Crafting and Executing Strategy, 22e (Thompson)

Chapter 1 What Is Strategy and Why Is It Important?

1) Managerial considerations in determining how to compete successfully do not normally

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

2) A pharmaceutical company selling prescription drugs in France for the past 10 years has had
moderate sales in a crowded market, as its rivals manufacture and market drugs of similar
efficacy and having similar safety precautions, but that have superior market share. This
particular pharmaceutical company's greatest challenge is to increase French doctors' prescribing
their drugs. What would be the most effective strategy to improve sales performance in the
existing market?
A) modifying marketing communication to increase brand familiarity within key physician
segments
B) relocating all the existing drug manufacturing facilities to developing countries to reduce
operational costs
C) employing hiring plans that aim at acquiring drug designers from rival companies
D) exiting the market and entering a new unexplored geographical location
E) engaging in new contract talks with suppliers about price breaks

3) A company's strategy consists of the action plan management takes to

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

4) ________ is the set of actions that its managers take to outperform the company's competitors
and achieve superior profitability.
A) A strategy
B) A mission statement
C) Strategic intent
D) A cost-price framework
E) A market vision

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5) Strategy, at its essence, is about
A) matching rival businesses' products and quality dimensions in the marketplace.
B) building profits for short-term success.
C) realigning the market to provoke change in rival companies.
D) developing lasting success that can support growth and secure the company's future over the
long term.
E) re-creating a business model with regularity.

6) To improve performance, there are many different avenues for outcompeting rivals such as
A) realizing a higher cost structure and lower operating profit margins than rivals in order to
drive sales growth.
B) creating products analogous with competitors so as to be competitive in the same markets.
C) pursuing similar personalized customer service or quality dimensions as rivals.
D) being undecided whether or not to concentrate operations on local versus global markets.
E) strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

7) Under Armour, a multinational sports apparel company plans entry into a new geographical
location, Vietnam, considered an emerging market, with its established and best-selling product
line: women's running shorts. How should Under Armour not craft a strategy to enhance future
profits in Vietnam?
A) create a sales plan that aims to enhance initial sales and market penetration with low prices
based on high operational costs
B) devise a marketing plan that aims at mass customer segments with attractive advertisements
and offers on products
C) implement a diversification plan that aims at adding health and fitness centers to its existing
line of products
D) chart an acquisition plan that aims at acquiring local smaller-scale sports apparel
manufacturers that seek funding and offer a complementary product lineup
E) establish a distribution plan to set up more supply outlets than any other rivals in the location

8) Every strategy needs

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

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

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

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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) employing night delivery drivers at a high cost and maintenance charges
B) developing radio tags that could be attached to packages to allow for real-time tracking by
customers' PCs and mobile phones
C) diversifying the different types of packages that can be transported and enabling booking
through calls
D) acquiring small transportation companies with cheaper trucks and tempos, rebranding, and
using them for deliveries
E) engaging in expensive advertising with new tag lines and famous celebrities to enhance its
brand image in the market

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

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

12) In crafting a company's strategy, managers

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

13) The heart and soul of a company's strategy-making effort is determining how to
A) become the industry's low-cost provider.
B) maximize profits and shareholder value.
C) improve the efficiency of its business model.
D) maximize profits while simultaneously operating in a socially responsible manner that keeps
the company's prices as low as possible.
E) come up with moves and actions that produce a durable competitive edge over rivals.

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14) The pattern of actions and business approaches that would not define a company's strategy
include actions to
A) strengthen market standing and competitiveness by acquiring or merging with other
companies.
B) strengthen competitiveness via strategic coalitions and partnerships.
C) upgrade competitively important resources and capabilities.
D) gain sales and market share with lower prices despite increased costs.
E) strengthen the firm's bargaining position with suppliers and distributors.

15) A creative, distinctive strategy that delivers a sustainable competitive advantage is important
because
A) without a competitive advantage a company cannot become the industry leader.
B) without a competitive advantage a company is likely to fall into bankruptcy.
C) crafting a strategy that yields a competitive advantage over rivals is a company's most reliable
means of achieving above-average profitability and financial performance.
D) a competitive advantage is what enables a company to achieve its strategic objectives.
E) how a company goes about trying to please customers and outcompete rivals is what enables
senior managers to choose an appropriate strategic vision for the company.

