MAN Chapt 5 – Flashcards
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A company's competitive strategy deals A) with the specific actions management plans to take to develop a better value chain than rivals. B) with how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. C) exclusively with the specifics of management's game plan for competing successfully. D) specifically with its plans for under-pricing rivals and achieving product superiority. E) with the specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry.
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C) exclusively with the specifics of management's game plan for competing successfully.
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The five generic types of competitive strategies include A) offensive strategies, defensive strategies, differentiation strategies, low-cost strategies, and first-mover strategies. B) low-cost provider strategies, broad differentiation strategies, best-cost provider strategies, focused low-cost strategies, and focused differentiation strategies. C) offensive strategies, defensive strategies, striving to be a market leader, technological leadership strategies, and product innovation strategies. D) low-price strategies, premium price strategies, middle-of-the-road strategies, product leadership strategies, and market share leadership strategies. E) attacking competitor strengths, attacking competitor weaknesses, market leadership strategies, low-cost leadership strategies, and product superiority strategies.
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B) low-cost provider strategies, broad differentiation strategies, best-cost provider strategies, focused low-cost strategies, and focused differentiation strategies.
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A low-cost leader's basis for competitive advantage is A) using an everyday low pricing strategy to gain the biggest market share. B) bigger profit margins than rival firms. C) high buyer switching costs because of the company's differentiated product offering. D) meaningfully lower overall costs than competitors. E) a reputation for charging the lowest prices in the industry.
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D) meaningfully lower overall costs than competitors.
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A competitive strategy of striving to be the low-cost provider is particularly attractive when A) buyers are large and use the product in much the same ways. B) most rivals are trying to differentiate their product offering from those of rivals. C) there are many ways to achieve higher product quality that have value to buyers. D) buyers are not swayed by advertising and are not very brand-loyal. E) most rivals are pursuing best-cost or broad differentiation strategies.
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A) buyers are large and use the product in much the same ways.
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A broad differentiation strategy A) is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller. B) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals. C) works best when the basis for differentiation is superior performance features and buyer switching costs are low. D) offers a better chance for gaining market share than low-cost or best-cost provider strategies, and typically allows a firm to charge the highest price in the industry. E) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.
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E) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.
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Which of the following is not one of the four basic routes to achieving a differentiation-based competitive advantage? A) Striving to capture all available economies of scale B) Incorporating tangible features that raise product performance C) Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D) Delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match E) Incorporating features that enhance buyer satisfaction in intangible or non-economic ways
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A) Striving to capture all available economies of scale
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A strategy of being a best-cost provider A) is the easiest of the five generic types of competitive strategies to copy or imitate. B) combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance. C) is almost always more profitable than focused or market niche strategies because of the potential for selling more units and realizing higher revenues. D) is the most attractive of all the competitive strategies because it combines the best features of the four other generic types of competitive strategies. E) is usually somewhat less profitable than either top-of-the-line differentiation or low-cost leadership strategies because it is based on achieving a weaker type of competitive advantage.
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B) combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance.
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Which of the following are distinguishing features of a best-cost provider strategy? A) The strategic target is price-conscious buyers B) A marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes C) A product line that stresses wide selection, many product variations, and emphasis on differentiating features D) A competitive advantage based on more value for the money E) Using constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy
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D) A competitive advantage based on more value for the money
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What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is A) the extra attention paid to establishing a distinctive competence. B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C) greater opportunity for brand loyalty. D) their suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor. E) their bold strategic intent of global market leadership via heavy advertising.
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B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.
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A focused differentiation strategy aims at securing competitive advantage by A) providing buyers in the target market niche with the best performance features at a price they perceive as fair.. B) catering to buyers looking for a medium-quality product at an average price. C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences. D) developing unique product attributes. E) convincing buyers that the company is a true leader in product innovation.
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C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.
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A company achieves competitive advantage whenever A) it has a product offering that is differentiated from the product offerings of rivals. B) its customers exhibit a high degree of loyalty to the company's brand. C) it has more core competencies than its rivals. D) it has a better credit rating than rivals. E) it has some type of edge over rivals in attracting customers and coping with competitive forces.
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E) it has some type of edge over rivals in attracting customers and coping with competitive forces.
