To which of the following firms is the term “repeatedly evolving strategy” most applicable?

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Chapter 01 Test Bank
Student: ___________________________________________________________________________

1.

Which of the following is NOT one of the managerial considerations in determining how to compete successfully?

A.
B.
C.
D.
E.
2.

A pharmaceutical company functioning in France for the last 10 years has moderate sales in a crowded market with
competitors offering drugs with similar efficacy and safety precautions, but with better sales. The greatest challenge
is to increase the prescription of their drugs. What would be the MOST effective strategy to improve sales
performance in the existing market?

A.
B.
C.
D.
E.
3.

Modifying marketing communication to increase brand familiarity within key physician segments
Relocating all the existing drug manufacturing facilities to developing countries to reduce operational costs
Employing hiring plans that aim at acquiring drug designers from rival companies
Exiting the market and entering a new unexplored geographical location
Engaging in new contract talks with suppliers about price breaks

A company's strategy consists of the action plan management is taking to:

A.
B.
C.
D.
E.
4.

How can a company attract, keep, and please customers?
How can a company modify its entire product line to emphasize its internal service attributes?
How should a company respond to changing economic and market conditions?
How should a company be competitive against rivals?
How should a company position itself in the marketplace?

stake out a unique market position and achieve superior profitability.
compete against rivals and establish a transitory competitive advantage.
concentrate on improving the existing product offering irrespective of the changing and turbulent markets.
develop a more appealing business model than rivals.
identify its strategic vision, its strategic objectives, and its strategic intent.

The competitive moves and business approaches a company's management is using to grow the business, stake out
a market position, attract and please customers, compete successfully, conduct operations, and achieve
organizational objectives is referred to as its:

A.
B.
C.
D.

E.

mission statement.
cost-price framework.

5.

The objectives of a well-crafted strategy require management to strive to:

A.
B.
C.
D.
E.
6.

To improve performance, there are many different avenues for outcompeting rivals such as:

A.
B.
C.
D.
E.
7.

Creating a sales plan that aims to enhance initial sales and market share with low prices based on high ope
Devising a marketing plan that aims at different customer segments with attractive advertisements and offers
Implementing a diversification plan that aims at adding smartphones to the existing line of products
Charting an acquisition plan that aims at acquiring small-scale companies looking for funding and with a simi

Establishing a distribution plan that aims at setting up more supply outlets than any other rivals in the locatio

Every strategy needs:

A.
B.
C.
D.
E.
9.

realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growt
creating products analogous with competitors so as to be competitive in the same markets.
pursuing similar personalized customer service or quality dimensions as rivals.
confining operations to local or regional markets or developing product superiority or concentrating on a narro
strengthening competitiveness by restricting strategic alliances and collaborative partnerships when compare

A multinational company enters a new geographical location, considered an emerging market, with its established
product line: laptops and tablets. Which of the following would NOT serve as a good strategic move to enhance
profits?

A.
B.
C.
D.
E.
8.

match rival businesses' products and quality dimensions in the marketplace.
build profits for short-term success.

realign the market to provoke change in rival companies.
develop lasting success that can support growth and secure the company's future over the long term.
re-create their business models regularly.

a distinctive element that attracts customers and produces a competitive edge.
to include similar characteristics to rival company strategies.
to pursue conservative growth built on historical strengths.
to employ diverse and sundry operating practices for producing greater control over sales growth targets.
to mimic the plans of the industry's most successful companies.

A company's strategy is NOT concerned with management's choices about how to:

A.
B.
C.
D.
E.

attract and please customers.
stake out the same market position as successful rival companies.
grow the business.
compete successfully.
conduct operations and improve the company's financial and market performance.

10. FaberRoad, a respected courier brand, is fast losing its market share to competitors who do overnight deliveries of
packages or offer lower prices. The company's research department has found that many customers care more
about knowing exactly when a package will arrive than getting it the next day. Which strategy would best address the
current state of FaberRoad and help it regain its market?

