Companies use their resources to improve organizational efficiency and effectiveness.
A competitive advantage becomes a sustainable competitive advantage when other companies have found it very expensive to duplicate the value a firm is providing to customers
There are four conditions that must be met if a firm's resources are to be used to achieve a sustainable competitive advantage. The resources must be valuable, rare, imperfectly imitable, and nonsubstitutable.
The three steps of the strategy-making process are (1) assess the need for strategic change, (2) conduct a situational analysis, and (3) choose the strategic alternatives.
Companies face very little uncertainty in their strategic business environments
Companies that succeed are often constantly re-examining strategies or competitive practices that have been successful in the past in order to ascertain their probable future success.
Strategic dissonance is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management.
An analysis of an organization's external environment begins with an assessment of the company's distinctive competencies and core capabilities.
A strategic group is a group of other companies within an industry that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities
When companies are performing above or better than their strategic reference points, top management is more likely to choose a daring, risk-taking strategy.
Corporate-level strategy is the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"
Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.
Based on the research evidence, related diversification appears to be a better strategy for portfolio management than unrelated diversification.
Companies can grow either externally or internally.
Companies often choose a stability strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.
If retrenchment works, it is typically followed by a stability strategy
Industry-level strategy is a corporate strategy that addresses the question "How should we compete against a particular firm in our industry?"
F-due to " a particular firm"
Character of the rivalry is a measure of the intensity of competitive behavior between companies in an industry.
The threat of substitute products or services is a measure of the ease with which customers can find substitutes for an industry's goods or services.
Bargaining power of buyers tends to be higher when a company sells a popular product to multiple buyers than when a company is dependent on just a few high-volume buyers.
The three positioning strategies are cost leadership, differentiation, and focus.
Differentiation is the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can so that the firm can offer the product or service at the lowest price in the industry
A focus strategy entails using either a cost leadership or a differentiation approach to producing a good or service.
The only kinds of adaptive strategies are defending, analyzing, and reacting.
Reactors follow the consistent strategy of anticipating and reacting to potential external opportunities and threats prior to their occurrence.
Most companies compete directly with all the firms in their industry.
The two factors that determine the extent to which firms will be in direct competition with each other are market commonality and resource similarity
The greater the market commonality, the less intense the direct competition between two companies.
From a competitive standpoint, resource similarity means that the strategic actions your company takes can probably be matched by your direct competitors
An organization that has ____ has the assets, capabilities, processes, information, and knowledge that an organization uses to improve its effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem.
A sustainable competitive advantage exists for an organization when other companies have tried unsuccessfully to duplicate the advantage and ____.
b. those companies have, for the moment, stopped trying to duplicate the advantage
Which of the following is a condition that must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?
b. imperfectly imitable resources
When making travel plans, many tourists have selected Thomas Cook, a British tour operation, because they perceive the tour company as being superior to all others. No other tour service can duplicate the customer service and satisfaction that Thomas Cook has provided over its years of operation. Thomas Cook has apparently created a sustainable competitive advantage by using ____ resources.
Deutsche Bank is the largest bank in the world. Would this give it a sustainable competitive advantage?
b. no, because size is not a criteria for sustainable competitive advantage
A(n) ____ resource is a resource that is not controlled or possessed by many competing firms
A(n) ____ is a resource that is impossible or extremely costly or difficult for other firms to duplicate.
There are numerous competitive brands of cosmetics, perfumes, hair-care, and skin-care products on the market. One such brand is Aveda. To differentiate its products from other similar brands, Aveda focuses on educating its customers on general skin and haircare. Its salespeople are trained to answer questions and help customers find solutions. Aveda has used customer education and employee training to ____.
e. create a competitive advantage
According to the text, valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage only if they are ____ resources
The first step in the strategy-making process is to ____.
a. assess the need for strategic change
NTL is the largest cable company in the United Kingdom. The company has recently declared bankruptcy and needs to engage in restructuring in order to give it more flexibility and allow it to raise capital. Since it has identified the need for strategic change, what would be the organization's next step in this strategy-making process?
e. conducting a situation analysis
Top-Flite manufactures Strata golf balls and prices these balls at about three times what ordinary golf balls cost. The Strata ball sells exceptionally well because customers perceive its patented three-layer construction to improve handling and increase distance. The patent on these golfballs gives Top-Flite a(n) ____.
a. sustainable competitive advantage
An organization is experiencing ____ when it is reluctant to change strategies or competitive practices that have been successful in the past.
d. competitive inertia
One of the reasons why the highly fragmented chemical industry in Europe has experienced decreasing profits is an industry reluctance to change the way it conducts business, especially in how it competes against lower-priced U.S. imports. This is an example of ____.
c. competitive inertia
An organization is experiencing ____ when there is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management.
