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Exam 4: Business-Level Strategy

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Question 31

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New Balance Athletic Shoes target Baby Boomers' needs for well-fitting shoes. The company is unique in that it offers a very broad range of shoe widths. A realistic potential risk New Balance runs in this focused differentiation strategy includes the possibility that:

A) Baby Boomers may find that they do not need well-fitting shoes, since they will become increasingly sedentary as they age.
B) A competitor may be able to better use flexible manufacturing systems to make shoes with an individualized fit.
C) Athletic shoes may go out of style.
D) New Balance shoes may begin to appeal to a wider market, thus losing New Balance's focus advantage.

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Question 32

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Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in

A) the selection of industries in which the firm will compete.
B) specific product markets.
C) primary value chain activities.
D) particular geographic locations.

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Question 33

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Describe the advantages of integrating cost leadership and differentiation strategies.

Big Lots is able to compete against Wal-Mart with a cost leadership strategy because of its strengths in highly disciplined merchandise cost and inventory management system. This illustrates the

Because of its focus on innovation and quality manufacturing, Total Quality Management is not useful for firms which follow a cost leadership strategy.

Subway is targeting a more narrow market segment among college students than the segment on which McDonald's focuses. Subway is focusing on students interested in healthy fast food. To select this business strategy, Subway would have used information from all the following categories EXCEPT

A customer relationship management system will allow firms to identify the trade-offs that customers are willing to make between differentiated features and low cost.

A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use

A cost leadership strategy targets the industry's ____ customers.

Companies successfully implementing an integrated cost leadership/differentiation strategy are better positioned than firms pursuing the other four business strategies to do all of the following EXCEPT

A manufacturer of jewelry imitates the style of a popular and expensive brand using manufactured stones rather than real gemstones and lesser grade metals rather than silver and gold. The manufacturer packages the jewelry in boxes of the same color imprinted with an almost identical logo. About 85 percent of the company's sales are through Internet sales. This example illustrates the competitive risk of ____ that threatens companies that use the differentiation strategy.

If Southwest Airlines employees lost their high enthusiasm and commitment to the company,

The differentiation strategy is effective for products that are expensive, luxury consumer goods. It is not effective for common, inexpensive products such as doughnuts.

Focus strategies are

The best of the generic business strategies is the integrated cost leadership/differentiation strategy.

Every firm uses all levels of strategy: corporate, acquisition and restructuring, international and cooperative.

Case Scenario 3: Abrahamson's Jewelers. Through its sole location in an affluent suburb of San Francisco, Abrahamson's Jewelers has established a strong niche market in the upscale jewelry store segment. Abrahamson's was founded in 1871 and is currently owned and operated by John Wickersham, who bought the firm from its namesake founders in 1985. Wickersham joined the firm as a trainee out of high school, completed his gemology training, and several years later took ownership with the financial help of his parents. That debt has long been paid off and business has thrived. When he first acquired the business, Abrahamson's offered a full range of jewelry and gift items from watches to wedding sets to silverware to clocks. This broad range of products was mirrored by a broad price range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry was custom designed and manufactured, most of the products were "case ready," meaning they were sourced from large jewelry and silver manufacturers from around the world. Over the last 15 years, Wickersham has narrowed the company's product offering considerably to focus only on high-end watches like Rolex and Piaget, custom jewelry, and estate jewelry. Wickersham stresses that this is an appropriate focus for his business since each of the products lends itself to relationship selling, and price rarely comes into the discussion. Despite the narrower offering moreover, Abrahamson's floor space has doubled, and clients are intensely loyal to the good taste, design skills, and personal service level provided by Mr. Wickersham. -(Refer to Case Scenario 3) Would you recommend that Mr. Wickersham embark on an Internet sales strategy for his company?

A differentiation strategy can be effective in controlling the power of substitutes in an industry because

The risks of a focus strategy include

The term "stuck in the middle"