MGMT 449 Chapters 1-8 TEST BANK Crafting and Executing Strategy 22nd Edition by Thompson.
Chapter 1
What Is Strategy and Why Is It Important?
1)
... [Show More] 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?
Answer: B
Explanation: Managerial considerations for successful strategies serve consumers better while increasing
performance. Internal attributes are modified to meet product line changes based on changes in the market
rather than vice versa.
Difficulty: 1 Easy
Topic: Strategy and the Strategic Management Process
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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
Answer: A
Explanation: Modifying marketing communication to target the most preferred set of physicians would help
increase the prescription of drugs, boosting sales and performance, and increasing market share. Relocation or
reduced supplier costs might improve profits but would not affect sales performance. Employing drug designers
does not add value as the rivals, too, offer drugs with similar efficacy and safety precautions.
Difficulty: 3 Hard
Topic: Strategy and the Strategic Management Process
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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.
Answer: A
Explanation: A company's strategy is the set of actions that its managers take to outperform the company's
competitors with a unique market position and sustained competitive advantage.
Difficulty: 2 Medium
Topic: Strategy and the Strategic Management Process
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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
Answer: A
Explanation: A company's strategy is the set of actions that its managers take to outperform the company's
competitors and achieve superior profitability. Achieving this entails making a managerial commitment to a
coherent array of well-considered moves about how to compete.
Difficulty: 1 Easy
Topic: Strategy and the Strategic Management Process
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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.
Answer: D
Explanation: Strategy at its essence is about setting a company apart from its rivals and staking out a market
position that is not crowded with strong competitors. It aims at doing what rivals cannot or do not do.
Difficulty: 2 Medium
Topic: Strategy and the Strategic Management Process
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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.
Answer: E
Explanation: Strategy is about competing differently from rivals—doing what competitors don't do or doing
what they can't do. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen
their market position and competitiveness.
Difficulty: 2 Medium
Topic: Strategy Analysis
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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
Answer: A
Explanation: A sales plan that is based on a low price, high cost model usually does not work as it creates a
wide gap between investment and realized profits, whereas an attractive mass market plan, diversification of
products, positive acquisition, and more visibility in a market are moves to enhance profits.
Difficulty: 3 Hard
Topic: Strategy Analysis
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Apply
AACSB: Analytical Thinking; Technology
Accessibility: Keyboard Navigation
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.
Answer: A
Explanation: Every company's strategy needs to have some distinctive and unconventional element that draws
in customers and produces a competitive edge. Mimicking the strategies of successful industry rivals and
employing diverse practices, not necessarily aligned to a strategy, rarely work.
Difficulty: 1 Easy
Topic: Define Competitive Advantage
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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.
Answer: B
Explanation: Mimicking the strategies of successful industry rivals—with either copycat product offerings or
maneuvers to stake out the same market position—is certainly not the best at yielding successful results.
Difficulty: 2 Medium
Topic: Define Competitive Advantage
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
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
Answer: B
Explanation: Developing new tracking technology would be a unique strategy to address the current issue of
losing customers.
Difficulty: 3 Hard
Topic: Define Competitive Advantage
Learning Objective: 01-01 What we mean by a company's strategy and why it needs to differ from
competitors' strategies.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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.
Answer: C
Explanation: Attracting and pleasing customers through cost, quality, and brand image of a product is one of
the "hows" to be considered while devising strategies that are dynamic, unique, and provide sustainable edge
over competitors. Usually, only the management is involved in devising strategies. [Show Less]