1. Which of the following is not one of the central questions in evaluating a companys business prospects?

A) What is the companys present situation? B) What are the key products or service attributes demanded by consumers? C) Where does the company need to go from here? D) How should it get there? E) All of these are pertinent in evaluating a companys business prospects. Answer: B

2.

Crafting a strategy involves A) trying to imitate as much of the market leaders strategy as possible so as not to end up at a competitive disadvantage. B) developing a 5-year strategic plan and then fine-tuning it during the remainder of the plan period; big changes in strategy are thus made only once every 5 years. C) stitching together a proactive/intended strategy and then adapting first one piece and then another as circumstances surrounding the companys situation change or better options emerge. D) doing everything possible (in the way of price, quality, service, warranties, advertising, and so on) to make sure the companys product/service is very clearly differentiated from the product/service offerings of rivals. E) All of these accurately characterize the managerial process of crafting a companys strategy. Answer: C

3. Which of the following questions ought to be used to test the merits of one strategy over another and distinguish a winning strategy from a mediocre or losing strategy? A) Is the companys strategy ethical and socially responsible and does it put enough emphasis on good product quality and good customer service? B) Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? C) Is the strategy resulting in the development of additional competitive capabilities? D) Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance? E) Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction? Answer: D

4. One of the important benefits of a well-conceived and well-stated strategic vision is to A) clearly delineate how the companys business model will be implemented and executed. B) clearly communicate managements aspirations for the company to stakeholders and help steer the energies of company personnel in a common direction. C) set forth the firm's strategic objectives in clear and fairly precise terms. D) help create a balanced scorecard approach to objective-setting and not stretch the companys resources too thin across different products, technologies, and geographic markets. E) indicate what kind of sustainable competitive advantage the company will try to create in the course of becoming the industry leader. Answer: B

5. The difference between the concept of a company mission statement and the concept of a strategic vision is that A) a mission concerns what to do to achieve short-run objectives and a strategic vision concerns what to do to achieve long-run performance targets. B) the mission is to make a profit, whereas a strategic vision concerns what business model to employ in striving to make a profit. C) a mission statement deals with what to accomplish on behalf of shareholders and a strategic vision concerns what to accomplish on behalf of customers. D) a mission statement typically concerns a companys present business scope (who we are and what we do) whereas the principal concern of a strategic vision is the company's long term direction and future product-market-customer-technology focus. E) a mission statement deals with where we are headed whereas a strategic vision provides the critical answer to how will we get there? Answer: D

6. A company's "macro-environment" refers to A) the industry and competitive arena in which the company operates. B) general economic conditions plus the factors driving change in the markets where a company operates. C) all the relevant forces and factors outside a company's boundaries!general economic conditions, population demographics, societal values and lifestyles, technological factors, governmental legislation and regulation, and closer to home, the industry and competitive arena in which it operates. D) the competitive market environment that exists between a company and its competitors. E) the dominant economic features of a company's industry. Answer: C

7. The key success factors in an industry A) are those competitive aspects that most affect industry members' abilities to prosper in the marketplace!specific strategy elements, product attributes, competencies, competitive capabilities, and market achievements that spell the difference between being a strong competitor and a weak competitor. B) are determined by the industry's driving forces. C) hinge on how many different strategic groups the industry has. D) depend on how many rivals are trying to move from one strategic group to another. E) are a function of such considerations as how many firms are in the industry, how many have market shares above 5%, and whether the business models being used are similar or diverse. Answer: A

8. A company's resource and capability analysis A) represent its core competencies. B) are the most important parts of the companys value chain. C) signal whether it has the wherewithal to be a strong competitor in the marketplace. D) give it excellent ability to insulate itself against the impact of the industry's driving forces. E) combine to give it a distinctive competence. Answer: C

9. Two analytical tools useful in determining whether a companys prices and costs are competitive are A) SWOT analysis and key success factor analysis. B) SWOT analysis and benchmarking. C) value chain analysis and benchmarking. D) competitive position assessment and competitive strength assessment. E) driving forces analysis and SWOT analysis. Answer: C

