Question 1

Which of the following is not a generic competitive strategy?
A)Cost leadership
B)Differentiation
C)Focused cost leadership
D)Focused differentiation
E)Innovation

Accepted Answer

Innovation is not a generic competitive strategy, rather it is a capability that can be used to achieve cost leadership, differentiation or focused strategies.

Question 2

At their simplest level,customer needs can be defined as
A)desires.
B)wants.
C)cravings.
D)all of these choices.
E)none of these choices.

Accepted Answer

Customer needs can be described as desires, wants, cravings, and various other forms of requests that consumers have for certain products or services. Therefore, all of the given choices are correct as they all represent different aspects of customer needs.

Question 3

Companies are now able to pursue cost leadership and differentiation simultaneously because
A)of the emergence of flexible manufacturing technologies and new information technologies.
B)markets have become more homogeneous.
C)industries have become consolidated.
D)barriers to entry have fallen.
E)government regulation has diminished.

Accepted Answer

The emergence of flexible manufacturing technologies and new information technologies have enabled companies to pursue cost leadership and differentiation strategies at the same time. Flexible manufacturing technologies allow for efficient and cost-effective production of customized products, while new information technologies enable companies to gather customer data and personalize products or services to meet unique customer needs. This has made it possible for companies to differentiate themselves from competitors while still maintaining cost leadership.

Question 4

A cost leader could reasonably be expected to reduce costs by developing distinctive competencies in all but
A)manufacturing.
B)materials management.
C)marketing and sales.
D)information technology.
E)learning organizational structure.

Accepted Answer

The answer of A cost leader could reasonably be expected...

Question 5

For any company,building new competencies in the functions that sustain its differentiation means neglecting its cost structure.

Accepted Answer

Building new competencies in the functions that sustain differentiation can actually improve a company's cost structure in the long run, as it can lead to increased efficiency and effectiveness in these functions. However, the company must be careful not to overspend on these new competencies and neglect cost management. Balancing investment in differentiation and cost management is critical for any successful company.

Question 6

Competitive advantage with product differentiation occurs when a company
A)creates competitive advantage by grouping customers on the basis of important differences in their needs.
B)helps firms keep costs to a minimum.
C)creates,makes,and sells a product in a way that better satisfies customer needs than its rivals do.
D)is focused on corporate-level strategy.
E)allows its managers to ignore costs.

Accepted Answer

The answer of Competitive advantage with product differentiation occurs when...

Question 7

Crowne Plaza,Hampton Inn,and Embassy Suites were created by Holiday Inn in response to competition in the hotel-motel industry.

Accepted Answer

Crowne Plaza, Hampton Inn, and Embassy Suites were all brands created by Holiday Inn to respond to the competition in the hotel-motel industry.

Question 8

A differentiation business model is based on pursuing a set of generic strategies that allows a company to achieve a competitive advantage by creating a product that customers perceive as different or distinct in some important way.

Accepted Answer

A differentiation business model is based on creating a product that is perceived as unique or different by customers, leading to a competitive advantage. This can involve differentiating based on product features, quality, design, customer service, or other factors that are important to customers.

Question 9

E*Trade,the online brokerage company,is an example of a new entrant to an industry that has used the Internet to overcome barriers to entry and compete successfully against market leaders.

Accepted Answer

E*Trade was one of the first online brokerages, and it used the internet to reduce costs and make trading more accessible to individual investors. By doing so, it was able to compete successfully against traditional market leaders in the brokerage industry.

Question 10

To create a successful business model,managers must choose a set of business-level strategies that
A)allow the company to better compete with rivals within an industry.
B)help them decide what businesses to enter and exit.
C)help build an organizational structure that contains multiple businesses.
D)work together to give a company a competitive advantage over its rivals.
E)help it to diversify to better leverage distinctive competencies.

Accepted Answer

A successful business model is one where the chosen business-level strategies work together to give the company a competitive advantage over its rivals. These strategies should be aligned and complementary to enable the company to better compete with rivals within an industry. Choosing the right strategies will help the company decide what businesses to enter and exit, and may also help in building an organizational structure that contains multiple businesses. Additionally, the right strategies can help a company diversify to better leverage its distinctive competencies. However, the ultimate goal of any business-level strategy is to create a sustainable competitive advantage that can help the company achieve its objectives. Therefore, Option D is the best choice.

Question 11

Zara,the Spanish high-fashion house,was unsuccessful in using creative information systems to produce fashionable clothes at lower prices and sell them in their own chain of clothing stores.

Accepted Answer

This statement is opposite to the reality. Zara successfully uses their creative information systems to produce fashionable clothes at lower prices and sell them in their own chain of clothing stores.

Question 12

The problem facing differentiators,such as L.L.Bean,is how to protect the distinctiveness of their products from imitators who are constantly searching for ways to steal away customers by offering similar products at lower prices.

Accepted Answer

This is a common challenge for differentiators like L.L.Bean as competitors are always trying to replicate their products or offer similar ones at lower prices, making it difficult for them to maintain their uniqueness in the market.