A.
B.
C.
D.
E.

Employing night delivery drivers at a high cost and maintenance charges
Developing radio tags that could be attached to packages to allow for real-time tracking by customers' PCs an
Diversifying the different types of packages that can be transported and enabling booking through calls
Acquiring small transportation companies with cheaper trucks and tempos, rebranding, and using them for d
Engaging in expensive advertising with new tag lines and famous celebrities to enhance its brand image in th

11. A company's strategy stands a better chance of succeeding when:

A.
B.
C.
D.
E.

it is developed through a collaborative process involving all managers and staff from all levels of the organi
managers employ conservative strategic moves based on past experience and form an underlying basis of
it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from
managers copy the strategic moves of successful companies in its industry.
managers focus on meeting or beating shareholder expectations.

12. In crafting a company's strategy, managers:

A.
B.

C.
D.
E.

face the biggest challenge of how closely to replicate strategies of successful companies in the industry.
have comparatively little freedom in choosing the "hows" of strategy.
are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility.
need to come up with a sustainable competitive advantage that draws in customers and produces a competit
are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-be-different" strategies are

13. The heart and soul of a company's strategy-making effort is determining how to:

A.
B.
C.
D.
E.

become the industry's low-cost provider.
maximize profits and shareholder value.
improve the efficiency of its business model.
maximize profits while simultaneously operating in a socially responsible manner that keeps the company's p
come up with moves and actions that produce a durable competitive edge over rivals.

14. The pattern of actions and business approaches that would NOT define a company's strategy include actions to:

A.
B.
C.
D.

E.

strengthen market standing and competitiveness by acquiring or merging with other companies.
strengthen competitiveness via strategic coalitions and partnerships.
upgrade competitively important resources and capabilities.
gain sales and market share with lower prices despite increased costs.
strengthen the firm's bargaining position with suppliers and distributors.

15. A company's strategy and its quest for competitive advantage are tightly connected because:

A.
B.
C.
D.
E.

without a competitive advantage a company cannot become the industry leader.
without a competitive advantage a company cannot have a profitable business model.
crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achie
a competitive advantage is what enables a company to achieve its strategic objectives.
how a company goes about trying to please customers and outcompete rivals is what enables senior manager

16. A company achieves a competitive advantage when it:

A.
B.
C.
D.
E.

provides buyers with superior value compared to rival sellers or offers the same value at a lower cost.
has a profitable business model.
is able to maximize shareholder wealth.
is consistently able to achieve both its strategic and financial objectives.
has a strategy well-matched to its business model.

17. A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive
advantage:

A.
B.
C.
D.
E.

is a reliable indicator that the company has a socially responsible business model.
is achievable in emerging but not mature industries.
is a company's most reliable ticket to above-average profitability.
signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objec
is the best indicator that the company's strategy and business model are well-matched and properly synchro

18. What separates a powerful strategy from a run-of-the-mill or ineffective one is:

A.
B.
C.
D.
E.

the ability of the strategy to keep the company profitable.
the proven ability of the strategy to generate maximum profits.
the speed with which it helps the company achieve its strategic vision.
management's ability to forge a series of actions, both in the marketplace and internally, that sets the compa
whether it allows the company to maximize shareholder value in the shortest possible time.

19. Telsteer Mobil, a smartphone manufacturer, is working on developing its next-generation products. It has decided on
a strategy of focusing on a narrow buyer segment and outcompeting rivals by offering buyers customized product
features for specialized needs and tastes. What basic strategic approach has Telsteer decided upon?

A.
B.
C.
D.
E.

Focused differentiation
Best-cost provider
Low-cost provider
Broad differentiation
Focused low-cost

20. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a
sustainable competitive advantage?

A.
B.
C.
D.

E.

Striving to be the industry's low-cost provider
Outcompeting rivals on the basis of differentiating features that will appeal to a broad spectrum of buyers
Developing a best-cost provider strategy that gives customers more value for the money
Focusing on a narrow market niche and serving buyers' special needs and tastes
Striving to be the industry's high-price provider

21. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a
sustainable competitive advantage?

