Question 1

A company using a narrow scope in its business strategy is

Accepted Answer

A company using a narrow scope in its business strategy is limiting the group of customer segments served. This is also known as a focused differentiation strategy, where the company focuses on serving a specific niche market with unique needs and preferences. It is different from a cost leadership strategy (A), which focuses on reducing costs to offer products at a lower price than competitors, and a broad array of geographic markets (B), which is a characteristic of a global business strategy. It is also different from decreasing the number of activities on its value chain (D), which is a characteristic of a lean business strategy.

Question 2

All of the following are considered generic business-level strategies EXCEPT

Accepted Answer

Product diversification is not a generic business-level strategy but rather a corporate-level strategy. In contrast, cost leadership, focused differentiation, and integrated cost leadership/differentiation are all examples of generic business-level strategies.

Question 3

The effectiveness of any of the generic business-level strategies is contingent upon

Accepted Answer

The effectiveness of any generic business-level strategy is influenced by the match between the strengths of an organization's internal environment and the opportunities and threats in its external market. Factors such as customer needs and competitors' strategies, trends in the general consumer base, and the global and industry economy, are important considerations but are not as directly related to the effectiveness of a business-level strategy as the match between an organization's internal and external environments. Competitive scope and competitive advantage are also important considerations but fall under the umbrella of the organization's internal environment.

Question 4

Which of the following are central to implementing value-creating strategies and thereby satisfying customers'needs?

Accepted Answer

The answer of Which of the following are central to...

Question 5

Big Lots is able to compete against Wal-Mart with a cost leadership strategy because of its strengths in highly disciplined merchandise cost and inventory management system. This illustrates the

Accepted Answer

The fact that Big Lots is able to compete with Wal-Mart through cost leadership strategy indicates that the support activities in the firm provide sources of cost reduction. Big Lots has strengths in highly disciplined merchandise cost and inventory management system, which are support activities that help the firm to reduce costs and improve efficiency. This suggests that cost reduction can be achieved not only through primary activities, but also through support activities in the value chain.

Question 6

Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools, prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on these construction firms for selling its product. Durable Ceramic's next most-efficient competitor, Cost-Less Ceramics, Inc., earns average returns, while Durable earns above-average returns. The commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below those of Cost-Less's prices, it is likely that

Accepted Answer

The answer of Durable Ceramics, Inc., provides inexpensive ceramic tile...

Question 7

By examining the ____ of Southwest Airlines, one can identify the strategic themes around which it has developed its business strategy. These themes include limited passenger service, high aircraft utilization, highly productive ground and gate crews, and so forth.

Accepted Answer

An activity map is a tool for analyzing a company's value chain and identifying the strategic themes that it has developed for its business strategy. By mapping out the different activities within the value chain, Southwest Airlines has been able to identify its areas of competitive advantage, such as limited passenger service, high aircraft utilization, and highly productive ground and gate crews. The other options listed (profit pool, value diagram, and five forces model) are not directly related to the analysis of a company's strategic themes or value chain.

Question 8

Business-level strategies are concerned specifically with

Accepted Answer

Business-level strategies focus on creating a competitive advantage over competitors by differentiating the firm's position in the market. B is a component of corporate-level strategy, while C and D are more operational in nature and not related to business-level strategy.

Question 9

A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use

Accepted Answer

The river barge company offers cheaper transportation, which aligns with the cost-leadership strategy. Therefore, the company should target customers who also use the cost-leadership strategy to enhance the likelihood of business transactions.

Question 10

An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must

Accepted Answer

In order to differentiate from existing competitors, the entrepreneur must either provide tax advice in a different manner or offer a different kind of tax service than competitors. This will give the company a unique selling proposition and reason for customers to choose their services over competitors. Simply offering lower prices or higher quality may not be enough to set the company apart.

Question 11

If Southwest Airlines employees lost their high enthusiasm and commitment to the company,

Accepted Answer

Southwest Airlines' high enthusiasm and commitment from its employees is one of the company's competitive advantages. If that was lost, it would impact its performance as customers may not receive the same level of service they are accustomed to, and it may affect customer loyalty. Therefore, the best choice is D.

Question 12

A cost leadership strategy targets the industry's ____ customers.

Accepted Answer

The answer of A cost leadership strategy targets the industry's...

Question 13

Michael Porter points out that strategic fit among many activities is fundamental to

Accepted Answer

According to Michael Porter, strategic fit among many activities is fundamental to the sustainability of a firm's competitive advantage. It enables a company to achieve a unique position in the market and create superior value for its customers consistently. When a company aligns different parts of its strategy, it can create a synergy that is difficult for its competitors to replicate. As a result, the firm gains a sustainable competitive advantage that allows it to earn above-average profits over the long term.

Question 14

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy.

Accepted Answer

The cost leadership strategy is focused on providing goods or services at a lower cost than competitors. Inbound and outbound logistics, which include transportation, warehousing, and distribution, are essential to achieving this goal. Research suggests that having a competitive advantage in logistics creates more value in the cost leadership strategy than it does in the differentiation strategy. This is because the differentiation strategy is focused on providing unique or superior products or services, whereas the cost leadership strategy is focused on providing similar products or services at a lower cost. While marketing, technology development, and human resource management are also important, logistics is specifically tied to cost reduction and therefore more impactful in the cost leadership strategy.

Question 15

In order to meet and exceed customer's expectations, firms must

Accepted Answer

Constant improvement, innovation, and upgrading of core competencies are essential for firms to keep up with changing customer expectations and remain competitive in the market. Manipulating customers' perceptions of their needs and defending established core competencies cannot replace the need for continuous improvement in order to meet and exceed customer expectations. The answer B is also important but it's not the best choice as it only represents a basic approach to understanding the customer's needs.

Question 16

The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how

Accepted Answer

Southwest Airlines' success is attributed to its unique and interlocked activities, which are difficult for competitors to replicate, creating a competitive advantage.

Question 17

A company pursuing the differentiation or focused differentiation strategy would tend to

Accepted Answer

A company pursuing a differentiation or focused differentiation strategy would likely have strong capabilities in basic research to develop unique products or services that stand out from competitors.

Question 18

A cost leadership strategy provides goods or services with features that are

Accepted Answer

A cost leadership strategy focuses on providing goods or services at a lower cost than competitors, without compromising on quality. Therefore, the features of the goods or services provided are acceptable, but not necessarily unique or exceptional. The emphasis is on keeping costs low in order to provide a competitive advantage.

Question 19

As the television industry has changed in the last few decades from just three major networks to a multiplicity of networks, one of the major aspects of business strategy for the newer networks is ____ than the traditional networks.

Accepted Answer

The newer networks, in order to successfully compete with the established traditional networks, often adopt a narrower competitive scope by focusing on a specific target audience or genre of programming. This allows them to establish a strong brand identity and differentiate themselves from the larger networks.

Question 20

An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouse's company transferred her to St. Paul. The decorator is distressed because the customers in his target market have, in his words, "banal and bourgeois taste." What is the decorator's problem?

Accepted Answer

The decorator's problem is his inability to understand that customer needs and tastes vary from place to place and are subjective. He should focus on adapting his style and services to meet the needs and preferences of his new target market instead of judging them.

Quiz 4: Business Level Strategy