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.
