Question 1

Many firms have achieved success by integrating activities throughout the extended value chain by using ________ to link their own value chain with the value chains of their customers and suppliers.
A)customization
B)information technology
C)human resources
D)competitive advantage

Accepted Answer

Many firms have achieved success by integrating activities throughout the extended value chain by using information technology to link their own value chain with the value chains of their customers and suppliers.

Question 2

Atlas Door created competitive advantage by reducing the time to receive and process an order and through installing a just-in-time logistics operation.Which of the following is not a reason for their favorable position relative to the five forces of industry competition?
A)The service was easily imitable.
B)It created high entry barriers for new entrants.
C)The integration of many company value-chain activities provided causal ambiguity and path dependency.
D)It exerted power over its customers.

Accepted Answer

When Atlas began operations,distributors had little interest in its product.The established distributors already carried the door line of a much larger competitor and saw little to no reason to switch suppliers except,perhaps,for a major price concession.But as a start-up,Atlas was too small to compete on price alone.Instead,it positioned itself as the door supplier of last resort;that is,the company people came to if the established supplier could not deliver or missed a key date.With an average industry order fulfillment time of almost four months,some calls inevitably came to Atlas.And when it did get the call,Atlas commanded a higher price because of its faster delivery.Atlas not only got a higher price,but its effective integration of value-creating activities saved time and lowered costs.Thus,it enjoyed the best of both worlds.

Question 3

Rivals would find it difficult to challenge Atlas Door in the short run because of
A)strong customer loyalty.
B)low barriers to entry.
C)high threat of substitution.
D)low buyer switching costs.

Accepted Answer

Two factors make it extremely difficult for a rival to challenge Atlas Door in the short term: (1)The success that Atlas Door has enjoyed with its just-in-time scheduling and production systems helps the firm not only lower costs but also respond quickly to customer needs,and (2)the strong,positive reputational effects that it has earned with its customers increases their loyalty and would take significant time for rivals to match.

Question 4

Which of the following is not a reason for the possible erosion of company competitive advantage?
A)rapid change in technology
B)globalization
C)actions by rivals from within and outside of the industry
D)company commitment to innovation

Accepted Answer

Nothing is forever when it comes to competitive advantages.Rapid changes in technology,globalization,and actions by rivals from within and outside of the industry can quickly erode company advantages.It is becoming increasingly important to recognize that the duration of competitive advantages is declining,especially in technology intensive industries.

Question 5

Atlas Door created competitive advantages in overall low cost and differentiation by creating ________ among value-chain activities.
A)substitutes
B)advantages
C)disadvantages
D)linkages

Accepted Answer

Atlas Door has created competitive advantages in both overall low cost and differentiation.Its strong linkages among value-chain activities,a requirement for its just-in-time operations,not only lower costs but enable the company to respond quickly to customer orders.As noted in Exhibit 5.4,many of the value-chain activities associated with a differentiation strategy reflect the element of speed or quick response.

Question 6

Ryanair and Spirit Airlines depend upon revenue from services not related to the actual flight.These services increase their
A)costs.
B)services.
C)profit pool.
D)difficulties.

Accepted Answer

By separating the value of the actual flight from the services associated with flying,airlines have greatly expanded the profit pool associated with flying.

Question 7

Which of the following reasons is not a reason that Atlas Door could lose competitive advantage?
A)Its technologies are non-proprietary.
B)A rival easily could hire away its talented employees.
C)A new rival with a strong resource base could undercut its prices.
D)It has strong power over its distributors.

Accepted Answer

An argument could be made that much of the Atlas Door strategy relies on technologies that are rather well-known and non-proprietary.Over time,a well-financed rival could imitate its strategy (via trial and error),achieve a tight integration among its value-creating activities,and implement a just-in-time manufacturing process.Because human capital is highly mobile,a rival could hire away Atlas Door talent,and these individuals could aid the rival in transferring Atlas Door best practices.A new rival could also enter the industry with a large resource base,which might enable it to price its doors well under Atlas Door to build market share (but this would likely involve pricing below cost and would be a risky and non-sustainable strategy).In its favor,it does have high power over its customers (distributors)because of its ability to deliver a quality product in a short period of time.

Question 8

Atlas Door relies on technologies that are rather well known and non-proprietary.This opens it up to the potential of
A)imitation by rivals.
B)customer abandonment.
C)increased supplier power.
D)government regulation.

