Which of the following is a good type of rival for an offensive-minded company to target

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• MGT603 Strategic Management Solved MCQs Set 2

MGT603 Strategic Management Solved MCQs Set 2

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What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is
A. The extra attention paid to top-notch product performance and product quality
B. Their concentrated attention on serving the needs of buyers in a narrow piece of the overall market
C. Greater opportunity for competitive advantage
Answer:b

Companies pursuing a focused low-cost or focused differentiation strategy strive to
A. Build a value-based competitive advantage keyed to product uniqueness
B. Develop the capability to simultaneously serve buyers in a variety of distinct and different market segments
C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry
Answer:c

A focused low-cost strategy seeks to achieve competitive advantage by
A. Outmatching competitors in offering niche members an absolute rock-bottom price
B. Delivering more value for the money than other competitors
C. Performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders
D. Dominating more market niches in the industry via a lower cost and a lower price than any other rival
E. Serving buyers in the target market niche at a lower cost and lower price than rivals
Answer:e

The chief difference between a low-cost leader strategy and a focused low-cost strategy is
A. Whether the product is strongly differentiated or weakly differentiated from rivals
B. The degree of bargaining power that buyers have
C. The size of the buyer group that a company is trying to appeal to
Answer:c

A focused differentiation strategy aims at securing competitive advantage
A. By providing niche members with a top-of-the-line product at a premium price
B. By catering to buyers looking for an upscale product at an attractively low price
C. With a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers
Answer:c

A focused low-cost strategy can lead to attractive competitive advantage when
A. Buyers are looking for the best value at the best price
B. Buyers are looking for a budget-priced product
C. Buyers are price sensitive and are attracted to brands with low switching costs
D. Demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies
E. A firm can lower costs significantly by limiting its customer base to a well-defined buyer segment; its two options for achieving a low-cost advantage are (1) out-managing rivals in controlling the factors that drive costs and (2) reconfiguring its value chain in ways that deliver a cost edge over rivals
Answer:e

The chief difference between a broad differentiation strategy and a focused differentiation is
A. The size of the buyer group that a company is trying to appeal to
B. The degree of bargaining power that buyers have
C. Whether the product is strongly differentiated or weakly differentiated from rivals
Answer:a

Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive?
A. When it is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers
B. When the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities
C. When industry leaders do not see that having a presence in the niche is crucial to their own success
D. When the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche
E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy
Answer:e

The risks of a focused strategy based on either low-cost or differentiation include
A. The chance that competitors outside the niche will find effective ways to match the focuser's capabilities in serving the target niche
B. The potential for the preferences and needs of niche members to shift over time towards many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market
C. The potential for the segment to become so attractive that it is soon inundated with competitors, intensifying rivalry and splintering sales, profits and growth prospects
D. The potential for segment growth to slow to such a small rate that a focuser's prospects for future sales and profit gains become unacceptably dim
E. All of these
Answer:e

The production emphasis of a company pursuing a broad differentiation strategy usually involves
A. A search for continuous cost reduction without sacrificing acceptable quality and essential features
B. Strong efforts to be a leader in manufacturing process innovation
C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority
Answer:c

The marketing emphasis of a company pursuing a broad differentiation strategy usually is to
A. Underprice rival brands with comparable features
B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features
C. Out-advertise rivals and make frequent use of discount coupons
Answer:b

The keys to sustaining a broad differentiation strategy are
A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features
B. To charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal
C. To out-innovate and out-advertise rivals
Answer:a

The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to
A. Tout the company's lower prices
B. Tout the lack of frills and extras
C. Out-advertise rivals and make frequent use of discount coupons
D. Communicate the attractive features of a budget-priced product offering that fits niche members' expectations
Answer:d

One of the big dangers in crafting a competitive strategy is that managers, torn between the pros and cons of the various generic strategies, will opt for
A. A low-cost provider strategy because it is usually the safest, least risky competitive strategy
B. A "stuck-in-the-middle" strategy
C. A broad differentiation strategy because it is frequently the most profitable competitive strategy
Answer:b

Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices as
A. Whether to enter into strategic alliances or collaborative partnerships
B. Whether and when to employ offensive and defensive moves
C. What type of Web site strategy to employ
Answer:a

Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies?
A. Whether to enter into strategic alliances or collaborative partnerships
B. Whether and when to employ offensive and defensive moves
C. Whether to employ a market share leadership strategy
Answer:c