10. A companys strategy is most accurately defined as A) management's approaches to building revenues, controlling costs and generating an attractive profit. B) the choices management has made regarding what financial plan to pursue. C) management's concept of "who we are, what we do, and where we are headed." D) the business model that a companys board of directors has approved for outcompeting rivals and making the company profitable. E) management's commitment to pursue a particular set of actions in growing the business, attracting and pleasing customers, competing successfully, conducting operations, and improving the companys financial and market performance. Answer: E

11. A company's business model A) zeros in on how and why the business will generate revenues sufficient to cover costs and produce attractive profits and return on investment. B) is managements storyline for how the strategy will result in achieving the targeted strategic objectives. C) details the ethical and socially responsible nature of the companys strategy. D) explains how it intends to achieve high profit margins. E) sets forth the actions and approaches that it will employ to achieve market leadership. Answer: A

12. Crafting and executing strategy are top-priority managerial tasks because
A) working their way through the tasks of crafting and executing strategy helps top executives create tight fits between a companys strategic vision and business model. B) all company personnel, and especially senior executives, need to know the answer to "who are we, what do we do, and where are we headed?" C) there is a compelling need for managers to proactively shape how the company's business will be conducted and because a strategy-focused enterprise is more likely to be a stronger bottom-line performer than a company whose management views strategy as secondary and puts its priorities elsewhere. D) without clear guidance as to what the company's business model and strategic intent are, managerial decision-making is likely to be rudderless. E) how well executives perform these tasks are the key determinants of executive compensation. Answer: C

13. Which of the following are characteristics of an effectively-worded strategic vision statement? A) Balanced, responsible, and rational B) Challenging, competitive, and set in concrete C) Graphic, directional, and focused D) Realistic, customer-focused, and market-driven E) Achievable, profitable, and ethical Answer: C

14. The managerial purpose of setting objectives includes A) converting the strategic vision into specific performance targetsresults and outcomes the organization wants to achieve. B) using the objectives as yardsticks for tracking the companys progress and performance. C) challenging and helping stretch the organization to perform at its full potential and deliver the best possible results. D) pushing company personnel to be more inventive and to exhibit more urgency in improving the companys financial performance and business position. E) All of these.

Answer: E

15. Which of the following is not a factor to consider in identifying an industry's dominant economic features? A) Market size and growth rate B) The extent of backward integration of buyer needs and requirements C) Whether the products or services of rival firms are becoming more or less differentiated D) Strength of driving forces and competitive forces E) The pace of technological change, scale economies and experience curve effects, and product innovation Answer:D

16. In analyzing driving forces, the strategist's role is to A) identify the driving forces and evaluate their impact on (1) demand for the industrys product, (2) the intensity of competition, and (3) industry profitability. B) predict future marketing innovations and how fast the industry is likely to globalize. C) evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage. D) determine who is likely to exit the industry and what changes can be expected in the industry's strategic group map. E) forecast fluctuations in product demand and how buyer needs will most likely change. Answer: A

17. Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? A) The industrys growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average B) An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C) Whether there are more than 5 key success factors and more than 5 barriers to entry D) Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group E) Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product Answer: A

18. A company's resource strengths are important because A) they pave the way for establishing a low-cost advantage over rivals. B) they represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace. C) they provide extra muscle in helping lengthen the companys value chain. D) they give it competitive protection against the industry's driving forces. E) they provide extra organizational muscle in turning a core competence into a key success factor. Answer: B

19. A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents the best practice when both cost and effectiveness are taken into account is A) competitive strength analysis. B) activity-based costing. C) resource cost mapping. D) SWOT analysis. E) benchmarking. Answer: E

