Strategic Management and Business Policy Globalization Innovation and Sustainability 14th Edition Wheelen Test Bank 1

Test Bank for Strategic Management and Business
Policy Globalization Innovation and Sustainability

14th Edition Wheelen Hunger Hoffman and Bamford
0133126145 9780133126143
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Strategic Management and Business Policy, 14e (Wheelen)

Chapter 6 Strategy Formulation: Situation Analysis and Business Strategy
1) SWOT is an acronym that stands for Strategy, Weaknesses, Opportunities, and Threats.
Answer: FALSE
Difficulty: Easy
Chapter Objective: Organize environmental and organizational information using a SWOT
approach and the SFAS matrix
2) SWOT analysis by itself is not a panacea for strategy.

Answer: TRUE
Difficulty: Moderate
3) The goal is to find a propitious niche so well suited to the firm's internal and external
environment that other corporations are not likely to challenge or dislodge it.
Answer: TRUE
1
Copyright © 2015 Pearson Education, Inc.
4) The first firm through a strategic window can occupy a propitious niche and discourage
competition (if the firm has the required internal strengths).
Answer: TRUE
AACSB: Reflective Thinking
5) One company that has successfully found a propitious niche is Frank J. Zamboni & Company,
the manufacturer of the machines that smooth the ice at ice skating rinks.
Answer: TRUE
Difficulty: Difficult
AACSB: Analytical Thinking
6) Niches can grow and change over time.

Answer: TRUE
7) If a mission does not provide a common thread for a corporation's businesses, managers might
be unclear about where the company is heading.
Answer: TRUE
AACSB: Application of Knowledge
8) The TOWS Matrix illustrates how the external opportunities and threats facing a particular
corporation can be matched with that company's internal strengths and weaknesses to result in
four sets of possible strategic alternatives.
Answer: TRUE
9) SO strategies attempt to take advantage of opportunities by overcoming weaknesses.

Answer: FALSE
2
10) Business strategy focuses on improving the competitive position of a company's or business
unit's products or services within the specific industry or market segment that the company or
business unit serves.
Answer: TRUE
Difficulty: Easy
Chapter Objective: Understand the competitive and cooperative strategies available to
corporations
11) Cost leadership is the ability of a company or business unit to design, produce, and market a
comparable product more efficiently than its competitors.
Answer: TRUE
corporations
12) A cost leader's lower costs allow it to continue to earn profits during times of heavy
competition.
Answer: TRUE
corporations
13) An example of a company following a cost focus strategy is Potlach Corporation, who makes
house brands of toilet paper for Safeway and other grocery store chains.
Answer: TRUE
corporations
14) One risk of a cost leadership strategy is that the technology for production or of products
may change.
Answer: TRUE
corporations
3
15) An example of a company that was "stuck in the middle" is K-Mart as they tried to imitate
both Walmart's low-cost strategy and Target's differentiation strategy.
Answer: TRUE
corporations
16) Based on the eight dimensions of quality discussed in the text, serviceability is defined as the
product's ease of repair.
Answer: TRUE
Difficulty: Easy
corporations
17) Most entrepreneurial ventures follow focus strategies.

Answer: TRUE
corporations
18) The strategic rollup was developed in the mid-1990s as an efficient way to quickly
consolidate a fragmented industry with the resulting large firm creating economies of scale.
Answer: TRUE
corporations
19) Rollups are not synonymous with traditional mergers and acquisitions.
Answer: TRUE
Difficulty: Easy
corporations
20) One danger of D'Aveni's concept of hypercompetition is that it may lead to an overemphasis
on short-term tactics over long-term strategy.
Answer: TRUE
corporations
21) One skill required of the cost leadership strategy is a strong marketing ability.
4
Answer: FALSE
Difficulty: Easy
corporations
22) Tight cost control is an organizational requirement for a cost leadership strategy.
Answer: TRUE
corporations
23) The only way to gain competitive advantage within an industry is to use a competitive
strategy.
Answer: FALSE
Difficulty: Easy
corporations
24) Alliances take more financial resources and involve more risk than do acquisitions and going
it alone.
Answer: FALSE
corporations
25) Those companies using cooperative strategies are generally not able to gain a competitive
advantage.
Answer: FALSE
corporations
26) The two general types of cooperative strategies are collusion and strategic alliances.
Answer: TRUE
corporations
27) In tacit collusion, there is no direct communication among competing firms.

