Question 1

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 2

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 3

Describe the risks of a differentiation strategy.

Accepted Answer

The answer of Describe the risks of a differentiation strategy....

Question 4

The integration of a cost leadership and a differentiation strategy

Accepted Answer

A)  is challenging because it increases the number of value chain activities and support functions in which the firm must become competent. 
B)  forces a firm to adapt more slowly to changes in its environment. 
C)  allows the firm to avoid being "stuck in the middle." 
D)  requires such a large customer base that it is most practical for firms in the global marketplace.

Question 5

The typical risks of a cost leadership strategy include

Accepted Answer

A)  the inability to balance high differentiation and low price. 
B)  production and distribution processes becoming obsolete. 
C)  excessive differentiation to the point where the customer base is too small. 
D)  loss of customer loyalty.

Question 6

Low-cost leaders usually concentrate on the value chain activities of inbound logistics and outbound logistics as a means to reduce costs.

Accepted Answer

A) True 
 B)False

Question 7

A differentiation strategy can be effective in controlling the power of substitutes in an industry because

Accepted Answer

A)  customers have low switching costs. 
B)  substitute products are lower quality. 
C)  a differentiating firm can always lower prices. 
D)  customers develop brand loyalty.

Question 8

A risk of The Li Ning Company's integrated cost leadership/differentation strategy is that it may end up "stuck-n-the-middle," i.e., not having either a low cost or a uniqueness advantage (Chapter 4 Strategic Focus).

Accepted Answer

A) True 
 B)False

Question 9

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) Why do you think that Mickey's Kitchen failed?

Accepted Answer

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

Question 10

A flexible manufacturing system is

Accepted Answer

A)  based on the use of temporary and part-time employees as well as outsourcing. 
B)  a computer-controlled process that is used to produce a variety of products in moderate, flexible quantities with minimal human intervention. 
C)  based on a 360-degree view of the company's relationships with customers. 
D)  a system that identifies "the one best way" to produce each product in the company's line.

Question 11

Hyundai allows customers to return their cars if they lose their job within 12 months of purchase. Which of the following aspects of managing customer relationships is Hyundai engaged in?

Accepted Answer

A)  Who: Determining the Customers to Serve 
B)  What: Determining Which Customer Needs to Satisfy 
C)  How: Determining Core Competencies Necessary to satisfy Customer Needs 
D)  When: Determining When to Satisfy Customer Needs

Question 12

An examination of a company's activity map will reveal its strategic themes.

Accepted Answer

A) True 
 B)False

Question 13

Define strategy and business-level strategy. What is the difference between these two concepts?

Accepted Answer

The answer of Define strategy and business-level strategy. What is...

Question 14

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 15

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) While Abrahamson's is doing well, Mr. Wickersham would like to grow his business beyond the present location. He believes that growth may bring greater profitability, as well as employment avenues for his only child, who will soon be finishing high school. What recommendations do you have for Mr. Wickersham regarding his growth choices?

Accepted Answer

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

Question 16

Target's brand promise "Expect More. Pay Less" and appeal to higher-income, fashion conscious discount shoppers illustrates the ________________strategy

Accepted Answer

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

Question 17

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 18

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy.

Accepted Answer

A)  marketing and sales 
B)  technology development 
C)  logistics 
D)  human resource management

Question 19

A cost leadership strategy targets the industry's ____ customers.

Accepted Answer

A)  most typical 
B)  poorest 
C)  least educated 
D)  most frugal

Question 20

Describe the advantages of integrating cost leadership and differentiation strategies.

Accepted Answer

The answer of Describe the advantages of integrating cost leadership...

Exam 4: Business Level 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.

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.

Describe the risks of a differentiation strategy.

The integration of a cost leadership and a differentiation strategy

The typical risks of a cost leadership strategy include

Low-cost leaders usually concentrate on the value chain activities of inbound logistics and outbound logistics as a means to reduce costs.

A differentiation strategy can be effective in controlling the power of substitutes in an industry because

A risk of The Li Ning Company's integrated cost leadership/differentation strategy is that it may end up "stuck-n-the-middle," i.e., not having either a low cost or a uniqueness advantage (Chapter 4 Strategic Focus).

A flexible manufacturing system is

Hyundai allows customers to return their cars if they lose their job within 12 months of purchase. Which of the following aspects of managing customer relationships is Hyundai engaged in?

An examination of a company's activity map will reveal its strategic themes.

Define strategy and business-level strategy. What is the difference between these two concepts?

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.

Target's brand promise "Expect More. Pay Less" and appeal to higher-income, fashion conscious discount shoppers illustrates the ________________strategy

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy.

A cost leadership strategy targets the industry's ____ customers.

Describe the advantages of integrating cost leadership and differentiation strategies.