Deck 5: Business-Level Strategies

Question 1

A business-level strategy consists of the competitive approach of a single line-of-business instead of the entire corporation.

Answer 1

True

Question 2

All of the following are ways that firms pursue a cost leadership strategy except:

A)Giving their product the most desirable and highest quality features
B)Using technology to cut costs
C)Fully utilizing firm production capacity
D)Experience effects
E)Economies of scale

Answer 2

A

Question 3

A strategy that is a combination of low cost leadership and differentiation is:
A)None of the above

A)Unlikely to be successful because of limited resources
B)Very rare in today's business climate
C)Best cost
D)Cost focus

Answer 3

C

Question 4

Generic strategies are concerned with:

A)The competitive tactics firms use to protect their competitive positions
B)How the firm intends to position itself to create value for its customers
C)Selection of the business areas in which the firm will compete
D)Functional strategies the firm will pursue
E)None of the above

Question 5

The industry life cycle portrays how sales volume for a class of products changes over its lifetime.

Question 6

Only one firm at a time can pursue a particular business-level strategy.

Question 7

A competitive shakeout usually occurs at the beginning of the growth stage of the product life cycle.

Question 8

Exporting,licensing,and franchising are international expansion tactics.

Question 9

A firm that pursues a cost leadership strategy:

A)Seeks cost efficiency in a broad market setting
B)Is too interested in lowering costs to bother with technological advances
C)Rarely learns from experience
D)Always has the lowest price
E)Uses differentiation to attract customers

Question 10

Economies of scale can contribute to reduced costs per unit.

Question 11

In differentiation strategies,the emphasis is on creating value through uniqueness.

Question 12

Which of the following is an advantage of pursuing cost leadership?

A)Sales always increase with increasing amounts of output
B)Loss of sales does not reduce scale benefits
C)The strategy easily accommodates changes in the market
D)Firms invest heavily in differentiating their products
E)A firm may charge the same price as its competitors but make a higher profit

Question 13

Competitive tactics are concerned with how the firm intends to position itself to create value for its customers.

Question 14

A best cost strategy combines the elements of low-cost leadership and differentiation.

Question 15

Which of the following is an accurate statement about economies of scale?

A)Production costs per unit are less in a large facility than in a small facility
B)The more product a company makes,the lower its variable production costs
C)Economies of scale are identical to throughput
D)Doubling factory size typically doubles fixed costs
E)Companies with economies of scale have high capacity utilization

Question 16

Strategy formulation responsibilities at the business level include all of the following except:

A)Establishment and communication of goals
B)Identification of strengths and weaknesses
C)Identification of opportunities and threats
D)Management of the corporate portfolio
E)Establishment of a strategic posture

Question 17

Experience effects mean:

A)An employee can easily learn to do several different jobs within a firm
B)Employees learn to do jobs more efficiently with repetition
C)Employees who are slow to learn new tasks will require additional training time
D)The time required to complete a task will decrease as a predictable function of the number of times the task is repeated
E)Both B and D are correct

Question 18

For a differentiation strategy to be considered successful:

A)The organization that is pursuing the differentiation must be highly innovative
B)Customers must be willing to pay more for the uniqueness of a product or service than the firm paid to create that uniqueness
C)Loss of sales cannot reduce the benefits from economies of scale
D)The organization must invest heavily in differentiating its products
E)The organization that is pursuing differentiation must charge approximately the same price as its competitors but make a higher profit

Question 19

In general,firms create competitive advantage by offering a basic product at a premium price and/or a preferred product at a low price.

Question 20

At the maturity stage of the life cycle,revenue growth accelerates rapidly.