Answer: TRUE
5
corporations
AACSB: Ethical Understanding and Reasoning
28) Collusion is the active cooperation of firms within an industry to reduce output and raise
prices in order to get around the normal economic law of supply and demand.
Answer: TRUE
corporations
29) Too much partnering experience with the same strategic partners generates diminishing
returns over time and leads to reduced performance.
Answer: TRUE
Chapter Objective: Identify the basic types of strategic alliances
30) A licensing arrangement is an agreement in which the licensing firm grants rights to another
firm in another country or market to produce and/or sell a product.
Answer: TRUE
Difficulty: Easy
31) A value chain partnership is a loose alliance with several distributors for the short term.
Answer: FALSE
32) One success factor to a strategic alliance is the ability to identify likely partnering risks and
deal with them when the alliance is formed.
Answer: TRUE
33) The concept that advocates management's attempt to find a strategic fit between external
opportunities and internal strengths while working around external threats and internal
weaknesses is called
A) environmental analysis.
B) position analysis.
C) strategic evaluation.
D) objective analysis.
E) situation analysis.
Answer: E
Difficulty: Easy
6
34) The particular capabilities and resources a firm possesses and the superior way in which they
are used is called
A) differentiating capabilities.
B) distinctive competencies.
C) situational proficiency.
D) core competencies.
E) distinctive characteristics.
Answer: B
35) An acronym for the assessment of the external and internal environments of the business
corporation in the process of strategy formulation/strategic planning is
A) PET.
B) MBO.
C) SWOT.
D) SBU.
E) ROI.
Answer: C
Difficulty: Easy
36) The T in SWOT represents

A) threat.
B) tactic.
C) tautology.
D) task.
E) time.
Answer: A
Difficulty: Easy
37) The text authors note that the essence of strategy is

A) opportunity divided by strengths minus weaknesses.
B) strength divided by opportunity.
C) threat divided by capacity.
D) threat divided by opportunity.
E) opportunity divided by threat.
7
Answer: A
38) All of the following reflect criticisms of the SWOT analysis EXCEPT
A) it uses no weights to reflect priorities.
B) it only requires a single level of analysis.
C) it provides a rational link to strategy implementation.
D) it uses ambiguity in words and phrases.
E) it generates lengthy lists.
Answer: C
39) In the development of a SFAS matrix, the first step is to

A) enter the ratings of how the company's management is responding to each of the strategic
factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.
Answer: C
40) A corporation's specific competitive role which is so well-suited to the firm's internal and
external environment that other corporations are NOT likely to challenge or dislodge it.
A) strategic fit
B) propitious niche
C) common thread
D) business screen
E) implicit strategy
Answer: B
41) According to the text, unique market opportunities that are available for only a particular
time are called
A) situational occasions.
8
B) critical openings.
C) strategy implementation.
D) strategic windows.
E) trigger points.
Answer: D
42) One company that has successfully found a propitious niche is

A) Coca-Cola.
B) PepsiCo.
C) Frank J. Zamboni & Company.
D) Walmart.
E) Disney.
Answer: C
43) The technique that illustrates how management can match the external opportunities and
threats with its strengths and weaknesses to yield four sets of strategic alternatives is called a(n)
A) IFAS Table.
B) EFAS Table.
C) SFAS Table.
D) TOWS Matrix.
E) Issues Priority Matrix.
Answer: D
44) In a TOWS Matrix, SO Strategies

