Question 1

A potential pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.

Accepted Answer

A) True 
 B)False

Question 2

By separating the value of the actual flight from the services associated with flying,airlines have greatly expanded the profit pool associated with flying.This combines the advantages of integrating overall low cost and differentiation strategies.

Accepted Answer

A) True 
 B)False

Question 3

Company competitive advantages can be eroded by all of the following except

Accepted Answer

A)  rapid changes in technology. 
B)  globalization. 
C)  actions by rivals within the industry. 
D)  actions by workers outside of the industry.

Question 4

The decline stage of the industry life cycle stage is inevitably followed by death.

Accepted Answer

A) True 
 B)False

Question 5

An overall high-cost position enables a firm to achieve above-average returns despite strong competition.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a potential pitfall of a focus strategy?

Accepted Answer

A)  Erosion of cost advantages can arise within the narrow segment. 
B)  Product/service offerings that are highly focused are subject to competition from new entrants. 
C)  Focusers can become too focused to satisfy buyer needs. 
D)  All rivals share a common input or raw material.

Question 7

Which of the following is a risk (or potential pitfall)of cost leadership?

Accepted Answer

A)  Cost cutting may lead to the loss of desirable features. 
B)  Attempts to stay ahead of the competition may lead to gold plating. 
C)  Cost differences increase as the market matures. 
D)  Producers are more able to withstand increases in supplier costs.

Question 8

A firm can attain an overall cost leadership position by using automated technology to reduce scrappage rates.

Accepted Answer

A) True 
 B)False

Question 9

In the __________ stage of the industry life cycle,the emphasis on product design is very high,the intensity of competition is low,and the market growth rate is low.

Accepted Answer

A)  growth 
B)  maturity 
C)  introduction 
D)  decline

Question 10

The desktop computer is in the decline stage of the industry life cycle,but it is not dead because companies have found ways to improve the price-performance trade-off.

Accepted Answer

A) True 
 B)False

Question 11

At one CVS drugstore,a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD.The Duracell market share dropped 2 percent in a recent two-year period,and its profits declined over 30 percent.Why did this happen?

Accepted Answer

A)  The price differential was too high. 
B)  The market for batteries is saturated. 
C)  The customer perceived the products to be different. 
D)  There are valid alternatives for batteries.

Question 12

The combination strategy of low-cost and differentiation provides lower prices and no differentiated attributes for customers.

Accepted Answer

A) True 
 B)False

Question 13

If a car manufacturer focuses a lot on downstream activities such as warranty fulfillment and financing operations,but also considers the differentiation and cost of the cars themselves,the resulting strategy is likely to be a failed strategy.

Accepted Answer

A) True 
 B)False

Question 14

To generate above average returns,a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers.

Accepted Answer

A) True 
 B)False

Question 15

Tesco is saving 3 million USD a year alone in landfill taxes by simply sending its used cooking oil and chicken fat to be used to generate bioenergy rather than putting it in a landfill.This is an example of an overall cost leadership strategy because it

Accepted Answer

A)  gives them competitive advantage by reducing energy costs. 
B)  gives them competitive advantage by decreasing productivity. 
C)  eliminates the need to compete based on its products. 
D)  requires the customer to recognize its efforts.

Question 16

When company performance severely erodes,no strategies exist that can help to reverse its situation and enhance its competitive position.

Accepted Answer

A) True 
 B)False

Question 17

Which of these statements regarding the industry life cycle is true?

Accepted Answer

A)  Partial power of the market life cycle is its ability to serve as a short-run forecasting device. 
B)  Trends suggested by the market life cycle model are generally not reversible or repeatable. 
C)  It points out the need to maintain a differentiation advantage and a low cost advantage. 
D)  It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

Question 18

Atlas Door created competitive advantages in overall low cost and differentiation by creating ___________ among value-chain activities.

Accepted Answer

A)  substitutes 
B)  advantages 
C)  disadvantages 
D)  linkages

Question 19

A risk for a firm that tries to attain both cost and differentiation advantages is that it can be stuck in the middle.An example of this is supermarkets because their _____ structure is _____ than discount retailers and customers do not value their products and services as being high-end such as those offered by Whole Foods.

Accepted Answer

A)  cost; higher 
B)  price; higher 
C)  price; lower 
D)  cost; lower

Question 20

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ______ integration of cost leadership and differentiation.

Accepted Answer

A)  good 
B)  poor 
C)  intentional 
D)  structured

Exam 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

A potential pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.

By separating the value of the actual flight from the services associated with flying,airlines have greatly expanded the profit pool associated with flying.This combines the advantages of integrating overall low cost and differentiation strategies.

Company competitive advantages can be eroded by all of the following except

The decline stage of the industry life cycle stage is inevitably followed by death.

An overall high-cost position enables a firm to achieve above-average returns despite strong competition.

Which of the following is not a potential pitfall of a focus strategy?

Which of the following is a risk (or potential pitfall) of cost leadership?

A firm can attain an overall cost leadership position by using automated technology to reduce scrappage rates.

In the __________ stage of the industry life cycle,the emphasis on product design is very high,the intensity of competition is low,and the market growth rate is low.

The desktop computer is in the decline stage of the industry life cycle,but it is not dead because companies have found ways to improve the price-performance trade-off.

At one CVS drugstore,a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD.The Duracell market share dropped 2 percent in a recent two-year period,and its profits declined over 30 percent.Why did this happen?

The combination strategy of low-cost and differentiation provides lower prices and no differentiated attributes for customers.

If a car manufacturer focuses a lot on downstream activities such as warranty fulfillment and financing operations,but also considers the differentiation and cost of the cars themselves,the resulting strategy is likely to be a failed strategy.

To generate above average returns,a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers.

Tesco is saving 3 million USD a year alone in landfill taxes by simply sending its used cooking oil and chicken fat to be used to generate bioenergy rather than putting it in a landfill.This is an example of an overall cost leadership strategy because it

When company performance severely erodes,no strategies exist that can help to reverse its situation and enhance its competitive position.

Which of these statements regarding the industry life cycle is true?

Atlas Door created competitive advantages in overall low cost and differentiation by creating ___________ among value-chain activities.

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ______ integration of cost leadership and differentiation.