Question 1

Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in  a. the selection of industries in which the firm will compete.  b. specific product markets.  c. primary value chain activities.  d. particular geographic locations.

Accepted Answer

b. specific product markets.

Question 2

A firm\'s core strategy is its ____ strategy.  a. corporate  b. business  c. pricing  d. international

Accepted Answer

b. business

Question 3

When selecting a business level strategy, the firm must determine all of the following EXCEPT  a. How will the customer\'s needs be satisfied?  b. Who is the customer?  c. What are the customers\' needs?  d. Why should these customers\' needs be satisfied?

Accepted Answer

d. Why should these customers\' needs be satisfied?

Question 4

The three dimensions of a firm\'s relationships with customers include all the following EXCEPT  a. exclusiveness.  b. affiliation.  c. richness.  d. reach.

Accepted Answer

a. exclusiveness.

Question 5

Which of the following is TRUE?  a. As customer loyalty increases, customers are more sensitive to price increases.  b. Customer loyalty has a positive relationship with firm profitability.  c. Customer loyalty is fragile and cannot reliably be considered a factor in firm success.  d. Customer loyalty is of importance only to firms using the differentiation strategy.

Accepted Answer

b. Customer loyalty has a positive relationship with firm profitability.

Question 6

The ________dimension of relationships with customers is particularly important for social networking sites such as Facebook and MySpace.  a. reach  b. richness  c. affiliation  d. social

Accepted Answer

a. reach

Question 7

Amazon has built capabilities around Internet technology and e-commerce to facilitate information exchanges with its customers in a cost effective manner. This represents which of the three service dimension?  a. Reach  b. Richness  c. Affiliation  d. None of the these

Accepted Answer

b. Richness

Question 8

Viewing the world through the customer\'s eyes and constantly seeking ways to create more value for the company enhances  a. the reach of the company toward the customer.  b. the ability to identify the customer.  c. the richness of the relationship with the customer.  d. affiliation with the customer.

Accepted Answer

d. affiliation with the customer.

Question 9

Before the firm decides what products to offer and what benefits and features they will have, the firm must decide all the following questions EXCEPT  a. who the firm should serve.  b. when the customer\'s needs should be satisfied.  c. what needs the firm should satisfy.  d. what core competencies are needed to satisfy customer needs.

Accepted Answer

b. when the customer\'s needs should be satisfied.

Question 10

In the animal food products business, food-product needs of owners of companion animals pets (e.g., dogs and cats) differ from the needs for food and health-related products of those owning production animals (e.g., livestock). Which of the following aspects of managing customer relationships does this choice refer to?  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

Accepted Answer

a. Who: Determining the Customers to Serve

Question 11

Starbuck\'s determined that all of the following customer needs were important EXCEPT  a. fast service.  b. the experience associated with drinking coffee, not just the coffee.  c. the actual product of service (e.g., a cup of coffee), not the experience.  d. allowing customer to design their own drinks.

Accepted Answer

c. the actual product of service (e.g., a cup of coffee), not the experience.

Question 12

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?  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

Accepted Answer

b. What: Determining Which Customer Needs to Satisfy

Question 13

An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouse\'s company transferred her to St. Paul. The decorator is distressed because the customers in his target market have, in his words, \"banal and bourgeois taste.\" What is the decorator\'s problem?  a. The decorator does not understand that customer needs are neither right nor wrong, good nor bad.  b. The decorator has no core competencies that will transfer to his new geographic market.  c. The decorator should choose a strategy of cost-leadership in this environment.  d. The decorator is highly affiliated with the new target market and understands how he can create value for it.

Accepted Answer

a. The decorator does not understand that customer needs are neither right nor wrong, good nor bad.

Question 14

In order to meet and exceed customer\'s expectations, firms must  a. constantly manipulate customers\' perceptions of their needs.  b. answer the questions: who, what, when, where, how, and why as they apply to customers.  c. continuously improve, innovate, and upgrade their core competencies.  d. successfully defend their established core competencies from imitation by competitors.

Accepted Answer

c. continuously improve, innovate, and upgrade their core competencies.

Question 15

Business-level strategies are concerned specifically with  a. creating differences between the firm\'s position and its competitors.  b. selecting the industries in which the firm will compete.  c. how functional areas will be organized within the firm.  d. how a business with multiple physical locations will operate one of those locations.

Accepted Answer

a. creating differences between the firm\'s position and its competitors.

Question 16

An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must  a. analyze the reach, richness, and affiliation the company must have with its customers.  b. provide tax advice either in a different manner or provide a different kind of tax service than competitors.  c. offer tax advice at a price lower than the cheapest competitor.  d. offer tax advice at a higher quality than the best competitor.

Accepted Answer

b. provide tax advice either in a different manner or provide a different kind of tax service than competitors.

