Question 1

Examples of important cost drivers in a company's value chain do not include:

Accepted Answer

A)   input costs.
B)   capacity utilization.
C)   learning and experience.
D)   production technology and design.
E)   customer service.F) C) and D)
G) C) and E)

Question 2

A broad differentiation strategy works best in situations where

Accepted Answer

A)   technological change is slow paced and new or improved products are infrequent.
B)   buyer needs and uses of the product are very similar.
C)   buyers incur low costs in switching their purchases to rival brands.
D)   buyers have a low degree of bargaining power and purchase the product frequently.
E)   technological change is fast paced and competition revolves around rapidly evolving product features.F) B) and C)
G) A) and B)

Question 3

For a best-cost provider strategy to be successful,a company must have

Accepted Answer

A)   excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/features incorporated in its product.
B)   the capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.
C)   access to greater learning/experience curve effects and scale economies than rivals.
D)   one of the best-known and most respected brand names in the industry.
E)   a short,low-cost value chain.F) A) and B)
G) A) and C)

Question 4

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

Accepted Answer

A)   cutting its price to levels significantly below the prices of rivals.
B)   using its low-cost edge to underprice competitors and attract price-sensitive buyers in large enough numbers to increase total profits or refraining from price cutting and using the low-cost advantage to earn a higher profit margin on each unit sold.
C)   going all out to use its cost advantage to capture a dominant share of the market.
D)   spending heavily on advertising to promote the fact that it charges the lowest prices in the industry.
E)   outproducing rivals and thus having more units available to sell.F) A) and B)
G) All of the above

Question 5

Which of the following is not one of the ways that a company can achieve a cost advantage by revamping its value chain?

Accepted Answer

A)   Cutting out distributors and dealers by selling direct to customers
B)   Replacing certain value chain activities with faster and cheaper online technology
C)   Increasing production capacity and then striving hard to operate at full capacity
D)   Relocating facilities so as to curb the need for shipping and handling activities
E)   Streamlining operations by eliminating low value-added or unnecessary work steps and activitiesF) C) and E)
G) A) and D)

Question 6

What are the distinctive features of a focused low-cost strategy? How does it differ from a low-cost leadership strategy?

Accepted Answer

The answer of What are the distinctive features of a...

Question 7

The pitfalls of a differentiation strategy include

Accepted Answer

A)   trying to differentiate on the basis of attributes or features that are easily copied.
B)   choosing to differentiate on the basis of attributes that buyers do not perceive as valuable or worth paying for.
C)   trying to charge too high a price premium for the differentiating features.
D)   being timid and not striving to open up meaningful gaps in quality or service or performance features relative to the products of rivals.
E)   All of these.F) A) and B)
G) C) and D)

Question 8

Focusing provides the ability to secure a competitive edge but also it carries some risks that will be detrimental to the focused firm,such as

Accepted Answer

A)   the chance that competitors will not find effective ways to match the focused company's capabilities in serving the market niche.
B)   the potential for the preferences and needs of niche members to shift over time toward mainstream provider product attributes.
C)   the potential for the niche to become so attractive it will not attract new competitors thereby providing excessive market segment profits.
D)   the likelihood that a focused company will become so cost efficient it will achieve excessive profits.
E)   None of these are risks worth worrying about.F) A) and B)
G) C) and E)

Question 9

While there are many routes to competitive advantage,they all involve

Accepted Answer

A)   building a brand name image that buyers trust.
B)   delivering superior value to buyers in ways rivals cannot readily match.
C)   achieving lower costs than rivals and becoming the industry's sales and market share leader.
D)   finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities.
E)   getting in the best strategic group and dominating it.F) A) and D)
G) A) and C)

Question 10

A company's biggest vulnerability in employing a best-cost provider strategy is

Accepted Answer

A)   relying too heavily on outsourcing.
B)   getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.
C)   getting trapped in a price war with low-cost leaders.
D)   being timid in cutting its prices far enough below high-end differentiators to win away many of their customers.
E)   not having a sustainable distinctive competence in cost reduction.F) B) and D)
G) B) and E)

Question 11

The aim of the best-cost provider strategy is to create a competitive advantage by

Accepted Answer

A)   incorporating attractive or upscale product attributes at a lower cost than rivals.
B)   offering buyers the industry's best-performing product at the best cost and best (lowest) price in the industry.
C)   attracting buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price.
D)   outcompeting rivals using low-cost provider strategies.
E)   translating its best-cost status into achieving the highest profit margins of any firm in the industry.F) None of the above
G) All of the above

Question 12

A low-cost leader's basis for competitive advantage is

Accepted Answer

A)   lower prices than rival firms.
B)   using a low-cost/low-price approach to gain the biggest market share.
C)   high buyer switching costs.
D)   lower overall costs than competitors.
E)   higher unit sales than rivals.F) A) and B)
G) A) and E)

Question 13

What are the five generic competitive strategies? Briefly describe each one and identify the type of competitive advantage that each strategy is aimed at achieving.