A.
B.
C.
D.
E.

Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage
Outcompeting rivals on the basis of differentiating features such as higher quality, wider product selection, ad
Focusing on a broad buyer segment and offering buyers a very low cost and highly customized attributes that
Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisf
Developing a cost advantage based on offering more value for the money

22. Which of the following companies would have the LEAST bargaining power with its suppliers?

A.
B.
C.
D.
E.

A company that is involved in mass production of goods to cater its expanding customer base
A company that actively caters to a broad price-sensitive customer base
A company that generates high quality product components from easily available raw materials for a broad cu
A company whose products are highly popular and easily available across most supermarkets
A company that offers high-cost specialized products that could be used only by customers of a certain age g

23. Winning a sustainable competitive edge over competitors does NOT hinge on which of the following?

A.
B.
C.
D.
E.

Having a distinctive competitive product offering
Building competitively valuable expertise and capabilities not readily matched, and offering distinctive produ
Building experience, know-how, and specialized capabilities that have been perfected over a long period of
Having "hard-to-beat" capabilities and impressive product innovation
Building products and distributing them at low prices to a broad customer base irrespective of manufacturing

24. Which of the following airlines does NOT employ a low-cost provider strategy?

A.
B.
C.
D.
E.

Airline 1 offers low prices on short-distance flights and cuts down on meals during flights.

Airline 2 offers low prices on long-distance flights and has long service times for its planes between flights.
Airline 3 offers low prices on short-distance flights and improves flight carrier capacity through addition of sea
Airline 4 offers low prices on short-distance flights and pays minimum wage rates to the flight crew.
Airline 5 offers low prices on long-distance flights and charges fees for carry-on as well as checked luggage

25. Easy DriveIn, a fast food facility, offers products at lower prices than its competitors in the market and has a drivethrough-only operation with no indoor seating. What strategy is Easy DriveIn using to gain competitive advantage?

A.
B.
C.
D.
E.

A low-cost provider strategy
A broad differentiation strategy
A focused low-cost strategy
A focused differentiation strategy
A best-cost provider strategy

26. BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds
of consumers, this resort caters mainly to gays with guaranteed hassle-free holiday experience at a premium price.
What strategy is BloomsJay using to gain competitive advantage?

A.
B.
C.
D.
E.

A low-cost provider strategy
A broad differentiation strategy
A focused low-cost strategy
A focused differentiation strategy
A best-cost provider strategy

27. Different companies across different industries adopt any one of the five generic strategies to gain competitive
advantage. Which of the following is most likely to use a low-cost provider strategy?

A.
B.
C.
D.
E.

A fashion clothing line uses sought-after designers and natural fabrics.
A mortgage company specializes in lending money for second homes.
An online retailer delivers organic groceries overnight.
A baby products retailer sells unassembled baby furniture produced in China.
A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy products.

28. Giving customers more value for the money by satisfying their expectations on key quality features, performance,
and/or service attributes while beating their price expectations is a:

A.
B.
C.
D.
E.

best-cost provider strategy.
focused low-cost strategy.
focused differentiation strategy.
broad differentiation strategy.
low-cost provider strategy.

29. Which of the following is NOT typically a trigger to an evolving strategy?

A.
B.
C.
D.
E.

The need to keep strategy in step with changing circumstances, market conditions, and changing customer n
The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy
The need to abandon some strategy features that are no longer working well
The need to respond to the newly initiated actions and competitive moves of rival firms
The need to respond to short-term swings in the stock market

30. To which of the following firms is the term "repeatedly evolving strategy" MOST applicable?

A.
B.
C.
D.
E.

A government agency that makes plans for a set period of time and implements them phase by phase throu

A mobile company, established in a saturated market, that aims at quarterly release of new products
A new cosmetics manufacturer in a market that replicates the products of a competitor at a moderate quality
A nationalized bank that lends at a lower interest rate but a zero processing fee in a market crowded with priv
A firearms regulatory agency, set up by the government, that publishes industry standards for safety, reliability

31. Changing circumstances and ongoing managerial efforts to improve the strategy:

A.
B.
C.
D.
E.

account for Why a Companys Strategy Evolves over Time.
explain why a company's strategic vision undergoes almost constant change.
make it very difficult for a company to have concrete strategic objectives.
make it very hard to know what a company's strategy really is.
result in abandoned strategic visions.

