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Question 1

The primary aim of strategic management at the business level is __________________. A. , maximizing risk-return tradeoffs through diversificationB. , achieving a low cost positionC. , maximizing differentiation of products and/or servicesD. , achieving competitive advantage

Answer 1

D. , achieving competitive advantage

Question 2

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? A. , differentiationB. , differentiation focusC. , overall cost leadershipD. , stuck-in-the-middle

Answer 2

C. , overall cost leadership

Question 3

A manufacturing business pursuing cost leadership is likely to _______. A. , focus on a narrow market segmentB. , use advertising to build brand imageC. , rely on experience effects to raise efficiencyD. , put heavy emphasis on product engineering

Answer 3

C. , rely on experience effects to raise efficiency

Question 4

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by ____________. A. , repeating a process until a task becomes easierB. , hiring more experienced personnelC. , spreading out a given expense or investment over a greater volumeD. , competing in an industry for a long time

Answer 4

A. , repeating a process until a task becomes easier

Question 5

With experience, unit costs of production decline as _________ increases in most industries. A. , costsB. , outputC. , priceD. , volume

Answer 5

B. , output

Question 6

Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform ______________. A. , at about the same level as firms that achieve either cost or differentiation advantagesB. , about the same as firms that are stuck-in-the-middleC. , higher than firms that achieve either a cost or a differentiation advantageD. , lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages

Answer 6

C. , higher than firms that achieve either a cost or a differentiation advantage

Question 7

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. , differentiationB. , overall cost leadershipC. , differentiation focusD. , cost leadership focus

Answer 7

B. , overall cost leadership

Question 8

Which of the following is a risk (or potential pitfall) of cost leadership? A. , Cost cutting may lead to the loss of desirable features.B. , Attempts to stay ahead of the competition may lead to gold plating.C. , Cost differences increase as the market matures.D. , Producers are more able to withstand increases in supplier costs.

Answer 8

A. , Cost cutting may lead to the loss of desirable features.

Question 9

A firm can achieve differentiation through all of the following means EXCEPT ________. A. , improving brand imageB. , better customer serviceC. , adding additional product featuresD. , offering lower prices to frequent customers

Answer 9

D. , offering lower prices to frequent customers

Question 10

Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. , overall cost leadershipB. , differentiationC. , differentiation focusD. , stuck-in-the middle

Answer 10

B. , differentiation

Question 11

High product differentiation is generally accompanied by __________. A. , higher market shareB. , higher profit margins and lower costsC. , decreased emphasis on competition based on priceD. , significant economies of scale

Answer 11

C. , decreased emphasis on competition based on price

Question 12

Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model? A. , By increasing firm margins, it avoids the need for a low cost position.B. , It reduces buyer power because buyers lack comparable alternatives.C. , Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.D. , Firms will enjoy high customer loyalty.

Answer 12

C. , Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.

Question 13

A differentiation strategy enables a business to address the five competitive forces by ______. A. , having brand-loyal customers become more sensitive to pricesB. , lessening competitive rivalry by distinguishing itselfC. , increasing economies of scaleD. , serving a broader market segment

Answer 13

B. , lessening competitive rivalry by distinguishing itself

Question 14

Which of the following is not a potential pitfall of a differentiation strategy? A. , Uniqueness that is not valuable.B. , All rivals share a common input or raw material.C. , The price premium is too high.D. , Perceptions of differentiation may vary between buyers and sellers.

Answer 14

B. , All rivals share a common input or raw material.

Question 15

Which statement regarding competitive advantages is true? A. , With an overall cost leadership strategy, firms need not be concerned with parity on differentiation.B. , If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.C. , In the long run, a business with one or more competitive advantages is probably destined to earn normal profits.D. , Attaining multiple types of competitive advantage is a recipe for failure.

Answer 15

B. , If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

Question 16

A narrow market focus is to a differentiation-based strategy as a __________________. A. , growth market is to a differentiation-based strategyB. , broadly-defined target market is to a cost leadership strategyC. , growth market is to a cost-based strategyD. , technological innovation is to a cost-based strategy

Answer 16

B. , broadly-defined target market is to a cost leadership strategy

Question 17

A firm following a focus strategy must focus on _____________. A. , governmental regulationsB. , the rising cost of inputsC. , a market segment or group of segmentsD. , avoiding entering international markets

Answer 17

C. , a market segment or group of segments

Question 18

Which of the following is not a potential pitfall of a focus strategy? A. , Erosion of cost advantages can arise within the narrow segment.B. , Product/service offerings that are highly focused are subject to competition from new entrants.C. , All rivals share a common input or raw material.D. , Focusers can become too focused to satisfy buyer needs.

Answer 18

C. , All rivals share a common input or raw material.

Question 19

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. Which of the following is not one of these three approaches? A. , automated and flexible manufacturing systemsB. , exploiting the profit pool concept for competitive advantageC. , deriving benefits from highly focused and high technology marketsD. , coordinating the extended value chain by way of information technology

Answer 19

C. , deriving benefits from highly focused and high technology markets

Question 20

A __________ can be defined as the total profits in an industry at all points along the industry value chain. A. , profit maximizerB. , profit poolC. , revenue enhancerD. , profit outsourcing

Answer 20

B. , profit pool

Question 21

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy? A. , Firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle.B. , Firms that underestimate the challenges and expenses associated with coordinating value-creating activities in the extended value chain.C. , Firms that target too large a market that causes unit costs to increase.D. , Firms that miscalculate sources of revenue and profit pools in the company industry.

