Deck 6: Business Strategy

Question 1

Mobile phone handset manufacturers and producers of the mobile phone infrastructure are in the same industry.

Answer 1

False

Question 2

Which of the following issues would be a concern of competitive strategy? Please select all that apply.

A) The degree of relatedness between businesses
B) How to compete in the market
C) How to defend against the forces in the industry
D) Which industries to enter

Answer 2

B, C

Question 3

Overall cost leadership can be achieved by: Please select all that apply.

A) Avoidance of marginal customer accounts
B) Pursuit of marginal customer accounts
C) Pursuit of scale efficiencies
D) Pursuit of large market share

Answer 3

A, C, D

Question 4

Generic strategy models can be used to: Please select all that apply.

A) Describe different theoretical ways of competing in a particular market
B) Ascertain which strategies are best or worst
C) Predict future performance of a firm
D) Ascertain how to achieve low cost or differentiation

Question 5

Porter's generic strategies can be defined as cost leadership, differentiation, and _____________________.

Question 6

Porter suggests that firms can only achieve high returns if their costs are lower than those of competitors or if they can _____________ their products effectively.

Question 7

The business strategy that allows an organization to target a segment or niche within the market is ____________ strategy.

Question 8

A hybrid strategy involves a combination of:

A) Aggressive construction of efficient-scale facilities.
B) Vigorous pursuit of cost reductions from experience.
C) Tight cost and overhead control.
D) Avoidance of marginal customer accounts.

Question 9

A firm produces 100 units at a cost of £10 per unit. According to the experience curve effect, if the firm produces 200 units, how much would each unit cost to produce?

A) £7-£8
B) £5-£6
C) £8-£9
D) £4-£5

Question 10

Ryanair will be in a better position than its competitors to counter substitutes such as the ferry and Eurotunnel, given its superior price-performance ratio.

Question 11

A differentiation strategy must be based on something tangible.

Question 12

Risks of following a differentiation strategy:

A) Consumers may not be interested in the differentiation.
B) If the price charged is so high that consumers perceive the difference as not worth paying, and it results in reduced brand loyalty.
C) Buyers may decide that their need for a differentiated product has declined.
D) Competitors may use cost advantage that results in consumers being faced with a viable substitute.

Question 13

According to Porter, if an organization does not follow either a cost reduction strategy or a differentiation strategy, they are______________.

Question 14

Generic strategy frameworks present a static view of a firm.

Question 15

A hybrid strategy involves a combination of:

A) differentiation based on tangible and intangible aspects.
B) low costs and differentiation.
C) differentiation based on product design and process design.
D) low costs and low prices.

Question 16

Some authors believe that no generic strategy can by itself be an enduring source of competitive advantage. Instead, they believe that competitive advantage comes from strategic resources and architecture. These authors are proponents of the _________________.

Question 17

Generic competitive strategies are seen as being part of:

A) The resource-based view of the firm
B) The inside-out approach
C) The positioning approach
D) Porter's Diamond

Question 18

The aim of the resource-based approach to strategy formulation is to maximize ______________ rents.

Question 19

'Durability' of resources refers to:

A) The extent to which a competitor can access the same resources
B) The extent to which a competitor understands the reason for competitive advantage
C) The rate at which they depreciate or become obsolete
D) The extent to which capabilities can be imitated

Question 20

Grant and Jordan's (2015) four stages model to guide organizations in their strategy formulation are: stage one is to identify and classify the firm's resources; stage two is to Identify the firm's capabilities; stage three is to appraise the rent-generating potential of resources and capabilities; stage four is to select a strategy which best exploits the firm's resources and capabilities relative to external opportunities.

A) Stage one is to identify and classify the firm's resources.
B) Stage two is to identify the firm's capabilities.
C) Stage three is to select a strategy which best exploits the firm's resources and capabilities relative to external opportunities.
D) Stage four is to appraise the rent-generating potential of resources and capabilities.

Question 21

Regarding generic strategies, Kay (1993:368) argues that 'there can be no such recipes because their value would be destroyed by the very fact of their ________________'.

Question 22

Kim and Mauborgne (2005) argue that organizations need to create and capture uncontested market space. They refer to this uncontested market space as ______________.

Question 23

Value innovation is the key to creating blue oceans. Please select all that are true.

A) Value innovation occurs when organizations shift their focus from beating the competition to making the competition irrelevant by placing equal emphasis on both value and innovation.
B) An organization needs to be able to appraise its competitive environment and to evaluate trends, which may start within the macro-environment.
C) To ensure sustainable competitive advantage, an organization needs to upgrade its resources and capabilities based on what it believes will be the basis of future competition.
D) Value innovation goes against Porter's assertion that an organization can pursue either differentiation or a low-cost strategy.

Question 24

To build a blue ocean strategy we use an analytical framework called the strategy canvas. Please select all that are true.

A) The horizontal axis captures the range of factors that the industry competes on and in which it invests.
B) The vertical axis displays the value a company offers the buyers in terms of each of these critical success factors.
C) Predict future performance of a firm.
D) Ascertain how to achieve low cost or differentiation.

Question 25

In the increasing turbulent market, the key to success is: Please select all that apply.

A) Particular factors that work under particular conditions at this particular point in time.
B) To understand the competitive conditions that operate in the marketplace.
C) Tacit knowledge that is difficult to imitate by competitors.
D) To understand the relationship between an environment's turbulence and the choice of strategy.

Question 26

D'Aveni (1999) describes industries in terms of how turbulent they are. The four different degrees of turbulence are described as equilibrium, fluctuating equilibrium, punctuated equilibrium, and:

A) Dynamic-equilibrium.
B) Hyper-equilibrium.
C) Anti-equilibrium.
D) Disequilibrium.

Question 27

In the disruptive innovation, a smaller company with fewer resources is able to successfully challenge established incumbent businesses because the smaller company: Select all that apply.

A) Targets neglected segments by offering them products with more suitable functionality, invariably at a lower price.
B) Improves products for high end of the market
C) Keeps good services in the mainstream of the market
D) Adopts entrant's disruptive strategy

Question 28

Entrant's disruptive strategy is positioned in the low end of the market.

Question 29

The disruptive theory differentiates disruptive innovation from sustaining innovations.

Question 30

Limitations of disruptive innovation include: Please select all that apply.

A) Disruptive innovation cannot explain change or continuity
B) Disruptive innovation explains why businesses succeed
C) Predict future performance of a firm
D) Disruptive theory is based on careful analysis and making difficult choices