edmundo business simulation game personal reflective report
To be used for all types of assessment and provided to students at the start of the module. Information provided should be compatible with the detail contained in the approved module specification although may contain more information for clarity. Module title Strategic Management CRN 39297 Level 6 Assessment title Assignment 2 - Reflective Journal Weighting within module This assessment is worth 50% of the overall module mark. Module Leader/Assessment set by Tracy Dixon T.L.Dixon@salford.ac.uk Submission deadline date and time 3 rd May 2023 by 4pm For coursework assessments only: students with a Reasonable Adjustment Plan (RAP) or Carer Support Plan should check your plan to see if an extension to this submission date has been agreed. How to submit You should submit your assessment electronically via Turnitin on Blackboard. Assessment task details and instructions All generic questions about the assessment should be asked on the Padlet provided on blackboard – generic questions sent to tutors’ email will be directed to put these on the message boards. You are to write a reflective journal based on your 8 weeks experience on the simulation exercise. The simulation runs from Week 3 to week 10 inclusive. This is an individual assessment. Your journal should be a reflection on each of the weeks. You reflection should: i) discuss your team’s strategy for the business as decided in week 3 and if any changes were made to it over the 8 weeks ii) look at the 3 key decisions made, how they were formed, the results of those decisions and how you used this information to make any changes for the future Assessment Information/Brief 2 iii) discuss any strategic tools that you used to form your decisions iv) reflect on where your team came in the final ranking and how it could be improved v) reflect on how you worked as a team. Information on the simulation will be given in week 3’s lecture and there will be a folder on blackboard containing all information on the exercise. Time will be given in each seminar for the group to work on the simulation however you are not limited to only this time, you can access the simulation at any point during the week prior to the 5pm Friday cut off (first week will end 3/2/2023). Results for the performance of the simulation will be available after 5pm each Friday. Guide to reflective writing LINK video on reflective writing LINK Assessment Criteria Task Marks available Word count i) Discussion of team’s strategy 15 270 ii) Reflection on 3 key decisions made 30 540 iii) Use of strategic tools 15 270 iv) Reflection on final position and improvements that could be made 20 360 v) Discussion of teamwork 10 180 vi) Presentation, demonstrates critical analysis, wider reading and range of academic sources, referencing 10 180 Sub total: 100 marks 1800 words Percentage Mark Level of Performance (based on mark awarded): 90-100 Outstanding 80-89 Excellent 70-79 Very Good 60-69 Good 50-59 Fair 40-49 Adequate 30-39 Unsatisfactory 20-29 Poor 10-19 Very Poor 0-9 Extremely Poor Assessment Information/Brief 3 Also refer to the detailed Level 6 grade descriptors available on the module’s Blackboard and the rubric. Knowledge and Understanding Practical, Professional or Subject Specific Skills Assessed intended learning outcomes On successful completion of this assessment, you will be able to: 1. Demonstrate coherent and detailed knowledge and understanding of strategic management within a global and sustainable context. 3. Identify strategic problems and issues facing a range of organizational types and situations 5. Engage in debate about strategy and communicate information, ideas, problems and solutions effectively from a theoretical and a 6. Research, analyse and interpret qualitative and quantitative data from a wide range of sources. 7. Consolidate cognitive skills in critical analysis and evaluation Employability Skills developed / demonstrated Communication YES Critical Thinking and Problem Solving YES Data Literacy NO Digital Literacy YES Industry Awareness YES Innovation and Creativity YES Proactive Leadership YES Reflection and Life-Long Learning YES Self-management and Organisation YES Team Working YES Word count/ duration (if applicable) Your assessment should be…... 1800 words +/- 10% in length, penalties may be applied for exceeding the word count. Your word count does not include any charts, diagrams, images or the bibliography. Feedback arrangements You can expect to receive feedback within 15 working days of submission. Assessment drafts cannot be looked at by lecturers, students have use of Smarthinking. Academic Integrity and Referencing Students are expected to learn and demonstrate skills associated with good academic conduct (academic integrity). Good academic conduct includes the use of clear and correct referencing of source materials. Here is a link to where you can find out more about the skills which students need: Assessment Information/Brief 4 Academic integrity & referencing Referencing Academic Misconduct is an action which may give you an unfair advantage in your academic work. This includes plagiarism, asking someone else to write your assessment for you or taking notes into an exam. The University takes all forms of academic misconduct seriously. Assessment Information and Support Support for this Assessment You can obtain support for this assessment using the Padlet link in the assessment folder. All questions on the assessment will be answered here so everyone can benefit, as well as it being consistent. Smarthinking can be used for help with academic writing. Office hours are available see blackboard for details. You can find more information about understanding your assessment brief and assessment tips for success here. Assessment Rules and Processes You can find information about assessment rules and processes in Blackboard in the Assessment Support module. Develop your Academic and Digital Skills Find resources to help you develop your skills here. Concerns about Studies or Progress If you have any concerns about your studies, contact your Academic Progress Review Tutor/Personal Tutor or your Student Progression Administrator (SPA). askUS Services The University offers a range of support services for students through askUS including Disability and Learner Support, Wellbeing and Counselling Services. Personal Mitigating Circumstances (PMCs) If personal mitigating circumstances (e.g. illness or other personal circumstances) may have affected your ability to complete this assessment, you can find more information about the Personal Mitigating Circumstances Procedure here. Independent advice is available from the Students’ Union Advice Centre about this process. Click here for an appointment to speak to an adviser or email advicecentre-ussu@salford.ac.uk. In Year Retrieval Scheme Your assessment is not eligible for in year retrieval. If you are eligible for this scheme, you will be contacted shortly after the feedback deadline. Assessment Information/Brief 5 You can find more information about this scheme in Blackboard in the Assessment Support module. Reassessment If you fail your assessment, and are eligible for reassessment, you will need to resubmit on or before TBC. For students with accepted personal mitigating circumstances for absence/non submission, this will be your replacement assessment attempt. The assessment will be changed for the reassessment. We know that having to undergo a reassessment can be challenging however support is available. Have a look at all the sources of support outlined earlier in this brief and refer to the Personal Effectiveness resources
As a Marketing manager, how can you increase net profit?
As a Marketing manager, how can you increase net profit? Select One A.Lower MTBF B.Increase price C.Increase automation D.Reduce debt
Which group of financing activities will all increase your company’s leverage?
Which group of financing activities will all increase your company’s leverage? Select One A.Paying off current debt, retiring long term debt, and issuing stock B.Paying off current debt, issuing long term debt, & retiring stock C.Issuing current debt, issuing long term debt, paying a dividend, & retiring stock D.Issuing current debt, retiring long term debt, paying a dividend & issuing stock
An increase in the Accounts Receivables policy:
An increase in the Accounts Receivables policy: Select One A.Gives customers less time to pay you B.Gives you more time to pay suppliers C.Gives you less time to pay suppliers D.Gives customers more time to pay you
How does the Balanced Scorecard measure how effectively your company is working its assets?
How does the Balanced Scorecard measure how effectively your company is working its assets? Select One A.Days of Working Capital B.Inventory Carrying Costs C.Product Count D.Plant Utilization
Besides focusing on higher technology segments, select which group of characteristics would be most commonly used by a niche differentiation strategy. Select One A.Heavily increase automation ratings, minimize marketing expenses early, & offer multiple product lines in each target segment B.Heavily increase automation ratings, invest heavily into marketing, & offer one product line in each target segment C.Slightly increase automation ratings, invest heavily in marketing, & offer multiple product lines in each target segment D.Slightly increase automation ratings, minimize marketing expenses early, & offer one product line in each target segment
What effect does decreasing automation have on a company?
What effect does decreasing automation have on a company? Select One A.Decreases variable costs by increasing the amount of production capacity B.Decreases variable costs by decreasing the amount of workers needed C.Decreases variable costs by increasing plant utilization D.Both B and C E.None of the above
What metrics are used to calculate a product’s contribution margin?
What metrics are used to calculate a product’s contribution margin? Select One A.Sales, total costs B.Profit, variable costs C.Sales, variable costs D.Profit, total costs
When the Marketing Department works with the R&D Department, which of the following would be determined? Select One A.Ensuring manufacturing runs are in line with market growth projections. B.Ensuring product line meets customer expectations, and projecting revenues. C.Ensuring assembly lines are purchased for new products, and the impact of automation increases on revision dates. D.Ensuring R&D costs per product and properly funded.
Which action would increase the customer survey score?
Which action would increase the customer survey score? Select One A.Increase price B.Increase MTBF C.Increase automation D.Decrease debt
Given the following data from a Comparative Competitive Efforts page in the CIR:
WHOLESALE SEGMENTYourCompanyIndustryAverageYour Companyvs. Ind. Avg.Wholesale Price ($ per pair)$74.50$53.83+38.4%S/Q Rating (1 to 10 stars)9.96.3+57.1%Model Availability50300-83.3%Brand Advertising ($000s)16,50014,350+15.0%Rebate Offer ($ per pair)0.003.40-100.0%Delivery Time (weeks)1 wks2.8 wks-64.3%Retailer Support ($ per outlet)5,0004,675+7.0%Retail Outlets3,2821,538+113.4%Celebrity Appeal345111+210.8%Brand Reputation (prior-year average)9476+23.7%Pairs Demanded2,0242,413-16.1%Gained/Lost (due to stockouts)00 Pairs Sold (000s)2,0242,413-16.1%Market Share (%)8.4%10.0%-1.6 ptsBased on the above data for your company, which of the following statements is false? Your company’s percentage competitive advantages and disadvantages on the 10 competitive factors affecting Wholesale sales and market share resulted in a net overall competitive disadvantage of a size that resulted in a below-average 8.4% market share for your company.Your company’s branded sales volume and market share in the Wholesale segment were negatively impacted by your company’s competitive effort in model availability and the lack of a rebate offer. Your company's sizable negative percentage competitive disadvantage in delivery time had a negative competitive impact on your company's branded sales volume and market share in the Wholesale segment .Your company’s biggest percentage competitive advantage in the Wholesale Segment related to celebrity appeal. Your company’s branded sales volume and market share in the Wholesale segment were positively impacted by your company’s brand reputation, S/Q rating, and number of retail outlets.
Your company's distribution and warehouse costs per pair sold are less than 20% below the industry average in the Asia-Pacific regionYour company's operating profit margin in the Wholesale segment of the North America region is below the industry averageYour company's operating profit per pair sold in the Wholesale segment of the Asia-Pacific region is below the operating profit margin in the Internet segment of the Asia-Pacific regionYour company's marketing expenses per pair sold in both the Internet and Wholesale branded footwear segments in the Europe-Africa region are about 10% above the industry averageYour company's operating profit per branded pair sold in the Wholesale segment in the North America region is equal to the industry low
only have value to the managers of companies whose costs are below the industry averages.are sometimes historically interesting but are of little or no value to managers when it comes to making decisions in the upcoming decision round.are worth careful scrutiny by the managers of all companies because they help managers determine the degree to which their company's costs for the benchmarked cost categories are competitive with those of rival companies.are of little value to company managers in making decisions to improve company performance in the upcoming decision round, unless a company is losing money and its managers do not understand why.are of considerable value to the managers of companies considering building additional facility space and/or adding more footwear-making equipment to boost production capabilities.
Spend an amount on brand advertising that exceeds the industry average for Latin AmericaCharge an average retail price that is below the industry average for Latin AmericaOffer online shoppers a number of models/styles that exceeds the industry average for Latin AmericaProduce and market branded footwear with an S/Q rating that exceeds the industry average for Latin AmericaOffer a higher mail-in rebate than most all other rivals competing in the Internet segment in the Latin America region
Given the following Year 12 balance sheet data for a footwear company:
Balance Sheet DataCash on Hand$ 15,000Total Current Assets130,000Total Fixed Assets290,000Total Assets$420,000Accounts Payable$ 20,000Overdraft Loan Payable01-Year Bank Loan Payable5,000Current Portion of Long-Term Bank Loans22,000Total Current Liabilities47,000Long-Term Bank Loans Outstanding153,000Total Liabilities200,000Shareholder Equity:Year 11BalanceYear 12Change Common Stock20,000020,000Additional Capital120,0000120,000Retained Earnings60,00020,00080,000Total Shareholder Equity200,000+20,000220,000Total Liabilities and Shareholder Equity$420,000Based on the above figures and the definition of the debt-assets ratio presented in the Help section for p. 5 of the Footwear Industry Report, the company’s debt-assets ratio (rounded to 2 decimal places) is0.45.0.46.0.40.0.48.0.42.
pursue a strategy of selling footwear to retailers in Europe-Africa at a wholesale price of $39 per pair or less--no import tariffs have to be paid on branded pairs shipped to footwear retailers in Europe-Africa when the wholesale price is below $40 per pair.pursue a strategy of selling fewer pairs in Europe-Africa than rival companies--this has the advantage of keeping the company's costs for import tariffs in Europe-Africa lower than those of rivals.build a production facility in Europe-Africa and then expand it as may be needed so that the company has sufficient capacity to supply all (or at least most) of the branded and private-label pairs the company intends to try to sell in that geographic region.raise the company's selling price of footwear in Europe-Africa by the full amount of the tariff and pass all tariff costs along to the purchasers of the company's footwear--this strategy has the advantage of completely eliminating the company's exposure to import tariffs in Europe-Africa.stop selling footwear in Europe-Africa and close down all company operations in that region.
Assume a company's Income Statement for Year 12 is as follows:
Income Statement DataYear 12(in 000s)Net Revenues from Footwear Sales$ 580,000Cost of Pairs Sold350,000Warehouse Expenses45,000Marketing Expenses90,000Administrative Expenses15,000Operating Profit (Loss)80,000Interest Income (Expense)(20,000)Pre-tax Profit (Loss)60,000Income Taxes18,000Net Profit (Loss)$ 42,000Based on the above income statement data and the formula for calculating the interest coverage ratio presented in the Help section for p. 5 of the Footwear Industry Report, the company’s interest coverage ratio is4.00.2.10.29.0.3.00.2.20.
Assume a company's Income Statement for Year 12 is as follows:
Income Statement DataYear 12(in 000s)Net Revenues from Footwear Sales$ 530,000Cost of Pairs Sold340,000Warehouse Expenses40,000Marketing Expenses80,000Administrative Expenses15,000Operating Profit (Loss)55,000Interest Income (Expense)(10,000)Pre-tax Profit (Loss)45,000Income Taxes13,500Net Profit (Loss)$ 31,500Based on the above income statement data and assuming the company has 20 million shares of common stock outstanding, the company's operating profit margin and EPS wereCopyright © by Glo-Bus Software, Inc. Copying, distributing, or 3rd party website posting isexpressly prohibited and constitutes copyright violation.10.4% and $2.75.10.38% and $1.58.8.49% and $2.25.5.94% and $1.55.6.67% and $1.84.
the production cost benchmarking data on p. 6 of each issue of the Footwear Industry Report to help determine whether it should make maximum use of overtime at each of the company's production facilities to help lower total production costs per pair.the benchmarking data on p. 7 of the FIR to determine whether it has achieved the lowest possible total branded costs per pair sold in each geographic region.page 4 of the FIR to help determine whether to (1) invest in one or more production improvement options, (2) bid more aggressively to win private-label contracts to help lower total production costs, or (3) sell some of the new or refurbished equipment at one or more production facilities.the production cost benchmarking data on p. 6 of each issue of the Footwear Industry Report to determine whether it should close down whichever production facility that has the highest total production costs per branded pair.the production cost benchmarking data on p. 6 of each issue of the Footwear Industry Report to see if its efforts to achieve low total production costs per branded pair have been more/less successful than other companies pursuing much the same outcome.
When the company has the ability to manufacture private-label footwear at a production cost per pair that is at least $2 per pair below its per pair production cost of branded footwearWhen the data in the latest Competitive Intelligence Report indicates that one or more rival firms were able to secure contracts at offer prices above $25 per pairWhen the data in the latest Competitive Intelligence Report indicates that all winners of contracts for private-label footwear in a geographic region in the past year had offer prices above $40 per pairWhen the demand of chain retailers for private-label footwear is rising faster than buyer demand for branded footwearWhen managers determine that all of the company's available production capacity will not be needed to produce branded footwear and that the total amount of idle production capacity at its production facilities will be sufficient to meet or exceed the 100,000-pair minimum-delivery requirement of chain retailers in each region.
10% or $1,440,000.8% or $1,150,000.4% or $575,000.2.5% or $360,000.5% or $720,000.
The easiest way for a company to achieve low labor costs per pair produced is make sure that all of its production facilities are equipped with new footwear-making equipment rather than refurbished equipment.The most effective way for a company to achieve labor costs per pair produced that are below the industry average is to give workers large increases in base pay (above 10%) annually and to keep incentive pay below $0.75 per non-defective pair produced.As long as labor productivity at a company's production facility is in the range of 3,400 to 3,600 pairs produced per worker, then labor costs per pair produced at that facility will closely match the labor costs per pair produced of other companies having production facilities in that same region.Companies producing branded footwear with a 7-star or higher S/Q rating are very unlikely to achieve labor costs per pair produced that are below the industry average in a given region whereas companies producing branded footwear with an S/Q rating no higher than 4-stars or less in that same geographic region are virtually assured of having labor costs per pair that are below the region's industry average.Company managers each year should seek to search out a combination of base pay increases, incentive pay per non-defective pair produced, total compensation, and expenditures for best practices training at each production facility that is projected to yield the lowest feasible labor cost per pair produced.
Increasing the base wage paid to production workers by at least 3% annuallyIncreasing total employee compensation by 4% and realizing a 6% increase in production worker productivityIncreasing total expenditures for best practices training by 10% annuallyIncreasing spending for TQM/Six Sigma quality control from $3 per pair to $5 per pairReducing the S/Q rating of branded pairs produced for 4.6 stars to 4.1 stars
One of the benefits of pursuing a strategy of social responsibility and corporate citizenship is
higher sales of branded footwear at the company's Web sites (because customers are pleased with the company's commitment to being a good corporate citizen).an enhanced image rating, provided company spending for socially responsible activities is meaningful and is sustained over a multi-year period.the boost such a strategy gives to increasing the company's global sales volume and global market share of branded footwear when the company's advertising is devoted to explaining all of the socially responsible activities it is undertaking.the boost such a strategy gives to the company's EPS and ROE.the positive impact that such a strategy has on worker job satisfaction and productivity.
concentrating all production of 500 models at a production facility in Latin America.instituting production improvement option A at each production location producing 500 models, so as to conserve on expenditures for TQM/Six Sigma programs.instituting production improvement option B at all production locations where 500 models are going to be produced.boosting the use of superior materials to 70% or more at all production locations where 500 models are to be produced to help also boost the company's S/Q rating on the branded pairs being produced.building production facilities in Latin America and Europe-Africa to produce 500 models/styles and installing either production improvement options C or D at both of these locations.
Given the following data from a recent Comparative Competitive Efforts page in the CIR:
INTERNET SEGMENTYourCompanyIndustryAverageYour Companyvs. Ind. Avg.Retail Price ($ per pair)$63.00$76.28-17.4%Search Engine Advertising ($000s)5,0006,225-19.7%Free ShippingNoNoneSameS/Q Rating4.36.3-31.7%Model Availability400300+33.3%Brand Advertising12,00014,350-16.4%Celebrity Appeal0111-100.0%Brand Reputation8076+5.3%Online Orders (000s)598538+11.2%Pairs Sold (000s)598538+11.2%Market Share (%)11.1%10.0%+11.2%Based on the above data for your company, which of the following statements is false?Your company’s percentage competitive advantages and disadvantages on the 8 competitive factors affecting Internet sales and market share resulted in a net overall competitive advantage of a size sufficient to produce an 11.1% market share for your company, which was above the 10.0% average market share for the region.Your company's branded sales volume and market share in the Internet segment were negatively impacted by your company's competitive effort in search engine advertising and brand advertising.Your company's most powerful competitive disadvantage in Internet segment related to the fact that your company's retail price was 17.4% below the industry average.Your company's branded sales volume and market share in the Internet segment were positively impacted by your company's brand reputation.Your company's biggest percentage competitive advantage in the Internet Segment related to model availability.
Managerial efforts to boost a company's stock price should entail such actions as
raising the company's dividend each year(by at least $0.10 and preferably $0.25 or more for the increase to have much impact on the stock price) and repurchasing shares of common stock.spending amounts on corporate citizenship and social responsibility that are above the industry average, boosting the company's dividend payout ratio to more than 100%, and paying off all long-term debt within 2 years.increasing the company's dividends each year (by at least $0.10 and preferably $0.25 or more for the increase to have much impact on the stock price), keeping the company's credit rating at A (or above), spending sufficient money on corporate citizenship and social responsibility to earn an Award for Exemplary Corporate Citizenship, and issuing a sufficient number of shares of common stock to pay off all long-term debt within 1-2 years.charging a price for branded footwear that is below the industry average in all geographic regions, spending amounts on corporate citizenship and social responsibility that are below the industry average, keeping the company's image rating above 70, paying a dividend each year that equals projected EPS, and repurchasing shares of common stock.paying off all long-term debt as rapidly as possible, keeping the company's dividend payout ratio between 25% and 50%, spending additional money on corporate citizenship and social responsibility, and maintaining a credit rating that is no less than B+.
the gross profit a seller receives on each pair of private-label footwear sold.how much the company received from each pair of private-label footwear sold over and above the cost of pairs sold -- these dollars are automatically deposited in a seller's retained earnings account and help boost the seller's credit rating.cash that can be used to pay bank loans or increase dividend payments or be deposited in the company's retained earnings (to strengthen the company's balance sheet and credit rating).how much sellers of private-label footwear received over and above the costs per pair sold; these margins, if positive, serve to improve a seller's operating profit in the designated region (negative margins over direct cost act to reduce a seller's operating profits in the region). the net profit sellers earn (or lose--in the case of negative numbers) on each pair of private-label footwear supplied to a given region's chain retailers.
Increasing the incentive pay for production workers, and thereby reduce reject rates on pairs producedIncreasing expenditures for enhanced styling/featuresIncreasing efforts to improve the productivity of production workersAvoiding bidding for contracts to supply private-label footwear to chain retailers, which damages the company's image as a producer of top quality footwearMaximizing the use of overtime at each production location
the Comparative Competitive Efforts section of the Competitive Intelligence Report for each geographic region.the information displayed on p. 8 of the FIR.the Demand Forecast data on p. 4 of the FIR.the facility space and production equipment data at the bottom of p. 4 of the FIR.the financial data on p. 5 of the FIR.
Your boss has just reviewed a report
Your boss has just reviewed a report you wrote for a new client. She comments that the report has all the important details, but just isn't convincing enough. She is likely referring to which of the following areas of effective communication?
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The format of your report.
The length of the report.
The accuracy of the report.