16) A company achieves a competitive advantage when it

A) provides buyers with superior value compared to rival sellers or offers the same value at a
lower cost.
B) has a profitable business model.
C) is able to maximize shareholder wealth.
D) is consistently able to achieve both its strategic and financial objectives.
E) 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) is a reliable indicator that the company has a socially responsible business model.
B) is achievable in emerging but not mature industries.
C) is a company's most reliable ticket to above-average profitability.
D) signals that the company has a bold, ambitious strategic intent that places the achievement of
strategic objectives ahead of the achievement of financial objectives.
E) is the best indicator that the company's strategy and business model are well-matched and
properly synchronized.

18) What separates a powerful strategy from a run-of-the-mill or ineffective one?

A) the ability of the strategy to keep the company profitable
B) the proven ability of the strategy to generate maximum profits
C) the speed with which it helps the company achieve its strategic vision
D) management's ability to forge a series of actions, both in the marketplace and internally, that
sets the company apart from rivals and produces sustainable competitive advantage
E) whether it allows the company to maximize shareholder value in the shortest possible time.

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19) Volta Motors, a manufacturer of self-driving delivery trucks, is working on developing its
next-generation electric vehicles. It has decided on a strategy of focusing on a narrow buyer
segment and outcompeting rivals by offering buyers customized autonomous, self-driving
electric vehicles at a lower cost than rivals. What basic strategic approach has Volta Motors
decided upon?
A) focused differentiation
B) best-cost provider
C) low-cost provider
D) broad differentiation
E) focused low-cost

20) Strategic approaches to set a company apart from rivals and achieve a sustainable
competitive advantage are not likely to include
A) striving to be the industry's low-cost provider.
B) outcompeting rivals on the basis of differentiating features that will appeal to a broad
spectrum of buyers.
C) developing a best-cost provider strategy that gives customers more value for the money.
D) focusing on a narrow market niche and serving buyers' special needs and tastes.
E) striving to be the industry's high-price provider.

21) If you were advising Rebel Toad Brewing, a local brewpub, about how to set itself apart
from rivals and achieve a sustainable competitive advantage, you would most likely not
recommend that Rebel Toad Brewing
A) strive to be the industry's low-cost provider, thereby aiming for a cost-based competitive
advantage.
B) outcompete rivals on the basis of differentiating features such as higher quality, wider product
selection, added performance, better service, more attractive styling, technological superiority, or
unusually good value for the money.
C) mimic the successful strategies of rivals.
D) focus on a narrow market niche to achieve a competitive edge by doing a better job than
rivals of satisfying the needs and tastes of buyers comprising the niche.
E) develop a cost advantage based on offering more value for its patrons' money.

22) A salsa manufacturing company that enjoys the lest bargaining power with its suppliers
would most likely be
A) involved in mass production of its products to cater to an expanding customer base.
B) actively catering to a broad, price-sensitive customer base.
C) manufacturing high-quality salsa and related products from readily available raw materials for
a broad customer base.
D) selling salsa and related products deemed to be highly popular and easily available across
most supermarkets.
E) offering high-cost specialized salsas that could be consumed only by customers with specific
food allergies.

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23) Winning a sustainable competitive edge over competitors does not hinge on which of the
following?
A) having a distinctive competitive product offering
B) building competitively valuable expertise and capabilities not readily matched, and offering
distinctive products
C) building experience, know-how, and specialized capabilities that have been perfected over a
long period of time
D) having  hard-to-beat capabilities and impressive product innovation
E) building products and distributing them at low prices to a broad customer base irrespective of
manufacturing cost