Accepted Answer

An argument could be made that much of the Atlas Door strategy relies on technologies that are rather well known and non-proprietary.Over time,a well-financed rival could imitate its strategy (via trial and error),achieve a tight integration among its value-creating activities,and implement a just-in-time manufacturing process.

Question 9

A risk for a firm that tries to attain both cost and differentiation advantages is that it can be stuck in the middle.An example of this is supermarkets because their ________ structure is ________ than discount retailers,and customers do not value their products and services as being high-end such as those offered by Whole Foods.
A)cost;higher
B)price;higher
C)price;lower
D)cost;lower

Accepted Answer

A key issue in strategic management is the creation of competitive advantages that enable a firm to enjoy above-average returns.Some firms may become stuck in the middle if they try to attain both cost and differentiation advantages.Mainline supermarket chains find themselves stuck in the middle as their cost structure is higher than discount retailers offering groceries and their products and services are not seen by consumers as being as valuable as those of high-end grocery chains,such as Whole Foods.

Question 10

Company competitive advantages can be eroded by all the following except
A)rapid changes in technology.
B)globalization.
C)actions by rivals within the industry.
D)actions by workers outside of the industry.

Accepted Answer

Clearly,nothing is forever when it comes to competitive advantages.Rapid changes in technology,globalization,and actions by rivals from within as well as outside the industry can quickly erode company advantages.

Question 11

In evaluating the sustainability of the Atlas Door competitive advantages over the long run,it is important to evaluate the ability of rivals to
A)easily imitate its strategy.
B)communicate with its customers.
C)consistently overprice their products.
D)find new suppliers.

Accepted Answer

It is important,of course,to assume that the Atlas Door strategy is unique in the industry,and the central issue becomes whether or not rivals will be able to easily imitate its strategy or create a viable substitute strategy.

Question 12

Caterpillar collects and analyses large volumes of data about how customers use their tractors.This permits them to ________ the cost of new product development efforts and to better ________ their products.
A)increase;differentiate
B)reduce;differentiate
C)position;understand
D)identify;disperse

Accepted Answer

Caterpillar collects and analyzes large volumes of data about how customers use their tractors.Because this data helps Caterpillar better assess the uses and limitations of their current tractors,the firm can use data analytics to employ more focused and timely product improvement efforts.This allows the firm to simultaneously reduce the cost of new product development efforts and better differentiate their products.

Question 13

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ________ integration of cost leadership and differentiation.
A)good
B)poor
C)intentional
D)structured

Accepted Answer

The pitfalls of integrated overall cost leadership and differentiation include: firms underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain.

Question 14

The Yoox algorithm permits it to predict which products will sell at which times and where,thus allowing effective stocking to meet customer needs.This a result of
A)purchasing patterns.
B)data analytics.
C)physical plant.
D)flooding the market with ads.

Accepted Answer

Yoox has developed innovative algorithms to predict which products will sell at which times and in which geographic regions,allowing effective stocking to meet the needs of customers and providing guidance to retailers on optimal pricing.

Question 15

Barnes and Noble lost its market share in book retailing to Amazon.It tried to regain market share by offering a similar electronic reader,the Nook,to the Amazon Kindle series.This demonstrates that Barnes and Noble lacked
A)a short-term strategy.
B)a company-wide strategy.
C)a sustainable competitive advantage.
D)good suppliers.

Accepted Answer

Even in industries that are normally viewed as low tech,the increasing use of technology has suddenly made competitive advantages less sustainable.The Amazon success in book retailing at the cost of Barnes and Noble,the former industry leader,as well as BlackBerry difficulties in responding to Apple innovations in the smartphone market,serves to illustrate how difficult it has become for industry leaders to sustain competitive advantages that they once thought would last forever.

Question 16

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to
A)increase competition.
B)expand the profit pool.
C)provide better customer service.
D)satisfy regulators.

Accepted Answer

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to expand the profit pool.

Question 17

BlackBerry lost its competitive advantage by 2016 because it
A)did not deliver innovations to respond to changing market demand.
B)developed a highly performant just-in-time delivery system.
C)did not reward its employees.
D)let suppliers have dominant power.