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Which of the following is not a way that a company can try to manage the costs of its value chain activities downward and thus be more cost-efficient than rivals? A) Striving to capture all available economies of scale and taking full advantage of experience and learning-curve effects B) Having outsiders perform all those value chain activities in which a company odes not have either a core competence or a distinctive competence C) Substituting the use of low-cost for high-cost raw materials or component parts D) Using the company's bargaining power vis-à-vis suppliers to gain concessions and trying to operate facilities at full capacity E) Adopting labor-saving operating methods and using online systems and sophisticated software to achieve operating efficiencies
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B) Having outsiders perform all those value chain activities in which a company odes not have either a core competence or a distinctive competence
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Striving to be the industry's low-cost provider and achieving lower costs than rivals entails A) doing a better job than rivals of performing value chain activities more cost-effectively. B) having a smaller labor force than rivals, paying lower wages than rivals, locating all facilities in countries where labor costs are low, and outsourcing many value chain activities to suppliers with world-class technological capabilities. C) revamping the firm's overall value chain to eliminate or bypass cost-producing activities that produce little value added insofar as customers are concerned. D) aggressive use of activity-based costing, utilizing more best practices than rivals, and having a narrower product line than rivals. E) Both A and C.
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E) Both A and C.
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Which of the following is not an accurate characterization of a strategy to be the industry's overall low-cost provider? A) A low-cost provider strategy works well in market situations where many buyers are price-sensitive and price competition among rival sellers is especially vigorous. B) A low-cost provider strategy entails pursuing cost-saving initiatives that are difficult for rivals to copy or match. C) A low-cost provider strategy entails making a product with minimal features so as to keeps cost per unit as low as absolutely possible. D) A low-cost provider strategy is quite suitable for situations where there are few ways to achieve product differentiation that have value to buyers, where most buyers utilize the product in the same ways, and buyers incur low costs in switching their purchases from one seller to another. E) A low-cost provider strategy is a particularly powerful strategy when the industry's product is essentially the same from rival to rival, many buyers are price sensitive, and industry newcomers use low introductory prices to attract buyers and build a customer base.
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C) A low-cost provider strategy entails making a product with minimal features so as to keeps cost per unit as low as absolutely possible.
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The most appealing approaches to broad differentiation A) are those that hinge upon first-rate R&D and frequent product innovation. B) involve features or attributes that (1) have considerable buyer appeal and (2) are hard or expensive for rivals to duplicate. C) are those that either lower buyer switching costs or enhance the differentiator's brand image. D) generally relate to product superiority or clever merchandising. E) are typically based on either superior product quality or superior customer service.
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B) involve features or attributes that (1) have considerable buyer appeal and (2) are hard or expensive for rivals to duplicate.
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Successful differentiation allows a firm to A) gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). B) earn the highest profit margins of any company in the industry. C) attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. D) command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). E) Both A and D.
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E) Both A and D.
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In which one of the following market circumstances is a broad differentiation strategy generally not well-suited? A) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B) When few rivals are pursuing a similar differentiation approach. C) When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated D) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E) When technological change is fast-paced and competition revolves around rapidly evolving product features
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C) When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated
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Which of the following is not one of the pitfalls of pursuing a differentiation strategy? A) Trying to charge too high a price premium for the differentiating features B) Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) D) Differentiating on features or attributes that rivals can easily copy E) Overspending on efforts to differentiate the company's product offering
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C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)
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A focused low-cost strategy A) involves a marketing emphasis that communicates the attractiveness of a budget-priced product tailored to fit the expectations of buyers comprising the target market niche. B) is the hardest of the five generic types of competitive strategies to employ successfully. C) involves the use of deep price discounting to capture customers. D) entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques. E) cannot be sustained over time unless the focuser is aggressive in entering other segments where it also can achieve a low-cost advantage.
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A) involves a marketing emphasis that communicates the attractiveness of a budget-priced product tailored to fit the expectations of buyers comprising the target market niche.
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Which of the following is not a distinguishing feature of a low-cost provider strategy? A) The product line consists of a few basic models having minimal frills and acceptable quality B) The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features C) The marketing emphasis is on making virtues out of product features that lead to low cost D) The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations E) Sustaining the strategy revolves around managing costs down year-after-year and delivering good value at economical prices
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D) The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations
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Creating buyer value via a differentiation strategy A) has to be grounded in providing buyers with unique extras that deliver real value rather than perceived value. B) allows a company to command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features). C) can be achieved anywhere along the industry value chain and can involve incorporating product attributes and user features that either lower buyers' overall costs of using the product or raise the performance a buyer gets from the product. D) is an attractive competitive strategy when there are few ways to achieve differentiation that have value to buyers. E) Both B and C.