24) If you were asked to develop a low-cost provider strategy for a startup passenger air carrier
business, what would you most likely not recommend?
A) offer low prices on short-distance flights and eliminate meals during flights
B) offer low prices on long-distance flights and maintain long service times for aircraft between
flights
C) offer low prices on short-distance flights and improve airplane capacity by reducing the
distance between existing seats to permit adding more rows of seating
D) offer low prices on short-distance flights and pay flight attendants a minimum wage
E) offer low prices on long-distance flights and charge fees for both carry-on and checked
luggage

25) Amy's Drive-Thru, a fast food facility, offers healthy, sustainably grown veggie and vegan
fast food at higher prices than its competitors in the market and has a drive-through and indoor
seated casual dining operation. What strategy is Amy's Drive-Thru using to gain competitive
advantage?
A) a low-cost provider strategy
B) a broad differentiation strategy
C) a focused low-cost strategy
D) a differentiation strategy
E) 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 a guaranteed
hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain
competitive advantage?
A) a low-cost provider strategy
B) a broad differentiation strategy
C) a focused low-cost strategy
D) a focused differentiation strategy
E) a best-cost provider strategy

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27) Identify the company with a low-cost provider strategy.
A) A fashion clothing line uses sought-after designers and natural fabrics.
B) A mortgage company specializes in lending money for second homes.
C) An online retailer delivers organic groceries overnight.
D) A baby products retailer sells unassembled baby furniture produced in China.
E) 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
________ strategy.
A) best-cost provider
B) focused low-cost
C) focused differentiation
D) broad differentiation
E) low-cost provider

29) An evolving strategy for a ride-share business like Uber or Lyft is not likely to be triggered
by
A) their need to keep strategy in step with changing circumstances, market conditions, and
changing customer needs and expectations.
B) the proactive efforts of their managers to fine-tune and improve one or more pieces of the
strategy.
C) their need to abandon some strategy features that have been faltering or are no longer working
well.
D) their need to respond to the newly initiated actions and competitive moves of manufacturers
of autonomous vehicles.
E) their need to respond to short-term swings in the stock market that impact timing of an initial
public offering (IPO).

30) A "repeatedly evolving strategy" best applies to a

A) government housing agency that formulates urban redevelopment plans during a four-year
window of time and implements them phase by phase over that period of time.
B) mobile phone company, established in a saturated market, that plans its research and
development activities to allow for quarterly releases of new products that match or overtake
features of rivals' mobile phones.
C) startup cosmetics manufacturer that replicates the products of rivals but at a comparable
quality and lower price.
D) nationalized bank that lends at a lower interest rate but offers a zero-processing fee in a
market crowded with privatized banks running at high cost.
E) firearms regulatory agency, set up by the government, that publishes industry standards for
safety, reliability, and quality of arms and ammunition.

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31) Managers of every company should be willing and ready to modify their strategies because
A) market conditions and circumstances are changing over time or the current strategy is clearly
failing.
B) the task of crafting strategy is a one-time event.
C) the strategic vision necessitates periodic updating.
D) frequent changes in strategy make it very difficult for rivals to imitate.
E) all strategies are reactive.

32) Adapting to new conditions like new innovations by competitors, fast-changing

technological developments, and constantly evaluating what is working result in
A) an assured profitability strategy.
B) a broad market entry strategy.
C) an emergent strategy.
D) unlimited revenue generation.
E) a proactive strategy.

33) Managers must be prepared to modify their strategy except when

A) changing circumstances affect performance and the desire to improve the current strategy.
B) rivals make or adjust moves in the market due to the shifting needs of buyers.
C) encountering stagnating market conditions and increasingly restrictive new customer
acquisition opportunities.
D) evidence is mounting that the current strategy is becoming less effective.
E) rivals announce their monthly profit margins in public.

34) A company's strategy is a "work in progress" and evolves over time because of the
A) importance of developing a fresh strategic plan every year that keeps employees from
becoming bored with executing the same strategy year after year.
B) ongoing need to imitate the new strategic moves of the industry leaders.
C) need to make regular adjustments in the company's strategic vision.
D) ongoing need of company managers to react and respond to changing market and competitive
conditions.
E) 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) a blend of offensive actions on the part of managers to improve the company's profitability
and defensive moves to counteract changing market conditions.
B) a combination of conservative moves to protect the company's market share and somewhat
more risky initiatives to set the company's product offering apart from rivals.
C) a close imitation of the strategy employed by the recognized industry leader.
D) a blend of proactive actions to improve the company's competitiveness and financial
performance, and adaptive reactions to unanticipated developments and fresh market conditions.
E) more a product of clever entrepreneurship than of efforts to clearly set a company's
product/service offering apart from the offerings of rivals.

