Question 1

Francisco Martínez is CFO of Comercial Mexicana SA, a retail chain in Mexico.Commenting on Wal-Mart's entry into Mexico, Mr.Martínez notes, "I buy 20,000 plastic toys, and Wal-Mart buys 20 million.Who do you think gets them cheaper?" Which strategic principles are evident in this comment?

Accepted Answer

A) Wal-Mart's buyer power and cost leadership 
B) Wal-Mart's barriers to entry and differentiation 
C) Wal-Mart's loose bricks and switching costs 
D) Wal-Mart's focused differentiation and supplier power 
E) Wal-Mart's discount policies for customers

Question 2

"Switching costs" are one of the barriers to entry in Porter's five forces model.

Accepted Answer

A) True 
 B)False

Question 3

Unique product attributes represent a barrier to industry entry known as differentiation.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following generic strategies best captures the way Harley-Davidson has achieved competitive advantage in the global motorcycle industry?

Accepted Answer

A) cost leadership 
B) differentiation 
C) cost focus 
D) focused differentiation 
E) cost differentiation

Question 5

In the terminology of the strategic intent framework for competitive advantage, a firm that establishes advantages in a number of different areas has:

Accepted Answer

A) attribute diversity. 
B) marketing breadth. 
C) comparative advantage. 
D) layers of advantage. 
E) a "double diamond."

Question 6

Michael E.Porter, a leading theorist of competitive strategy, developed a five forces model to explain competition in an industry.List these forces and describe the impact of the threat of new entrants.

Accepted Answer

The answer of Michael E.Porter, a leading theorist of competitive...

Question 7

Building layers of advantage, searching for loose bricks, changing the rules of competitive engagement, and collaborating are elements of Hamel and Prahalad's framework for:

Accepted Answer

A) quality advantage. 
B) positioning. 
C) competitive innovation. 
D) marketing management. 
E) innovation leadership.

Question 8

Describe how competitive advantage can be created via strategic intent, giving examples of successful approaches of competitors.

Accepted Answer

The answer of Describe how competitive advantage can be created...

Question 9

In the 1950s, Sony licensed the technology for the transistor from Bell Labs and proceeded to become the world's leading manufacturer of portable radios.Which strategy was Sony using to gain competitive advantage?

Accepted Answer

A) collaboration 
B) layers of advantage 
C) changing the rules 
D) loose bricks 
E) engagement

Question 10

When managers at Matsushita realized that cost advantages in TV production were often fleeting, they added quality and reliability advantages, thus establishing:

Accepted Answer

A) loose bricks. 
B) a "double diamond." 
C) attribute diversity. 
D) layers of advantage. 
E) buyer power.

Question 11

The "layers of advantage" approach to global competitive innovation is based on using know-how developed by other companies.

Accepted Answer

A) True 
 B)False

Question 12

The "double-diamond" approach to national competitive advantage is a conceptual framework associated with:

Accepted Answer

A) Michael Porter. 
B) Gary Hamel and C.K.Prahalad. 
C) Richard D'Aveni. 
D) Alan Rugman. 
E) Antonio Perez.

Question 13

Michael Porter's five forces model and Rugman and D'Cruz's flagship model are both based on the concept of corporate individualism.

Accepted Answer

A) True 
 B)False

Question 14

"Hypercompetition" is a term that describes a business environment of escalating rivalry characterized by rapid product innovation and short product life cycles.

Accepted Answer

A) True 
 B)False

Question 15

Competition in an industry tends to drive rates of return on invested capital up towards the level of "perfect competition."

Accepted Answer

A) True 
 B)False

Question 16

Intel's focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices.In the strategic intent model of competitive advantage, this is an example of:

Accepted Answer

A) building layers of advantage. 
B) loose bricks. 
C) changing the rules of engagement. 
D) collaborating. 
E) none of the above

Question 17

What does the phrase factor condition refer to? How can these factors be inherited or created? Describe Porter's categories of factor conditions.

Accepted Answer

The answer of What does the phrase factor condition refer...

Question 18

If suppliers have enough leverage over industry firms, they can raise prices high enough to significantly influence the profitability of their organizational customers.

Accepted Answer

A) True 
 B)False

Question 19

Volkswagen Auto Group of America markets both the VW and Audi nameplates in the United States.The VW brand has been hampered by perceptions of hit-and-miss quality.

Accepted Answer

A) True 
 B)False

Question 20

There have been considerable changes that have taken effect since Porter presented his theories.One such impact is due to the tremendous technological advancement.In light of these changes, examine what potential impact technology has on some of his theories.

Accepted Answer

The answer of There have been considerable changes that have...

Exam 16: Strategic Elements of Competitive Advantage

Francisco Martínez is CFO of Comercial Mexicana SA, a retail chain in Mexico.Commenting on Wal-Mart's entry into Mexico, Mr.Martínez notes, "I buy 20,000 plastic toys, and Wal-Mart buys 20 million.Who do you think gets them cheaper?" Which strategic principles are evident in this comment?

"Switching costs" are one of the barriers to entry in Porter's five forces model.

Unique product attributes represent a barrier to industry entry known as differentiation.

Which of the following generic strategies best captures the way Harley-Davidson has achieved competitive advantage in the global motorcycle industry?

In the terminology of the strategic intent framework for competitive advantage, a firm that establishes advantages in a number of different areas has:

Michael E.Porter, a leading theorist of competitive strategy, developed a five forces model to explain competition in an industry.List these forces and describe the impact of the threat of new entrants.

Building layers of advantage, searching for loose bricks, changing the rules of competitive engagement, and collaborating are elements of Hamel and Prahalad's framework for:

Describe how competitive advantage can be created via strategic intent, giving examples of successful approaches of competitors.

In the 1950s, Sony licensed the technology for the transistor from Bell Labs and proceeded to become the world's leading manufacturer of portable radios.Which strategy was Sony using to gain competitive advantage?

When managers at Matsushita realized that cost advantages in TV production were often fleeting, they added quality and reliability advantages, thus establishing:

The "layers of advantage" approach to global competitive innovation is based on using know-how developed by other companies.

The "double-diamond" approach to national competitive advantage is a conceptual framework associated with:

Michael Porter's five forces model and Rugman and D'Cruz's flagship model are both based on the concept of corporate individualism.

"Hypercompetition" is a term that describes a business environment of escalating rivalry characterized by rapid product innovation and short product life cycles.

Competition in an industry tends to drive rates of return on invested capital up towards the level of "perfect competition."

Intel's focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices.In the strategic intent model of competitive advantage, this is an example of:

What does the phrase factor condition refer to? How can these factors be inherited or created? Describe Porter's categories of factor conditions.

If suppliers have enough leverage over industry firms, they can raise prices high enough to significantly influence the profitability of their organizational customers.

Volkswagen Auto Group of America markets both the VW and Audi nameplates in the United States.The VW brand has been hampered by perceptions of hit-and-miss quality.

There have been considerable changes that have taken effect since Porter presented his theories.One such impact is due to the tremendous technological advancement.In light of these changes, examine what potential impact technology has on some of his theories.