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| 1 | |
A company's competitive strategy deals with |
| | A) | the specific actions management plans to take to gain a competitive advantage over rivals. |
| | B) | how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. |
| | C) | how to compete successfully—its specific efforts to please customers, its offensive and defensive moves to counter the maneuvers of rivals, its responses to whatever market condition prevail at the moment, and its initiatives to strengthen its market position and, ideally, gain a competitive advantage over rivals. |
| | D) | its plans for becoming the market leader, achieving product superiority, and strengthening its brand name reputation. |
| | E) | the specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry. |
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| 2 | |
The five generic types of competitive strategies are |
| | A) | offensive strategies, defensive strategies, first-mover strategies, pre-emptive strike strategies, and guerilla warfare strategies. |
| | B) | low-cost leadership, broad differentiation, best-cost provider, focused low-cost, and focused differentiation. |
| | C) | offensive strategies, defensive strategies, market leader strategies, technological leadership strategies, and first-mover strategies. |
| | D) | offensive strategies, vertical integration, merger and acquisition strategies, outsourcing strategies, and defensive strategies. |
| | E) | low-cost leadership strategies, differentiation strategies, market leadership strategies, offensive strategies, and defensive strategies. |
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| 3 | |
A low-cost leader's basis for competitive advantage is |
| | A) | using an everyday low pricing strategy to gain the biggest market share. |
| | B) | bigger profit margins than rival firms. |
| | C) | high buyer switching costs because of the company's differentiated product offering. |
| | D) | meaningfully lower overall costs than competitors. |
| | E) | a reputation for charging the lowest prices in the industry. |
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| 4 | |
Striving to be the industry's low-cost provider and achieving lower costs than rivals entails |
| | A) | building core competencies and competitive capabilities more cheaply than rivals. |
| | B) | finding ways to (1) achieve lower labor costs than rivals and (2) incorporate upscale features and product attributes at a lower cost than rivals. |
| | C) | out-managing rivals in controlling the drivers of cost and/or revamping the existing value chain to bypass or eliminate some cost-producing activities that produce little value added insofar as customers are concerned. |
| | D) | developing a bigger customer base than rivals so as to be better able to achieve maximum scale economies. |
| | E) | becoming the market share leader so as to be able to spread fixed costs out over a larger unit sales volume. |
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| 5 | |
Which of the following is not an accurate characterization of a strategy to be an industry's overall low-cost provider? |
| | A) | A low-cost provider strategy works well in market situations where many buyers are price-sensitive and price competition among rival sellers is especially vigorous. |
| | B) | For a low-cost provider strategy to succeed, it must entail pursuing cost-saving initiatives that are difficult for rivals to copy or match. |
| | C) | A low-cost provider strategy entails striving to achieve the absolute lowest cost per unit that is possible by offering buyers a bare-bones, totally frills-free product/service at absolute, rock-bottom prices. |
| | D) | A low-cost provider strategy is quite suitable for situations where there are few ways to achieve product differentiation that have value to buyers, where most buyers utilize the product in the same ways, and buyer switching costs are low. |
| | E) | A low-cost provider strategy is an attratctive strategy when the industry's product is essentially the same from rival to rival, important buyers have significant power to bargain down prices, and industry newcomers are using the attraction of a low price to attract buyers and build a customer base. |
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| 6 | |
To be successful with a broad differentiation strategy, a company has to |
| | A) | study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for. |
| | B) | incorporate more differentiating features into its product/service offering than rivals and also charge a price no higher than the prices charged by rivals. |
| | C) | outspend rivals on R&D in order to have differentiating attributes that rivals don't have—usually it must differentiate its product on the basis of superior product quality. |
| | D) | search for differentiation opportunities all along the value chain and come up with a product/service offering that is unique in ways that are valuable to a wide range of customers. |
| | E) | Both A and D. |
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| 7 | |
Which one of the following statements is inaccurate as concerns broad differentiation strategies? |
| | A) | Broad differentiation strategies are an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller. |
| | B) | Broad differentiation strategies can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals. |
| | C) | A differentiator's basis for competitive advantage is either (1) a product/service offering whose attributes differ significantly from the offerings of rivals or (2) competitive capabilities and resource strengths that set it apart from rivals. |
| | D) | Broad differentiation strategies usually offer the best chance for gaining market share, as compared to low-cost or best-cost provider strategies and typically result in much greater buyer loyalty than low-cost provider strategies. |
| | E) | Creating buyer value via a differentiation strategy can be achieved anywhere along the industry value chain and can involve creating unique value for buyers by incorporating product attributes and user features that (1) lower buyers' overall costs of using the product, (2) raise the performance a buyer gets from the product, and/or (3) enhance buyer satisfaction in non-economic or intangible ways. |
