Question 1

Suppose another firm found a way to offer IKEA's customers (young buyers interested in stylish furniture at low cost)  additional sources of differentiation while charging the same price or to provide the same service with the same sources of differentiation at a lower price. What category of competitive risk to a focus strategy would this be?

Accepted Answer

A)   An industry-wide competitor decides that the market segment served by IKEA is worth entering.
B)   Focusing on a more narrowly defined segment and "outfocusing" the focuser.
C)   The needs of the customers in this narrow segment have become more similar to those of industry-wide competitors.
D)   Experience can narrow customer's perceptions of value of the firm's differentiated features.

Question 2

Changing consumer needs are illustrated by Starbucks' enabling consumers to have an experience and design their own drinks rather than just a cup of coffee.

Accepted Answer

A) True 
 B)False

Question 3

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity, such as sales promotion or a process technology.

Accepted Answer

A) True 
 B)False

Question 4

Business-level strategies are concerned specifically with:

Accepted Answer

A)   creating differences between the firm's position and its competitors.
B)   selecting the industries in which the firm will compete.
C)   how functional areas will be organized within the firm.
D)   how a business with multiple physical locations will operate one of those locations.

Question 5

A risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value for which customers are willing to pay.

Accepted Answer

A) True 
 B)False

Question 6

Human resources and other support functions are not value-creating activities in the value chain; only value chain activities create value.

Accepted Answer

A) True 
 B)False

Question 7

Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

A)   customer sensitive to price differentials
B)   threat by the cost leader
C)   customer experience
D)   counterfeiting

Question 9

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation, such as an engaging culture.

Accepted Answer

A) True 
 B)False

Question 10

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because:

Accepted Answer

A)   customers will seek out the lowest-cost product.
B)   customers of nondifferentiated products are sensitive to price increases.
C)   customers are loyal to brands that are differentiated in meaningful ways.
D)   the differentiation strategy benefits from rivalry because it forces the firm to innovate.

Question 11

How do focused differentiation and focused cost leadership strategies differ from their non-focused counterparts?

Accepted Answer

Focus strategies target specific industr...

Question 12

The integration of a cost leadership and a differentiation strategy:

Accepted Answer

A)   is challenging because it increases the number of value-chain activities and support functions in which the firm must become competent.
B)   forces a firm to adapt more slowly to changes in its environment.
C)   allows the firm to avoid being "stuck in the middle."
D)   requires such a large customer base that it is most practical for firms in the global marketplace.

Question 13

The benefit of a flexible manufacturing system is that:

Accepted Answer

A)   the lot size needed to manufacture a firm's product efficiently is reduced.
B)   the necessary skill levels of workers are reduced, allowing the firm to reduce costs.
C)   it lends itself to empowerment of employees.
D)   it captures the cost savings of economies of scale.

Question 14

TQM is most helpful to firms following the ____ business strategy.

Accepted Answer

A)   cost leadership
B)   integrated cost leadership/differentiation
C)   focused cost leadership
D)   focused differentiation

Question 15

More choices and easily accessible information about the functionality of firms' products are creating increasingly ______ customers.

Accepted Answer

A)   sophisticated and knowledgeable
B)   loyal
C)   dissatisfied
D)   content

Question 16

When the costs of supplies increase in an industry, the low-cost leader:

Accepted Answer

A)   may continue competing with rivals on the basis of product features.
B)   will lose customers as a result of price increases.
C)   will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins.
D)   may be the only firm able to pay the higher prices and continue to earn average or above-average returns.

Question 17

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

Accepted Answer

A)   most typical
B)   poorest
C)   least educated
D)   most frugal

Question 18

Walmart went against business-level strategy and made changes to attract upscale customers. These changes had which of the following results?

Accepted Answer

A)   It strengthened Walmart's position against rivals such as Dollar Stores and Amazon.
B)   It made Walmart vulnerable to Dollar Store and Amazon.
C)   It attracted significant numbers of new customers.
D)   Family Dollar, Dollar Tree, and Dollar General all experienced losses in sales as many of their customers went to Walmart.

Question 19

A firm successfully implementing a differentiation strategy would expect:

Accepted Answer

A)   customers to be sensitive to price increases.
B)   to charge premium prices.
C)   customers to perceive the product as standard.
D)   to have high levels of power over suppliers.

Question 20

A firm's core strategy is its ____ strategy.

Accepted Answer

A)   corporate
B)   business
C)   pricing
D)   international

Exam 4: Business-Level Strategy

How do focused differentiation and focused cost leadership strategies differ from their non-focused counterparts?

Correct Answer
verified
Focus strategies target specific industr...
View Answer

A firm's core strategy is its ____ strategy.

Correct Answer
verified

Human resources and other support functions are not value-creating activities in the value chain; only value chain activities create value.

Correct Answer
verified

A firm successfully implementing a differentiation strategy would expect:

Correct Answer
verified

Business-level strategies are concerned specifically with:

Correct Answer
verified

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation, such as an engaging culture.

Correct Answer
verified

More choices and easily accessible information about the functionality of firms' products are creating increasingly ______ customers.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The benefit of a flexible manufacturing system is that:

Correct Answer
verified

Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.

Correct Answer
verified

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity, such as sales promotion or a process technology.

Correct Answer
verified

TQM is most helpful to firms following the ____ business strategy.

Correct Answer
verified

Changing consumer needs are illustrated by Starbucks' enabling consumers to have an experience and design their own drinks rather than just a cup of coffee.

Correct Answer
verified

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because:

Correct Answer
verified

When the costs of supplies increase in an industry, the low-cost leader:

Correct Answer
verified

A risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value for which customers are willing to pay.

Correct Answer
verified

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

Correct Answer
verified

Walmart went against business-level strategy and made changes to attract upscale customers. These changes had which of the following results?

Correct Answer
verified

The integration of a cost leadership and a differentiation strategy:

Correct Answer
verified

Exam 4: Business-Level Strategy

How do focused differentiation and focused cost leadership strategies differ from their non-focused counterparts?

Correct AnswerverifiedFocus strategies target specific industr...View AnswerShow Answer

A firm's core strategy is its ____ strategy.

Correct AnswerverifiedShow Answer

Human resources and other support functions are not value-creating activities in the value chain; only value chain activities create value.

Correct AnswerverifiedShow Answer

A firm successfully implementing a differentiation strategy would expect:

Correct AnswerverifiedShow Answer

Business-level strategies are concerned specifically with:

Correct AnswerverifiedShow Answer

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation, such as an engaging culture.

Correct AnswerverifiedShow Answer

More choices and easily accessible information about the functionality of firms' products are creating increasingly ______ customers.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The benefit of a flexible manufacturing system is that:

Correct AnswerverifiedShow Answer

Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.

Correct AnswerverifiedShow Answer

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity, such as sales promotion or a process technology.

Correct AnswerverifiedShow Answer

TQM is most helpful to firms following the ____ business strategy.

Correct AnswerverifiedShow Answer

Changing consumer needs are illustrated by Starbucks' enabling consumers to have an experience and design their own drinks rather than just a cup of coffee.

Correct AnswerverifiedShow Answer

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because:

Correct AnswerverifiedShow Answer

When the costs of supplies increase in an industry, the low-cost leader:

Correct AnswerverifiedShow Answer

A risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value for which customers are willing to pay.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Walmart went against business-level strategy and made changes to attract upscale customers. These changes had which of the following results?

Correct AnswerverifiedShow Answer

The integration of a cost leadership and a differentiation strategy:

Correct AnswerverifiedShow Answer

Correct Answer
verified
Focus strategies target specific industr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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