Chapter Two: Strategy Multiple Choice MC 2-1 a b c d Answer: Difficulty: Page: MC 2-2 a b c d Answer: Difficulty: Page: MC 2-3 a b c d Answer: Difficulty: Page: MC 2-4 a b c d Answer: Difficulty: Page: The four components of the strategy model are goals, products, markets, and activities financial resources, goals, markets, and products focus, goals, activities, and financial resources value, goals, focus, and activities d moderate 18 An organization's value proposition answers the question Which markets should the business enter? How does the business intend to attract customers? Which products should the business offer? How should the products of the business be priced? b easy 18 In the hands of the general manager, strategy is a tool for establishing, directing, and controlling the operation of an organization creating, sustaining, and monitoring the direction of an organization establishing, implementing, and monitoring the performance of an organization creating, sustaining, and assessing the operation of an organization b easy 18 The soft goals of an organization are targets for the financial performance of the business social conduct of the business operation of the corporate office organization's contributions to the community b easy 21 Copyright © 2013 Pearson Canada Inc MC 2-5 a b c d Answer: Difficulty: Page: MC 2-6 a b c d Answer: Difficulty: Page: MC 2-7 a b c d Answer: Difficulty: Page: MC 2-8 a b c d Answer: Difficulty: Page: MC 2-9 a b c d A 15% return on investment and a reduction in re-infection rates are examples of shareholder priorities soft goals hard goals corporate values c moderate 20 A growth strategy is one that implies the priorities are market share, return on investment, and shareholder satisfaction increased sales, lower costs, and higher profits market, plant, and personnel investments revenue, cost containment, and higher earnings per share c moderate 22 With a harvest strategy, you would expect the level of investment in plant and equipment to be lower than for a growth strategy the same as that for a growth strategy higher than for a growth strategy unrelated to the strategy a moderate 22 The product market component of strategy refers to price and market position size of the target product market product and market choice the consumer needs of the target product market c moderate What type of strategy presents new products to existing markets? market penetration harvest diversification product development Copyright © 2013 Pearson Canada Inc Answer: Difficulty: Page: MC 2-10 a b c d Answer: Difficulty: Page: MC 2-11 a b c d Answer: Difficulty: Page: MC 2-12 a b c d Answer: Difficulty: Page: MC 2-13 a b c d Answer: Difficulty: Page: d moderate 24 An organization that provides products at a lower price than its competitors is competing on the basis of brand recognition cost differentiation competitive parity b easy 26 An organization that provides exclusive products is competing on the basis of differentiation cost goodwill competitive difference a moderate 28 A firm that provides convenience and friendly service is pursuing a value proposition based on service execution price features b moderate 28 A firm that discounts and offers rebates is pursing a value proposition based on features execution price reliability c moderate 28 Copyright © 2013 Pearson Canada Inc MC 2-14 a b c d Answer: Difficulty: Page: MC 2-15 a b c d Answer: Difficulty: Page: MC 2-16 a b c d Answer: Difficulty: Page: MC 2-17 a b c d Answer: Difficulty: Page: MC 2-18 a b c d A firm that focuses on image and design is competing on the basis of function fashion reliability features d moderate 28 Core activities are considered standard for all businesses within an industry critical to the operation of the business essential functions for the market leader outsourced activities b easy 29 Three key functions for a vertically integrated firm are supply management, production, and sales resource agreements, manufacturing, and marketing capital acquisition, equipment, and plant operations raw material supply, manufacturing, and distribution d challenging 30 Three key functions for a firm that competes on the basis of its technology are supply agreements, employee recruitment, and contracted services research and development, joint ventures, and assembly patents, technical publications, and employee recruitment research and development, component supply, and service d challenging 31 Key activities for firms that compete on the basis of cost would include supplier relationships and logistics marketing and after-sales service research and development and contract manufacturing component supply arrangements and assembly Copyright © 2013 Pearson Canada Inc Answer: Difficulty: Page: MC 2-19 a b c d Answer: Difficulty: Page: MC 2-20 a b c d Answer: Difficulty: Page: MC 2-21 a b c d Answer: Difficulty: Page: MC 2-22 a b c d Answer: Difficulty: Page: a moderate 32 Key activities for a firm that competes on the basis of differentiation are design, sourcing, and marketing contract manufacturing, distribution, and after-sales service financing, operations, and distribution raw material supply, assembly, and marketing a moderate 32 Strategy is