Answer 21

C. , Firms that target too large a market that causes unit costs to increase.

Question 22

Which of the following is not a reason for the possible erosion of company competitive advantage? A. , rapid change in technologyB. , globalizationC. , actions by rivals from within and outside of the industryD. , company commitment to innovation

Answer 22

D. , company commitment to innovation

Question 23

Atlas Door created competitive advantage by reducing the time to receive and process and order and through installing a just in time logistics operation. Which of the following is not a reason for their favorable position relative to the five forces of industry competition? A. , It exerted power over its customers.B. , It created high entry barriers for new entrants.C. , The integration of many value-chain activities in the firm provided causal ambiguity and path dependency.D. , The product was easily imitable.

Answer 23

D. , The product was easily imitable.

Question 24

Which of the following is NOT one of the ways the Internet is lowering transaction costs? A. , eliminating supply chain intermediariesB. , minimizing office expensesC. , evaluating employee performanceD. , reducing business travel

Answer 24

C. , evaluating employee performance

Question 25

Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of _____________. A. , electronic data interchangeB. , mass customizationC. , knowledge managementD. , collaborative design

Answer 25

B. , mass customization

Question 26

Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. , celebrity endorsementsB. , prestige packagingC. , mass customizationD. , exceptional service

Answer 26

C. , mass customization

Question 27

., Due to the Internet, firms that use a focus strategy have new opportunities to _________. A. , respond quickly to customer requestsB. , provide more services and featuresC. , access niche markets in a highly specialized fashionD. , access markets less expensively

Answer 27

C. , access niche markets in a highly specialized fashion

Question 28

One of the main reasons the Internet is eroding sustainable competitive advantages is that _______. A. , incumbent firms are entering market segments that they previously considered to be too smallB. , nearly all competitors will have greater access to tools for managing costsC. , differentiators have been able to preserve their unique advantagesD. , firms are ignoring opportunities to offer high-end services in niche markets

Answer 28

B. , nearly all competitors will have greater access to tools for managing costs

Question 29

Which of these statements regarding the industry life cycle is correct? A. , Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.B. , Trends suggested by the market life cycle model are generally not reversible or repeatable.C. , It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.D. , It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

Answer 29

D. , It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

Question 30

Which of the following statements about the introduction stage of the market life cycle is TRUE? A. , It produces relatively large, positive cash flows.B. , Strong brand recognition seldom serves as an important switching cost.C. , Market share gains by pioneers are usually easily sustained for many years.D. , Products or services offered by pioneers may be perceived as differentiated because they are new.

Answer 30

D. , Products or services offered by pioneers may be perceived as differentiated because they are new.

Question 31

In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. , growthB. , maturityC. , introductionD. , decline

Answer 31

C. , introduction

Question 32

The growth stage of the industry life cycle is characterized by A. , in-kind competition (from the same type of product)B. , premium pricingC. , a growing trend to compete on the basis of priceD. , retaliation by competitors whose customers are stolen

Answer 32

A. , in-kind competition (from the same type of product)

Question 33

In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. , introductionB. , growthC. , maturityD. , decline

Answer 33

C. , maturity

Question 34

In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? A. , introductionB. , growthC. , maturityD. , decline

Answer 34

C. , maturity

Question 35

., A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? A. , introductionB. , growthC. , maturityD. , decline

Answer 35

C. , maturity

Question 36

As markets mature, ___________. A. , costs continue to increaseB. , application for patents increaseC. , there is increasing emphasis on efficiencyD. , differentiation opportunities increase

Answer 36

C. , there is increasing emphasis on efficiency

Question 37

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? A. , introductionB. , growthC. , maturityD. , decline

Answer 37

C. , maturity

Question 38

Which of the following is most often true of mature markets? A. , Some competitors enjoy a significant operating advantage due to increasing experience effects.B. , Advantages that cannot be duplicated by other competitors are difficult to achieve.C. , The market supports premium pricing, which attracts additional competitors.D. , The magnitude of pricing differences and product differentiation is larger than in the growth stage.

Answer 38

B. , Advantages that cannot be duplicated by other competitors are difficult to achieve.

Question 39

In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. A. , introductionB. , growthC. , declineD. , maturity

Answer 39

C. , decline

Question 40

The most likely time to pursue a harvest strategy is in a situation of _______. A. , high growthB. , strong competitive advantageC. , decline in the market life cycleD. , mergers and acquisitions

Answer 40

C. , decline in the market life cycle

Question 41

During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly. A. , maintainingB. , exitingC. , harvestingD. , consolidating

Answer 41

C. , harvesting

Question 42

Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds? A. , asset and cost surgeryB. , global expansionC. , selective product and market pruningD. , piecemeal productivity improvements

Answer 42

B. , global expansion

Question 43

Piecemeal productivity improvements during a turnaround typically do NOT involve _______. A. , business process reengineeringB. , increased capacity utilizationC. , expansion of company product market scopeD. , benchmarking

Answer 43

C. , expansion of company product market scope

Question 44

Which of the following is not a reason for the successful turnaround that Ford experienced in 2011 under CEO Mulally? A. , downsizing through the sale of non-Ford brandsB. , focus on a narrower range of carsC. , tightening of the product design across brandsD. , increasing its manpower across the company

Answer 44

D. , increasing its manpower across the company