32. Adapting to new conditions like new innovations by competitors, fast-changing technological developments, and
constantly evaluating what is working result in:

A.
B.
C.
D.
E.

an assured profitability strategy.
a broad market entry strategy.

an emergent strategy.
unlimited revenue generation.
a proactive strategy.

33. Managers must be prepared to modify their strategy in response to all of the following EXCEPT:

A.
B.
C.
D.
E.

changing circumstances that affect performance and the desire to improve the current strategy.
competitor moves in the market and shifting needs of buyers.
stagnating market and restrictive industrial opportunities.
mounting evidence that the strategy is less effective.
public pronouncements from rivals about monthly profit margins.

34. A company's strategy is a "work in progress" and evolves over time because of:

A.
B.
C.
D.
E.

the importance of developing a fresh strategic plan every year that keeps employees from becoming bored w
the ongoing need to imitate the new strategic moves of the industry leaders.
the need to make regular adjustments in the company's strategic vision.
the ongoing need of company managers to react and respond to changing market and competitive conditi

the frequent need to modify key elements of the company's business model.

35. It is normal for a company's strategy to end up being:

A.
B.
C.
D.
E.

a blend of offensive actions on the part of managers to improve the company's profitability and defensive mo
a combination of conservative moves to protect the company's market share and somewhat more risky initiati
a close imitation of the strategy employed by the recognized industry leader.
a blend of proactive actions to improve the company's competitiveness and financial performance, and adap
more a product of clever entrepreneurship than of efforts to clearly set a company's product/service offering ap

36. Crafting a deliberate strategy involves developing strategy elements that:

A.
B.
C.
D.
E.

imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvant
comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan period; big changes
consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior p
deliberately eliminate the ongoing strategic elements and implement new planned initiatives.
consist of adaptive change plans to new market situations along with abandoned redundant ongoing elemen

37. Which of the following statements about a company's strategy is true?

A.
B.
C.
D.
E.

A company's strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level man
A company's strategy is typically planned well in advance and usually deviates little from the planned set of ac
A company's strategy generally changes very little over time unless a newly appointed CEO decides to take th
A company's strategy is typically a blend of proactive and reactive strategy elements.
A company's strategy is developed mostly on the fly because of the constant efforts of managers to come up w

38. A company's realized strategy evolves from one version to the next due to:

A.
B.
C.
D.
E.

changing management direction because of understanding several appealing strategy alternatives.
the proactive efforts of company managers to improve the current strategy, a need to respond to changing cu
ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different st
pressures from shareholders to boost profit margins and pay higher dividends.
the importance of keeping the company's business model fresh and up-to-date.

39. Which one of the following does NOT account for WHY a company's strategy evolves from one version to another?

A.
B.
C.
D.
E.

A need to promote stability and retain the status quo
The need to abandon some strategy elements that are no longer working well
A need to respond to changing customer requirements and expectations
A need to react to fresh strategic maneuvers on the part of rival firms
The proactive efforts of company managers to improve obsolete aspects of the strategy

40. In the course of crafting a strategy, which of the following is NOT a common management function?

A.
B.
C.
D.
E.

Abandoning certain strategy elements that have grown stale or become obsolete
Modifying the current strategy when market and competitive conditions take an unexpected turn or some aspe
Modifying the current strategy in response to the fresh strategic maneuvers of rival firms
Taking proactive actions to improve this or that piece of the strategy
Sharing the strategy with the public to gain additional customer and shareholder support

41. Strategy is about competing differently than rivals, thus strategy success is about:

A.
B.
C.
D.
E.

the sources of sustained advantages and superior profitability.
those emergent, unplanned, reactive, and adaptive plans that are more appropriate than deliberate or intende
matching internal resources and capabilities to the industry environment.
keeping the firm current with the rapid pace of change in the industry.
replacing proactive and reactive measures by modified ongoing strategic elements to preserve company val

42. Which of the following firms uses a deliberate strategy?

A.
B.
C.
D.
E.

A popular downtown theater that has been staging plays decides to begin booking rock and roll acts.
An airline company cuts frills in order to cope with increasing fuel prices.
An IT firm trims jobs during a recession.
A smartphone company divests its tablet production branch after not gaining market share.
An online jewelry site discontinues its line of turquoise rings due to lack of demand.

