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Concept-Tutor no Evaluating a Com 4 1919600 1

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Evaluating a company's resources and competitive position does not include developing
answers to which one of the following questions?
How good is the company's value chain?

Is the company competitively stronger or weaker than key rivals?

What are the company's resource strengths and weaknesses and its external
opportunities and threats?
Are the company's prices and costs competitive?

What strategic issues and problems merit front-burner managerial attention?

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Which one of the following is not helpful in identifying the components of a single-
business company's strategy?
The company's moves to respond to changing conditions in its macro-environment
and in industry and competitive conditions
The scope of the company's geographic coverage

The company's resource strengths and weaknesses

The company's key functional strategies

 The company's planned, proactive moves to outcompete rivals and its efforts to
build competitive advantage

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Which one of the following is not a good indicator of how well a company's present
strategy is working?
Whether its sales are growing faster than, slower than, or about the same pace as the
market as a whole, thus resulting in a rising, falling, or stable market share.
How well the company stacks up against rivals on such factors as technology,
product quality, customer service, product innovation, delivery time, speed in
getting new products to market, and other factors on which buyers base their choice
of brands
Whether the firm's profit margins are increasing or decreasing and how well its
margins compare to rival firms' margins
Whether the company's resource strengths and competitive capabilities outnumber
its resource weaknesses and competitive vulnerabilities
The firm's image and reputation with its customers and whether the company's
overall financial strength and credit rating are improving or on the decline

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SWOT analysis:
consists of three steps (as shown in Figure 4.2): identifying a company's resource
strengths and weaknesses and its opportunities and threats, drawing conclusions
about the company's overall situation, and translating the conclusions into strategic
actions to improve the company's strategy and business prospects.
provides a quick overview of where on the scale from "alarmingly weak" to
"exceptionally strong" the attractiveness of the company's overall business situation
ranks.
helps provide a basis for matching the company's strategy to its internal resource
capabilities and its external opportunities and threats.
helps identify a company's core competencies and competitive capabilities and the
seriousness of its resource weaknesses and competitive deficiencies.
All of these.

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A core competence:
is a more durable company resource than a "distinctive competence."
 usually resides in a company's technology and physical assets (state-of-the-art plants
and equipment, attractive real estate locations, modern distribution facilities, and so
on) whereas a company competence usually resides in a company's human assets.
is typically knowledge-based, residing in people and in a company's intellectual
capital and not in its assets on the balance sheet; moreover, a core competence tends
to be grounded in cross-department combinations of knowledge and expertise rather
than being the product of a single department or work group.
is usually tied closely to the caliber of a company's manufacturing capability and/or
its proprietary technology and know-how.
is better suited to helping a company defend against external threats than in pursuing
external market opportunities.

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Which one of the following groups of characteristics is least likely to represent company
strengths or competitive assets?
Physical assets such as state-of-the-art plants, attractive real estate locations, and
worldwide distribution facilities
More plants than rivals, more employees than rivals, being in business more years
than rivals, and smaller capital investment expenditures than rivals
A well-known brand name, a highly motivated workforce, and the collective
learning embedded in the organization
Short development times in bringing new products to market, a strong dealer
network, strong collaborative partnerships with key suppliers, and an experienced
and capable workforce
Proven quality control skills, good supply chain management capabilities, state-of-
the-art systems for doing business via the Internet, and a strong balance sheet

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A distinctive competence:
is a more important competitive asset than a core competence.
represents uniquely strong capability relative to rival companies–it qualifies as a
competitively superior resource strength with competitive advantage potential.
is a competitively important value chain activity that a company performs better
than its rivals.
can underpin and add real punch to a company's strategy.

All of the above.