Strategic alliances
A. Are the cheapest means of developing new technologies and getting new products to market quickly
B. Are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes
C. Are a proven means of reducing the costs of performing value chain activities
Answer:b

A strategic alliance
A. Is a collaborative arrangement where companies join forces to defeat mutual competitive rivals
B. Involves two or more companies joining forces to pursue vertical integration
C. Is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control and mutual dependence
Answer:c

Entering into strategic alliances and collaborative partnerships can be competitively valuable because
A. Working closely with outsiders is essential in developing new technologies and new products in virtually every industry
B. Cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology
C. They represent highly effective ways to achieve low-cost leadership and capture first-mover advantages
Answer:b

The best strategic alliances
A. Are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit
B. Are those whose purpose is to create an industry key success factor
C. Are those which help a company move quickly from one strategic group to another
Answer:a

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries in order to
A. Combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals
B. Help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers
C. Get into critical country markets quickly and accelerate the process of building a potent global presence, gain inside knowledge about unfamiliar markets and cultures and access valuable skills and competencies that are concentrated in particular geographic locations
Answer:c

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships in order to
A. Discourage rival companies from merging with or acquiring the very companies that it is partnering with
B. Reduce overall business risk and raise entry barriers into the newly emerging industry
C. Help master new technologies and build new expertise and competencies faster than would be possible through internal efforts, establish a stronger beachhead for participating in the target industry and open up broader opportunities in the target industry by melding their capabilities with the resources and expertise of partners
Answer:c

Which of the following is not a typical reason that many alliances prove unstable or break apart?
A. Diverging objectives and priorities
B. An inability to work well together
C. The emergence of more attractive technological paths that are better pursued alone or with other partners
D. Disagreement over how to divide the profits gained from joint collaboration
Answer:d

Experience indicates that strategic alliances
A. Are generally successful
B. Work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency
C. Work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies
D. Have a high "divorce rate."
Answer:d

Which of the following is not a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement?
A. The alliance is critical to the company's achievement of an important objective
B. The alliance helps block a competitive threat
C. The alliance helps open up important new market opportunities
D. The alliance helps build, enhance or sustain a core competence or competitive advantage
E. The alliance helps the company obtain additional financing on better credit terms
Answer:e

The Achilles heel (or biggest disadvantage/danger/pitfall) of relying heavily on alliances and cooperative strategies is
A. That partners will not fully cooperate or share all they know, preferring instead to guard their most valuable information and protect their more valuable know-how
B. Becoming dependent on other companies for essential expertise and capabilities
C. The added time and extra expenses associated with engaging in collaborative efforts
Answer:b

Which of the following is not one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits?
A. Picking a good partner
B. Recognizing that the alliance must benefit both sides
C. Minimizing the amount of resources that the partners commit to the alliance
Answer:c

Which one of the following is not a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors or makers of complementary products?
A. To improve access to new markets
B. To expedite the development of promising new technologies or products
C. To enable greater vertical integration
Answer:c

The competitive attraction of entering into strategic alliances and collaborative partnerships is
A. In allowing companies to bundle competencies and resources that are more valuable in a joint effort than when kept separate
B. Speeding new products to market more quickly
C. Enabling greater vertical integration
Answer:a

The difference between a merger and an acquisition is that
A. A merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock
B. A merger is a pooling of equals whereas an acquisition involves one company, the acquirer, purchasing and absorbing the operations of another company, the acquired
C. In a merger the companies retain their original names whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company
Answer:b

Which of the following is not a typical strategic objective or benefit that drives mergers and acquisitions?
A. To gain quick access to new technologies or other resources and capabilities
B. To create a more cost-efficient operation out of the combined companies
C. To expand a company's geographic coverage
D. To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy
Answer:d

Mergers and acquisitions are often driven by such strategic objectives as to
A. Expand a company's geographic coverage or extend its business into new product categories
B. Reduce the number of industry key success factors
C. Reduce the number of strategic groups in the industry
Answer:a

Merger and acquisition strategies
A. Are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies
B. May offer considerable cost-saving opportunities (perhaps helping to transform otherwise high-cost companies into a competitor with average or below-average costs) and can also be beneficial in helping a company try to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities
C. Are a particularly effective way of pursuing a blue ocean strategy and outsourcing strategies
Answer:b

Mergers and acquisitions
A. Are nearly always successful in achieving their desired purpose
B. Frequently do not produce the hoped-for outcomes
C. Are generally less effective than forming alliances or partnerships with these same companies
Answer:b