43. A company's strategy in toto that tends to be a combination of proactive and reactive elements is known as its:

A.
B.

C.
D.
E.

realized strat
emergent strategy.
deliberate strategy
visionary strategy.
abandoned strategy.

44. Consider the following three companies and their strategies.
· Company A is an established database management company that acquires a well-reputed but small publishing
house to enter the booming publishing industry.
· Company B, a sports management house, declared bankruptcy during a recent recession but now has created a
television network that airs regional sports events.
· Company C, a package delivery business, is a startup based on delivery efficiency models created by a few
students, and delivers almost all kinds of packages.
Which of the following describes the use of strategies by these companies accurately?

A.
B.
C.
D.
E.

Company B employs an emergent strategy, whereas Companies A and C employ deliberate strategies.
All three companies employ deliberate strategies.
All three companies employ emergent strategies.
Company C employs a deliberate strategy, Companies A and B employ emergent strategy.
Companies A and C employ emergent strategies, Company B employs a deliberate strategy.

45. A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons as a gimmick when their
bathtubs did not sell. Their bubble foam became famous among some women and led to a line of exclusive bath
products for women. They established shops in various regional locations and roped in celebrities to market their
products to enhance sales. Now its products are sold through retail outlets and online sites throughout the world.
Which of the following is accurate?

A.
B.
C.
D.
E.

Offering scented bubble bath foams and massage coupons was an emergent strategy.
Creating a sub-brand that offered exclusive bath products for women was an emergent strategy.
Establishing shops in regional locations was an emergent strategy.
Roping in celebrities to market their products was an emergent strategy.
Creating a worldwide presence through retail outlets and online sites was an emergent strategy.

46. A computer chip manufacturing giant decides to outsource its operations to a new geographical location with cheaper
labor amidst ongoing labor strikes in a few of its existing locations (due to proposed job cuts). This draws criticism in
its new market and affects its current market position and productivity. Which of the following would be an
appropriate reactive (emergent) strategy while moving forward?

A.
B.
C.
D.
E.

Hiring and training new talent to begin operations in the emerging market
Acquiring a local computer chip marketing and distribution specialist firm in the new location
Cancelling the idea of outsourcing and retaining the existing the workforce to run operations
Shifting the existing workforce to the new geographical location and paying them according to new standa
Cancelling the job cuts till the market situation and entry operations stabilize

47. A company's business model:

A.
B.
C.
D.
E.

concerns the actions and business approaches that will be used to grow the business, conduct operations, a
is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive p
concerns what combination of moves in the marketplace it plans to make to outcompete rivals.
deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keep
concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or bea

48. Which of the following is true of a company's business model?

A.
B.
C.
D.
E.

It zeroes in on the customer value proposition and its related profit formula.

It explains why the customer value proposition takes precedence over the related profit formula to generate o
It details the ethical and socially responsible nature of the company's strategy.
It explains how it intends to achieve the same market position as a rival.
It is termed a winning model if it passes any one of the three strategy tests.

49. Why is it important to craft a business model?

A.
B.
C.
D.
E.

Because it sets forth management's game plan for maximizing profits for shareholders
Because it details exactly how management's strategy will result in the achievement of the company's strate
Because it is a part of an operating model that focuses on delivering excellence and creating value for externa
Because it sets forth the key components of the enterprise's business approach, indicates how revenues will
Because it sets forth management's long-term action plan to match the business standards set by formidable

50. Management's blueprint for how and why the company's business approaches will generate revenues sufficient to
cover costs and produce attractive profits and returns on investment:

A.
B.
C.
D.
E.

best describes what is meant by a company's strategy.

best describes what is meant by a company's business model.
accounts for why a company's financial objectives are at the stated level.
portrays the essence of a company's business purpose or mission.
is what is meant by the term strategic intent.

