Question 1

Case Scenario 3: Abrahamson's Jewelers.
Through its sole location in an affluent suburb of San Francisco, Abrahamson's Jewelers has established a strong niche market in the upscale jewelry store segment. Abrahamson's was founded in 1871 and is currently owned and operated by John Wickersham, who bought the firm from its namesake founders in 1985. Wickersham joined the firm as a trainee out of high school, completed his gemology training, and several years later took ownership with the financial help of his parents. That debt has long been paid off and business has thrived. When he first acquired the business, Abrahamson's offered a full range of jewelry and gift items from watches to wedding sets to silverware to clocks. This broad range of products was mirrored by a broad price range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry was custom designed and manufactured, most of the products were "case ready," meaning they were sourced from large jewelry and silver manufacturers from around the world. Over the last 15 years, Wickersham has narrowed the company's product offering considerably to focus only on high-end watches like Rolex and Piaget, custom jewelry, and estate jewelry. Wickersham stresses that this is an appropriate focus for his business since each of the products lends itself to relationship selling, and price rarely comes into the discussion. Despite the narrower offering moreover, Abrahamson's floor space has doubled, and clients are intensely loyal to the good taste, design skills, and personal service level provided by Mr. Wickersham.
-(Refer to Case Scenario 3). Would you recommend that Mr. Wickersham embark on an Internet sales strategy for his company?

Accepted Answer

The answer of Case Scenario 3: Abrahamson's Jewelers.
Through its sole...

Question 2

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 3

The focused differentiation strategy differs from the differentiation strategy in that

Accepted Answer

A) the focused differentiators have a broader competitive scope. 
B) the value-creating activities of focused differentiators are more constrained. 
C) focused differentiators target a narrower customer market. 
D) there are fewer risks with the focused differentiation strategy.

Question 4

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 2 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). Based on your own knowledge of Disney and the information provided in the scenario,does Disney appear to create value in its businesses primarily through a cost leadership or through a differentiation strategy?

Accepted Answer

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

Question 5

All of the following are ways that a good or service can be differentiated EXCEPT

Accepted Answer

A) responsive customer service. 
B) perceived prestige and status. 
C) economies of scale and efficient operations. 
D) engineering design and performance.

Question 6

Historically,women have paid more for dry cleaning than men. Signature Cleaners advertises "equal price" for all customers. Signature Cleaners appeals to women,which is market segmentation by factors.

Accepted Answer

A) demographic 
B) socioeconomic 
C) geographic 
D) consumption pattern

Question 7

Case Scenario 3: Abrahamson's Jewelers.
Through its sole location in an affluent suburb of San Francisco, Abrahamson's Jewelers has established a strong niche market in the upscale jewelry store segment. Abrahamson's was founded in 1871 and is currently owned and operated by John Wickersham, who bought the firm from its namesake founders in 1985. Wickersham joined the firm as a trainee out of high school, completed his gemology training, and several years later took ownership with the financial help of his parents. That debt has long been paid off and business has thrived. When he first acquired the business, Abrahamson's offered a full range of jewelry and gift items from watches to wedding sets to silverware to clocks. This broad range of products was mirrored by a broad price range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry was custom designed and manufactured, most of the products were "case ready," meaning they were sourced from large jewelry and silver manufacturers from around the world. Over the last 15 years, Wickersham has narrowed the company's product offering considerably to focus only on high-end watches like Rolex and Piaget, custom jewelry, and estate jewelry. Wickersham stresses that this is an appropriate focus for his business since each of the products lends itself to relationship selling, and price rarely comes into the discussion. Despite the narrower offering moreover, Abrahamson's floor space has doubled, and clients are intensely loyal to the good taste, design skills, and personal service level provided by Mr. Wickersham.
-(Refer to Case Scenario 3). What generic business strategy best describes Abrahamson's? Why?

Accepted Answer

The answer of Case Scenario 3: Abrahamson's Jewelers.
Through its sole...

Question 8

The generalized forms of value that goods and services provide are either low cost with acceptable features or highly differentiated features with acceptable cost.

