Full Name: Nguyen Thi Viet Huong

Class: Advanced Finance 56 B

EXAM CRAFTING & EXECUTING STRATEGY
Chapter 6
1

Which one of the following is not a factor that makes an alliance "strategic" as opposed to just a
convenient business arrangement?
A)
The alliance involves joint contribution of resources and is mutually beneficial.
B)
The alliance helps block a competitive threat or open up new market opportunities.
C)
The alliance helps mitigate a significant risk to a company's business.
D)
The alliance helps build, enhance, or sustain a core competence or competitive advantage.
E)
The alliance is critical to the company's achievement of an important objective.
Answer: A strategic alliance is a formal agreement between two or more separate companies in
A
which they agree to work cooperatively (not contribute resources) toward some common
objective.

Companies are motivated to enter into strategic alliances or cooperative arrangements

A)
to expedite the development of promising new technologies or products.
B) to bring together the personnel and expertise needed to create desirable new skill sets and
capabilities to improve supply chain efficiency, and/or gain economies of scale in production
and/or marketing.
C)
to acquire or improve market access through joint marketing agreements.
D)
E)

to help win the race against rivals for global market leadership.
All of these.

An strategic alliance:
1. Facilitates achievement of an important business objective.
2. Helps build, sustain, or enhance a core competence or competitive advantage.
3. Helps remedy an important resource deficiency or competitive weakness.
Answer
4. Helps defend against a competitive threat, or mitigates a significant risk to a companys
:E
business.
5. Increases the bargaining power over suppliers or buyers.
6. Helps open up important new market opportunities.
7. Speeds the development of new technologies and/or product innovations

The best strategic alliances

A) aim at teaming up with world-class suppliers or else companies with world-class know-how in
product innovation.
B)
are those whose purpose is helping a company master a new technology.
C)

are those formed to enable the partners to be consistent first movers or fast followers.

D) are highly selective, focusing on particular value chain activities and on obtaining a particular
competitive benefit.
E) aim at insulating the partners against the impacts of the five competitive forces and industry
driving forces.

The best alliances are highly selective, focusing on particular value chain activities and on
Answer
obtaining a specific competitive benefit.
:D

Alliances enable a firm to build on its strengths and to learn.

Mergers and acquisitions are a much used strategy because they are an effective means of
A)
revamping a company's value chain.
B)

facilitating the employment of both offensive and defensive strategies.

C) creating a more cost-efficient operation, expanding a company's geographic coverage, and

extending a company's business into new product categories.
D) gaining quick access to new technologies or other resources and competitive capabilities and
trying to invent a new industry and lead the convergence of industries whose boundaries are
being blurred by changing technologies and new market opportunities.
E) gaining quick access to new technologies or other resources and competitive capabilities and;
plus creating a more cost-efficient operation, expanding a company's geographic coverage,
and extending a company's business into new product categories.

Answer
:E

A.
B.
C.
D.

False
False
Lack of info relate to E.
Not invent a new industry

Which one of the following statements about merger and acquisition strategies is true?
A) Merger and acquisition strategies are nearly always a superior strategic alternative to forming
alliances or partnerships with these same companies.
B) Merger and acquisition strategies tend to be far more successful that forming strategic
alliances and cooperative partnerships with other companies.
C) Despite many successes, mergers and acquisitions do not always produce the hoped-for
outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities
may never materialize at all.
D) Mergers and acquisition strategies are a very high-risk strategy because of the financial drain
of using the company's cash resources to accomplish the merger or acquisition.
E) Merger and acquisition strategies are one of the best ways for helping a company strengthen
its brand image.
Strategic Issues:
Answer
Cost savings may prove smaller than expected.
: C Gains in competitive capabilities take longer to realize or never materialize at all.

Which of the following is typically the strategic impetus for forward vertical integration?
A)
To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers
B)
C)
D)
E)

To make it easier to expand the company's product line

To gain better access to end users and better market visibility
To achieve greater control over advertising and in-store retail merchandising
To gain better access to greater economies of scale

Vertical Integration Strategy can expand the firms range of activities backward into its
Answer
sources of supply and/or forward toward end users of its products.
:C

Which of the following is not a strategic disadvantage of vertical integration?