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36) Crafting a deliberate strategy involves developing strategy elements that
A) imitate as much of the market leader's strategy as possible so as not to end up at a competitive
disadvantage.
B) comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan
period; big changes in strategy are thus made only once every five years.
C) consist of a blend of proactive new planned initiatives plus ongoing strategy elements
continued from prior periods.
D) deliberately eliminate the ongoing strategic elements and implement new planned initiatives.
E) consist of adaptive change plans to new market situations along with abandoned redundant
ongoing elements.

37) Strategy formulation is

A) mostly hidden to outside view and is deliberately kept under wraps by top-level managers (so
as to catch rival companies by surprise when the strategy is launched).
B) typically planned well in advance and usually deviates little from the planned set of actions
and business approaches because of the risks of making on-the-spot changes.
C) static over time unless a newly appointed CEO decides to take the company in a new
direction with a new strategy.
D) typically a blend of proactive and reactive strategy elements.
E) developed solely on the fly because managers must make constant efforts to come up with
fresh moves to keep a company's product offering clearly set apart from the product offerings of
rival firms.

38) A company's realized strategy evolves from one version to the next due to
A) changing management direction because of understanding several appealing strategy
alternatives.
B) the proactive efforts of company managers to improve the current strategy, a need to respond
to changing customer requirements and expectations, and a need to react to fresh strategic
maneuvers on the part of rival firms.
C) ongoing turnover in the managerial and executive ranks (new managers often decide to shift
to a different strategy).
D) pressures from shareholders to boost profit margins and pay higher dividends.
E) the importance of keeping the company's business model fresh and up-to-date.

39) It is incorrect to say that a company's strategy evolves due to

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

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40) In the course of crafting a strategy, managers typically do not
A) abandon certain strategy elements that have grown stale or become obsolete.
B) modify the current strategy when market and competitive conditions take an unexpected turn
or some aspects of the company's strategy hit a stone wall.
C) revamp the current strategy in response to the fresh strategic maneuvers of rival firms.
D) take proactive actions to improve this or that piece of the strategy.
E) share the strategy publicly to obtain additional customer and shareholder support.

41) Strategy is about competing differently than rivals; thus, strategy success is about
A) the sources of sustained advantages and superior profitability.
B) those emergent, unplanned, reactive, and adaptive plans that are more appropriate than
deliberate or intended ones that drive the realized strategy.
C) matching internal resources and capabilities to the industry environment.
D) keeping the firm current with the rapid pace of change in the industry.
E) replacing proactive and reactive measures by modified ongoing strategic elements to preserve
company values.

42) A deliberate strategy is best exemplified by a(n)

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

43) An emergent strategy is best exemplified by a(n)

A) local hardware store that offers a 10 percent discount for seniors on the first Wednesday of
every month.
B) online book reseller that diversifies into custom book publishing.
C) oil-change franchisor that continues geographical expansion despite a recession.
D) healthy food manufacturer that integrates forward into drive-thru fast health food restaurants.
E) microbrewer that invests in building community water wells during a drought.

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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.

The use of strategies by these three companies accurately can be analyzed by saying that
A) Company B employs an emergent strategy, whereas companies A and C employ deliberate
strategies.
B) All three companies employ deliberate strategies.
C) All three companies employ emergent strategies.
D) Company C employs a deliberate strategy; companies A and B employ emergent strategy.
E) 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 its bathtubs did not sell. The bubble foam became famous among some women
and led to a line of exclusive bath products for women. The manufacturer established shops in
various regional locations and hired celebrities to market its 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) Offering scented bubble bath foams and massage coupons was an emergent strategy.
B) Creating a subbrand that offered exclusive bath products for women was an emergent
strategy.
C) Establishing shops in regional locations was an emergent strategy.
D) Hiring celebrities to market its products was an emergent strategy.
E) Creating a worldwide presence through retail outlets and online sites was an emergent
strategy.