A) are generated by thinking of ways in which a company or business unit could use its strengths
to take advantage of opportunities.
B) attempt to take advantage of opportunities by overcoming weaknesses.
C) are basically defensive and primarily act to minimize weaknesses and avoid threats.
D) consider a company's or unit's strengths as a way to avoid threats.
E) are ways to get strategists to think "out of the box."
Answer: A
9
45) In a TOWS Matrix, ST Strategies
Answer: D
46) In a TOWS Matrix, WT Strategies

Answer: C
47) Business strategy focuses on

A) ensuring that the company maintains the existing market share that it has historically enjoyed.
B) improving the competitive position of a corporation's products or services within the industry
or market segment served.
C) providing adequate shareholders' return on investment.
D) preventing the competition from gaining a competitive edge by undermining their marketing
plan.
E) recovering the competitive lead by using all available resources that the company can provide.
Answer: B
corporations
48) Business strategy is composed of

A) corporate and competitive strategy.
B) functional and divisional strategy.
C) competitive and cooperative strategy.
D) corporate and cooperative strategy.
E) divisional and competitive strategy.
Answer: C
10
corporations
49) Which of the following is NOT one of the questions that development of a competitive
strategy should raise?
A) Should we compete on the basis of lower cost?
B) Should we compete head-to-head with major competitors?
C) Should we differentiate our products or services on some basis other than cost?
D) Should we compete by garnering political support of influential leaders?
E) Should we compete in a niche market that we can satisfy which is superior to that of the
competition?
Answer: D
corporations
50) According to Porter, the generic competitive strategy that reflects the ability of the
corporation or its business unit to design, produce, and market a comparable product more
efficiently than its competitors is called
A) competitive scope.
B) differentiation.
C) cost leadership.
D) diversification.
E) focus.
Answer: C
corporations
51) What are the three generic competitive strategies that Porter promotes as the means for
outperforming other corporations in a particular industry?
A) competitive scope, differentiation, and focus
B) diversification, concentration, and competitive scope
C) cost, competitive scope, and focus
D) concentration, cost leadership, and differentiation
E) cost leadership, differentiation, and focus
Answer: E
Difficulty: Easy
corporations
52) According to Porter, the generic competitive strategy that reflects the ability to provide
unique and superior value to the buyer in terms of product quality, special features, or after-sale
service is called
11
B) differentiation.
C) focus.
D) diversification.
E) cost leadership.
Answer: B
corporations
53) According to Porter, the term that applies to the breadth of a company's or business unit's
target market is called
B) differentiation.
C) focus.
D) diversification.
E) cost leadership.
Answer: A
corporations
54) Walmart, as a discount retailer, is an example of a company following which of Porter's

competitive strategies?
A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus
Answer: B
corporations
55) Apple is an example of a company following which of Porter's generic competitive

strategies?
A) cost leadership
B) differentiation
C) cost focus
D) competitive scope
E) diversification
Answer: B
corporations
12
56) Which of Porter's competitive strategies recommends that a company emphasize a particular
buyer group or geographic market and attempts to seek a cost advantage in its targeted segment?
A) differentiation
B) cost leadership
E) cost focus
Answer: E
corporations
57) In manufacturing toilet paper for grocery store chains (and avoiding competing directly
against Charmin), Potlach has followed which of Porter's generic competitive strategies?
A) differentiation
B) cost leadership
E) cost focus
Answer: E
corporations
58) Orphagenix, a small biotech firm, avoids head-to-head competition with large
pharmaceutical companies by developing orphan drugs to target diseases that affect fewer than
200,000 people. This is an example of which of Porter's generic strategies?
A) differentiation
B) cost leadership
E) cost focus
Answer: C
corporations
59) Which of Porter's competitive strategies concentrates on seeking differentiation in a

