market

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25. A boutique hotel chain provides upscale rooms and superior customer service at value prices.
What strategy is the hotelier using to gain competitive advantage?
A. a low-cost provider strategy
B. a broad differentiation strategy
C. a focused low-cost strategy
D. a focused differentiation strategy
E. a best-cost provider strategy

26. A competitive strategy of striving to be the low-cost provider is particularly attractive when
A. buyers are not very price-conscious
B. most rivals are trying to be best-cost providers
C. there are many ways to achieve product differentiation that have value to buyers
D. most buyers use the product in much the same ways, with user requirements calling for
a standardized product

27. Which of the following is NOT one of the pitfalls of a low-cost provider strategy?
A. overly aggressive price-cutting
B. relying on an approach to reduce costs that can be easily copied
C. becoming too obsessed of cost reduction and ignoring value
D. revamping value chains to reduce cost

28. The essence of a broad differentiation strategy is to

A. appeal to the high-end part of the market and concentrate on providing a top-of-the-line
product to consumers
B. incorporate a greater number of differentiating features into its product/service than
rivals
C. lower buyer switching costs
D. outspend rivals on advertising and promotion in order to inform and convince buyers of
the value of its differentiating attributes
E. offer unique product attributes in ways that are valuable and appealing and that buyers
consider worth paying for

29. Broad differentiation strategies are well-suited for market circumstances where
A. there are many ways to differentiate the product or service that has value to buyers.
B. most buyers have the same needs and use the product in the same ways
C. technological changes are slow-paced
D. barriers to entry are high and suppliers have a low degree of bargaining power.
E. price competition is especially vigorous

30. Focused strategies keyed either to low cost or differentiation are especially appropriate for
situations where
A. the market is composed of distinctly different buyer groups who have different needs or
use the product in different ways
B. most other rival firms are using a best-cost producer strategy
C. buyers have strong bargaining power and entry barriers are low
D. most industry rivals have weakly differentiated products

31. A focused differentiation strategy aims at securing competitive advantage by

A. providing niche members with a top-of-the-line product at a premium price
B. catering to buyers looking for an upscale product at an attractively low price
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 C. offering a product carefully designed to appeal to the unique preferences and needs of a
narrow, well-defined group of buyers
D. developing product attributes that no other company in the industry has
E. convincing a narrow, well-defined group of buyers that the company has a truly world-
class product

32. The major difference between a low-cost provider strategy and a focused low-cost strategy is
the
A. amount of outsourcing involved
B. length of the managerial experience curve
C. size of the buyer group to which a company is appealing
D. number of upscale attributes incorporated into the product offering
E. production methods being used to achieve a low-cost competitive advantage.

33. Overdrive Motors, a manufacturer of self-driving delivery trucks, is working on developing

its next-generation vehicles. It has decided on a strategy of focusing on a narrow buyer segment
and outcompeting rivals by offering buyers customized vehicles at a lower cost than rivals. What
basic strategic approach has Overdrive Motors decided upon?
A. focused differentiation
B. best-cost provider
C. low-cost provider
D. broad differentiation
E. focused low-cost

34. BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market
that caters to all kinds of consumers, this resort caters mainly to newly married couples with
guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using
to gain competitive advantage?
A. a low-cost provider strategy
B. a broad differentiation strategy
C. a focused low-cost strategy
D. a focused differentiation strategy
E. a best-cost provider strategy

35. To be successful and to survive the shakeout stage of the industry life cycle, a firm should
A. charge higher prices than its competitors
B. focus on product innovation rather than process innovation
C. gain economies of scale
D. shift from price to non-price competition.

36. Which of the conditions prevail when an industry is at the end of its life cycle?
A. The level of process innovation reaches its maximum as firms attempt to lower cost
B. The industry structure is perfectly competitive with a large number of buyers and
sellers.
C. The strategic objectives of businesses will involve gaining market acceptance.
D. The market reaches its maximum size at this stage

37. Which of the following statements is true of technology enthusiasts?

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 A. They make up the largest market segment
B. They are the customer segment in the maturity stage of the industry life cycle
C. They are highly price conscious buyers.
D. They enjoy using beta versions of products and providing feedback to companies

38. Which of the following statements is true of the early majority section of consumers?
A. They come into the market during the introduction stage
B. They are unaware that many hyped new product introductions will fade away
C. They weigh the benefits and costs carefully when adopting a new product
D. They make up the smallest market segment

39. It is important for a firm to win over the early majority section of the market to ensure the
commercial success of an innovation because they
A. are driven by technology concerns rather than the practicality of a new product
B. influence the purchase decisions of early adopters
C. enter into the market in large numbers, creating a herding effect
D. have the highest purchasing power when compared to the other customer segments

40. Sara can be categorized under the late majority customer segment. Which of the following
behaviors is she most likely to exhibit?
A. She will be confident in her ability to master any new technology
B. She will prefer to buy from well-established brands rather than unknown new ventures
C. She will not rely on endorsements by the early majority or early adopters.
D. She will buy beta versions of new products and technology