46) Due to impending labor strife over planned layoffs in its Silicon Valley headquarters, a social
networking company has decided to outsource its programming operations to an emerging
market, India, to obtain cheaper labor. Since then, this social networking company has
encountered criticism that has diminished its current market position and staff productivity. You
have been retained by this company to develop an appropriate reactive (emergent) strategy that
would begin by
A) hiring and training new talent to begin operations in the emerging market.
B) acquiring a local computer chip marketing and distribution specialist firm in the new location.
C) cancelling the idea of outsourcing and retaining the existing workforce to run operations.
D) shifting the existing workforce to the new geographical location and paying them according
to new standards.
E) cancelling the job cuts till the market situation and entry operations stabilize.

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47) A company's business model
A) concerns the actions and business approaches that will be used to grow the business, conduct
operations, and stake a competitor's market position.
B) is management's blueprint for how it will generate revenues sufficient to cover costs and yield
an attractive profit.
C) concerns what combination of moves in the marketplace it plans to make to outcompete
rivals.
D) deals with how it can simultaneously maximize profits and operate in a socially responsible
manner that keeps its prices as low as possible.
E) concerns how management plans to pursue strategic objectives, given the larger imperative of
meeting or beating its financial performance targets.

48) The consumer goods companies listed below all pursue the same business model with the
exception of
A) Acer laptops.
B) Gillette razors.
C) Epson printers.
D) Keurig espresso coffee machines.
E) Nintendo Wii.

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

A) Because it sets forth management's game plan for maximizing profits for shareholders
B) Because it details exactly how management's strategy will result in the achievement of the
company's strategic intent
C) Because it is a part of an operating model that focuses on delivering excellence and creating
value for external shareholders and internal labor force
D) Because it sets forth the key components of the enterprise's business approach, indicates how
revenues will be generated, and makes a case for why the strategy can deliver value to customers
in a profitable manner
E) Because it sets forth management's long-term action plan to match the business standards set
by formidable rivals

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

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51) The difference between a company's strategy and a company's business model is that
A) a company's strategy is management's game plan for achieving strategic objectives while its
business model is management's game plan for achieving financial objectives.
B) the strategy concerns how to compete successfully and the business model concerns how to
operate efficiently.
C) a company's strategy is management's game plan for realizing the strategic vision, whereas a
company's business model is the game plan for accomplishing its corporate responsibility goals.
D) strategy relates broadly to a company's competitive moves and business approaches while its
business model relates to whether the revenues flowing from the strategy are sufficient to cover
costs and realize a profit.
E) a company's strategy is solely concerned with how to please customers while its business
model is solely concerned with how to please shareholders.

52) The customer value proposition lays out the company's approach to
A) meeting profitability guidelines without the risk of losing customers.
B) operating efficiently given the current level of customers.
C) embracing rival company approaches to gaining customers.
D) satisfying customer wants and needs at a price that customers will consider a good value.
E) 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
manufacturers of two-wheeler scooters. What will make the product most attractive for
customers?
A) low profit
B) high value
C) high cost
D) low value
E) low cost

54) You have been asked to advise Waltham Furniture, a company that seeks to serve a target
middle-class customer demographic obsessed with the quality and price of products. Your
proposed value proposition for this company to offer to its customers would be to
A) identify the unique features of your client's furniture without comparing it with a rival's
products.
B) offer copycat furniture at low cost but an average quality compared to your client's rivals.
C) offer the same quality of furniture as do your client's rivals but at a high cost based on greater
market share and higher brand value.
D) provide comparable quality furniture at a much lower price than your rivals but leave the final
assembly of purchased furniture to customers accompanied by an easy-to-follow assembly guide.
E) market and sell only average quality furniture compared to your rivals at an imperceptible
difference in price.

