Competitive Strategy
Final Test Solutions
Course Introduction
Competitive Strategy explores the frameworks, analytical tools, and critical thinking skills necessary to develop and sustain a firm's competitive advantage in dynamic markets. The course examines key concepts such as industry structure, value creation, positioning, strategic alliances, and the impact of technological change. Through case studies and real-world applications, students learn how organizations analyze competitors, anticipate market trends, and make informed strategic decisions. By the end of the course, participants will be equipped to craft and implement effective strategies that maximize long-term organizational performance in competitive environments.
Recommended Textbook
Strategic Management Concepts and Cases 1st Edition by Jeffrey H. Dyer
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14 Chapters
699 Verified Questions
699 Flashcards
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Page 2
Chapter 1: What Is Business Strategy
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Sample Questions
Q1) _____ can be best defined as the reason a firm wins with customers or the value proposition it offers to customers,such as a low cost advantage or differentiation advantage.
A) Switching costs
B) Unique value
C) Complementary products
D) SWOT analysis
Answer: B
Q2) Define business strategy and the four strategic choices it involves.
Answer: A company's business strategy is defined as a company's plan to gain,and sustain competitive advantage in the marketplace.This plan is based on the theory its leaders have about how to succeed in a particular market.This theory involves predictions of which markets are attractive and how a company can offer unique value to customers in those markets in a way that won't be easily imitated by competitors.As such,a business strategy plan to achieve competitive advantage involves making four strategic choices: (1)markets to compete in; (2)unique value the firm will offer in those markets; (3)the resources and capabilities required to offer that unique value better than competitors; and (4)ways to sustain the advantage by preventing imitation.
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Chapter 2: Analysis of the External Environment: Opportunities and Threats
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Sample Questions
Q1) The computers of Main Frame Inc.,a computer company,are manufactured with in-built operating software.The users of this software have avoided using computers manufactured by other companies because that would entail converting their data to the other software.Also,they would have to get used to working smoothly with the other software.From this scenario,we can infer that:
A) the users of Main Frame Inc. have increased power.
B) the switching cost would be higher for the users of Main Frame Inc.
C) the users of Main Frame Inc. have increased industry rivalry tremendously.
D) it is easy for competitors to poach users of Main Frame Inc.
Answer: B
Q2) In what way are switching costs a fundamental part of not just rivalry but also the force of new entrants?
Answer: If buyers can easily switch to new companies attempting to enter the industry,there is a greater threat of new entrants.
Q3) How do switching costs affect industry rivalry?
Answer: The lower the switching costs,the easier it is for competitors to poach customers,thereby increasing industry rivalry.
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Page 4
Chapter 3: Internal Analysis: Strengths, Weaknesses, and Competitive Advantage
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Sample Questions
Q1) Which of the following is true of a tangible resource?
A) It is an economically valuable asset such as brands and patents.
B) It has a physical presence such as land, machinery, and cash.
C) It includes employee and management skills and talents.
D) It includes organizational assets like knowledge and reputation.
Answer: B
Q2) A survey is conducted among the customers of a supermarket chain.This survey reveals that the majority of these customers prefer to buy Lia,a brand of soap,because they feel that the company Lia Products Inc.has created a product that is of worth to the customers.The reason for the customers' preference is because the company constantly delivers what it promises.In this scenario,the factor that has made the brand of soap named Lia popular among these customers can be best categorized as _____.
A) value
B) rarity
C) inimitability
D) prestige
Answer: A
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Page 5
Chapter 4: Cost Advantage
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Sample Questions
Q1) In a recent presentation by the management of Seas Inc.,the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product.Which of the following charts did the presenters of Seas discuss?
A) The learning curve
B) The experience curve
C) The scale curve
D) The value curve
Q2) Breaking a large process into smaller elements that require specialized knowledge is known as _____.
A) professional specialization
B) employee specialization
C) task specialization
D) process specialization
Q3) A strategy in which the unique value offered to customers is lower-priced products or services is known as _____.
Q4) Define the cost advantage strategy and its characteristics.
Q5) Explain why a learning curve is more complex than a scale curve.
Q6) When do economies of scope come into existence?
Page 6
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Chapter 5: Differentiation Advantage
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Sample Questions
Q1) Saturn Inc.,a manufacturer of home appliances,familiarizes customers with its products through advertising.Apart from attracting new customers,it offers quick demos in mass media that assist existing customers.Which of the following stages in the consumption chain is depicted in this scenario?
