question

There are several basic approaches to competing successfully and gaining a competitive advantage over rivals, such as:

answer

Delivering more value to its customers than rivals or delivering value more efficiently than rivals (or both).

question

A company's competitive strategy deals with:

answer

The specifics of management's game plan for competing successfully--its specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular kind of competitive advantage

question

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another involves:

answer

Whether a company's target market is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation

question

Whatever strategic approach is adopted by a company to deliver value, it nearly always:

answer

Requires performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match or trump.

question

The biggest and most important differences among the competitive strategies of different companies boil down to:

answer

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.

question

Which of the following is NOT one of the five generic types of competitive strategy?

answer

A market share dominator strategy

question

The generic types of competitive strategies include:

answer

low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation strategies.

question

Which one of the following generic types of competitive strategy is typically the "best" strategy for a company to employ?

answer

One that is customized to fit the macro-environment, industry and competitive conditions, and the company's own resources and competitive capabilities

question

A low-cost leader's basis for competitive advantage is:

answer

meaningfully lower overall costs than rivals on comparable products

question

Low-cost leaders, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable:

answer

positioned to deliver affordable luxury products at mass market quality

question

How valuable a low-cost leader's cost advantage is depends on:

answer

whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.

question

A low-cost leader translates its low-cost advantage over rivals into superior profit performance by:

answer

either using its lower-cost edge to under-price competitors and attract price-sensitive buyers in great enough numbers to increase total profits or maintain the present price, and using the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising total profits and overall return on investment.

question

The major avenues for achieving a cost advantage over rivals include:

answer

performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities

question

To succeed with a low-cost provider strategy, company managers have to:

answer

do two things: (1) perform value chain activities more cost-effectively than rivals, and (2) act proactively in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost producing activities

question

Achieving a cost advantage over rivals entails:

answer

performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether

question

A factor that has a strong influence on a company's costs is termed:

answer

a cost driver

question

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?

answer

Eliminate product features that might have market appeal, but excessively increase production costs

question

Cost-efficient management of a company's overall value chain activities requires that management:

answer

ferret out cost-saving opportunities in every part of the value chain

question

Which of the following is NOT one of the ways that a company can achieve cost-efficient management of its value chain activities?

answer

Striving to ensure a corporate diversity policy is introduced with effective controls

question

The culture of a company can be a cost-efficient value chain activity because it can:

answer

allow for safeguarding internalized operating benefits

question

Which of the following is NOT one of the ways that a company can achieve a cost advantage by revamping its value chain?

answer

Increasing production capacity and then striving hard to operate at full capacity

question

An example of how companies can revamp their value chain to reduce costs is:

answer

to increase service availability while reducing staffing requirements

question

Success in achieving a low-cost edge over rivals comes from:

answer

out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost efficiently

question

While low-cost providers are champions of frugality, they:

answer

seldom hesitate to spend aggressively on resources and capabilities that promise to drive costs out of the business

question

A competitive strategy of striving to be the low-cost provider is particularly attractive when:

answer

most buyers use the product in much the same ways, with user requirements calling for a standardized product.

question

Being the overall low-cost provider in an industry has the attractive advantage of:

answer

putting the firm in the best position to with the business of price-sensitive customers, set the floor on market price, and still earn a profit.

question

A competitive strategy to be the low-cost provider in an industry works well when:

answer

industry newcomers use introductory low prices to attract buyers and build a customer base

question

A competitive strategy predicated on low-cost leadership tends to work best when:

answer

price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products

question

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?

answer

When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high

question

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:

answer

the offerings of rival firms are essentially identical, standardized, commodity-like products

question

Which of the following is NOT one of the pitfalls of a low-cost provider strategy?

answer

Setting the industry's price ceiling to capture volume gains and achieve economies of scale

question

A low-cost provider's product does NOT have to always:

answer

suggest that a low price, by itself, is not always that appealing to buyers.