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| 8 | |
The trick to a profitable broad differentiation strategy is |
| | A) | to spend heavily on R&D and concentrate differentiation efforts on superior technology and product innovation. |
| | B) | either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits. |
| | C) | concentrating differentiation efforts on providing superior customer service and product attributes that appeal to sophisticated and prestigious buyers. |
| | D) | differentiating on the basis of attributes that enhance product performance. |
| | E) | having as many differentiating features as management can think up. |
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| 9 | |
Which of the following is not one of the pitfalls of pursuing a differentiation strategy? |
| | A) | "Price-gouging"—trying to charge too high a price premium for the differentiating features |
| | B) | Incorporating so many features and attributes that the company's product offering exceeds buyer needs and requirements |
| | C) | Trying to differentiate on features or attributes that buyers do not view as valuable |
| | D) | Differentiating on features or attributes that rivals can easily copy |
| | E) | Trying to differentiate on the basis of something that lowers a buyer's cost of using the product instead of concentrating on adding differentiating features that enhance overall product performance |
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| 10 | |
Which of the following statements concerning a best-cost provider strategy is not accurate? |
| | A) | A strategy of being a best-cost provider is risky because it tends to be the easiest of the five generic types of competitive strategies to copy or imitate, but its is appealing because it is almost always more profitable than focused or market niche strategies because of the potential for selling more units and realizing higher revenues. |
| | B) | A best-cost provider strategy is very appealing in markets where buyer diversity makes product differentiation the norm and where many buyers are also sensitive to price and value—this is because a best-cost provider can position itself near the middle of the market with either a medium-quality product at a below-average price or else an above-average product at an average price. |
| | C) | The competitive advantage of a best-cost provider is lower costs than rivals in incorporating good-to-excellent attributes, putting the company in a position to under-price rivals whose products have similar appealing attributes. |
| | D) | Best-cost provider strategies aim at giving customers more value for the money and the target market of companies that employ this strategy is value conscious buyers. |
| | E) | To become a best-cost provider, a company must have the resources and capabilities to incorporate good-to-excellent quality, appealing features, good product performance, and/or good-to-excellent customer service into its product/service offering—all at a lower cost than rivals. |
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| 11 | |
A focused low-cost strategy |
| | A) | involves a marketing emphasis that communicates the attractive features of a budget-priced product tailored to fit niche buyers' expectations. |
| | B) | works best when the market is composed of a very large number of distinct market segments, when buyers are highly brand loyal, and most all rivals in the segment are also pursuing a focused low-cost strategy. |
| | C) | is particularly well-suited to the use of hit-and-run guerrilla offensives to capture customers. |
| | D) | entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques. |
| | E) | cannot be sustained over time unless the focuser is aggressive in entering other market segments where it also can achieve a low-cost advantage. |
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| 12 | |
A focused differentiation strategy aims at securing competitive advantage by |
| | A) | providing buyers in the target market niche with the best performance features at the best price. |
| | B) | catering to buyers looking for a medium-quality product at an average price. |
| | C) | offering buyers in the target market niche a product/service which they perceive is uniquely well suited to their tastes and preferences. |
| | D) | developing unique product attributes. |
| | E) | convincing buyers that the company is a true leader in product innovation. |
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| 13 | |
Companies are motivated to enter into strategic alliances or cooperative arrangements |
| | A) | to collaborate on mutually-interesting technology or the development of promising new products. |
| | B) | to improve supply chain efficiency and/or overcome deficiencies in their technical or manufacturing expertise and/or gain economies of scale in production and/or marketing. |
| | C) | to help open up or improve access to attractive market opportunities. |
| | D) | to gain access to technology, expertise, competitive capabilities, and other resources that will help them in racing for global leadership or in building a stronger position in emerging new industries. |
| | E) | All of these. |
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| 14 | |
Which one of the following statements about the pros and cons of vertical integration strategies is not accurate? |
| | A) | A strategy to integrate forward or backward can have merit if it enhances a firm's competitiveness; otherwise, it is ill-advised in part because it locks a firm into relying on its own in-house activities and sources of supply and/or distribution outlets (which later may prove more costly or inflexible than having these value chain activities performed by outsiders). |
| | B) | A vertical integration strategy to operate across more stages of the industry value chain has the disadvantage of boosting a firm's capital investment in the industry and thus increasing the company's business risk if the industry becomes unattractive later. |
