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Ch. 5 Multiple Choice

front 1

A company's competitive strategy deals with

back 1

A. Management's game plan for competing successfully—the specific efforts to please customers, offensive and defensive moves to counter the maneuvers of rivals, the reactions and responses to whatever market conditions prevail at the moment and the initiatives undertaken to improve the company's market position

front 2

The objective of competitive strategy is to

back 2

B. Knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences

front 3

A company achieves competitive advantage whenever

back 3

E. It has some type of edge over rivals in attracting customers and coping with competitive forces

front 4

A company can be said to have competitive advantage if

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C. It has some type of edge over rivals in attracting customers and coping with competitive forces

front 5

While there are many routes to competitive advantage, they all involve

back 5

B. Delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match

front 6

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

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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

front 7

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

back 7

E. A market share dominator strategy

front 8

The generic types of competitive strategies include

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C. Low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation

front 9

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

back 9

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

front 10

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

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D. Meaningfully lower overall costs than competitors

front 11

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

back 11

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

front 12

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

back 12

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

front 13

The major avenues for achieving a cost advantage over rivals include

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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

front 14

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

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D. Buyers are large and have significant power to bargain down prices; buyers use the product in much the same ways; and buyers have low switching costs

front 15

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?

back 15

E. Outsourcing all production-related activities

front 16

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

back 16

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

front 17

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

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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

front 18

Achieving a cost advantage over rivals entails

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C. Out-managing rivals in performing value chain activities cost-effectively and finding creative ways to cut cost-producing activities out of the value chain

front 19

The best evidence that a company is the industry's low-cost provider is that

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B. It has lower overall per unit costs for its product/service than other competitors in the industry

front 20

A company pursuing a low-cost leadership strategy must generally

back 20

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

front 21

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

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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

front 22

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

back 22

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

front 23

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

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C. Price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products

front 24

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?

back 24

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

front 25

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

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C. The offerings of rival firms are essentially identical, standardized, commodity-like products

front 26

In which of the following circumstances is a low-cost leadership strategy NOT likely to be particularly successful?

back 26

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

front 27

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

back 27

B. Trying to set the industry's price ceiling

front 28

The essence of a broad differentiation strategy is to

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E. Be unique in ways that are valuable and appealing to a wide range of buyers

front 29

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

back 29

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

front 30

Successful differentiation allows a firm to

back 30

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)

front 31

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

back 31

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

front 32

A broad differentiation strategy improves profitability when

back 32

D. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

front 33

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

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C. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

front 34

Using a broad differentiation strategy to produce an attractive competitive advantage is LEAST LIKELY to be based on

back 34

E. Undercutting the prices being charged by rivals

front 35

Opportunities to differentiate a company's product offering

back 35

C. Can exist in activities all along an industry's value chain

front 36

Easy-to-copy differentiating features

back 36

A. Cannot produce sustainable competitive advantage

front 37

The most appealing approaches to differentiation are

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E. Those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal

front 38

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

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

front 39

A differentiation-based competitive advantage

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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

front 40

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

back 40

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

front 41

Achieving a differentiation-based competitive advantage can involve

back 41

A. Incorporating product attributes and user features that lower a buyer's overall cost of using the product
B. Incorporating features that raise the performance a buyer gets from using the product
C. Incorporating features that enhance buyer satisfaction in non-economic or intangible ways
D. Delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match
E. All of the above are viable ways of building competitive advantage via differentiation

front 42

Broad differentiation strategies are well-suited for market circumstances where

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A. There are many ways to differentiate the product or service and many buyers perceive these differences as having value

front 43

Broad differentiation strategies generally work best in market circumstances where

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A. Buyer needs and preferences are too diverse to be fully satisfied by a standardized product

front 44

A broad differentiation strategy works best in situations where

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

front 45

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

back 45

B. Buyer needs and uses of the product are diverse

front 46

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

back 46

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

front 47

The pitfalls of a differentiation strategy include

back 47

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

front 48

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

back 48

A. Trying to STRONGLY differentiate the company's product from those of rivals rather than be content with WEAK product differentiation

front 49

Which one of the following statements about pursuing a broad differentiation strategy is false?

back 49

B. The best opportunities for achieving strong product differentiation are in the production technology and marketing portions of the value chain

front 50

A company achieves best-cost provider status by

back 50

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

front 51

A firm pursuing a best-cost provider strategy

back 51

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)

front 52

Best-cost provider strategies

back 52

D. Aim at giving customers more value for the money

front 53

The objective of a best-cost provider strategy is to

back 53

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)

front 54

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

back 54

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)—thereby achieving a value-based competitive advantage

front 55

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

back 55

B. Resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes

front 56

The competitive advantage of a best-cost provider is

back 56

C. Its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes

front 57

The target market of a best-cost provider is

back 57

A. Value-conscious buyers

front 58

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

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A. Diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value

front 59

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

back 59

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

front 60

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

back 60

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

front 61

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

back 61

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

front 62

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

back 62

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

front 63

Companies pursuing a focused low-cost or focused differentiation strategy strive to

back 63

C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry

front 64

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

back 64

E. Serving buyers in the target market niche at a lower cost and lower price than rivals

front 65

The chief difference between a low-cost leader strategy and a focused low-cost strategy is

back 65

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

front 66

A focused differentiation strategy aims at securing competitive advantage

back 66

C. With a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers

front 67

A focused low-cost strategy can lead to attractive competitive advantage when

back 67

E. A firm can lower costs significantly by limiting its customer base to a well-defined buyer segment; its two options for achieving a low-cost advantage are (1) out-managing rivals in controlling the factors that drive costs and (2) reconfiguring its value chain in ways that deliver a cost edge over rivals

front 68

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

back 68

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

front 69

Which one of the following does NOT represent market circumstances that make a focused low-cost or focused differentiation strategy attractive?

back 69

E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy

front 70

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

back 70

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

front 71

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

back 71

C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority

front 72

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

back 72

B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features

front 73

The keys to sustaining a broad differentiation strategy are

back 73

A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features

front 74

The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to

back 74

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

front 75

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

back 75

B. A "stuck-in-the-middle" strategy