Deck 5: Business-Level Strategy

Question 1

The five business level strategies include all except

A) cost leadership.
B) differentiation.
C) focused integration.
D) integrated cost leadership/differentiation.

Answer 1

C

Question 2

Ralph Lauren produces products that are

A) too expensive.
B) differentiated.
C) standardized.
D) appealing to a very small niche market.

Answer 2

B

Question 3

The key to implementing the integrated cost leadership/differentiation strategy is flexibility.

Answer 3

True

Question 4

JetBlue's early success can be attributed to the solid execution of the cost leadership strategy

Question 5

A factor contributing to the poor performance of some large, diversified firms is their unwillingness to use a single, corporate-wide business-level strategy for each of their business units.

Question 6

A ____ strategy describes how it will compete in the marketplace on a day-by-day basis.

A) corporate
B) limited
C) competitive
D) business

Question 7

In general, firms with a standardized product should narrowly segment their market.

Question 8

A firm following a cost leadership strategy would invest heavily in product R&D.

Question 9

Competitive scope describes the breadth of the target market the organization wishes to serve.

Question 10

Wal-Mart's history shows that

A) business-level strategy is constantly subject to change.
B) business-level strategy can remain unchanged for a long time.
C) business-level strategy is overrated.
D) corporate-level strategy is more important than business-level strategy.

Question 11

A business-level strategy is a "big picture," highly-generalized action plan that will move an organization toward achievement of its general vision.

Question 12

The integrated cost leadership/differentiation strategy must target a narrow market.

Question 13

The dominant function in the structure for the cost-leadership strategy is Accounting.

Question 14

Typically, the customers of organizations using the cost-leadership strategy are not highly loyal.

Question 15

A generic business strategy is one that can be used in all industries and by all types of firms.

Question 16

Wal-Mart has not adjusted its business model since the mid 1990s.

Question 17

One of the benefits of the functional structure is that its elements are the same across different business-level strategies.

Question 18

Of the three organizational structures, only the simple structure and the functional structure can be used to implement business-level strategies.

Question 19

In general, customers are satisfied when the firm's product

A) is produced according to any corporate code of ethics.
B) costs less than similar products offered by competing firms.
C) is unique in the marketplace.
D) creates value for them.

Question 20

An action plan the firm develops to produce goods or services to serve the needs of a specific market segment is called a focus strategy.

Question 21

The business-level strategy that focuses on a narrow competitive scope and product uniqueness is

A) integrated cost leadership/differentiation.
B) focused cost leadership.
C) differentiation
D) focused differentiation.

Question 22

Which of the following companies uses the integrated cost-leadership/differentiation strategy to serve a broad target market?

A) Anon
B) McDonald's
C) Boeing
D) Ritz-Carlton

Question 23

A cost leader can maintain its power by all of the following except

A) continually increasing its level of efficiency.
B) negotiating tough short-term contracts with suppliers.
C) maintaining lower prices than its competitors.
D) selling to a large number of buyers.

Question 24

The word or term that is most descriptive of the products offered by an organization using the differentiation strategy is

A) uniqueness.
B) value for the money.
C) luxuriousness.
D) high-technology.

Question 25

As a cost leader, Wal-Mart is able to defeat its rivals largely because its competitors

A) cannot meet the quality of Wal-Mart's products.
B) cannot invest in operational efficiency because of low profit margins.
C) are committed to using expensive unionized labor.
D) have not generated the customer loyalty Wal-Mart has developed.

Question 26

If purchasers of Rolex watches decide that their main objective is a watch that keeps accurate time, then Rolex will experience which risk of focus strategies?

A) A competitor is outfocusing Rolex.
B) A company that serves the broad market is targeting Rolex's market.
C) Rolex's target customer has changed to be more like the customer in the broad market.
D) Rolex has neglected a key aspect of its value chain.

Question 27

The main risk of using the integrated cost leadership/differentiation strategy is

A) if the firm fails to produce somewhat differentiated products at low costs.
B) if the firm's products are too differentiated for the mass market.
C) if the firm's products are too expensive for the target market.
D) if competitors are able to imitate its strategy.

Question 28

The most difficult business strategy to implement is the ____ strategy.

A) integrated cost leadership/differentiation
B) focused differentiation
C) focused cost leadership
D) cost leadership

Question 29

The market for a cost leadership strategy is

A) the industry's average customer.
B) low income consumers.
C) the segment of consumers who desire high quality at a low cost.
D) consumers who are being poorly served by competing organizations.

Question 30

Aaron Household Movers is a small company with five trucks and 15 permanent employees. Aaron Blanco, the owner, has expanded the operation from the original one truck and two employees. The ____ structure would be most appropriate for this firm.

A) functional
B) entrepreneurial
C) simple
D) multidivisional

Question 31

There are many places where customers can buy decorative objects for their home. Which of the following companies most likely follows a focused cost leadership strategy?

