Competitive Strategy
Textbook Exam Questions
Course Introduction
Competitive Strategy explores the frameworks and tools organizations use to achieve and sustain competitive advantage in dynamic markets. The course examines key concepts such as industry analysis, positioning, core competencies, value chain analysis, and game theory, enabling students to analyze rivals, identify threats and opportunities, and formulate effective strategies. Through case studies, discussion, and practical applications, students learn how leading firms create differentiation and cost advantages, respond to changing industry dynamics, and make strategic decisions that enhance long-term performance.
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Strategic Management and Competitive Advantage Concepts and Cases 5th Edition by Jay
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B.
Chapter 1: What Is Strategy and the Strategic Management Process
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Sample Questions
Q1) Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is
A) defining its mission.
B) setting objectives.
C) measuring performance.
D) defining its business level strategy.
Answer: A
Q2) A sustained competitive advantage is virtually permanent.
A)True
B)False
Answer: False
Q3) Activity ratios are ratios with some measure of profit in the numerator and some measure of firm size or assets in the denominator.
A)True
B)False
Answer: False
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Chapter 2: Evaluating a Firms External Environment
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Sample Questions
Q1) The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.
A) different; the same
B) approximately the same; the same
C) different; different
D) approximately the same; different
Answer: D
Q2) In general, it is rarely the case that all five forces in the five forces framework will be equally threatening at the same time.
A)True
B)False
Answer: True
Q3) It is possible for a single firm to be a complementor of one firm and a competitor of another.
A)True
B)False Answer: True
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Chapter 3: Evaluating a Firms Internal Capabilities
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Sample Questions
Q1) LaserTech's new technology appears to be
A) valuable and rare but not costly to imitate.
B) valuable and either rare or costly to imitate.
C) valuable but neither rare nor costly to imitate.
D) valuable, rare and costly to imitate.
Answer: D
Q2) The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)
A) sustained distinctive competence.
B) informal management control.
C) formal reporting structure.
D) compensation policy.
Answer: D
Q3) In the VRIO framework, the R represents resources.
A)True
B)False
Answer: False
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Chapter 4: Cost Leadership
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Sample Questions
Q1) In general, firms that are attempting to implement a cost-leadership strategy will choose to produce relatively simple standardized products that sell for relatively low prices compared to the products and prices of firms pursuing other business or corporate strategies.
A)True
B)False
Q2) Identify the types of control systems that are appropriate for firms pursuing a cost-leadership strategy.
Q3) Which of the following compensation policies is most likely to enhance a firm's ability to pursue a low-cost strategy?
A) awarding employees bonuses based on the total amount of goods produced
B) awarding employees bonuses based on customer comment cards
C) awarding employees bonuses that are equal to 50% of the total cost savings achieved based on employee suggestions and initiatives
D) awarding employees bonuses based solely on how long they have been employed with the company
Q4) What are the responsibilities of the CEO in a functional organization?
Q5) Identify six reasons firms can differ in their costs.
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Chapter 5: Product Differentiation
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Sample Questions
Q1) If Coach had an organizational structure that used cross-functional teams, the members of which reported not only to their functional boss (i.e. the head of production) but also to the head of the team, Coach could be said to be using which organizational structure?
A) product divisional
B) matrix
C) U-form
D) multi-domestic
Q2) Discuss the similarities and differences of the organizational structures used by firms pursuing a cost-leadership and a product-differentiation strategy and discuss the importance of broad decision-making authority within a product-differentiation strategy.
Q3) A ________ structure exists when individuals in a firm have two or more bosses simultaneously.
A) U-form
B) multidivisional
C) cross-divisional
D) matrix
Q4) What is the relationship between product differentiation and managerial creativity?
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Chapter 6: Vertical Integration
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Sample Questions
Q1) ________ exists when a firm is unfairly exploited in an exchange.
A) Competitive advantage
B) Business level strategy
C) Opportunism
D) Corporate level strategy
Q2) More vertically integrated firms accomplish fewer stages of the value chain within their boundaries than less vertically integrated firms.
A)True
B)False
Q3) Investments made by employees that have more value in a particular company than in alternative companies are known as
A) firm-specific investments.
B) individual-specific investments.
C) group-specific investments.
D) opportunistic investments.
Q4) A firm's vertical integration strategy is rare when few competing firms are able to create value by vertically integrating in the same way.
A)True
B)False
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Chapter 7: Corporate Diversification
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Sample Questions
Q1) One substitute for diversification that exists is that instead of obtaining cost or revenue advantages from exploiting economies of scope across businesses in a diversified firm, a firm may decide to simply grow and develop each of its businesses separately.
A)True
B)False
Q2) A dominant-business firm is pursuing a related diversification strategy and has between 70 and 95 percent of firm revenues from a single business.
A)True
B)False
Q3) Identify and discuss the two economies of scope that do not have the potential for generating positive returns for a firm's outside equity investors.
Q4) The businesses within a diversified firm always gain cost-of-capital advantages by being part of a diversified firm's portfolio.
A)True
B)False
Q5) Explain how strategic alliances are a substitute for exploiting economies of scope in diversification.
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Chapter 8: Organizing to Implement Corporate Diversification
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Sample Questions
Q1) In 2005, what percentage of the equity traded in the United States was owned by institutional investors?
A) 20%
B) 38%
C) 59%
D) 69%
Q2) The greatest risk associated with treating shared activities as profit centers is that divisions may choose to obtain no services from the shared activities.
A)True
B)False
Q3) Corporate spin-offs are different from asset divestitures.
A)True
B)False
Q4) In an agency relationship the party delegating the decision-making authority is called the agent.
A)True
B)False
Q5) Describe the multidivisional, or M-form structure, and how it is used to implement a corporate diversification strategy.
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Chapter 9: Strategic Alliances
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Sample Questions
Q1) When both parties to an alliance are seeking to learn something from that alliance, a learning race can evolve.
A)True
B)False
Q2) When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.
A) adverse selection
B) holdup
C) moral hazard
D) noncompliance
Q3) Define a strategic alliance and identify and differentiate between three broad categories of strategic alliances.
Q4) A learning race exists in a strategic alliance when both parties seek to learn from each other.
A)True
B)False
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Chapter 10: Mergers and Acquisitions
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Sample Questions
Q1) Diversification economies are achieved by the ability of firms to dictate prices by exerting market power.
A)True
B)False
Q2) For a firm to gain a controlling share in an acquisition, it must purchase more than 51% of the acquired firm's assets.
A)True
B)False
Q3) If one of the reasons P&G acquired Gillette was to gain greater market power in key industries, this would be an example of ________ economies.
A) technical
B) pecuniary
C) diversification
D) vertical
Q4) The value that a bidding firm brings to a target firm through an acquisition should be discounted by the cost of strategizing to implement an acquisition.
A)True
B)False
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Chapter 11: International Strategies
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Sample Questions
Q1) ________ can help firms be successful in addressing the local needs of nondomestic customers, thereby increasing demand for a firm's current products or services.
A) Globalization
B) Internationalization
C) Target responsiveness
D) Local responsiveness
Q2) Hedging is a way to counter the ________ risks of doing business in foreign markets.
A) political
B) financial
C) cultural
D) business
Q3) Government upheaval and the attendant risks to international firms are facts of life in some countries.
A)True
B)False
Q4) What is financial risk? How can firms hedge?
Q5) What is countertrade? How is it useful in international business?
Q6) Is learning from international operations automatic for firms? Why or why not?
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