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
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