The writing style in the report.
You just delivered a "mock" presentation to
You just delivered a "mock" presentation to your team to practice your communication skills. The team gave very positive feedback on the format, length, and content of your presentation. What should you focus on most to improve your presentation skills?
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Adding more images and graphics to the presentation.
Increasing the amount of details you provide.
Varying your tone during the presentation.
Decreasing the time it take to deliver the presentation.
You are a Director in the Andrews
You are a Director in the Andrews Company. Your boss called you to inform you that there is a proposed layoff in your department, which would affect three of six of your employees if it takes place. Given the sensitivity of the issue, your boss asks you to keep this information absolutely confidential. Later that day, one of your employees (Shelia) who would be affected stops you in the hallway and says she’s heard rumors about a layoff, remarking, "I’m not going to be fired am I?" Which of the following people best represent the stakeholders for whom you are primarily obligated?
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Your boss and Shelia
Yourself, Shelia and your other employees
Your boss, Shelia and yourself
Your boss, Shelia, and Sheila’s family and yourself
You’ve just received a complaint from your
You’ve just received a complaint from your best customer that her set of 50 new sensors is overheating and she wants her money back or a significant reduction in the cost. You showed her email to your boss who remarked, "Well, that’s not covered under the service-agreement, and she’s beyond 90 days for returns. We can’t be responsible for customers who abuse the products without regard for proper use as stated clearly in the manual." How would you best characterize this situation?
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This is an ethical dilemma because both the customer and the company have legitimate concerns.
This is not an ethical dilemma because both proper use and return policies are clearly stated.
This is an ethical dilemma because it’s quite possible the customer will sue the company over this issue.
This is not an ethical dilemma because the customer has free will and was under no obligation to buy from this particular company.
You are a consultant on a project
You are a consultant on a project team that has been hired by the Andrews Company to design and administer an employee survey. The survey contains information about employee job satisfaction, engagement, and issues concerning pay and promotion fairness perceptions. The project is generating over $450,000 in consulting fees. The night before your presentation to the client, a Sr. Vice President of Marketing at Andrews calls you and asks you to send her the survey data for the Marketing department so she isn’t "surprised by any of the report’s findings." You respond by saying that "the information is confidential" to which she says, "Of course! I’m not going to share it with anyone else." Which of the following issues should most concern you in considering a response?
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Providing high quality service to the client.
Giving the client feedback about her aggressive behavior.
Protecting the identity of individual survey respondents.
Ensuring accurate data analysis.
One of your employees just told you
One of your employees just told you that she is being sexually harassed at work by an employee outside your work group. Which of the following would be the most effective action to take?
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Review the policies and procedures in your organization for dealing with a claim of sexual harassment.
Call the police to report the incident.
Ask the employee to give you a full report of the details and circumstances.
Ask the employee to write up a report to submit to the human resources department.
One of your employees has performed well
One of your employees has performed well this year. At performance appraisal time, she asks you about how raise and bonus amounts will be determined. In this situation, she is most likely to be concerned about which of the following methods for fair distribution of resources?
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Loyalty
Equality
Need
Equity
As part of a leadership development program
As part of a leadership development program at your company, you are about to be assigned to a global cross-functional project team. The team has members from 6 different countries that you haven't visited before and don't know of any colleagues that have worked in these countries. The opportunity is exciting and will increase your exposure to the executive team, which means it's a big deal to you chances for promotion. Which of the following actions would be the LEAST helpful in building your cultural competence ?
The Andrews Company has just purchased $50,944,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $5,094,400 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles.
The Andrews Company has just purchased $50,944,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $5,094,400 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles.
The Andrews Company has just purchased $50,944,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $5,094,400 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles
The Andrews Company has just purchased $50,944,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $5,094,400 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles
[solved] A company's strategy needs to be ethical because
a strategy that is unethical in whole or in part is morally incorrect and "the wrong thing to do"; pursuit of an unethical strategy reflects badly on the character of the company personnel involved.
there are very high risks that the executives of companies employing unethical strategies will face criminal prosecution by governmental authorities and sentenced to lengthy terms in prison.
it is embarrassing to top executives when their company's unethical behavior is publicly exposed.
unethical strategies raise a company's costs per unit sold and thus lower company profitability.
unethical strategies weaken the corporate culture.
Actions to create a work environment that enhances the quality of life for employees and makes the company a great place to work
Actions to build a workforce that is diverse with respect to gender, race, national origin, and perhaps other aspects that different people bring to the workplace
Actions to protect or enhance the environment and, in particular, to minimize or eliminate any adverse impact on the environment stemming from the company's own business activities
Making charitable contributions, supporting worthy organizational causes, participating in community service activities, helping to make a difference in the lives of the disadvantaged, and trying to better the quality of life in society at large
Actions to keep the prices the company charges for its products/services low enough to prevent the company's profits from being viewed by the general public as obscenely high or exorbitant
[solved] According to the data in Table 9.1,
the Corruption Perception Index score for the United States is higher than for Canada, Australia, and the United Kingdom.
the Corruption Perception Index (CPI) scores in such countries as Denmark, Sweden, and Canada are higher (indicating lower perceived levels of corruption) than in such countries as the United States, France, Ireland, and Japan.
there is no reason to be concerned about the lack of high ethical standards in most of the world's countries (based on the Corruption Perception Index scores in the table).
only a small number of countries have a Corruption Perception Index score below 80 and most of these are countries with small populations located in geographically remote parts of the world.
the perception of corruption in the United States is the lowest in the world, indicating that ethical conduct in business transactions involving U.S. companies is very likely the highest in the world.
[solved] Business ethics concerns
the application of general ethical principles and standards to the actions and decisions of businesses and the conduct of their personnel.
adhering to and enforcing the consensus ethical principles that companies worldwide have agreed are appropriate for all businesses and their personnel to observe.
a set of behavioral standards, usually established by governmental authorities or organizations such as the United Nations, that businesses worldwide are expected to observe in conducting their activities.
the socially responsible actions and behaviors that a company and its personnel are expected to display in conducting business activities.
the special set of ethical standards and behaviors that are applicable only to business situations and the conduct of business-related matters.
[solved] An immoral manager is one who
operates within the bounds of what is considered ethical most of the time but who is perfectly willing to engage in unethical behavior when there's low risk of discovery and the action or decision has a sizable positive effect on company profitability.
believes any action or behavior that qualifies as legal can in no way ever be considered unethical.
believes in ethical relativism but not in ethical universalism.
is ethically unprincipled but nonetheless usually complies with the company's code of ethics for fear of getting caught and fired.
has no regard for so-called ethical standards in business and pays no attention to ethical principles in making decisions and conducting the company's business.
if the payment of bribes/kickbacks is legal in a particular country, then it is ethical for a company to pay them.
it is ethically acceptable for a company to pay them so long as such payments are allowed in the company's written code of ethics.
it is very difficult (and logically inconsistent) for a multinational company to ethically justify such payments in countries where bribes and kickbacks are common practice when it does business in countries where such payments are illegal and/or when the company's code of ethics forbids such payments.
the ethical relativism school of thought is correct in asserting each businessperson has the freedom to set his/her own standards for deciding whether the payment of bribes/kickbacks is ethically acceptable or not.
if the payment of bribes/kickbacks is normal and customary in a particular culture/society/country, then--according to both integrative social contracts theory and the school of ethical universalism--it is ethically acceptable for a company to pay them in conducting its business activities in that culture/society/country.
[solved] The categories of managerial morality include:
always ethical managers, usually ethical managers, and often unethical managers.
moral managers, immoral managers, and amoral managers.
managers with lots of integrity, managers with some integrity, and managers with no integrity.
managers committed to ethical behavior all of the time, managers who behave ethically most of the time, and managers who do whatever it is in their own self-interest and are indifferent to whether their behavior is ethical or unethical.
managers who are "true believers" in high ethical standards, managers who claim to believe in high ethical standards but who nonetheless engage in unethical behavior whenever they deem it in their best self-interest to do so, and managers who are skeptical about so-called ethical standards and do whatever they think is best.
[solved] According to integrative social contracts theory,
the Code of Expected Ethical Conduct developed by the United Nations represents a pragmatic and effective compromise of the best parts of the ethical standards advocated by the school of ethical universalism and the ethical standards advocated by the school of ethical relativism.
a company's first duty and responsibility is to be respectful of and responsive to the ethical standards and norms of the each of the countries in which it operates.
each country's ethical norms and customs form a "social contract" that all individuals, groups, organizations, and businesses in that country have a duty to observe; this contract draws a clear and bright the line between actions and behaviors that are ethically permissible and those that are not and must be strictly observed in all circumstances in that particular country.
universal ethical principles or norms based on the collective views of multiple cultures and societies combine to form a "social contract" that is binding on all individuals, groups, organizations, and businesses; however, within the bounds defined by universal ethical principles, there is legitimate room (or "moral free space") for local cultures or groups to specify what other actions may or may not be ethically permissible.
the slippery slope of ethical universalism should be rejected and the principles of ethical relativism should be embraced.
[solved] According to the ethical relativism school of thought,
whether the use of underage labor is ethically acceptable or not hinges upon the ethical standards that each industry establishes for its member businesses.
it is very clear and well-established that the use of underage labor is ethically impermissible, even in those countries and situations where it is the local custom to utilize child labor.
if the use of underage labor is acceptable in a particular culture/society/country, then it is ethical for a company to use underage labor in conducting its business activities in that culture/society/country.
if the use of underage labor is legal in a particular country, then it is ethical for a company to use underage labor in conducting its business activities in that country, no matter what the legality of using underage labor happens to be in other countries.
it is up to each business to set its own standards for deciding whether the use of underage labor is ethically acceptable or not.
[solved] The notion of social responsibility as it applies to businesses concerns
a company's duty to put the public interest and the well-being of society ahead of shareholder interests.
the responsibility that all businesses have to operate in a manner that promotes environmental sustainability and the overall best long-term interest of society.
societal expectations that a company will charge fair prices and pay fair wages.
a company's duty to operate in an honorable manner, provide good working conditions for employees, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.
a company's duty to observe high ethical standards and conduct its business in a manner that benefits society at large.
[solved] The term "triple bottom line" refers to
the three most frequently used measures of profitability--gross profit, operating profit, and net profit.
the practice among some companies to measure their performance in the social responsibility arena by setting formal performance targets in three areas: "profit, people, and planet"--this set of performance targets is often referred to as the company's "triple bottom line" or TBL.
the three outcomes that underlie good corporate citizenship: conducting business according to high ethical standards, demonstration of an exemplary environmental sustainability strategy, and significant ongoing contributions to the better of society as a whole.
the three performance measures that a company considers to be most important.
the three types of bottom line results society should rightfully expect of all businesses: delivering value to shareholders, delivering value to customers, and delivering value to society as a whole.
[solved] The central thesis of the school of ethical universalism is that
what actions and behaviors are ethically right and wrong are absolute and thus are entirely appropriate for judging the "ethical correctness" of the behavior of all people and organizations in all countries and in all circumstances.
the best and most legitimate basis for judging the "ethical correctness" of the actions and behavior of businesspeople is the Code of Ethical and Moral Behavior adopted and advocated by the United Nations.
concepts of right and wrong are universal within countries but not across countries and cultures.
common moral agreement about right and wrong actions and behaviors across multiple cultures and countries form the basis for universal ethical standards applicable to the members of all societies, all companies, and all businesspeople.
only those ethical principles that are widely recognized and agreed-upon worldwide can be used to put valid ethical boundaries on how business activities are conducted.
[solved] Which of the following are major drivers of unethical strategies and business behavior?
A lack on the part of many companies to implement and strongly enforce codes of ethical conduct, the excessively strong profit motive that pervades the business community, and the obscenely high bonuses and stock options paid to top executives that motivate/cause these overpaid executives to violate ethical standards
Fierce competitive pressures that inflict losses on companies and may even force some to file for bankruptcy, lax government enforcement of ethical standards and ethical business conduct, and the ease with which businesspeople who engage in unethical behavior can bribe corrupt public officials not to prosecute them or their companies
The drive among most businesses to maximize profits and return on capital investment, the ethically corrupt nature of most businesspeople, and a lack on the part of many companies to implement and strongly enforce codes of ethical conduct
A company culture that puts profitability and good business performance ahead of ethical behavior; lax oversight by company boards of directors that enables unscrupulous pursuit of personal gain, wealth, and other selfish interests; and heavy pressures on company managers to meet or beat short-term performance targets
The excessively strong profit motive that pervades the business community, the excessive bonuses and stock options that top executives can earn if company profits are excellent, and a widespread belief in the business community that ethical behavior is not necessary or even relevant
[solved] According to the school of ethical relativism,
concepts of right and wrong as applied to business situations are always a function of each company's own set of values, beliefs, and ethical convictions (as stated in the company's code of ethical conduct).
differing religious beliefs, historic traditions and customs, core values and beliefs, and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong.
what constitutes ethical business behavior and what constitutes unethical business behavior is governed by what is legal in a given country.
what constitutes ethical business behavior and what constitutes unethical business behavior is always relative to some ideal standard that is subject to different interpretation in different countries.
a "one-size-fits-all" template should always be used to determine the ethical appropriateness of business actions and the behaviors of company personnel.
ignore the underlying principles of the school of ethical universalism. the school of ethical relativism, and integrative social contracts theory and do whatever it takes to avoid impairing the company's financial performance and competitive standing.
follow the principles of the school of ethical relativism in deciding whether to engage in paying bribes or kickbacks.
reject the underlying principles of both the school of ethical universalism and the school of ethical relativism and adopt the principles of integrative social contracts theory.
avoid the payment of bribes and kickbacks in all countries and in all circumstances if the payment of bribes and kickbacks is forbidden in its code of ethical conduct and if top management is serious about enforcing this prohibition.
take the position that it ethically permissible for its personnel to pay bribes and kickbacks in countries where such payments are customary but ethically impermissible for its personnel to make such payments elsewhere.
Because rapidly changing conditions (either favorable or unfavorable) in one or more of a company's core businesses make it desirable to expand into other industries
Because the company has an imbalance of cash cow and cash hog businesses
Because there is attractive potential for transferring a portion of its portfolio of competitively potent resources and capabilities to other related or complementary businesses
Because the company's growth is sluggish and it needs the sales and profit boost that a new business can provide
Because it is desirable to make new acquisitions in order to complement and strengthen the market position and competitive capabilities of one or more of its present businesses
When it can leverage existing resources and capabilities by expanding into businesses where these same resources and capabilities are key success factors and valuable competitive assets
When diversifying into closely related businesses opens new avenues for reducing costs
When it has a powerful and well-known brand name that can be transferred to the products of other businesses and help drive the sales and profits of such businesses to higher levels
When it is facing strong competitive pressures from rival companies
When it spots opportunities to expand into industries whose technologies and/or products complement its present business
determining each industry's key success factors, weighting the importance of each industry KSF, using a scale of 1 to 10 to rate the company's ability to be successful in coping with each industry KSF in each industry, multiplying the company's rating on each industry KSF by the respective KSF importance weights to obtain a weighted rating on each KSF, adding the weighted KSF ratings to obtain an overall KSF score for each industry, and using the overall KSF scores to evaluate in which industries it is easiest/hardest for the company to be highly profitable and competitively successful.
selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.
rating the attractiveness of each industry's strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries, both individually and as a group, do or do not have attractive strategic and resource fits.
identifying each industry's likely growth potential, rating the difficulty of actually achieving this growth potential, and deciding whether the company's growth prospects are attractive or unattractive, industry-by-industry.
determining the biggest determinants of profitability in each industry, rating the ability of the company to be successful on each of the profit-determining factors, and obtaining overall measures of the firm's ability to achieve profitability in each of the industries where it operates.
Choosing which one of the five generic competitive strategies that each of the company's different businesses will pursue
Specifying the type of competitive advantage that each different company business should pursue
Picking new industries to enter and deciding on the means of entry
Choosing the most appropriate value chain for each of the company's different businesses to implement and employ
Deciding whether to combine and merge all of the company's businesses into a single unified operation or to operate them as separate stand-alone divisions
is a reliable indicator of the extent to which a business unit enjoys strong product differentiation vis-a-vis rivals (signaled by a relative market share above 1.0) or suffers from weak product differentiation vis-a-vis rivals (signaled by a relative market share below 0.50).
is a better indicator of competitive strength than is a simple percentage measure of market share--for instance, a company with a 20% market share is in a much stronger competitive position if its largest rival has a market share of 10% (which means its relative market share is 2.0) than it is if its largest rival has a 30% market share (in which case the company's relative market share is only 0.67).
is a reliable indicator of the extent to which a business unit enjoys a strong brand image and reputation with buyers (signaled by a relative market share above 0.75) or a weak brand image and reputation with buyers (signaled by a relative market share below 0.30).
is a more reliable indicator of a business unit's revenue growth and profit potential.
is a reliable indicator of the extent to which a business unit enjoys competitive advantage (signaled by a relative market share above 1.0) or suffers from competitive disadvantage (signaled by a relative market share below 0.25).
is essential if a diversified company is to pass the value chain test, accelerate its growth in revenues and earnings, and build long-term value for shareholders.
is the key to realizing the highest possible economies of scope and realizing a significantly higher return on capital investment.
puts sister businesses in position to perform better financially as part of the same company than they could have performed as independent enterprises, thus providing a clear avenue for boosting shareholder value.
enhances a company's ability to build a bigger portfolio of distinctive competencies.
gives a company a clear path to global market leadership in those industries where it has related businesses.
is essential if a diversified company is to pass the value chain test, accelerate its growth in revenues and earnings, and build long-term value for shareholders.
is the key to realizing the highest possible economies of scope and realizing a significantly higher return on capital investment.
puts sister businesses in position to perform better financially as part of the same company than they could have performed as independent enterprises, thus providing a clear avenue for boosting shareholder value.
enhances a company's ability to build a bigger portfolio of distinctive competencies.
gives a company a clear path to global market leadership in those industries where it has related businesses.
is useful for identifying which business units have the biggest/smallest economies of scale and which have the biggest/smallest economies of scope.
provides valuable guidance in deploying corporate resources to the various business units--in general, a diversified company's prospects for good overall performance are enhanced by concentrating corporate resources and strategic attention on those business units positioned in the three cells in the upper left portion of the attractiveness-strength matrix.
is useful for ranking a company's different business units from best to worst based on how much resource fit each unit has with its sister businesses.
is useful for ranking a company's different business units from best to worst based on how much strategic fit each unit has with its sister businesses.
pinpoints which of a diversified company's business units are cash cows (those in the three diagonal cells) and which ones are cash hogs (those in the three cells in the lower-right corner of the matrix).
are the single biggest benefit of pursuing unrelated diversification.
are present whenever diversification satisfies the industry attractiveness test and the cost-of-entry test.
are cost reductions that flow from operating in multiple businesses.
stem from cost-saving efficiencies that arise when sister business operate over a wider geographic area.
arise mainly from scale economy efficiencies in the production and distribution portions of the value chains of unrelated businesses.
Determining whether much competitive value can potentially be gained from cross-business transfer of technology, skills, or know-how to correct the resource deficiencies of certain businesses and boost their bottom lines?
Determining the extent to which sister business units have value chain matchups that present opportunities for cross-business sharing of a corporate parent's umbrella brand name or corporate reputation?
Determining the extent to which sister business units have value chain matchups that present sizable opportunities to reduce costs by combining the performance of certain value chain activities and thereby capture economies of scope.
Determining whether there is sizable potential for sister business to engage in cross-business collaboration to create new competitive capabilities and thereby realize significant gains in performance.
Determining whether the diversified company has enough cash cow business units to cover the negative cash flows of its cash hog business units.
[solved] The two biggest drawbacks of pursuing unrelated diversification strategies are
(1) weak ability to capture cross-business resource fits and (2) conflicts/incompatibility among the competitive strategies of the company's different businesses.
(1) the likelihood of overspending on efforts to capture economies of scope and (2) difficulty in passing the industry attractiveness test when making new acquisitions.
(1) increased likelihood that the company's financial resources will be spread thinly over too many distinctly different lines of business and (2) the high risks of conflicts and/or incompatibility among the strategies of the businesses it has diversified into.
(1) no potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generate on its own and (2) demanding managerial requirements.
(1) demanding managerial requirements and (2) falling into the trap of diversifying into too many cash cow businesses.
for combining their related value chain activities into a single operation to achieve lower costs and/or cross-business collaboration to create new or stronger competitively valuable resources and capabilities that will be mutually beneficial.
to accelerate revenue growth, streamline the value chains of each of the businesses, and lower capital investment requirements.
to increase the number of core competencies a company has, lower business risk, and reduce vulnerability to competitive pressures.
to increase resource fit, brand name fit, and industry attractiveness fit.
to reduce diseconomies of scale and diseconomies of scope.
for combining their related value chain activities into a single operation to achieve lower costs and/or cross-business collaboration to create new or stronger competitively valuable resources and capabilities that will be mutually beneficial.
to accelerate revenue growth, streamline the value chains of each of the businesses, and lower capital investment requirements.
to increase the number of core competencies a company has, lower business risk, and reduce vulnerability to competitive pressures.
to increase resource fit, brand name fit, and industry attractiveness fit.
to reduce diseconomies of scale and diseconomies of scope.
the technological proficiencies and labor skill requirements of each of the firm's businesses and the competitive strategy each business is employing.
whether the company is focusing on "milking its cash cows" or "feeding its cash hogs" and whether it is pursuing the same or different competitive strategies in each of its business units.
each business's competitive approach (low-cost provider, broad differentiation, best-cost, focused differentiation, or focused low-cost), whether its products are sold under the same brand or different brands, and whether its businesses are mostly cash cows or mostly cash hogs or a balanced mixture of both.
the recent moves it has made to divest weak businesses, build positions in new industries, and strengthen the positions of its existing businesses and whether the company's diversification is based narrowly in a few industries or broadly in many industries.
the actions top management is taking to capture economies of scale and economies of scope and the company's recent moves to divest its cash hogs.
Focus on acquiring businesses that offer the best opportunities for achieving rapid market growth and that have a big competitive advantage over rivals (thereby satisfying the industry attractiveness and competitive strength tests)
Do an astute job of allocating financial resources across the company's businesses
Do such a superior job of overseeing, guiding, and otherwise parenting the firm’s business subsidiaries that the subsidiaries perform at a higher level than they would otherwise be able to do as a standalone enterprise (thus satisfying the better-off test)
Utilize the business acumen of certain corporate executives in identifying undervalued or underperforming companies and then further rely on the skills and expertise of these or other corporate executives in pinpointing achievable ways that the operations of such companies can be overhauled and streamlined to produce dramatic increases in profitability
Employ strong bargaining skills to successfully negotiate a low price and other favorable terms in acquiring any new business the corporate parent decides to enter (thereby helping satisfy the cost-of-entry test)
[solved] Businesses are said to be "related" when
they have common suppliers and common customers.
they possess the same competitively valuable resources and capabilities and thus can pursue the same market opportunities.
they possess industry attractiveness fit, risk avoidance fit, and ability-to-compete fit.
their products exhibit strategic fit, resource fit, and industry attractiveness fit.
they possess competitively valuable cross-business value-chain matchups.