particular buyer group, product line segment, or geographic market?
A) differentiation
B) cost leadership
13
E) cost focus
Answer: C
corporations
60) When a company following a differentiation strategy ensures that the higher price it charges
for its higher quality is not priced too far above the price of the competition, the company is
using the process of
A) low-cost differentiation.
B) cost leadership.
C) cost proximity.
D) basic differentiation.
E) price fixing.
Answer: C
corporations
61) Which of the following is NOT one of the risks of a cost leadership strategy?
A) The technology that the organization has been using changes.
B) Achieving excessive success causes jealousy amongst competitors.
C) Competitors can achieve viable imitations.
D) Other bases for cost leadership erode.
E) Proximity in differentiation is lost.
Answer: B
Difficulty: Easy
corporations
62) Which of the following is NOT one of the risks of the focus strategy?
A) The target segment's structure erodes.
B) The segment's differences from other segments narrow.
C) The advantages of a broad line increase.
D) Focusers exit the industry.
E) Demand disappears for the product in the target segment.
Answer: D
corporations
63) According to Porter, a business unit in a competitive marketplace with no generic

competitive strategy is
14
A) achieving synergy.
B) practicing innovative leadership.
C) stuck in the middle.
D) not goal directed.
E) last in line.
Answer: C
Difficulty: Easy
corporations
64) Most entrepreneurial ventures follow

A) differentiation strategies.
B) focus strategies.
C) no strategies.
D) cost leadership strategies.
E) all of the above
Answer: B
corporations
65) Which of the following is NOT one of the eight dimensions of quality?
A) serviceability
B) durability
C) performance
D) value
E) features
Answer: D
corporations
66) A car's cruise control, known as a "bell and whistle," is an example of which of the eight
dimensions of quality?
A) performance
B) features
C) reliability
D) durability
E) aesthetics
Answer: B
corporations
15
67) The focus strategies will likely predominate when many small and medium sized local
companies compete for relatively small shares of the total market in a(n)
A) united industry.
B) fragmented industry.
C) consolidated industry.
D) isolated industry.
E) integrated industry.
Answer: B
corporations
68) As an industry matures while overcoming fragmentation and becomes dominated by a small
number of large companies, it tends to become a(n)
A) united industry.
B) fragmented industry.
C) consolidated industry.
D) isolated industry.
E) integrated industry.
Answer: C
corporations
69) A method developed in the mid-1990s as an efficient means to quickly consolidate a

fragmented industry can be referred to as a
A) merger.
B) strategic rollup.
C) cost strategy.
D) differentiation strategy.
E) focus strategy.
Answer: B
corporations
70) As an industry becomes hypercompetitive, firms initially respond by

A) raising entry barriers.
B) moving into untapped markets.
C) attacking the strongholds of other firms.
D) competing on cost and quality.
E) working their way to a situation of perfect competition.
Answer: D
16
corporations
71) The book Hypercompetition was written by

A) Porter.
B) D'Aveni.
C) Mintzberg.
D) Maslow.
E) Drucker.
Answer: B
Difficulty: Easy
corporations
72) The last stage of a hypercompetitive industry is reached when the remaining large global
competitors
A) raise entry barriers.
B) move into untapped markets.
C) attack the strongholds of other firms.
D) compete on cost and quality.
E) work their way to a situation of perfect competition in which no one has any advantage and
profits are minimal.
Answer: E
corporations
73) According to D'Aveni

A) except for a few stable industries, strategy initiatives do not provide sustainable competitive
advantage.
B) hypercompetition is rare.
C) it is enough to gain competitive advantage by being the lowest cost competitor.
D) the theory of hypercompetition is not supported by any research.
E) the American home appliance industry was immune to hypercompetition.
Answer: A
Difficulty: Easy
corporations
74) Porter recommends that a division with tight cost control, frequent detailed control reports, a
well structured organization, and quantitatively based incentives is required for which of the
following generic competitive strategies?
A) focus
B) differentiation
17
C) cost leadership
D) focus differentiation
E) concentration
Answer: C
corporations
75) If it is to be successful, Porter advises that a division possess strong marketing abilities,
product engineering, a creative flair, strong capability in basic research and a corporate
reputation for quality or technological leadership, for which one of the following generic
competitive strategies?
A) focus
B) differentiation
C) overall cost leadership
D) vertical growth
E) concentration
Answer: B
corporations
76) Product engineering, creative flair, and strong cooperation from channels are commonly
required skills and resources for which of Porter's generic strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion
Answer: B
Difficulty: Easy
corporations
77) Intense supervision of labor, sustained capital investment and access to capital are commonly
required skills and resources for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
E) collusion
Answer: A
Difficulty: Easy
18
corporations
78) Amenities to attract highly skilled labor, scientists, or creative people is a common
organizational requirement for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
E) collusion
Answer: B
corporations
79) Incentives based on meeting strict quantitative targets is a common organizational

