Exam 7: Business Strategy and Competitive Advantage

Differentiation increases profit margins by lowering costs, while cost leadership increases profit margins by allowing firms to charge higher prices for products that are perceived as unique.

Firms seeking competitive advantage by pursuing a ____________ strategy must develop the capabilities to provide customers with the appropriate justification to make ultra-luxury purchases of these firms' goods and services.

A firm seeking strategic advantage in a broad target market by controlling its costs is pursuing a ___________ strategy.

A "blue ocean" strategy requires an examination of buyer value elements to create a separation between differentiation and low cost strategies.

List three characteristics of firms pursuing successful cost leadership strategies.

So-called "dollar stores"-Dollar General, Family Dollar, and Dollar Tree-are good examples of competitors pursuing ____________ strategies.

The profitability levels of firms in commodity markets tend to be heavily impacted by business cycles.

The efficiency of a firm's chosen strategy can be judged by ____________.

List three characteristics of the management culture of firms pursuing successful cost leadership strategies.

Product (as opposed to process) innovation is important for firms pursuing differentiation strategies.

____________ are firms that pursue entrepreneurial exploration of their competitive environments with the aim of developing new product and market opportunities.

Which of the following actions by competitors can thwart the success of differentiation strategies?

____________ are firms that balance the opportunity-seeking nature of prospectors against the risk aversion of defenders.

To achieve an overall low cost position in their industries, firms should avoid seeking large market shares.

__________ are firms that pursue strategies characterized by inconsistencies and a reactionary response to environmental change.

Effectiveness of a firm's chosen strategy can be judged by its performance relative to average industry performance.

List three steps that managers can take when confronted by an aggressive competitor eager to initiate a price war.

Discuss two reasons that can cause firms to become strategically "stuck in the middle."

One of the ways to evaluate the effectiveness of the business strategy is to assess how effectively the firm's strategy is succeeding in preventing the reshaping of its demand curve.

List three competitive advantages that firms are likely to enjoy when pursuing a cost leadership strategy in a broad market segment.