[solved] Different businesses are said to be "unrelated" when
the products of the different businesses are highly dissimilar.
they have dissimilar value chains containing no competitively useful cross-business relationships or strategic fits.
the businesses utilize different types of production technologies and production processes.
they are in different industries.
the products of the different businesses satisfy very different buyer needs.
[solved] Which of the following is the best example of unrelated diversification?
A producer of toothpaste acquiring a maker of shampoos and hair care products.
A maker of garden hoses acquiring a producer of lawn fertilizers.
A maker of bedroom furniture buying a maker of patio furniture.
A newspaper chain acquiring a publisher of magazines.
A maker of camera-equipped copter drones acquiring a maker of athletic footwear.
Divesting cash hog businesses and using the proceeds to fund capital investments in promising cash cow businesses
Paying down existing debt, increasing dividend payments to shareholders, or repurchasing shares of the company's common stock
Investing in ways to strengthen or grow existing businesses
Making acquisitions to establish positions in new businesses or to complement existing businesses
Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses
Assessing the competitive strength of the company’s business units and drawing a nine-cell matrix to simultaneously portray the industry attractiveness and competitive strength of each of the business units
Checking whether the company has sufficient corporate parenting capabilities to cope with resource fit conflicts and strategic fit incompatibilities among the businesses the company has diversified into
Assessing the attractiveness of the industries the company has diversified into, both individually and as a group
Ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent’s priorities should be in allocating resources to its different businesses
Evaluating the competitive value of cross-business strategic fits along the value chains of the company’s various business units and checking whether the firm’s resources fit the requirements of its present business lineup
[solved] A "cash hog" type of business
is one that is losing money and requires cash infusions from its corporate parent to continue operations.
is one that has substantially more current liabilities than current assets.
generates negative cash flows from internal operations and thus requires cash infusions from its corporate parent to report a profit.
is a business that faces a liquidity crisis due to declining sales revenues and profits.
generates cash flows that are too small to fully fund its operations and growth--such businesses require periodic cash infusions by the corporate parent to provide additional working capital and finance new capital investment.
When a company has little knowledge of the strategies local rivals are employing
When adding new production capacity will not adversely impact the supply-demand balance in the local market
When a startup subsidiary can quickly be infused with the resources and capabilities needed to achieve the cost structure and competitive strength to battle local rivals
When a company already operates in a number of countries and has experience in getting new subsidiaries up and running and overseeing their operations
When acquiring a local business may be the quickest, least risky, and most cost-efficient means of hurdling entry barriers
[solved] A "think local, act local" multicountry type of strategy
has the distinct disadvantage of increasing a company's exposure to fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods.
can defeat a global strategy if the "think local, act local" multicountry strategist concentrates on competing only in those foreign countries where the company has profit sanctuaries.
becomes more appealing the bigger the country-to-country differences in buyer tastes and preferences, market conditions, and competitive circumstances.
is generally an inferior strategy unless a company is lucky enough to have well-protected profit sanctuaries in each of the country markets where it operates.
can usually be defeated by a well-conceived "think global, act global" type of strategy.
Maintaining a national (one-country) production base and exporting goods to foreign markets
Rely upon acquisitions or internal startup ventures to gain entry into foreign markets
Using the creation of profit sanctuaries as the primary vehicle for entering foreign markets
License foreign firms to use the company's technology or to produce and distribute the company's products.
Employ a franchising strategy
the imperatives of crafting a different strategy for each different country in which a company competes.
the imperatives of using different advertising and promotional techniques in each country where a company competes.
sizable cross-country differences in wage rates, worker productivity, inflation rates, energy supplies and costs, tax rates, and other factors that impact a company's costs and profit prospects.
the difficulties of turning the world market into one big profit sanctuary.
the need to customize a company's product offering in each different country market where it competes in order to compete successfully against local rivals and thus be profitable.
Utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide
Having relatively small plants in many countries, with each plant producing product versions for local area markets
Using the same fundamental competitive approach worldwide, although the company's strategy or product offering may be adapted in very minor ways to accommodate specific situations in a few host countries
Requiring local managers in host countries to stick close to the chosen global strategy
Minimal responsiveness to buyer tastes, cultural traditions, and market conditions in each country market
Be quick to transfer important new technological know-how, core competencies, best practices, and/or ways of improving/strengthening certain capabilities that have been recently discovered or successfully implemented at the company's operations in one country to its operations in other countries
Be quick to transfer personnel with competitively valuable expertise from operations in one country to operations in other parts of the world (the cost of transferring already-developed resources and capabilities across country borders is low in comparison to the time and considerable expense it takes for a country subsidiary to build matching resources and capabilities solely on its own initiative)
Concentrate a big majority of the company's most competitively powerful resources and capabilities on building a dominant market share in those country markets where it has sizable and well-protected profit sanctuaries and use any surplus cash flows from the operations in countries where it is competitively weaker to gradually strengthen the competitiveness of these weaker-performing operations
Pursue opportunities to extend use of a competitively potent brand name developed in one country (often its home-country market) to its operations in other parts of the world
Be alert for opportunities to transfer some of its competitively powerful resources and capabilities from countries where it has established competitively strong market positions to countries where it is competitively weaker
[solved] The advantages of using a licensing strategy to participate in foreign markets include
being especially well-suited to an act global, think local strategy.
being able to generate revenues and income from a company's technical know-how or a unique patented product without committing significant additional resources to country markets that are unfamiliar, politically volatile, economically unstable, or otherwise risky.
increased ability to achieve higher product quality and better product performance as compared to what could be achieved via either an export strategy or a franchising strategy.
enabling a company to achieve first-mover advantages quickly and easily.
increased ability to achieve a low-cost advantage over foreign-based rivals.
using an export strategy to circumvent the risks of adverse exchange rate fluctuations.
employing a multicountry strategy instead of a global strategy.
locating certain facilities and value chain activities in whatever nations prove most advantageous.
doing whatever it takes to build multiple profit sanctuaries in foreign markets.
avoiding the use of costly offensive strategies.
Whether to employ essentially the same basic competitive strategy in all countries or modify the strategy country by country to better match local market and competitive conditions
What type of offensive strategy to employ in gaining a strong and profitable foothold in each of the foreign country markets it chooses to enter
Where to locate the company's production facilities, distribution centers, and customer service operations so as to realize the greatest location-related advantages
Whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers or to offer a mostly standardized product worldwide
When and how to efficiently transfer some of the company's competitively powerful resources and capabilities from certain countries to other countries in order to aid the entry into new country markets and/or to more effectively battle local rivals for sales and market share
a company is unlikely to be profitable in each and every country market where it operates.
it is hard for a company to create a big and well-protected profit sanctuary in every country in which it operates
company managers must resolve the tension between the market pressures to localize the firm's product offerings country-by-country to match the tastes and preferences of local buyers and the competitive pressures to lower costs by offering mostly standardized products in all countries where a company competes.
it is hard for a company to compete successfully and profitably in more than 15 different country markets.
it is nearly always necessary for a company to offer buyers a wide selection of models, styles, and product versions in order to accommodate varying buyer tastes from country to country.
[solved] Which of the following account for why companies decide to enter foreign markets?
To gain more experience in employing effective offensive and defensive strategies
To establish an even bigger competitive advantage over the company's closest domestic rivals
To build a bigger and more diverse portfolio of competitively valuable resources and capabilities
To further exploit the company's competitively valuable resources and capabilities and to spread business risk across a wider market area
To grow and strengthen the profit sanctuary the company has in its domestic market
Launching a think global, act global competitive strategy
Launching a think local, act local competitive strategy
Attacking the profit sanctuaries of rival companies
Deliberately operating at a loss in some country markets in order to help grow the size of a company's profit sanctuary in a competitively crucial country market
Shifting company resources from one profit sanctuary to another
Coordinate major strategic decisions worldwide, but give local managers leeway to make minor adjustments to the global strategy
Use the best suppliers from anywhere in the world
Design manufacturing plants to cost-effectively produce many different product versions
Strive to achieve the same type of competitive advantage over rivals in every country where the company competes
Sell the same products under the same brand names worldwide.
[solved] Which of the following statements regarding multicountry competition is false?
With multicountry competition, rivals battle for national championships and winning in one country market does not necessarily signal the ability to fare well in other countries.
With multicountry competition, the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole.
One of the features of multicountry competition is that buyers in different countries are attracted to different product attributes.
One of the features of multicountry competition is that industry conditions and competitive forces in each national market differ in important respects.
With multicountry competition, any competitive advantage a company secures in one country is largely confined to that country; the spillover effects to other countries are minimal to nonexistent.
is largely unaffected by fluctuating exchange rates; it would, however, be affected if its plants were in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting.
has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
is largely unaffected by fluctuating exchange rates; it would, however, be affected if its plants were in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting.
has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
is largely unaffected by fluctuating exchange rates; it would, however, be affected if its plants were in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting.
has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.
becomes more cost competitive in selling its exported goods in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.
When the company has more production capacity than it needs to fill the projected orders for branded footwear and when its analysis and projections reveal the company stands a good chance of winning a contract at a profit-enhancing offer price
When the company has the capability to produce private-label footwear at a production cost per pair that is at least $5 below its per pair production cost for branded footwear
When the data in the latest Competitive Intelligence Report indicates that one or more rival firms successfully won contracts to supply private-label footwear at offer prices that were attractively profitable
When no seller of private-label footwear in the prior year captured as much as a 20% share of the private-label pairs supplied in any given region
When the data in the latest Competitive Intelligence Report indicates that some of the companies competing to supply for private-label footwear were able to win contracts at offer prices above $25 per pair
have the greatest value to those company managers who are desperately searching for ideas on what they can do to improve their company's EPS and ROE.
are of little value to company managers in making decisions to improve company performance in the upcoming decision round, although they may certainly be of interest to those managers who are curious about how their company fared on the various reported benchmarks.
are especially valuable to the managers of companies whose branded footwear has an S/Q rating below 4 stars or above 7 stars.
aid managers in assessing whether their company's costs and/or operating profits for the benchmarked items are adequately competitive--when such is not the case, the company's managers are well-advised to promptly address how best to correct the high-cost or low-profit problem(s) in the upcoming decision round.
are particularly valuable to the managers of companies looking for ways to increase their company's market share of branded footwear sales in one or more geographic regions.
cutting the percentage use of superior materials to help cover some (preferably all) of the costs of the $15 million in annual production run setup costs at each production facility producing 500 models/styles.
producing no more than 200 models at the company's production facilities in other regions.
investing in production improvement option B at those production facility locations producing 500 models.
instituting production improvement options A and C at each production facility where 500 models are being produced.
doubling its expenditures for enhanced styling/features to also increase the S/Q ratings of its footwear brand.
The comparative financial data on p. 5 of the FIR
The benchmarking data on pp. 6 and 7 of the FIR
The facility space and production equipment data at the bottom of page 4 of the FIR
The data on materials prices at the top of p. 4 of the FIR
The celebrity endorsement data and the 4 graphs showing branded prices and S/Q rating trends in each of the four geographic regions on p. 8 of the FIR.
Maximizing the use of overtime at each production location
Increasing the incentive pay for production workers, and thereby reduce reject rates on pairs produced
Increasing expenditures for enhanced styling/features
Avoiding bidding for contracts to supply private-label footwear to chain retailers, which damages the company's image as a producer of top quality footwear
Increasing efforts to improve the productivity of production workers
Your company's marketing expenses per pair sold in both the Internet and Wholesale segments in one or more regions are the highest in the industry
Your company's distribution and warehouse costs per pair available for sale in one or more regions are 20% or more above the industry-average number
The cost of branded pairs sold in one or more regions is very near or at the industry high value
Your company's operating profit margin per branded pair sold is at or very near the industry low in one or more geographic regions
Your company's operating profits per pair sold in all 4 geographic regions of the wholesale segment for branded footwear are below the industry-high values
only sell the company's branded footwear at its Internet site for Latin America; no import tariffs have to be paid on Internet sales--import tariffs only have to be paid on footwear shipped from the company's Latin America warehouse to footwear retailers in Latin America.
simply stop selling branded and private-label footwear in Latin America.
build a production facility in Latin America and then expand its capacity as may be needed so that the production facility has the capability to supply all (or at least most) of the branded and private-label pairs the company intends to try to sell in Latin America.
pursue a strategy of only selling footwear with an S/Q rating of just 1 star or 2 stars in Latin America--no tariffs have to be paid on imported branded footwear having an S/Q rating of 2-stars or below.
pursue a strategy of selling fewer pairs in Latin America than rival companies, which will then keep the company's costs for import tariffs in Latin America lower than those of rivals and give the company a low tariff cost advantage on its sales in Latin America.
[solved] Given the following Year 12 balance sheet data for a footwear company:
Given the following Year 12 balance sheet data for a footwear company:
Balance Sheet Data
Cash on Hand$ 10,000
Total Current Assets100,000
Total Fixed Assets250,000
Total Assets$350,000
Accounts Payable$ 20,000
Overdraft Loan Payable0
1-Year Bank Loan Payable5,000
Current Portion of Long-Term Bank Loans17,000
Total Current Liabilities42,000
Long-Term Bank Loans Outstanding98,000
Total Liabilities140,000
Shareholder Equity:Year 11
BalanceYear 12
Change
Common Stock20,000020,000
Additional Capital110,0000110,000
Retained Earnings60,00020,00080,000
Total Shareholder Equity190,000+20,000210,000
Total Liabilities and Shareholder Equity$350,000
Based on the above figures and the definition of the debt-assets ratio presented in the Help section for p. 5 of the Footwear Industry Report, the company’s debt-assets ratio (rounded to 2 decimal places) is
0.57.
0.32.
0.38.
0.43.
0.40.
Increasing total employee compensation by 4% and realizing a 6% increase in production worker productivity
Increasing total expenditures for best practices training by 10% annually
Increasing the base wage paid to production workers by at least 3% annually
Reducing the S/Q rating of branded pairs produced for 4.6 stars to 4.1 stars
Increasing spending for TQM/Six Sigma quality control from $3 per pair to $5 per pair
pay a steady dividend of $1.00 per year, avoid the use of short-term loans, boost total stockholders' equity by 5% to 10% annually, and maintain a credit rating of at least an A.
repurchase shares of common stock, increase earnings per share annually by amounts that meet or beat investor expectations, and raise the company's dividend payments to shareholders (by at least $0.10 and preferably $0.25 or more for the increase to have much impact on the stock price).
increase the S/Q rating on the company branded footwear, spend additional money on corporate citizenship and social responsibility, pay a dividend each year that equals projected EPS, and keep the company's image rating above 75.
quickly pay off all long-term debt, keep the company's dividend payout ratio below 50%, and issue no more than 5,000 shares of common stock in any given year.
boost the company's dividend payout ratio to more than 100%, increase the company's retained earnings, and issue sufficient shares of common stock to raise the funds to pay off all long-term debt within 2 years.
[solved] Given the following data from a Comparative Competitive Efforts page in the CIR:
WHOLESALE SEGMENTYour
CompanyIndustry
AverageYour Company
vs. Ind. Avg.
Wholesale Price ($ per pair)$74.50$53.83+38.4%
S/Q Rating (1 to 10 stars)9.96.3+57.1%
Model Availability50300-83.3%
Brand Advertising ($000s)16,50014,350+15.0%
Rebate Offer ($ per pair)0.003.40-100.0%
Delivery Time (weeks)1 wks2.8 wks-64.3%
Retailer Support ($ per outlet)5,0004,675+7.0%
Retail Outlets3,2821,538+113.4%
Celebrity Appeal345111+210.8%
Brand Reputation (prior-year average)9476+23.7%
Pairs Demanded2,0242,413-16.1%
Gained/Lost (due to stockouts)00
Pairs Sold (000s)2,0242,413-16.1%
Market Share (%)8.4%10.0%-1.6 pts
Based on the above data for your company, which of the following statements is false?
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Your company's sizable negative percentage competitive disadvantage in delivery time had a negative competitive impact on your company's branded sales volume and market share in the Wholesale segment .
Your company’s branded sales volume and market share in the Wholesale segment were negatively impacted by your company’s competitive effort in model availability and the lack of a rebate offer.
Your company’s branded sales volume and market share in the Wholesale segment were positively impacted by your company’s brand reputation, S/Q rating, and number of retail outlets.
Your company’s biggest percentage competitive advantage in the Wholesale Segment related to celebrity appeal.
Your company’s percentage competitive advantages and disadvantages on the 10 competitive factors affecting Wholesale sales and market share resulted in a net overall competitive disadvantage of a size that resulted in a below-average 8.4% market share for your company.
the net profit earned (or lost -- in the case of a negative number) on each pair of private-label footwear supplied to a given region's chain retailers.
the seller's net revenue gain (or loss -- in the case of a negative number) on each pair of private-label footwear sold to a given region's chain retailers.
how much per private-label pair sold in each region was available to (1) help cover any of a seller's branded expenses in the region not covered by branded revenues and (2) increase the seller's operating profits in the region.
the amount per pair of private-label footwear sold that flowed into a company's retained earnings account (or the amount deducted in the case of a negative number).
the gross profit earned (or lost--in the case of a negative number) on each pair of private-label footwear sold in the various regions.
Offering a number of models/styles in the North America region that exceeds the all-company average in North America
Marketing branded footwear with an S/Q rating that is above the industry average in North America
Signing enough celebrities to endorsement contracts to earn celebrity appeal ratings in North America that exceed the North American industry average
Providing free shipping to online buyers in North America
Charging an average wholesale price to North American footwear retailers that is higher than the all-company average in North America
[solved] Assume a company's Income Statement for Year 12 is as follows:
Income Statement DataYear 12
(in 000s)
Net Revenues from Footwear Sales$ 580,000
Cost of Pairs Sold370,000
Warehouse Expenses40,000
Marketing Expenses75,000
Administrative Expenses15,000
Operating Profit (Loss)90,000
Interest Income (Expense)(15,000)
Pre-tax Profit (Loss)75,000
Income Taxes22,500
Net Profit (Loss)$ 52,500
Based on the above income statement data and the formula for calculating the interest coverage ratio presented on the Help section for p. 5 of the Footwear Industry Report, the company’s interest coverage ratio is
[solved] Assume a company's Income Statement for Year 12 is as follows:
Income Statement DataYear 12
(in 000s)
Net Revenues from Footwear Sales$ 560,000
Cost of Pairs Sold340,000
Warehouse Expenses45,000
Marketing Expenses85,000
Administrative Expenses15,000
Operating Profit (Loss)75,000
Interest Income (Expense)(25,000)
Pre-tax Profit (Loss)50,000
Income Taxes15,000
Net Profit (Loss)$ 35,000
Based on the above income statement data and assuming the company has 20 million shares of common stock outstanding, the company's operating profit margin and EPS were
[solved] Given the following data from a recent Comparative Competitive Efforts page in the CIR:
INTERNET SEGMENTYour
CompanyIndustry
AverageYour Company
vs. Ind. Avg.
Retail Price ($ per pair)$83.50$76.28+9.5%
Search Engine Advertising ($000s)6,2506,225+0.4%
Free ShippingNoNoneSame
S/Q Rating8.66.3+36.5%
Model Availability499300+66.5%
Brand Advertising16,50014,350+15.0%
Celebrity Appeal140111+26.1%
Brand Reputation8776+14.5%
Online Orders (000s)709538+31.8%
Pairs Sold (000s)709538+31.8%
Market Share (%)13.2%10.0%13.2%
Based on the above data for your company, which of the following statements is false?
Your company's two biggest competitive advantages in the Internet Segment related to S/Q rating and model availability.
Your company's branded sales volume and market share in the Internet segment was positively impacted by your company's brand reputation.
Your company had a competitive advantage on each one of the eight competitive factors affecting Internet sales and market share.
Your company’s percentage competitive advantages and disadvantages on the 8 competitive factors affecting Internet sales and market share resulted in a net overall competitive advantage of a size sufficient to produce an above-average 13.2% market share.
Your company had a tiny competitive advantage in search engine advertising.
compensate production workers at levels that are close to the highest in the industry in each geographic region where its production facilities are located--this is because companies with the highest total annual compensation packages attract highly-motivated workers with the skills needed to achieve the highest levels of labor productivity.
achieve the highest possible worker productivity (pairs produced per worker per year).
achieve labor costs per pair produced that are at worst below the industry average and at best are very close to (or even equal to) the industry-low in each region where the company has production facilities.
make sure its annual total compensation of production workers remains below the average annual total compensation paid by all companies in the regions where it has production facilities.
pay an incentive per non-defective pair that results in the lowest feasible reject rate for branded pairs produced.
4% or $800,000.
15% or $3,000,000.
10% or $2,000,000.
5% or $1,000,000.
8% or $1,600,000.
discover which particular rival companies are overspending on production-related activities to differentiate their branded footwear.
learn how much manufacturing costs per pair produced can be lowered by investing in one or more equipment upgrade options.
learn whether its TQM/Six-Sigma expenditures, reject rates, and total compensation packages for labor are comparable to other rival companies also pursuing a differentiation strategy.
discern whether the company can boost profits by lowering the Internet and wholesale prices being charged for branded footwear.
determine whether immediate actions need to be taken to reduce one or more production cost components at a particular facility--because the facility's manufacturing costs per pair produced are unacceptably high relative to those at the facilities of rival companies.
the boost such a strategy gives to increasing the company's global sales volume and global market share of branded footwear when the company's advertising is devoted to explaining all of the socially responsible activities it is undertaking.
an enhanced image rating, provided company spending for socially responsible activities is meaningful and is sustained over a multi-year period.
the boost such a strategy gives to the company's EPS and ROE.
the positive impact that such a strategy has on worker job satisfaction and productivity.
higher sales of branded footwear at the company's Web sites (because customers are pleased with the company's commitment to being a good corporate citizen).
When a first-mover's actions are protected by patents, copyrights, or other forms of property rights, thus thwarting a response by would-be followers
When pioneering helps build a firm's image and reputation with buyers and creates strong brand loyalty
When, for various reasons, an early lead helps a company gain an absolute cost advantage over later-moving rivals
When first-time customers face significant costs in later switching to the product offerings of later entrants
When a pioneer is using a broad differentiation strategy and is striving to achieve strong differentiation keyed to three or more value drivers
get into critical country markets more quickly and gain inside knowledge from local partners about unfamiliar markets and cultures.
master new technologies and build valuable expertise and capabilities faster than would be possible through internal efforts alone
employ a low-cost provider strategy in those country markets where buyers are extremely price sensitive.
quickly achieve strong brand name recognition in those new country markets that are "top-priority" because of the large size of their populations.
access the financial resources needed to launch powerful offensive strategies in important country markets.
