Competitive Strategy
Chapter Exam Questions
Course Introduction
Competitive Strategy explores the frameworks, tools, and analytical approaches that organizations use to achieve sustainable competitive advantage within their industries. The course examines how firms assess their competitive environments, make strategic choices regarding positioning and differentiation, and respond to changes in market dynamics and competitor actions. Students will learn to analyze industry structures, evaluate internal capabilities, and formulate strategies that capitalize on opportunities while mitigating risks. Case studies and real-world examples illustrate the application of strategic concepts, enabling students to develop critical thinking and decision-making skills essential for effective strategic management in business.
Recommended Textbook
Strategic Management Theory An Integrated Approach 12th Edition by
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Charles W. L. Hill
Chapter 1: Strategic Leadership: Managing the Strategy
Making Process for Competitive Advantage
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Sample Questions
Q1) Between 2005 and 2011,Blue Drinks,a multinational beverage corporation,increased its return on investment from $5 million to $25 million.The company was able to do this by expanding its product line to include a wider variety of flavors.The $20 million increase in its return on investment between 2005 and 2011 can be referred to as which of the following?
A)Shareholder value
B)Dividend payment
C)Profit growth
D)Profitability turnover
E)Risk capital
Answer: C
Q2) The mission of a company lays out some desired future state and articulates what the company would like to achieve.
A)True
B)False
Answer: False
Q3) A SWOT analysis is implemented to fine-tune strategies.
A)True
B)False
Answer: True
Page 3
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) Starbucks and an independent local café are different in terms of their business techniques.They both sell coffee,and therefore belong to the same strategic group.
A)True
B)False
Answer: False
Q2) The threat from potential competitors is greatest in the _____ stage of the industry life cycle.
A)embryonic
B)growth
C)shakeout
D)maturity
E)decline
Answer: B
Q3) Strong brand loyalty and high customer switching costs are low barriers to entering an industry.
A)True
B)False
Answer: False
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) Imitating a company's capabilities tends to be more difficult than imitating its basic and advanced factors of production.
A)True
B)False
Answer: True
Q2) Ted is an accountant at ABC Company.He calculates the difference between total revenues and total costs before tax.Ted calculates the:
A)net profit.
B)capital turnover.
C)cost of goods sold.
D)return on sales.
E)invested capital.
Answer: A
Q3) The more a resource is firm-specific and difficult to imitate,the more likely a company holding that resource is said to have a distinctive competency.
A)True
B)False
Answer: True
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Chapter 4: Building Competitive Advantage Through Functional Level Strategies
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Sample Questions
Q1) ____ refers to unit cost increases associated with a large scale of output.
A)Economies of scale
B)Learning effects
C)Diseconomies of scale
D)Flexible manufacturing
E)Mass customization
Q2) Product attributes that collectively define product excellence include the form,features,performance,durability,and styling of the product.
A)True
B)False
Q3) The primary challenge for a company's human resource function is to find ways to lower wage and benefits costs.
A)True
B)False
Q4) Explain the process by which increased production volume leads to lower costs.Give an example from a real or hypothetical firm.Can this process apply to a service organization as well as a manufacturing one? If so,give an example.If not,explain why not.
Page 6
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Chapter 5: Business Level Strategy
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Sample Questions
Q1) A low-cost position is most appropriate when:
A)the power of buyers is low and barriers to entry are high.
B)economies of scale are relatively unimportant in manufacturing products.
C)customers have very different needs and uses for the industry's products.
D)product innovation is the key competitive factor.
E)industry rivalry is high and customers are very sensitive to prices.
Q2) Delta Airlines used to advertise its high-quality air travel service by saying it flew "anywhere,anytime." What generic strategy is represented by this advertisement?
A)Broad low-cost
B)Broad differentiation
C)Vertical integration
D)Right-time marketing
E)Rapid growth
Q3) One of the great advantages of successful value innovation is that it can catch rivals off guard and make it difficult for them to catch up.
A)True
B)False
Q4) Define the generic business-level strategies companies pursue.
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Chapter 6: Business Level Strategy and the Industry Environment
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Sample Questions
Q1) A harvest strategy requires the company to halt all new investments in capital equipment,advertising,research and development,and other activities that require cash flow.
A)True
B)False
Q2) Product proliferation often results in lowering of entry barriers in a mature industry.
A)True
B)False
Q3) One strategy used to consolidate fragmented industries is:
A)vertical mergers.
B)chaining.
C)product proliferation.
D)price signaling.
