Exam 5: Selecting Business-Level Strategies

A company introduces a new product in the market.The company decides that the only way it could attract customers is to keep the price of the product lower than what its competitors charge.What advantage would the company enjoy because of the strategy it proposes to follow?

One of the ways that cost leaders generally keep their costs low is by not spending much on advertising.

Cost leaders are companies that sell inferior, poor quality goods and services for rock-bottom prices.

Which of the following is an advantage of cost leadership?

According to Porter, which two competitive dimensions are the keys to business-level strategy?

In many cases, the target market is defined by the sales channel used to reach customers.

Effective differentiation creates an ability to obtain premium prices from customers.

Which of the following constitutes an advantage of the differentiation strategy?

Mekcin is a company that regularly launches products with features that are different from what are offered in the market.It has now launched a new electronic device which can be fitted to vehicles.It can be programmed to automatically dial the police emergency number, provide them with all the required location details, and guide them to the location, in the case of an emergency.Which of the following statements would hold true for Mekcin?

A firm is said to be _____ if it does not offer features that are unique enough to convince customers to buy its offerings and its prices are too high to effectively compete on based on price.

Which of the following statements holds true for the cost leadership strategy?

Which of the following are created when the costs of offering goods and services decreases as a firm is able to sell more items?

A firm following the focused cost strategy necessarily charges the lowest prices in the industry.

Which of the following holds true for companies following the focused differentiation strategy?

Most cost leaders spend little on advertising, market research, or research and development in order to be efficient.

The unique features provided by firms following a focused differentiation strategy are often very specialized.

A firm following a(n) _____ strategy offers products or services with acceptable quality and features to a broad set of customers at a low price.

Which of the following constitutes a disadvantage of the differentiation strategy?

Pete opens a new pizzeria in town.He promises home delivery of pizzas within a period of thirty minutes.He also makes a unique offer that if the pizzas are not delivered within thirty minutes of placing the order, then the customer will not be charged for the pizza.None of the other pizzerias in his town offer such a deal.This is an example of a(n) _____ strategy.

One route toward a best-cost strategy is for a firm to adopt a business model whose fixed costs and overhead are very low relative to the costs that competitors are absorbing.