Question 1

A firm can achieve differentiation through all of the following means except
A) improving brand image.
B) better customer service.
C) offering lower prices to frequent customers.
D) adding additional product features.

Accepted Answer

Offering lower prices to frequent customers is not a means of achieving differentiation, as it focuses on price rather than offering a unique product or service that sets the firm apart from its competitors. The other options listed (improving brand image, better customer service, and adding additional product features) are all examples of ways a firm can achieve differentiation.

Question 2

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except
A) automated and flexible manufacturing systems.
B) exploiting the profit pool concept for competitive advantage.
C) coordinating the "extended" value chain by way of information technology.
D) deriving benefits from highly focused and high technology markets.

Accepted Answer

The text discusses three approaches to combining overall cost leadership and differentiation, which are automated and flexible manufacturing systems, exploiting the profit pool concept, and coordinating the extended value chain through information technology. The text does not mention deriving benefits from highly focused and high technology markets.

Question 3

Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform
A) at about the same level as firms that achieve either cost or differentiation advantages.
B) about the same as firms that are "stuck-in-the-middle."
C) lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
D) higher than firms that achieve either a cost or a differentiation advantage.

Accepted Answer

According to the question, firms that achieve both cost and differentiation advantages tend to perform higher than firms that achieve either a cost or a differentiation advantage. Therefore, answer choice D is the correct answer.

Question 4

A manufacturing business pursuing cost leadership will likely
A) focus on a narrow market segment.
B) rely on experience effects to raise efficiency.
C) use advertising to build brand image.
D) put heavy emphasis on product engineering.

Accepted Answer

A manufacturing business pursuing cost leadership will focus on lowering its costs to offer lower prices than its competitors while still maintaining profitability. One way to lower costs is to achieve economies of scale by increasing production volume, which can lead to experience effects or learning by doing that increases efficiency over time. Therefore, B is the best choice. A is incorrect because a narrow market segment may limit potential sales and profit opportunities. C is incorrect because building brand image may require higher spending on advertising and marketing, which can increase costs and reduce competitiveness. D is incorrect because heavy emphasis on product engineering may increase costs and reduce efficiency if it doesn't contribute to lowering production costs.

Question 5

All of the following are potential pitfalls of a focus strategy except
A) erosion of cost advantages within the narrow segment.
B) all rivals share a common input or raw material.
C) even product and service offerings that are highly focused are subject to competition from new entrants and from imitation.
D) focusers can become too focused to satisfy buyer needs.

Accepted Answer

Shared input or raw material is actually an advantage of a focus strategy, as it allows for cost savings and specialization within the segment. The other options listed are potential drawbacks of a focus strategy.

Question 6

Which of the following are good examples of firms that follows the strategy of differentiation on the basis of prestige or brand image?
A) North Face and Marantz
B) 3M and Cirque du Soleil
C) Lexus and President's Choice
D) BMW, Roots, and Holt Renfrew

Accepted Answer

The answer of Which of the following are good examples...

Question 7

The case of Cott beverages explains how this company
A) employed a poor strategy.
B) failed to secure a long-term agreement with RC Cola.
C) faced high marketing and distribution costs by adopting the retailer's brand.
D) built success from selling private label products to Loblaw.

Accepted Answer

The case of Cott beverages demonstrates that the company built success from selling private label products to Loblaw.

Question 8

Staples Business Depot's strategy in Canada is to deliberately limit its product selection for the purpose of:
A) focusing on quality.
B) focusing on quantity.
C) shedding customers.
D) building the brand.

Accepted Answer

The answer of Staples Business Depot's strategy in Canada is...

Question 9

The experience curve suggests that cutting prices is a good strategy
A) if it can induce greater demand and thereby help a firm travel down the experience curve faster.
B) in industries characterized by high economies of scale.
C) in the maturity stage of the industry life cycle.
D) in the decline stage of the industry life cycle.

Accepted Answer

The experience curve suggests that as a firm gains experience, its costs decrease and it can produce more efficiently. Cutting prices can induce greater demand and lead to increased production, which can help the firm travel down the experience curve faster. This can further decrease costs and improve efficiency, leading to a competitive advantage. Therefore, cutting prices is a good strategy if it can induce greater demand and help a firm gain experience faster.

Question 10

The primary aim of strategic management at the business level is
A) maximizing risk-return trade offs through diversification.
B) achieving a low cost position.
C) maximizing differentiation of products and/or services.
D) achieving competitive advantage(s).

Accepted Answer

The primary aim of strategic management at the business level is to achieve competitive advantage(s). This involves formulating and implementing strategies that enable the business to outperform its competitors and create value for its customers. While maximizing risk-return trade offs through diversification and achieving a low cost position can contribute to competitive advantage, they are not the primary aim of strategic management at the business level. Maximizing differentiation of products and/or services can also contribute to competitive advantage, but it is not the only goal of strategic management at the business level.

Question 11

The Keg Steakhouse & Bar has a simple operating formula. The Keg
A) purposefully limited its menu and has stayed away from food fashions and fads.
B) expanded its menu and embraced food fashions and fads.
C) cut expenses from suppliers.
D) purposefully limited its menu and has stayed away from food fashions and fads, and cut expenses from suppliers.