20. A companys strategy and its quest for competitive advantage are tightly connected because A) without a competitive advantage a company cannot become the industry leader. B) without a competitive advantage a company cannot have a profitable business model. C) crafting a strategy that yields a competitive advantage over rivals is a companys most reliable means of achieving above-average profitability and financial performance. D) a competitive advantage is what enables a company to achieve its strategic objectives. E) how a company goes about trying to please customers and outcompete rivals is what enables senior managers choose an appropriate strategic vision for the company. Answer: C

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21. The difference between a company's strategy and a company's business model is that A) a company's strategy is managements game plan for achieving strategic objectives while its business model is managements game plan for achieving financial objectives. B) the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. C) a company's strategy is management's game plan for realizing the strategic vision whereas a company's business model is the game plan for accomplishing the business purpose or mission. D) strategy relates broadly to a company's competitive moves and business approaches (which may or may not lead to profitability) while its business model relates to whether the revenues and costs flowing from the strategy demonstrate that the business is viable from the standpoint of being able to earn satisfactory profits and returns on investment. E) a company's strategy concerns how to please customers while its business model concerns how to please shareholders. Answer: D

22. Which one of the following is not one of the five basic tasks of the strategy-making, strategyexecuting process? A) Forming a strategic vision of where the company needs to head and what its future business make-up will be B) Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve C) Crafting a strategy to achieve the objectives and get the company where it wants to go D) Developing a profitable business model E) Implementing and executing the chosen strategy efficiently and effectively Answer: D

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23. Top management efforts to communicate the strategic vision to company personnel A) ought to be done in writing rather than orally so as to leave no room for company personnel to misinterpret what the strategic vision really is. B) should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. C) tends to be more effective when top management avoids trying to capture the essence of the strategic vision in a catchy slogan. D) is most efficiently and effectively done by posting the strategic vision prominently on the companys Web site and encouraging employees to read it. E) should be attempted only after management has explained the companys strategic intent, strategy, and business model to company personnel. Answer: B

24. The task of stitching together a strategy A) entails addressing a series of hows: how to grow the business, how to please customers, how to outcompete rivals, how to respond to changing market conditions, and how to achieve strategic and financial objectives. B) is primarily an exercise in deciding which of several freshly-emerging market opportunities to pursue. C) is mainly an exercise that should be dictated by what is comfortable to management from a risk perspective and what is acceptable in terms of capital requirements. D) requires trying to copy the strategies of industry leaders as closely as possible. E) is mainly an exercise in good planning. Answer: A

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25. The state of competition in an industry is a function of A) the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B) competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products. C) competitive pressures associated with the threat of new entrants into the marketplace. D) competitive pressures associated with the bargaining power of suppliers and customers. E) All of these. Answer: E

26. Strategic group mapping is a 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 identifying each rivals closest competitors. D) which companies have the highest degrees of brand loyalty. E) which companies have failing business models. Answer: C

27. Which of the following is not one of the six questions that comprise the task of evaluating a companys resources and competitive position? A) What are the company's most profitable geographic market segments? B) How well is the companys present strategy working? C) Are the company's prices and costs competitive? D) Is the company competitively stronger or weaker than key rivals? E) What strategic issues and problems merit front-burner managerial attention? Answer: A

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28. The market opportunities most relevant to a particular company are those that A) offer the best growth and profitability. B) provide a strong defense against threats to the companys profitability. C) hold the most potential for product innovation. D) provide avenues for taking market share away from close rivals. E) hold the most potential to reduce costs. Answer: A

29. A higher companys overall weighted strength rating does not signal A) greater implied net competitive advantage B) stronger overall competitiveness versus rivals. C) weaker overall competitiveness versus rivals. D) possession of competitive advantage. E) None of these. Answer: C

30. One of the keys to successful strategy-making is A) to come up with one or more strategy elements that act as a magnet to draw customers and yield a lasting competitive edge. B) to aggressively pursue all of the growth opportunities the company can identify. C) to develop a product/service with more innovative performance features than what rivals are offering and to provide customers with better after-the-sale service. D) to come up with a business model that enables a company to earn bigger profits per unit sold than rivals. E) to charge a lower price than rivals and thereby win sales and market share away from rivals. Answer: A