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55) Based upon its advertising slogan, the pizza restaurant that likely offers the best value
proposition to its customers is
A) Johnny's Pie Shop: "The Tastiest Pizza You've Ever Had."
B) Fast n'Fresh Pizza: "Get fresh, hot pizza, delivered under 20 minutes—or it's free."
C) Sustainable Slices: "Organic and sustainably sourced ingredients that are good for you and the
planet."
D) Loyalty Pizza: "One pizza, 5 points: to be redeemed with a pan pizza upon reaching 50
points."
E) Crackerjack Pizza: "Open your 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) providing free delivery of purchased laptops
B) allowing customers to pay through gift coupons
C) updating the site with better high-resolution pictures of laptops
D) providing mobile friendly version of the site and compatible apps for mobile users
E) 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; stores all passwords for commonly visited sites in encrypted
form; allows users to view ads on previously made related searches; provides suggestive search
items to assist the user; allows users to view a collection of related web pages users might want
to visit; and provides a faster load time and more accurate hits than its rivals. This search engine
company uses a profit formula that primarily consists of
A) providing a free translation feature for 80 different languages.
B) allowing users to view ads on previously made related searches.
C) allowing users to view a collation of related web pages users might want to visit.
D) providing a faster load time and more accurate hits than its rivals.
E) providing suggestive search items based on history of sites visited.

58) A winning strategy is one that

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

59) A winning strategy must pass which three tests?

A) the dominant market test, the sustainable advantage test, and the profit test
B) the fit test, the competitive advantage test, and the performance test
C) the sustainable performance test, the fit test, and the profit test
D) the performance test, the dominant market test, and the fit test
E) the fit test, the sustainable advantage test, and the dominant market test

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60) To distinguish a winning strategy from a mediocre or losing strategy, a strategic manager
should ask which question?
A) How good is the company's business model?
B) Is the company a technology leader?
C) Does the company have low prices in comparison to rivals?
D) Is the company putting too little emphasis on behaving in an ethical and socially responsible
manner?
E) How well does the strategy fit the company's situation?

61) To test the merits of a firm's strategy and distinguish it as a winning strategy, which major
question needs to be addressed?
A) Is the company's strategy ethical and socially responsible, and does it put enough emphasis on
good product quality and good customer service?
B) Is the company putting too little emphasis on growth and profitability and too much emphasis
on behaving in an ethical and socially responsible manner?
C) Is the strategy resulting in the development of additional competitive capabilities?
D) Is the strategy helping the company achieve a sustainable competitive advantage, and is it
resulting in better company performance?
E) Does the strategy strike a good balance between maximizing shareholder wealth and
maximizing customer satisfaction?

62) For John Sidanta, CEO and founder of Primaplast, a manufacturer of biodegradable plastic
drinking straws made from recycled material, crafting and executing a strategy is a top-priority
managerial task because it
A) helps Primaplast management create tight fits between a company's strategic vision and
business model.
B) allows Primaplast company personnel, and especially senior executives, to know the answer
to "who are we, what do we do, and where are we headed?"
C) is Primaplast management's prescription for doing business, its roadmap to competitive
advantage, a game plan for pleasing customers, and its formula for improving performance,
especially in light of impending community and some food service outlets' bans on conventional
plastic drinking straws.
D) provides Primaplast with clear guidance as to what the company's business model and
strategic intent are, and helps keep managerial decision-making from being rudderless.
E) establishes how well Primaplast executives perform these tasks and are the key determinants
of executive compensation.

63) Why are crafting and executing business strategies the foremost tasks of any organization?
A) because they are necessary ingredients of a sound operational business model
B) because a good strategy coupled with a good strategy execution are the most telling signs of
good. management and allow a company to be a standout performer in the marketplace
C) because the management skills of top executives are sharpened as they work their way
through the strategy-making, strategy-executing processes
D) because doing these tasks helps executives develop an appropriate strategic vision, strategic
intent, and set of strategic objectives
E) because of the contribution they make to maximizing value for shareholders

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

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

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

66) Excellent execution of an excellent strategy is

A) the best test of managerial excellence and the best recipe for making a company a standout
performer.
B) a solid indication that managers are maximizing profits and looking out for the best interests
of shareholders.
C) the best test of whether a company is a true industry leader.
D) the best evidence that managers have an emerging business model.
E) the best test of whether a company enjoys sustainable competitive advantage.