requirement for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
E) collusion
Answer: A
corporations
80) According to Barney, under which condition would tacit collusion most likely be successful?
A) There is a large number of identifiable competitors.
B) Costs are not similar among firms.
C) One firm tends to act as the price leader.
D) Sales are characterized by a high frequency of large orders.
E) There are low barriers to entry in the industry.
Answer: C
corporations
AACSB: Reflective Skills
81) When firms follow each other's lead to reduce the level of competition such as GE and
Westinghouse did in steam turbines, it is referred to as
A) explicit collusion.
B) a strategic alliance.
C) a mutual service consortium.
19
D) conscious parallelism.
E) partnering.
Answer: D
corporations
82) A secret salary cap was the contention in a 2012 collusion lawsuit filed against
A) KFC.
B) the National Football League.
C) GE.
D) Major League Baseball.
E) ESPN.
Answer: B
corporations
83) Jet airplane manufacturers often enter into strategic alliances to

A) obtain new capabilities.
B) obtain access to specific markets.
C) reduce financial risk.
D) reduce political risk.
E) preserve autonomy.
Answer: C
84) The "cell" chip created by IBM, Sony Electronics, and Toshiba was a result of pooling their
resources in a
A) joint venture.
B) licensing arrangement.
C) value-chain partnership.
D) mutual service consortium.
E) competitive advantage.
Answer: D
85) Disadvantages of joint ventures include all of the following EXCEPT

A) loss of control.
B) lower profits.
C) probability of conflicts with partners.
20
D) likely transfer of technological advantage to the partner.
E) mutual dependence.
Answer: E
86) When P&G (the maker of Folgers and Millstone coffee) worked with Mr. Coffee, Krups, and
Hamilton Beach to market Home Café, they engaged in a
A) joint venture.
B) licensing arrangement.
D) mutual service consortium.
E) competitive advantage.
Answer: C
87) In licensing arrangements

A) the licensee can gain technical expertise.
B) companies can be aided in entering new countries directly.
C) the licensee might become a competitor to the licensing firm.
D) companies should never license their distinctive competencies.
E) all of the above
Answer: E
88) Tacit collusion

A) involves direct communication among competing firms.
B) is most likely to be successful if there are many competitors.
C) is seen with conscious parallelism as practiced by GE and Westinghouse.
D) is not illegal.
E) is most effective when the industry does not have a firm that acts as a price leader.
Answer: C
corporations
89) Collusion
A) may be explicit.
B) may be tacit.
C) is illegal when explicit.
D) can be illegal even when tacit.
E) all of the above
21
Answer: E
corporations
90) The active cooperation of firms within an industry to reduce output and raise prices to get
around the normal law of supply and demand is referred to as
A) a strategic alliance.
B) collusion.
C) a strategic roll up.
D) a merger.
E) licensing.
Answer: B
corporations
91) The two general types of cooperative strategies are