Accepted Answer

The passage states that The Keg has purposefully limited its menu and stayed away from food fashions and fads. There is no mention of the company expanding its menu or embracing food fashions and fads. While the passage does not specifically mention cutting expenses from suppliers, this is not relevant to the company's operating formula, which is primarily focused on menu strategy.

Question 12

Support value chain activities that involve excellent applications, engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?
A) differentiation
B) overall cost leadership
C) differentiation focus
D) stuck-in-the middle

Accepted Answer

The activities mentioned in the question, such as excellent applications, engineering support, and facilities that promote a positive firm image, are characteristic of a differentiation strategy. This strategy focuses on offering unique or superior value to customers, which can be achieved through investments in technology development and infrastructure that differentiate the firm from its competitors.

Question 13

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
A) overall cost leadership
B) differentiation
C) differentiation focus
D) cost leadership focus

Accepted Answer

The answer of Convincing rivals not to enter a price...

Question 14

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?
A) by increasing a firm's margins, it avoids the need for a low-cost position
B) it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives
C) supplier power is increased because suppliers will be able to charge higher prices for their inputs
D) firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors

Accepted Answer

A differentiation strategy may lead to increased supplier power, as suppliers may have unique inputs that a firm needs in order to differentiate its products. This can result in higher input costs for the firm, thereby reducing its overall margins. Option A is true, as a differentiation strategy can allow a firm to charge higher prices, thus increasing its margins. Option B is also true, as a firm that differentiates its products may find that its buyers have fewer comparable alternatives, thus reducing buyer power. Option D is true, as a firm with a strong differentiation strategy may enjoy high levels of customer loyalty, which can help to reduce the threat of substitutes.

Question 15

Generic strategies include all except
A) differentiation.
B) resources exploitation.
C) cost leadership.
D) focus.

Accepted Answer

Generic strategies include differentiation, cost leadership, and focus. Resource exploitation is not considered as one of the generic strategies.

Question 16

High product differentiation is generally accompanied by
A) higher market share.
B) decreased emphasis on competition based on price.
C) higher profit margins and lower costs.
D) significant economies of scale.

Accepted Answer

When a company emphasizes high product differentiation, it means that they are focusing on creating unique products that stand out from their competitors. This often leads to less emphasis on competition based on price, as customers are willing to pay more for a product that they believe is different or superior. However, it does not necessarily lead to higher market share, as customers may still prefer other brands. While higher profit margins could be a possible result of high product differentiation, it does not necessarily lead to lower costs or significant economies of scale.

Question 17

A firm following a focus strategy
A) must focus on governmental regulations.
B) must focus on a market segment or group of segments.
C) must focus on the rising cost of inputs.
D) must avoid entering international markets.

Accepted Answer

A firm following a focus strategy must focus on a market segment or group of segments, tailoring its products or services to meet the unique needs or preferences of that particular segment. This allows the firm to differentiate itself from competitors and create a competitive advantage. The other choices are not necessarily relevant to a firm following a focus strategy.

Question 18

Which of the following is a risk (or pitfall) of cost leadership?
A) the strategy is too easily imitated
B) attempts to stay ahead of the competition may lead to gold plating
C) cost differences increase as the market matures
D) producers are more able to withstand increases in suppliers' cost

Accepted Answer

Cost leadership is a popular strategy, and therefore, it can easily be imitated by competitors. This means that competitors can also offer low prices, and the firm that originally implemented the strategy may lose its competitive advantage.

Question 19

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
A) differentiation
B) overall cost leadership
C) differentiation focus
D) stuck-in-the-middle

Accepted Answer

The answer of Primary value chain activities that involve the...

Question 20

Developing uniqueness that is not valuable is:
A) an essential feature of a differentiation strategy.
B) the result of having brand-loyal customers become more sensitive to prices.
C) a potential pitfall of a differentiation strategy.
D) an necessary evil of a cost-leadership strategy.

Accepted Answer

Developing uniqueness that is not valuable is a potential pitfall of a differentiation strategy. A differentiation strategy aims to create unique and valuable products that set a company apart from its competitors. However, if the uniqueness is not valuable to consumers, it will not help the company gain a competitive advantage. In fact, it may even lead to decreased sales and market share. Therefore, it is important to ensure that any uniqueness developed aligns with the needs and desires of the target market.

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

A firm can achieve differentiation through all of the following means except

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except

Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform

A manufacturing business pursuing cost leadership will likely

All of the following are potential pitfalls of a focus strategy except

Which of the following are good examples of firms that follows the strategy of differentiation on the basis of prestige or brand image?

The case of Cott beverages explains how this company

Staples Business Depot's strategy in Canada is to deliberately limit its product selection for the purpose of:

The experience curve suggests that cutting prices is a good strategy

The primary aim of strategic management at the business level is

The Keg Steakhouse & Bar has a simple operating formula. The Keg

Support value chain activities that involve excellent applications, engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?

Generic strategies include all except

High product differentiation is generally accompanied by

A firm following a focus strategy

Which of the following is a risk (or pitfall) of cost leadership?

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

Developing uniqueness that is not valuable is: