Solution Manual for MGMT 9th Edition Williams 1305661591

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Chapter 6 Organizational Strategy

TRUEFALSE

1. A competitive advantage becomes a sustainable competitive advantage when other companies

start duplicating the value a firm is providing to customers.

(A) True (B)

False

Answer : (B)

2. Rare resources are resources that are not controlled or possessed by many competing firms and
are necessary to sustain a competitive advantage.

(A) True (B)

False

Answer : (A)

3. Imperfectly imitable resources are those resources that are impossible or extremely costly or
difficult to duplicate.

(A) True (B)

False

Answer : (A)

4. A situational analysis is an assessment of the strengths and weaknesses in an organization's

internal environment and the opportunities and threats in its external environment.

(A) True (B)

False

Answer : (A)

5. Sanfase, a technology company in Rockbourne, manufactures microprocessors for computers. Its

product is a lot more powerful than its competitors. This scenario is an example of competitive
inertia.
(A) True (B)

False

Answer : (B)
6. A strategic group is a task force within a company that analyzes the company's own weaknesses
to determine how competitors could exploit them for competitive advantage.

(A) True (B)

False

Answer : (B)

7. Strategic reference points are the less visible, internal decision-making routines, problem-solving
processes, and organizational cultures that determine how efficiently inputs can be turned into
outputs.

(A) True (B)

False

Answer : (B)

8. According to portfolio strategy, the more businesses in which a corporation competes, the larger
its overall chances of failing.

(A) True (B)

False

Answer : (B)

9. Growth, stability, and retrenchment are all types of portfolio strategies.

(A) True

(B) False

Answer : (B)

10. The threat of new entrants is a measure of the degree to which barriers to entry make it easy or
difficult for new companies to get started in an industry.

(A) True (B)

False

Answer : (A)

MULTICHOICE

11. Organizations can achieve a competitive advantage by using their resources to .

(A) create strategies that are simultaneously being implemented by competitors

(B) duplicate the value a competitor firm provides to its customers

(C) provide greater value for customers than competitors can

(D) foster competitive inertia

Answer : (C)

12. is a competitive advantage that other companies have tried unsuccessfully to duplicate and
have, for the moment, stopped trying to duplicate.

(A) Sustainable competitive advantage

(B) Revealed competitive advantage

(C) Comparative advantage

(D) Core competency advantage

Answer : (A)

13. A competitive advantage becomes a sustainable competitive advantage when:

(A) a company collaborates with its competitors to obtain a larger market share.

(B) other companies cannot duplicate the value a firm is providing to customers.

(C) all of a company's competitors have similar resources and capabilities.

(D) a company's competitors are able to imitate or find substitutes for rare resources.

Answer : (B)

14. Which of the following conditions must be met if a firm's resources are to be used to achieve a
sustainable competitive advantage?

(A) The resources must be cheap, common, and substitutable.

(B) The resources must be fixed assets, such as machinery, buildings, and land.

(C) The resources must be current assets, such as inventory.

(D) The resources must be valuable, rare, imperfectly imitable, and nonsubstitutable.

Answer : (D)

15. Which of the following is the first step of a strategy-making process?

(A) Conducting situational analysis

(B) Assessing the need for strategic change

(C) Choosing strategic alternatives

(D) Evaluating strategic alternatives

Answer : (B)

16. Which of the following is the last step of a strategy-making process?

(A) Conducting situational analysis

(B) Assessing the need for strategic change

(C) Choosing strategic alternatives

(D) Evaluating strategic alternatives

Answer : (C)

17. Which of the following best defines competitive inertia?

(A) It is a reluctance to change strategies or competitive practices that have been successful in the
past.

(B) It is a competitive advantage that other companies have tried unsuccessfully to duplicate.

(C) It is a discrepancy between a company's intended strategy and the strategic actions managers
take when implementing that strategy.

(D) It is a corporate-level strategy that minimizes risk by diversifying investment among various
businesses or product lines.

Answer : (A)

18. Ziff Corp. was a leading electronics firm for about three decades. As the competition changed,
its product innovation stopped. The managers at Ziff Corp. are well aware of the strategies that lead
to their company's success and they continue to follow the old strategies. This scenario is an
example of .

(A) distinctive competence

(B) strategic dissonance

(C) core capabilities

(D) competitive inertia

Answer : (D)
19. Which of the following best defines strategic dissonance?

(A) It is a reluctance to change strategies or competitive practices that have been successful in the
past.