While ____ is a problem strongly associated with top managers, ____ is a problem more likely to be associated with middle and lower-level managers.
e. competitive inertia; strategic dissonance
A ____, also called a SWOT analysis for strengths, weaknesses, opportunities, and threats, is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.
companies in the chemical industry are struggling to attract the most talented college graduates. One of the biggest challenges facing these companies is attracting new talent to organizations with an "old economy" image. A situational analysis would term this challenge a(n) ____.
c. internal weakness
Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. It is recognized worldwide for its ability to design and produce superior mountain bikes. This ability is its ____.
d. distinctive competence
While ____ are tangible, ____ are not.
e. distinctive competencies; core capabilities
In any organization, the ____ are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs.
d. core capabilities
Which of the following is a mechanism used to examine external threats and opportunities facing a firm as well as its internal strengths and weaknesses?
In a situational analysis, a strategic group is a group of ____ that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities.
d. other firms within an industry
Imagine Dow Chemical is conducting a situational analysis. According to its sales, Dow is the second largest chemical company in the world. BASF is the largest. Both companies use a similar strategy. Within Dow's situational analysis, BASF would be classified as a ____.
d core firm
Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Since then, the company has maintained a technological leadership in the production of bike and bike accessories and an organizational culture that encourages innovation. This technological leadership as well as its organizational culture are the company's ____.
d core capabilities
For companies whose main products will not be seen by consumers and whose skills lie in productivity anonymity, a ____ could be to create a brand image to create a distinctive competence. For example, a chemical company could set an objective that 30 percent of its customers would recognize its brand name two years after the introduction of the branding strategy.
a. strategic reference point
Which of the following statements about the Strategic Reference Point Theory is true?
e. None of these statements about the Strategic Reference Point Theory is true.
When doing an analysis of strategic groups to assess external environmental threats and opportunities, ____ firms are firms that use related but somewhat different strategies than ____ firms.
b. secondary; core
A situational analysis for a manufacturer of pet food might reveal ____.
e. all of these
According to Strategic Reference Point Theory, managers have two basic strategic alternatives. They are ____.
c. risk-avoiding strategy and risk-seeking strategy
____ are the targets that managers use to measure whether their firm has developed the core competencies that it needs to achieve a sustainable competitive advantage
a. Strategic reference points
The term ____ refers to the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"
b. corporate-level strategy
The two major approaches to corporate-level strategy are ____.
grand strategy and portfolio strategy
34. Which of the following is an example of a common approach to corporate-level strategy?
d. grand strategies
Which of the following statements is true about how the portfolio strategy can be used to help managers acquire companies that fit well with the rest of their corporate portfolio?
b. Risk can be reduced through related diversification (creating or acquiring companies in related businesses).
Starbucks, the operator of Starbucks coffeehouses, also markets a line of compilation CDs under the brand name Hear Music. The making and marketing of CDs would be an example of ____.
When Clorox Corporation, a manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce, it was an example of ____.
e. unrelated diversification
The ____ is a portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share. This strategy helps them to decide how to invest corporate funds.
Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. Specialized bikes have a large share of a fast-growing market. According to the BCG matrix, Specialized mountain bikes would be classified as ____.
Deutsche Bank became the world's largest bank through mergers with Bankers Trust, a transatlantic banking operation. Since both banking companies had similar core capabilities, this would be classified as an example of ____.
Which of the following statements about portfolio strategy is true?
b. Dysfunctional consequences can occur when companies are categorized.
The research on diversification in portfolio management indicates that the best approach is probably ____.
b. related diversification
A ____ strategy is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use.
In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital-intensive, less cyclical business. What type of a grand strategy was ICI using?
McDonald's uses a ____ strategy (a kind of grand strategy) as it increases its profits in France by offering uniquely French products such as Croque McDo, the McDonald's version of a popular French grilled sandwich.
When Coca-Cola acquired a water-treatment and bottling plant so it could produce and market Dasani brand bottled water, it was an example of ____.
When Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce, it was an example of ____.
d. external growth
Companies can achieve growth by ____.
growing internally through direct expansion or creating new businesses
Companies that are following a ____ strategy would be most likely to try to improve the way in which they sell the same goods or services to the same customers.
Companies often choose a ____ strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.
The purpose of a ____ strategy is to turn around very poor company performance by shrinking the size or scope of the business.
The ____ strategy is analogous to pruning roses.
Significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or closing or selling entire lines of products or services would be characteristic of a ____ strategy
In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital-intensive, less cyclical business. If ICI is successful in making the needed changes, it will more than likely implement a ____ strategy.
If successful, the ____ strategy is often followed by a growth strategy
A(n) ____ strategy is a corporate strategy that addresses the question "How should we compete in this industry?"
According to Michael Porter, five industry forces determine an industry's overall attractiveness and potential for long-term profitability. Which of the following is one of those forces Porter identified?
bargaining of suppliers
According to Harvard professor Michael Porter, five industry forces (character of rivalry, threat of new entrants, threat of substitute products or services, bargaining power of suppliers, and the bargaining power of buyers) determine an industry's overall attractiveness and its ____.
d. potential for long-term profitability
59. ____ is the measure of the intensity of competitive behavior between companies in an industry.
c. Character of the rivalry
Which of the following is NOT one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability?
existing complementary products
The ad for ASKO washer reads, "Since our humble Swedish beginnings back in 1950, ASKO has been dedicated to building machines with superior cleaning power, reliability, and style." ASKO is more than likely using which kind of positioning strategy?
Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who was considering developing and marketing a new brand of bleach. Which of Michael Porter's industry forces should you be most concerned about?
character of the rivalry
Glassmaker AFG Industries positions itself as the primary supplier of glass used in microwave doors, shower doors, and patio tables. What type of a positioning strategy does the glass manufacturer use
When the bargaining power of suppliers and buyers is high, companies in the industry will ____.
find it more difficult to be profitable
65. Cost leadership, differentiation, and focus are the three types of ____ strategies discussed in the text.
66. The positioning strategies identified by Michael Porter are ____.
focus, cost leadership, and differentiation
When The Home Depot opened stores in Canada, it ran a series of ads featuring an animated hammer that was busily reducing prices to show that the U.S.-based home improvement store had the lowest prices. According to Michael Porter, which of the following positioning strategies did The Home Depot adopt to deal with existing Canadian stores that sold similar products?
68. The positioning strategy that is always paired with one of the other two positioning strategies to produce a specialized product or service is ____.
The purpose of ____ strategies is to choose an industry-level strategy that is best suited to changes in the organization's external environment.
Hohner is a company that manufactures and markets harmonicas, a product with a steady demand rate. It is so successful at what it does that the company controls 85 percent of the world's harmonica industry. In terms of the adaptive strategies, Hohner would most likely be categorized as a(n) ____.
Sales of Arm & Hammer baking soda had flattened when its manufacturer started promoting innovative uses for its product. By searching for new market opportunities, the manufacturer of Arm & Hammer is using which type of adaptive strategy?
Among companies who use the adaptive strategies, ____ blend the strategies used by ____.
analyzers; defenders and prospectors
An organization which is a ____ in terms of its adaptive strategy would NOT follow a consistent strategy.
74. Which of the adaptive strategies tends to result in the poorest performance?
Resource similarity and ____ are factors that determine the extent to which firms will be in direct competition with each other.
76. Which of the following organizations are most directly in competition with each other?
fedex and ups
As direct competitors, UPS and FedEx would have ____.
high degree of market commonality
From a competitive standpoint, ____ means that the strategic actions your company takes can probably be matched by your direct competitors.
Under conditions of ____, a competitive attack by the stronger rival is more likely to produce sustained competitive advantage.
low resource similairty
Refer to The Rolling Stones. Because other music groups cannot duplicate the value the Rolling Stones are providing to customers, the band can be said to have a(n) ____.
sustainable competitive advantage
Refer to The Rolling Stones. Prior to 1989, The Stones and all other touring bands would hire a tour director who would cut individual deals with local promoters in each city to set up the shows. In 1989, the Stones were the first group to book their tours themselves, dealing with the venues directly and eliminating the local promoters. The band's income increased from about $400,000 per show to $1 million per show. Obviously The Stones were not guilty of ____.
Refer to The Rolling Stones. When compared to others musicians, The Rolling Stones have demonstrated that they have a ____ when it comes to operating as a business.
Refer to The Rolling Stones. What kind of diversification has the Rolling Stones used to grow their business?
Refer to The Rolling Stones. In recent years, what kind of a grand strategy does Rolling Stones, Inc. use?
Refer to The Rolling Stones. What kind of positioning strategy does Rolling Stones, Inc. use?