A) The eighth step: what do customers need help with when they use a product?
B) The ninth step: what if customers aren't satisfied and need a return or exchange?
C) The third step: how do customers make their final selections?
D) The fourth step: how do customers order and purchase a product?
Q2) Peter always buys shoes from Brown Boot's Inc.,although other brands offering shoes of same quality are available closer to home and at lower prices.Brown Boots differentiates itself through a strong brand image.Their advertisements associate the brand with class,style,and elegance.Which of the following is a likely reason for Peter's preference toward Brown Boot's?
A) Quality
B) Reliability
C) Convenience
D) Prestige
Q3) Explain the reason why substitute products are taken as a threat by firms.
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Chapter 6: Corporate Strategy
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Sample
Questions
Q1) Winter Sources Inc.,an apparel manufacturer,recently opened a retail store in its unused office space to sell the excess material produced.In this way,the company generated extra profits.The unused space that was available to Winter Sources Inc.is an example of _____.
A) kanban
B) kaizen
C) hubris
D) slack
Q2) Lee,the CEO of Libra Inc.,decided that the best way to diversify this food processing company would be to set up its own small-scale beverage producing unit in a new area where its new products would have high demands.This decision by Lee best reflects a(n)_____.
A) acquisition
B) greenfield entry
C) brownfield entry
D) merger
Q3) How does a related-constrained diversification differ from a related-linked diversification?
Q4) Explain the ways in which diversification adds value.
Q5) How does diversification help exploit existing customer-facing resources?
Page 8
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Chapter 7: Vertical Integration and Outsourcing
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Sample Questions
Q1) Briefly state the difference between outsourcing and insourcing.
Q2) Which of the following scenarios illustrates the concept of outsourcing?
A) TechOn Inc., a company that buys raw materials from a supplier company
B) BNX Corp., a company that procures raw materials and supplies them to a different company
C) Virgo Corp., a company that contracts out a business activity to another company
D) Red Inc., a company that sells all its assets to another company
Q3) In the context of vertical integration,when is flexibility most valuable?
Q4) The process where a firm contracts out a business process or activity to an external supplier is known as _____.
A) outsourcing
B) vertical integration
C) horizontal diversification
D) market penetration
Q5) What is the main difference between a company that is vertically integrated and a company that is vertically specialized?
Q6) What are the disadvantages to outsourcing?
Q7) In the context of coordination,what is modular interdependence?
Page 9
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Chapter 8: Strategic Alliances
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Sample Questions
Q1) Two organizations that are positioned at different stages along the value chain form an alliance.The contract includes the conditions under which the contract will be closed and the consequences of closure for each partner.Which of the following clauses specifies the above conditions?
A) Preemption rights clauses
B) Voting rights clauses
C) Termination clauses
D) Noncompete clauses
Q2) An organization wants to form a strategic alliance with another firm.The second firm is at the same level along the value chain.It cannot contribute the same financial resources,although it can contribute an extensive knowledge.In order to accommodate these factors,they decide to start a legally independent firm.Which of the following alliances will be best suited for the organization?
A) A contractual alliance
B) An equity alliance
C) A distribution agreement
D) A joint venture
Q3) Explain the different ways through which a firm can create value in an alliance.Support your answer with suitable examples.
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Page 10
Chapter 9: International Strategy
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Sample Questions
Q1) Which of the following statements is true of alliances as a means of entering international markets?
A) It is a favored way to enter markets that are close to the home market.
B) It allows the alliance to be perceived by both government and consumers as local.
C) It avoids sharing resources, risks, and rewards.
D) It offers the least amount of control of all the various modes of entry.
Q2) Neferent Inc.,a finance company,incorporates itself in the Notre Islands because of low corporate tax rates there.In this case,the strategy adopted by Neferent is to gain a(n)_____.
A) economic arbitrage
B) cultural arbitrage
C) administrative arbitrage
D) capital arbitrage
Q3) Write a note on cultural distance.
Q4) Explain why firms choose to compete in international markets.
Q5) Granting another business the permission to use or sell a firm's product,technology,or process is called _____.
Q6) The spread of businesses across national borders is called _____.
Q7) Explain the four different modes of international market entry.
