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| 1 | |
A company's competitive strategy deals with |
| | A) | the specific actions management plans to take to develop a better value chain than 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) | deals exclusively with the specifics of management's game plan for securing a competitive advantage vis- à -vis rivals. |
| | D) | its plans for under-pricing rivals and achieving product superiority. |
| | 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 four generic types of competitive strategies include |
| | A) | offensive strategies, defensive strategies, differentiation strategies, and low-cost strategies. |
| | B) | low-cost provider, broad differentiation, focused low-cost, and focused differentiation. |
| | C) | offensive strategies, defensive strategies, technological leadership strategies, and product innovation strategies. |
| | D) | low-price strategies, premium price strategies, middle-of-the-road strategies, and market share leadership strategies. |
| | E) | attacking competitor strengths, attacking competitor weaknesses, market leadership strategies, and product superiority strategies. |
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| 3 | |
A low-cost provider'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) | eliminating or curbing nonessential activities. |
| | B) | having a smaller labor force than rivals, paying lower wages than rivals, locating all facilities in countries where labor costs are low, and outsourcing many value chain activities to suppliers with world-class technological capabilities. |
| | C) | doing a better job than rivals in performing essential activities. |
| | D) | aggressive use of activity-based costing, utilizing more best practices than rivals, and having a narrower product line than rivals. |
| | E) | Both A and C. |
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| 5 | |
A competitive strategy of striving to be the low-cost provider is particularly attractive when |
| | A) | buyers are large and incur low costs in switching their purchases from one seller to another. |
| | B) | most rivals are trying to differentiate their product offering from those of rivals. |
| | C) | there are many ways to achieve higher product quality that have value to buyers. |
| | D) | buyers are not swayed by advertising and are not very brand-loyal. |
| | E) | most rivals are pursuing best-cost or broad differentiation strategies. |
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| 6 | |
Successful differentiation allows a firm to |
| | A) | gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). |
| | B) | earn the highest profit margins of any company in the industry. |
| | C) | attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. |
| | D) | command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). |
| | E) | Both A and D. |
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| 7 | |
Easy-to-copy differentiating features |
| | A) | lead to excessive price competition. |
| | B) | are less expensive to integrate into a product or service offering. |
| | C) | tend to satisfy the needs of most buyers. |
| | D) | should be patented before other companies imitate the features. |
| | E) | do not offer the promise of sustainable competitive advantage. |
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| 8 | |
The most appealing approaches to broad differentiation |
| | A) | are those that hinge upon first-rate R&D and frequent product innovation. |
| | B) | involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate. |
| | C) | are those that either lower buyer switching costs or enhance the differentiator's brand image. |
| | D) | generally relate to product superiority or clever merchandising. |
| | E) | are typically based on either superior product quality or superior customer service. |
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| 9 | |
In which one of the following market circumstances is a broad differentiation strategy generally not well-suited? |
| | A) | When buyer needs and preferences are too diverse to be fully satisfied by a standardized product |
| | B) | When few rivals are pursuing a similar differentiation approach |
| | C) | When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated |
| | D) | When there are many ways to differentiate the product or service and many buyers perceive these differences as having value |
| | E) | When technological change is fast-paced and competition revolves around rapidly evolving product features |
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| 10 | |
A broad differentiation strategy |
| | A) | is 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) | can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals. |
| | C) | works best when the basis for differentiation is superior performance features and buyer switching costs are low. |
| | D) | offers a better chance for gaining market share than low-cost or best-cost provider strategies, and typically allows a firm to charge the highest price in the industry. |
| | E) | Both A and B. |
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| 11 | |
Which of the following is not one of the hazards of pursuing a differentiation strategy? |
| | A) | Trying to charge too high a price premium for the differentiating features |
| | B) | Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements |
| | C) | Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) |
| | D) | Differentiating on features or attributes that rivals can easily copy |
| | E) | Overspending on efforts to differentiate the company's product offering |
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| 12 | |
What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is |
| | A) | the extra attention paid to establishing a distinctive competence. |
| | B) | their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. |
| | C) | greater opportunity for brand loyalty. |
| | D) | their suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor. |
| | E) | their bold strategic intent of global market leadership via heavy advertising. |
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| 13 | |
A focused low-cost strategy |
| | A) | involves a serving buyers in the target market niche at a lower cost and a lower price than rival competitors. |
| | B) | is the hardest of the four generic types of competitive strategies to employ successfully. |
| | C) | involves the use of deep price discounting 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 segments where it also can achieve a low-cost advantage. |
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| 14 | |
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 carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. |
| | D) | developing unique product attributes. |
| | E) | convincing buyers that the company is a true leader in product innovation. |
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| 15 | |
The difference between a competence and a core competence is that |
| | A) | a competence represents proficiency in performing an internal activity whereas a core competence is a proficiently performed internal activity that is central to a company's strategy and competitiveness. |
| | B) | a competence refers to a company's most strategically important resource whereas a core competence is the basis of a company's competitive advantage over rivals. |
| | C) | a competence is a competitively relevant internal activity which a firm performs especially well relative to other internal activities, whereas a core competence is a competitively important activity performed by key strategic allies. |
| | D) | a competence refers to a company's best-executed functional strategy and a core competence refers to a company's best-executed business strategy. |
| | E) | a core competence is an activity that relates to the company's core values whereas a competence can apply to any activity performed by the company. |
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| 16 | |
For a particular company resource strength to have meaningful competitive power and perhaps qualify as a basis for competitive advantage, it should |
| | A) | be central the company's strategy, qualify as a distinctive competence, and provide customer value. |
| | B) | be something that a company does internally rather than in collaborative arrangements with outsiders. |
| | C) | be competitively important, hard for competitors to copy, rare and something rivals lack, and not be easily trumped by the substitute resources/capabilities of rivals. |
| | D) | be rooted in the intangible skills and talents of the company's employees. |
| | E) | have the potential for lowering the firm's unit costs. |
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| 17 | |
A company that lacks a single resource strength capable of contributing to competitive advantage may attempt to develop a distinctive competence through |
| | A) | devising clever approaches to turning resource weaknesses into resource strengths. |
| | B) | bundled resource strengths that can be leveraged to develop a core competence. |
| | C) | changing its industry positioning and approach to building competitive advantage. |
| | D) | the development of a new business model. |
| | E) | improved employee training programs, new marketing promotions, or technological enhancements to production processes. |
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| 18 | |
A company that is a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals |
| | A) | should adopt a new competitive strategy that might better match the circumstances of the marketplace. |
| | B) | should abandon strategy elements that have caused its weakness in the marketplace. |
| | C) | undertake efforts to develop a distinctive competence. |
| | D) | is virtually blockaded from using offensive strategies and must rely on defensive strategies. |
| | E) | may be able to develop substitute resources that accomplish the same objective as the resource strength possessed by rivals. |
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| 19 | |
A strategic alliance |
| | A) | is a collaborative arrangement where companies collude to shape competition in the industry. |
| | B) | is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence. |
| | C) | involves two or more companies joining forces to develop a distinctive competence. |
| | D) | is a partnership between two companies that is typically intended to eliminate the need to engage in outsourcing. |
| | E) | is usually the first step to a merger between the two companies. |
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| 20 | |
The competitive attraction of entering into strategic alliances and collaborative partnerships is |
| | A) | in allowing the partners to transfer the use of patents. |
| | B) | achieving economies of scope in production and distribution. |
| | C) | enabling greater vertical integration. |
| | D) | in allowing companies to bundle competencies and resources that are more valuable in a joint effort than when kept separate. |
| | E) | in helping the partners to increase their respective market shares. |
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