Chapter 6 - SFI

What is the potential for First-Mover advantage:

• Learn from a pioneer’s experience and avoid making the same costly mistakes as the pioneer

• Market uncertainties make it difficult to ascertain what will eventually succeed

• Benefit from a monopoly position that enables it to recover its investment costs and make an attractive profit

• Rapid market evolution (due to fast-paced changes in either technology or buyer needs

 Which of the following information is INCORRECT about offensive strategy?

• Lower the risk of being attacked, weaken the impact of any attack that occurs, and induce challengers to aim their efforts at other rivals

• The strategies that companies apply to go ahead of the opponent, rather than react to their actions, and improve its market position and performance

• Pursuing continuous product innovation to draw sales and market share away from less innovative rivals

• Using hit-and-run or guerrilla warfare tactics to grab market share from complacent or distracted rivals

What is an example of a later mover?

• Netflix

• Facebook

• A and B are correct

• A and B are incorrect

How many objectives of Horizontal merger and acquisition strategies?

• 4

• 5

• 6

• 7

Vertical integration strategies:

• Involve combining the operations of firms within the same product or service market, provide an effective means for firms to rapidly increase the scale and horizontal scope of their core business

• Providing an alternative to vertical integration and acquisition strategies. Being sometimes used to facilitate outsourcing

• Narrowing the firm’s boundaries with respect to its participation in value chain activities

• Performs value chain activities along more than one stage of an industry’s value chain system

FULL INTEGRATION refers to:

• Has set up its own manufacturing plants to procure the raw materials which are used for the preparation of its eatables

• Operates in its owned stores & has created its in-house brands where the whole manufacturing and retailing is being taken care of by the company itself

• Operates full-price and factory outlet stores but also sells its products through third-party department store outlets

• All of above

When should a company outsource?

• It can be performed better or more cheaply by outside specialists

• It is not crucial to the firm’s ability to achieve sustainable competitive advantage

• It improves organizational flexibility and speeds up time to market

• All of above

What is the risk of outsourcing strategies?

• A company will farm out the wrong types of activities and thereby hollow out its capabilities

• Key employees at the acquired company can quickly become disenchanted and leave

• Differences in management styles and operating procedures can prove hard to resolve

• Efforts to mesh the corporate cultures can stall due to formidable resistance from organization members

What are the benefits of strategic alliances?

• Managing the learning process and then adjusting the alliance agreement over time to fit new circumstances

• Creating a more cost-efficient operation out of the combined companies

• Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities

• A & B are correct

Reason to enter strategic alliances:

• When staking out a strong industry position

• When seeking global market leadership

• A & B are correct

• A & B are incorrect