E)nonprice competition.
Q4) Market development strategy involves finding new market segments for a company's products.
A)True
B)False
Page 8
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Chapter 7: Strategy and Technology
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Q1) A technical standard helps to guarantee compatibility between products and their complements.
A)True
B)False
Q2) Switching costs,in the context of technology industries,refer to the costs that:
A)industries have to incur in order to adhere to technical standards.
B)companies have to incur to switch from one business model to another.
C)customers need to bear to abandon an established standard and adopt a new standard.
D)industries need to bear in order to abandon old technology and get license for a new technology.
E)companies need to bear to create product differentiation when they are locked inside an industry.
Q3) Aggressive marketing is a key factor in jump-starting demand to get potential early adopters to bear the switching costs associated with adopting a new innovation.
A)True
B)False
Q4) What are technical standards,why are they important,and how are they established?
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) A transnational strategy makes the most sense when demand for local responsiveness is minimal.
A)True
B)False
Q2) What is meant by the term national competitive advantage,and what are the attributes of a nation that affect the global competitiveness of companies located within that nation?
Q3) Most manufacturing companies begin their global expansion by exporting.
A)True
B)False
Q4) Which of the following statements is true about transnational strategy?
A)It gives little emphasis to cost reduction and achieving scale economies.
B)It makes little sense when the pressures for local responsiveness are intense.
C)It is an easy one to pursue because it places minimal demands on the company.
D)It fosters a flow of competencies between different subsidiaries in the company's global network of operations.
E)It is adopted by companies that produce standardized goods that do not require product differentiation.
Q5) List and briefly describe each of the four basic global strategies.
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Q1) Horizontal integration almost always increases rivalry in an industry.
A)True
B)False
Q2) Outsourcing:
A)eliminates the need for a value chain.
B)reduces the firm's dependence on its value chain.
C)reorders the steps in a firm's value chain.
D)moves some value chain activities outside the firm.
E)strengthens the firm's capabilities in each value chain function.
Q3) Unfortunately,horizontal integration can not be accomplished by acquisitions or mergers.
A)True
B)False
Q4) Under a competitive bidding strategy,independent component suppliers compete with each other to be the company that will be chosen to supply:
A)a particular part for a particular manufacturer.
B)all of the parts for a particular manufacturer.
C)a particular part for all manufacturers in the industry.
D)all parts for all products a manufacturer needs in the industry.
E)all parts for a particular product a manufacturer needs in the industry.
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Chapter 10: Corporate Level Strategy: Related and Unrelated Diversification
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Sample Questions
Q1) To be commercially successful,new products must be developed with ____ in mind.
A)manufacturing requirements
B)engineering technology
C)customer requirements
D)sales techniques
E)technical requirements
Q2) In which of the following cases are bureaucratic costs likely to be lowest?
A)A vertically integrated company with five divisions that pursues full integration
B)A company with five divisions that pursues related diversification based on economies of scope
C)A company with five divisions that pursues related diversification based on transferring competencies
D)A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring
E)A company with twenty divisions that pursues taper integration
Q3) Firms can create profitable new business units by leveraging their competencies.
A)True
B)False
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) Alpha LLC is a large paint manufacturing company.Despite government regulations,the company has been illegally disposing of its chemical wastes in a lake,which is an important habitat for several fish and birds.Which of the following ethical concerns is illustrated in this scenario?
A)On-the-job consumption
B)Opportunistic exploitation
C)Environmental degradation
D)Self-dealing
E)Substandard working conditions
Q2) A criticism of stock-based compensation plans is that:
A)they discourage empire building.
B)they reduce motivation among agents.
C)they do not align management and stockholder interests
D)they dilute stockholders' equity.
E)they adversely affect the earnings of principals.
Q3) Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.
A)True
B)False
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Chapter 12: Implementing Strategy Through Organization
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Q1) An organization with a centralized structure has a potential for creating high bureaucracy.
A)True
B)False
Q2) If a firm's leaders are using a functional structure but feel it is becoming too complex as the company grows in size,the leaders can turn to:
A)a simple structure.
B)downsizing.
C)reengineering.
D)restructuring.
E)a multidivisional structure.
Q3) A matrix structure would be the most appropriate for which of the following firms??
A)A company in which each employee is required to have only one boss
B)A company operating in the maturity stage of the industry life cycle
C)A company that is dependent on rapid mobilization of resources for competitive success
D)A company with a high level of vertical differentiation
E)A company in which the speed of product development is not crucial
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