8
Which of the following is not a measure of the competitive power of a company's
resource strengths?
How hard it is for competitors to copy the resource strength

Whether the company has more resources/capabilities than any other key rival
Whether a company's resource is really competitively superior to what rivals have or
can do
How easily the resource or capability can be trumped by the different
resources/capabilities of rivals
Whether the resource or capability is durable and has staying power (in the sense of
not losing its value quickly because of new developments)

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9
The industry or market opportunities that are most relevant to a company and those
which its strategy should aim at capturing include:
opportunities that are well-suited to the company's competitive capabilities and
resource strengths.
opportunities which the company has the financial resources to pursue.

opportunities that offer important avenues for growth.

opportunities where the company has the greatest potential for competitive
advantage.
All of the above.

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0 Which of the following is not an example of an external threat to a company's future
business prospects (see Table 4.2)?
Mounting intensity of competition among industry rivals and costly new regulatory
requirements
Having a weaker brand image than rivals and a smaller network of retailer dealers
than rivals
Shifts in buyer needs and preferences away from using the industry's product
Vulnerability to unfavorable industry driving forces and adverse demographic
changes that are likely to curtail demand for the industry's product
 Growing bargaining power on the part of customers and/or suppliers

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1 Which of the following analytical tools are particularly useful for determining whether a
company's prices and costs are competitive?
SWOT analysis, strategy assessment, activity-based costing analysis, and key
success factor analysis.
SWOT analysis, competitive strength assessment, best practices analysis, and value
chain analysis.
Value chain analysis and benchmarking.
Competitive position assessment, competitive strength assessment, strategic group
mapping, SWOT analysis, and value chain analysis.
SWOT analysis, best practices analysis, activity-based costing analysis, and
competitive strength assessment.

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2 A company's value chain consists of:
the activities a company performs in converting its resource weaknesses into
resource strengths.
the collection of activities it performs in the course of designing, producing,
marketing, delivering, and supporting its product or service and delivering value to
customers–these activities can be grouped into (a) the primary activities that are
foremost in creating value for customers and (b) the related support activities that
facilitate and enhance the performance of the primary activities.
those activities a company performs that represent "best practices"–only best
practice activities are capable of delivering value to customers and thus qualify to be
part of a company's value chain.
the activities that a company performs in developing a distinctive competence.
the activities that represent a company's competencies, core competencies,
distinctive competencies, and competitive capabilities–it is these activities that
underpin a company's efforts to create value for customers and shareholders.

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3 Benchmarking:
 is inherently unethical if it involves companies that are direct competitors because it
involves gathering competitively sensitive information about the operations and
costs of rivals.
is not a valid tool for measuring the cost-effectiveness of an activity unless it is
restricted to companies in the same industry.
is a tool for learning which companies are best at performing particular activities
and then using their techniques (or "best practices") to improve the cost and
effectiveness of a company's own internal activities.
loses much of its managerial usefulness if it is done with the aid of third-party
organizations who insist on protecting the confidentiality of individual company
data; moreover, benchmarking is not used very often by companies because of
"borderline" ethical considerations and because most of the time the information and
data used in doing benchmarking studies has turned out to be unreliable and
untrustworthy.
entails calculating the costs of performing each of the primary and related support
activities in a company's value chain.

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4 A company's cost competitiveness is largely a function of:
whether it does a good enough job of benchmarking its value chain activities against
the value chains of competitors so that it knows exactly how low to drive its costs to
be cost-competitive.
how efficiently it manages its overall value chain activities relative to how
efficiently competitors manage theirs.
whether it does a better job of building its resource strengths more cost effectively
than rivals.
whether it possesses more core competencies and competitive capabilities than
rivals.
how closely its internally-performed activities are linked to the activities performed
by suppliers and to the activities performed by forward channel allies.

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5 Strategic actions to eliminate a cost disadvantage:
can aim at lowering costs (1) in the suppliers' part of the industry value chain, (2) in
a company's own internally-performed activities, and/or (3) in the forward channel
portion of the value chain.
work best when they aim at lowering the costs of performing those tasks and
activities where the company has core competencies and distinctive competencies.
work best when aimed at increasing the amount of the company's low-cost
competitive assets and decreasing the amount of its high-cost competitive assets.
 are likely to be most effective when they are aimed at lowering the costs of the value
chain activities that a company performs internally.
are most likely to be successful when they involve efforts to concentrate more
company resources and talents on those value chain activities where the company
already has the lowest costs.

