Question 1

A business model is developed first.Then the firm takes steps to understand customers in terms of who, what, and how in order to develop a business-level strategy.

Accepted Answer

A firm typically first seeks to understand its customers and market environment to inform the development of a business model and strategy.

Question 2

The differentiation strategy is ineffective for products that are expensive, luxury consumer goods.It is best used for common, inexpensive products such as donuts.

Accepted Answer

Differentiation strategy is effective for luxury goods as it emphasizes unique features and quality, which are important for justifying higher prices.

Question 3

The hazard of getting "stuck in the middle" applies to firms using any business strategy.

Accepted Answer

The hazard of getting "stuck in the middle" specifically applies to firms that fail to effectively pursue either a cost leadership or differentiation strategy, leading to a lack of competitive advantage.

Question 4

The activities in the value chains of companies using focus strategies are quite different than the activities in the value chains of companies using industry-wide business strategies.

Accepted Answer

The answer of The activities in the value chains of...

Question 5

Human resources and other support functions are not value-creating activities in the value chain; only value-chain activities create value.

Accepted Answer

Support functions like human resources contribute to the overall efficiency and effectiveness of value-chain activities, indirectly creating value by enhancing the organization's capabilities.

Question 6

In general, firms can be MOST effective if they develop business-level strategies that will serve the needs of the "typical customer" in the industry.

Accepted Answer

Firms are often more effective when they target specific customer segments rather than the "typical customer," as this allows them to tailor their strategies to meet the unique needs and preferences of those segments, leading to a competitive advantage.

Question 7

Flexible manufacturing systems, information networks, and total quality management are three techniques that make it possible for firms to implement the focused differentiation strategy.

Accepted Answer

The answer of Flexible manufacturing systems, information networks, and total...

Question 8

Because of its focus on innovation and quality manufacturing, total quality management is not useful for firms that follow a cost leadership strategy.

Accepted Answer

Total quality management (TQM) can be beneficial for firms with a cost leadership strategy as it helps in reducing waste, improving efficiency, and lowering costs, which aligns with the goals of cost leadership.

Question 9

A risk of the differentiation strategy is that a firm's means of differentiation may cease to provide value for which customers are willing to pay.

Accepted Answer

A differentiation strategy relies on unique features that add value to customers. If these features become less valuable or common, customers may not be willing to pay a premium, undermining the strategy.

Question 10

A firm's core strategy is its __________ strategy.

Accepted Answer

A firm's core strategy is its business-level strategy, which focuses on how the firm will compete in its chosen markets.

Question 11

Delgado is a U.S.-based firm that serves an international market.It determines product offerings and price points based on the country in which the product will be sold.Delgado is using consumption patterns as the basis for segmenting its customers.

Accepted Answer

The answer of Delgado is a U.S.-based firm that serves...

Question 12

Although it is a cost leader, IKEA also offers some differentiated features that appeal to its target customers, including its unique furniture designs, in-store playrooms for children, wheelchairs for customer use, and extended hours.

Accepted Answer

IKEA is known for its cost leadership strategy but also incorporates differentiation by offering unique designs, customer-friendly services like playrooms and wheelchairs, and convenient store hours to enhance customer experience.

Question 13

A flexible manufacturing system is a computer-controlled process used to produce a variety of products in moderate, flexible quantities with a minimum of manual intervention.

Accepted Answer

A flexible manufacturing system (FMS) is designed to adapt to changes in the type and quantity of production, using computer control to minimize manual intervention and efficiently produce different products.

Question 14

A risk of a focus strategy is that the needs of customers within a narrow competitive segment may become more similar to those of industry-wide customers as a whole over time.

Accepted Answer

A focus strategy targets a specific market segment, but over time, the distinct needs of this segment may align more closely with the broader market, reducing the effectiveness of the focus strategy.

Question 15

A business-level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in:

Accepted Answer

A business-level strategy focuses on how a firm will compete in specific product markets by leveraging its core competencies to gain a competitive advantage.

Question 16

One of the benefits of the integrated cost leadership/differentiation strategy is that it is less risky than either the cost leadership or differentiation strategies.

Accepted Answer

The integrated cost leadership/differentiation strategy can be more risky because it requires balancing two different approaches, which can lead to a lack of focus and potential failure to achieve either cost leadership or differentiation effectively.

Question 17

A new generation of lunch trucks in cities such as New York, San Francisco, and Los Angeles is serving high-end fare such as hamburgers made from grass-fed cattle, escargot, and crème brulee, at less expensive prices than sit-down restaurants.This illustrates a focused differentiation strategy.

Accepted Answer

A focused differentiation strategy targets a specific market niche by offering unique products or services, like high-end food from lunch trucks, at competitive prices compared to traditional restaurants.

Question 18

When selecting a business-level strategy, the firm must determine all of the following EXCEPT:

Accepted Answer

The firm must determine how to satisfy customer needs, who the customers are, and what their needs are, but "why these customers' needs should be satisfied" is not typically a consideration in selecting a business-level strategy.

Question 19

Steak and Shake just announced that it is selling some of its stores to individuals who will then pay a fee and royalties back to the company in exchange for use of the company name and products.Steak and Shake is transitioning into a franchise business model.

Accepted Answer

Steak and Shake's decision to sell stores to individuals who will pay fees and royalties indicates a shift to a franchise model, where independent owners operate under the company's brand and system.

Question 20

The value-creating activities associated with the cost leadership strategy and differentiation strategy are the same.

Accepted Answer

The cost leadership strategy focuses on minimizing costs and achieving economies of scale, while the differentiation strategy emphasizes creating unique products or services that justify a premium price. These strategies involve different value-creating activities.

Quiz 4: Business-Level Strategy