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.
the added time and extra expenses associated with engaging in collaborative efforts.
becoming dependent on other companies for essential expertise and capabilities.
having to compromise the company's own priorities and strategies in reaching agreements with partners.
that the collaborative arrangements seldom live up to expectations and, therefore, turn out to be a waste of time and money.
[solved] A good example of vertical integration is
a large steak and seafood restaurant chain opening a retail store specializing in fresh seafood.
a large global bank acquiring a small local or regional bank.
a fast food chain acquiring a chain of casual dining restaurants.
a hospital opening up a wellness and fitness center.
a company that refines crude oil into gasoline purchasing a firm engaged in drilling and exploring for oil.
Entering into strategic alliances or partnerships with other enterprises
What type of website strategy to employ
Using merger and acquisition strategies to strengthen the company's competitiveness
Exerting additional efforts to achieve strong product differentiation
Employing defensive moves to protect the company's market position
[solved] Which one of the following statements about offensive strategies is false?
Among the best behaviors and principles to employ in an offensive strategy is employing the element of surprise as opposed to doing what rivals expect and are prepared for.
One of the most potent strategic offensives is to grant volume discounts or better financing terms to dealers and distributors to discourage them from experimenting with the products of rival firms, particularly those products of close competitors.
A strategic offensive spearheaded by relatively weak company resources and capabilities has dim prospects for success.
The best offensives use a company’s most potent resources and capabilities to attack rivals where they are competitively weakest.
It takes successful offensive strategies to build competitive advantage, widen an existing advantage, or narrow the advantage held by a strong competitor.
To reduce the risk of disruptions in the delivery of the company's products to end-users
To be able to establish personal relationships with consumers who purchase the company's products/services
To increase the volume and profitability of selling direct to customers at the company's website
To raise the overall caliber of customer service the company provides to buyers
To gain better access to end users, improve market visibility, and enhance brand name awareness
Introducing new features, adding new models, and/or broadening the product line to close off gaps and vacant niches to opportunity-seeking challengers
Granting volume discounts or better financing terms to dealers and distributors to discourage them from experimenting with other suppliers
Trying to convince dealers/distributors to handle the company's product line exclusively (which, if successful, forces competitors to use other distribution outlets)
Pursuing continuous product innovation to draw sales and market share away from rivals with comparatively weak product innovation capabilities
Thwarting the efforts of rivals to attack with a lower price by maintaining a lineup of product selections that includes economy-priced options for price-sensitive buyers
Streamlining company operations in ways that improve organizational flexibility or speed the time it takes to get new products to market
Helping the company assemble diverse kinds of expertise speedily and efficiently
Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best
Reducing a company's risk exposure to changing technology or shifting buyer preferences
Facilitating stronger product differentiation and the achievement of a differentiation-based competitive advantage
[solved] A blue ocean strategy
seeks to gain a dramatic and durable competitive advantage by abandoning efforts to beat out competitors in existing markets and, instead, moving to a "blue ocean" market space where the industry does not really exist yet, is untainted by competition, and offers wide open opportunity for profitable and rapid growth.
involves a preemptive strike to secure an advantageous position in a fast-growing market segment.
involves attacking strong rivals by offering buyers an equally good or better product at a lower price.
is a defensive strategy that can be used by a market leader to protect against rivals' efforts to steal its customers.
works best when a company has numerous resource strengths and capabilities and wishes to go on the offensive to become the global market share leader.
[solved] The difference between a merger and an acquisition is that
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.
a merger is a combination of three or more companies whereas an acquisition is combination of just two companies
a merger is the combining of two or more companies into a newly created company that usually takes on a different name, whereas an acquisition is a combination in which one company, the acquirer, purchases and absorbs the operations of another company, the acquired.
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.
a merger involves combining the strategies of the merged companies into a single new strategy whereas an acquisition involves both the acquiring company and the acquired company continuing to pursue their respective strategies.
[solved] When an alliance among two or more enterprises involves formal ownership ties, it is called
a merger.
a collaborative ownership arrangement.
a joint venture.
a partnership.
a multi-owner, mutually-beneficial enterprise.
When customer loyalty to the pioneer is low and a first-mover's skills, know-how, and actions are easily copied or even surpassed
When technological change is rapid and follower firms (and maybe even cautious late-movers) find it easy to leapfrog a first-mover with more attractive next-version products
The lack of any barriers to entering into an alliance or merging with another firm
When pioneering leadership is more costly than imitating followership
When buyers are skeptical about the benefits of a new technology or product being pioneered by a first-mover
improve the effectiveness of defensive actions to protect the company's market position and/or enable the company to be a leader in product innovation.
achieve a higher degree of product differentiation and/or shorten the time it takes to get new and improved products into the marketplace.
strengthen the company's competitive position and/or boost its profitability.
gain internal control over a bigger portion of the industry value chain and/or facilitate a company's efforts to expand into foreign geographic markets.
reduce operating costs and/or gain a first mover advantage over rivals in introducing next-generation products.
Creating as much channel conflict as possible so as to quickly learn whether all customer-related transactions should be conducted at the company's website or whether the company needs to continue selling through traditional wholesalers, distributors, and retailers
Employing a brick-and-click strategy to sell direct to consumers at the company's website while at the same time utilizing traditional wholesalers/distributors and retail outlets to access customers
Using sales at the company's website as the exclusive channel for making sales to customers
Using online sales at the company's website as a relatively minor distribution channel for achieving incremental sales
Operating a website that provides existing and potential customers with extensive product information but that relies on click-throughs to distribution channel partners to handle orders and sales transactions
[SOLVED] Experience indicates that strategic alliances
stand a reasonable chance of helping a company reduce competitive disadvantage but rarely boost the competitive power of its resources and capabilities by enough to gain a competitive advantage.
are generally successful.
are rarely useful in helping a company reduce costs but may well help a company open up attractive new market opportunities.
work well when the purpose is to collaborate in developing new technologies but seldom work well in helping the partners gain better access to attractive new market opportunities.
work best when two companies that are fierce competitors decide to join forces and collaborate rather continue their warfare and ruin their chances for good profitability.
The lack of any barriers to entering into an alliance or merging with another firm
When buyers are skeptical about the benefits of a new technology or product being pioneered by a first-mover
When technological change is rapid and follower firms (and maybe even cautious late-movers) find it easy to leapfrog a first-mover with more attractive next-version products
When customer loyalty to the pioneer is low and a first-mover's skills, know-how, and actions are easily copied or even surpassed
When pioneering leadership is more costly than imitating followership
[SOLVED] A strategic alliance or partnership
has the advantage of being the cheapest means of developing new technologies and getting new products to market quickly.
is a formal agreement between two or more separate companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence.
has the distinct disadvantage of preventing a company from being totally independent and self-sufficient with regard to each and every skill, resource, and capability it may need.
typically helps insulate a firm from the adverse impacts of both competitive pressures and industry driving forces, especially if the alliance is with suppliers.
is an important cross-business arrangement that allows rivals firms to operate their businesses in a more collaborative and cooperative fashion rather than resorting to competitive warfare that erodes their respective profitability.
[SOLVED] Mergers and acquisitions typically aim at achieving such objectives as
putting a company in better position to deliver superior value to buyers, increasing company revenues, having a bigger and more experienced work force, and becoming a global market leader.
facilitating company efforts to pursue a blue ocean strategy, create more core competencies, and expand the number of cost driver opportunities.
transforming an important core competence into a distinctive competence and better defending against external threats to the company's continued profitability.
expanding a company's geographic coverage, creating a more cost-efficient operation out of the combined companies, and/or extending the company's business into new product categories.
speeding product innovation, improving supply chain efficiency, and boosting product quality.
[SOLVED] Which of the following is not a potential advantage of backward vertical integration?
Sparing a company the uncertainty of being dependent on suppliers for crucial components or support services
Reduced business risk because of controlling a bigger portion of the overall industry value chain
Adding to a company's differentiation capabilities in those circumstances when, by performing certain activities internally that were formerly outsourced to suppliers, the company ends up with a better-quality or better-performing product, improved customer service capabilities, or in other ways is able to deliver added value to customers.
Reduced exposure to supplier price increases
Opportunities to improve a company's cost position and competitiveness by performing a broader range of value chain activities internally rather than having some of these activities performed by outside suppliers
Small local and regional firms with limited capabilities
Runner-up firms with weaknesses in areas where the challenger is strong
Market leaders that are vulnerable
Struggling enterprises that are on the verge of going under
Companies with proven capabilities as a low-cost provider or as a best-cost provider and that also have a sizable war chest of cash and marketable securities
reduce operating costs and/or gain a first mover advantage over rivals in introducing next-generation products.
achieve a higher degree of product differentiation and/or shorten the time it takes to get new and improved products into the marketplace.
improve the effectiveness of defensive actions to protect the company's market position and/or enable the company to be a leader in product innovation.
strengthen the company's competitive position and/or boost its profitability.
gain internal control over a bigger portion of the industry value chain and/or facilitate a company's efforts to expand into foreign geographic markets.
[SOLVED] In which of the following instances is being a first-mover not particularly advantageous?
When first-time customers do not remain strongly loyal to pioneering firms in making repeat purchases
When the first-mover is pioneering a new technology rather than a new product
When a pioneer is already the industry's low-cost provider or best-cost provider
When the first-mover is employing a blue ocean strategy
When the first-mover already has a sizable global market share
[SOLVED] Which of the following is not a potential defensive move to ward off challenger firms?
Granting volume discounts or better financing terms to dealers/distributors to discourage them from experimenting with other suppliers/brands and/or trying to convince them to handle its product exclusively and force competitors to use other distribution outlets
Maintaining a war chest of cash and marketable securities
Making an occasional strong counter-response to the moves of weak competitors to enhance the firm's image as a tough defender
Using a blue ocean strategy to maneuver around competitors and concentrate on capturing unoccupied or less contested market territory
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
[SOLVED] Which one of the following is an example of an offensive strategy?
Pursuing disruptive product innovation to create new markets
Signaling challengers that retaliation is likely
Blocking the avenues open to challengers
Introducing new features or models to fill vacant niches in its overall product offering and better match the product offerings of key rivals
Maintaining a war chest of cash and marketable securities
To overcome deficits in their own expertise and capabilities and/or bring together the personnel and expertise needed to create desirable new skill sets and capabilities
To expedite the development of promising new technologies or products
To avoid the need to employ outsourcing strategies or risk impairing their ability to strongly differentiate their products or services from the offerings of industry rivals
To improve supply chain efficiency
To acquire or improve market access through joint marketing agreements
To overcome deficits in their own expertise and capabilities and/or bring together the personnel and expertise needed to create desirable new skill sets and capabilities
To expedite the development of promising new technologies or products
To avoid the need to employ outsourcing strategies or risk impairing their ability to strongly differentiate their products or services from the offerings of industry rivals
To improve supply chain efficiency
To acquire or improve market access through joint marketing agreements
[SOLVED] The strategic impetus for forward vertical integration is to
gain greater ability to control the retail price at which its products are sold.
achieve the same scale economies as wholesale distributors and/or retail dealers.
develop greater expertise in sales and marketing activities.
bypass distributors-dealers and sell direct to consumers at the company's website.
gain better access to end users, improve the company's market visibility, and enhance brand name awareness.
Whether to outsource selected value chain activities
Initiating actions to compete globally instead of nationally
Initiating offensive and/or defensive strategic moves
Employing backward or forward vertical integration strategies
Entering into strategic alliances or partnerships
Creating as much channel conflict as possible so as to quickly learn whether all customer-related transactions should be conducted at the company's website or whether the company needs to continue selling through traditional wholesalers, distributors, and retailers
Using sales at the company's website as the exclusive channel for making sales to customers
Using online sales at the company's website as a relatively minor distribution channel for achieving incremental sales
Operating a website that provides existing and potential customers with extensive product information but that relies on click-throughs to distribution channel partners to handle orders and sales transactions
Employing a brick-and-click strategy to sell direct to consumers at the company's website while at the same time utilizing traditional wholesalers/distributors and retail outlets to access customers
[solved] The big danger of outsourcing value chain activities is
increasing the firm's risk exposure to supply chain management failures and the price increases of suppliers.
making it harder and more costly for the company to control the quality of its product offering, thus impairing the value it delivers to its customers.
curtailing the company's ability to achieve strong differentiation of its products or services.
farming out too many or the wrong types of activities, thereby narrowing the scope of its capabilities in ways that unwittingly reduce or degrade its long-term competitiveness and prevent it from being a master of its own destiny.
impairing a company's distribution capability and weakening its ability to access customers directly.
Efforts to expand or narrow the company's geographic coverage and the initiatives being made to build competitive advantage
Management's planned, proactive moves to attract customers and outcompete rivals
The number and type of core competencies a company has and the kinds of activities that comprise its value chain
The company's actions to respond and react to changing conditions in the macro-environment or in industry and competitive conditions
The key functional strategies (R&D, supply chain management, production, sales and marketing, information technology, HR, and finance) a company is employing
[solved] Which of the following most accurately qualify as valuable company resources?
Big profit margins, more than 2 core competencies, and more global distribution centers than key rivals
More distinctive competencies than core competencies, an above-average market share, national geographic coverage, and having more personnel assigned to customer service activities than close rivals
State-of-the-art manufacturing plants and/or equipment and/or distribution facilities; the cumulative learning and know-how of key personnel and work groups; cash and marketable securities; a strong balance sheet and credit rating; and a strong network of distributors and/or retail dealers
A large volume of unit sales, modern production plants, and a large number of newly-introduced products
More primary value chain activities than close rivals, more plants than any other company in the industry, and a bigger work force than key rivals
[solved] The external market opportunities most relevant to a company are those that
help defend against the external threats to its well-being and future profitability.
will help the company increase its market share.
allow it to build a distinctive competence.
can be pursued with its competitively strong resources and capabilities, offer the best prospects of growth and profitability, and present the most potential for achieving competitive advantage.
allow it to operate at 100% of production capacity (so as to avoid incurring the added cost burdens of having too much unutilized plant capacity).
is a tool for gauging how well a company's strategy is matched to industry key success factors and for benchmarking the cost-effectiveness of its value chain.
is a potent analytical tool for identifying the reasons why a company's strategy is or is not working very well and whether it has dynamic and competitively valuable capabilities.
is a reliable way to identify the drivers of a company's profitability.
is a simple and powerful tool for assessing a company's overall situation--specifically, its competitively important internal strengths and weaknesses, its market opportunities, and the external threats to its future well-being.
reveals whether a company has competitively stronger resources and capabilities than its closest rivals.
[solved] The value of doing a weighted competitive strength assessment is to
learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage versus its closest rivals.
determine whether a company's resources and capabilities are potent enough to allow it to capture a bigger market share than its closest rivals.
learn whether a company has enough resource and capabilities to be profitable.
determine how competitively powerful the company's core competencies are.
learn if the company has a more cost-efficient value chain than rivals.
Vulnerability to unfavorable industry driving forces; unfavorable trade policies and tariffs
Adverse demographic changes that threaten to curtail demand for the industry's product
Growing bargaining power of buyers and/or suppliers
Having too few resources and capabilities that are well-matched to the company's available market opportunities
Costly new regulatory requirements; rising prices for energy or other key inputs
is in excellent position to strongly differentiate its product offering from the offerings of rival firms and thus achieve a differentiation-based competitive advantage.
may be able to achieve competitive advantage either by performing its certain differentiation-enhancing value chain activities more proficiently than rivals (thus gaining a differentiation-based competitive advantage keyed to delivering what customers perceive as a superior product offering) or by performing certain value chain activities more cheaply than rivals (thus achieving a cost-based competitive advantage).
stands a good chance of being the industry leader in using best practices to perform its primary value chain activities and thereby gaining a competitive advantage based on dedicated use of best practices.
is likely to have more cost-saving distinctive competencies than rivals and thus possess good ability to gain a competitive advantage over rivals based on performing value chain activities very cost-efficiently.
is likely to have a greater number of competitively potent resources and capabilities than rivals and thus greater ability to achieve a sustainable competitive advantage.
industry key success factors and other telling measures of competitive strength or weakness.
those factors that are the biggest determinants of a company's revenues and sales volume.
those factors that are the biggest determinants of company profitability.
those factors that are the biggest determinants of whether industry members have above-average, close to average, or below-average market shares.
those factors and product attributes that buyers will find most appealing.
competitive strength analysis and SWOT analysis.
SWOT analysis and key success factor analysis.
SWOT analysis and activity-based costing analysis.
competitive position assessment and activity-based costing.
value chain analysis and benchmarking.
Whether a company's costs are competitive with those of its close rivals depends on how the costs of its internally-performed value chain activities compare with the costs of the internally-performed value chain activities of its close rivals.
The combined costs of all the various primary and support activities comprising a company's value chain define the company's internal cost structure.
Evaluating a company's cost-competitiveness involves using what accountants call activity-based costing to determine the costs of performing each value chain activity.
A company's cost-competitiveness depends not only on the costs of internally performed activities (its own value chain) but also on costs in the value chains of its suppliers and distribution channel allies.
A company's own internal costs are insufficient to assess whether its product offering and customer value proposition are competitive with those of rivals.
a distinctive competence in performing that activity.
a core competence in performing that activity.
a sustainable competitive advantage over rivals based on dynamic capabilities.
a competitive capability.
a competitively valuable resource strength.
Whether the resource or capability represents a technological asset or a marketing asset
How much it helps a company improve its customer value proposition, its role in the company's profit proposition, and the degree to which it enables the company to compete effectively against rivals
Whether many or most rivals have much the same resource or capability
How easily it can be trumped by substitute resources and capabilities of rivals
How hard it is for competitors to copy
A weaker dealer network than key rivals and/or weak global distribution capability
No distinctive competence in producing a high-quality product
Weaker product quality, R&D, and/or technological know-how than key rivals
Too much underutilized plant capacity and/or short on financial resources to grow the business and pursue promising initiatives
In an overcrowded strategic group; plagued with internal operating problems or obsolete facilities
[solved] The three steps of SWOT analysis are
determining whether the company has more internal strengths than internal weaknesses, determining whether the company has good market opportunities, and evaluating the seriousness of the threats to the company's future well-being.
identifying the company's competitive assets, determining whether it enjoys a competitive advantage, and deciding how best to correct the company's competitive deficiencies.
identifying the company's competitively important strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall business situation, and translating the conclusions into strategic actions and an overall strategy that is well-matched to the company's overall situation.
determining if the company has more resource strengths than close rivals, identifying the company's market opportunities and the external threats it faces, and determining the company's potential for achieving a sustainable competitive advantage.
matching the company's strategy to its competitive strengths, correcting the company's two to three biggest competitive weaknesses, and identifying the company's best market opportunities.
The higher a company's overall competitive strength score/rating the stronger is its competitiveness and ability to compete successfully against rival industry members; low scores signal weak competitiveness and probable competitive disadvantage compared to rivals with higher scores.
The company with the highest score/rating is excellently positioned to be the most profitable company in the industry while the company with the lowest score is likely to be the least profitable company in the industry.
The company with the highest score/rating has the greatest number of competitively valuable resources and capabilities while the company with the lowest score has the smallest number of competitively valuable resources and capabilities.
The company with the highest score/rating is excellently positioned to have the biggest market share in the industry while the company with the lowest score is likely to have the lowest market share in the industry.
High scores/ratings indicate which rivals are most vulnerable to competitive attack and low scores indicate companies with strong defenses against competitive attack.
How the combined costs of a company's internally performed activities, the activities performed by its suppliers, and the activities performed by its forward channel allies compare against the costs of the supplier-performed, internally-performed, and forward channel ally-performed value chain systems employed by rival firms
How the costs of the company's production and marketing activities compare against the costs of the production and marketing activities of rival companies
How the costs of the company's primary value chain activities compare against the costs of the primary value chain activities of rival companies
How the costs of the company's internally performed activities compare against the costs of the internally-performed activities of rival companies
How the value chain costs of a company's suppliers and forward channel allies compare against the value chain costs of rival companies' suppliers and forward channel allies
Pinpointing what strategic issues and problems top management need to address in crafting a strategy to fit the company's situation
Evaluating whether the company is competitively stronger or weaker than key rivals
Identifying the company's important resources and capabilities, and evaluating whether they have the competitive power to produce a competitive advantage over rival companies?
Scanning the external environment to determine which company strengths offer the best prospects for achieving sustainable competitive advantage
Assessing whether the company's costs and prices are competitive with those of key rivals, and whether it has an appealing customer value proposition
the "worry list" serves as an agenda of items that need to be addressed in crafting a set of strategic actions that fit the company's overall external and internal situation.
without a precise fix on what problems/roadblocks a company confronts, managers are less clear about which value chain activities to benchmark and what resources and capabilities are needed to be competitively successful.
the worry list identifies the specific issues and problems that company managers must address and resolve in order to wisely chart a strategic path for the company to take and decide upon an appropriate strategic intent.
the "worry list" helps company managers determine how best to modify the company's value chain, what type of competitive advantage to try to create, and how best to maximize profitability.
without a clear fix on what problems/issues a company confronts, managers cannot know what the industry's driving forces and key success factors are.
[solved] Which of the following is not one of the objectives of benchmarking?
To take action to emulate the "best practice" of another company whenever benchmarking reveals that the company's own costs and results of performing an activity are not on a par with what one or more other companies have achieved
To identify the best means of performing an activity that is being benchmarked
To develop cross-company comparisons of the costs of performing specific value chain activities
To learn which company in an industry is using the greatest number of best practices in performing its value chain activities and thus very likely has the industry's lowest cost value chain
To learn how other companies have actually achieved lower costs or better results in performing benchmarked activities
Outsourcing certain high-cost activities being performed internally to outside vendors or contractors who can perform them more cheaply than they can be performed in-house
Implementing the use of best practices throughout the company, but most particularly for those activities where costs are higher than those of some or many rivals
Implementing an activity-based cost accounting system that identifies high-cost activities and then eliminating those activities with the highest costs from the company's value chain
Ceasing to perform activities of minimal value to customers
Relocating high-cost activities (such as manufacturing) to geographic areas like Southeast Asia or Latin America or Eastern Europe where they can be performed more cheaply
[solved] The term "triple bottom line" refers to
the three most frequently used measures of profitability--gross profit, operating profit, and net profit.
the three outcomes that underlie good corporate citizenship: conducting business according to high ethical standards, demonstration of an exemplary environmental sustainability strategy, and significant ongoing contributions to the better of society as a whole.
the three performance measures that a company considers to be most important.
the three types of bottom line results society should rightfully expect of all businesses: delivering value to shareholders, delivering value to customers, and delivering value to society as a whole.
the practice among some companies to measure their performance in the social responsibility arena by setting formal performance targets in three areas: "profit, people, and planet"--this set of performance targets is often referred to as the company's "triple bottom line" or TBL.