(B) It is a discrepancy between a company's intended strategy and the strategic actions taken by
managers while implementing that strategy.

(C) It is a competitive advantage that other companies have tried unsuccessfully to duplicate.

(D) It is a corporate-level strategy that minimizes risk by diversifying investment among various
businesses or product lines.

Answer : (B)

20. Which of the following can help managers to improve the speed and accuracy with which they
determine the need for strategic change?

(A) Fostering competitive inertia

(B) Eliminating creative work environments

(C) Looking for signs of strategic dissonance

(D) Limiting design iterations

Answer : (C)

21. Which of the following best defines a SWOT analysis?

(A) It is an assessment of both the internal and external environment of an organization.

(B) It measures the tangible rather than the intangible assets of an organization.

(C) It is conducted by regulatory agencies to measure the performance of organizations.

(D) Its aim is to review internal processes independently of the external industry environment.

Answer : (A)

22. Which of the following best defines a distinctive competence?

(A) It is what a company can make, do, or perform better than its competitors.

(B) It is creating or acquiring companies in completely unrelated businesses.

(C) It is the extent to which a competitor has similar amounts and kinds of resources.

(D) It is the competitive move designed to reduce a rival's market share or profits.

Answer : (A)
23. Bob's Assembly is a hardware manufacturer. It specializes in builders' hardware for doors,
cabinets, windows, and bathrooms. Bob's Assembly products are cheaper and 95% more durable
than its competitors' products. This scenario is an example of as Bob's Assembly performs
better than its competitors.

(A) core capability

(B) distinctive competence

(C) competitive inertia

(D) strategic dissonance

Answer : (B)

24. Which of the following is a core capability of a company that determines how efficiently inputs
can be turned into outputs?

(A) External decision-making routines

(B) Customer acquisition routines

(C) Problem-solving processes

(D) Market-sensing processes

Answer : (C)

25. Which of the following statements is true of a portfolio strategy?

(A) It guides the strategic decisions of corporations that compete in a variety of businesses.

(B) It guides an investor who invests in a variety of stocks.

(C) It reduces risk by buying a variety of items so that the failure of one business does not doom the
entire portfolio.

(D) It focuses on increasing profits, revenues, or the number of places in which a company does
business.

Answer : (A)

26. In the context of portfolio strategy, is the purchase of a company by another company.

(A) divestiture

(B) demerger (C)

acquisition (D)

restructuring
Answer : (C)

27. Which of the following statements is true of the BCG matrix?

(A) It is used to guide the strategic alternatives that managers of individual businesses may use.

(B) It focuses on increasing profits or the number of places in which a company does business.

(C) It focuses on improving the way in which a company sells the same products to the same
customers.

(D) It is used to categorize a corporation's businesses by growth rate and relative market share.

Answer : (D)

28. Which of the following best defines cash cows?

(A) They are the companies that have a large share of a fast-growing market.

(B) They are the companies that have a small share of a fast-growing market.

(C) They are the companies that have a large share of a slow-growing market.

(D) They are the companies that have a small share of a slow-growing market.

Answer : (C)

29. The BCG matrix starts by recommending that while the substantial cash flows from cash cows
last, they should be reinvested in stars to:

(A) achieve strategic goals and guide the strategic alternatives.

(B) help them grow even faster and obtain even more market share.

(C) increase the number of places in which a company does business.

(D) acquire companies that share similar products, technology, or cultures.

Answer : (B)

30. is a measure of the intensity of competitive behavior among companies in an industry.

(A) Character assassination

(B) Character of the rivalry

(C) Threat of new entrants

(D) Threat of substitute products

Answer : (B)
31. Which of the following best defines cost leadership?

(A) It is the positioning strategy of producing a product or service of acceptable quality at

consistently lower production costs than competitors can so that a firm can offer the product or
service at the lowest price in the industry.

(B) It is the positioning strategy of providing a product or service that is sufficiently different from
competitors' offerings that customers are willing to pay a premium price for it.

(C) It is the positioning strategy to produce a specialized product or service for a limited, specially
targeted group of customers in a particular geographic region or market segment.

(D) It is the positioning strategy of companies that do not follow a consistent adaptive strategy but
instead react to changes in the external environment after they occur.

Answer : (A)

32. In the context of adaptive strategies, which of the following is true of defenders?

(A) They aggressively hold their current strategic position by doing the best job they can to hold on
to customers in a particular market segment.