Accepted Answer

The answer of What are the five generic competitive strategies?...

Question 14

A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or focus strategy when

Accepted Answer

A)   there are many ways to achieve product differentiation that buyers find appealing.
B)   buyers use the product in a variety of different ways.
C)   the offerings of rival firms are essentially identical,standardized,commodity-like products.
D)   buyers have high switching costs in changing from one seller's product to another.
E)   the market is composed of many buyer types,all with varying needs and expectations.F) B) and D)
G) A) and D)

Question 15

The chief difference between a low-cost leader strategy and a focused low-cost strategy is

Accepted Answer

A)   whether the product is strongly differentiated or weakly differentiated from rivals.
B)   the degree of bargaining power that buyers have.
C)   the size of the buyer group that a company is trying to appeal to.
D)   the production methods being used to achieve a low-cost competitive advantage.
E)   the number of upscale attributes incorporated into the product offering.F) B) and E)
G) None of the above

Question 16

The most appealing approaches to differentiation are

Accepted Answer

A)   those that are the most costly to incorporate.
B)   those that match the differentiating features offered by rivals in the industry.
C)   those that can be made even more attractive to buyers via clever advertising.
D)   those that appeal to the most affluent consumers.
E)   those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal.F) A) and C)
G) None of the above

Question 17

A competitive strategy to be the low-cost provider in an industry works well when

Accepted Answer

A)   price competition among rival sellers is especially vigorous.
B)   commodity-based product prevails and minimal differentiation exists.
C)   buyers incur low costs in switching their purchases from one seller/brand to another.
D)   industry newcomers use low introductory prices to attract buyers and build a customer base.
E)   All of these.F) A) and B)
G) C) and D)

Question 18

A company's competitive strategy deals with

Accepted Answer

A)   management's game plan for securing a competitive advantage relative to rivals.
B)   what its strategy will be in such functional areas as R&D,production,sales and marketing,distribution,finance and accounting,and so on.
C)   its efforts to change its position on the industry's strategic group map.
D)   its plans for entering into strategic alliances,utilizing mergers or acquisitions to strengthen its market position,outsourcing some in-house activities to outside specialists,and integrating forward or backward.
E)   All of these.F) B) and D)
G) A) and B)

Question 19

To succeed with a low-cost provider strategy,company managers have to

Accepted Answer

A)   pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage.
B)   move the performance of most all value chain activities to low-wage countries.
C)   sell direct to users of their product or service and eliminate use of wholesale and retail intermediaries.
D)   do two things: (1) perform value chain activities more cost-effectively than rivals and (2) be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities.
E)   outsource the majority of value chain activities.F) A) and E)
G) C) and E)

Question 20

The risks of a focused strategy based on either low-cost or differentiation include

Accepted Answer

A)   the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace.
B)   the potential for the preferences and needs of niche members to shift over time toward many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market.
C)   the potential for the segment to be highly vulnerable to economic cycles.
D)   the potential for segment growth to race beyond the production or service capabilities of incumbent firms.
E)   All of these.F) A) and D)
G) B) and C)

Exam 5: The Five Generic Competitive Strategies

For a best-cost provider strategy to be successful,a company must have

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A company's competitive strategy deals with

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The pitfalls of a differentiation strategy include

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While there are many routes to competitive advantage,they all involve

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To succeed with a low-cost provider strategy,company managers have to

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What are the distinctive features of a focused low-cost strategy? How does it differ from a low-cost leadership strategy?

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The aim of the best-cost provider strategy is to create a competitive advantage by

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Examples of important cost drivers in a company's value chain do not include:

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A low-cost leader's basis for competitive advantage is

Correct AnswerverifiedShow Answer

Focusing provides the ability to secure a competitive edge but also it carries some risks that will be detrimental to the focused firm,such as

Correct AnswerverifiedShow Answer

The risks of a focused strategy based on either low-cost or differentiation include

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A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or focus strategy when

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A competitive strategy to be the low-cost provider in an industry works well when

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A broad differentiation strategy works best in situations where

Correct AnswerverifiedShow Answer

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

Correct AnswerverifiedShow Answer

What are the five generic competitive strategies? Briefly describe each one and identify the type of competitive advantage that each strategy is aimed at achieving.

Correct AnswerverifiedShow Answer

The most appealing approaches to differentiation are

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A company's biggest vulnerability in employing a best-cost provider strategy is

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The chief difference between a low-cost leader strategy and a focused low-cost strategy is

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Which of the following is not one of the ways that a company can achieve a cost advantage by revamping its value chain?

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