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6 The options for attacking the high costs of items purchased from suppliers does not
include which one of the following?
Pressuring suppliers for more favorable prices
Integrating backward into the business of high-cost suppliers and making the item
in-house so as to better control the cost
Switching to lower priced substitute inputs

Raising prices to customers (so as to cover the high costs)

Collaborating closely with suppliers to identify mutual cost-saving opportunities

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7 For a company to translate performance of value chain activities into competitive
advantage, it:
must (1) develop core competencies and maybe a distinctive competence that rivals
don't have or can't quite match and that are instrumental in helping it deliver
attractive value to customers or (2) be more cost efficient in how it performs value
chain activities such that it has a low-cost advantage.

has to develop more core competencies than rivals.

must be more adept than rivals in using benchmarking and activity-based costing.

has to position itself in the strategic group where profit margins are highest.

must adopt more best practices than rival firms.

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8
 Doing a weighted competitive strength assessment of how a company compares against
key rivals involves:
developing a list of 6 to 10 telling measures of competitive strength and then
assigning weights to each of these strength measures that reflects their relative
importance.
rating each company on each strength measure (using a scale of 1 to 10) and then
multiplying the strength rating by the assigned weight to get a weighted strength
score.
summing each company's weighted strength scores on the various strength measures
to get an overall measure of competitive strength for each competitor.
drawing conclusions about the size of a company's net competitive advantage or
disadvantage vis-à-vis its rivals (with the size of the advantage/disadvantage being
indicated by the sizes of the differences among the companies' competitive strength
scores).
All of the above.

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9 Which one of the following is not something that can be learned from doing a
competitive strength assessment?
Identifying the competitive factors where a company is strongest and weakest vis-à-
vis key rivals and the kinds of offensive/defensive actions the company can use to
exploit its competitive strengths and reduce its competitive vulnerabilities
Whether a company utilizes more best practices than rivals in performing its value
chain activities
Which of the rated companies is competitively strongest and what size competitive
advantage it enjoys
Whether a company has a net competitive advantage or is a net competitive
disadvantage relative to key rivals (with the size of the advantage/disadvantage
being indicated by the differences among the companies' competitive strength
scores)
Which rival company is competitively weakest and the areas where it is most
vulnerable to competitive attack–when a company has important competitive
strengths in areas where one or more rivals are weak, it makes sense to consider
offensive moves to exploit rivals' competitive weaknesses

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0 Identifying the strategic issues that company managers need to address:
involves using the results of both industry and competitive analysis and what has
been learned from evaluating the company's present strategy, SWOT analysis, and
the evaluations of the company's own competitiveness.
 entails developing a "worry list" of "how to...", "whether to....", and "what to do
about....."
is important because it sets the agenda for deciding what actions to take next to
improve the company's performance and business outlook–a good strategy must
include actions to deal with all the strategic issues and problems that stand in the
way of the company's future success.
entails locking in on what challenges the company has to overcome in order to be
financially and competitively successful in the years ahead.
All of the above.

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1 Which of the following statements is false?
The higher a company's costs are above those of close rivals, the more competitively
vulnerable it becomes.
Because the value chains of rival companies tend to be quite similar, costs outside a
company's own value chain do not affect whether it is at a cost advantage or
disadvantage vis-à-vis key rivals.
A company's cost competitiveness depends not only on the costs of internally
performed value chain activities but also on the costs of activities performed by its
suppliers and forward channel allies.
The stronger a company's financial performance and market position, the more
likely it has a well-conceived, well-executed strategy.
A competence is something a company is good at doing whereas a core competence
is a proficiently performed internal activity that is central to a company's strategy
and competitiveness.
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