Question 17

Which of the following are central to implementing value-creating strategies and thereby satisfying customers\'needs?  a. Firm resources  b. Capabilities  c. Core competencies  d. None of the these.

Accepted Answer

c. Core competencies

Question 18

The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how  a. the organizational culture of Southwest Airlines is the key to the success of the organization.  b. understanding of the profit pool in an industry indicates to companies where above-average returns can be earned.  c. it is hard for rivals to match a configuration of integrated activities than to imitate a single activity.  d. the primary and support activities of a successful company capture value all along the value chain.

Accepted Answer

c. it is hard for rivals to match a configuration of integrated activities than to imitate a single activity.

Question 19

By examining the ____ of Southwest Airlines, one can identify the strategic themes around which it has developed its business strategy. These themes include limited passenger service, high aircraft utilization, highly productive ground and gate crews, and so forth.  a. activity map  b. profit pool  c. value diagram  d. five forces model

Accepted Answer

a. activity map

Question 20

If Southwest Airlines employees lost their high enthusiasm and commitment to the company,  a. the airline could continue without problems because its cost-leadership strategy is dependent on its efficient internal procedures.  b. replacement employees could be hired from rival airlines that are laying off employees easily merged into the Southwest culture.  c. there would be no impact on Southwest\'s profitability because Southwest\'s customers value the low fares rather than being \"entertained\" by the employees.  d. Southwest would have lost one of its competitive advantages and its performance would be threatened.

Accepted Answer

d. Southwest would have lost one of its competitive advantages and its performance would be threatened.

Question 21

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

Accepted Answer

c. sustainability of a firm\'s competitive advantage.

Question 22

All of the following are considered generic business-level strategies EXCEPT  a. product diversification.  b. cost leadership.  c. focused differentiation.  d. integrated cost leadership/differentiation.

Accepted Answer

a. product diversification.

Question 23

A company using a narrow target market in its business strategy is  a. following a cost leadership business strategy.  b. focusing on a broad array of geographic markets.  c. limiting the group of customer segments served.  d. decreasing the number of activities on its value chain.

Accepted Answer

c. limiting the group of customer segments served.

Question 24

As the television industry has changed in the last few decades from just three major networks to a multiplicity of networks, one of the major aspects of business strategy for the newer networks is ____ than the traditional networks.  a. broader target market  b. narrower target market  c. increased use of primary activities to capture value  d. increased use of support activities to capture value

Accepted Answer

b. narrower target market

Question 25

The effectiveness of any of the generic business-level strategies is contingent upon  a. customer needs and competitors\' strategies.  b. the match between the opportunities and threats in its external market and the strengths of its internal environment.  c. the trends in the general consumer base and the robustness of the global and industry economy.  d. the firm\'s competitive scope and its competitive advantage.

Accepted Answer

b. the match between the opportunities and threats in its external market and the strengths of its internal environment.

Question 26

A cost leadership strategy provides goods or services with features that are  a. acceptable.  b. unique.  c. substandard.  d. mediocre.

Accepted Answer

a. acceptable.

Question 27

A cost leadership strategy targets the industry\'s ____ customers.  a. most typical  b. poorest  c. least educated  d. most frugal

Accepted Answer

a. most typical

Question 28

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  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.

Accepted Answer

d. Cost-Less will go out of business, and Durable will gain higher power over its customers.

Question 29

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy.  a. marketing and sales  b. technology development  c. logistics  d. human resource management

Accepted Answer

c. logistics

Question 30

A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use  a. the integrated cost leadership/differentiation strategy.  b. either of the focus strategies.  c. the cost-leadership strategy.  d. any of the strategies except the focused differentiation strategy.

Accepted Answer

c. the cost-leadership strategy.

Question 31

In the Chapter 4 Strategic Focus, Walmart made changes to attract upscale customers. These changes had which of the following results?  a. It strengthened Walmart\'s position against rivals such as Dollar Stores and Amazon.  b. It made Walmart vulnerable to Dollar Store and Amazon.  c. It attracted significant numbers of new customers.  d. Family Dollar, Dollar Tree, and Dollar General all experienced losses in sales as many of their customers went to Walmart.

Accepted Answer

b. It made Walmart vulnerable to Dollar Store and Amazon.

Question 32

In the Chapter 4 Strategic Focus, Walmart\'s same store sales have been declining and those of rivals Family Dollar and Amazon have been increasing. What explains this recent change?  a. Walmart was too aggressive with its low-cost position and lost customers who wanted more upscale products.  b. Walmart changed its strategy to focused dirrerentation.  c. Amazon and Family Dollar changed their strategies to attract more upscale customers.  d. Walmart changed its strategy to attract more upscale customers.

Accepted Answer

d. Walmart changed its strategy to attract more upscale customers.