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E) Both B and C.
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To be successful with a differentiation strategy, a company has to A) study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for. B) incorporate more differentiating features into its product/service offering than rivals and also charge a price no higher than the prices charged by rivals. C) have a state-of-the-art value chain and concentrate on providing buyers with a technologically superior product. D) outspend rivals on R&D in order to have differentiating attributes that rivals don't have. E) Concentrate on differentiating its product on the basis of superior product quality or personalized customer service.
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A) study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for.
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The trick to a profitable broad differentiation strategy is A) to concentrate differentiation efforts on superior technology and product innovation. B) either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits. C) to concentrate differentiation efforts on superior customer service and appealing to sophisticated and prestigious buyers. D) differentiating on the basis of attributes that enhance product performance. E) having as many differentiating features as management can think up.
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B) either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits.
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Broad differentiation strategies are an attractive competitive approach whenever A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product or by sellers with very similar capabilities. B) buyers are quick to switch brands when a product fails to meet their expectations. C) no other rivals have a strong brand name reputation. D) price competition is especially vigorous. E) buyer switching costs are high and the industry's products are weakly differentiated.
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A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product or by sellers with very similar capabilities.
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Which of the following accurately characterize a best-cost provider strategy? A) The strategic target is price-conscious buyers B) A marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes C) A product line that stresses wide selection, many product variations, and emphasis on differentiating features D) A competitive advantage based on more value for the money E) Using constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy
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D) A competitive advantage based on more value for the money
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A focused strategy based on differentiation aims at securing competitive advantage by A) providing buyers in the target market niche with the best performance features at the best price. B) catering to buyers looking for a medium-quality product at an average price. C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences. D) developing unique product attributes. E) convincing buyers that the company is a true leader in product innovation.
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C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.
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A focused strategy based on low-cost can lead to attractive competitive advantage when A) buyers in the target market niche are looking for a no-frills product at a rock-bottom price. B) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment that is less costly to satisfy as compared to other parts of the market. C) buyers are not very brand loyal and are always on the lookout for something new and different at a bargain price. D) demand in the target market niche is growing rapidly and no other rivals are very cost-conscious. E) there are few, if any, rivals offering low-priced products.
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B) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment that is less costly to satisfy as compared to other parts of the market.
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A focuser's basis for competitive advantage is A) nearly always created in the distribution channel portion of the industry value chain. B) lower costs than competitors in serving the target market niche or else an ability to outmatch other competitors in offering niche members something they perceive is better suited to their own unique tastes and preferences. C) being fully vertically integrated and thus in position to perform all of the value chain activities needed to serve the target market niche. D) being the only company serving buyers in the target market niche. E) delivering more value for the money than other competitors.
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B) lower costs than competitors in serving the target market niche or else an ability to outmatch other competitors in offering niche members something they perceive is better suited to their own unique tastes and preferences.
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A low-cost provider's basis for competitive advantage is A) using an everyday low pricing strategy to gain the biggest market share. B) bigger profit margins than rival firms. C) high buyer switching costs because of the company's differentiated product offering. D) meaningfully lower overall costs than competitors. E) a reputation for charging the lowest prices in the industry.
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D) meaningfully lower overall costs than competitors.
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Which of the following is not one of the hazards of pursuing a differentiation strategy? A) Trying to charge too high a price premium for the differentiating features B) Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) D) Differentiating on features or attributes that rivals can easily copy E) Overspending on efforts to differentiate the company's product offering
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C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)
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A firm pursuing a best-cost provider strategy A) seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) achieves competitive advantage because its operating activities are "best-in-industry" or "best-in-world." D) is a hybrid strategy based upon superior resources and a narrow market niche. E) a "middle of the road" strategic approach that attempts to satisfy the product or service needs of consumers with average household incomes.
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A) seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation.