51. The difference between a company's strategy and a company's business model is that:

A.
B.
C.
D.
E.

a company's strategy is management's game plan for achieving strategic objectives while its business model
the strategy concerns how to compete successfully and the business model concerns how to operate efficie
a company's strategy is management's game plan for realizing the strategic vision, whereas a company's bus
strategy relates broadly to a company's competitive moves and business approaches while its business mod
a company's strategy is solely concerned with how to please customers while its business model is solely conc

52. The customer value proposition lays out the company's approach to:

A.
B.
C.
D.
E.

meeting profitability guidelines without the risk of losing customers.
operating efficiently given the current level of customers.
embracing rival company approaches to gaining customers.

satisfying customer wants and needs at a price customers will consider a good value.
assuring that the company makes enough profits based on its per-unit cost.

53. A regional electric scooter manufacturer sells its scooter at a lower price than other two-wheeler manufacturers.
What will make the product most attractive for customers?

A.
B.
C.
D.
E.
54. A middle-class customer (target) base in a region is most concerned with quality and price of products. Which of the
following would be considered a best value proposition for the customers?

A.
B.
C.
D.
E.

A company that identifies unique features of its products without comparing it with a rival's products
A company that offers copycat products at low cost but an average quality compared to rivals
A company that offers the same quality of products as rivals but at a high cost based on greater market share
A company that provides same quality of products at a much lower price than rivals, but leaves the final asse
A company that sells an average quality product compared to rivals with a meager difference in price.

55. Which of the following pizza firms competing in a crowded market likely offers the best value proposition to its
customers, based on the following sales pitches?

A.
B.
C.
D.
E.

Firm A: "The Tastiest Pizza You've Ever Had."
Firm B: "Get fresh, hot pizza, delivered under 20 minutes–or it's free."
Firm C: "Get your pizza at your doorstep–absolutely free delivery, anywhere."
Firm D: "One pizza, 5 points: to be redeemed with a pan pizza upon reaching 50 points."
Firm E: "Open you pizza box and find a free gift. Hurry! Free gifts for 100 lucky customers."

56. Troopline Inc., an online laptop retailer, sells laptops of similar range and features as other online laptop retailers.
Which of the value propositions would NOT benefit the company?

A.
B.
C.
D.
E.

Providing free delivery of purchased laptops
Allowing customers to pay through gift coupons
Updating the site with better high-resolution pictures of laptops
Providing mobile friendly version of the site and compatible apps for mobile users
Establishing a comparison feature tab that allows customers to compare offerings from other online retailers

57. A search engine giant specializes in all types of search items; provides a free translation feature for 80 different
languages; allows users to view ads on previously made related searches; provides suggestive search items to
assist the user; allows users to view a collation of related web pages users might want to visit; and provides a faster

load time and more accurate hits than its rivals. Which of the following is a profit formula used by the company?

A.
B.
C.
D.
E.

Providing a free translation feature for 80 different languages
Allowing users to view ads on previously made related searches
Allowing users to view a collation of related web pages users might want to visit
Providing a faster load time and more accurate hits than its rivals
Providing suggestive search items based on history of sites visited

58. A winning strategy is one that:

A.
B.
C.
D.
E.

builds strategic fit, is socially responsible, and maximizes shareholder wealth.
is highly profitable and boosts the company's market share.
fits the company's internal and external situation, builds sustainable competitive advantage, and improves com
results in a company becoming the dominant industry leader.
can pass the ethical standards test, the strategic intent test, and the profitability test.

59. A winning strategy must pass which three tests?

A.
B.
C.
D.
E.

The Dominant Market Test, the Sustainable Advantage Test, and the Profit Test
The Fit Test, the Competitive Advantage Test, and the Performance Test
The Sustainable Performance Test, the Fit Test, and the Profit Test
The Performance Test, the Dominant Market Test, and the Fit Test
The Fit Test, the Sustainable Advantage Test, and the Dominant Market Test

60. Which of the following questions can be used to distinguish a winning strategy from a mediocre or losing strategy?

A.
B.
C.
D.
E.

How good is the company's business model?
Is the company a technology leader?
Does the company have low prices in comparison to rivals?
Is the company putting too little emphasis on behaving in an ethical and socially responsible manner?
How well does the strategy fit the company's situation?

