Strategic Management: Concepts and Cases 3rd Edition by Jeffrey H. Dyer Test bank

Learning Objective 1: Define business strategy, including the importance of competitive advantage, the four choices that are critical to strategy formulation, and the strategic management process.
Bloomcode: Knowledge
Standard 1: AACSB || Analytic
Solution: It is an advantage that a firm has over its competitors in the activities associated with producing a product or service, thereby allowing it to produce the same product at lower cost.
 
 
61) Define business strategy and the four strategic choices it involves.
 
Answer:
 
Difficulty: Easy
Section Reference 1: What Is Business Strategy?
Learning Objective 1: Define business strategy, including the importance of competitive advantage, the four choices that are critical to strategy formulation, and the strategic management process.
Bloomcode: Knowledge
Standard 1: AACSB || Analytic
Solution: A company’s business strategy is defined as a company’s plan to gain, and sustain competitive advantage in the marketplace. This plan is based on the theory its leaders have about how to succeed in a particular market. This theory involves predictions of which markets are attractive and how a company can offer unique value to customers in those markets in a way that won’t be easily imitated by competitors. As such, a business strategy plan to achieve competitive advantage involves making four strategic choices: (1) markets to compete in; (2) unique value the firm will offer in those markets; (3) the resources and capabilities required to offer that unique value better than competitors; and (4) ways to sustain the advantage by preventing imitation.
 
 
62) What does it mean to provide unique value? Briefly explain the two strategies involved in providing unique value.
 
Answer:
 
Difficulty: Easy
Section Reference 1: What Is Business Strategy?
Learning Objective 1: Define business strategy, including the importance of competitive advantage, the four choices that are critical to strategy formulation, and the strategic management process.
Bloomcode: Knowledge
Standard 1: AACSB || Analytic
Solution: Unique value is the reason a firm wins with customers or the value proposition it offers to customers, such as a low-cost advantage or differentiation advantage. This is often referred to as a company’s value proposition, or the value that it proposes to offer to customers. Companies typically try to achieve a competitive advantage by choosing between one of two generic strategies for offering unique value: low cost or differentiation. A firm that chooses a low-cost strategy focuses on reducing its costs below those of its competitors. Key sources of cost advantage include economies of scale, lower-cost inputs, or proprietary production know-how. A firm that chooses a differentiation strategy focuses on offering features, quality, convenience, or image that customers cannot get from competitors.
 
 
63) Briefly explain SWOT analysis.
 
Answer:
 
Difficulty: Easy
Section Reference 2: What Information and Analysis Guides Strategy Formulation?
Learning Objective 2: Summarize the information that the company’s mission and thorough external and internal analysis provide to guide strategy.
Bloomcode: Knowledge
Standard 1: AACSB || Analytic
Solution: SWOT analysis is a strategic planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a business. External analysis involves: (1) an examination of the competition and the forces that shape industry competition and profitability; and (2) customer analysis to understand what customers really want. The combined results of external analysis with internal analysis of the firm are often summarized as a SWOT analysis. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. External analysis is particularly useful for shedding light on the latter two: opportunities and threats.
 
 
64) Explain the significance of internal analysis.
 
Answer:
 
Difficulty: Medium
Section Reference 2: What Information and Analysis Guides Strategy Formulation?
Learning Objective 2: Summarize the information that the company’s mission and thorough external and internal analysis provide to guide strategy.
Bloomcode: Comprehension
Standard 1: AACSB || Analytic
Solution: Internal analysis focuses on the company itself. Internal analysis completes the SWOT (Strengths, Weaknesses, Opportunities, and Threats) by focusing on strengths and weaknesses. More formally, internal analysis involves an analysis of the company’s set of resources and capabilities that can be deployed—or should be developed—to deliver unique value to customers.