, Chapter 01 What Is Strategy and Why Is It Important? Answer Key
Multiple Choice Questions
1. Which of the following is NOT one of the managerial considerations in determining how to compete
successfully?
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?
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Strategic management
,2. A pharmaceutical company functioning in France for the last 10 years has moderate sales in a crowded
market with competitors offering drugs with similar efficacy and safety precautions, but with better
sales. The greatest challenge is to increase the prescription of 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
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.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic planning
,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
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
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.
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 doing what rivals cannot or do not do.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
,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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic positioning
7. A multinational pharmaceutical company enters a new geographical location, considered an emerging
market, with its established product line: generic antibiotics. Which of the following would NOT serve
as a good strategic move to enhance profits?
A. creating a sales plan that aims to enhance initial sales and market penetration with low prices based
on high operational costs
B. devising a marketing plan that aims at mass customer segments with attractive advertisements and
offers on products
C. implementing a diversification plan that aims at adding non-generic prescription medications to the
existing line of products
D. charting an acquisition plan that aims at acquiring local smaller-scale pharmaceutical manufacturers
that seek funding and offer a complementary product lineup
E. establishing a distribution plan to set up more supply outlets than any other rivals in the
location
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.
AACSB: Analytical Thinking
AACSB: Technology
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic planning
,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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive intelligence
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.
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.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
,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
Developing new tracking technology would be a unique strategy to address the current issue of losing
customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
,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.
A well-crafted, well-executed, constantly evolving strategy manages to please customers and
shareholders by providing lasting competitive edge. In the process, managers have to take risks and
provide concrete solutions in ever-changing markets.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
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.
A company achieves a competitive advantage whenever it has some type of edge over rivals in
attracting buyers and coping with competitive forces. Strategy, at its essence, is about competing
differently—doing what rival firms don't do or what rival firms can't do.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
,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.
A company's strategy would include actions to gain sales and market share with lower prices based on
lower costs, not higher costs.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
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.
A company might tailor a strategy to compete profitably in a new market that has few rivals for its
business. But when rivals are already entrenched in a market, sustainable competitive advantage
provides buyers with lasting reasons to prefer a company's products or services over its rivals' offerings
—reasons that competitors are unable to nullify or overcome despite their best efforts.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
, 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.
There are many routes to competitive advantage, but they all involve either giving buyers what they
perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as
others at a lower cost to the firm.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
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.
If a company's competitive edge holds promise for being sustainable (as opposed to just temporary),
then so much the better for both the strategy and the company's future profitability.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable
competitive advantage.
Topic: Competitive advantage
Multiple Choice Questions
1. Which of the following is NOT one of the managerial considerations in determining how to compete
successfully?
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?
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Strategic management
,2. A pharmaceutical company functioning in France for the last 10 years has moderate sales in a crowded
market with competitors offering drugs with similar efficacy and safety precautions, but with better
sales. The greatest challenge is to increase the prescription of 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
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.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic planning
,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
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
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.
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 doing what rivals cannot or do not do.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
,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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic positioning
7. A multinational pharmaceutical company enters a new geographical location, considered an emerging
market, with its established product line: generic antibiotics. Which of the following would NOT serve
as a good strategic move to enhance profits?
A. creating a sales plan that aims to enhance initial sales and market penetration with low prices based
on high operational costs
B. devising a marketing plan that aims at mass customer segments with attractive advertisements and
offers on products
C. implementing a diversification plan that aims at adding non-generic prescription medications to the
existing line of products
D. charting an acquisition plan that aims at acquiring local smaller-scale pharmaceutical manufacturers
that seek funding and offer a complementary product lineup
E. establishing a distribution plan to set up more supply outlets than any other rivals in the
location
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.
AACSB: Analytical Thinking
AACSB: Technology
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic planning
,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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive intelligence
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.
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.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Strategic management
,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
Developing new tracking technology would be a unique strategy to address the current issue of losing
customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
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.
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.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
,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.
A well-crafted, well-executed, constantly evolving strategy manages to please customers and
shareholders by providing lasting competitive edge. In the process, managers have to take risks and
provide concrete solutions in ever-changing markets.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 What we mean by a company's strategy.
Topic: Competitive advantage
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.
A company achieves a competitive advantage whenever it has some type of edge over rivals in
attracting buyers and coping with competitive forces. Strategy, at its essence, is about competing
differently—doing what rival firms don't do or what rival firms can't do.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
,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.
A company's strategy would include actions to gain sales and market share with lower prices based on
lower costs, not higher costs.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
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.
A company might tailor a strategy to compete profitably in a new market that has few rivals for its
business. But when rivals are already entrenched in a market, sustainable competitive advantage
provides buyers with lasting reasons to prefer a company's products or services over its rivals' offerings
—reasons that competitors are unable to nullify or overcome despite their best efforts.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
, 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.
There are many routes to competitive advantage, but they all involve either giving buyers what they
perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as
others at a lower cost to the firm.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 The concept of a sustainable competitive advantage.
Topic: Competitive advantage
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.
If a company's competitive edge holds promise for being sustainable (as opposed to just temporary),
then so much the better for both the strategy and the company's future profitability.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable
competitive advantage.
Topic: Competitive advantage