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The generic types of competitive strategies include a. market share growth provider, sales revenue leader strategy, and market share retention strategy b. offensive strategies, defensive strategies, and counter maneuvers strategies c. low-cost/low-price strategies, high-quality/high-price strategies, and medium price strategies d. low-cost provider, broad differentiation, best-cost provider, focused low cost and focused differentiation strategies e. price leader strategies, price follower strategies, technology leader, and first-mover strategies
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d. low-cost provider, broad differentiation, best-cost provider, focused low cost and focused differentiation strategies
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The objective of competitive strategy is to A. Contend successfully with the industry's 5 competitive forces B. Knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences C. Get the company into the best strategic group and then dominate it
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B. Knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences
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A company can be said to have competitive advantage if A. It is the acknowledged leader in product quality B. It has a different value chain than rivals C. It has some type of edge over rivals in attracting customers and coping with competitive forces D. It has a well-known and well-regarded brand name, prefers offensive strategies to defensive strategies, and has a strong balance sheet E. It has more resource strengths than weaknesses
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C. It has some type of edge over rivals in attracting customers and coping with competitive forces
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While there are many routes to competitive advantage, they all involve A. Building a brand name image that buyers trust B. Delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match C. Achieving lower costs than rivals and becoming the industry's sales and market share leader D. Finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. E. Getting in the best strategic group and dominating it.
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B. Delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match
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The biggest and most important differences among the competitive strategies of different companies boil down to A. How they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider B. The different ways that companies try to cope with the five competitive forces C. Whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation D. The kinds of actions companies take to improve their competitive assets E. The relative emphasis they place on offensive versus defensive strategies
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C. Whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation
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Which of the following is not one of the five generic types of competitive strategy? A. A low-cost provider strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. A market share dominator strategy
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E. A market share dominator strategy
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Which one of the following generic types of competitive strategy is typically the best strategy for a company to employ? A. A low-cost leadership strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities
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E. There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities
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How valuable a low-cost leader's cost advantage is depends on A. Whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs B. How easy it is for the low-cost leader to gain the biggest market share C. The aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs D. The leader's ability to combine the cost advantage with a reputation for good quality E. The low-cost's leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs
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A. Whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs
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A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by A. Cutting its price to levels significantly below the prices of rivals B. Either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold C. Going all out to use its cost advantage to capture a dominant share of the market D Spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry -- it can then use this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long-term E Outproducing rivals and thus having more units available to sell
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B. Either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold
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The major avenues for achieving a cost advantage over rivals include A. Revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out-managing rivals in the efficiency with which value chain activities are performed B. Having a management team that is highly skilled in cutting costs C. Being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture
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A. Revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out-managing rivals in the efficiency with which value chain activities are performed
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Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively? A. Striving to capture all available economies of scale and learning/experience curve effects B. Trying to operate facilities at full capacity C. Adopting labor-saving operating methods D. Improving supply chain efficiency E. Outsourcing all production-related activities
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E. Outsourcing all production-related activities
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Which of the following is not one of the ways that a company can achieve a cost advantage by revamping its value chain? A. Cutting out distributors and dealers by selling direct to customers B. Replacing certain value chain activities with faster and cheaper online technology C. Increasing production capacity and then striving hard to operate at full capacity D) Relocating facilities so as to curb the need for shipping and handling activities E) Streamlining operations by eliminating low value-added or unnecessary work steps and activities
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C. Increasing production capacity and then striving hard to operate at full capacity
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To succeed with a low-cost provider strategy, company managers have to To succeed with a low-cost provider strategy, company managers have to A. Pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage B. Move the performance of most all value chain activities to low-wage countries C. Sell direct to users of their product or service and eliminate use of wholesale and retail intermediaries D. Do two things: (1) do a better job than rivals of pursuing cost savings throughout the value chain and (2) be proactive in revamping the firm's overall value chain to eliminate low value-added activities and bypass "nonessential" cost-producing activities
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D. Do two things: (1) do a better job than rivals of pursuing cost savings throughout the value chain and (2) be proactive in revamping the firm's overall value chain to eliminate low value-added activities and bypass "nonessential" cost-producing activities
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Achieving a cost advantage over rivals entails A) concentrating on the primary activities portion of the value chain and outsourcing all support activities. B) being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether. D) minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E) producing a standard product, redesigning the product infrequently, and having minimal advertising.
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C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or
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The best evidence that a company is the industry's low-cost provider is that A. It sells more of its product/service than its key competitors and is the market share leader B. It has lower overall per unit costs for its product/service than other competitors in the industry C. It has lower total operating costs on its income statement than do its competitors
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B. It has lower overall per unit costs for its product/service than other competitors in the industry
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A company pursuing a low-cost leadership strategy must generally A. Have products with good-to-excellent attributes so that its low prices will provide customers with more value for the money B. Have acceptable quality products that incorporate a good basic design with few frills and offer a limited number of models/styles to select from C. Have a wide selection of products that are of average or better quality
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B. Have acceptable quality products that incorporate a good basic design with few frills and offer a limited number of models/styles to select from
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Being the overall low-cost provider in an industry has the attractive advantage of A. Building strong customer loyalty and locking customers into its product (because customers have such high switching costs) B. Giving the firm a very appealing brand image C. Putting a firm in position to compete offensively on the basis of low price, win the business of price sensitive customers, set the floor on market price and defend against price war conditions should they arise D) putting the company in strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of key suppliers.