Vertical integration strategies
A. Extend a company's competitive scope within the same industry by expanding its operations across more parts of the industry value chain
B. Are one of the best strategic options for helping companies win the race for global market leadership
C. Offer good potential to expand a company's lineup of products and services
Answer:a

The two best reasons for investing company resources in vertical integration (either forward or backward) are to
A. Expand into foreign markets and/or control more of the industry value chain
B. Broaden the firm's product line and/or avoid the need for outsourcing
C. Enable use of offensive strategies and/or gain a first mover advantage over rivals in revamping the industry value chain
D. Strengthen the company's competitive position and/or boost its profitability
Answer:d

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company
A. Must first be a proficient manufacturer
B. Must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality
C. Must have excess production capacity, so that it has ample in-house ability to undertake additional production activities
Answer:b

The strategic impetus for forward vertical integration is to
A. Gain better access to end users and better market visibility
B. Achieve the same scale economies as wholesale distributors and/or retail dealers
C. Control price at the retail level
Answer:a

Which of the following is typically the strategic impetus for forward vertical integration?
A. Being able to control the wholesale/retail portion of the industry value chain
B. Fewer disruptions in the delivery of the company's products to end-users
C. Gaining better access to end users and better market visibility
Answer:c

A good example of vertical integration is
A. A global public accounting firm acquiring a small local or regional public accounting firm
B. A large supermarket chain getting into convenience food stores
C. A crude oil refiner purchasing a firm engaged in drilling and exploring for oil
Answer:c

Which of the following is not a potential advantage of backward vertical integration?
A. Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity)
B. Reduced risks of disruptions in obtaining crucial components or support services
C. Reduced costs
D. Reduced business risk because of controlling a bigger portion of the overall industry value chain
Answer:d

Which of the following is not a strategic disadvantage of vertical integration?
A. Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later
B. Vertical integration backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components
C. Vertical integration reduces the opportunity for achieving greater product differentiation
Answer:c

Outsourcing strategies
A. Are nearly always a more attractive strategic option than merger and acquisition strategies
B. Carry the substantial risk of raising a company's costs
C. Carry the substantial risk of making a company overly dependent on its suppliers
D. Increase a company's risk exposure to changing technology and/or changing buyer preferences
E. Involve farming out value chain activities presently performed in-house to outside specialists and strategic allies
Answer:e

Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense when
A. An activity can be performed better or more cheaply by outside specialists
B. It allows a company to focus its entire energies on those activities that are at the center of its expertise (its core competencies) and that are most critical to its competitive and financial success
C. Outsourcing won't adversely hollow out the company's technical know-how, competencies or capabilities
D. It reduces the company's risk exposure to changing technology and/or changing buyer preferences
E. All of these
Answer:e

The two big drivers of outsourcing are
A. Increased ability to cut R&D expenses and increased ability to avoid the problems of strategic alliances
B. A desire to take advantage of the fact that outsiders can perform certain activities better or cheaper and allowing a company to focus its entire energies on those activities that are at the center of its expertise (its core competencies) and that are most critical to its competitive and financial success
C. A desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities
Answer:b

Which of the following is not one of the benefits of outsourcing value chain activities presently performed in-house?
A. Streamlining company operations in ways that improve organizational flexibility and cut the time it takes to get new products into the marketplace
B. Allowing a company to concentrate on its core business, leverage its key resources and do even better what it already does best
C. Helping the company assemble diverse kinds of expertise speedily and efficiently
D. Preventing a company from hollowing out its technical know-how, competencies or capabilities
Answer:d

Relying on outsiders to perform certain value chain activities offers such strategic advantages as
A. Obtaining higher quality and/or cheaper components or services
B. Improving the company's ability to innovate by allying with "best-in-world" suppliers
C. Reducing the company's risk exposure to changing technology and/or changing buyer preferences
D. Increasing the firm's ability to assemble diverse kinds of expertise speedily and efficiently
E. All of the above
Answer:e

Outsourcing strategies can offer such advantages as
A. Increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy
B. Obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate and reducing its risk exposure
C. Speeding a company's entry into foreign markets
Answer:b

The big risk of employing an outsourcing strategy is
A. Causing the company to become partially integrated instead of being fully integrated
B. Hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success
C. Hurting a company's R&D capability
Answer:b