[solved] Multinational companies
are well advised to rely upon the principle of ethical relativism for guidance in how to conduct their activities because it is far more sensible for a multinational company to take the position that it is ethically okay for company personnel to pay bribes and kickbacks in countries where such payments are customary but that it is not ethically permissible for company personnel to pay bribes and kickbacks in those countries where bribes and kickbacks are considered unethical or illegal.
operating in countries where ethical standards vary considerably from country to country quickly find themselves on a slippery slope with no locally credible guiding moral authority if they insist on having a single companywide code of ethical standards that applies to all company personnel in all countries where the company operates.
that wish to be respectful of local customs and ethical standards should give company personnel sufficient wiggle room to pay bribes and kickbacks in those countries where the payment of bribes and kickbacks are customary and to forbid the payment of bribes and kickbacks in those countries where they are considered unethical or illegal.
face a real dilemma in basing their standards of what is ethical and what is unethical on the principle of ethical universalism because it is much better and easier for them to operate with multiple sets of ethical standards (sometimes one for each country, so as to be respectful and accommodative of local customs and traditions).
that forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition are acting in accord with the principles of the school of ethical universalism and are rejecting the principles underlying the school of ethical relativism.
[solved] According to ongoing research by Berlin-based Transparency International,
corruption in business transactions is relatively low across the world but corruption among public officials in a majority of the world's countries is a serious problem.
corruption among public officials and in business transactions is widespread across the world.
corruption in business occurs in roughly 30% of business transactions across the world and the percentage has been steady for the past 5 years.
businesspeople are more corrupt on average than public officials.
corruption in business transactions is a problem in fewer than 15% of the countries of the world, but the percentage is increasing.
[solved] A company's environmental sustainability strategy concerns
its deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against ultimate endangerment of the planet.
its action plan for reducing global warming.
its action plan for reducing energy consumption and shifting to renewable energy sources.
its plans for promoting organic farming and increased public consumption of organic foods.
the time and money it plans to spend in collaborating with other businesses to prevent climate change.
[solved] Ethical principles in business
are universal and do not vary significantly from country to country.
concern the company-specified values and behaviors that senior executives expect all personnel to observe and display in the course of doing their jobs.
are generally less permissive than the ethical principles for society at large.
are generally more permissive than the ethical principles for society at large.
are not materially different from ethical principles in general because business actions must be judged in the context of society's standards of what is ethically right and wrong, not by a special set of rules that apply just to business conduct.
[solved] According to the ethical relativism school of thought,
if the payment of bribes/kickbacks is legal in a particular country, then it is ethical for a company to pay bribes/kickbacks in conducting its business activities in that country, no matter what the legality of paying bribes/kickbacks happens to be in other countries.
whether the payment of bribes/kickbacks is ethically acceptable or not hinges upon the ethical standards that each industry establishes for its member businesses.
it is very clear that the payment of bribes and kickbacks is ethically impermissible even in those countries and situations where it is the local custom to engage in such payments.
because local ethical standards take precedence over ethical standards elsewhere, then if the payment of bribes/kickbacks is acceptable in a particular country, it is ethically acceptable for a company to pay bribes/kickbacks in conducting its business activities in that country.
businesses have the flexibility to set their own standards for deciding whether the payment of bribes/kickbacks is ethically acceptable or not.
[solved] Which of the following are major drivers of unethical strategies and business behavior?
A company culture that puts profitability and good business performance ahead of ethical behavior; lax oversight by company boards of directors that enables unscrupulous pursuit of personal gain, wealth, and other selfish interests; and heavy pressures on company managers to meet or beat short-term performance targets
The drive among most businesses to maximize profits and return on capital investment, the ethically corrupt nature of most businesspeople, and a lack on the part of many companies to implement and strongly enforce codes of ethical conduct
Fierce competitive pressures that inflict losses on companies and may even force some to file for bankruptcy, lax government enforcement of ethical standards and ethical business conduct, and the ease with which businesspeople who engage in unethical behavior can bribe corrupt public officials not to prosecute them or their companies
A lack on the part of many companies to implement and strongly enforce codes of ethical conduct, the excessively strong profit motive that pervades the business community, and the obscenely high bonuses and stock options paid to top executives that motivate/cause these overpaid executives to violate ethical standards
The excessively strong profit motive that pervades the business community, the excessive bonuses and stock options that top executives can earn if company profits are excellent, and a widespread belief in the business community that ethical behavior is not necessary or even relevant
are ethically-principled as long as they see such behavior being in their own self-interest.
try to stay within ethical bounds for fear of being caught doing something unethical and having their careers ruined.
are sometimes skeptical about certain ethical standards but they feel strongly obligated to observe the company's code of ethics and ethical standards in general.
see themselves as stewards of ethical behavior, are ethically principled, and believe it is important to pursue success in business within the confines of both the letter and spirit of what is ethical and legal.
view what is legal as also ethical.
[solved] According to the school of ethical universalism,
it is up to each business to set its own standards for deciding whether the use of underage labor is ethically acceptable or not.
if the use of underage labor is acceptable in a particular culture/society/country, then it is ethical for a company to use underage labor in conducting its business activities in that culture/society/country.
if the use of underage labor is legal in a particular country, then it is ethical for a company to use underage labor in conducting its business activities in that country, no matter what the legality of using underage labor happens to be in other countries.
there are ample grounds for rejecting the principle of ethical relativism that the use of underage labor is ethically permissible in those countries, societies, and situations where the use of child labor is normal and customary (and also legal).
whether the use of underage labor is ethically acceptable or not hinges upon the ethical standards that each country government establishes for businesses located within its boundaries.
Companies that engage in shady behavior usually suffer big drops in sales revenues and are unlikely to be profitable for as many as 5 to 10 years after their unethical conduct is exposed in the media
An unethical strategy and/or unethical conduct on the part of company personnel can badly damage a company's reputation and also damage the reputations and job security of the personnel involved
The costs of ethical misconduct can easily run into the hundreds of millions and even billions of dollars, especially if they provoke widespread public outrage and many people were harmed
Buyers shun companies caught up in highly publicized ethical scandals and companies with tarnished reputations have difficulty in recruiting and retaining talented employees because many people consider a company's ethical reputation when deciding whether to accept a job offer
A company's unethical behavior can do considerable damage to shareholders in the form of lost revenues, higher costs, lower profits, lower stock prices, and a diminished business reputation
Actions to protect or enhance the environment and, in particular, to minimize or eliminate any adverse impact on the environment stemming from the company's own business activities
Actions to build a workforce that is diverse with respect to gender, race, national origin, and perhaps other aspects that different people bring to the workplace
Actions to keep the prices the company charges for its products/services low enough to prevent the company's profits from being viewed by the general public as obscenely high or exorbitant
Actions to create a work environment that enhances the quality of life for employees and makes the company a great place to work
Making charitable contributions, supporting worthy organizational causes, participating in community service activities, helping to make a difference in the lives of the disadvantaged, and trying to better the quality of life in society at large
[solved] The categories of managerial morality include:
managers with lots of integrity, managers with some integrity, and managers with no integrity.
mostly ethical managers, somewhat ethical managers, and totally unethical managers.
managers who behave ethically virtually all of the time, managers who behave ethically most of the time, and managers who behave ethically when it is in their best interest to do so and unethically when it is in their best interest to do so.
moral managers, immoral managers, and amoral managers.
managers who are "true believers" in high ethical standards, managers who claim to believe in high ethical standards but who nonetheless engage in unethical behavior whenever they deem it in their best economic interest to do so, and if-it-is-legal-then-it-is-ethical managers.
[solved] According to integrative social contracts theory,
a company's first duty and responsibility is to be respectful of and responsive to the ethical standards and norms of the each of the countries in which it operates.
the slippery slope of ethical universalism should be rejected and the principles of ethical relativism should be embraced.
the Code of Expected Ethical Conduct developed by the United Nations represents a pragmatic and effective compromise of the best parts of the ethical standards advocated by the school of ethical universalism and the ethical standards advocated by the school of ethical relativism.
each country's ethical norms and customs form a "social contract" that all individuals, groups, organizations, and businesses in that country have a duty to observe; this contract draws a clear and bright the line between actions and behaviors that are ethically permissible and those that are not and must be strictly observed in all circumstances in that particular country.
universal ethical principles or norms based on the collective views of multiple cultures and societies combine to form a "social contract" that is binding on all individuals, groups, organizations, and businesses; however, within the bounds defined by universal ethical principles, there is legitimate room (or "moral free space") for local cultures or groups to specify what other actions may or may not be ethically permissible.
the school of ethical relativism.
integrative social contracts theory.
the Code of Ethical and Moral Behavior adopted by the United Nations and ratified by a majority of member nations.
the widely used and authoritative Statement of Universal Ethical Principles developed by the Global Center for Universal Ethical Standards in Brussels, Belgium.
the school of ethical universalism.
[solved] According to the school of ethical relativism,
it is generally best to avoid use of a "one-size-fits-all" template for judging the ethical appropriateness of business actions and the behaviors of company personnel because any standard of ethically right and wrong behavior is subject to varying interpretation.
what constitutes ethical or unethical conduct varies according to the religious convictions of each society or each culture within a country.
differing religious beliefs, historic traditions and customs, core values and beliefs, and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong; these different standards translate into differences about what is considered ethical or unethical in the conduct of business activities,
there can be no single standard for judging ethically right and wrong behavior because each culture and each country should always have complete freedom to determine its own standards of what is and is not ethically permissible.
it is appropriate for ethical standards as they apply to business behavior to vary from business situation to business situation because of the varying circumstances that accompany different business situations.
Unit sales volumes per company of private-label footwear in Years 11-13 are projected to be higher in the Asia-Pacific and Latin America regions than in the North America and Europe-Africa regions.
The unit sales volumes of private-label footwear per company in the Asia-Pacific region in Years 11-13 are projected to be the same as in Latin America.
The unit sales volumes of private-label footwear per company in the Europe-Africa region in Years 11-13 are projected to be the same as in North America.
The projected unit sales volumes of private-label footwear per company in Europe-Africa in Years 11-13 are higher than in North America.
The unit sales volumes per company in North America in Year 12 are projected to be 2,640,000 pairs of branded footwear and 246,000 pairs of private-label footwear.
[solved] The projected percentage growth in buyer demand for private-label athletic footwear is
10-12% annually in North America region during the Year 16-Year 20 period and 12-14% annually in Europe-Africa region during the Year 16-Year 20 period.
higher than the projected growth for branded footwear in the Asia Pacific and Latin America regions in both the Year 11-15 and Year 16-20 periods.
10-12% annually in Latin America during the Year 11-Year 15 period, declining to 8-10% annually during the Year 16-Year 20 period.
5-7% annually worldwide, during the Year 11-Year 15 period, increasing to 7-9% annually during the Year 16-Year 20 period.
12-14% annually in the Europe-Africa region during Years 11-15 and 10-12% annually in Latin America during Years 11-15.
Cozy's product manager continues to perform well
Cozy's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Cozy product manager do in order to improve upon the buying criteria, and thus potentially increase demand?
Cozy's product manager continues to perform well
Cozy's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Cozy product manager do in order to improve upon the buying criteria, and thus potentially increase demand?
[solved] Which of the following are most unlikely to qualify as driving forces?
Changes in an industry's long-term growth rate, the entry or exit of major firms, and changes in cost and efficiency
Emerging new Internet technology applications, reductions in uncertainty and business risk, regulatory influences, and government policy changes
Mounting competition from substitutes, increasing efforts on the part of industry members to collaborate with suppliers, and the speed with which the number of industry key success factors is either rising or falling
Product innovation and changes in who buys the industry's product and how they use it
Increasing globalization of the industry and marketing innovation
whether entry barriers are high or low and the pool of likely entry candidates is big or small.
the price sensitivity of buyers, whether buyer switching costs are high or low, and how well-informed buyers are about the product offerings of industry members.
whether the profit margins of sellers are relatively high or low.
whether buyer demand is local, regional, national, or global.
whether the overall quality of the products/services of industry members is rising or falling
[solved] The bargaining leverage of suppliers is stronger when
suppliers provide an item that accounts for a sizable fraction of the costs of the industry's product.
there are no good substitutes for the items being furnished by the suppliers and when there are only a few "preferred" suppliers of a particular input.
industry members purchase in large quantities and thus are important customers of the suppliers.
the products of suppliers are weakly differentiated and the supplier industry is composed of more than five suppliers.
industry members are a threat to integrate backward into the business of suppliers and to self-manufacture their own requirements.
[solved] Which of the following is generally not considered as a barrier to entry?
Weak brand preferences and low degrees of customer loyalty to existing brands
High capital requirements
The ability and willingness of industry incumbents to launch strong defensive maneuvers to maintain their positions and make it harder for a newcomer to build a clientele
The cost advantages enjoyed by industry members due to scale economies (in production, distribution, or other activities), favorable locations, and/or low fixed costs
The difficulties of building a network of distributors-retailers and securing adequate space on retailers' shelves
whether potential entrants have ample cash on hand to fund the capital requirements to enter the industry.
how formidable the entry barriers are for each type of potential entrant and whether most companies already in the industry are making money or losing money.
whether existing industry members have sufficient capacity to supply the expected growth in buyer demand.
whether industry incumbents will or will not have a cost advantage over new entrants.
whether the industry's growth and profit prospects are strongly attractive to potential entry candidates.
Strongly differentiated products among rival sellers
Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales
A situation where a few large sellers have the majority of sales and dominant market shares
Rapid growth in buyer demand
High buyer switching costs
the producers of substitutes have strong product innovation capabilities.
industry members face strong bargaining power from their most influential customers.
the readily available substitute products have comparable or better performance features and are attractively priced.
industry members make purchases frequently or infrequently.
there are fewer than five online sellers of substitute products with widespread brand name recognition.
[solved] The term strategic group refers to
those members of an industry that confront the same types of competitive pressures and are combating the same kinds of driving forces.
those industry rivals that are charging about the same prices for their products/services.
a cluster of industry rivals that employ similar competitive approaches, have product offerings that appeal to similar types of buyers, and thus occupy similar market positions.
those industry rivals whose products are of very similar quality.
a cluster of industry rivals that have differentiated their product offerings in essentially identical ways.
[solved] As a rule, the stronger the collective impact of the five competitive forces,
the fewer the number of industry key success factors.
the larger the number of competitive advantage opportunities for industry members.
the lower the combined profitability of industry participants.
the stronger are the industry's driving forces.
the fewer the number of industry members that can earn a profit by charging premium prices for highly differentiated products.
[solved] The competitive threat that outsiders will enter a market is weaker when
existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.
it takes new entrants longer than 6 months to secure attractive amounts of space on retailers' shelves and build a well-recognized brand name.
entry barriers are high, the pool of entry candidates is small, and buyer demand is growing slowly or is stagnant.
more than three of the existing industry members have lost money during the past 5 years.
buyers have little loyalty to the brands and product offerings of existing industry members.
[solved] Competitive pressures stemming from the threat of entry are stronger when
the industry outlook is risky or uncertain.
industry incumbents have competitive arsenals that are formidable enough to put obstacles in a newcomer's path and potentially defeat its strategic efforts to become a successful and profitable competitor.
there are fewer than 20 potential entry candidates and more than 10 firms are already in the industry.
incumbent firms have cost advantages that are difficult for a newcomer to replicate.
the pool of entry candidates is large and some have adequate resources to overcome entry barriers and combat defensive actions of existing industry.
[solved] What makes the marketplace a competitive battlefield is
the ongoing jockeying and maneuvering among rivals to cut costs, charge the lowest price in the industry, steal customers away from rivals, and drive their weakest rivals out of business.
the constant jockeying of industry members to deploy whatever means in their business arsenals they believe will attract and retain buyers, enhance their competitive strength vis-a-vis rivals, and yield the best profitability.
the ongoing race among rival sellers to add new and improved product features so as to have the highest quality product in the industry.
the race among industry members to see who can employ the most powerful strategic offensive, take sales and market share away from rivals, and drive one or more rivals out of business.
the ongoing efforts of industry members to introduce innovative next-generation products/services at a faster rate than their rivals.
[solved] The "driving forces" in an industry
are usually triggered by changing technology, the entry of important new competitors, or the exit of several important industry members.
are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.
usually are spawned by growing demand for the product, the outbreak of price-cutting, and unexpectedly large reductions in entry barriers.
become more numerous and grow in intensity when the industry begins to mature and the rate of growth in buyer demand slows.
are the major underlying causes of changing industry and competitive conditions and have the biggest influence on how the industry landscape will be altered.
Whether the company's strategy incorporates at least 5 of the industry's key success factors
Whether a company has the resources and competitive capabilities to capture the industry's most appealing market opportunities
How many industry members are currently making money and how many are losing money
Whether and to what degree industry profitability will be favorably or unfavorably affected by the industry's driving forces
How many industry members are pursuing offensive strategies to gain sales and market share and how many are pursuing defensive strategies to protect their present sales levels and market shares
When he industry's product entails low inventory storage costs
When there are so many rivals that any one company's actions have little direct impact on the businesses of rivals
When one or more rivals are dissatisfied with their business performance and are making aggressive moves to attract more customers
When the loyalty of buyers to their preferred brand is high
When buyer switching costs are high and competing sellers seldom make fresh moves to improve their market standing and business performance
enabling company managers to determine which successful strategy elements of rival companies need to be quickly incorporated into the company's own strategy.
helping company managers determine which rivals in other strategic groups need to be monitored very closely.
enabling managers to prepare effective countermoves (perhaps to even beat a rival to the punch) and to take rivals' probable actions into account in crafting their own best course of action.
allowing company managers to accurately predict which rival companies are destined to gain market share and which ones are destined to lose market share over the next 3-5 years.
enabling a company to successfully underprice rival companies and steal away some of their sales and market share.
Competitive pressures created by shifting industry key success factors
The attempts of companies in other industries to win buyers over to their own substitute products
The threat of new entrants into the market
The exercise of supplier bargaining power
The market maneuvering and jockeying for buyer patronage among rival sellers in the industry
To what extent are competitive forces influenced by societal values and lifestyles?
Is the industry considered to be a fiercely competitive high-tech industry or a moderately competitive low-tech industry?
What impact do buyer demographics and purchasing power have on the industry's outlook for good profitability?
What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
How extensively and tightly is the industry regulated?
Charging whatever price the industry leader is charging
Providing quicker or cheaper delivery
Building a bigger/better dealer network
Offering coupons and/or improving warranties
Improving selection of models/styles
[solved] Strategic group mapping is a technique for determining
industry key success factors.
whether the collective impact of the five competitive forces is strong, moderate, or weak and which companies are best shielded from the most powerful competitive forces.
how many rivals are profitable, who the industry leader is, and how big a competitive advantage the industry leader has.
the different market positions that rival firms occupy in an industry and which companies are close competitors and which are distant competitors.
what strategic moves key rivals are likely to make next.
[solved] The concept of strategic groups is relevant to industry and competitive analysis because
strategic group maps help identify which industry members are close rivals and which are distant rivals.
a company's profit potential depends on which strategic group it is in.
competition grows in intensity as the number and diversity of the strategic groups in an industry increases.
firms in the same strategic groups are rarely close competitors--a firm's closest competitors are usually in distant strategic groups.
competitive pressures tend to be weaker within strategic groups than across strategic groups.
The ever-changing competitive maneuvering among industry rivals produces a continually evolving competitive landscape where the market battle ebbs and flows, sometimes takes unpredictable twists and turns, and produces winners and losers.
Each competing company endeavors to deploy whatever means in its business arsenal it believes will attract and retain buyers, enhance its competitive strength vis-a-vis rivals, and yield good profits.
When one industry competitor makes a new strategic move or boosts its competitive efforts in ways that yield good results, its rivals typically respond with offensive or defensive countermoves of their own.
The ongoing jockeying of rivals leads to some companies gaining or losing momentum in the marketplace based on the success or failure of their latest competitive efforts and maneuvering in the marketplace.
A market is a competitive battlefield where the winners are usually companies with a large market share of industry sales and the losers are companies with a small market share.Â
[solved] The best test of whether potential entry is a strong or weak competitive force is whether
the industry's growth and profit prospects are strongly attractive to potential entry candidates.
capital requirements for new entrants are high or low.
a majority of the existing industry members have earned a profit for 3 consecutive years.
buyer loyalty to existing brands is high or low.
the number of entry barriers.
[solved] Which of the following are most unlikely to qualify as driving forces?
Changes in an industry's long-term growth rate, the entry or exit of major firms, and changes in cost and efficiency
Increasing globalization of the industry and marketing innovation
Product innovation and changes in who buys the industry's product and how they use it
Emerging new Internet technology applications, reductions in uncertainty and business risk, regulatory influences, and government policy changes
Mounting competition from substitutes, increasing efforts on the part of industry members to collaborate with suppliers, and the speed with which the number of industry key success factors is either rising or falling
how much bargaining power industry members face from both their suppliers and their most influential customers.
buyers make purchases frequently or infrequently and whether the producers of substitutes have idle production capacity.
the producers of substitutes provide high levels of customer service and their product offerings are strongly differentiated from one another.
there are at least five well-known and highly regarded sellers of substitute products.
substitutes are attractively priced and have comparable or better performance features.
[solved] Driving forces analysis entails
learning what the drivers of industry success are and which industry key success factor is the most important determinant of company profitability.
identifying what the driving forces are, assessing whether the drivers of change are, on the whole, acting to make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impacts of the driving forces.
determining which of the five competitive forces is the biggest driver of industry change and deciding what changes a company needs to make to best protect itself from the adverse impacts of the very strong competitive force that is driving industry change.
identifying all of the potential causes of changing industry conditions.
predicting whether future market conditions are likely to be attractive or unattractive, predicting how the industry's driving forces will alter the factors for future competitive success, and then crafting a strategy that will shield the firm from as many of the different adverse driving forces as possible.
avoids the mistake of flying blind into competitive battle without having some inkling of what actions rivals may take, thereby reducing the risk of being caught napping and suffering a damaging loss of sales and profits.
makes it easy to predict which rivals are likely to gain market share in the upcoming years and which ones are likely to lose market share.
helps clarify which rivals are the firm's closest competitors and how to capitalize on their strategy flaws or mistakes.
helps company managers identify which rival has the best strategy and must be watched most closely.
is important because it enables company managers to identify which rivals are in the best and worst strategic groups.
Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs.
