unit 6 exam revised

Question 1

What qualifies as a competitive advantage?

Answer 1

Competitive advantage that is:
Sustainable
Seen by consumers as a competitive advantage

Question 2

Break down cost leadership.

Answer 2

Organisations that aim to sell a product or service that appeals to a broad target market.

Question 3

When is cost leadership the best strategy
to follow?

Answer 3

Price competition among competitors
is vigorous.
The targeted customer is price
sensitive.
Brand loyalty does not play a big role
among customers.
Buyers have high bargaining power
because of higher concentration.

Question 4

List the advantages of cost leadership.

Answer 4

Customer loyalty
Potential to increase market share
and profitability
Keeps new entrants from entering the
market

Question 5

List the disadvantages of Cost Leadership.

Answer 5

A degree of differentiation is often still
needed.
Sometimes organisations risk being overly
aggressive in their price-cutting and end
up with lower profitability

Question 6

Define differentiation.

Answer 6

Creating differences in the organisation’s product or
service offering by creating something perceived as unique and valued by customers.

Question 7

List the types of differentiation.

Answer 7

Brand image
Technology
Innovation
Features
Customer service
Speed of delivery

Question 8

Study the distinguishing features of the differentiation strategy.

Answer 8

Unit 6, page 15.

Question 9

When is differentiation the best strategy to follow?

Answer 9

Buyers’ preferences are diverse and varied.
Brand loyalty exists.

Question 10

List the potential pitfalls of the differentiation strategy.

Answer 10

Uniqueness that is not valuable
Too much differentiation
Charging too high a premium

Question 11

Break down the focus generic strategy.

Answer 11

This strategy focuses on choosing a narrow competitive scope within the industry.

Question 12

Study the distinguishing features of a focus strategy

Answer 12

Unit 6, pages 18 & 19.

Question 13

When is focus the best strategy to follow?

Answer 13

It provides a way for a smaller organisation to avoid
direct competition.
The target market niche is large enough to be profitable
and offers good growth potential.

Question 14

List the disadvantages of the focus strategy.

Answer 14

The segment can easily get competition.

Question 15

Study the distinguishing features of a best-cost strategy.

Answer 15

Unit 6, page 22.

Question 16

When best-cost is the best strategy to follow

Answer 16

Competition is fierce, and barriers to entry are low.
Customers are simultaneously price and quality-sensitive.

Question 17

List the Potential pitfalls of a best-cost strategy.

Answer 17

Unit 6, page 23.