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C. Putting a firm in position to compete offensively on the basis of low price, win the business of price sensitive customers, set the floor on market price and defend against price war conditions should they arise
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Being the overall low-cost provider in an industry has the attractive advantage of A) building strong customer loyalty and locking customers into its product (because customers have such high switching costs). B) giving the firm a very appealing brand image. C) putting a firm in position to win the business of price sensitive customers, set the floor on market price, and still earn a profit. D) putting the company in strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of key suppliers.
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C) putting a firm in position to win the business of price sensitive customers, set the floor on market price, and still earn a profit.
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A competitive strategy to be the low-cost provider in an industry works well when A) price competition among rival sellers is especially vigorous. B) there are few ways to achieve product differentiation that have value to buyers. C) buyers incur low costs in switching their purchases from one seller/brand to another. D) industry newcomers use low introductory prices to attract buyers and build a customer base. E) All of these.
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E) All of these.
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A competitive strategy predicated on low-cost leadership tends to work best when A) there are widely varying needs and preferences among the various buyers of the product or service. B) there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C) price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E) buyers have high switching costs and there is considerable diversity in how buyers use the product.
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C) price competition is especially vigorous and the offerings of rival firms are essentially identical,
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In which of the following circumstances is a strategy to be the industry's overall low-cost provider not particularly well matched to the market situation? A) When the offerings of rival firms are essentially identical, standardized, commodity-like products B) When there are few ways to achieve differentiation that have value to buyers C) When price competition is especially vigorous D) When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high E) When entry barriers are low and there is a stream of newcomers to the industry
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D) When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high
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A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when A) there are many ways to achieve product differentiation that buyers find appealing. B) buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C) the offerings of rival firms are essentially identical, standardized, commodity-like products. D) entry barriers are high and competition from substitutes is relatively weak. E) the market is composed of many distinct segments with varying buyer needs and expectations.
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C) the offerings of rival firms are essentially identical, standardized, commodity-like products.
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A company attempting to be successful with a broad differentiation strategy has to A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B) incorporate more differentiating features into its product/service than rivals. C) concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D) have a widely known and highly respected brand name image. E) provide a top-of-the-line product and sell it at premium prices.
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A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for.
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Successful differentiation allows a firm to A) be the industry's best-cost provider. B) set the industry ceiling on price. C) avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E) take sales and market share away from rivals by undercutting them on price.
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D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.
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A company that succeeds in differentiating its product offering from those of its rivals can usually A) avoid having to compete on the basis of simply a low price. B) charge a price premium for its product. C) increase unit sales. D) gain buyer loyalty to its brand. E) All of the above.
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E) All of the above.
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A broad differentiation strategy improves profitability when A) it is focused on product innovation. B) differentiating enhances product performance. C) the differentiating features appeal to sophisticated and prestigious buyers. D) the extra price the product commands exceeds the added costs of achieving the differentiation. E) the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.
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D) the extra price the product commands exceeds the added costs of achieving the differentiation.
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Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether A) many buyers view the product's differentiating features as having value. B) most buyers have similar needs and use the product in the same ways. C) the extra price the product commands exceeds the added costs of achieving the differentiation. D) buyer switching costs are low and customer loyalty to any one brand is low. E) buyers are prone to shop the market for sellers having the best price.
answer
C) the extra price the product commands exceeds the added costs of achieving the differentiation.
question
Broad differentiation strategies are well-suited for market circumstances where A) there are many ways to differentiate the product or service and many buyers perceive these differences as having value. B) most buyers have the same needs and use the product in the same ways. C) buyers are susceptible to clever advertising. D) barriers to entry are high and suppliers have a low degree of bargaining power. E) price competition is especially vigorous.
answer
A) there are many ways to differentiate the product or service and many buyers perceive these differences
question
Broad differentiation strategies generally work best in market circumstances where A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product. B) most buyers have similar needs and use the product in the same ways. C) the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D) buyers are price sensitive and buying switching costs are quite low. E) the five competitive forces are strong.
answer
A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product.