Accepted Answer

BlackBerry initially dominated the smartphone market.BlackBerry held 20 percent of the cell phone market in 2009,and its users were addicted to BlackBerry's products,leading some to refer to them as crackberrys.However,the market share of the firm quickly eroded with the introduction of touch screen smartphones from Apple,Samsung,and others.BlackBerry was slow to move away from its physical keyboards and saw its market share fall to 0.1 percent by 2016.

Question 18

Atlas Door tightly controlled logistics so that it always shipped only fully complete orders to construction sites.In regard to the five forces model,which of the following is a reason this might give them competitive advantage?
A)It helps to reduce the threat of new entrants.
B)It created low entry barriers for new entrants.
C)It created a high threat of substitution.
D)It gave more power to buyers.

Accepted Answer

Atlas tightly controlled logistics so that it always shipped only fully complete orders to construction sites.Orders require many components,and gathering all of them at the factory and making sure that they are with the correct order can be a time-consuming task.Of course,it is even more time-consuming to get the correct parts to the job site after the order has been shipped.Atlas developed a system to track the parts in production and the purchased parts for each order.This helped to ensure the arrival of all necessary parts at the shipping dock in time.This time-saving efficiency also had cost benefits that made it difficult for new entrants to compete successfully,at least in the short run.

Question 19

Mass customization permits companies to manufacture unique products in relatively ________ quantities at ________ costs.
A)large;higher
B)large;lower
C)small;higher
D)small;lower

Accepted Answer

Given the advances in manufacturing technologies such as CAD-CAM (computer aided design and computer aided manufacturing)as well as information technologies,many firms have been able to manufacture unique products in relatively small quantities at lower costs.This is a concept known as mass customization.

Question 20

Andersen Windows lowered costs,enhanced quality and variety,and improved its response time to customers by
A)creating a new paper-based catalog.
B)creating an interactive computer version of its paper catalogs.
C)creating an integrated computer system of catalogs,products,orders,and manufacturing.
D)creating a manufacturing system for ordering parts.

Accepted Answer

Andersen developed an interactive computer version of its paper catalogs that it sold to distributors and retailers.Salespersons can now customize each window to meet customer needs,check the design for structural soundness,and provide a price quote.The system is virtually error-free,customers get exactly what they want,and the time to develop the design and furnish a quotation has been cut by 75 percent.Each showroom computer is connected to the factory,and customers are assigned a code number that permits them to track the order.The manufacturing system has been developed to use some common finished parts,but it also allows considerable variation in the final products.

Quiz 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

Many firms have achieved success by integrating activities throughout the extended value chain by using ________ to link their own value chain with the value chains of their customers and suppliers.

Atlas Door created competitive advantage by reducing the time to receive and process an order and through installing a just-in-time logistics operation.Which of the following is not a reason for their favorable position relative to the five forces of industry competition?

Rivals would find it difficult to challenge Atlas Door in the short run because of

Which of the following is not a reason for the possible erosion of company competitive advantage?

Atlas Door created competitive advantages in overall low cost and differentiation by creating ________ among value-chain activities.

Ryanair and Spirit Airlines depend upon revenue from services not related to the actual flight.These services increase their

Which of the following reasons is not a reason that Atlas Door could lose competitive advantage?

Atlas Door relies on technologies that are rather well known and non-proprietary.This opens it up to the potential of

Company competitive advantages can be eroded by all the following except

In evaluating the sustainability of the Atlas Door competitive advantages over the long run,it is important to evaluate the ability of rivals to

Caterpillar collects and analyses large volumes of data about how customers use their tractors.This permits them to the cost of new product development efforts and to better their products.

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ________ integration of cost leadership and differentiation.

The Yoox algorithm permits it to predict which products will sell at which times and where,thus allowing effective stocking to meet customer needs.This a result of

Barnes and Noble lost its market share in book retailing to Amazon.It tried to regain market share by offering a similar electronic reader,the Nook,to the Amazon Kindle series.This demonstrates that Barnes and Noble lacked

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to

BlackBerry lost its competitive advantage by 2016 because it

Atlas Door tightly controlled logistics so that it always shipped only fully complete orders to construction sites.In regard to the five forces model,which of the following is a reason this might give them competitive advantage?

Mass customization permits companies to manufacture unique products in relatively quantities at costs.

Andersen Windows lowered costs,enhanced quality and variety,and improved its response time to customers by