Which of the following is not one of the principal offensive strategy options?
A. Leapfrogging competitors by being the first adopter of next-generation technologies
B. Offering an equally good or better product at a lower price
C. Blocking the avenues open to challengers
Answer:c

Which one of the following is an example of an offensive strategy?
A. Blocking the avenues open to challengers
B. Signaling challengers that retaliation is likely
C. Pursuing continuous product innovation to draw sales and market share away from less innovative rivals
Answer:c

A blue ocean type of offensive strategy
A. Is an offensive attack used by a market leader to steal customers away from unsuspecting smaller rivals
B. Involves a preemptive strike to secure an advantageous position in a fast-growing market segment
C. Works best when a company is the industry's low-cost leader
D. Involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand
Answer:d

A hit-and-run or guerilla warfare type of offensive strategy involves
A. Random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals
B. Undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerilla signals rivals that it will use deep price cuts to defend its newly-won position
C. Work best if the guerilla is the industry's low-cost leader
D. Pitting a small company's own competitive strengths head-on against the strengths of much larger rivals
E. Random raids by a small competitor to grab sales and market share from complacent or distracted rivals
Answer:e

Launching a preemptive strike type of offensive strategy entails
A. Cutting prices below a weak rival's costs
B. Moving first to secure an advantageous position that rivals are prevented or discouraged from duplicating
C. Using hit-and-run tactics to grab sales and market share away from complacent or distracted rivals
Answer:b

Which one of the following statements about offensive strategies is false?
A. It often takes the use of successful offensive strategies to build to competitive advantage
B. One situation when a company needs to use offensive strategies is when it has no choice but to try to whittle away at a strong rival's competitive advantage
C. Offensive strategies have much to recommend when a company sees an opening to gain profitable market share at the expense of rivals
D. One of the most potent types of offensive strategy is to introduce new features or models to fill vacant niches in a company's overall product offering and thereby better match the product offerings of key rivals
Answer:d

Which one of the following is not a trait of a good strategic offensive?
A. Trying to build a more cost-efficient supply chain than rivals have
B. Being impatient with the status quo and displaying a strong bias for swift, decisive actions to boost a company's competitive position vis-à-vis rivals
C. Applying resources where rivals are least able to defend themselves
Answer:a

Which one of the following is not a good type of rival for an offensive-minded company to target?
A. Market leaders that are vulnerable
B. Runner-up firms with weaknesses in areas where the challenger is strong
C. Small local and regional companies with limited capabilities
D. Other offensive-minded companies with a sizable war chest of cash and marketable securities
Answer:d

Which one of the following statements regarding the basis for offensive attack on rivals is false?
A. It is generally wise to use a company's resource strengths to attack rivals in those competitive areas where they are strong
B. Ignoring the need to tie a strategic offensive to a company's strengths is like going to war with a popgun
C. Strategic offensives should, as a general rule, be predicated on leveraging a company's competitive assets—its core competencies, competitive capabilities and other resource strengths
D. Offensive initiatives aimed at exploiting the competitive weaknesses of rivals stand a better chance of success than do those that challenge a competitor's strengths
E. Attacking a market leader is always unwise
Answer:e

The purposes of defensive strategies are to
A. Aggressively retaliate against rivals pursuing offensive strategies and prevent against price wars
B. Lower the risk of being attacked by rivals, weaken the impact of any attack that occurs and influence challengers to aim their offensive efforts at other rivals
C. Guard against adverse changes in the company's macro-environment and insulate the company from the impact of industry driving forces
Answer:b

Which one of the following is not a defensive option for protecting a company's market share and competitive position?
A. Adding new features or models and otherwise broadening the product line to close off vacant niches and gaps to opportunity-seeking challengers
B. Thwarting the efforts of rivals to attack with lower prices by maintaining economy-priced options of its own
C. Running comparison ads that call attention to weaknesses in rivals' products
Answer:c

Which of the following is a potential defensive move to ward off challenger firms?
A. Granting volume discounts or better financing terms to dealers/distributors and providing discount coupons to buyers to help discourage them from experimenting with other suppliers/brands
B. Signaling challengers that retaliation is likely in the event they launch an attack
C. Lengthening warranties, offering free or low-cost training and support services and providing coupons and sample giveaways to buyers most prone to experiment with using rival brands
D. Maintaining a war chest of cash and marketable securities
E. All of these
Answer:e

What is an offensive competitive strategy?

Which of the following is an example of an offensive strategy to improve a companies market position?

What is an example of an offensive strategy?

What are offensive and defensive strategies in strategic management?