question
A broad differentiation strategy works best in situations where A) technological change is slow-paced and new or improved products are infrequent. B) buyer needs and uses of the product are very similar. C) buyers incur low costs in switching their purchases to rival brands. D) buyers have a low degree of bargaining power and purchase the product frequently. E) technological change is fast-paced and competition revolves around rapidly evolving product features.
answer
E) technological change is fast-paced and competition revolves around rapidly evolving product features.
question
A broad differentiation strategy generally produces the best results in situations where A) buyer brand loyalty is low. B) buyer needs and uses of the product are diverse. C) new and improved products are introduced only infrequently. D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E) price competition is vigorous.
answer
B) buyer needs and uses of the product are diverse.
question
In which one of the following market circumstances is a broad differentiation strategy generally not well- suited? A) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B) When few rivals are pursuing a similar differentiation approach C) When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart D) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E) When technological change is fast-paced and competition revolves around rapidly evolving product features
answer
C) When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart
question
A company achieves best-cost provider status by A) selling a product with the best cost at the best price. B) having the best cost (as compared to rivals) for each activity in the industry's value chain. C) providing buyers with the best attributes at the best cost. D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals. E) doing a better job than rivals of adopting the best operating practices.
answer
D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals.
question
A firm pursuing a best-cost provider strategy A) seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/ features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes). E) seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.
answer
D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/ features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes).
question
The objective of a best-cost provider strategy is to A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes). B) offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C) attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D) outcompete rivals using low-cost provider strategies. E) translate its best-cost status into achieving the highest profit margins of any firm in the industry.
answer
A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes).
question
C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat The competitive objective of a best-cost provider strategy is to A) outmatch the resource strengths of both low-cost providers and differentiators. B) position the company outside the competitive arena of low-cost producers and differentiators. C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D) deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E) identify and concentrate on those differentiating features that are inexpensive to incorporate.
answer
C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes).
question
The competitive advantage of a best-cost provider is A) having the best value chain in the industry. B) its brand name reputation. C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. D) a distinctive competence in delivering top-notch quality and customer service. E) a distinctive competence in supply chain management.
answer
C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.
question
For a best-cost provider strategy to be successful, a company must have A) excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/ features incorporated in its product. B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C) access to greater learning/experience curve effects and scale economies than rivals. D) one of the best-known and most respected brand names in the industry. E) a short, low-cost value chain.
answer
B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.
question
The target market of a best-cost provider is A) value-conscious buyers. B) brand-conscious buyers. C) price-sensitive buyers. D) middle-income buyers. E) young adults (in the 18-35 age group).
answer
A) value-conscious buyers.
question
A focused low-cost strategy seeks to achieve competitive advantage by A) outmatching competitors in offering niche members an absolute rock-bottom price. B) delivering more value for the money than other competitors. C) performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D) dominating more market niches in the industry via a lower cost and a lower price than any other rival. E) serving buyers in the target market niche at a lower cost and lower price than rivals.
answer
E) serving buyers in the target market niche at a lower cost and lower price than rivals.
question
The chief difference between a low-cost provider strategy and a focused low-cost strategy is A) whether the product is strongly differentiated or weakly differentiated from rivals. B) the degree of bargaining power that buyers have. C) the size of the buyer group that a company is trying to appeal to. D) the type of value chain being used to achieve a low-cost competitive advantage. E) the number of upscale attributes incorporated into the product offering.
answer
C) the size of the buyer group that a company is trying to appeal to.
question
A focused low-cost strategy can lead to attractive competitive advantage when A) buyers are looking for the best value at the best price. B) buyers are looking for a budget-priced product. C) buyers are price sensitive and are attracted to brands with low switching costs. D) demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies. E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.
answer
E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.
question
A focused differentiation strategy aims at securing competitive advantage A) by providing niche members with a top-of-the-line product at a premium price. B) by catering to buyers looking for an upscale product at an attractively low price. C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D) by developing product attributes that no other company in the industry has. E) by convincing a narrow, well-defined group of buyers that the company has a true world class product.
answer
C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.
question
The chief difference between a broad differentiation strategy and a focused differentiation is A) the size of the buyer group that a company is trying to appeal to. B) the degree of bargaining power that buyers have. C) whether the product is strongly differentiated or weakly differentiated from rivals. D) the type of value chain being used to achieve a differentiation-based competitive advantage. E) the number of upscale attributes incorporated into the product offering.
answer
A) the size of the buyer group that a company is trying to appeal to.