61. Which of the following questions tests the merits of the firm's strategy and distinguishes it as a winning strategy?

A.

B.
C.
D.
E.

Is the company's strategy ethical and socially responsible and does it put enough emphasis on good product
Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in a
Is the strategy resulting in the development of additional competitive capabilities?
Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better
Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer sa

62. Crafting and executing a strategy is a top-priority managerial task because:

A.
B.
C.
D.
E.

it helps management create tight fits between a company's strategic vision and business model.
it allows all company personnel, and especially senior executives, to know the answer to "who are we, what d
it is management's prescription for doing business, its roadmap to competitive advantage, a game plan for ple
it provides clear guidance as to what the company's business model and strategic intent are, and helps keep
it establishes how well executives perform these tasks and are the key determinants of executive compensa

63. Why are crafting and executing business strategies the foremost tasks of any organization?

A.
B.
C.

D.
E.

Because they are necessary ingredients of a sound operational business model
Because a good strategy coupled with a good strategy execution are the most telling signs of good managem
Because the management skills of top executives are sharpened as they work their way through the strategyBecause doing these tasks helps executives develop an appropriate strategic vision, strategic intent, and set
Because of the contribution they make to maximizing value for shareholders

64. Good strategy combined with good strategy execution:

A.
B.
C.
D.
E.

offers a surefire guarantee for avoiding periods of weak financial performance.
is the best sign that a company is a true industry leader.
is a more important management function than forming a strategic vision combined with setting objectives.
is the clearest indicator of good management.
signals that a company has the best business model in a market.

65. The most significant signs of a well-managed company are:

A.
B.
C.
D.
E.

the eagerness with which executives set stretch financial and strategic objectives and develop an ambitious
aggressive pursuit of new opportunities and a willingness to change the company's business model whenever
good strategy-making combined with good strategy execution.
a visionary mission statement and a willingness to pursue offensive strategies rather than defensive strate
a profitable business model and a balanced scorecard approach to measuring the company's performance.

66. Excellent execution of an excellent strategy is:

A.
B.
C.
D.
E.

the best test of managerial excellence and the best recipe for making a company a standout performer.
a solid indication that managers are maximizing profits and looking out for the best interests of shareholder
the best test of whether a company is a "true" industry leader.
the best evidence that managers have a emerging business model.
the best test of whether a company enjoys sustainable competitive advantage.

67. What is the foremost question in running a business enterprise?

A.
B.
C.
D.
E.

What must managers do, and do well, to make a company a winner in the marketplace?

What can employees do, and do well, to ensure customer satisfaction?
What can shareholders do, and do well, to ensure a profitable company?
What do customers do, how to profile customers who buy a company's product, and tailor sales strategy aro
What do suppliers do, and how to get supplies at the lowest cost to build a profitable business?

68. A pharmaceutical giant acquires a manufacturer of rare specialty drugs to improve its falling share prices and invests
all its wealth into the deal. Due to a deficit, it agrees to do a joint venture for the acquisition and involves a major
automobile giant to fund the deal. After a rocky start, the companies now have a strong market position and generate
good profits. Which of the following regarding the company's strategy is true?

A.
B.
C.
D.
E.

It fails the Performance test.
It fails the Competitive Advantage and the Fit tests.
It is a winning strategy.
It fails in all three tests.
It fails the Fit test, but passes the Competitive advantage and Performance tests.

69. What is strategy and why is it important?

70. Briefly define each of the following terms.
a. Sustainable competitive advantage
b. Deliberate strategy
c. Emergent strategy
d. Realized strategy

e. Abandoned strategy

71. What are the three tests of a winning strategy?

72. Identify and briefly describe the four most frequently used strategic approaches to achieving a sustainable
competitive advantage. Provide examples.

73. What is the connection between a company's strategy and its quest for sustainable competitive advantage?

74. Should a company's strategy be tightly connected to its quest for competitive advantage? Why or why not? What
difference does it make whether a company has a sustainable competitive advantage or not?