Whether there are greater or fewer than ten suppliers of the item being purchased from suppliers
Whether industry members have sound business reasons to integrate backward into the business of suppliers and self-manufacture items they have been buying from suppliers
Whether suppliers provide an item that accounts for a sizable fraction of the costs of the industry's product
Whether the item being supplied is a commodity readily available from a host of suppliers or whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product
[solved] Which of the following generally do not qualify as a barrier to entry?
Rapid market growth and low degrees of customer loyalty to existing brands
The ability and willingness of industry incumbents to launch strong defensive maneuvers to maintain their positions and make it harder for a newcomer to compete successfully and profitably
High capital requirements and the cost advantages enjoyed by existing industry members
Tariffs and other burdensome international trade restrictions
The difficulties of building a network of distributors-retailers and securing adequate space on retailers' shelves
lacks powerful driving forces and is thus likely to be relatively slow-changing and cause industry members to have low profit margins.
typically results in a "buyers' market" where industry members are forced to reduce prices.
is conducive to industry members earning attractive profits.
gives each industry competitor the best potential for growing rapidly and strongly differentiating its product.
requires that industry members have low costs in order to be competitively successful.
[solved] Which of the following is not a factor that causes buyer bargaining power to be stronger?
Buyers are well-informed and have compared the product offerings of industry members regarding prices, product features, quality, buyer reviews, and other pertinent factors.
The supply side of the marketplace is composed of a few large sellers and the demand side of the marketplace consists of numerous buyers that purchase in fairly small quantities
The costs incurred by buyers in switching to competing brands or to substitute products are relatively low
Some buyers are a threat to integrate backward into the business of sellers and become an important competitor
Buyers have considerable discretion over whether and when they purchase the product
[solved] Rivalry among competing sellers grows in intensity when
buyer demand is growing rapidly.
a few large sellers have the majority of sales and dominant market shares.
the products of rival sellers are essentially identical or else weakly differentiated, resulting in little or no buyer brand loyalty.
the products/services of rival sellers are becoming more strongly differentiated.
rivals' products/services are sold at widely varying prices.
Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales
Strongly differentiated products among rival sellers
Rapid growth in buyer demand
A situation where a few large sellers have the majority of sales and dominant market shares
High buyer switching costs
[solved] The competitive threat that outsiders will enter a market is weaker when
buyers have little loyalty to the brands and product offerings of existing industry members.
it takes new entrants longer than 6 months to secure attractive amounts of space on retailers' shelves and build a well-recognized brand name.
existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.
entry barriers are high, the pool of entry candidates is small, and buyer demand is growing slowly or is stagnant.
more than three of the existing industry members have lost money during the past 5 years.
[solved] The five-forces model of competition (as shown in Figure 3.3) does not include
competitive pressures stemming from the exercise of supplier bargaining power.
competitive pressures triggered by the unexpected appearance of new and powerful driving forces.
competitive pressures from companies in other industries selling substitute products
competitive pressures stemming from the threat of new entrants into the market.
competitive pressures stemming from the exercise of buyer (or customer) bargaining power.
[solved] Competitive pressures stemming from the threat of entry are stronger when
there are fewer than 20 potential entry candidates and more than 10 firms are already in the industry.
incumbent firms have cost advantages that are difficult for a newcomer to replicate.
industry incumbents have competitive arsenals that are formidable enough to put obstacles in a newcomer's path and potentially defeat its strategic efforts to become a successful and profitable competitor.
the pool of entry candidates is large and some have adequate resources to overcome entry barriers and combat defensive actions of existing industry.
the industry outlook is risky or uncertain.
On what basis do buyers of the industry's product or service choose between the competing brands of sellers?
What shortcomings are almost certain to put a company at a significant competitive disadvantage?
Which one of the five competitive forces must any company in the industry absolutely be able to cope with and defend against successfully in order to survive and have a reasonable chance at earning a profit?
Given the nature of competitive rivalry and the competitive forces prevailing in the marketplace, what resources and competitive capabilities must a company have to be competitively successful?
Is the long-term growth rate in buyer demand for the industry's product/service expected to decrease, remain about the same, or increase?
Technological factors
Sociocultural forces
Environmental factors and economic conditions
Political factors and legal/regulatory factors
The industry's profit outlook
Reducing price; granting discounts to win the business of particular buyers
Improving customer service
Running ads to inform buyers of new or special features and/or to strengthen brand awareness and brand image
Introducing more or different features
Winning a bigger market share
is chiefly determined by how favorably the company is impacted by factors in the outer ring of its macro-environment.
depends almost entirely on whether a company has the resources and competitive capabilities to capture the industry's most appealing market opportunities.
involves (a) using a strategic group map to determine which strategic groups are likely to enjoy good profits in the future and which ones are likely to experience weak profitability and (b) determining if a company's strategy incorporates at least 5 of the industry's key success factors.
hinges in part on such considerations as the industry's growth potential, the anticipated strength of competitive forces, whether the company is strongly or weakly positioned on the industry's strategic group map, and whether and to what degree industry profitability will be favorably or unfavorably affected by the industry's driving forces.
is best gauged by how many industry members are currently making money and how many are losing money and whether the average profitability of industry members has risen or fallen over the past five years.
is chiefly determined by how favorably the company is impacted by factors in the outer ring of its macro-environment.
depends almost entirely on whether a company has the resources and competitive capabilities to capture the industry's most appealing market opportunities.
involves (a) using a strategic group map to determine which strategic groups are likely to enjoy good profits in the future and which ones are likely to experience weak profitability and (b) determining if a company's strategy incorporates at least 5 of the industry's key success factors.
hinges in part on such considerations as the industry's growth potential, the anticipated strength of competitive forces, whether the company is strongly or weakly positioned on the industry's strategic group map, and whether and to what degree industry profitability will be favorably or unfavorably affected by the industry's driving forces.
is best gauged by how many industry members are currently making money and how many are losing money and whether the average profitability of industry members has risen or fallen over the past five years.
When buyer switching costs are high and competing sellers seldom make fresh moves to improve their market standing and business performance
When he industry's product entails low inventory storage costs
When the loyalty of buyers to their preferred brand is high
When there are so many rivals that any one company's actions have little direct impact on the businesses of rivals
When one or more rivals are dissatisfied with their business performance and are making aggressive moves to attract more customers
[solved] Competitive jockeying and market maneuvering among industry rivals
is usually an industry's strongest driving force and acts to weaken customer loyalty.
is generally weak when both buyers and suppliers have strong bargaining power, there are few industry key success factors, and industry driving forces are weak.
is ever-changing as competing sellers initiate round after round of offensive and defensive moves, emphasizing first one mix of competitive weapons and then another in efforts to improve their market positions and profitability.
determines whether companies positioned in the upper right quadrant of the industry's strategic group map will have a strong or weak competitive advantage over industry members positioned in other parts of the map.
is usually one of the two or three weakest competitive forces when the outlook for the industry as a whole is not conducive to good profitability.
Charging whatever price the industry leader is charging
Offering coupons and/or improving warranties
Providing quicker or cheaper delivery
Building a bigger/better dealer network
Improving selection of models/styles
[solved] The key success factors in an industry
concern those industry-related factors that play a major role in whether a company is able to gain a sustainable competitive advantage and/or will make it easier to overcome competitive pressures and industry driving forces.
are those competitive factors that most affect industry members' abilities to prosper in the marketplace--the particular strategy elements, product attributes, resource strengths, competitive capabilities, and market achievements that spell the difference between being a strong competitor and a weak competitor (and sometimes the difference between profit and loss).
relate to the kinds of business models and strategies that a company must employ in order to be profitable, win a competitive edge, and give the company a chance at being the global market leader.
concern the specific resource strengths and competitive capabilities that a company must always incorporate in its strategy in order to be profitable.
are determined by the industry's driving forces, by the number of different strategic groups in the industry, and by the number of different competitive strategies that industry members are employing.
[solved] The bargaining leverage of suppliers is stronger when
industry members make frequent purchases in small quantities.
industry members are a threat to integrate backward into the business of suppliers and to self-manufacture their own requirements.
suppliers provide an item that accounts for a small fraction of the costs of the industry's product and when a needed input is in short supply.
the products of suppliers are strongly differentiated, which reduces the costs industry members incur in switching to alternative suppliers.
good substitutes exist for the items being furnished by the suppliers.
[solved] The "driving forces" in an industry
are usually triggered by changing technology, the entry of important new competitors, or the exit of several important industry members.
are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.
usually are spawned by growing demand for the product, the outbreak of price-cutting, and unexpectedly large reductions in entry barriers.
become more numerous and grow in intensity when the industry begins to mature and the rate of growth in buyer demand slows.
are the major underlying causes of changing industry and competitive conditions and have the biggest influence on how the industry landscape will be altered.
allowing company managers to accurately predict which rival companies are destined to gain market share and which ones are destined to lose market share over the next 3-5 years.
enabling managers to prepare effective countermoves (perhaps to even beat a rival to the punch) and to take rivals' probable actions into account in crafting their own best course of action.
helping company managers determine which rivals in other strategic groups need to be monitored very closely.
enabling company managers to determine which successful strategy elements of rival companies need to be quickly incorporated into the company's own strategy.
enabling a company to successfully underprice rival companies and steal away some of their sales and market share.
[solved] The concept of strategic groups is relevant to industry and competitive analysis because
strategic group maps help identify which industry members are close rivals and which are distant rivals.
firms in the same strategic groups are rarely close competitors--a firm's closest competitors are usually in distant strategic groups.
a company's profit potential depends on which strategic group it is in.
competitive pressures tend to be weaker within strategic groups than across strategic groups.
competition grows in intensity as the number and diversity of the strategic groups in an industry increases.
[solved] The competitive pressures from substitute products tend to be weaker when
there are fewer than 5 sellers of substitute products with idle production capacity.
substitutes have been on the market and available for purchase for fewer than three years.
buyers have high costs in switching to substitutes.
the prices of substitutes are less than 10% higher than the prices being charged by sellers in the industry.
the substitute products that are currently available are weakly differentiated from one another.
[solved] Which of the following generally do not qualify as a barrier to entry?
Tariffs and other burdensome international trade restrictions
The difficulties of building a network of distributors-retailers and securing adequate space on retailers' shelves
The ability and willingness of industry incumbents to launch strong defensive maneuvers to maintain their positions and make it harder for a newcomer to compete successfully and profitably
High capital requirements and the cost advantages enjoyed by existing industry members
Rapid market growth and low degrees of customer loyalty to existing brands
[solved] The five-forces model of competition (as shown in Figure 3.3) does not include
competitive pressures from companies in other industries selling substitute products
competitive pressures stemming from the exercise of supplier bargaining power.
competitive pressures stemming from the exercise of buyer (or customer) bargaining power.
competitive pressures triggered by the unexpected appearance of new and powerful driving forces.
competitive pressures stemming from the threat of new entrants into the market.
[solved] A company's macro-environment concerns
the buying habits of consumers, the overall business climate in which the company operates, and the balance between global supply and global demand for the industry's product/service.
political factors, economic conditions, sociocultural forces, technological factors, environmental forces, legal/regulatory factors and, closer to home, the immediate industry and competitive arena in which the company operates--as shown in Figure 3.2.
the rates of change in consumer purchasing power and the stability of consumer tastes, preferences, and buying habits.
the fresh competitive efforts and market maneuvers that rival companies are likely to initiate in the near future.
such factors as industry growth, competitive pressures, industry driving forces, the company's current profitability, and the pressures that company shareholders are putting on top management for better company performance.
[solved] The best test of whether potential entry is a strong or weak competitive force is whether
capital requirements for new entrants are high or low.
a majority of the existing industry members have earned a profit for 3 consecutive years.
the industry's growth and profit prospects are strongly attractive to potential entry candidates.
the number of entry barriers.
buyer loyalty to existing brands is high or low.
[solved] Which of the following is not a factor that causes buyer bargaining power to be stronger?
The costs incurred by buyers in switching to competing brands or to substitute products are relatively low
The supply side of the marketplace is composed of a few large sellers and the demand side of the marketplace consists of numerous buyers that purchase in fairly small quantities
Buyers have considerable discretion over whether and when they purchase the product
Buyers are well-informed and have compared the product offerings of industry members regarding prices, product features, quality, buyer reviews, and other pertinent factors.
Some buyers are a threat to integrate backward into the business of sellers and become an important competitor
[solved] Competitive pressures stemming from the threat of entry are stronger when
there are fewer than 10 entry candidates with the potential to hurdle the industry's barriers to entry.
buyers have strong brand preferences and high degrees of loyalty to their preferred brand and when it takes new entrants less than 5 years to secure attractive amounts of space on retailers' shelves and build a well-recognized brand name.
the industry's outlook is uncertain or highly risky, entry barriers are low, and very few existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.
entry barriers are low, the pool of entry candidates is large, and existing industry members are earning good profits.
it is difficult or costly for a customer to switch to a new brand, the total dollar investment needed to enter the market successfully exceeds $5 million, and existing governmental regulations impose significant cost and compliance burdens on industry members.
results in an unattractive strategic group map where all industry members are crowded into the top right corner of the map and forced into competing on the basis of rapid product innovation.
tends to mean that the industry will have fewer than 3 key success factors.
greatly strengthens the number of driving forces and the power of their impact on industry members.
typically results in a "sellers' market" where industry members can raise prices and earn large profit margins.
makes it hard for industry members to earn attractive profits.
[solved] Factors that weaken the rivalry among competing sellers include
rapid growth in buyer demand, high buyer switching costs, small inventories, and/or little idle production capacity.
low buyer switching costs, slow growth in buyer demand, and rival sellers that are relatively equal in size and capability.
low barriers to entry, weakly differentiated products among rival sellers, and low inventory storage costs.
slow growth in buyer demand, low degrees of customer loyalty, and sellers' products are costly to hold in inventory, seasonal or perishable.
low buyer switching costs, weakly differentiated products among rival sellers, and conditions where one or more rivals are dissatisfied with their business performance and are making aggressive moves to attract more customers.
The degrees of risk and uncertainty in the industry’s future
Whether the industry and the company are being favorably or unfavorably impacted by macro-environmental factors
Whether statistical analysis indicates that long-term industry profitability is trending up or down
Whether and to what degree industry profitability will be favorably or unfavorably affected by the industry's driving forces
The industry’s growth potential
[solved] Which of the following are most unlikely to qualify as driving forces?
Emerging new Internet technology applications, reductions in uncertainty and business risk, regulatory influences, and government policy changes
Changes in an industry's long-term growth rate, the entry or exit of major firms, and changes in cost and efficiency
Mounting competition from substitutes, increasing efforts on the part of industry members to collaborate with suppliers, and the speed with which the number of industry key success factors is either rising or falling
Increasing globalization of the industry and marketing innovation
Product innovation and changes in who buys the industry's product and how they use it
[solved] Potential entrants are more likely to be deterred from actually entering an industry when
the products of incumbent firms are strongly differentiated.
the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage.
the industry already contains a dozen or more rivals and the capital requirements to enter the market successfully are greater than $1 million.
the products of industry members are weakly differentiated and the pool of entry candidates is large.
industry incumbents are willing and able to launch strong defensive maneuvers to maintain their positions and make it harder for a newcomer to compete successfully and profitably.
Well-stated objectives should be quantitative or measurable.
Well-stated objectives should contain a deadline for achievement.
Well-stated objectives should be challenging.
Well-stated objectives should be specific.
Well-stated objectives should contain sufficient wiggle room to allow for the occurrence of unexpected circumstances that block achievement of the objective.
[solved] In most corporations, strategy-making is
first and foremost the function and responsibility of a company's chief strategy officer (who usually reports directly to the chief executive officer and also coordinates closely with members of the company's board of directors).
more of a collaborative group effort that involves executives and managers at many organizational levels, as opposed to being the function and sole responsibility of a few high-ranking executives.
primarily the joint responsibility of a company's senior executives and board of directors.
first and foremost the function of a company's chief executive officer - who formulates strategic initiatives and submits them to the board of directors for approval.
first and foremost the function and responsibility of a company's board of directors.
critically appraising the company's direction, strategy, and business approaches and evaluating the caliber of senior executives' strategy-making and strategy-executing skills.
developing the company's business model and advising the CEO as to how best to implement and execute the business model.
determining whether the CEO and other senior executives have established an appropriate set of financial and strategic objectives.
playing the lead role in developing the company's strategy and supervising the efforts of the CEO and other top executives in implementing and executing the strategy.
making sure the company has a sound and up-to-date 5-year strategic plan, determining the company's dividend policy, and hiring and firing (if need be) all senior management executives.
[solved] Developing a strategic vision for a company entails
describing the company's business model and explaining the kind of value that it is trying to deliver to customers.
describing the company's customer value proposition and the revenue-cost-profit formula management will use to deliver value to shareholders.
prescribing a route for the company to take in developing and strengthening its business--a strategic vision lays out the company's strategic course in preparing for the future.
coming up with a 5-year strategic plan for outcompeting rivals and achieving a competitive advantage.
describing the company's strategic intent in some detail and how management plans to respond to shifting economic and market conditions.
[solved] A company's mission statement typically addresses which of the following questions?
"Where are we headed and what should our strategy be?"
"Who are we, what do we do, and why are we here?"
"What types of customers are we trying to attract and what do we intend to do for them in order to achieve a high level of customer satisfaction?"
"How will we get to where we are going?"
"What products will we market in order to deliver attractive value to our customers?"
[solved] Business strategy, as distinct from corporate strategy, concerns
choosing what customer value proposition to employ.
selecting which new businesses to enter, which existing businesses to get out of, and which existing businesses to remain in.
the actions, approaches, and practices to be employed in managing particular functions or business processes or key activities within a given line of business.
the actions and approaches being employed to produce successful performance in one specific line of business.
choosing the most appropriate strategic intent for a specific line of business.
Communicating the company's mission statement to employees, shareholders, and suppliers and developing a balanced scorecard to track organizational performance
Setting objectives for measuring the company's performance and tracking its progress in moving in the intended long-term direction and pursuing the strategic vision and mission
Deciding on a customer value proposition, identifying the three most appealing strategy alternatives, and determining what kinds of resources to employ in the pursuit of sustainable competitive advantage
Developing a proven business model and identifying profitable strategy alternatives.
Deciding on the company's strategic intent and what strategic plan to pursue in accomplishing the chosen strategic intent
Challenging, totally ethical, and highly focused on achieving competitive advantage
Innovative, inspiring, and highly unique
Memorable, forward-looking and directional, and focused
Balanced, rational, unique, and inspirational
Imaginative, customer-focused, and no longer than 10 words
[solved] Strategic intent refers to a situation where a company
is strongly committed to achieving the targeted outcomes in its balanced scorecard.
relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.
decides to shift from one competitive approach to a different competitive approach.
has an unshakable commitment to a particular strategy.
adopts a new or different strategic vision.
Does the company have attractively strong resources and competitive capabilities to grow revenues and profits in the years ahead?
Does the company have the resource strengths and competitive capabilities to become the dominant market leader in every country the company competes in?
What, if any, new customer groups and/or geographic markets should the company get in position to serve?
Are there good reasons why the company should begin to deemphasize or eventually abandon any of the markets or customer groups it is currently serving?
What resource strengths and competitive capabilities offer good potential for creating competitive advantage?
[solved] Effectively communicating the strategic vision to company personnel is important because
the more a vision evokes positive support and excitement among company personnel, the greater its impact in terms of arousing a committed organizational effort and getting company personnel to move in a common direction.
a good understanding of the vision boosts employee confidence in the profitability of the company's business model.
company personnel cannot be highly productive and happy with their jobs unless they have a clear understanding of management's strategic plan for being competitively successful and profitable over the long term.
a good understanding of the vision boosts employee support for company initiatives to win a sustainable competitive advantage over rivals.
when company personnel understand what the company needs to do to be profitable and successful, the company's chances of achieving its financial and strategic objectives are typically greater than 90%.
[solved] A company's strategic plan consists of
its strategic intent and the strategy it will employ to achieve this intent and win a sustainable competitive advantage.
a company's strategic vision, strategic objectives, strategic intent, and strategy.
a strategic vision, a strategy to earn appealingly high profits, and a strategic intent to achieve a particular type of competitive advantage over rivals.
the actions and approaches to be used in achieving a competitive edge over rival firms.
a vision of where it is headed, a set of performance targets, and a strategy to achieve them.
help managers track an organization's progress in achieving high levels of customer satisfaction.
are more difficult to achieve and harder to measure than financial objectives.
are actions a company must take to achieve a sustainable competitive advantage.
are generally less important than financial objectives.
relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
help managers track an organization's progress in achieving high levels of customer satisfaction.
are more difficult to achieve and harder to measure than financial objectives.
are actions a company must take to achieve a sustainable competitive advantage.
are generally less important than financial objectives.
relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
Good strategy execution requires diligent pursuit of operating excellence.
Managing the implementation and execution of strategy is easily the most demanding and time-consuming part of the strategy management process.
Management's handling of the strategy implementation and execution process can be considered successful if the company's net profits are higher after the process is completed than they were before the process began.
Managing the implementation and execution of strategy is an operations-oriented make-things-happen activity aimed at performing core business activities in a strategy-supportive manner.
Initiatives to put the strategy in place and execute it proficiently must be launched and managed on many organizational fronts.
[solved] The task of stitching together a strategy
is mainly an exercise in staying flexible, so as to enable quick response to changing market conditions and competitive circumstances, rapid pursuit of emerging growth opportunities, and early adoption of newly emerging technologies.
entails addressing a series of hows: how to attract and please customers, how to compete against rivals, how to position the company in the marketplace vis-a-vis rivals, how best to pursue attractive opportunities to grow the business, how best to respond to changing economic and market conditions, how to manage each functional piece of the business, and how to achieve the company's strategic and financial objectives.
is mainly an exercise in piecing together and unifying several "dare-to-be different" ways to attract customers and build a high degree of customer loyalty.
entails trying to copy the strategies of the most successful companies in the industry as closely as possible.
chiefly entails deciding which of several freshly-emerging market opportunities to pursue but can also include planned actions to capitalize on attractive growth opportunities in other businesses, internal actions aimed at achieving financial and strategic objectives more quickly than planned, and how to manage each functional piece of the business.
[solved] The task of stitching together a strategy
is mainly an exercise in staying flexible, so as to enable quick response to changing market conditions and competitive circumstances, rapid pursuit of emerging growth opportunities, and early adoption of newly emerging technologies.
entails addressing a series of hows: how to attract and please customers, how to compete against rivals, how to position the company in the marketplace vis-a-vis rivals, how best to pursue attractive opportunities to grow the business, how best to respond to changing economic and market conditions, how to manage each functional piece of the business, and how to achieve the company's strategic and financial objectives.
is mainly an exercise in piecing together and unifying several "dare-to-be different" ways to attract customers and build a high degree of customer loyalty.
entails trying to copy the strategies of the most successful companies in the industry as closely as possible.
chiefly entails deciding which of several freshly-emerging market opportunities to pursue but can also include planned actions to capitalize on attractive growth opportunities in other businesses, internal actions aimed at achieving financial and strategic objectives more quickly than planned, and how to manage each functional piece of the business.