Question 13

Market fragmentation has occurred in many industries because of the
A)emergence of flexible technologies.
B)homogenization of markets.
C)implementation of just-in-time inventories.
D)increased strength of large competitors.
E)increased internationalization of business.

Accepted Answer

The emergence of flexible technologies has allowed for the customization and targeting of specific market segments, leading to market fragmentation.

Question 14

Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure?
A)Cost leadership
B)Differentiation
C)Broad differentiation
D)Focused differentiation
E)None of these choices

Accepted Answer

The cost leadership strategy is based on achieving a competitive advantage by having the lowest cost of operation in the industry. This allows the company to price its products or services lower than competitors and still maintain a profitable margin. Therefore, the answer is (A) Cost leadership.

Question 15

The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is
A)standardized market price.
B)industry life cycle stage.
C)degree of market segmentation.
D)age of the market.
E)market trajectory.

Accepted Answer

The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is the degree of market segmentation. Companies following a cost leadership strategy focus on achieving the lowest cost of production and delivering products at a low price to a broad market. In contrast, companies following a focused cost leadership strategy target a specific market segment and offer products that meet the needs of that segment at a low price. This requires a deeper understanding of the needs and preferences of the segment, and the ability to tailor the production and delivery process to optimize cost savings.

Question 16

Ryanair,based in Dublin,Ireland,used the cost-leadership business model pioneered by Southwest Airlines in the United States to become a leading player in the European air travel market.

Accepted Answer

Ryanair's business model is based on low-cost and efficiency, similar to Southwest Airlines. They have used this strategy to become one of the largest airlines in Europe.

Question 17

A radio station has a distinctive competency in developing new products (shows)and wants to serve the upscale market.Which of the following is the most appropriate generic strategy for this company?
A)Cost leadership
B)Differentiation
C)Both cost leadership and differentiation
D)Focused low-cost approach
E)Focused differentiation approach

Accepted Answer

The answer of A radio station has a distinctive competency...

Question 18

A differentiated product is a product that
A)looks different from rival products.
B)better satisfies customer needs than rival products do.
C)is packaged in a unique and eye-appealing manner.
D)always costs more than rival products.
E)always costs less than rival products.

Accepted Answer

A differentiated product is a product that better satisfies customer needs than rival products do. It does not necessarily have to look different or have unique packaging, nor does it have to always cost more or less than rival products. The key is in offering unique value to customers that sets it apart from competitors.

Question 19

To pursue a cost leadership strategy,strategic managers need to incorporate all the latest technology into their products.

Accepted Answer

Pursuing a cost leadership strategy does not necessarily require the incorporation of all the latest technology, as such investments in technology may add to the cost of production and thus reduce the firm's ability to compete on cost. Rather, cost leadership strategy typically involves finding ways to produce and deliver products or services more efficiently and economically than competitors, such as through process improvements, economies of scale, or low-cost sourcing of inputs.

Question 20

A product's appeal to customers' psychological desires is a source of differentiation.

Accepted Answer

Customers' psychological desires can be a source of differentiation as customers may be attracted to a product that satisfies their emotional or personal needs. For example, a luxury car may appeal to a customer's desire for status or prestige.

Quiz 5: Building Competitive Advantage Through Business-Level Strategy

Which of the following is not a generic competitive strategy?

At their simplest level,customer needs can be defined as

Companies are now able to pursue cost leadership and differentiation simultaneously because

A cost leader could reasonably be expected to reduce costs by developing distinctive competencies in all but

For any company,building new competencies in the functions that sustain its differentiation means neglecting its cost structure.

Competitive advantage with product differentiation occurs when a company

Crowne Plaza,Hampton Inn,and Embassy Suites were created by Holiday Inn in response to competition in the hotel-motel industry.

A differentiation business model is based on pursuing a set of generic strategies that allows a company to achieve a competitive advantage by creating a product that customers perceive as different or distinct in some important way.

E*Trade,the online brokerage company,is an example of a new entrant to an industry that has used the Internet to overcome barriers to entry and compete successfully against market leaders.

To create a successful business model,managers must choose a set of business-level strategies that

Zara,the Spanish high-fashion house,was unsuccessful in using creative information systems to produce fashionable clothes at lower prices and sell them in their own chain of clothing stores.

The problem facing differentiators,such as L.L.Bean,is how to protect the distinctiveness of their products from imitators who are constantly searching for ways to steal away customers by offering similar products at lower prices.

Market fragmentation has occurred in many industries because of the

Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure?

The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is

Ryanair,based in Dublin,Ireland,used the cost-leadership business model pioneered by Southwest Airlines in the United States to become a leading player in the European air travel market.

A radio station has a distinctive competency in developing new products (shows) and wants to serve the upscale market.Which of the following is the most appropriate generic strategy for this company?

A differentiated product is a product that

To pursue a cost leadership strategy,strategic managers need to incorporate all the latest technology into their products.

A product's appeal to customers' psychological desires is a source of differentiation.