Chapter 5

Question 1

Competitive advantage

Answer 1

Providing greater value for customers than competitors can

Question 2

Valuable resources

Answer 2

Resources that allow companies to improve efficiency and effectiveness

Question 3

Rare resources

Answer 3

Resources that are not controlled or possessed by many competing firms

Question 4

Imperfectly imitable resources

Answer 4

Resources that are extremely difficult or costly for others to duplicate

Question 5

Strategic dissonance

Answer 5

Discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy

Question 6

Situational analysis (SWOT)

Answer 6

An assessment of the strengths and weaknesses in an organizations environment and the opportunities and threats in the environment

Question 7

Distinctive competence

Answer 7

What a company can make, do, or perform better than its competitors

Question 8

Core capabilities

Answer 8

The internal decision making routines, problem solving processes and organizational cultures that determine how efficiently inputs can be turned into outputs

Question 9

PESTEEL analysis

Answer 9

Analysis of the political, economic, social/demographic, technological, environmental, external-employee, and legal factors that affect a company and shape the strategy

Question 10

Diversification

Answer 10

A strategy for reducing risk by owning a variety of items so that the failure of one stock does not doom the entire portfolio

Question 11

Acquisitation

Answer 11

The purchase of a company by another company

Question 12

Unrelated diversification

Answer 12

Creating or acquiring companies in completely unrelated businesses

Question 13

BCG Matrix

Answer 13

Portfolio strategy developed by Boston Consulting Group that categorizes a corporation’s businesses by growth rate and relative market share and helps managers decide how to invest funds

Question 14

Related diversification

Answer 14

Creating companies that share similar products, manufacturing, marketing, technology or culture

Question 15

Grand strategy

Answer 15

A broad corporate level strategic plan used to achieve

Question 16

Growth strategy

Answer 16

A strategy that concentrates on increasing profits, revenues, market share or the number of places in which the company does business

Question 17

Stability strategy

Answer 17

Strategy that concentrates on improving the way in which the company sells the same products or services to the same customers

Question 18

Retrenchment strategy

Answer 18

A strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business

Question 19

Industry level strategy

Answer 19

A corporate strategy that addresses the question “How should we compete in this industry”

Question 20

Competitive rivalry

Answer 20

A measure of the intensity of competitive behavior between companies in an industry

Question 21

Threat of new entrants

Answer 21

A measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry

Question 22

Threat of substitute products or services

Answer 22

A measure of the ease with which customers can find substitutes for an industry;s products or services

Question 23

Bargaining power of supplies

Answer 23

A measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs

Question 24

Bargaining power of buyers

Answer 24

A measure of the influence that customers have on a firm

Question 25

Cost leadership

Answer 25

Strategy of producing a product or service of acceptable quality at consistently lower production costs

Question 26

Differentiation

Answer 26

The positioning strategy of providing a product or service that is sufficiently different from competitor’s

Question 27

Focus strategy

Answer 27

The positioning strategy of using cost focus or

Question 28

Firm level strategy

Answer 28

A corporate strategy that addresses the question “How should we compete against a particular firm”

Question 29

Direct competition

Answer 29

The rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and react to e

Question 30

Market commonality

Answer 30

The degree to which two companies have overlapping products, services or customers in multiple markets

Question 31

Resource similiarity

Answer 31

The extent to which a competitor has similar amounts and kinds of resources

Question 32

Attack

Answer 32

A competitive move designed to reduce a rival’s market share or profits

Question 33

Response

Answer 33

A competitive countermove, prompted by a rival’s attack, to defend or improve a company’s market share or profit