Student ID: 22039100

Exam: 500637RR - Crafting a Strategy

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Questions 1 to 25: Select the best answer to each question. Note that a question and its answers may be split across a page
break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. Diversification should be considered when a company

A. is under the gun to create a more attractive and cost-efficient value chain.
B. begins to encounter diminishing growth prospects in its mainstay business.
C. lacks sustainable competitive advantage in its present business.
D. has run out of ways to achieve a distinctive competence in its present business.

2. A weighted industry-attractiveness assessment is generally analytically superior to an unweighted

assessment because
A. an unweighted ranking doesn't help identify which industries have the easiest and hardest value chains to execute.
B. a weighted ranking identifies which industries offer the best or worst long-term profit prospects.
C. an unweighted ranking doesn't discriminate between strong and weak industry driving forces and competitive forces.
D. the various measures of attractiveness aren't likely to be equally important in determining overall attractiveness.

3. Which of the following choices is not a typical host-government requirement that affects the operations
of foreign companies?
A. Establishing local content requirements on goods made inside their borders by foreign companies
B. Requiring foreign companies to use vertical integration to support operations of local companies
C. Having rules and policies that protect local companies from foreign competition
D. Placing restrictions on exports to ensure adequate local supplies

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

5. Businesses competing in stagnant or declining industries must

A. initiate deep price cuts to rejuvenate long-term demand and expand into the markets of foreign countries, especially emerging-
country markets.
B. steer a middle course between low-cost differentiation and focusing, and adopt a best-cost producer strategy aimed squarely
at being a middle-of-the-market seller.
C. choose whether to remain committed to the industry for the long-term despite its dim prospects or to pursue an end-game
strategy to withdraw from the market.
D. pursue vertical integration and gain greater operating control over more stages of the industry's value chain.

6. Which of the following objectives is not a purpose of a defensive strategy?

A. To increase the risk of having to defend an attack
B. To pressure challengers to aim their efforts at other rivals
C. To weaken the impact of any attack that occurs
D. To help protect a competitive advantage

7. Which of the following choices 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 extend a company's business into new product categories
D. To facilitate a company's shift from a broad to a focused differentiation strategy

8. Evaluating a diversified company's corporate strategy and critiquing the pluses and minuses of its
business lineup involves
A. applying the cost-of-entry test, the better-off test, the profitability test, and the shareholder value test to each business and
industry represented in the company's business portfolio.
B. performing a SWOT analysis of each industry in which the firm has a business interest.
C. evaluating the strategic fits and resource fits among the various sister businesses and deciding what priority to give each of the
company's business units in allocating resources.
D. looking at each industry/business to determine how many profitable strategic groups that the company has diversified into.

9. In which of the following circumstances is it not advantageous for a multinational competitor to

concentrate its activities in a limited number of locations to build competitive advantage?
A. When a company has competitively superior patented technology that it can license to foreign partners
B. When there's a steep learning or experience curve associated with performing an activity in a single location
C. When the costs of performing certain value-chain activities are significantly lower in certain geographic locations than in others
D. When certain locations have superior resources, allow better coordination of related activities, or offer other valuable
advantages

10. A company's biggest vulnerability in employing a best-cost provider strategy is

A. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers.
B. relying too heavily on outsourcing.
C. getting trapped in a price war with low-cost leaders.
D. getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

11. In which of the following circumstances is a strategy to be the industry's overall low-cost provider not
particularly well matched to the market situation?
A. When price competition is especially vigorous
B. When the offerings of rival firms are essentially identical, standardized, commodity-like products
C. When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high
D. When there are few ways to achieve differentiation that have value to buyers
12. In which of the following instances is being a first-mover not particularly advantageous?
A. When a pioneer is using a low-cost provider strategy
B. When a pioneer is employing a defensive strategy
C. When buyers aren't loyal to pioneering firms in making repeat purchases
D. When a pioneer is pursuing product innovation and using a differentiation strategy