A) It greatly reduces the opportunity for capturing maximum scale economies and achieving the
lowest possible operating costs.
B)
Vertical integration poses all kinds of capacity-matching problems.
C) It boosts a firm's capital investment in the industry and thus increases business risk if the
industry becomes unattractive later.
D) Vertical integration can result in less flexibility in accommodating shifting buyer preferences
when a new product design doesn't include parts and components that the company makes inhouse.
E) Vertically integrated companies are often slow to embrace technological advances or more
efficient production methods when they are saddled with older technology or facilities

Not
achieving
same
scale
economies
as
outside
suppliers
low-cost based competitive advantage.
Answer
Not matching or beating suppliers production efficiency with no drop-off in quality
:A
differentiation-based competitive advantage

Which of the following is not an advantage of outsourcing the performance of certain value
chain activities to outsiders?
A) Being able to reduce distribution costs by eliminating the use of wholesale distributors and
retail dealers and, instead, selling direct to end-users at the company's Web site.
B) Allowing a company to concentrate on its core business, leverage its key resources, and do
even better what it already does best
C) Improving the company's ability to innovate by allying with "world-class" suppliers who have
cutting edge intellectual capital and are first-to-market with next-generation parts and
components
D) Being able to speedily and efficiently assemble diverse kinds of competitively valuable
expertise
E)
Obtaining higher quality and/or cheaper components or services
Answer
:A

Can be performed better or more cheaply by outside specialists.

Is not crucial to achieving sustainable competitive advantage.
Improves organizational flexibility and speeds time to market.
Reduces risk exposure due to new technology and/or buyer preferences.
Allows the firm to concentrate on its core business, leverage key resources, and
do even better what it already does best.

A blue ocean type of offensive strategy

A) is a pre-emptive strike type of price-cutting offensive used by a market leader to steal
customers away from higher-priced rivals.
B) offers growth in revenues and profits by discovering or inventing new industry segments that
create altogether new demand
C)
involves deliberately attacking those market segments where a key rival makes big profits.
D) involves using innovative advertising and deep price discounts to grab sales and market share
from complacent or distracted rivals.
E) employs highly creative, never-used-before strategic moves to attack the competitive
weaknesses of rivals.
Answer A blue-ocean strategy offers growth in revenues and profits by discovering or
:B
inventing new industry segments that create altogether new demand.

10

In which of the following situations is being first to initiate a particular move not likely to result
in a positive payoff?
A)
When pioneering helps build up a firm's image and reputation with buyers
B)
C)
D)
E)

When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases
When late movers can copy a successful pioneer's moves quickly and at lower cost
When moving first can constitute a preemptive strike, making imitation extra hard or unlikely
When moving first can result in a cost advantage over rivals

Answer: C
EXAM CRAFTING & EXECUTING STRATEGY
Chapter 7
1

Companies opt to expand into foreign markets for such reasons as to

A) boost returns on investment, broaden their product lines, avoid tariffs and trade
restrictions, and escape having to deal with strong labor unions.

B)
C)
D)
E)

gain access to new customers, achieve lower costs and enhance the company's
competitiveness, capitalize on core competencies, and spread business risk across a
wider market base.
grow sales faster than the industry average, reduce the competitive threats from
rivals, and open up more opportunities to enter into strategic alliances.
avoid having to employ an export strategy, avoid the threat of cross-market
subsidization from rivals, and enable the use of a global strategy instead of a
multicountry strategy.
raise the entry barriers for industry newcomers, neutralize the bargaining power of
important suppliers, grow sales faster, and increase the number of loyal customers.

Answer:
B

Which one of the following is not a factor that a company must contend with in
competing in the markets of foreign countries?
A) Variations in market growth rates from country to country and important countryto-country differences in consumer buying habits and buyer tastes and preferences
B)
Country-to-country variations in host government policies and trade requirements
C)
D)
E)

The fact that product designs suitable for one country are sometimes inappropriate
in another
Vulnerability to adverse shifts in currency exchange rates
A need to convince shippers to keep cross-country transportation costs low

Answer:
E

Which one of the following statements concerning the effects of fluctuating exchange
rates on companies competing in foreign markets is true?
A) Domestic companies trying to combat competition from foreign imports are hurt
even more when their government's currency grows weaker in relation to the
currencies of the countries where the imported goods are being made.
B) Fluctuating foreign exchange rates greatly reduce the risks of competing in foreign
marketsthe big problem occurs when exchange rates are fixed at unreasonably
low levels.
C) Domestic companies under pressure from lower-cost imports are benefited when
their government's currency grows weaker in relation to the currencies of the
countries where the imported goods are being made.

D)
E)

Manufacturers that are exporting much of what they produce are benefited when
their country's currency grows stronger relative to the currencies of the countries
that the goods are being exported to.
If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25
per euro, then it is correct to say that the U.S. dollar has grown stronger.