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31. A winning strategy is one that A) results in a company becoming the dominant market leader. B) produces exceptionally high levels of customer satisfaction and is both ethical and highly profitable. C) fits the company's internal and external situations, builds sustainable competitive advantage, and improves company performance. D) is ethical, socially responsible, and profitable. E) builds shareholder value, passes the completeness test, and passes the customer satisfaction test. Answer: C

32. The managerial task of developing a strategic vision for a company A) concerns deciding what approach the company should take to implement and execute its business model. B) entails coming up with a fairly specific answer to "who are we, what do we do, and why are we here?" C) is chiefly concerned with addressing what a company needs to do to successfully outcompete rivals in the marketplace. D) involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense. E) entails coming up with a persuasive storyline of how the company intends to make money. Answer: D

33. The payoffs of a clear vision statement do not include A) reducing the risks of rudderless decision-making. B) helping the organization prepare for the future. C) greater ability to avoid strategic inflection points. D) helping to crystallize top management's own view about the firm's long-term direction. E) providing a tool for winning the support of organizational members for internal changes that will help make the vision a reality. Answer: C

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34. The leadership challenges that top executives face in making corrective adjustments when things are not going well include A) knowing when to replace poorly performing subordinates and when to do a better job of coaching them to do the right things. B) being able to discern whether to promote better achievement of strategic performance targets or whether to promote better achievement of financial performance targets. C) deciding when adjustments are needed and what adjustments to make. D) having the analytical skills to separate the problems due to a bad strategy from the problems due to bad strategy execution. E) deciding whether the company would be better off making adjustments that curtail the achievement of strategic objectives or that curtail the achievement of financial objectives. Answer: C

35. Which of the following is not generally a "driving force" capable of producing fundamental changes in industry and competitive conditions? A) Changes in the long-term industry growth rate B) Increasing globalization of the industry C) Product innovation and technological change D) Ups and downs in the economy and in interest rates E) New government regulations or significant changes in government policy toward the industry Answer: D

36. Good competitive intelligence about the strategies and competitive strengths and weaknesses of rival companies helps management determine A) which competitor has the best strategy and which competitors have flawed or weak strategies. B) which rivals are poised to gain market share and which seem destined to lose market share. C) which rivals are likely to rank among the industry leaders on the road ahead. D) which rivals are likely to initiate what kinds of fresh strategic moves and why. E) All of these. Answer: E

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37. Which of the following is not pertinent in identifying a companys present strategy? A) The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing B) Managements planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on) C) The companys mission, strategic objectives, and financial objectives D) Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions E) The strategic role of its collaborative partnerships and strategic alliances with others Answer: C

38. Which one of the following is not something that can be gleaned from identifying a companys resource strengths, resource weaknesses, market opportunities, and external threats? A) How to improve a companys strategy by using company strengths and capabilities as cornerstones for its strategy B) Which market opportunities are best suited to a companys strengths and capabilities C) Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats D) How to turn a core competence into a distinctive competence E) Whether any of the companys resource strengths can be used to help lessen the impact of external threats Answer: D

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39. Identifying the strategic issues a company faces and compiling a worry list of problems and roadblocks is an important component of company situation analysis because A) without a precise fix on what problems/issues a company confronts, managers cannot know what the industrys key success factors are. B) the worry list sets the management agenda for taking actions to improve the companys performance and business outlook. C) without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark. D) the worry list helps company managers clarify their thinking about how best to modify the companys value chain. E) these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue. Answer: B

40. Which of the following are most unlikely to qualify as driving forces? A) Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency B) Increasing globalization of the industry and product innovation C) New Internet technology applications, new government regulations, and significant changes in government policy toward the industry D) Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances E) Marketing innovations and changes in who buys the industry's product and how they use it Answer: D

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