[solved] A "balanced scorecard" that includes both strategic and financial performance targets
requires managers to set an equal number of financial and strategic objectives and devote roughly equivalent energy and resources to achieving both types of performance targets.
is a tool for helping managers measure the degree to which the company is both outcompeting rivals in the marketplace and pleasing shareholders.
assists managers in putting roughly equal emphasis on achieving short-term and long-term performance targets.
helps managers avoid the mistake of focusing only on financial performance measures and overlooking the fact that pursuing and achieving strategic outcomes that boost its competitiveness and strength in the marketplace vis-a-vis rivals is better able to improve its future financial performance.
forces managers to put equal emphasis on pursuing the achievement of both financial and strategic outcomes.
[solved] A set of "stretch" financial and strategic objectives
helps convert a company's strategic intent into meaningful performance targets.
helps a company avoid ho-hum results.
helps top executives determine how close the company is to true maximization of both revenues and profits.
helps lower-level managers and employees gain a clearer understanding of the company's strategic vision, strategic intent, and strategy.
is one of the best managerial tools for motivating company personnel to execute the strategy with greater proficiency and at lower overall cost.
[solved] Functional area strategies
are normally crafted by the head of the business, in close consultation with the managers of key operating units (plants, distribution centers, geographic divisions).
concern the relatively narrow strategic initiatives and approaches for managing specific operating units (plants, distribution centers, geographic units) and operating activities with strategic significance for the company as a whole.
are normally crafted by operating-level managers who head key functional units (plants, distribution centers, geographic units).
concern the actions and approaches managers plan to take to unify the firm's several different operating strategies into a cohesive and well-functioning whole.
concern the actions, approaches, and practices to be employed in managing particular functions or business processes or key activities within a business.
[solved] Which of the following is the best example of a well-stated financial objective?
Within 24 months, boost the company's profit margin per unit sold to an amount bigger than any other competitor in the industry
Increase total after-tax profits from the current level of $2 million annually to $4 million annually no later than the end of 2022.
Boost the company's dividend payments to shareholders every year
Gradually boost the annual percentage increase in total revenues
Maximize the company's annual return on shareholders' equity invest
business strategy, divisional strategies, and departmental strategies.
business strategy and departmental strategy.
managerial strategy, business strategy, and divisional strategies.
corporate strategy, divisional strategies, and departmental strategies.
business strategy, functional area strategies, and operating strategies.
[solved] A company's values relate to such things as
fair treatment, honor and integrity, ethical behavior, innovativeness, teamwork, accountability, a passion for top-notch quality or superior customer service, social responsibility, and community citizenship.
the preferred business approaches and operating practices that help company personnel balance efforts to achieve short-term performance targets with their efforts to achieve long-range performance targets.
the beliefs, principles, and ethical standards that are incorporated into the company's strategy.
whether it will emphasize high ethical standards or engage in shady business practices, whether it will pursue high market share or high profitability, and whether it will put more emphasis on pleasing customers or on pleasing shareholders.
how it will balance its pursuit of financial objectives against the pursuit of its strategic objectives--creating a "balanced scorecard" approach to measuring performance is a strong plus.
[solved] The strategy-making, strategy-executing process
includes the tasks of developing a strategic vision, mission and core values; setting objectives; crafting a strategy to achieve the performance objectives and move the company along the chosen path; implementing and executing the strategy; and monitoring developments, evaluating performance, and initiating corrective adjustments.
is handled by key members of a company's board of directors so as not to infringe on the time of busy executives.
is principally concerned with sizing up an organization's internal and external situation, so as to be prepared for the challenge of developing a sound business model.
includes establishing a company's mission, developing a business model aimed at making the company an industry leader, and crafting a strategy to implement and execute the business model.
entails developing a viable business model, deciding on the company's strategic intent, creating a balanced scorecard to monitor performance, and crafting a 5-year strategic plan.
are more difficult to achieve and harder to measure than financial objectives.
are generally less important than financial objectives.
relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
are actions a company must take to achieve a sustainable competitive advantage.
help managers track an organization's progress in achieving high levels of customer satisfaction.
[solved] Strategic intent refers to a situation where a company
has an unshakable commitment to a particular strategy.
adopts a new or different strategic vision.
decides to shift from one competitive approach to a different competitive approach.
is strongly committed to achieving the targeted outcomes in its balanced scorecard.
relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.
Managing the implementation and execution of strategy is easily the most demanding and time-consuming part of the strategy management process.
Managing the implementation and execution of strategy is an operations-oriented make-things-happen activity aimed at performing core business activities in a strategy-supportive manner.
Initiatives to put the strategy in place and execute it proficiently must be launched and managed on many organizational fronts.
Management's handling of the strategy implementation and execution process can be considered successful if the company's net profits are higher after the process is completed than they were before the process began.
Good strategy execution requires diligent pursuit of operating excellence.
[solved] Corporate strategy for a diversified or multi-business enterprise
chiefly concerns the development of a strategic vision, a set of objectives, a strategy for each business the company is in, and also the functional area and operating strategies that each of the company's different businesses need to employ.
concerns developing the strategic initiatives and approaches that are to be used in managing key operating units (plants, distribution centers, geographic units) and specific operating activities with strategic significance for the company as a whole.
is orchestrated by the company's CEO and other top executives and consists of a collection of business strategies--one for each business the company has diversified into.
concerns strategy initiatives to establish business positions in different industries, whether to hold or divest existing businesses, strategic actions to boost the combined performance of the set of businesses the company has diversified into, and how to capture cross-business synergies and turn them into a competitive advantage.
is orchestrated by the general managers of each of the company's different lines of business, often with advice and input from the heads of functional area activities within each business and other key people.
A large enterprise's overall strategy is really a collection of strategic initiatives and actions devised by managers (and sometimes key employees) up and down the whole organizational hierarchy.
Ultimate responsibility for leading the strategy-making task rests with the chief executive officer.
It is flawed thinking to view crafting and executing strategy as something only high-level executives do.
Most strategy-making is done by top-ranking executives and the members of a company's board of directors, with board members generally taking the lead role.
The larger and more diverse the operations of an enterprise, the more points of strategic initiative it has and the more levels of management that have a significant strategy-making role.
coming up with compelling strategy proposals of their own to debate against those put forward by top management.
overseeing the company's financial accounting and financial reporting practices and instituting a compensation plan for top executives.
replacing the CEO when the company fails to earn a profit or pay a satisfactory dividend.
reviewing and approving the company's operating strategies and functional-area strategies and approving the appointment of all people to executive-level positions.
taking the lead in developing a strategic vision for the company.
[solved] A "balanced scorecard" that includes both strategic and financial performance targets
assists managers in putting roughly equal emphasis on achieving short-term and long-term performance targets.
helps managers avoid the mistake of focusing only on financial performance measures and overlooking the fact that pursuing and achieving strategic outcomes that boost its competitiveness and strength in the marketplace vis-a-vis rivals is better able to improve its future financial performance.
is a tool for helping managers measure the degree to which the company is both outcompeting rivals in the marketplace and pleasing shareholders.
forces managers to put equal emphasis on pursuing the achievement of both financial and strategic outcomes.
requires managers to set an equal number of financial and strategic objectives and devote roughly equivalent energy and resources to achieving both types of performance targets.
[solved] The primary role of functional area strategies is to
create compatible degrees of strategic intent among a company's different business functions.
set forth the performance targets to be pursued in such functional departments as R&D, production, sales and marketing, human resources, customer service, and finance.
unify the company's various operating-level strategies.
specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully.
add relevant details to the hows of a company's overall business strategy by specifying what actions, approaches, and practices will be employed in managing particular functions within a business.
How well is the company faring vis-a-vis key competitors; is the company gaining ground or losing ground, and why?
Does sticking with the company's present strategic course present attractive opportunities for growth and profitability?
Which emerging market opportunities should the company pursue and which ones should not be pursued?
Is the company competing in too many markets or product categories where profits are skimpy or nonexistent?
Does the company have sufficient resource strengths and competitive capabilities to capture the leading market share in every geographic market the company competes in--and, if not, should it abandon those markets where it is not the leader?
[solved] A company's strategic plan
lays out its future direction, business purpose, performance targets, and strategy--in other words, a strategic vision + mission + a set of objectives + a strategy = a strategic plan.
consists of its corporate strategy, a set of business strategies, its functional strategies for each business, and its operating strategies for each business.
consists of a strategic vision, a set of strategic objectives, the company's declaration of strategic intent, its overall strategy, and whatever functional and operating strategies are needed.
consists of its business strategy, its functional strategies, and its operating strategies.
includes a strategic vision, the type of competitive advantage the company hopes to earn, and the strategy that management intends to employ in pursuing the intended competitive advantage and strategic vision.
corporate strategy, business strategies, and operating strategies
functional area strategies, departmental strategies, and operating strategies.
business strategy, functional area strategies, and operating strategies.
executive-level strategies, middle management strategies, and front-line manager strategies.
corporate strategy, divisional strategies, and departmental strategies.
[solved] Which of the following is the best example of a well-stated financial objective?
Maximize earnings per share
Achieve bigger profit margins than any other industry competitor
Boost the company's dividend payments to shareholders every year
Increase total profits by 10% annually
Gradually boost annual revenue growth to 15% over the next several years
making internal enforcement of the company's values the centerpiece of the company's strategy.
making it clear that company personnel who do not observe company values and behavioral norms will be dismissed.
(1) being careful to craft a vision, mission, strategy, and set of operating practices that match established values and (2) repeatedly emphasizing how the values-based behavioral norms contribute to the company's business success.
making achievement of the values a prominent part of the company's strategic objectives.
using a values-based balanced scorecard to measure the company's progress in achieving the vision/mission.
[solved] A company's mission statement typically addresses which of the following questions?
"What business model should we employ to successfully achieve our shareholder value proposition?"
"How fast do we plan to introduce new products?"
"Who are we, what do we do, and why are we here?"
"What are our high-priority objectives and what should our strategy be to achieve them?"
"What products/services are we providing to customers in order to be successful in achieving our customer proposition?"
Customer-driven, hard to copy, short (no longer than 2 sentences), and realistic
Unique, inspiring, achievable within 5 years, and completely ethical
Flexible, ethical, not overly narrow, and appealing to investors
Feasible, memorable, makes good business sense, and has some wiggle room
Imaginative, market-driven, totally ethical, and globally-oriented
[solved] Masterful strategies come from
avoiding unconventional and "dare-to-be different" ways to attract customers and, instead, sticking to making solid improvements in proven ways to deliver good customer service and build market share.
being quick to recognize and adopt a sound strategic vision and business model.
doing things differently from competitors where it counts--out-innovating them, being more efficient, being more imaginative, adapting faster--rather than running with the herd.
crafting a strategy that mimics the best parts of the strategies of the industry's most profitable companies.
doing a very thorough job of assessing the strategies of competitors and a talent for spotting ways to improve on the strategy of whatever rival company is deemed to have the best strategy in the industry.
holding meetings of all company personnel at least twice a year to explain the latest strategic vision and to allow lower-level managers and employees to ask questions about the company's long-term direction, strategic intent, and strategy.
stating the strategic vision in a single sentence.
capturing the essence of the vision in an easily remembered phrase or catchy slogan and then using the phrase/slogan repeatedly as a reminder of "where we are going and why."
combining the strategic vision and the mission statement into a single paragraph-long statement that describes where we are going, how we intend to get there, and when we expect to arrive.
combining the strategic vision and the company's values statement into a single document, posting the document on the company's website, and sending all company personnel monthly e-mails containing a link to the latest monthly update of the strategic vision.
[SOLVED]A company's strategic plan consists of
a vision of where it is headed, a set of performance targets, and a strategy to achieve them.
a strategic vision, a strategy to earn appealingly high profits, and a strategic intent to achieve a particular type of competitive advantage over rivals.
a company's strategic vision, strategic objectives, strategic intent, and strategy.
its strategic intent and the strategy it will employ to achieve this intent and win a sustainable competitive advantage.
the actions and approaches to be used in achieving a competitive edge over rival firms.
holding meetings of all company personnel at least twice a year to explain the latest strategic vision and to allow lower-level managers and employees to ask questions about the company's long-term direction, strategic intent, and strategy.
combining the strategic vision and the company's values statement into a single document, posting the document on the company's website, and sending all company personnel monthly e-mails containing a link to the latest monthly update of the strategic vision.
capturing the essence of the vision in an easily remembered phrase or catchy slogan and then using the phrase/slogan repeatedly as a reminder of "where we are going and why."
stating the strategic vision in a single sentence.
combining the strategic vision and the mission statement into a single paragraph-long statement that describes where we are going, how we intend to get there, and when we expect to arrive.
[solved] A company's strategy-making hierarchy
consists of a strategic vision, a set of strategic objectives, a declared strategic intent, and the actions and approaches a company intends to take in achieving a sustainable competitive advantage.
consists of a group of functional and operating strategies.
consists of two managerial levels: (1) executives who make major strategic decisions and (2) managers of specific units who make minor strategic decisions (as shown in Figure 2.2).
varies from company to company, according to whether a company's strategic intent is proactive or reactive, risky or conservative, offensive or defensive.
typically involves three organizational levels in single-business companies and four organizational levels in multi-business or diversified companies (as shown in Figure 2.2).
Exerting the internal leadership needed to drive implementation forward and keep improving on how the strategy is being executed
Allocating ample resources to those activities critical to strategic success
Installing information and operating systems that enable company personnel to better perform daily operating activities and otherwise execute their part of the strategy
Pushing employees to work hard, do their very best, and meet or beat the established performance targets---employees that fall short on these criteria must be quickly weeded out
Ensuring that policies and procedures facilitate rather than impede effective execution
[solved] Setting and achieving strategic objectives is critically important because
the aggressiveness with which a company pursues strategic objectives is the most important determinant of long-term customer satisfaction.
achieving targeted strategic outcomes is more important in determining a company's credit rating and financial well-being than whether the company is meeting shareholder expectations for good short-term financial performance.
this is what prevents management's drive for achieving good financial performance from overwhelming the pursuit of higher levels of customer satisfaction.
a company's strategic performance is the biggest single factor that determines how fast a company will be able to increase dividends to shareholders and boost the company's stock price.
a stronger market standing with buyers and improved competitive strength to combat rivals' vitality--especially when these result in a bigger competitive advantage--is what enables and empowers a company to improve its financial performance in upcoming periods.
[solved] Developing a strategic vision for a company entails
describing the company's business model and explaining the kind of value that it is trying to deliver to customers.
describing the company's strategic intent in some detail and how management plans to respond to shifting economic and market conditions.
prescribing a route for the company to take in developing and strengthening its business--a strategic vision lays out the company's strategic course in preparing for the future.
coming up with a 5-year strategic plan for outcompeting rivals and achieving a competitive advantage.
describing the company's customer value proposition and the revenue-cost-profit formula management will use to deliver value to shareholders.
[solved] The primary role of functional area strategies is to
specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully.
create compatible degrees of strategic intent among a company's different business functions.
set forth the performance targets to be pursued in such functional departments as R&D, production, sales and marketing, human resources, customer service, and finance.
unify the company's various operating-level strategies.
add relevant details to the hows of a company's overall business strategy by specifying what actions, approaches, and practices will be employed in managing particular functions within a business.
[solved] A set of "stretch" financial and strategic objectives
helps top executives determine how close the company is to true maximization of both revenues and profits.
helps lower-level managers and employees gain a clearer understanding of the company's strategic vision, strategic intent, and strategy.
helps a company avoid ho-hum results.
is one of the best managerial tools for motivating company personnel to execute the strategy with greater proficiency and at lower overall cost.
helps convert a company's strategic intent into meaningful performance targets
Overseeing the company's financial accounting and financial reporting practices
Evaluating the caliber of senior executives' strategy-making and strategy-executing skills
Supervising enforcement of high ethical standards and stepping in to take the lead role in promptly revising and improving the company's strategy whenever the company's financial performance is unsatisfactory
Critically appraising the company's direction, strategy, and business approaches
Instituting a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests, and most especially those of shareholders
[solved] Strategic intent refers to a situation where a company
adopts a new or different strategic vision.
decides to shift from one competitive approach to a different competitive approach.
is strongly committed to achieving the targeted outcomes in its balanced scorecard.
relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.
has an unshakable commitment to a particular strategy.
[solved] The task of stitching together a strategy
entails addressing a series of hows: how to attract and please customers, how to compete against rivals, how to position the company in the marketplace vis-a-vis rivals, how best to pursue attractive opportunities to grow the business, how best to respond to changing economic and market conditions, how to manage each functional piece of the business, and how to achieve the company's strategic and financial objectives.
chiefly entails deciding which of several freshly-emerging market opportunities to pursue but can also include planned actions to capitalize on attractive growth opportunities in other businesses, internal actions aimed at achieving financial and strategic objectives more quickly than planned, and how to manage each functional piece of the business.
entails trying to copy the strategies of the most successful companies in the industry as closely as possible.
is mainly an exercise in piecing together and unifying several "dare-to-be different" ways to attract customers and build a high degree of customer loyalty.
is mainly an exercise in staying flexible, so as to enable quick response to changing market conditions and competitive circumstances, rapid pursuit of emerging growth opportunities, and early adoption of newly emerging technologies.
[solved] A company's values relate to such things as
how it will balance its pursuit of financial objectives against the pursuit of its strategic objectives--creating a "balanced scorecard" approach to measuring performance is a strong plus.
the beliefs, principles, and ethical standards that are incorporated into the company's strategy.
the preferred business approaches and operating practices that help company personnel balance efforts to achieve short-term performance targets with their efforts to achieve long-range performance targets.
whether it will emphasize high ethical standards or engage in shady business practices, whether it will pursue high market share or high profitability, and whether it will put more emphasis on pleasing customers or on pleasing shareholders.
fair treatment, honor and integrity, ethical behavior, innovativeness, teamwork, accountability, a passion for top-notch quality or superior customer service, social responsibility, and community citizenship.
Implementing and executing the chosen strategy efficiently and effectively
Crafting a strategy to achieve the performance objectives and move the company along the path management has charted
Setting objectives and using them as yardsticks for measuring the company's performance and tracking its progress in moving in the intended long-term direction and pursuing the strategic vision and mission
Developing a profitable business model
Developing a strategic vision that charts the company's long-term direction, a mission statement that describes the purpose of the company's business, and a set of core values to guide the pursuit of the strategic vision and mission
[SOLVED] A company that pursues and achieves strategic objectives
is likely to be a below-average financial performer because diverting resources to the pursuit of strategic objectives takes away from the achievement of financial performance targets.
is frequently better able to improve its future financial performance (because of the stronger market standing and greater ability to compete successfully against rivals that result from setting and achieving aggressive strategic objectives).
is likely to earn lower profits than a company that focuses it full attention on achieving higher profitability.
is unlikely to satisfy shareholder expectations because senior executives are not totally focused on the only valid purpose of a business: making the largest possible profit for shareholders.
believes that pleasing customers is the single biggest driver of good long-term financial performance.
Innovative, inspiring, and highly unique
Memorable, forward-looking and directional, and focused
Balanced, rational, unique, and inspirational
Challenging, totally ethical, and highly focused on achieving competitive advantage
Imaginative, customer-focused, and no longer than 10 words
[solved] Business strategy, as distinct from corporate strategy, concerns
selecting which new businesses to enter, which existing businesses to get out of, and which existing businesses to remain in.
the actions, approaches, and practices to be employed in managing particular functions or business processes or key activities within a given line of business.
choosing what customer value proposition to employ.
the actions and approaches being employed to produce successful performance in one specific line of business.
choosing the most appropriate strategic intent for a specific line of business.
What actions should the company take to achieve a sustainable competitive advantage in every market the company competes in?
Are the winds of change—most especially those affecting the market and competitive arenas in which the company competes—acting to enhance or weaken the company’s prospects?
Does sticking with the company's present strategic course present attractive opportunities for growth and profitability?
Does the company have attractively strong resources and competitive capabilities to grow revenues and profits in the years ahead?
Is the company at risk because of specific resource weaknesses or deficient competitive capabilities or threats of technological obsolescence?
[SOLVED] Which one of the following approaches to objective-setting should definitely be avoided?
Setting objectives for each of the organization's separate businesses, product lines, functional departments, and individual work units
Setting both strategic and financial objectives
Setting both short-term and long-term objectives
Setting stretch objectives
Setting unspecific targets like maximize profits, reduce costs, become more efficient, or increase revenues
[SOLVED] A company's mission statement typically addresses which of the following questions? quizlet
"What are our high-priority objectives and what should our strategy be to achieve them?"
"What products/services are we providing to customers in order to be successful in achieving our customer proposition?"
"How fast do we plan to introduce new products?"
"Who are we, what do we do, and why are we here?"
"What business model should we employ to successfully achieve our shareholder value proposition?"
[SOLVED] In most corporations, strategy-making is quizlet
first and foremost the function of a company's chief executive officer - who formulates strategic initiatives and submits them to the board of directors for approval.
primarily the joint responsibility of a company's senior executives and board of directors.
first and foremost the function and responsibility of a company's chief strategy officer (who usually reports directly to the chief executive officer and also coordinates closely with members of the company's board of directors).
more of a collaborative group effort that involves executives and managers at many organizational levels, as opposed to being the function and sole responsibility of a few high-ranking executives.
first and foremost the function and responsibility of a company's board of directors.
[solved] Opportunities to differentiate a company's product offering quizlet
are most reliably found in either the product R&D or supply chain portions of its value chain.
can exist in activities all along an industry's value chain and usually entail deliberate efforts to perform value chain activities in ways that create value-adding differentiating attributes for customers.
are typically located in the sales and marketing portion of the value chain.
are most frequently related to a company's R&D expertise, manufacturing capabilities, and/or customer service activities.
are usually tied to product quality and customer service.
[solved] The generic types of competitive strategies include quizlet
best-cost provider strategies, low-cost provider strategies, focused low-cost strategies, broad differentiation strategies, and focused differentiation strategies.
best-value strategies, best-cost strategies, best-performance strategies, first-mover strategies, offensive strategies, and defensive strategies.
offensive strategies, defensive strategies, customer-focused strategies, market-focused strategies, and brand image strategies.
high differentiation strategies, low differentiation strategies, first-mover strategies, late-mover strategies, best-value strategies, low-price strategies, customer-focused strategies.
low-cost strategies, best-price strategies, differentiation strategies, best-value strategies, offensive strategies, defensive strategies, and market focused strategies.
[solved] Which one of the following statements about cost drivers is true?