67) Ben Weprin is founder and CEO of Graduate Hotel, a growing chain of boutique hotels
situated near college campuses and designed to cater to the nostalgia and local boosterism that
are part of the culture of university towns. (Room keys are imprinted with the names of famous
alumni, and public spaces are decorated with historical photos of campus life, vintage art and
other collegiate artifacts.) Mr. Weprin and his company are trying to create a brand that will find
year-round business by catering to more than just alumni coming back for once-a-year football
weekends or 10-year anniversaries of their graduating classes. What is the major question that
Mr. Weprin and his team need to ask about his company's strategy?
A) What must managers do, and do well, to make a company a winner in the marketplace?
B) What can employees do, and do well, to ensure customer satisfaction?
C) What can shareholders do, and do well, to ensure a profitable company?
D) What do customers do, how to profile customers who buy a company's product, and tailor
sales strategy around them?
E) What do suppliers do, and how to get supplies at the lowest cost to build a profitable
business?

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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. How would you
characterize this company's strategy?
A) It fails the performance test.
B) It fails the competitive advantage and the fit tests.
C) It is a winning strategy.
D) It fails in all three tests.
E) It fails the fit test but passes the competitive advantage and performance tests.

69) Consider the following five companies and their situations.

• Company A is an established online fantasy sports gaming company that has been accused of
game-rigging, bribes and kickbacks.
• Company B, a ride share company, has delayed its planned initial public offering due to reports
of having an inhospitable workplace characterized by sexual harassment and discrimination.
• Company C, a pharmaceutical manufacturer, charges higher prices for life-saving drugs in
some countries than it charges in others.
• Company D, a manufacturer and marketer of high-end consumer electronics, has a strict Code
of Conduct that requires its suppliers to comply with several standards regarding safe working
conditions, fair treatment of workers, and environmentally safe manufacturing.
• Company E, a pizza delivery business, is a being boycotted by customers and losing sponsored
tie-ins with professional sports due to racist comments by its founder and CEO.

Which of the above companies is distinguished by an ethical strategy as opposed to an unethical

or flawed strategy?
A) Company A
B) Company B
C) Company C
D) Company D
E) Company E

70) In evaluating proposed or existing strategies managers should

A) initiate new initiatives even though they don't seem to match the company's internal and
external situation.
B) scrutinize the company's existing strategies on a regular basis to ensure they offer a good
strategic fit, create a competitive advantage, and result in above-average performance.
C) evaluate the firm's business model at least every three years.
D) ensure core capabilities are incorporated for establishing a competitive advantage.
E) align existing strategies with new strategies to emphasize incremental gains.

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71) A winning strategy is one that
A) builds strategic fit, is socially responsible, and maximizes shareholder wealth.
B) is highly profitable and boosts the company's market share.
C) results in a company becoming the dominant industry leader.
D) fits the company's internal and external situation, builds sustainable competitive advantage,
and improves company performance.
E) can pass the ethical standards test, the strategic intent test, and the profitability test.

72) A seldom used strategic approach to setting a company apart from rivals and achieving a
sustainable competitive advantage is
A) striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive
advantage.
B) outcompeting rivals on the basis of such differentiating features as higher quality, wider
product selection, added performance, better service, more attractive styling, or technological
superiority.
C) developing competitively valuable resources and capabilities that rivals cannot easily match,
copy, or trump with capabilities of their own.
D) 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 comprising the niche.
E) copying the attributes of a popular product or service.

73) A company achieves sustainable competitive advantage when

A) it has a profitable business model.
B) a sufficiently large number of buyers have a lasting preference for its products or services as
compared to the offerings of competitors.
C) it is able to maximize shareholder wealth.
D) it is consistently able to achieve both its strategic and financial objectives.
E) its strategy and its business model are well matched and in sync.