A) competitive and functional.
B) collusion and competitive.
C) strategic alliances and collusion.
D) strategic alliances and competitive.
E) competitive and collusive alliances.
Answer: C
Difficulty: Easy
corporations
92) Which of the following is NOT a reason companies or business units may form a strategic
alliance?
A) to obtain access to specific markets
B) to reduce financial risk
C) to reduce political risk
D) to set prices in the industry
E) to learn new capabilities
Answer: D
93) The kind of strategic alliance in which there is a partnership of similar companies in similar
industries who pool their resources to gain a benefit that is too expensive to develop alone is the
A) joint venture.
B) licensing agreement.
22
D) mutual service consortia.
E) holding company.
Answer: D
Difficulty: Easy
94) Which strategy has been used successfully by Yum! Brands to establish KFC and Pizza Hut
restaurants across the globe?
A) joint venture
B) licensing arrangement
C) strategic alliance
D) marketing strategy
E) value-chain partnership
Answer: B
95) The kind of strategic alliance in which a company forms a strong and close long-term
relationship for mutual advantage with a key supplier or distributor is the
A) joint venture.
B) licensing agreement.
D) mutual service consortia.
E) holding company.
Answer: C
96) Which of the following is NOT considered a strategic alliance success factor?
A) Have a clear strategic purpose.
B) Operate with short-term time horizon.
C) Agree on an exit strategy for when the partners' objectives are achieved or the partnership
fails.
D) Minimize conflicts among the partners by clarifying the objectives.
E) Identify likely partnering risks and deal with them when the alliance is formed.
Answer: B
23
97) What is a propitious niche? Provide an example of a firm that has been able to successfully
occupy a propitious niche.
Answer: A propitious niche is an extremely favorable niche that is so well suited to the firm's
internal and external environment that other corporations are not likely to challenge or dislodge
it. A niche is propitious to the extent that it currently is just large enough for one firm to satisfy
its demand. After a firm has found and filled that niche, it is not worth a potential competitor's
time or money to also go after the same niche.
One company that has successfully found a propitious niche is Frank J. Zamboni & Company,
the manufacturer of the machines that smooth the ice at ice skating rinks. Before the machine
was invented, people had to clean and scrape the ice by hand to prepare the surface for skating.
So long as Zamboni's company is able to produce the machines in the quantity and quality
desired at a reasonable price, it's not worth another company's effort to go after Frank J.
Zamboni's propitious niche.
98) Explain the four combination strategies that may be generated from the TOWS Matrix.
Answer: The TOWS Matrix results in four combination strategies as follows:
SO Strategies are generated by thinking of ways in which a company or business unit could use
its strengths to take advantage of opportunities.
ST Strategies consider a company's or unit's strengths as a way to avoid threats.
WO Strategies attempt to take advantage of opportunities by overcoming weaknesses.
WT Strategies are basically defensive and primarily act to minimize weaknesses and avoid
threats.
99) What are Porter's four generic strategies?

Answer: Cost leadership is a lower-cost competitive strategy that aims at the broad mass market
and requires "aggressive construction of efficient facilities, vigorous pursuit of cost reductions
from experience, tight cost and overhead control, avoidance of marginal customer accounts, and
cost minimization in areas like R&D, service, sales force, advertising, and so on." Because of its
lower costs, the cost leader is able to charge a lower price for its products than its competitors
and still make a satisfactory profit.
Differentiation is aimed at the broad mass market and involves the creation of a product or
service that is perceived throughout its industry as unique. The company or business unit may
then charge a premium for its product.
Cost focus is a low-cost competitive strategy that focuses on a particular buyer group or
geographic market and attempts to serve only this niche, to the exclusion of others. In using cost
focus, the company or business unit seeks a cost advantage in its target segment.
24
Differentiation focus concentrates on a particular buyer group, product line segment, or
geographic market. In using differentiation focus, the company or business unit seeks
differentiation in a targeted market segment.
corporations
100) Discuss competitive strategy differences between a fragmented and a consolidated industry.
Answer: In a fragmented industry, there are many small- and medium-sized local companies
that compete for relatively small shares of the total market. Focus strategies will likely
predominate in a fragmented industry. Fragmented industries are typical for products in the early
stages of their life cycle. If few economies are to be gained through size, no large firms will
emerge and entry barriers will be low — allowing a stream of new entrants into the industry.
As an industry matures, fragmentation is overcome and the industry tends to become a

consolidated industry dominated by a few large companies. Although many industries begin
fragmented, battles for market share and creative attempts to overcome local or niche market
boundaries often increase the market share of a few companies. After product standards become
established for minimum quality and features, competition shifts to a greater emphasis on cost
and service. Slower growth, overcapacity, and knowledgeable buyers combine to put a premium
on a firm's ability to achieve cost leadership or differentiation along the dimensions most desired
by the market. Research and development shifts from product to process improvements. Overall
product quality improves, and costs are reduced significantly.
corporations
101) What is the impact of hypercompetition on competitive advantage?