Effective management of a company's cost drivers is essential for a company to be successful in eliminating or bypassing some cost-producing activities.
The two cost drivers with the biggest cost-saving potential are product design and supply chain efficiency.
The more cost drivers that a company has, the better are its chances of becoming the industry's low-cost leader.
The three most important cost drivers are economies of scale, labor efficiency and pay scales, and capacity utilization.
The term cost drivers refers to a set of factors that have a strong effect on a company's costs and can be used as levers to lower costs.
When buyers are not strongly brand loyal and have low costs in switching brands
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
When the target market niche is big enough to be profitable and offers good growth potential
When the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche
When the focuser has a reservoir of customer goodwill and loyalty that it can draw upon to help stave off any ambitious challengers looking to horn in on its business.
the company is well-advised to employ either a low-cost provider strategy or a best-cost provider strategy--differentiation strategies rarely work well because of the ease with which competitors are usually able to quickly copy most or all of the appealing product attributes a company comes up with.
it must be underpinned by resources and capabilities that enable the company to execute its strategy with a high degree of proficiency.
the company must typically employ a value chain with more cost drivers and more value drivers than any other rival company in the industry.
it must possess the resources and capabilities to achieve best-cost status and thereby put itself in strong position to become a dominating market leader by outcompeting firms employing low-cost provider, broad differentiation, and focused strategies.
the strategy must be aimed squarely at achieving a cost-based competitive advantage--this is because, given sufficient time, competitors can clone most any product feature that buyers find quite appealing and thus defeat a strategy keyed to product differentiation.
[SOLVED] Which one of the following is not among the cost drivers shown in Figure 5.2? quizlet
Economies of scale and learning and experience effects
Outsourcing and vertical integration
Raw materials and components, capacity utilization, and product design and production technology
Advertising and administrative activities
Bargaining power with suppliers and supply chain efficiency
[solved] Which one of the following is not among the cost drivers shown in Figure 5.2? quizlet
Economies of scale and learning and experience effects
Outsourcing and vertical integration
Raw materials and components, capacity utilization, and product design and production technology
Advertising and administrative activities
Bargaining power with suppliers and supply chain efficiency
[solved] To achieve a cost advantage over rivals, a company
must either do a better job of performing value chain activities more cost-effectively than rivals and/or else cut costs by revamping its overall value chain to eliminate or bypass some cost-producing activities.
must either use the company's bargaining power vis-a-vis suppliers to gain cost-saving concessions or else sell direct to consumers in order to cut out the activities and costs of distributors and dealers.
minimize the use of cost drivers in performing value chain activities.
offer a limited selection of models and styles (as opposed to a wide selection), pursue efforts to boost sales volumes and thus spread such costs as R&D, advertising, and selling and administrative costs out over more units, and pursue either a low-cost provider strategy or a focused low-cost strategy.
must succeed in substituting the use of low-cost for high-cost raw materials and component parts and/or strip frills and features from its product offering that are not highly valued by price sensitive or bargain-hunting buyers.
[solved] A company's competitive strategy deals with quizlet
which weapons it plans to use in outmaneuvering rivals and achieving bigger sales volumes.
the specifics of management's game plan for competing successfully - how it intends to please customers, offensive and defensive moves to counter the maneuvers of rivals, responses to shifting market conditions, and initiatives to strengthen the company's market position and achieve a particular kind of competitive advantage.
what business, functional area, and operating-level strategies it will employ to execute its customer service proposition and profit proposition.
the operating strategies it will employ to defend against the five competitive forces.
what actions, if any, the company is taking to change its position on the industry's strategic group map.
[solved] When a company adopts a low-cost provider strategy, quizlet
its foremost strategic objective becomes one of earning higher profit margins than rivals with higher costs.
it must strive to attract, please, and retain bargain-hunting buyers.
its strategic intent is one of charging an absolutely rock-bottom price and thereby attract more price sensitive buyers than all other rival companies combined.
its success in the marketplace hinges on producing and marketing a frills-free product and pursuing cost-saving approaches and/or having cost-reducing capabilities that enable it to achieve the lowest possible costs per unit sold.
it needs to find ways to drive costs out of its business such that it is able to achieve meaningfully lower costs than rivals while taking care to incorporate features and attributes into its product offering that buyers consider essential.
When buyer needs and preferences are too diverse to be fully satisfied by a standardized product
When technological change is fast-paced and competition revolves around rapidly evolving product features and attributes.
When the products of rivals are weakly differentiated and price competition among rival firms is vigorous
When there are many ways to differentiate the product or service that have value to buyers
When few rivals are pursuing a differentiation approach that is similar to the one a company is pursuing
striving to capture all available economies of scale and thereby having the most efficient value chain in the industry.
charging everyday low prices for its products/services in order to gain the biggest (and thus most profitable) market share in the industry.
using its lower-cost edge to underprice competitors and attract price-sensitive buyers in great enough numbers to increase total profits.
using its ability to drive costs out of the business to achieve the absolute lowest possible costs and the absolute highest profit margins.
aggressively pursuing manufacturing innovation so as to keep lowering its manufacturing costs and increasing its after-tax profit margins.
[solved] Which of the following statements about a best-cost provider strategy is false? quizlet
Unless a company has the resources and capabilities to incorporate upscale product or service attributes at a lower cost than rivals, adopting a best-cost strategy is ill-advised because the company lacks the ability to execute it.
The target market for a best-cost provider is value-conscious buyers--buyers looking for appealing extras and functionality at an appealingly low price.
The competitive advantage of a best-cost provider is lower costs than rivals in incorporating upscale attributes, thus putting the company in a position to underprice rivals whose products have similar upscale attributes.
A best-cost provider strategy aims at attracting buyers on the basis of having the industry's overall best-performing product and charging a price that is slightly below the industry-average price.
Being a best-cost provider is different from being a low-cost provider.
[SOLVED] Which of the following is not one of the pitfalls of a low-cost provider strategy? quizlet
Getting carried away with overly aggressive price-cutting to win sales and market share away from rival firms--higher unit sales and market shares do not automatically translate into higher total profits
Not being alert to the risks that an innovative rival may discover an even lower lower-cost value chain approach or that the firm's cost advantage can be undermined by cost-saving technological breakthroughs
Failing to emphasize avenues of cost advantage that can be kept proprietary or that are very costly and/or time-consuming for rivals to copy
Pursuing low costs so zealously that a company's product offering ends up being too features-poor to generate buyer appeal
Failing to slash price far enough below what rivals are charging to achieve dramatically large gains in sales volumes and market share
the degree to which the product offering is frills free--a low-cost provider strategy is aimed at cutting frills and features throughout the entire value chain whereas a focused low-cost strategy concentrates on achieving cost-savings by cutting a select number of frills and features.
the number of areas in the value chain where efforts are being made to achieve cost-savings--a low-cost provider strategy is aimed at achieving cost-savings throughout the entire value chain whereas a focused low-cost strategy concentrates on achieving cost-savings in a few carefully-selected value chain activities.
the degree to which a company uses the appeal of a lower price to attract buyers--a low-cost provider strategy entails deeper price discounting than a focused low-cost strategy.
the size of the buyer group that a company is trying to appeal to.
the approach a company uses to achieve a low-cost advantage--a low-cost provider strategy is aimed at performing value chain activities more cost effectively than rivals whereas a focused low-cost strategy concentrates on utilizing innovative ways to eliminate or bypass the costs of certain non-essential value chain activities.
the degree to which the product offering is frills free--a low-cost provider strategy is aimed at cutting frills and features throughout the entire value chain whereas a focused low-cost strategy concentrates on achieving cost-savings by cutting a select number of frills and features.
the number of areas in the value chain where efforts are being made to achieve cost-savings--a low-cost provider strategy is aimed at achieving cost-savings throughout the entire value chain whereas a focused low-cost strategy concentrates on achieving cost-savings in a few carefully-selected value chain activities.
the degree to which a company uses the appeal of a lower price to attract buyers--a low-cost provider strategy entails deeper price discounting than a focused low-cost strategy.
the size of the buyer group that a company is trying to appeal to.
the approach a company uses to achieve a low-cost advantage--a low-cost provider strategy is aimed at performing value chain activities more cost effectively than rivals whereas a focused low-cost strategy concentrates on utilizing innovative ways to eliminate or bypass the costs of certain non-essential value chain activities.
focusing its differentiation efforts on those product features and attributes that are costly to incorporate (because expensive attributes are perceived by buyers as more valuable and worth paying more for).
underpricing rivals who also have differentiated products.
incorporating product attributes and user features that enhance buyer satisfaction in intangible ways.
incorporating features that enable it to compete in multiple market segments.
deliberately designing and employing a value chain that utilizes more "value drivers" than any other firm in the industry.
Automation and robotics technology that enhance labor productivity
Product features and performance
New product R&D and product innovation
Customer service and product quality and reliability
Production R&D and breakthrough production techniques
[solved] A company achieves best-cost provider status by quizlet
concentrating its full attention on attracting value-conscious buyers looking for the best price for the best product produced at the best cost.
providing buyers with the best features and attributes, thereby enabling it to charge the best price and deliver the best value to its customers.
having the best cost (as compared to rivals) for each activity in the industry's value chain.
using the best operating practices and incorporating the best features and attributes.
developing the capability to incorporate attractive upscale attributes at a lower cost than those rivals with comparable upscale product offerings.
concentrated attention on a narrow piece of the overall market--the target segment or market niche can be defined by geographic uniqueness, by specialized requirements in using the product, or by special product attributes that appeal only to those buyers who comprise the market niche.
concentrated effort to become the industry's overall market share leader by totally dominating sales in one particular market niche.
strong focus on using a single value driver to provide buyers with a few well-defined product features and attributes.
their suitability for market situations where most industry rivals have weakly differentiated products.
concentrated attention on providing buyers with top-notch product performance and superior product quality.
[SOLVED] The pitfalls of a differentiation strategy include quizlet
not spending enough on advertising and promotional campaigns.
charging too low a price premium for the differentiating features.
trying to focus simultaneously on most all of the available value drivers to set the company's product offering apart from those of rivals.
not pursuing the same approach to differentiation as other rivals employing a differentiation strategy.
differentiating on the basis of attributes that produce an unenthusiastic response on the part of buyers (because they do not perceive the differentiating features as valuable or worth paying for).
[solved] A company's strategy is most accurately defined as
the choices management has made in trying to execute its customer value proposition and its profit proposition.
the competitive maneuvers and business approaches that a company is using to maximize its profitability and increase the wealth of its shareholders.
management's commitment to pursue a particular set of actions in attracting and pleasing customers, competing successfully, growing the business, responding to changing market conditions, conducting operations, and achieving the targeted financial and market performance.
management's game plan for being highly profitable and having the biggest market share of any company in the industry.
the combination of competitive business approaches management is employing to increase revenues, reduce costs, and earn attractive profits.
[solved] There are many routes to competitive advantage, but they all involve quizlet
selling at a price that is lower than the prices charged by other rival firms.
achieving the largest market share of any company in the industry.
providing a distinctive buyer segment with what segment members perceive as superior value compared to the offerings of rival sellers.
providing buyers with a very high quality product at an attractive price.
having lower production costs than any other rival company in the industry.
Is the company's strategy ethical and does it put enough emphasis on good product quality and good customer service?
Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in good company performance?
Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?
Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and environmentally responsible manner?
Is the strategy resulting in declining costs per unit produced and sold?
represents managerial commitment to undertake one set of actions rather than another in an effort to compete successfully and achieve good performance outcomes.
sets forth the long-term direction that management intends for the company to pursue.
concerns management's plans for delivering value to customers and being profitable in the company's chosen line of business.
concerns the market segments it plans to target, the means of executing its business model, and how it will implement and execute its customer value proposition and shareholder value proposition.
consists of the actions the company is pursuing to increase its sales revenues, become the market share leader, and boost its stock price.
[solved] which of the following is not something to look for in identifying a company's strategy?
Actions to compete more successfully and profitably by offering buyers more or better performance features, more appealing design, higher quality, better customer service, wider product selection, or other such attributes that enhance buyer appeal
Actions to boost the company's earnings per share and stock price
Actions to enter new product segments or geographic markets or to exit existing ones
Actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities
Actions to strengthen marketing standing and competitiveness via mergers, acquisitions, strategic alliances, or collaborative partnerships
[solved] A company's strategy evolves from one version to the next
because of ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy).
because an ongoing tide of new and stricter government regulations forces managers to make strategy changes in order for the company to remain in compliance with shifting regulatory requirements.
because of shifting managerial conclusions about which strategy alternative is actually best.
because ongoing pressures from shareholders for higher profits and bigger dividends force top management to institute new and bold strategic initiatives of varying kinds to produce better overall company performance.
as managers abandon obsolete or ineffective strategy elements, settle upon a set of proactive strategy elements, and then--as new circumstances unfold--make adaptive strategic adjustments, all of which result in an assortment of reactive strategy elements.
[solved] The profit proposition or profit formula portion of a company's business model concerns
its business approach to generating sufficiently large revenues and controlling the costs of its customer value proposition, such that the company will simultaneously be able to deliver the intended value to customers and deliver appealing profits to shareholders.
how the company will generate revenues big enough to cover all operating costs, keep prices as low as possible, and achieve 100% customer satisfaction.
the operating profit margin the company earns over and above the costs of all the resources and business processes the company utilizes in delivering value to the company's shareholders.
whether the value the company provides to customers will be high enough to enable the company to outcompete rivals and achieve a sustainable competitive advantage.
the ways and means by which it will control the costs of delivering value to customers.
[solved] The difference between a company's strategy and a company's business model is that
the strategy concerns how to compete successfully and the business model concerns how to operate cost-efficiently.
a company's strategy concerns how to differentiate its product offering from the offerings of rival companies while its business model concerns how to operate cost-efficiently and profitably.
a company's strategy concerns how it intends to deliver value to customers whereas a company's business model concerns how to deliver value to the owners of the business.
a company's strategy is its game plan for achieving operating efficiency while its business model is management's game plan for satisfying shareholder expectations for attractive revenue growth and excellent long-term profitability.
its strategy is defined by the specific market positioning, competitive moves, and business approaches management employs to try to produce good business results while its business model relates to management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit.
Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals that can become the basis for charging lower prices and/or earning higher profits
Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers that compose the niche
Developing competitively valuable resources and capabilities that rivals can't easily imitate or trump with resources or capabilities of their own
Outcompeting rivals by having the most unique and economically-priced product offering of any firm in the industry
Competing successfully and profitably against rivals based on such differentiating features as higher quality, wider product selection, added performance, value-added services, more attractive styling, technological superiority, or some other attributes that set a company's product offering apart from those of rivals
[solved] The two crucial elements of a company's business model are
its proposition for achieving an attractive return on investment and its action plan for maximizing customer satisfaction.
its profit proposition or "profit formula" and its customer value proposition.
its pricing formula and the set of actions and approaches that it will employ to achieve market leadership.
its revenue growth proposition and its formula for delivering value to customers at a price that yields attractive profits for shareholders.
its proposition for gaining a sustainable competitive advantage and the pricing formula it will employ to attract and please customers.
The deliberately planned efforts of company managers to make frequent strategy adjustments that will surprise rivals and keep them busily engaged in defending against its latest moves in the marketplace.
The need to respond to important technological breakthroughs and/or the fresh moves of competitors
When the present strategy is clearly failing, perhaps because market conditions or buyer preferences suddenly change dramatically
Ongoing management efforts to fine-tune this or that piece of the strategy and to adjust certain strategy elements in response to new learning and unfolding events
The need to keep strategy in step with changing market conditions, advancing technology, and/or newly emerging market opportunities
is typically of no concern to customers since they are unaffected.
is normally quite minimal so long as company officials quickly make a public apology for the wrongdoing.
is usually very short-run in nature; typically, companies can overcome the adverse effects of ethical improprieties within several months.
is seldom big enough to be of much concern to its shareholders.
is substantial; consequently, there are good business reasons for a company and its personnel to avoid unethical strategic actions and behaviors.
their ability to operate the company in a manner that both pleases customers and results in above-average profitability.
the degree to which the company is able to achieve a sustainable competitive advantage.
the ability of top management to develop a superior business model and to execute the company's strategy in the most cost-effective manner.
top management's success in executing both the company's customer value proposition and profit proposition.
how well its management team charts the company's direction, develops competitively effective strategic moves and business approaches, and pursues what needs to be done internally to produce good day-in/day-out strategy execution and operating excellence.
[SOLVED] A company's strategy can be considered "ethical"
if it does not entail actions or behaviors that cross the moral line from "can do" to "should not do."
if each element of its strategy is "legal" and does not injure the business of rival firms or the well-being of customers or the environment.
so long as the company's strategic actions fall within the bounds of what is legal and help the company achieve the purpose and intent of both its customer value proposition and profit proposition.
if its actions and behaviors fall within the bounds of "fair competition."
so long as the appropriate governmental authorities find nothing "morally wrong" in the company's actions and issue the company a certificate of ethical compliance.
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[solved] Which of the following statements about a company's strategy is true? quizlet
A company's strategy is developed mostly on the fly because of ongoing managerial actions to experiment with innovative ways to keep the company's product offering fresh and appealing to buyers.
A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches.
A company's strategy is typically a blend of proactive and reactive strategy elements.
A company's strategy generally changes very little over time unless a newly-appointed CEO decides to take the company in a new direction with a new strategy.
Mimicking the strategies of successful industry rivals--with either copycat product offerings or maneuvers to stake out the same market position--is one of the most reliable and time efficient ways to craft a profitable strategy.
Striving to be more profitable than rivals and aiming for a competitive edge based on bigger profit margins
Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals that can become the basis for charging lower prices and/or earning higher profits
Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the special needs and tastes of buyers comprising the niche
Developing competitively valuable resources and capabilities that rivals can't easily imitate or trump with resources or capabilities of their own
Competing successfully and profitably against rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, value-added services, more attractive styling, technological superiority, or some other attributes that set a company's product offering apart from those of rivals
[SOLVED] A company's business model
sets forth how its strategy and operating approaches will create value for customers while at the same time generating revenues sufficient to cover costs and realize a profit.
describes the actions that will be taken to satisfy the three tests of a winning strategy.
concerns the strategy and business approaches that will be used to attract customers, become the market share leader, and earn appealing profits.
deals with how it can simultaneously maximize profits and deliver good value to customers.
concerns what strategic initiatives and business approaches will be employed to simultaneously produce a sustainable competitive advantage, grow revenues and profits, and deliver good value to customers.
[SOLVED] A company achieves sustainable competitive advantage when
it gains a sufficiently large market share to become and remain the biggest company in the industry.
it has the highest sales revenues of any company in the industry.
its after-tax profits are larger than any other company in the industry.
an attractive number of buyers are drawn to purchase its products or services rather than those of competitors and when the basis for this preference is durable, despite the efforts of competitors to nullify or overcome the appeal of its product offering.
it is consistently able to charge a higher price than rivals and thereby maximize its profits.
[solved] The difference between a company's strategy and a company's business model is that
the strategy concerns how to compete successfully and the business model concerns how to deliver value to customers in the most cost-efficient manner.
a company's strategy concerns how to outcompete rivals while its business model concerns how to achieve high levels of customer satisfaction.
a company's strategy is management's game plan for delivering value to customers while its business model is management's game plan for meeting the conditions of its profit formula or profit proposition and delivering value to shareholders.
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 company can execute its customer value proposition profitably.
a company's strategy is management's game plan for delivering value to customers whereas a company's business model is the game plan for delivering value to shareholders.
Is the company's strategy ethical and does it put enough emphasis on good product quality and good customer service?
Is the strategy resulting in declining costs per unit produced and sold?
Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in good company performance?
Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and environmentally responsible manner?
Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?
[SOLVED] A company's strategy is a "work in progress" and evolves over time because of
the need to react and respond to changing market and competitive conditions and ongoing management efforts to improve this or that piece of the strategy.
the importance of developing a fresh strategy at least once a year.
the importance of copying the latest strategic moves of the industry leader.
an ongoing need to make periodic adjustments in the company's business model.
an ongoing need to experiment with new and/or different ways to outmaneuver rivals, gain market share, and boost the company's stock price.
[SOLVED] Which of the following is not something a company's strategy is concerned with?
Management's choices about how to position the company in the marketplace vis-a-vis rivals and capitalize on opportunities to grow the business
Management's choices and decisions about how to manage each functional piece of the business and achieve the company's performance targets
Management's choice of which of several alternative business models to employ in delivering value to customers and to shareholders
Management's choices about how to compete against rival companies
Management's choices about how to attract and please customers and respond to changing economic and market conditions
[SOLVED] Which of the following statements about a company's strategy is true? quizlet
Mimicking the strategies of successful industry rivals--with either copycat product offerings or maneuvers to stake out the same market position--is one of the most reliable and time efficient ways to craft a profitable strategy.
A company's strategy generally changes very little over time unless a newly-appointed CEO decides to take the company in a new direction with a new strategy.
A company's strategy is developed mostly on the fly because of ongoing managerial actions to experiment with innovative ways to keep the company's product offering fresh and appealing to buyers.
A company's strategy is typically a blend of proactive and reactive strategy elements.
A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches.
[solved] Typically, a company's strategy is quizlet
kept relatively unchanged for a year or more; frequent strategy changes confuse customers and cannot be executed with any degree of competence.
a close imitation of the market leader's strategy.
a blend of (1) proactive actions to improve the company's financial performance and secure a competitive edge and (2) as-needed reactions to unanticipated developments and fresh market conditions.
100 percent differentiated from the strategies of rival companies; any and all copycat strategy elements must be avoided for a company's strategy to be competitively and financially successful.
fine-tuned monthly (occasionally, more often) in order to be as innovative as possible in trying to achieve a sustainable competitive advantage over rivals.
[SOLVED] In choosing among strategy alternatives, company managers quizlet
should be aware that governmental authorities are the final arbiter of whether a company's strategic actions are "morally right" or "morally wrong."
are well-advised to embrace strategic actions that can pass the test of moral scrutiny--it is not enough to just stay within the bounds of what is legal and is in compliance with prevailing government regulations.
should recognize that all strategic actions that are legal are entirely permissible and comply with ethical standards.
are duty-bound to craft a strategy that maximizes the wealth of the company's shareholders.
have no reason to be concerned about pursuing any strategic actions that are both legal and in full compliance with prevailing governmental regulations.
Actions to strengthen public image and reputation via corporate social responsibility initiatives and environmental efforts to protect the planet
Actions to diversify the company’s revenues and earnings by entering new businesses
Actions to compete more successfully and profitably by offering buyers more or better performance features, more appealing design, higher quality, better customer service, wider product selection, or other attributes that enhance buyer appeal
Actions to enter new product segments or geographic markets or to exit existing ones
Actions to improve the company's image and stock price