(B) They use an adaptive strategy that seeks fast growth by searching for new market opportunities,
encouraging risk taking.

(C) They try to simultaneously minimize risk and maximize profits by following or imitating the
proven successes of prospectors.

(D) They do not follow a consistent strategy and tend to react to changes in their external
environment after they occur.

Answer : (A)

33. In the context of adaptive strategies, which of the following best describes prospectors?

(A) They seek moderate, steady growth by offering a limited range of products and services to a
well-defined set of customers.

(B) They seek fast growth by searching for new market opportunities, encouraging risk taking, and
being the first to bring innovative new products to market.

(C) They try to simultaneously minimize risk and maximize profits by following or imitating the
proven successes of firms.

(D) They do not follow a consistent strategy and tend to react to changes in their external
environment after they occur.

Answer : (B)

34. Which of the following statements is true of analyzers?

(A) They are the first to bring innovative new products to market.

(B) They do not follow a consistent strategy.

(C) They are a blend of the defender and prospector strategies.

(D) They react to changes in their external environment after they occur.

Answer : (C)

35. Spade and Marcher Corp. manufactures and sells toy guns. These toy guns are a perfect
imitation of real weapons. Inspired by Spade and Marcher's success, Keith & Sons, an arms
manufacturer in Korowlla, starts to manufacture toy guns too. Which of the following adaptive
strategies is used by Keith & Sons?

(A) Defenders

(B) Prospectors

(C) Analyzers

(D) Reactors

Answer : (C)

36. Which of the following statements is true of direct competition?

(A) It is determined by two factors: market commonality and resource.

(B) It does not follow a consistent strategy.

(C) It uses cost leadership to produce a specialized product for limited customers.

(D) It minimizes the effects of industry competition.

Answer : (A)

37. ZeCola is a beverage manufacturer. It presents WYB, a zero-calorie drink to compete with We
Fresh's Shire, a low-calorie drink. When WYB is released in the market, We Fresh cuts down the
price on Shire to match WYB's price. This scenario is an example of a(n) .

(A) rejoinder

(B) attack (C)

recovery (D)

acquisition

Answer : (B)
38. A(n) is a competitive countermove, prompted by a rival's attack, to defend or improve a
company's market share or profit.

(A) response

(B) attack (C)

recovery (D)

acquisition

Answer : (A)

39. affects the likelihood of an attack or a response to an attack.

(A) Grand strategy

(B) Cost leadership

(C) Differentiation

(D) Market commonality

Answer : (D)

40. largely affects response capability, that is, how quickly and forcefully a company can
respond to an attack.

(A) Growth strategy

(B) Cost leadership

(C) Differentiation

(D) Resource similarity

Answer : (D)

SHORTANSWER

41. are used by managers to measure whether their firm has developed the core
competencies that it needs to achieve a sustainable competitive advantage. A. Strategic reference
points
B. Corporate-level strategies
C. Distinctive competencies
D. Core capabilities
Answer : Strategic reference points

42. is a strategy for reducing risk by buying a variety of items so that the failure of one
stock or one business does not doom the entire portfolio. A. Restructuring
B. Diversification
C. Acquisition
D. Exit planning
Answer : Diversification

43. are companies that have a small share of a fast-growing market. A. Question marks
B. Cash cows
C. Stars
D. Dogs
Answer : Question marks

44. is a strategy that focuses on increasing profits, revenues, market share, or the number
of places in which a company does business. A. Retrenchment strategy
B. Stability strategy
C. Recovery strategy
D. Growth strategy
Answer : Growth strategy

45. is a measure of the intensity of competitive behavior among companies in an industry.

A. Direct competition
B. Character of the rivalry
C. Competitive advantage
D. Market commonality
Answer : Character of the rivalry

46. is creating or acquiring companies that share similar products, manufacturing,

marketing, technology, or cultures.Answer : Related diversification

47. is the positioning strategy of providing products or services sufficiently different from
competitors' offerings that customers are willing to pay a premium cost for the extra value or
performance that it provides.Answer : Differentiation

48. are companies using an adaptive strategy aimed at defending strategic positions by
seeking moderate, steady growth and by offering a limited range of high-quality products and
services to a well-defined set of customers.Answer : Defenders

49. are companies using an adaptive strategy that seeks to minimize risk and maximize
profits by following or imitating the proven successes of prospectors.Answer : Analyzers

50. In the context of direct competition, is defined as the degree to which two companies
have overlapping products, services, or customers in multiple markets.Answer : market
commonality