75. A company with strong competition in a saturated market decides to wipe out all its products and introduce a fresh
line of products in reaction to its falling shares during recession. Would this type of a reactive strategy revive its
position? Why or why not?

76. Why does a company's strategy tend to evolve over time?

77. Why is a company's strategy partly proactive and partly reactive?

78. Is it more accurate to think of strategy as being "proactive" or as being "reactive"? Why?

79. Explain why a company's strategy cannot be completely planned out in advance and why crafting a company's
strategy cannot be a one-time, once-and-for-all managerial exercise. Identify at least three factors that account for
why company strategies evolve.

80. Explain in detail what a company's business model entails.

81. What factors determine whether a strategy can be called a winning strategy?

82. How can one tell a winning strategy from a strategy that is mediocre or a loser?

83. Why is sustainable competitive advantage so important to a winning business strategy?

84. Why is it appropriate to argue that good strategy-making combined with good strategy execution are valid signs of
good management?

85. Powerful execution of a powerful strategy is a proven recipe for winning in the marketplace. True or false? Explain
your answer.

86. Good strategy + good strategy execution = good management. True or false? Justify and explain your answer.

87. A company's strategy represents a managerial commitment to an integrated array of considered choices about how
to compete. This includes the choice about how to capitalize on attractive opportunities to grow the business. Why is
opportunity recognition a vital component of the company's strategy?

88. A new entrant in a market dominated by established players introduces itself with copycat products of another
competitor. Would this strategy work in the long term for the firm? Justify your answer.

89. An established organization is fast losing its market share to companies that offer similar products and are upgrading
their capabilities to produce better products. List a few general actions and approaches that would help the
organization revive its position.

90. A well-establisher retail house offers lower-priced commodities to powerful buyers at widespread locations and has
loyal suppliers that supply mass goods to the retailer. With fewer ways to achieve differentiation in the market, most

other rivals offer similar products but lack sufficient funding to compete against the retail house. Which strategy has
the house employed? Explain your answer.

91. A laptop manufacturing company acquires a microprocessors manufacturing company to gain a strong market
position. Which of the five generic strategies has the laptop manufacturer used to gain competitive advantage?

92. An automobile company with an established brand name uses a unique assembly line method to reduce the final
packaging and fitting procedures cost. It then sells the cars to all customers at a reduced price. Which of the five
generic strategies automobile company using?

93. A dining facility with multiple branches caters to newlywed couples only. The ambience, special live music
arrangements for each couple, and privacy of the dining sections have become a rage among newlyweds. Which of
the five generic strategies has the company used?

94. A beauty products giant that manufactures quality makeup products observes a lot of its hits by college students on
its makeup tutorials. It opens another sub-brand that provides low-priced makeup services to college partygoers.
Which of the five generic strategies has the company used?

95. An electronic chip manufacturer has a quarterly release of its products. What can you say about its strategy?

96. A data storage company realizes that its facilities are used most by financial institutions. It capitalizes on the
opportunity and starts storing specific financial information only and is now one of the most sought-after financial
databases. What strategy has the company employed?

97. An established company in a market decides to donate a part of its profits to a children's charity to improve its market
image. Soon after it launched a website that offers new clothes, accessories, and books that could be donated to
various children's charities by interested parties. The company gained positive publicity and its sales went up. What
would you say about this strategy?

98. A pen manufacturer sells high-quality pens at a very low price but provides pen-specific low-cost refills at a relatively
higher price. Explain this business model.

99. A pizza maker manufactures thin-crust pizzas and offers free soft drinks with a pack of four pan pizzas. What can
you say about its Value-Price-Cost Framework?

100. A new entrant in a market uses copycat products at its rival at budget prices. What can you say about this company's
long-term success?

101. A fashion magazine plans to cuts down on its fashion-related content and provides the space for high-priced
advertisements, but fails to convince giant fashion brands to advertise in the magazine. What do we understand from
this failure?

Chapter 01 Test Bank Key

What is a repeatedly evolving strategy?

Why does a company's strategy tend to evolve over time?

What causes a company's strategy to evolve from one version to the next?

When can a company achieve sustainable competitive advantage?