13. Achieving a cost advantage over rivals entails which of the following tasks?
A. Producing a standard product, redesigning the product infrequently, and having minimal advertising
B. Outmanaging rivals in performing value-chain activities in a cost effective manner and finding creative ways to cut cost-
producing activities out of the value chain
C. Concentrating on the primary activities portion of the value chain and outsourcing all support activities
D. Being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as
possible

14. The characteristics of a world market where global competition prevails include
A. a competitive environment comprised of so many competitors that no company has a sizable worldwide market share.
B. a market situation in which competitive conditions across national markets are linked strongly enough to form a true world
market and leading competitors typically compete head-to-head in many different countries.
C. minor cost variations from country-to-country (as concerns production, distribution, sales and marketing, and other primary
components of the industry value chain), and minimal cross-country trade restrictions.
D. many companies racing for global-market leadership, with most contenders using the same basic type of competitive strategy
and positioning themselves in the same strategic group.

15. The three tests for judging whether a particular diversification move can create value for shareholders
are the
A. resource-fit test, the profitability test, and the shareholder-value test.
B. attractiveness test, the cost-of-entry test, and the better-off test.
C. strategic-fit test, the competitive-advantage test, and the return-on-investment test.
D. attractiveness test, the profitability test, and the shareholder-value test.

16. Companies racing against rivals for global-market leadership need strategic alliances and collaborative
partnerships with companies in foreign countries 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, gain inside knowledge about unfamiliar markets and cultures, and access valuable
skills and competencies that are concentrated in particular geographic locations.
D. help wage price wars against foreign competitors.

17. Which of the following choices is the correct definition of "cross-market subsidization"?
A. The practice of getting a company's home government to help finance, and otherwise subsidize, its entry into the markets of
foreign countries
B. Supporting competitive offensives in one market with resources and profits diverted from operations in other country markets
C. The practice of shifting company resources from nations where a company has big-profit sanctuaries to nations where it has
smaller profit sanctuaries
D. Using cross-border transfer of a company's skills and expertise as a basis for successfully overcoming the barriers to entering
new country markets

18. Which of the following actions is not something a company should consider when crafting an
environmental-sustainability strategy?
A. Seeking to protect the environment that will guard against the ultimate endangerment of the planet
B. Making contributions to the Global Environmental Council that are distributed based on a competitive basis
C. Working to provide for the longevity of natural resources
D. Striving to maintain ecological support systems for future generations

19. The biggest risk of employing an outsourcing strategy is

A. 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.
B. causing the company to become partially integrated instead of being fully integrated.
C. hurting a company's R&D capability.
D. putting the company in the position of being a late mover instead of an early mover.

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

21. A company achieves competitive advantage whenever it

A. is the acknowledged market-share leader.
B. is the industry's acknowledged technology leader.
C. has some type of edge over rivals in attracting customers and coping with competitive forces.
D. has a well-known and well-regarded brand name, prefers offensive strategies to defensive strategies, and has a strong balance
sheet.

22. A low-cost leader's basis for competitive advantage is

A. high buyer switching costs.
B. using a low-cost/low-price approach to gain the biggest market share.
C. lower prices than rival firms.
D. meaningfully lower overall costs than competitors.

23. Which of the following statements about cross-business strategic fit in a diversified enterprise is not
accurate?
A. Strategic fit is primarily a by-product of unrelated diversification and exists when the value-chain activities of unrelated
businesses possess economies of scope and good financial fit.
B. Strategic fit exists when two businesses present opportunities to economize on marketing, selling, and distribution costs.
C. Strategic fit between two businesses exists when the management know-how that's accumulated in one business is
transferable to the other.
D. Competitively valuable and cross-business strategic fits are what enable related diversification to produce a 1 + 1 = 3
performance outcome.

24. Which of the following is not one of the five generic types of competitive strategy?
A. Broad differentiation
B. Best-cost provider
C. Focused low-cost provider
D. Market-share dominator

25. The chief difference between a low-cost provider 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 to which a company is trying to appeal.
D. the type of value chain being used to achieve a low-cost competitive advantage.

End of exam