Question 33

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

Accepted Answer

c. develop flexible systems that allow rapid response to customers changing needs.

Question 34

When the costs of supplies increase in an industry, the low-cost leader  a. may continue competing with rivals on the basis of product features.  b. will lose customers as a result of price increases.  c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins.  d. may be the only firm able to pay the higher prices and continue to earn average or above- average returns.

Accepted Answer

d. may be the only firm able to pay the higher prices and continue to earn average or above- average returns.

Question 35

Ever improving levels of efficiency enhance profit margins for a cost leader. This effects which of the five forces of industry structure most directly?  a. Potential entrants  b. Substitutes  c. Buyer power  d. Supplier power

Accepted Answer

a. Potential entrants

Question 36

The typical risks of a cost leadership strategy include  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.

Accepted Answer

b. production and distribution processes becoming obsolete.

Question 37

When a firm is able to produce nonstandardized (that is, distinctive) products for customers who value differentiated features more than they value low cost, the firm is successfully implementing  a. a differentiation strategy.  b. a cost leadership strategy.  c. an integrated cost leadership/differentiation strategy.  d. a single-product strategy.

Accepted Answer

a. a differentiation strategy.

Question 38

A firm successfully implementing a differentiation strategy would expect  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.

Accepted Answer

b. to charge premium prices.

Question 39

The products or services that are differentiated from others have qualities that are  a. perceived by the customer to add value for which they will pay a premium.  b. valued by the typical industry customer.  c. perceived as standardized by the customer.  d. seen as classic attributes rather than passing fads.

Accepted Answer

a. perceived by the customer to add value for which they will pay a premium.

Question 40

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  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.

Accepted Answer

a. the perception of perceived prestige and status as a means of differentiating a product.

Question 41

All of the following are examples of differentiated products EXCEPT  a. Toyota\'s Lexus.  b. Caterpillar\'s heavy duty earth moving equipment.  c. store brand beef and pork.  d. McKinsey ; Company.

Accepted Answer

c. store brand beef and pork.

Question 42

The use of a differentiation strategy would be expected to be LEAST effective in which of the following markets?  a. Commodity goods  b. Motion pictures  c. Popular music  d. Writing instruments

Accepted Answer

a. Commodity goods

Question 43

All of the following are ways that a good or service can be differentiated EXCEPT  a. Responsive customer service  b. Perceived prestige and status  c. Economies of scale and efficient operations  d. Engineering design and performance

Accepted Answer

c. Economies of scale and efficient operations

Question 44

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

Accepted Answer

c. customers are loyal to brands that are differentiated in meaningful ways.

Question 45

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.  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.

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.

Question 46

Which of the following is NOT a value-creating activity associated with the differentiation strategy?  a. develop policies to ensure efficient hiring and retention to keep costs low and implement traing to ensure high employee efficiency.  b. provide accurate and timely delivery of goods to customers.  c. ensure receipt of of high quality supplies (raw materials and other goods).  d. develop flexible systems that allow rapid response to to customers\' changing needs.

Accepted Answer

a. develop policies to ensure efficient hiring and retention to keep costs low and implement traing to ensure high employee efficiency.

Question 47

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

Accepted Answer

d. customers develop brand loyalty.

Question 48

Recently, the only type of car available for Anthony to rent on a business trip was a compact, fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is in the market for a new car and had previously considered only buying another luxury SUV. Now, he is thinking about the significant cost savings he would have if he bought the compact vehicle rather than a new SUV. This is an example of the competitive risk that  a. a competitor\'s products can convey a product\'s differentiated features to a customer at a significantly reduced price.  b. a product imitation can cause customers to perceive that competitors offer essentially the same good.  c. experience can narrow a customer\'s perceptions of the value of a product\'s differentiated features.  d. brand loyalty insulates a company from rivalry with competitors.

Accepted Answer

c. experience can narrow a customer\'s perceptions of the value of a product\'s differentiated features.

Question 49

A manufacturer of jewelry imitates the style of a popular and expensive brand using manufactured stones rather than real gemstones and lesser grade metals rather than silver and gold. The manufacturer packages the jewelry in boxes of the same color imprinted with an almost identical logo. About 85 percent of the company\'s sales are through Internet sales. This example illustrates the competitive risk of ____ that threatens companies that use the differentiation strategy.  a. customer sensitive to price differentials  b. threat by the cost leader  c. customer experience  d. counterfeiting

Accepted Answer

d. counterfeiting

Question 50

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

Accepted Answer

d. Suppliers of raw materials erode the firm\'s profit margin with price increases.

Question 51

When implementing a focus strategy, the firm seeks to  a. offer products that are both differentiated and low cost.  b. move into the global market.  c. target the typical customer in an industry.  d. serve the specialized needs of a market segment.

