Question 1

Business-level strategy can be thought of as the firm's core strategy.

Accepted Answer

A) True 
 B)False

Question 2

Strategic fit among many activities (in an activity map) is fundamental to

Accepted Answer

A)  the development of core competencies for a firm. 
B)  the breadth of competitive scope for a firm. 
C)  sustainability of a firm's competitive advantage. 
D)  the integrity of the firm's value chain.

Question 3

Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically-raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. Wholesome's main supplier of lamb has announced that the price for lamb will be 15 percent higher next year.

Accepted Answer

A)  Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer. 
B)  Companies pursuing Wholesome's business strategy are especially vulnerable to this risk. 
C)  If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina. 
D)  Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns.

Question 4

Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools, prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on these construction firms for selling its product. Durable Ceramic's next most-efficient competitor, Cost-Less Ceramics, Inc., earns average returns, while Durable earns above-average returns. The commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below those of Cost-Less's prices, it is likely that

Accepted Answer

A)  both Durable and Cost-Less will devise additional ways to become more efficient in their production processes. 
B)  Durable will be unable to absorb the lower cost, and will go out of business. 
C)  both Cost-Less and Durable will go out of business, leaving the customers with fewer alternative sources of low-cost tile. 
D)  Cost-Less will go out of business, and Durable will gain higher power over its customers.

Question 5

What are the risks of an integrated cost leadership/differentiation strategy?

Accepted Answer

The answer of What are the risks of an integrated...

Question 6

A new generation of lunch trucks in cities such as New York, San francisco, and Los Angeles serving high-end fare such as hamburgers made from grass-fed cattle, escargot and crème brulee illustrate the focus cost leadership strategy.

Accepted Answer

A) True 
 B)False

Question 7

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity such as sales promotion or a process technology.

Accepted Answer

A) True 
 B)False

Question 8

A firm's core strategy is its ____ strategy.

Accepted Answer

A)  corporate 
B)  business 
C)  pricing 
D)  international

Question 9

Zara offers current and desirable fashion goods at relatively low prices. To implement this strategy, Zara has sophisticated designers and effective means of managing costs. Zara is an example of the integrated cost leadership/differentiation strategy.

Accepted Answer

A) True 
 B)False

Question 10

Case Scenario 2: Walt Disney Company.
Walt Disney Company is famed for its creativity, strong global brand, and uncanny ability to take service and experience businesses to higher levels. In the early 1990s, then-CEO Michael Eisner looked to the fast-food industry as a way to draw additional attention to the Disney presence outside of its theme parks - its retail chain was highly successful and growing rapidly. A fast-food restaurant made sense from Eisner's perspective since Disney's theme parks had already mastered rapid, high-volume food preparation, and, despite somewhat undistinguished food and high prices (or perhaps because of), all its in-park restaurants were extremely profitable. From this inspiration, Mickey's Kitchen was launched. The first two locations were opened in California and in a suburb of Chicago, adjacent to existing Disney stores. Menu items included healthy, child-oriented fare like Jumbo Dumbo burgers and even a meatless Mickey Burger. Eisner thought that locating each restaurant next to existing Disney stores was sure to increase foot traffic through both venues. Less than two years later Disney closed down the California and Chicago stores and shuttered further expansion plans. Eisner cited overwhelming competition from McDonalds and general oversaturation in the fast-food industry as the primary reasons for closing down the failing Mickey's Kitchen.
-(Refer to Case Scenario 2) What resources and value-chain activities did Disney try to leverage through the opening of Mickey's Kitchen?

Accepted Answer

The answer of Case Scenario 2: Walt Disney Company.
Walt Disney...

Question 11

As shown in the Chapter 4 Opening Case, Starbucks was unable to control the quality of its experience across the thousands of its stores and hence lost its differentation.

Accepted Answer

A) True 
 B)False

Question 12

An English professor spends her summers writing low-brow romance novels that sell directly to paperback. She writes under a fictional name because she is embarrassed to admit to her colleagues and students how she earns the extra money for foreign vacations. The professor is correct in her concern that she is serving customer needs that are objectively inferior and bad.

Accepted Answer

A) True 
 B)False

Question 13

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because

Accepted Answer

A)  customers will seek out the lowest cost product. 
B)  customers of non-differentiated products are sensitive to price increases. 
C)  customers are loyal to brands that are differentiated in meaningful ways. 
D)  the differentiation strategy benefits from rivalry because it forces the firm to innovate.

Question 14

Every firm uses all levels of strategy: corporate, acquisition and restructuring, international and cooperative.

Accepted Answer

A) True 
 B)False

Question 15

When selecting a business level strategy, the firm determines who will be served, what customer needs will be satisfied, and how those needs will be satisfied.

Accepted Answer

A) True 
 B)False

Question 16

Counterfeit products are a serious problem for firms following the differentiation strategy.

Accepted Answer

A) True 
 B)False

Question 17

A risk of a focus strategy is that the needs of the customer within a narrow competitive segment may become more similar to those needs of customers in the whole market.

Accepted Answer

A) True 
 B)False

Question 18

To position itself differently from competitors, a firm must decide to either perform activities differently or to perform different activities.

Accepted Answer

A) True 
 B)False

Question 19

Denver-based Kazoo Toys uses the __________ strategy to create value for parents and children interested in purchasing unique toys while simultaneously having access to unique services.

Accepted Answer

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

Question 20

The three dimensions of a firm's relationships with customers include all the following EXCEPT

Accepted Answer

A)  exclusiveness. 
B)  affiliation. 
C)  richness. 
D)  reach.

Exam 4: Business Level Strategy

Business-level strategy can be thought of as the firm's core strategy.

Strategic fit among many activities (in an activity map) is fundamental to

What are the risks of an integrated cost leadership/differentiation strategy?

A new generation of lunch trucks in cities such as New York, San francisco, and Los Angeles serving high-end fare such as hamburgers made from grass-fed cattle, escargot and crème brulee illustrate the focus cost leadership strategy.

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity such as sales promotion or a process technology.

A firm's core strategy is its ____ strategy.

Zara offers current and desirable fashion goods at relatively low prices. To implement this strategy, Zara has sophisticated designers and effective means of managing costs. Zara is an example of the integrated cost leadership/differentiation strategy.

As shown in the Chapter 4 Opening Case, Starbucks was unable to control the quality of its experience across the thousands of its stores and hence lost its differentation.

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because

Every firm uses all levels of strategy: corporate, acquisition and restructuring, international and cooperative.

When selecting a business level strategy, the firm determines who will be served, what customer needs will be satisfied, and how those needs will be satisfied.

Counterfeit products are a serious problem for firms following the differentiation strategy.

A risk of a focus strategy is that the needs of the customer within a narrow competitive segment may become more similar to those needs of customers in the whole market.

To position itself differently from competitors, a firm must decide to either perform activities differently or to perform different activities.

Denver-based Kazoo Toys uses the __________ strategy to create value for parents and children interested in purchasing unique toys while simultaneously having access to unique services.

The three dimensions of a firm's relationships with customers include all the following EXCEPT