question

The essence of a broad differentiation strategy is to:

answer

offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

question

A company attempting to be successful with a broad differentiation strategy has to:

answer

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

Successful differentiation allows a firm to:

answer

command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand

question

A company that succeeds in differentiating its product offering from those of its rivals can usually:

answer

All of these

question

A broad differentiation strategy improves profitability when:

answer

the higher price the product commands exceeds the added costs of achieving the differentiation

question

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether:

answer

most buyers accept the customer value proposition as unique and the product can command a higher price or produce sufficiently bigger unit sales to cover the added costs of achieving the differentiation

question

Opportunities to differentiate a company's product offering:

answer

can exist in activities all along an industry's value chain

question

Uniqueness drivers are a:

answer

set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect

question

Which of the following is NOT one of the ways managers can enhance differentiation based on uniqueness drivers?

answer

Seeking out low-quality inputs

question

Brands create customer loyalty, which in turn:

answer

increases the perceived cost of switching to another product

question

Pursuing continuous quality improvement as a uniqueness factor is sound because:

answer

it can often reduce product defects, improve economy of use, and result in more end-user convenience

question

Approaches to enhancing differentiation through changes in the value chain include:

answer

All of these

question

The objective of differentiation:

answer

is to offer customers something rivals can't, at least in terms of level of satisfaction.

question

A route to take in developing a differentiation advantage includes:

answer

incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling.

question

Easy-to-copy differentiating features:

answer

cannot produce sustainable competitive advantage

question

A differentiation-based competitive advantage:

answer

often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or non-economic ways, or delivers value to customers by differentiating on the bases of competencies and capabilities that rivals can't match

question

Which of the following is NOT one of the four basic routes to achieving a differentiation-based competitive advantage?

answer

Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes

question

Achieving a differentiation-based competitive advantage can involve:

answer

All of these

question

Perceived value and signaling value are often an important part of a successful differentiation strategy because:

answer

buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.

question

Broad differentiation strategies are well-suited for market circumstance where:

answer

buyer needs and uses of the product are diverse and they are not fully satisfied by a standardized product.

question

A broad differentiation strategy works best in situations where:

answer

technological change is fast-paced and competition revolves around rapidly evolving product features

question

Broad differentiation strategies generally work best in market circumstances where:

answer

buyer needs and uses of the product are diverse and they are not fully satisfied by a standardized product

question

A broad differentiation strategy generally produces the best results in situations where:

answer

few rival firms are following a similar differentiation approach

question

In which one of the following market circumstances is a broad differentiation strategy generally NOT well suited?

answer

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 pitfall to avoid in pursuing a differentiation strategy is:

answer

trying to differentiate on the basis of attributes or features that are easily and quickly copied.

question

Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy?

answer

Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than be content with weak product differentiation

question

Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where:

answer

the market is composed of distinctly different buyer groups who have different needs or use the product in different ways

question

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is:

answer

their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.

question

A focused low-cost strategy seeks to achieve competitive advantage by:

answer

serving buyers in a narrow piece of the total market (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:

answer

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:

answer

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:

answer

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:

answer

the size of the buyer group that a company is trying to appeal to

question

A focused strategy aimed at securing a competitive edge and which is based either on low cost or differentiation becomes more attractive when:

answer

the target market niche is small enough to limit profitability and the outlook is ripe for differentiating.

question

The risks of a focused strategy based on either low-cost or differentiation include:

answer

the potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market

question

Focusing carries several risks, one of which is:

answer

the chance that competitors will find effective ways to match the focused firm's capabilities is serving the target market

question

Best-cost provider strategies are:

answer

a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/service attributes while beating rivals on price.

question

To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to:

answer

incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

question

A firm pursuing a best-cost provider strategy:

answer

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:

answer

deliver superior value to value-conscious buyers at a comparatively lower price than rivals

question

The competitive objective of a best-cost provider strategy is to:

answer

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 of the same attributes).

question

What is the primary target market for a best-cost provider?

answer

Value-conscious buyers

question

The competitive advantage of a best-cost provider is:

answer

its capability to incorporate upscale or attractive industry attributes into its product offering at lower costs than rivals

question

For a best-cost provider strategy to be successful, a company must have:

answer

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:

answer

value-conscious buyers

question

Best-cost provider strategies are appealing in those market situations where:

answer

diverse buyer preferences make product differentiation the norm and where a large number of value conscious buyers can be induced to purchase mid-range products.