Question 21

Offensive competitive tactics include:

A)Threat of retaliation
B)Creating barriers to imitation
C)Seeking first-mover advantages
D)Collaborative tactics
E)Avoiding direct competition

Question 22

During the decline stage of the industry life cycle:

A)Tight cost controls leading to efficiency are essential
B)Products are highly differentiated
C)Competition is no longer based on price
D)New entrants are common
E)Demand is increasing

Question 23

A multidomestic approach to international markets:

A)Involves the production and marketing of one product design throughout the world
B)Involves custom tailoring of products and services around individual market needs
C)Is almost always preferable to a global strategy
D)Is almost always less costly than a global strategy
E)Is only appropriate when economic efficiencies are possible

Question 24

An organization would like to expand overseas.Its managers have considered pursing the expansion through a joint venture,but they are concerned that using a joint venture would limit the amount of profits they can make and also limit their control of the venture.Which of the following global expansion tactics should you suggest to these managers?

A)Exporting
B)Transnational symbiotic venturing
C)A greenfield venture
D)Franchising
E)Licensing

Question 25

Describe the strategic flexibility tactic and how it is pursued.

Question 26

During the maturity stage of the industry life cycle:

A)Product differentiation becomes easier to establish
B)Customers focus on product quality and availability
C)Firms have an opportunity to create entry barriers
D)High-volume production tends to dominate manufacturing strategy
E)First-mover advantages are commonly available

Question 27

What is a cost leadership strategy? How might a firm pursue it? What are some of the risks associated with this strategy?

Question 28

How can a firm be successful by pursuing a differentiation strategy? What are some of the risks associated with a differentiation strategy?

Question 29

A firm pursuing a "blue ocean" strategy:

A)Will collaborate with competitors to create a stronger market position
B)Will utilize a best cost generic strategy,but in a completely unique way
C)Will threaten to retaliate against competitive actions
D)Will erect huge barriers to competition
E)Will pursue political lobbying

Question 30

The risks associated with pursuing a cost leadership strategy include all of the following except:

A)Preoccupation with costs may lead a firm not to detect required product changes
B)The firm's products are likely to become targets for imitators
C)Efforts to cut costs could lead to unsafe products
D)Cost cutting could lead to products of very poor quality
E)Large investments could cause reluctance to change

Question 31

What are the key elements in defining a business model?

Question 32

Market penetration entails:

A)Vertical integration combined with horizontal integration
B)Modification of existing products to create new market segments
C)Acquisition of an organization in the same line of business
D)Forming a strategic alliance with a firm in a new business
E)Increasing market share in the current business through advertising,promotions,or a stepped-up sales effort

Question 33

A firm that caters to a very specific segment of its market is pursuing which generic strategy?

A)Differentiation
B)Focus
C)Cost leadership
D)Best cost
E)None of the above

Question 34

A best cost strategy is most like which of the other generic business strategies?

A)Differentiation
B)Differentiation focus
C)Cost leadership
D)Cost focus
E)Differentiation combined with cost leadership

Question 35

During the introduction stage of the industry life cycle:

A)Demand for a product is fairly steady
B)Research and development activities are less important than activities to gain market share
C)Firms have an opportunity to create barriers to entry
D)Producers are generally highly profitable
E)First-mover advantages are unimportant

Question 36

The most important elements in a business model include all of the following except:

A)Selecting a growth strategy
B)Verifying that sufficient demand exists for a given product at a given price in a particular market
C)Selecting unique features and technologies to be imbedded into the products or services
D)Determining how to capture a portion of the value created in terms of revenues and profits
E)Identifying market segments to be targeted

Question 37

Market development entails:

A)Seeking new market segments or new applications for existing products
B)Modification of existing products to create new market segments
C)Acquisition of an organization in the same line of business
D)Forming a strategic alliance with a firm in a new business
E)Investments in resources that may increase market share in the current business

Question 38

Toward the end of the growth stage of the industry life cycle:

A)Demand for products falls
B)A competitive shakeout usually occurs
C)Entry barriers play no role
D)Competition tends to focus on tight cost controls
E)Differentiation is not possible

Question 39

When does a global approach to an international product/market strategy make the most sense?