question
One of the big dangers in crafting a competitive strategy is that managers, torn between the pros and cons of the various generic strategies, will opt for A. A low-cost provider strategy because it is usually the safest, least risky competitive strategy B. A "stuck-in-the-middle" strategy C. A broad differentiation strategy because it is frequently the most profitable competitive strategy
answer
B. A "stuck-in-the-middle" strategy
question
The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to A. Tout the company's lower prices B. Tout the lack of frills and extras C. Out-advertise rivals and make frequent use of discount coupons D. Communicate the attractive features of a budget-priced product offering that fits niche members' expectations
answer
D. Communicate the attractive features of a budget-priced product offering that fits niche members' expectations
question
The keys to sustaining a broad differentiation strategy are A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features B. To charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal C. To out-innovate and out-advertise rivals
answer
A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features
question
The marketing emphasis of a company pursuing a broad differentiation strategy usually is to A. Underprice rival brands with comparable features B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features C. Out-advertise rivals and make frequent use of discount coupons
answer
B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features
question
The production emphasis of a company pursuing a broad differentiation strategy usually involves A. A search for continuous cost reduction without sacrificing acceptable quality and essential features B. Strong efforts to be a leader in manufacturing process innovation C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority
answer
C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority
question
The risks of a focused strategy based on either low-cost or differentiation include A. The chance that competitors outside the niche will find effective ways to match the focuser's capabilities in serving the target niche B. The potential for the preferences and needs of niche members to shift over time towards many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market C. The potential for the segment to become so attractive that it is soon inundated with competitors, intensifying rivalry and splintering sales, profits and growth prospects D. The potential for segment growth to slow to such a small rate that a focuser's prospects for future sales and profit gains become unacceptably dim E. All of these
answer
E. All of these
question
Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive? A. When it is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers B. When the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities C. When industry leaders do not see that having a presence in the niche is crucial to their own success D. When the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy
answer
E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy
question
The chief difference between a broad differentiation strategy and a focused differentiation is A. The size of the buyer group that a company is trying to appeal to B. The degree of bargaining power that buyers have C. Whether the product is strongly differentiated or weakly differentiated from rivals
answer
A. The size of the buyer group that a company is trying to appeal to
question
The chief difference between a low-cost leader strategy and a focused low-cost strategy is A. Whether the product is strongly differentiated or weakly differentiated from rivals B. The degree of bargaining power that buyers have C. The size of the buyer group that a company is trying to appeal to
answer
C. The size of the buyer group that a company is trying to appeal to
question
Companies pursuing a focused low-cost or focused differentiation strategy strive to A. Build a value-based competitive advantage keyed to product uniqueness B. Develop the capability to simultaneously serve buyers in a variety of distinct and different market segments C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry
answer
C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry
question
Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where A. The market is composed of distinctly different buyer groups who have different needs or use the product in different ways B. Most other rival firms are using a best-cost producer strategy C. Buyers have strong bargaining power and entry barriers are low
answer
A. The market is composed of distinctly different buyer groups who have different needs or use the product in different ways
question
A company's biggest vulnerability in employing a best-cost provider strategy is A. Relying too heavily on outsourcing B. Getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies C. Getting trapped in a price war with low-cost leaders
answer
B. Getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies
question
The big danger or risk of a best-cost provider strategy is A. That buyers will be highly skeptical about paying a relatively low price for upscale attributes/features B. Not establishing strong alliances and partnerships with key suppliers C. That low-cost leaders will be able to steal away some customers on the basis of a lower price and high-end differentiators will be able to steal away customers with the appeal of better product attributes
answer
C. That low-cost leaders will be able to steal away some customers on the basis of a lower price and high-end differentiators will be able to steal away customers with the appeal of better product attributes
question
Best-cost provider strategies are appealing in those market situations where A. Diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value B. A company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance C. Buyers are more quality-conscious than price-conscious
answer
A. Diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value
question
Which one of the following statements about pursuing a broad differentiation strategy is false? A. Any differentiating feature that works well is a magnet for imitators B. The best opportunities for achieving strong product differentiation are in the production technology and marketing portions of the value chain C. A low-cost provider strategy can defeat a broad differentiation strategy when buyers are satisfied with a basic product and don't think "extra" attributes are worth paying a higher price
answer
B. The best opportunities for achieving strong product differentiation are in the production technology and marketing portions of the value chain
question
