Deck 6: Business-Level Strategy

Question 1

Which of the following is not one of the points on Bowman's strategy clock?

A) Focused differentiation
B) No frills
C) Hybrid
D) Cost leadership
E) Differentiation

Answer 1

D

Question 2

Who developed the concept of 'lock- in'?

A) Bowman
B) Porter
C) Burgelman
D) Hax and Wilde

Answer 2

D

Question 3

Which of the following is not a characteristic of a no frills strategy?

A) Low perceived product/service benefits
B) Focus on price- sensitive market
C) Benefits that are different from those of competitors and which are widely valued by buyers
D) A low price

Answer 3

C

Question 4

Which of the following is not a strategy for competing in hypercompetitive markets?

A) Relying on tried and trusted methods of securing competitive advantage
B) Imitating competitors' product/market moves
C) Achieving advantage as a first mover
D) Pre- empting imitation by competing in new ways
E) Constant disruption of the status quo

Question 5

Which of the following is not a characteristic of successful hypercompetitive strategies?

A) Disrupt the status quo
B) Make smaller moves rather than larger ones
C) Be predictable
D) Mislead the competition
E) Cannibalise bases of success

Question 6

Which of the following would you not associate with a low price strategy?

A) Employing cheaper resources
B) Producing 'no frills' products and services
C) An industry leading brand
D) Reducing labour costs and increasing labour productivity.
E) Copying designs to save R&D costs

Question 7

Which of the following is one of the problems of game theory?

A) It provides scenarios of competitor behaviour which are taken into account in developing strategy.
B) It provides a useful way of thinking through competitor moves.
C) It provides food for thought about cooperation rather than conflict.
D) It assumes that competitors behave rationally.

Question 8

Which of the following conclusions can be reached by playing sequential games? Choose all that apply.

A) There may be benefits in bluff and counter- bluff.
B) The timing of strategic moves is crucial.
C) Risk must be weighed carefully.
D) Establishing credibility and commitment is essential.
E) In sequential games, the need to 'think forwards and reason backwards' becomes less important.

Question 9

Which of the following is not a way to sustain differentiation based advantage?

A) Developing high switching costs
B) Creating difficulties of imitation
C) Entering a price war
D) Co- specialisation with the buyers organisation

Question 10

What is meant by a hybrid strategy in the context of the strategy clock?

A) A strategy that combines a broad market with focus characteristics
B) A strategy that combines emergent and intended elements
C) A strategy that combines positioning and resource based approaches
D) A strategy that combines differentiation and cost control

Question 11

Which of the following is not an objective of game theory?

A) Assessing the impact of a new product launch on the competition
B) Putting oneself in the position of the competitor
C) Identifying whether there is any strategy that could be followed by a competitor that would lead to market domination
D) Evaluating macroenvironmental scenarios
E) Taking an informed, rational view about the competitor's likely actions

Question 12

Which of the following is not a way to sustain price- based advantage?

A) Having deep pockets to fund a price war
B) Cross subsidising the low margin business from other parts of the business portfolio
C) Focusing on markets where high product/service value is appreciated by customers
D) Having organisationally specific capabilities which drive down cost throughout the value chain
E) Selling higher volumes at reduced margins

Question 13

Which two of the following are examples of collaboration to share work with customers?

A) Self- assessment of income tax
B) Reduced queuing by using larger numbers of checkouts in supermarkets
C) Allowing customers to design their own computer on line
D) Asking customers to include payment with an order.

Question 14

Which of the following are the key assumptions of game theory? Choose all that apply.

A) Competitors will behave rationally in trying to win.
B) Competitors can perfectly understand each other's motives.
C) Competitors are in an interdependent relationship with each other.
D) Competitor can reason forwards and think backwards.

Question 15

How might managers create a 'confusion' of SBUs?

A) By subdividing the market into segments.
B) By creating a management structure with an excessive number of middle managers.
C) By subdividing the market into many segments based on different criteria.
D) By giving equal weight to the needs of every supplier.

Question 16

Which of the following is the main problem that can arise for corporate level management if too many SBUs are identified?

A) Difficulties in giving equal weight to the needs of each supplier.
B) Difficulties in setting clear targets for operational teams.
C) Excessive requirements for clear, authoritarian leadership.
D) Excessive complexity in developing corporate- level strategy.

Question 17

The axes on Bowman's strategy clock are:

A) Fast/slow response and high/low quality
B) High/low market focus and high/low price
C) High/low perceived product/service benefits and high/low price
D) High/low price and high/low quality

Question 18

Which of the following does not explain how a differentiation strategy leads to superior performance?

A) It enables a firm to sell their products at a premium price.
B) Earn above average profits by reducing elasticity of demand for the product.
C) Creates a barrier to the entry of new competitors.
D) Price competitiveness leads to greater sales volumes.

Question 19

Which two of the following are the most suitable criteria to use when identifying SBUs?

A) Capabilities- based criteria
B) Management- based criteria
C) Market- based criteria
D) Structure- based criteria

Question 20

Which of the following could be good ways of shifting the rules of the game in a market dominated by price- based strategies? Choose all that apply.

A) Give incentives for customer loyalty.
B) Invest heavily in creating new products.
C) Make pricing more transparent.
D) Differentiate more clearly on what what customers really value.

Question 21

Which of the following is not one of Porter's generic strategies?

A) Hybrid
B) Focus
C) Cost leadership
D) Differentiation

Question 22

Which two of the following guide the development of successful competitive strategies?