question

The big danger or risk of a best-cost provider strategy is:

answer

that rivals, with low-cost provider strategies 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

A company's biggest vulnerability in employing a best-cost provider strategy is:

answer

getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

question

Success with a best-cost provider strategy designed to outcompete high-end differentiators requires:

answer

achieving significantly lower costs in providing the upscale features

question

Each of the five generic strategies positions the company differently, except when it concerns:

answer

creating differentiation barriers within economies of scope

question

The production emphasis of a company pursuing a broad differentiation strategy usually involves:

answer

emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations

question

the marketing emphasis of a company pursuing a broad differentiation strategy usually is to:

answer

tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features

question

The keys to maintaining a broad differentiation strategy are:

answer

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 focused low-cost provider strategy usually is to:

answer

communicate the attractive features of a budget-priced product offering that fits niche members' expectations.

question

The underlying criteria of a best-cost provider strategy usually is found in the ability of a company to:

answer

offer similar goods at more attractive prices

question

At the heart of a production-based emphasis toward a low-cost provider strategy usually requires a company to:

answer

strive for continuous cost reductions without sacrificing acceptable quality and essential features

question

A company's strategy is likely to succeed if:

answer

All of the above

question

Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT:

answer

using a strategic offense to allow the company to leverage its weaknesses to strengthen operating vulnerabilities.

question

Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices, such as:

answer

All of these

question

Which of the following is NOT a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive advantages?

answer

Whether to employ a market share leadership strategy.

question

Strategic offensives should, as a generic rule, be based on:

answer

exploiting a company's strongest competitive assets--its most valuable resources and capabilities.

question

The principal offensive strategy options include all of the following EXCEPT:

answer

initiating a market threat and counterattack simultaneously to effect a distraction

question

Which of the following is NOT a principal offensive strategy option?

answer

Being the final competitor to market a next-generation product so as to guarantee the product is operationally sound.

question

An offensive to yield good results can be short if:

answer

buyers respond immediately (to dramatic cost-based price cut or imaginative ad campaign).

question

Which of the following rivals make the best targets for an offensive attack?

answer

Firms with weakness in areas where the challenger is strong.

question

When challenging a struggling rival, it can:

answer

All of these

question

A blue-ocean strategy:

answer

involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.

question

Which of the following is NOT a prime example of a blue-ocean market strategy?

answer

Walmart's logistics and distribution.

question

All firms are subject to offensive challenges from rivals. The intent of the best defensive move is to:

answer

All of these

question

Which of the following is NOT a purpose of a defensive strategy?

answer

To increase the risk of having to defend an attack

question

Which of the following ways are employed by defending companies to fend off a competitive attack?

answer

Gain product line exclusivity to force competitors to use other distributors.

question

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?

answer

To dissuade challenges from attacking or diverting them into using less threatening options.

question

Which of the following signals would NOT warn challengers that strong retaliation is likely?

answer

Announcing strong quarterly earnings potential to financial analysts.

question

Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when:

answer

market uncertainties make it difficult to ascertain what will eventually succeed.

question

In which of the following instances is being a first-mover NOT particularly advantageous?

answer

When markets are slow to accept the innovative product offering of a first-mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover.

question

First-mover disadvantages (or late-mover advantages) rarely ever arise when:

answer

the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment

question

In which of the following cases are late-mover advantages (or first-mover disadvantageous) NOT likely to arise?

answer

When opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand.

question

Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is:

answer

to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

question

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when:

answer

the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover

question

For every emerging opportunity there exists:

answer

a market penetration curve, and this typically has an inflection point where the business model falls into place

question

Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask?

answer

Did the company pour too many resources into getting ahead of the market opportunity?

question

What does the scope of the firm refer to?

answer

The range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses

question

The range of products and service segments that the firm serves within its market is known as the firm's:

answer

horizontal scope

question

The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as:

answer

vertical scope

question

The difference between a merger and an acquisition is that:

answer

a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).

question

The difference between a merger and an acquisition relates to:

answer

the details of ownership, management control, and the financial arrangements.

question

Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions?