The pitfalls of a differentiation strategy include A. Trying to differentiate on the basis of attributes or features that are easily copied B. Choosing to differentiate on the basis of attributes that buyers do not perceive as valuable or worth paying for C. Trying to charge too high a price premium for the differentiating features D. Being timid and not striving to open up meaningful gaps in quality or performance or service or other attractive differentiating attributes E. All of these
answer
E. All of these
question
A differentiation-based competitive advantage A. Nearly always is attached to the quality and service aspects of a company's product offering B. Most usually is the result of highly effective marketing and advertising C. Requires developing at least one distinctive competence that buyers consider valuable D. Hinges on a company's success in developing top-of-the-line product features that will command the biggest price premium in the industry E. Often hinges on incorporating features that (1) raise the performance of the product or (2) lower the buyer's overall costs of using the company's product or (3) enhance buyer satisfaction in intangible or non-economic ways
answer
E. Often hinges on incorporating features that (1) raise the performance of the product or (2) lower the buyer's overall costs of using the company's product or (3) enhance buyer satisfaction in intangible or non-economic ways
question
Perceived value and signaling value are often an important part of a successful differentiation strategy because A. Of the diversity of buyer needs and preferences B. Buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be C. Most buyers are heavily influenced by clever ads that signal value
answer
B. Buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be
question
The most appealing approaches to differentiation are A. Those that are also being pursued by other rivals with differentiation strategies B. Those that are the most costly to incorporate (because expensive attributes are perceived by buyers as more valuable and worth paying more for) C. Those that can be made even more attractive to buyers via clever advertising D. Generally related to flavor and taste or sophisticated use of Internet technology applications E. Those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal
answer
E. Those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal
question
Easy-to-copy differentiating features A. Cannot produce sustainable competitive advantage B. Seldom are perceived by buyers as having much value C. Tend to give buyers a high degree of power in bargaining for a lower price
answer
A. Cannot produce sustainable competitive advantage
question
Opportunities to differentiate a company's product offering A. Are most reliably found in the R&D portion of the value chain B. Are typically located in the sales and marketing portion of the value chain C. Can exist in activities all along an industry's value chain
answer
C. Can exist in activities all along an industry's value chain
question
Using a broad differentiation strategy to produce an attractive competitive advantage is least likely to be based on A. Developing a superior performing product B. Offering buyers a product which is superior in quality and reliability as compared to rivals' brands C. Giving consumers comprehensive support services D. Providing buyers with a continuing stream of better-designed, better-performing and more stylish products E. Undercutting the prices being charged by rivals
answer
E. Undercutting the prices being charged by rivals
question
Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether A. Many buyers view the product's differentiating features as having value B. Most buyers have similar needs and use the product in the same ways C. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation
answer
C. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation
question
A broad differentiation strategy improves profitability when A. It is focused on product innovation B. Differentiating enhances product performance C. The differentiating features appeal to sophisticated and prestigious buyers D. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation
answer
D. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation
question
A company that succeeds in differentiating its product offering from those of its rivals can usually A. Avoid having to compete on the basis of simply a low price B. Charge a price premium for its product (because buyers see its differentiating features as worth something extra) C. Increase unit sales (because of the attraction of its differentiating product attributes) D. Gain buyer loyalty to its brand (because some, maybe many, of its customers will have a strong preference for the company's differentiating features) E. All of the above
answer
E. All of the above
question
Successful differentiation allows a firm to A. Be the industry's best-cost provider B. Set the industry ceiling on price C. Avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low D. Command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal)
answer
D. Command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal)
question
A company attempting to be successful with a broad differentiation strategy has to A. Study buyer needs and behavior carefully to learn what buyers consider important, what they think has value and what they are willing to pay for B. Incorporate more differentiating features into its product/service than rivals C. Concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created)
answer
A. Study buyer needs and behavior carefully to learn what buyers consider important, what they think has value and what they are willing to pay for
question
The essence of a broad differentiation strategy is to A. Appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers B. Incorporate a greater number of differentiating features into its product/service than rivals C. Lower buyer switching costs D. Outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes E. Be unique in ways that are valuable and appealing to a wide range of buyers
answer
E. Be unique in ways that are valuable and appealing to a wide range of buyers
question
In which of the following circumstances is a low-cost leadership strategy not likely to be particularly successful? A. When the industry's product is a standardized commodity B. When buyers are looking for a good-to-excellent product at a bargain price C. When the industry is composed of more than three strategic groups and the companies in at least one of the groups are pursuing full vertical integration strategies
answer
C. When the industry is composed of more than three strategic groups and the companies in at least one of the groups are pursuing full vertical integration strategies