Answer: Hypercompetition reflects the increasing difficulty of sustaining a competitive
advantage over time. As a result of this erosion of competitive advantage, companies must
constantly work to improve their advantage. Firms must constantly seek new ways to lower costs
and add value to their products and services.
Difficulty: Easy
corporations
102) Discuss the reasons a firm may form a strategic alliance.

Answer: A firm may form a strategic alliance to obtain or learn new capabilities, to obtain
access to specific markets, to reduce financial risk, or to reduce political risk.
103) What are cooperative strategies?

Answer: Cooperative strategies are used to gain competitive advantage within an industry by
25
working with other firms. The two general types of cooperative strategies are collusion and
strategic alliances. Collusion is the active cooperation of firms within an industry to reduce
output and raise prices in order to get around the normal economic law of supply and demand. A
strategic alliance is a partnership of two or more corporations or business units to achieve
strategically significant objectives that are mutually beneficial.
corporations
104) What are the types of alliances that businesses can engage in?
Answer: The types of alliances that businesses can engage in include a mutual service consortia,
a joint venture, a licensing arrangement, and a value-chain partnership. A mutual service
consortium is a partnership of similar companies in similar industries that pool their resources to
gain a benefit that is too expensive to develop alone. A joint venture is a "cooperative business
activity, formed by two or more separate organizations for strategic purposes, that creates an
independent business entity and allocates ownership, operational responsibilities, and financial
risks and rewards to each member, while preserving their separate identity/autonomy." A
licensing arrangement is an agreement in which the licensing firm grants rights to another firm in
another country or market to produce and/or sell a product. The licensee pays compensation to
the licensing firm in return for technical expertise. A value-chain partnership is a strong and
close alliance in which one company or unit forms a long-term arrangement with a key supplier
or distributor for mutual advantage.
26

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Strategic Management and Business Policy, 14e (Wheelen)

2) SWOT analysis by itself is not a panacea for strategy.

6) Niches can grow and change over time.

9) SO strategies attempt to take advantage of opportunities by overcoming weaknesses.

17) Most entrepreneurial ventures follow focus strategies.

27) In tacit collusion, there is no direct communication among competing firms.

36) The T in SWOT represents

37) The text authors note that the essence of strategy is

39) In the development of a SFAS matrix, the first step is to

42) One company that has successfully found a propitious niche is

44) In a TOWS Matrix, SO Strategies

46) In a TOWS Matrix, WT Strategies

47) Business strategy focuses on

48) Business strategy is composed of

54) Walmart, as a discount retailer, is an example of a company following which of Porter's

55) Apple is an example of a company following which of Porter's generic competitive

59) Which of Porter's competitive strategies concentrates on seeking differentiation in a

63) According to Porter, a business unit in a competitive marketplace with no generic

64) Most entrepreneurial ventures follow

69) A method developed in the mid-1990s as an efficient means to quickly consolidate a

70) As an industry becomes hypercompetitive, firms initially respond by

71) The book Hypercompetition was written by

73) According to D'Aveni

79) Incentives based on meeting strict quantitative targets is a common organizational

83) Jet airplane manufacturers often enter into strategic alliances to

85) Disadvantages of joint ventures include all of the following EXCEPT

87) In licensing arrangements

88) Tacit collusion

91) The two general types of cooperative strategies are

99) What are Porter's four generic strategies?

As an industry matures, fragmentation is overcome and the industry tends to become a

101) What is the impact of hypercompetition on competitive advantage?

102) Discuss the reasons a firm may form a strategic alliance.

103) What are cooperative strategies?

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