answer

To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy.

question

Mergers and acquisitions are often driven by such strategic objectives as:

answer

expanding a company's geographic coverage or extending its business into new product categories.

question

Merger and acquisition strategies:

answer

may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry

question

What outcomes do horizontal merger and acquisition strategies intend?

answer

All of these

question

Mergers and acquisitions:

answer

frequently do not produce the hoped-for outcomes.

question

A primary reason for why mergers and acquisitions sometimes fail is due to the:

answer

misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.

question

Vertical integration strategies:

answer

extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain.

question

The two best reasons for investing company resources in vertical integration (either forward or backward) are to:

answer

add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability

question

A vertical integration strategy can expand the firm's range of activities:

answer

backward into sources of supply and/or forward toward end users.

question

When firms are involved in a mix of in-house and outsourced activity in any given stage of the vertical chain, it is called:

answer

tapered integration

question

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company:

answer

must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality.

question

Vertical integration can lower costs by:

answer

facilitating the coordination of production flows and avoiding bottlenecks

question

Which of the following is NOT a potential advantage of backward vertical integration?

answer

Reduced business risk because of controlling a bigger portion of the overall industry value chain.

question

Backward vertical integration can produce:

answer

a differentiation-based competitive advantage when activities enhance the performance of the final product

question

The strategic impetus for for forward vertical integration is to:

answer

gain better access to end users and better market visibility

question

Which of the following is typically the strategic impetus for forward vertical integration?

answer

Gaining better access to end users and better market visibility.

question

Which of the following is NOT a strategic disadvantage of vertical integration?

answer

Vertical integration reduces the opportunity for achieving greater product differentiation.

question

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if:

answer

it reinforces the brand, enhances customer, satisfaction, and results in lower prices to end users.

question

A strategy of vertical integration can have substantial drawbacks, including:

answer

the environmental cost of coordinating operations across vertical chain activities.

question

A strategy of vertical integration can have both important strengths and weaknesses and depends on:

answer

All of these

question

An outsourcing strategy:

answer

involves farming out certain value chain activities presently performed in-house to outside vendors.

question

The two big drivers of outsourcing are:

answer

that outsiders can often perform certain activities better of more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).

question

Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense EXCEPT when:

answer

it restricts a company's ability to assemble diverse kinds of expertise speedily and efficiently.

question

Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house?

answer

Enables a company to gain better access to end users and better market visibility.

question

Relying on outsiders to perform certain value chain activities offers such strategic advantages as:

answer

reducing the company's risk exposure to changing technology and/or changing buyer preferences.

question

Outsourcing strategies can offer such advantages as:

answer

obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.

question

The big risk of employing an outsourcing strategy is:

answer

hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success

question

Strategic alliances

answer

are collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective

question

A strategic alliance

answer

is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, the joint contribution of resources, shared risk, shared control, and mutual dependence.

question

Which of the following is NOT a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement?

answer

The alliance helps the company obtain additional financing on better credit terms.

question

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to:

answer

help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry.

question

Which of the following is NOT one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits?

answer

Minimizing the amount of resources that the partners commit to the alliance.

question

Capturing the benefits of strategic alliances is not easy, but success generally is a function of six factors, except when:

answer

ensuring the division of work is directly apportioned to appropriate skill sets.

question

Which of the following is NOT a typical reason that many alliances prove unstable or break apart?

answer

Disagreement over how to divide the profits gained from joint collaboration.

question

Experience indicates that strategic alliances:

answer

can suffer culture clash and integration problems due to different management styles and business practices.

question

The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is:

answer

becoming dependent on other companies for essential expertise and capabilities.

question

The principal advantage of strategic alliances over vertical integration or horizontal mergers/acquisitions is defined best by:

answer

resource pooling and risk sharing, more adaptive response capabilities, and the speed of deployment wherewithal.

question

A company that has greater success in managing their strategic alliances can credit all of the following, EXCEPT:

answer

creating organizational learning barriers across boundaries

question

A company that fails in managing their strategic alliance probably has not:

answer

All of these

question

Alliance management is considered an organizational capability and:

answer

develops over time, out of effort and learning.

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