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Chapter 10: Innovative Strategies That Change the Nature of Competition
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Sample Questions
Q1) The approach,or pricing strategy,a company uses to get paid for the value it delivers through its business model is called the _____.
A) cost model
B) customization model
C) differentiation model
D) revenue model
Q2) Which of the following statements is true of a third-party pay strategy?
A) It focuses on a small product user base.
B) It charges the consumers of the actual product or service a high price.
C) It requires a targeted community of users that comprises a customer segment.
D) It typically sells products for a premium price rather than at a discount.
Q3) Groups of people who share similar needs and thus are likely to desire the same features in a product are called _____.
Q4) Which of the following statements is true of the cross-sell strategy?
A) It focuses on a small product user base.
B) It offers premium features to free users.
C) It requires a high conversion rate.
D) It uses discounts to gain widespread initial use.
Q5) Creating new demand in an uncontested market space is called the _____.
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Chapter 11: Competitive Strategy
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Sample Questions
Q1) Any factor that limits the ability of a company to move between strategic groups is called a(n)_____.
Q2) Zara,a research analyst,is studying the business decisions of some restaurant owners.During the data analysis stage,she employs a strategic canvas.Which of the following is likely to be her primary reason to employ this tool?
A) To understand the pricing strategy used for different dishes within each restaurant
B) To study the differences in the ways the restaurants compete with each other
C) To identify the combined target audience of strategic groups as a whole
D) To observe the similarities in the employees' views of their respective organizations
Q3) An organization studies the strategies of its competitors closely.At the current stage,it studies factors such as geographic location,characteristics of business model,services provided,and time management.At this stage,the organization is identifying the competitor's _____.
A) resources and capabilities
B) objectives
C) organizational structure
D) goals and achievements
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13
Chapter 12: Implementing Strategy
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Sample Questions
Q1) Austin Inc.,a media firm,wants to link its employees' day-to-day activities to its impact on the overall strategy.Which of the following will help the company in this case?
A) Empowerment of action
B) Principle of line of sight
C) Creation of a response profile
D) Communication of a vision
Q2) In the context of the 7 S model of organizational alignment,_____ refers to the plan,process,and related activities that create and sustain a competitive advantage for a firm in its target markets.
Q3) Green Cruz Inc.,a multinational retailer,is hiring employees who possess creative talents and prefer working in a challenging environment.In the context of the 7 S model of organizational alignment,which of the following is exemplified in this case?
A) Structure
B) Strategy
C) Skills
D) Systems
Q4) Explain the hard triangle and soft square in the 7 S model.
Q5) Write a note on the structure of the 7 S model of organizational alignment.
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Page 14
Chapter 13: Corporate Governance and Ethics
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Q1) _____ are those values that define for an individual,group,or society things that are morally right or wrong.
Q2) Antonia owns and runs a bakery in her neighborhood.She is the only person responsible for the liabilities of her bakery.Her bakery is an example of a(n)_____.
A) individual proprietorship
B) corporation
C) partnership
D) joint venture
Q3) Jiao,a student of business management,claims that the shareholder primacy model is better than the stakeholder model of business management.Which of the following statements best supports her claim?
A) The customers are the legal owners of the corporation's assets.
B) The most important input into making a business successful is wealth.
C) The shareholders own stock of a corporation that they can easily trade.
D) The shareholders have different objectives for investing in a firm.
Q4) Define ethical behavior.
Q5) A _____ is a formal declaration of a company's core values,business objectives,and ethical aspirations.
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Chapter 14: Strategy and Society
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Sample Questions
Q1) Peter,the founder of MilkWorld Inc.,started his dairy company with the intent of creating a formidable supply-chain link and providing a lucrative source of income for the local dairy farmers in his country.Peter is most likely to be considered a(n):
A) venture capitalist.
B) investment manager.
C) social entrepreneur.
D) angel investor.
Q2) Walter Inc.,an engineering firm,follows stringent rules related to safety such as wearing helmets,sporting safety goggles,and dust masks while working on-site.In this scenario,which of the following responsibilities is fulfilled by Walter?
A) Hybrid responsibility
B) Ethical responsibility
C) Philanthropic responsibility
D) Economic responsibility
Q3) Differentiate between institutional change and capacity building.
Q4) The ability of an organization to consistently gather resources from,or provide services to,key stakeholders such as donors,volunteers,students,or clients is referred to as _____.
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