Accepted Answer

A) True 
 B)False

Question 9

The typical risks of a differentiation strategy do NOT include which of the following?

Accepted Answer

A) Customers may find the price differential between the low-cost product and the differentiated product too large. 
B) Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features. 
C) Counterfeit goods are widely available and acceptable to customers. 
D) Suppliers of raw materials erode the firm's profit margin with price increases.

Question 10

The use of a differentiation strategy would be expected to be LEAST effective in which of the following markets?

Accepted Answer

A) commodity goods 
B) motion pictures 
C) popular music 
D) writing instruments

Question 11

The difference between the cost leadership and differentiation business-level strategies,and the focused cost leadership and focused differentiation strategies,is their basis for customer value.

Accepted Answer

A) True 
 B)False

Question 12

Human resources and other support functions are not value-creating activities in the value chain; only the value chain activities create value.

Accepted Answer

A) True 
 B)False

Question 13

Global competition has increased the options for consumers and has made it more imperative for firms to identify the needs of customers in order to earn above-average returns.

Accepted Answer

A) True 
 B)False

Question 14

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of

Accepted Answer

A) the perception of perceived prestige and status as a means of differentiating a product. 
B) the importance of high-quality raw materials when using the differentiation strategy. 
C) the risk of product imitation by competitors. 
D) the danger counterfeiting holds for firms pursuing the differentiation strategy.

Question 15

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation such as an engaging culture.

Accepted Answer

A) True 
 B)False

Question 16

A company pursuing the differentiation or focused differentiation strategy would tend to

Accepted Answer

A) build economies of scale and efficient operations. 
B) develop and maintain cost-effective MIS operations. 
C) develop flexible systems that allow rapid response to customers' changing needs. 
D) have relationships with suppliers to maintain efficient flow of supplies for operations.

Question 17

Firms use the integrated cost leadership/differentiation strategy because

Accepted Answer

A) other firms have established unassailable market dominance with the other four strategies. 
B) global markets allow for much broader competitive scope. 
C) most consumers want to pay a low price for products with somewhat highly differentiated features. 
D) one strategy is not enough for most large firms.

Question 18

A firm successfully implementing a differentiation strategy would expect

Accepted Answer

A) customers to be sensitive to price increases. 
B) to charge premium prices. 
C) customers to perceive the product as standard. 
D) to have high levels of power over suppliers.

Question 19

Because of its focus on innovation and quality manufacturing,Total Quality Management is not useful for firms that follow a cost leadership strategy.

Accepted Answer

A) True 
 B)False

Question 20

Effective use of the generic business strategies allows the firm to favorably position itself relative to the five forces.

Accepted Answer

A) True 
 B)False

Exam 4: Business-Level 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.

The focused differentiation strategy differs from the differentiation strategy in that

All of the following are ways that a good or service can be differentiated EXCEPT

Historically,women have paid more for dry cleaning than men. Signature Cleaners advertises "equal price" for all customers. Signature Cleaners appeals to women,which is market segmentation by factors.

The generalized forms of value that goods and services provide are either low cost with acceptable features or highly differentiated features with acceptable cost.

The typical risks of a differentiation strategy do NOT include which of the following?

The use of a differentiation strategy would be expected to be LEAST effective in which of the following markets?

The difference between the cost leadership and differentiation business-level strategies,and the focused cost leadership and focused differentiation strategies,is their basis for customer value.

Human resources and other support functions are not value-creating activities in the value chain; only the value chain activities create value.

Global competition has increased the options for consumers and has made it more imperative for firms to identify the needs of customers in order to earn above-average returns.

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation such as an engaging culture.

A company pursuing the differentiation or focused differentiation strategy would tend to

Firms use the integrated cost leadership/differentiation strategy because

A firm successfully implementing a differentiation strategy would expect

Because of its focus on innovation and quality manufacturing,Total Quality Management is not useful for firms that follow a cost leadership strategy.

Effective use of the generic business strategies allows the firm to favorably position itself relative to the five forces.