commonly considered to be a product and market position set of goals and tactics blueprint for the operations business plan and a marketplace position d moderate 35 A sound competitive strategy rests on operational excellence financial stability unique capabilities benchmarking c challenging 37 Corporate strategy can be recognized by the organization's head office location and corporate management processes financial performance and number of shareholders product market focus and mission statement business portfolio and corporate resources d easy 39 Copyright © 2013 Pearson Canada Inc MC 2-23 a b c d A corporate strategy of better than 70% of revenues from a single business unit is consolidation constrained business harvest dominant business unit Answer: Difficulty: Page: MC 2-24 a b c d d easy 40 The central challenge for corporate general management is in negotiating corporate supply agreements managing diverse operations from a central location adding value to the individual business units hedging exchange rate risks Answer: Difficulty: Page: MC 2-25 a b c d c easy 41 The ultimate test of the utility of corporate strategy is in the optimism of shareholders endorsement of the Board of Directors commitment of the employees performance of the corporation Answer: Difficulty: Page: d easy 41 True/False TF 2-26 Answer: Difficulty: Page: TF 2-27 Answer: Difficulty: Page: TF 2-28 Answer: Organizational strategy is about winning in the marketplace t easy 17 Every organization has an implied strategy t easy 17 10% annual growth is an example of an organizational goal t Copyright © 2013 Pearson Canada Inc Difficulty: Page: TF 2-29 Answer: Difficulty: Page: TF 2-30 Answer: Difficulty: Page: TF 2-31 Answer: Difficulty: Page: TF 2-32 Answer: Difficulty: Page: TF 2-33 Answer: Difficulty: Page: TF 2-34 Answer: Difficulty: Page: TF 2-35 Answer: Difficulty: Page: moderate 17 The key components of a business strategy are goals, product, market, and financing f easy 18 The 'base case' strategy is the current strategy adjusted for inflation f challenging 19 Strategy can be used to set direction for the organization t challenging 19 Business strategy focuses on how an organization will create value for a portfolio of business lines f moderate 20 For a healthcare organization, patient satisfaction is an example of a 'soft' business goal t moderate 21 Returns to the shareholder are an example of a 'hard' business goal t easy 21 A growth strategy implies a focus on investment without sacrificing current profitability f challenging 22 Copyright © 2013 Pearson Canada Inc TF 2-36 Answer: Difficulty: Page: TF 2-37 Answer: Difficulty: Page: TF 2-38 Answer: Difficulty: Page: TF 21-39 Answer: Difficulty: Page: TF 2-40 Answer: Difficulty: Page: TF 2-41 Answer: Difficulty: Page: TF 2-42 Answer: Difficulty: Page: TF 2-43 Answer: Difficulty: Page: A penetration strategy suggests there is continuing growth in current markets t moderate 23 An organization's value proposition reflects the benefits it has chosen to offer in the marketplace t easy 26 Convenience is an example of a value proposition t easy 28 Operations that are common to all businesses are known as 'core activities' f moderate 29 Operational effectiveness can generate sustained profitability for an organization f moderate 37 Corporate strategy focuses on creating a competitive advantage across industries t moderate 38 Business strategy focuses on creating a competitive advantage within an industry t easy 38 Functional strategy focuses on executing the business strategy t easy 38 Copyright © 2013 Pearson Canada Inc TF 2-44 Answer: Difficulty: Page: TF 2-45 Answer: Difficulty: Page: TF 2-46 Answer: Difficulty: Page: TF 2-47 Answer: Difficulty: Page: TF 2-48 Answer: Difficulty: Page: TF 2-49 Answer: Difficulty: Page: TF 2-50 Answer: Difficulty: Page: The corporate office typically sets strategic guidelines for the business units t moderate 38 The corporate management typically determines the industries in which the organization will compete t moderate 38 The more unrelated the business units, the greater the role for the corporate office f easy 39 The contribution of the corporate office to the success of the business units is expected to exceed the cost of the office t moderate 40 Sharing corporate resources is an example of corporate cost synergy t easy 40 A conglomerate is an organization where the business units are highly integrated f challenging 40 In a highly diversified organization, there are numerous opportunities for the corporate office to add value f challenging 41 Copyright © 2013 Pearson Canada Inc ... recruitment, and contracted services research and development, joint ventures, and assembly patents, technical publications, and employee recruitment research and development, component supply, and service... return on investment, and shareholder satisfaction increased sales, lower costs, and higher profits market, plant, and personnel investments revenue, cost containment, and higher earnings per... include supplier relationships and logistics marketing and after-sales service research and development and contract manufacturing component supply arrangements and assembly Copyright © 2013 Pearson