Business Policy Chapter 5 Flashcards

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Which one of the following is NOT the cost drivers shown in figure 5.2?

  • Raw materials and components, capacity utilization, and product design and production technology
  • Economies of scale and learning and experience effects
  • Bargaining power with suppliers and supply chain efficiency
  • Selling direct to consumers, advertising, and administrative activities
  • Outsourcing and vertical integration


What sets focused strategies apart from low-cost provider and broad differentiation strategies is...

concentrated attention on a narrow piece of the overall market--the target segment or market niche can be defined by geographic uniqueness, by specialized requirements in using the product, or by special product attributes that appeal only to those buyers who comprise the


A company can translate a low-cost advantage over rivals into attractive profit performance by...

either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or else by refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold.


Broad differentiation strategies are well-suited for market circumstances where...

there are many ways to differentiate the product or service that have value to buyers.


The pitfalls of a differentiation strategy include...

differentiating on the basis of attributes that produce an unenthusiastic response on the part of buyers (because they do not perceive the differentiating features as valuable or worth paying for).


Opportunities to differentiate a company's product offering..

can exist in activities all along an industry's value chain and usually entail focusing on one or more uniqueness drivers--factors that are particularly effective in creating differentiation.


The two biggest factors that distinguish one competitive strategy from another concern...

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


A low-cost provider strategy becomes increasingly appealing and competitively powerful when...

price competition among rival sellers is vigorous, the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers, and buyers incur low costs in switching their purchases from one seller to another.


A company can achieve a sustainable competitive advantage via differentiation by

incorporating product attributes and user features that (a) lower a buyer's overall cost of using the product, (b) raise product performance and deliver added value to the buyer/end-user and/or (c) enhance buyer satisfaction in intangible or non-economic ways.


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

  1. Broad differentiation strategy
  2. superior customer service strategy
  3. a low-cost provider strategy
  4. focused differentiation strategy
  5. best-cost provider strategy


To achieve a cost advantage over rivals, a company...

must either do a better job than rivals of performing value chain activities more cost-effectively and/or else revamp its overall value chain to eliminate or bypass some cost-producing activities.


Which one of the following is not a "uniqueness driver" and thus something that company managers can use to successfully achieve differentiation?

Labor efficiency and pay scales


A company's competitive strategy is unlikely to result in good performance or sustainable competitive advantage unless...

the company has a competitively valuable collection of resource strengths, competencies, and capabilities and unless its strategy is predicated on leveraging use of these resources.


A best-cost provider strategy...

seeks to defeat a low-cost provider strategy by attracting buyers on the basis of charging the best price for the best product produced at the best cost.


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

  1. Failing to recognize the risks that an innovative rival may discover an even lower lower-cost value chain approach or that the firm's cost advantage can be undermined by cost-saving technological breakthroughs
  2. Being greedy and trying to charge too high a price
  3. Overly aggressive price-cutting to win sales and market share away from rivals
  4. Not emphasizing avenues of cost advantage that can be kept proprietary or that relegate rivals to playing catch up
  5. Becoming too fixated on cost reduction


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

the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its resource strengths and capabilities and, also, to avoid the risk of overcrowding that occurs when too many rivals attempt to focus their energies on the same target segment.


The chief difference between a broad differentiation strategy and a focused differentiation strategy is...

the size of the buyer group that a company is trying to appeal to--a broad differentiation strategy is aimed at many buyer groups and market segments and a focused differentiation strategy is aimed at appealing to the unique preferences and needs of a narrow well-defined group of


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

ower overall costs than rivals--but not necessarily the absolutely lowest possible cost because a product offering that is too frills-free can undermine its attractiveness to buyers despite being cheaper priced.


Which of the following statements about a best-cost provider strategy is false?

The competitive advantage of a best-cost provider strategy is the ability to attract buyers on the basis of having the industry’s overall best-performing product and being in position to sell it at a price that is slightly below the industry-average price.


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

Improving product design and production techniques and striving hard to operate at full .