BSG Chapter 5 Flashcards

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A best-cost provider strategy

is a middle ground competitive approach aimed squarely at the sometimes great mass of value-conscious buyers looking for a good-to-very-good product or service at an economical price.


In which one of the following instances is a focused strategy keyed either to low-cost or differentiation not likely to work well?

most buyers use the product in the same ways, the products of rival sellers are essentially identical and readily available from many eager sellers, and price competition among rival sellers is vigorous.


A broad differentiation strategy enhances company profitability whenever

a company's product can command a sufficiently higher price to more than cover the added costs of achieving the differentiation


in which one of the following market circumstances is a broad differentiation strategy generally not well-suited?

when the product of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart.


The generic types of competitive strategies include

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


a competitive strategy aimed at being the industry's low-cost provider tends to work best when

most buyers use the product in the same ways, industry newcomers use introductory low prices to attract buyers and build a customer base, and buyers incur low costs in switching their purchases from one seller to another


successful differentiation allows a firm 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 really like the differentiating features and bond with the company and its products.


a company achieves low-cost leadership when

it becomes the industry's lowest-cost provider rather than just being on of perhaps several competitors with comparatively low costs


which of the following is not one of the pitfalls of a low-cost provider strategy?

being greedy and trying to charge to high a price


the competitive values of achieving lower overall costs than rivals depends on

whether it is relatively easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs -- the more rapidly that a company's cost advantage can evaporate, the less valuable it is.


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

the big appeal of a best-cost provider strategy is being able to offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry.


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


the risks of a focused strategy do not include which of the following?

the potential for buyer needs and uses of the product to become even more diverse


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).


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 van 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 market niche.


a company can achieve a sustainable competitive advantage via differentiation by

incorporating product attributes and user features that (a) lower a buyer's overall costs 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 ways.


a company's broad differentiation strategy fails (in the sense of not significantly boosting profitability or results in a competitive advantage) whenever

buyers don't value the brand's uniqueness and/or whenever a company's approach to differentiation is easily copied or matched by its rivals


which one of the following does not qualify as a "uniqueness driver" that can function as a pathway to differentiating a company's product/service?

charging a sufficiently low price to gain strong customer loyalty to the company's brand.


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 capacity.


a low-cost leader's basis for competitive advantage

lower 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 prices.


a strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focused (or market niche) strategy when

buyers incur low costs in switching their purchases from one seller to another and the products of rival sellers are essentially identical and in abundant supply from a number of eager sellers.


which one of the following is not among the types of cost drivers shown in Figure 5.2?

value chain efficiency and bargaining power with buyers


Broad differentiation strategies generally work best in market circumstances where

buyer needs and uses of the product are diverse, few rival firms are following a similar differentiation approach, technological change is fast-paced, and competition revolves around rapidly evolving product features.


For all types of competitive strategies, success in sustaining the intended competitive edge over rivals depends on having

at least some unique and valuable resources/capabilities that are either (1) hard for rivals to duplicate or (2) hard for rivals to develop offsetting close substitute resources/capabilities.


one way a company can translate a low-cost advantage over rivals into attractive profit performance is by

using its lower-cost edge to underprice competitors and attract price-sensitive buyers in great enough numbers to increase total profits.


a company achieves a best-cost provider status by

using its resources and capabilities to incorporate attractive upscale attributes at a lower cost than those rivals with comparable upscale product offerings.


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.


the chief difference between a low-cost provider strategy and a focused low-cost strategy is

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


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.


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

serving buyers in the target market niche at a lower cost and lower price than rival competitors--this requires performing value chain activities more cost effectively than rivals and/or finding innovative ways to bypass non-essential value chain activities.


which one fo the following is not a cost-saving approach that demonstrates effective management use of a company's cost drivers?

Conserving on marketing costs by cutting back on advertising expenditures.


The most appealing approaches to differentiation are those that

are hard or expensive for rivals to duplicate--easy-to-copy differentiating features cannot produce sustainable competitive advantage.


a broad differentiation strategy works best in situations where

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


which of the following is not among the best routes to achieving a sustainable competitive advantage via differentiation?

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


which of the following is not one of the five generic types of competitive strategy?

A best-value strategy


which one of the following statements about cost drivers is true?

The term cost drivers refers to a set of factors that have a strong effect on a company's costs and can be used as levers to lower costs.


which one of the following is not a "uniqueness driver" (as shown in Figure 5.3) and thus something that company managers can utilize to successfully achieve differentiation?

labor efficiency and pay scales


A broad differentiation strategy enhances profitability when

a company is able to either keep the costs of achieving differentiation below the added price premium the differentiating attributes can command in the marketplace or else offset thinner profit margins per unit by selling enough additional units to increase total profits.