Q1. 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) the specifics of management’s game plan for competing
successfully.
D) its plans for underpricing 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.
Q2. The biggest factors that distinguish one competitive
strategy from another are _______________
A) a customer value proposition, profit formula, and
collection of valuable resources.
B) striving for a high degree of customer loyalty to the
company’s brand.
C) assembling a wide portfolio of company resources,
competitive capabilities, and core competencies.
D) developing a better credit rating than rivals.
E) choosing between (1) a market target that is either broad
or narrow, and (2) whether the company should pursue a competitive advantage
linked to lower costs or product differentiation.
Q3. The five 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, focused differentiation, and best-cost provider.
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.
Q4. 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.
Q5. 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.
Q6. Which of the following is not a distinguishing feature
of a low-cost provider strategy?
A) The product line consists of a few basic models having
minimal frills and acceptable quality.
B) The production emphasis is on continuously searching for
ways to reduce costs without sacrificing acceptable quality and essential
features.
C) The marketing emphasis is on making virtues out of
product features that lead to low cost.
D) The strategic target is value-conscious buyers and
sustaining the strategy depends on frequent advances in technology and
occasional product innovations.
E) Sustaining the strategy revolves around managing costs
down year-after-year and delivering good value at economical prices.
Q7. A competitive strategy of striving to be the low-cost
provider is particularly attractive when _______________
A) a company pays particular attention to cost drivers such
as number of products in the product line, capacity utilization, production
technology and design, and labor productivity and compensation costs.
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.
Q8. 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.
Q9. Examples of uniqueness drivers do not include
_______________
A) product features, design, and performance.
B) production R&D.
C) customer service.
D) continuous quality improvement.
E) eliminating low value-added activities and work steps.
Q10. 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.
Q11. 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.
Q12. 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.
Q13. 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.
Q14. 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.
Q15. A focused low-cost strategy _______________
A) involves 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.
Q16. 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.
Q17. A firm pursuing a best-cost provider strategy
_______________
A) seeks to offer more value-adding features than the
industry’s low-cost providers and lower prices than those pursuing
differentiation.
B) tries to have the best cost (as compared to rivals) for
each activity in the industry’s value chain.
C) achieves competitive advantage because its operating
activities are “best-in-industry” or “best-in-world.”
D) follows a hybrid strategy based upon superior resources
and a narrow market niche.
E) seeks a “middle of the road” strategic approach
that attempts to satisfy the product or service needs of consumers with average
household incomes.
Q18. Which of the following are distinguishing features of a
best-cost provider strategy?
A) The strategic target is price-conscious buyers.
B) A marketing emphasis on charging a slightly higher price
than rival brands having comparable features and attributes.
C) A product line that stresses wide selection, many product
variations, and emphasis on differentiating features.
D) A competitive advantage based on more value for the
money.
E) Using constant product innovation, excellent R&D
skills, and periodic technological breakthroughs to sustain the strategy.
Q19. For a best-cost provider strategy to be successful, a
company must have _______________
A) excellent supply chain capabilities and product design
expertise.
B) economies of scope or greater scale economies than
rivals.
C) a superior value chain configuration and unmatched
efficiency in managing essential value chain activities.
D) superior product innovation skills and manufacturing
capabilities.
E) a short, low-cost value chain.
Q20. A company’s biggest vulnerability in employing a
best-cost provider strategy is _______________
A) relying too heavily on price discounting.
B) adding features not needed by the majority of buyers.
C) not having the needed efficiencies in managing value
chain activities to add differentiating features without significantly
increasing costs.
D) being timid in cutting its prices far enough below
high-end differentiators to win away many of their customers.
E) relying excessively on outsourcing in an attempt to boost
gross profit margins.