A) Get in the mind of the competitors.
B) Always select the most unexpected option.
C) Act independently.
D) Think forwards and reason backwards.

Question 23

Which two of the following are examples of collaboration to build barriers to entry or avoid substitution?

A) Firms in an industry collaborate to invest in research and development.
B) An industry develops a policy of only dealing with accredited suppliers.
C) An industry develops a policy of dealing only with individual buyers.
D) Trade associations promote an industry's generic features to speed up innovation.

Question 24

Which three of the following may be the benefits of collaborating rather than competing?

A) Increased barriers to entry
B) Entry to new markets
C) Increased risk of substitution
D) Increased selling power

Question 25

Which three of the following may be the benefits of collaborating rather than competing?

A) Increased buying power
B) Decreased risk of substitution
C) Shared work with customers
D) Decreased barriers to entry

Question 26

What do strategists mean when they refer to 'bases of competition'?

A) Price based, differentiation, hybrid or focus strategies
B) Mergers, acquisitions, alliances, organic growth
C) Question marks, stars, cash cows, dogs
D) Diversification, penetration, market development or product development

Question 27

Which of the following is not a good reason for collaborating between potential competitors?

A) To increase buying power
B) To carve up the market between competitors to maximise prices
C) To increase selling power by offering a complete package of product and service
D) To increase barriers to entry by joint investment in R&D or marketing

Question 28

Which of the following is an example of collaboration to increase buying power?

A) Pharmaceutical companies agree on prices for certain drugs for third world countries.
B) Hospital trusts and government drug- specifying agencies combine to gain buying power.
C) A group of customers collect their drugs jointly from their local pharmacy.
D) Two pharmaceutical companies agree on what prices they will charge for two similar, newly developed drugs.

Question 29

Which of the following is 'lock- in' not a function of?

A) First mover advantage
B) Providing a low cost version of a product in popular demand
C) Market dominance/size
D) Fierce insistence on the preservation of the lock- in status by fighting off rivals
E) Self- reinforcement as more firms adopt the standard

Question 30

Which of the following statements apply to SBUs? Choose all that apply.

A) Each SBU typically competes in a different market or market segment.
B) Each SBU must have a separate manager responsible for its performance.
C) Different competitive strategies may be needed for each SBU.
D) They may be organisationally separate.

Question 31

Which of the following is not a way of overcoming bases of competitive advantage?

A) Strategic repositioning
B) Increasing output while maintaining price
C) Blocking first- mover advantage
D) Imitation
E) Overcoming barriers to entry

Question 32

Which of the following is a method of changing the rules of the game?

A) Developing a new business model
B) Imitating the competitors
C) Expanding the number of distribution channels
D) Embarking on a new advertising campaign

Question 33

Which of the following strategies is not destined for ultimate failure according to Bowman's strategy clock?

A) Low price
B) Low value/standard price
C) Increased price/standard value
D) Increased price/low value

Question 34

In repeated games which of the following is not a factor upon which cooperation depends?

A) Lack of transparency
B) Mixture of small and large competitors
C) Substantial difference between organisations
D) Number of competitors
E) Branding

Question 35

What does the term 'coopetition' suggest?

A) Cooperation easily degenerates into competition.
B) Game theory works best when all players work in a confined space.
C) To varying degrees all competitors cooperate.
D) The aim of game theory is to encourage people to work together.

Question 36

Which of the following is not a characteristic of a hypercompetitive environment?

A) Low levels of competition
B) Fast changing
C) Turbulence
D) Uncertain

Question 37

A competitor appears to be developing a first- mover advantage in one market segment. Which two statements best describe what actions may be suitable?

A) Wait until the market response becomes clear.
B) Offer another product with enhanced features.
C) Respond before the competitor has established a dominant position.
D) Offer an imitation product.

Question 38

Which is the most likely reason why an organisation has a number of strategic business units?

A) To fit the management structure.
B) Because it has many different suppliers.
C) For historical reasons.
D) Because it competes in different markets or market segments.

Question 39

Why is it often a good idea to be unpredictable in a hypercompetitive situation?

A) Because this creates market confusion, which increases sales.
B) Because if competitors can see a pattern they can predict the next competitive move.
C) Because if your organisation can identify a pattern, it is likely that the competition can also do so.
D) Because if competitors can see a pattern your organisation will not be able to predict its own future moves.

Question 40

Which of the following is not a concept in game theory?

A) Dominated strategy
B) Equilibrium
C) Punctuated equilibrium
D) Dominant strategy

Question 41

Organisations achieve competitive advantage by providing their customers with what they want or need, better or more effectively than competitors.

Question 42

SBUs must always be represented by different sections of the management structure.

Question 43

The Prisoner's dilemma was a computer game developed by Sony which failed to take off in the market place.

Question 44

Collaboration is likely to be advantageous when the combined costs of purchase and buying transactions are lower through collaboration than the cost of operating alone.

Question 45

Which of the following is not an example of differentiation based competitive advantages?

A) Just In Time (JIT) inventory management
B) Product positioning strategy
C) Branding
D) Service standards
E) Superior product quality

Question 46

A dominant strategy is one that outperforms other strategies whatever rivals choose.

Question 47

Attacking a competitor's weaknesses may be unwise as it shows how those weaknesses are perceived and give the competitor a chance to build their strategy accordingly.

Question 48

A strategic business unit is a subsidiary of an organisation.

Question 49

Lock- in is where an organisation achieves a proprietary position in its industry; it becomes an industry standard.

Question 50

A hybrid strategy seeks simultaneously to achieve differentiation and focused differentiation.