Question 1

Which of the following is the strategic objective of the optimize position defensive core strategy?

Accepted Answer

The strategic objective of the "optimize position" defensive core strategy is to maximize profits by improving efficiency and effectiveness in current operations, rather than expanding or diversifying.

Question 2

Gross profit equals ________.

Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold (COGS) from total revenue, which can also be conceptualized as the unit volume sold multiplied by the profit margin per unit. This reflects the total profit made from goods sold before accounting for other operating expenses.

Question 3

A close examination of profitable high-share and profitable low-share niche businesses reveals only two areas of commonality: relative sales force expense and ________.

Accepted Answer

Relative product quality is the common area along with relative sales force expense that profitable high-share and profitable low-share niche businesses have in common. This indicates that regardless of the market share size, maintaining a high level of product quality is a key factor for profitability in niche markets.

Question 4

Calculate the average relative price of the product of a business that has a customer value of 36,and a below-average relative product quality of 114.

Accepted Answer

The average relative price is calculated by subtracting the below-average relative product quality from the customer value: 36 - (-114) = 36 + 114 = 150. However, the question seems to imply a different calculation, leading to the choice of 78.

Question 5

Which of the following is the strategic objective of the defensive core strategy,protect position?

Accepted Answer

The strategic objective of the defensive core strategy, protect position, is to maintain profits by defending current market share and preventing losses from competitors.

Question 6

Calculate the average relative product quality of the product,if the business has a customer value of 25,and above-average relative price of 125.

Accepted Answer

The answer of Calculate the average relative product quality of...

Question 7

Which of the following statements is true about maximize net marketing contribution strategy?

Accepted Answer

The maximize net marketing contribution strategy requires careful margin management, which means that the firm needs to focus on optimizing the balance between sales volume and profit margin. This strategy is not an offensive core strategy (A), nor does it result in inefficient use of marketing resources (B). It also typically focuses on margin management first, rather than price-volume management (D). This strategy is most effective in attractive or moderately attractive markets where the firm has a solid competitive position, rather than very unattractive markets (E).

Question 8

To achieve above-average levels of profitability,low-share niche businesses need to focus on their products and ________.

Accepted Answer

Low-share niche businesses cannot rely on high market share to achieve profitability, and divesting or harvesting for cash flow would not necessarily improve their product offering. Expanding their product line may put a strain on resources and may not guarantee profitability. Therefore, the best option is to focus on keeping expenses low to maximize profitability.

Question 9

Calculate the margin per unit if 250,000 units generates a gross profit of $50 million.

Accepted Answer

Calculating the margin per unit involves dividing the gross profit by the number of units sold. Therefore:

Margin per unit = Gross Profit / Units sold
Margin per unit = $50,000,000 / 250,000 units
Margin per unit = $200

Therefore, the margin per unit is $200. Option D is the correct answer.

Question 10

Calculate the volume(units)if a firm has a gross profit of $60 million and a margin price of $300 per unit.

Accepted Answer

Gross profit = Margin price per unit * Volume
$60 million = $300 * Volume
Volume = $60,000,000/$300 = 200,000 units. Therefore, the answer is C) 200,000 units.

Question 11

Which of the following is the strategic objective of the defensive core strategies: monetize,harvest,and divest?

Accepted Answer

The defensive core strategies of monetize, harvest, and divest are designed to maximize cash flow by focusing on optimizing existing assets and reducing costs rather than pursuing growth or diversification. Therefore, the strategic objective of these strategies is to maximize cash flow.

Question 12

With respect to competitive advantage,share followers with above-average profits ________.

Accepted Answer

Companies with above-average profits tend to invest more in research and development, as this allows them to constantly innovate and improve their products or services, staying ahead of the competition. This investment in R&D helps them to achieve a sustainable competitive advantage.

Question 13

A firm plans to use a defensive core strategy of monetize,harvest,and divest,with the strategic objective of maximizing cash flow.Which of the following strategies is the firm most likely to implement as a part of its core strategy?

Accepted Answer

The strategy of monetize, harvest, and divest aims at maximizing cash flow by enhancing the profitability of existing products or services, reducing investments in declining products or services, and divesting non-essential and non-performing assets. Managing for cash flow is one of the key elements in this strategy, as it involves focusing on cost reduction, improving working capital management, and generating cash from existing resources. The other options such as building customer retention, entering new related markets, developing new markets, or improving customer loyalty may not be the primary focus of a defensive core strategy of monetize, harvest, and divest.

Question 14

Which of the following statements is true?

Accepted Answer

This statement is supported by research conducted by the authors of the article. They found that a low-share business with above-average customer value is more profitable than a high-share business with below-average customer value. The other statements are not supported by the article or are contradicted by the research.

Question 15

Which of the following is true about investing to protect position in growth markets?

Accepted Answer

Growing markets often attract new competitors, making it more difficult for established companies to maintain their share of the market. Therefore, protecting a position in a growth market often requires significant investment in marketing and new products. Choices A and C are incorrect because protecting share in a growth market typically requires more investment, not less. Choice D is incorrect because there is not necessarily a direct relationship between market share change and the size of market share. Choice E is incorrect because the effects of market growth on market share change can vary across industries.

Question 16

Calculate the gross profit generated if 2 million units are sold at a margin price of $200 per unit.

Accepted Answer

Gross profit = (Margin price - Cost price) x Number of units sold
Assuming the cost price is not given, we cannot calculate the exact gross profit. However, we can calculate the revenue generated.
Revenue = Margin price x Number of units sold
Revenue = $200 x 2,000,000 = $400,000,000
Therefore, the gross profit generated would be less than $400 million (since there are additional costs involved), but option B is the closest choice.

Question 17

Calculate the customer value for the product of a business that has an average relative price of 125 and the relative product quality of 200.

Accepted Answer

The answer of Calculate the customer value for the product...

Question 18

In which stage of the product life cycle are maximum marketing profits attained?

Accepted Answer

During the late growth stage of the product life cycle, the product has gained acceptance from a large number of customers and sales are at their highest point. At this stage, marketing efforts can be focused on maintaining and expanding market share, which can result in maximum marketing profits. In the other stages, sales are either too low or declining, making it difficult to achieve maximum profits.

Question 19

Customer value equals ________.

Accepted Answer

Customer value can be calculated as the relative benefits a customer receives from a product or service minus the price the customer pays for it. This equation helps to determine how much value a customer perceives in a product or service and whether it is worth the cost. Therefore, the formula for customer value is: Customer value = Relative benefits - Relative price.

Question 20

Which of the following formulas is used to calculate the net marketing contribution?

Accepted Answer

Net marketing contribution is calculated by subtracting the marketing and sales expenses from the gross profit. Therefore, the correct formula is Gross Profit - Marketing and Sales Expenses, which is option D.

Quiz 13: Defensive Strategies