A) K-Mart with its Martha Stewart collection
B) T J Maxx the discount retailer
C) Land's End (catalog and Internet retailer) with its At Home collection
D) the White Elephant, a local second-hand and consignment shop

Question 32

A high-priced women's leather goods maker uses an easily recognizable gold star-motif which ornaments the embossed leather used to make the products. This manufacturer has a policy of never having "sales" on its merchandise or selling its products through discount retailers. This company's products are easily recognizable by persons familiar with the brand. This company would be very careful to

A) advertise the durability of its products.
B) maintain average to lower-than average costs of raw materials.
C) monitor for counterfeit products.
D) monitor prices of leather goods sold by mass merchandisers.

Question 33

Nouvelle Home Designs is a group of highly skilled architects, interior designers, and interior decorators who design and furnish custom homes for clients who wish to "make an architectural statement" with their homes while being sensitive to the ecology of the location in which the house is built. Nouvelle is using the

A) integrated cost-leadership/differentiation strategy.
B) broad differentiation strategy.
C) focused differentiation strategy.
D) focused cost-leadership strategy.

Question 34

Economies of scale would be most important for an organization with a/an ____ strategy.

A) differentiation
B) integration
C) cost leadership
D) market segmentation

Question 35

Allowing for targeting a narrower market, the value chain for an organization using the focused differentiation strategy ____ the value chain for an organization using the differentiation strategy.

A) is similar to
B) varies in the operations function compared with
C) varies in the procurement function compared with
D) varies in the inbound and outbound logistics functions compared with

Question 36

Which of the following is most typical of a value-creating activity associated with the differentiation strategy compared with the cost leadership strategy?

A) frequent evaluation processes to monitor suppliers' performance
B) intense and effective training programs to improve worker efficiency and effectiveness
C) easy-to-use manufacturing technologies.
D) extensive personal relationships with buyers and suppliers

Question 37

Live Easy, Inc., specializes in dietary supplements that address the specific needs of women over the age of sixty, such as bone loss and joint pain. The premium-priced supplements are sold by mail and advertised in upscale magazines such as Town and Country, Art and Antiques, and Architectural Digest. Live Easy has a/an ____ business-level strategy.

A) focused differentiation.
B) cost leadership.
C) integrated cost leadership/differentiation.
D) value-creating

Question 38

Which of the following is not an example of a potential narrow market segment?

A) women who practice yoga
B) residents of coastal California with incomes over $100,000
C) CPAs with tax practices
D) people who have landline telephones

Question 39

The two dimensions of business level strategy are

A) supply and demand.
B) competitive scope and cost leadership.
C) narrow or broad target market.
D) competitive advantage and competitive scope.

Question 40

Which of the following statements is true?

A) The customers of firms using the cost-leadership strategy prefer low quality products..
B) Firms using the cost-leadership strategy musts focus exclusively on the price of the product.
C) Cost-leaders tend to be oblivious to competitors' product innovations.
D) Firms using the cost-leadership strategy usually target their products at the largest market segment possible.

Question 41

What special implementation needs does a integrated cost leadership/differentiation strategy have for the organization?

Question 42

In an organization using the cost leadership strategy, the functional structure should emphasize the ____ function.

A) marketing
B) operations
C) accounting
D) personnel

Question 43

How do the recommended functional structures vary between the cost leadership strategy and the differentiation strategy?

Question 44

The key factor that the organization structure of a firm using the integrated cost leadership/differentiation strategy must provide is

A) efficiency
B) innovation
C) accountability
D) flexibility

Question 45

What are the two key dimensions of the organization's business level strategy? And what combinations of these dimensions lead to the five types of business level strategies?

Question 46

Krispy Kreme's current business strategy can best be described as

A) very focused.
B) very successful.
C) moderately successful.
D) unsuccessful.

Question 47

In an organization using the differentiation strategy, which of the following functions is most likely to be more important than the others?

A) operations
B) marketing
C) accounting
D) personnel

Question 48

The main drawback of the functional structure is that

A) the structure is easily overwhelmed if the firm grows rapidly.
B) the formality and bureaucracy involved reduce efficiency and effectiveness.
C) it is more expensive to operate than the simple structure.
D) it is sometimes difficult to communicate across functions.

Question 49

Describe the similarities and differences between the cost-leadership strategy and the focused cost-leadership strategy; and between the differentiation strategy and the focused differentiation strategy.

Question 50

Which of the following statements is true?

A) After a firm reaches a certain size, it needs multiple business-level strategies.
B) Diversified firms need multiple business- level strategies.
C) The simple structure is being replaced by the functional structure because of its inability to cope with the complexity of the modern economic environment.
D) Once an organization develops the right structure, this structure will keep the organization "on course" indefinitely.