Question 1

The competitive objective of a best-cost provider strategy is to:

Accepted Answer

A)   outmatch the resource strengths of both low-cost providers and differentiators.
B)   position the company outside the competitive arena of low-cost producers and differentiators.
C)   meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes) .
D)   deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain.
E)   identify and concentrate on those differentiating features that are inexpensive to incorporate.

Question 2

A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult.Which of the following will be most helpful in solving the manufacturer's problem?

Accepted Answer

A)   Outsourcing
B)   Achieving economies of scale
C)   Lowering input costs
D)   Increasing bargaining power
E)   Going for a vertical integration with a distributor

Question 3

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

Accepted Answer

A)   lowest possible prices for comparable products.
B)   a low-cost/moderate price approach to gain the biggest market share.
C)   high buyer switching costs.
D)   meaningful lower overall costs than rivals on comparable products.
E)   higher unit sales than rivals.

Question 4

Opportunities to differentiate a company's product offering:

Accepted Answer

A)   are most reliably found in the R&D portion of the value chain.
B)   are typically located in the sales and marketing portion of the value chain.
C)   can exist in activities all along an industry's value chain.
D)   usually are tied to product quality and customer service.
E)   are most frequently attached to a company's manufacturing expertise and to its ability to achieve economies of scale in production.

Question 5

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 sluggish.
B)   there are numerous ways to achieve product differentiation that have no value to buyers.
C)   buyers incur high costs in switching their purchases from one seller/brand to another.
D)   industry newcomers use introductory low prices to attract buyers and build a customer base.
E)   industry newcomers use high introductory prices to let buyers know they have a superior product to build a customer base.

Question 6

Which of the following is NOT an action that a company should take to perform value chain activities more cost-effectively?

Accepted Answer

A)   Striving to capture all available economies of scale and taking advantage of experience and learning-curve effects
B)   Trying to operate facilities at full capacity
C)   Adopting labor-saving operating methods
D)   Improving supply chain efficiency
E)   Over-differentiating so that product features exceed the needs of most buyers

Question 7

What are the distinctive features of a focused differentiation strategy? How is it different from a broad differentiation strategy?

Accepted Answer

In a focused differentiation strategy th...

Question 8

Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy?

Accepted Answer

A)   Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than being content with weak product differentiation
B)   Offering trivial improvements in quality,service,or performance features
C)   Overcharging for the differentiating features
D)   Adding so many frills and extra features that the product exceeds the needs of buyers
E)   Overspending on efforts to differentiate the company's product offering

Question 9

What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain what a company has to do to achieve this advantage.

Accepted Answer

Best-cost strategies create competitive ...

Question 10

Achieving a sure cost advantage over rivals entails:

Accepted Answer

A)   concentrating on the primary activities portion of the value chain and outsourcing all support activities.
B)   being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible.
C)   selling a mostly standard product and increasing the scale of operation.
D)   minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs.
E)   producing a standard product,redesigning the product infrequently,and having minimal advertising.

Question 11

Pursuing continuous quality improvement as a uniqueness factor is sound because it:

Accepted Answer

A)   can create differentiation even if little tangible differentiation exists otherwise.
B)   bestows the first-mover-in-the-market advantage on companies practicing it.
C)   can often reduce product defects and improve economy of use.
D)   always provides a competitive advantage.
E)   provides wider product variety and selection through product versioning.

Question 12

The chief difference between a low-cost provider 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 type of value chain being used to achieve a low-cost competitive advantage.
E)   the number of upscale attributes incorporated into the product offering.

Question 13

The biggest and most important differences among the competitive strategies of different companies boil down to:

Accepted Answer

A)   how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider.
B)   the different ways the companies try to cope with the five competitive forces.
C)   whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation.
D)   the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities.
E)   the relative emphasis they place on offensive versus defensive strategies.

Question 14

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.

Question 15

Cost-efficient management of a company's overall value chain activities requires that management:

Accepted Answer

A)   ferret out cost-saving opportunities in every part of the value chain.
B)   undertake an operations functionality redesign.
C)   establish sales productivity and operating practices guidelines.
D)   re-create rivals' assembly plant structuration savings.
E)   pursue a differentiation strategy that can be easily copied.

Question 16

Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less,or it's free!" With it what has the pizza maker achieved?

Accepted Answer

A)   Built a unique customer value proposition
B)   Created a new delivery system
C)   Given a sense of exclusivity to its customers
D)   Coordinated with suppliers to better address customer needs
E)   Emphasized human resource management activities

Question 17

An example of how companies can revamp their value chain to reduce costs is to:

Accepted Answer

A)   have suppliers locate their plants close to companies' own facilities.
B)   continue to utilize traditional methods of distribution and sales.
C)   not make any changes in product manufacturing but change end distribution methods.
D)   increase extra services to increase staffing requirements.
E)   facilitate the learning curve by providing superior training to new employees.

Question 18

Which of the five generic competitive strategies are most likely to be best suited for an industry whose product may be customized to create a cheaper version? Explain.

Accepted Answer

The low-cost provider strategy will be s...

Question 19

What market conditions and circumstances make a low-cost provider strategy attractive? What are the pitfalls in pursuing a low-cost provider strategy? What can go wrong?

Accepted Answer

Market conditions and circumstances that...

Question 20

Successful broad differentiation allows a firm to:

Accepted Answer

A)   be the industry's best-cost provider.
B)   set the industry ceiling on price.
C)   avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low.
D)   command a premium price for its product,and/or increase unit sales,and/or gain buyer loyalty to its brand.
E)   take sales and market share away from rivals by undercutting them on price.

Exam 5: The Five Generic Competitive Strategies

The competitive objective of a best-cost provider strategy is to:

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Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy?

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What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain what a company has to do to achieve this advantage.

Correct AnswerverifiedBest-cost strategies create competitive ...View AnswerShow Answer

Which of the five generic competitive strategies are most likely to be best suited for an industry whose product may be customized to create a cheaper version? Explain.

Correct AnswerverifiedThe low-cost provider strategy will be s...View AnswerShow Answer

Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less,or it's free!" With it what has the pizza maker achieved?

Correct AnswerverifiedShow Answer

Opportunities to differentiate a company's product offering:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Achieving a sure cost advantage over rivals entails:

Correct AnswerverifiedShow Answer

Cost-efficient management of a company's overall value chain activities requires that management:

Correct AnswerverifiedShow Answer

A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult.Which of the following will be most helpful in solving the manufacturer's problem?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An example of how companies can revamp their value chain to reduce costs is to:

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Which of the following is NOT an action that a company should take to perform value chain activities more cost-effectively?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What market conditions and circumstances make a low-cost provider strategy attractive? What are the pitfalls in pursuing a low-cost provider strategy? What can go wrong?

Correct AnswerverifiedMarket conditions and circumstances that...View AnswerShow Answer

A broad differentiation strategy works best in situations where:

Correct AnswerverifiedShow Answer

The biggest and most important differences among the competitive strategies of different companies boil down to:

Correct AnswerverifiedShow Answer

Successful broad differentiation allows a firm to:

Correct AnswerverifiedShow Answer

What are the distinctive features of a focused differentiation strategy? How is it different from a broad differentiation strategy?

Correct AnswerverifiedIn a focused differentiation strategy th...View AnswerShow Answer

Pursuing continuous quality improvement as a uniqueness factor is sound because it:

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Best-cost strategies create competitive ...
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The low-cost provider strategy will be s...
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Market conditions and circumstances that...
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In a focused differentiation strategy th...
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