Practice questions for exam 3 Flashcards
(21 cards)
A cost-leadership strategy is an attractive strategy in industries where consumers price sensitive. Successful pursuit of this strategy allows the firm to offer consumers a price for its products/services.
a. are; cheap
b. are not; cheap
c. are; below average
d. are not; below average
e.Options A & C are correct.
c. are; below average
A successful differentiation strategy results in customers paying a(n) price.
a. expensive
b. cheap
c. below average
d. premium
e. A & D
d. premium
A firm’s ability to pass an increases in the cost of a supply to the customer is a benefit of a successful strategy. The ability of the firm to manage powerful buyers by increasing their switching costs (as a result of loyalty) is a benefit of a successful strategy.
Question 3Answer
a. differentiation; differentiation
b. cost-leadership; cost-leadership
c. cost-leadership; differentiation
d. differentiation; cost-leadership
a. differentiation; differentiation
A firm successfully pursuing a differentiation strategy will have an average cost per unit than the average firm in the industry. A firm successfully pursuing a cost-leadership strategy will have an average cost per unit than the average firm in the industry.
a. higher; lower
b. higher; higher
c. lower; lower
d. lower; higher
a. higher; lower
An integrated strategy:
a. is the combination of a cost-leadership and a differentiation strategy
b. is more difficult to achieve than a cost-leadership strategy or a differentiation strategy.
c. must balance the expenses associated with differentiating products/services with lowering the expenses of providing these products/services to the marketplace.
d. options A & B are correct
e. options A, B & C are correct
e. options A, B & C are correct
Which of the following is a true statement?
a. Charging a below average price for your products/services is an attractive business-level strategy and an effective mode of competition especially in more commoditized industries where consumers are price sensitive.
b. Charging a premium price for your products/services is an attractive business-level strategy and an effective mode of competition for firms like Ralph Lauren.
c. If an industry’s customers can be divided into multiple segments based on their wants/needs/preferences, it is never advisable for the firm to target the average customer. No firm has successfully done this.
d. If multiple customer segments exist (i.e., different customer profiles), the most profitable and successful firms will always offer different products/services for each of those customer segments.
e. Attempting to combine differentiation and cost-leadership in the same business-level strategy is a legitimate mode of competition in today’s business environment.
e. Attempting to combine differentiation and cost-leadership in the same business-level strategy is a legitimate mode of competition in today’s business environment.
A large risk of a cost-leadership model is cutting costs in areas that negatively impact for the customer, thus ultimately leading to a(n) in demand for the products offered.
a. value; increase
b. price; decrease
c. value; decrease
d. price; increase
e. substitutes; decrease
c. value; decrease
Which of the following is a false statement about business-level strategy?
a.
If a firm has 4 businesses (also known as business-units), it technically needs to craft 4 business-level strategies.
b. “In what industries are we going to compete?” is the key question to ask and answer when designing a business-level strategy.
c. They key ingredient in an effective business-level strategy is the customer.
d. At times, an effective business-level strategy is more impactful if it focuses on the users of the products/services versus the buyers of the products/services.
e. None of the above - A, B, C & D are all true statements about business-level strategy.
b. “In what industries are we going to compete?” is the key question to ask and answer when designing a business-level strategy.
Which of the following is an inaccurate conclusion to the following sentence? A differentiation strategy is successful if the firm…..
a. can successfully survive a price war with rivals due to differentiator’s attractive cost structure.
b. is able to minimize the loss of existing customers to rivals due to high loyalty and high switching costs.
c. can charge a premium price
d. can offer products/services that are perceived to be unique to the consumers in ways that cannot be matched by the firm’s rivals.
e. none of the above - options A, B, C & D are all accurate conclusions to the sentence, A differentiation strategy is successful if the firm…..
a. can successfully survive a price war with rivals due to differentiator’s attractive cost structure.
A key question to ask and answer when investigating the firm’s MIC is:
a. Who will take away my revenue?
b. How is demand driven in my industry?
c. How intense is the level of rivalry in my industry?
d. Is the buyer different than the user in the industry?
e. How price sensitive are customers?
Feedback
b. How is demand driven in my industry?
Which of the following is not a concentration strategy?
Question 1Answer
a. market penetration
b. horizontal integration
c. product development
d. market development
e. none of the above - A, B, C & D are all concentration strategies
b. horizontal integration
Corporate-level strategy:
a. addresses in what industries are we going to compete.
b. addresses the optimal mix of assets for the firm to hold on its balance sheet in order to maximize long-term growth.
c. necessitates a firm deciding whether to pursue a differentiation, cost-leadership and/or integrated strategy.
d. all of the above - A, B & C are correct statements
e. A & B are correct statements
e. A & B are correct statements
Which of the following is a true statement about horizontal integration?
Question 3Answer
a. It automatically translates into the attainment of monopolistic revenue.
b. It is best to pursue horizontal integration in industries that are experiencing growth.
c. Achieving monopolistic revenue means a firm can charge an above-competitive price due to restricting choice for customers.
d. B & C are true statements
e. A, B & C are all true statements.
d. B & C are true statements
Backward vertical integration (BVI) becomes more viable for a firm to consider when the ratio of suppliers to the industry . Forward vertical integration (FVI) becomes more viable for a firm to consider when the ratio of buyers to the industry
a. decreases; decreases
b. decreases; increases
c. increases; increases
d. increases; decreases
a. decreases; decreases
Dutch Bros Coffee is a drive-through coffee shop chain that offers customizable drinks and personalized service with over 950 locations. In 2025, the Grant Pass, Oregon coffee chain plans to open up a new store in Baton Rouge located near Andy’s Frozen Custard on Lee Drive, just minutes from the LSU campus. This is an example of a ___________ strategy.
a. market penetration
b. market development
c. product development
d. related diversification
e. horizontal integration
b. market development
Walmart opened its first milk processing facility in Fort Wayne, Indiana, in 2018. This facility has allowed Walmart to supply itself with milk and other dairy products under its own Great Value brand. In 2025, Walmart plans to open a second milk processing facility in Valdosta, Georgia. This is an example of which strategy?
Question 6Answer
a. market penetration
b. backward vertical integration
c. forward vertical integration
d. horizontal integration
e. product development
b. backward vertical integration
A firm with an ineffective differentiation strategy results in a(n):
Question 7Answer
a. OPM higher than competitors.
b. OPM lower than competitors.
c. GPM lower than competitors.
d. GPM higher than competitors.
e. GPM and an OPM higher than competitors.
c. GPM lower than competitors.
Economies of scope:
Question 8Answer
a. are achievable when a firm pursues a horizontal integration strategy.
b. are a source of a competitive advantage if the firm has a shared activity between two business units.
c. is the same thing as economies of scale.
d. are achievable if a firm pursues unrelated diversification.
e. none of the above - A, B, C & D are all inaccurate statements.
b. are a source of a competitive advantage if the firm has a shared activity between two business units.
If a firm wishes to achieve growth by introducing new products to its existing customer base, the firm needs to develop a strategy.
a. market penetration
b. product development
c. backward vertical integration
d. market development
e. forward vertical integration
b. product development
A firm successfully pursuing unrelated diversification:
Question 10Answer
a. is able to achieve economies of scope.
b. is able to transfer existing skill sets in manufacturing from its existing business unit to a new business unit.
c. is able to transfer existing skill sets in marketing from its existing business unit to a new business unit.
d. A, B & C are all correct statements
e. A, B & C are all incorrect statements
e. A, B & C are all incorrect statements