Answer:
D

Fluctuating exchange rates pose significant economic risks to a firms

competitiveness in foreign markets.
Exporters are disadvantaged when the currency of the country where goods
are being manufactured grows stronger relative to the currency of the
importing country.
Domestic companies facing competitive pressure from lower-cost imports
benefit when their governments currency grows weaker in relation to the
currencies of the countries where the lower-cost imports are being made.

One of the biggest strategy issues confronting a company competing in the international
arena is
A) whether to enter country markets where competitive forces are relatively strong or
whether to only enter country markets where competition is relatively weak.
B)
whether to charge the same price in all country markets.
C)
D)
E)

whether to license a select few or a large number of foreign firms to produce and
distribute the company's products.
whether to offer a mostly standardized product worldwide or whether to customize
the company's offerings in each different country market to match the preferences
and requirements of local buyers.
how many strategic alliances to form with foreign-based firms.

Answer:
E

Which one of the following is not among the major reasons a company might choose to
enter foreign markets?
A) To build profit sanctuaries necessary to wage guerrilla offensives against
challengers invading its home market.
B)
To spread business risk across a wider geographic market base.

C)
D)
E)

To gain access to more buyers for the company's products/services.

To capitalize on company competencies and capabilities
To achieve lower costs and enhance the firm's competitiveness.

Answer:
C

Which of the following is/are not "valid" strategy options for entering and/or
competing in foreign markets?
A) An import strategy, a strategic alliance strategy, a profit sanctuary strategy, and a
cross-market subsidization strategy
B) A global strategy where a company uses essentially the same competitive strategy
approach in all country markets where it has a presence.
C)
A multicountry strategy
D)
E)

An export strategy and using strategic alliances or joint ventures with foreign
companies as the primary vehicle for entering foreign markets
A franchising strategy and a strategy of licensing foreign firms to use the
company's technology or to produce and distribute the company's products

Answer:
C

Once a company decides to expand beyond its borders it has which of the following
strategic options?
A)
To maintain a domestic production base and export goods to foreign markets.
B)
C)
D)
E)
Answer:
A

To rely on strategic alliances or joint ventures to partner with foreign companies.

To license foreign firms to produce and distribute its products or use the company's
technology.
Employ a franchising strategy
All of the above.

Profit sanctuaries
A) are markets where prices and competitive conditions are strongly linked across
country markets to form a world market.
B) are country markets in which a company derives substantial profits because of its
protected market position or unassailable competitive advantage.
C)
are markets where the risk of fluctuating exchange rates is very high.
D)
E)

are not valuable competitive assets, providing financial weaknesses and hinder a
company's race for world-market leadership.
are markets where competitive conditions make it infeasible to employ a profit
strategy and an export strategy.

Profit sanctuaries are country markets that provide a firm with substantial profits
Answer:
because of a strong or protected market position.
A

Which of the following is not a typical option that companies have to consider to tailor
their strategy to fit the circumstances of emerging country markets?
A) Develop new sets of core competencies that allow a company to offer value to
consumers of emerging markets in ways unmatched by rivals
B)
Prepare to compete on the basis of low price
C)
D)
E)

Be prepared to modify aspects of the company's business model to accommodate

local circumstances (but not so much that the company loses the advantage of
global scale and global branding)
Try to change the local market to better match the way the company does business
elsewhere
Stay away from those emerging markets where it is impractical or uneconomic to
modify the company's business model to accommodate local circumstances

Answer:
A typical option that companies have to consider to compete in markets of
B
developing countries.
10

The strategy options for local companies in competing against global challengers
include
A) develop business models that exploit the shortcomings of local distribution
networks and infrastructure, utilize keen understanding of local customer needs and

preferences, and transferring company expertise to cross-border markets.

B) employing defensive rather than offensive strategies, entering into strategic
alliances with other local companies to defeat the challengers, and not using an
import strategy.
C) licensing the company's technology to industry participants competing in foreign
markets.
D) developing a core competence in as many value chain activities as possible, and
pursuing a multicountry strategy to quickly build new profit sanctuaries.
E) Using an export strategy to gain economies of scale, forming strategic alliances
with global giants, using home-run strategies to enter nearby foreign markets, and
relying on patriotic themes in local advertising to defeat global challengers trying
to enter their home markets.

Develop a business model that exploits shortcomings in local distribution

networks or infrastructure.

Utilize knowledge of local customer needs and preferences to create customized

products or services.

Take advantage of aspects of the local workforce with which large multinational
Answer:
firms may be unfamiliar.
C

Use acquisition and rapid-growth strategies to defend against expansion-minded

internationals.

Transfer company expertise to cross-border markets and initiate actions to

contend on an international level.