74) A company's business strategy is not likely to include

A) actions to respond to changing market conditions or other external factors.
B) actions to strengthen competitiveness via strategic alliances and collaborative partnerships.
C) actions to strengthen internal capabilities and competitively valuable resources.
D) actions to manage the functional areas of the business.
E) management's actions to revise the company's financial and strategic performance targets.

75) Changing circumstances and ongoing managerial efforts to improve the strategy
A) account for why a company's strategy evolves over time.
B) explain why a company's strategic vision undergoes almost constant change.
C) make it very difficult for a company to have concrete strategic objectives.
D) make it very hard to know what a company's strategy really is.
E) are consistent with a planned strategy approach.

76) What is strategy and why is it important?

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77) Briefly define each of the following terms.

a. Sustainable competitive advantage

b. Deliberate strategy
c. Emergent strategy
d. Realized strategy
e. Abandoned strategy

78) What are the three tests of a winning strategy?

79) Identify and briefly describe the five most frequently used strategic approaches to achieving
a sustainable competitive advantage. Provide examples.

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

81) Provide at least two examples of a company's competitively valuable capabilities.

82) What are the three questions that managers can use to distinguish a winning strategy from a
so-so or flawed strategy? Briefly explain why each question is important.

83) 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?

84) During a recession, a high-end beverage producer facing strong competition in a saturated
market has decided to phase out all its flagship products and introduce a new line of second-label
beverages at lower price points in reaction to its falling market share. Would this type of a
reactive strategy revive its position? Why or why not?

85) Compare the business models of Gillette and Epson.

86) Why are the capabilities needed to build a sustainable competitive advantage so important to
a winning business strategy? Cite one of the company examples in the chapter to illustrate your
answer.

87) Why is a company's strategy typically a blend of proactive and reactive approaches?

88) Can an organization succeed by pursuing strategies that are proactive and reactive? Explain.

89) 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.

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

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91) What factors determine whether a strategy can be called a winning strategy?

92) How can a manager tell a winning strategy from a strategy that is mediocre or a loser?

93) Why is sustainable competitive advantage so important to a winning business strategy?

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

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

96) Good strategy plus good strategy execution equals good management. True or false? Justify
and explain your answer.

97) Apple Inc.'s strategy, outlined in Chapter 1, represents a managerial commitment to an

integrated array of considered choices about how it should compete. What are the hallmarks of
Apple Inc.'s strategy?

98) 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.

99) An established manufacturer and marketer of apparel and equipment for competitive sports is
fast losing market share to companies that not only offer similar products, but also are upgrading
their research and development capabilities to produce better products. List a few general actions
and approaches that would help the established company revive its position.

100) A well-established brewery offers lower-priced beer to powerful supermarket buyers at

widespread locations and has loyal distributors that supply mass goods to supermarket retailers.
With fewer ways to achieve differentiation in the market, most new microbrewery entrants offer
similar products but lack sufficient funding to compete against the well-established brewery.
Which strategy could new microbrewers employ? Explain your answer.

101) A mobile phone manufacturing and marketing company acquires an overseas display
manufacturing company to gain a strong market position. Which of the five generic strategies
has the mobile phone manufacturer used to gain competitive advantage?

102) A mobile on-demand transportation company with an established brand name uses a unique
mobile app and GPS mapping technology to reduce the time for drivers to pick up passengers
and take them to their destinations. It then gives the mobile apps away free to all riders. Which of
the five generic strategies is this company using?

103) 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?

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104) LinkedIn specializes in social networking for businesses and recruiters. Which of the five
generic strategies is LinkedIn employing?

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

106) 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?

107) 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 launches 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?

108) Keurig, a coffee machine manufacturer, sells high-quality espresso machines at a very low
price but provides low-cost refills of varietal coffee pods at a relatively higher price than rivals.
Explain this business model.

109) 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?

110) A new entrant into the mobile phone market imitates its rivals' cellphones feature for
feature, but offers its products at a 20 percent discount over its rivals' prices. What can you say
about the new entrant's prospects for long-term success?

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

112) Explain why some companies get to the top of industry rankings and stay there, while
others do not.

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