| | C) | One of the appeals of forward vertical integration into wholesale/retail distribution channels is avoiding being dependent on independent distributors/retailers who have no strong allegiance to the company's brand and who instead push whatever sells and earns them the biggest profits. |
| | D) | Integrating forward or backward can entail taking on the performance of value chain activities that require radically different skills and business capabilities than the firm possesses—so vertical integration strategies are not always easy to carry off successfully. |
| | E) | A vertical integration strategy is attractive partly because it reduces business risk and partly because it is one of the cheapest and most reliable ways to achieve a cost advantage over rivals. |
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| 15 | |
Which of the following is not an advantage of a strategy to outsource the performance of certain value chain activities to outsiders? |
| | A) | Heightening the company's focus on what it does best and those value chain activities most crucial to the company's strategic success |
| | B) | Being able to reduce costs by hollowing out many of the company's unnecessary capabilities and core competencies |
| | C) | Improving the company's ability to innovate by allying with "best-in-world" suppliers and enhancing the firm's strategic flexibility |
| | D) | Being able to speedily and efficiently assemble diverse kinds of competitively valuable expertise |
| | E) | Obtaining higher quality and/or cheaper components or services |
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| 16 | |
Which of the following is not one of the basic types of offensive strategies that a company can employ? |
| | A) | Leapfrogging competitors by being the first adopter of next-generation technologies or being first to market with next-generation products |
| | B) | Offering an equally good or better product at a lower price and/or deliberately attacking those market segments where a key rival makes big profits |
| | C) | Using hit-and-run tactics to grab sales and market share from complacent or distracted rivals |
| | D) | Launching fresh initiatives to copy the strategy of the industry's market share leader |
| | E) | Attacking the competitive weakness of rivals and/or launching a preemptive strike |
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| 17 | |
Defensive strategies |
| | A) | serve the purpose of helping protect competitive advantage, lowering the risk of being attacked, weakening the impact of any attack that occurs, and influencing would-be challengers to aim their attacks elsewhere; they often entail actions that signal would-be challengers that retaliation is likely. |
| | B) | are the best ways to counter the efforts of firms trying to make market inroads with substitute products. |
| | C) | tend to work more frequently than offensive strategies because they are usually less risky and are more likely to succeed if they are predicated on actions to capture first-mover advantages via preemptive strikes that foreclose imitation by rivals. |
| | D) | are an excellent way to discourage challengers from using guerilla offensives and pre-emptive strike strategies, particularly when the defender tries to thwart would-be challengers by aggressively cutting its prices, introducing next-generation products ahead of rivals, and boosting its ad expenditures. |
| | E) | work best when they involve a combination of vertical integration, acquisition of other firms, outsourcing certain value chain activities, and strategic alliances with suppliers. |
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| 18 | |
Which of the following is not one of the Web site strategy options that companies have for accessing buyers? |
| | A) | Employing a brick-and-click strategy to sell direct to consumers at the company's Web site while at the same time maintaining a network of wholesalers and store retailers to access customers |
| | B) | Operating a website that provides existing and potential customers with extensive product information but that relies on click-throughs to distribution channel partners to handle orders and transactions |
| | C) | Using online sales at the company's Web site as a relatively minor distribution channel for achieving incremental sales |
| | D) | Establishing a company Web site to provide information about the company to investors and the general public |
| | E) | Operating the company's Web site as the exclusive channel for accessing buyers and making sales |
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| 19 | |
Two big appeals of a brick-and-click Web site strategy are |
| | A) | lower customer service costs and greater ability to achieve strong product differentiation. |
| | B) | economically expanding a company's geographic reach and giving existing and potential customers another choice of how to communicate with the company, shop for company products, make purchases, or resolve customer service problems. |
| | C) | the low-cost economics of establishing a Web site and the low-cost economics of using existing company store locations as "distribution centers" for filling customer orders and then delivering the orders to customers within 24-hours. |
| | D) | an ability to use a well-known brand name to draw buyer traffic to the company's Web site and then use the company's local store locations as pickup points for the items customers order on the Web site. |
| | E) | the low-cost economics of establishing a Web site and the exceptionally low order-filling and delivery costs associated with Web site sales. |
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| 20 | |
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? |
| | A) | When pioneering helps build up a firm's image and reputation with buyers |
| | B) | When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases |
| | C) | When late movers can copy a successful pioneer's moves quickly and at lower cost |
| | D) | When moving first can constitute a preemptive strike, making imitation extra hard or unlikely |
| | E) | When moving first can result in a cost advantage over rivals |
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