Accepted Answer

d. serve the specialized needs of a market segment.

Question 52

Ikea offers young customers a selection of home furnishings featuring good design, function, and acceptable quality at low prices. Ikea is using which business level strategy?  a. Cost leadership  b. Focused cost leadership  c. Differentiation  d. Focused differentiation

Accepted Answer

b. Focused cost leadership

Question 53

The focused differentiation strategy differs from the differentiation strategy in that  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.

Accepted Answer

c. focused differentiators target a narrower customer market.

Question 54

Chico\'s is a clothing retailer that targets middle-aged women who want stylish and appealing clothes that are suitable for the mature figure. Chico\'s has an extensive customer list, a frequent-buyer discount card, and frequent sales promotions to Chico\'s customers based on their spending levels. Chico\'s uses a ____ strategy.  a. focused differentiation based on a buyer group  b. focused differentiation based on a product line segment  c. generic differentiation  d. integrated cost leadership/differentiation

Accepted Answer

a. focused differentiation based on a buyer group

Question 55

The new generation of lunch trucks serving high-end fare in cities such as New York, San Francisco, and Los Angeles share which of the following a business strategies?  a. cost leadership.  b. focused differentiation.  c. integrated cost leadership/differentiation.  d. differentiation.

Accepted Answer

b. focused differentiation.

Question 56

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.  a. cost leadership  b. focused differentation  c. integrated cost leadership differentation  d. differentiation

Accepted Answer

b. focused differentation

Question 57

The Monteleone Company pays large fees to a highly-recognizable, prestigious individual to be the spokesperson for the company\'s products, luxury private jets. Monteleone is probably following the  a. focused cost-leadership strategy.  b. focused differentiation strategy.  c. integrated cost leadership/differentiation strategy.  d. total quality strategy.

Accepted Answer

b. focused differentiation strategy.

Question 58

The risks of a focus strategy include  a. a competitor\'s ability to use its core competencies to outfocus the focuser by serving an even more narrowly defined segment.  b. a competitor\'s ability to use its core competencies to outfocus the focuser by serving an even more broadly defined segment.  c. decisions by industry-wide competitors to use their resources to serve a wider range of customers\' needs than the focuser has been serving.  d. decisions by focused competitors to use their resources to serve a wider range of customers\' needs.

Accepted Answer

a. a competitor\'s ability to use its core competencies to outfocus the focuser by serving an even more narrowly defined segment.

Question 59

Focus strategies are  a. sheltered from the risks associated with industry-wide strategies because of their niche focus.  b. able to avoid global risk by focusing on niches in national or regional markets.  c. faced with additional types of risks than are industry-wide strategies.  d. more subject to failure than industry-wide strategies.

Accepted Answer

c. faced with additional types of risks than are industry-wide strategies.

Question 60

New Balance Athletic Shoes target Baby Boomers\' needs for well-fitting shoes. The company is unique in that it offers a very broad range of shoe widths. A realistic potential risk New Balance runs in this focused differentiation strategy includes the possibility that:  a. Baby Boomers may find that they do not need well-fitting shoes, since they will become increasingly sedentary as they age.  b. A competitor may be able to better use flexible manufacturing systems to make shoes with an individualized fit.  c. Athletic shoes may go out of style.  d. New Balance shoes may begin to appeal to a wider market, thus losing New Balance\'s focus advantage.

Accepted Answer

b. A competitor may be able to better use flexible manufacturing systems to make shoes with an individualized fit.

Question 61

Suppose another firm found a way to offer IKEA\'s customers (young buyers interested in stylish furniture at low cost) additional sources of differentiation while charging the same price or to provide the same service with the same sources of differentiation at a lower price. What category of competitive risk to a focus strategy would this be?  a. An industry-wide competitor decides that the market segment served by IKEA is worth entering.  b. Focusing on a more narrowly defined segment and \"outfocusing\" the focuser.  c. The needs of the customers in this narrow segment have become more similar to those of industry-wide competitors.  d. Experience can narrow customer\'s perceptions of value of the firm\'s differentiated features.

Accepted Answer

b. Focusing on a more narrowly defined segment and \"outfocusing\" the focuser.

Question 62

Zara has pioneered \"cheap chic\" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which business level strategy?  a. Cost leadership  b. Differentiation  c. Integrated Cost Leadership/Differentiation  d. Stuck-in-the-middle

Accepted Answer

c. Integrated Cost Leadership/Differentiation

Question 63

Firms use the integrated cost leadership/differentiation strategy because  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.

Accepted Answer

c. most consumers want to pay a low price for products with somewhat highly differentiated features.

Question 64

The integration of a cost leadership and a differentiation strategy  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.

Accepted Answer

a. is challenging because it increases the number of value chain activities and support functions in which the firm must become competent.

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