Question 1

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

Accepted Answer

A)  that management undertake formal planning sessions with functional departments to ensure productivity improvement.
B)  the identification of strengths and weaknesses within the company.
C)  matching corporate identity with the corporate culture in order to integrate effort and build sales momentum.
D)  performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match.
E)  constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium.F) A) and B)
G) A) and D)

Question 2

From the list below, identify the company that is not the lowest-cost provider in its industry.

Accepted Answer

A)  Southwest Airlines
B)  Walmart
C)  Nucor Steel
D)  CNN
E)  AmazonF) None of the above
G) A) and D)

Question 3

The essence of a broad differentiation strategy is to

Accepted Answer

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)  offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.F) A) and E)
G) D) and E)

Question 4

Approaches to enhancing differentiation through changes in the value chain do not include

Accepted Answer

A)  coordinating with retailers to enhance the buying experience and building a company's image.
B)  coordinating with suppliers to speed up new product development cycles.
C)  coordinating with distributors or shippers to lower shipping costs.
D)  collaborating with suppliers to improve many dimensions affecting product features and quality.
E)  coordinating with employees to create a greater incentive system to encourage worker productivity.F) A) and B)
G) C) and D)

Question 5

What strategy would you recommend for a small-sized company entering a highly segmented market, each segment with a complex set of needs and spending power?

Accepted Answer

A focused low-cost strategy or a focused...

Question 6

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

Accepted Answer

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.F) A) and B)
G) A) and C)

Question 7

Provide two examples of companies pursuing a low-cost strategy and two examples of companies pursuing a best-cost strategy and explain how their strategic targets are similar or different.

Accepted Answer

The strategic target of a low-cost provi...

Question 8

Brands create customer loyalty, which in turn

Accepted Answer

A)  increases the perceived cost of switching to another product.
B)  strengthens the product's quality.
C)  validates the motivation for alternate products.
D)  provides monetary incentive for using the product.
E)  allows a company to operate facilities at full capacity.F) A) and B)
G) A) and C)

Question 9

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

Accepted Answer

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.
E)  communicate the product's ability to serve the customer's every need.F) B) and C)
G) C) and D)

Question 10

Describe the two basic cost-reducing approaches a company can take to become a low-cost provider in its industry.

Accepted Answer

The two basic cost-reducing approaches a...

Question 11

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

Accepted Answer

A)  have suppliers locate their plants close to companies' own facilities.
B)  continue to utilize traditional methods of distribution and sales.
C)  not make any changes in product manufacturing but change end distribution methods.
D)  increase extra services to increase staffing requirements.
E)  facilitate the learning curve by providing superior training to new employees.F) A) and D)
G) A) and B)

Question 12

To attain a differentiation-based competitive advantage, a company would be UNLIKELY to

Accepted Answer

A)  deliver value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well-matched to the requirements of the strategy.
B)  utilize research and development to incorporate tangible features that raise product performance and increase customer satisfaction with the product.
C)  incorporate product attributes and user features that lower the buyer's overall costs of using the company's product.
D)  appeal to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes.
E)  build in product design features that enhance buyer satisfaction in intangible or noneconomic ways.F) All of the above
G) C) and D)

Question 13

What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain what a company has to do to achieve this advantage.

Accepted Answer

Best-cost strategies create competitive ...

Question 14

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

Accepted Answer

A)  of the standardization 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)  buyer satisfaction cannot be achieved until a product's value is promoted through clever ads.
D)  differentiation is all about selling products to sophisticated buyers.
E)  there are no other ways to differentiate a product.F) C) and D)
G) C) and E)

Question 15

A low-cost provider strategy can defeat a differentiation strategy when

Accepted Answer

A)  sellers are not charging a price premium.
B)  many rivals are pursuing a similar differentiation approach.
C)  a company can offset thinner profit margins per unit by selling enough additional units to increase total profits.
D)  there are few ways to differentiate a product or a service and many buyers perceive these differences valuable.
E)  customers are basically satisfied and don't think extra attributes are worth a higher price.F) B) and D)
G) None of the above

Question 16

A generic strategy to become an industry's overall low-cost provider would not be particularly well-matched to a customer-market characterized by

Accepted Answer

A)  offerings of rival firm that are essentially identical and readily available from many eager sellers.
B)  limited possibilities to achieve differentiation that have value to buyers.
C)  price competition among rival sellers is especially vigorous.
D)  widely varying buyers' needs and special requirements, and the prices of substitute products are relatively high.
E)  a few, large-volume buyers account for the preponderance of industry sales.F) C) and D)
G) None of the above

Question 17

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

Accepted Answer

A)  achieving significantly lower costs in providing the upscale features.
B)  providing significantly better product attributes in order to justify a price above what low-cost leaders are charging.
C)  matching the company's resources and capabilities to a low-cost provider status.
D)  motivating buyers to purchase upscale features that match rivals.
E)  achieving the lowest costs in the industry.F) None of the above
G) All of the above

Question 18

A low-cost leadership strategy becomes competitively powerful when

Accepted Answer

A)  buyers of the product or service use the product or service in the same ways.
B)  the offerings of rival firms are essentially unique, different, and customized to end users.
C)  price competition among rivals is absent.
D)  buyers prefer that the products/services of competing sellers have widely varying attributes and prices.
E)  buyers have high switching costs.F) All of the above
G) A) and D)

Question 19

The objective of a best-cost provider strategy is to

Accepted Answer

A)  deliver superior value to value-conscious buyers at a comparatively lower price than rivals.
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.F) D) and E)
G) B) and C)

Question 20

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

Accepted Answer

A)  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.
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.
D)  there are numerous buyer segments, buyer needs are diverse across these segments, only a few of the segments are growing rapidly, and sellers' products are strongly differentiated.
E)  buyers are more performance-conscious than value-conscious.F) A) and D)
G) A) and C)

Exam 5: The Five Generic Competitive Strategies

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

Correct AnswerverifiedShow Answer

Provide two examples of companies pursuing a low-cost strategy and two examples of companies pursuing a best-cost strategy and explain how their strategic targets are similar or different.

Correct AnswerverifiedThe strategic target of a low-cost provi...View AnswerShow Answer

What strategy would you recommend for a small-sized company entering a highly segmented market, each segment with a complex set of needs and spending power?

Correct AnswerverifiedA focused low-cost strategy or a focused...View AnswerShow Answer

Describe the two basic cost-reducing approaches a company can take to become a low-cost provider in its industry.

Correct AnswerverifiedThe two basic cost-reducing approaches a...View AnswerShow Answer

Brands create customer loyalty, which in turn

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A low-cost leadership strategy becomes competitively powerful when

Correct AnswerverifiedShow Answer

From the list below, identify the company that is not the lowest-cost provider in its industry.

Correct AnswerverifiedShow Answer

A low-cost provider strategy can defeat a differentiation strategy when

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Approaches to enhancing differentiation through changes in the value chain do not include

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The essence of a broad differentiation strategy is to

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

Correct AnswerverifiedShow Answer

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

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What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain what a company has to do to achieve this advantage.

Correct AnswerverifiedBest-cost strategies create competitive ...View AnswerShow Answer

To attain a differentiation-based competitive advantage, a company would be UNLIKELY to

Correct AnswerverifiedShow Answer

The objective of a best-cost provider strategy is to

Correct AnswerverifiedShow Answer

A generic strategy to become an industry's overall low-cost provider would not be particularly well-matched to a customer-market characterized by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The strategic target of a low-cost provi...
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A focused low-cost strategy or a focused...
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The two basic cost-reducing approaches a...
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Best-cost strategies create competitive ...
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