Question 1

When competing on the basis of low-cost leadership,a primary objective is to:

Accepted Answer

A)   Lower manufacturing costs.
B)   Lower production costs.
C)   Lower supplier costs.
D)   Lower overall costs. D

Question 2

How are the benefits different for cost leadership versus differentiation when analyzing the power of suppliers to the industry?

Accepted Answer

Cost leaders are in the best position to...

Question 3

The opening case of Chapter 6 highlights the business-level strategy of Whole Foods.All of the following are part of this strategy EXCEPT:

Accepted Answer

A)   Adopting a new strategic intent to become the champion of healthy eating.
B)   Reducing costs through initiatives such as expanding its private-label offerings.
C)   Emphasizing its organic food offerings as the tool to compete on price.
D)   Improving its logistics system in order to improve efficiencies. C

Question 4

How does an experience curve help a business gain competitive advantage?

Accepted Answer

An experience curve captures both econom...

Question 5

When pursuing a cost-leadership strategy,a business must remember that:

Accepted Answer

A)   Buyers will be reluctant to pay for a product unless the quality is acceptable.
B)   Buyers will be reluctant to pay for a product unless the quality is superior.
C)   Buyers will be reluctant to pay for the product unless it is customized.
D)   Product quality is more important in a broad market than in a narrow one.

Question 6

Why are differentiation and cost-leadership described as generic business strategies?

Accepted Answer

These two strategies are called generic ...

Question 7

Value drivers are tools that help managers:

Accepted Answer

A)   Increase perceived value and decrease costs.
B)   Improve value chain activities and increase costs.
C)   Achieve a low-cost position and maintain perceived value.
D)   Achieve cost parity and maintain perceived value.

Question 8

When pursuing an integration strategy,managers use levers to help them simultaneously increase perceived value and lower costs.Which of the following is NOT one of these levers?

Accepted Answer

A)   Quality
B)   Complements
C)   Economies of scope
D)   Structure, culture, and routines

Question 9

Applying the five forces model to business-level strategy allows managers to assess the benefits and risks of both cost-leadership and differentiation strategies.

Accepted Answer

A) True 
 B)False

Question 10

Succeeding at an integration strategy is typically easy for a firm.

Accepted Answer

A) True 
 B)False

Question 11

The Tata Group of India is a widely diversified multinational company.In 2008,it bought Jaguar and Land Rover from Ford.It is hoping to leverage the prestige of these brands due to their global reputation.Then,in 2009 Tata introduced the Nano car,which is the lowest-priced car in the world.The rear hatch of the Nano can't be opened,and it has no radio or even a glove compartment.It can be said that the Tata Group of India is:

Accepted Answer

A)   Planning to move the Jaguar business unit from differentiated to an integration strategy.
B)   Pursuing the Chinese market with the Land Rover acquisition.
C)   Pursuing both a focused differentiation strategy and a focused cost-leadership strategy.
D)   Planning to move the Nano business unit from low-cost to an integration strategy.

Question 12

Understanding the productivity frontier is useful because of all of the following EXCEPT:

Accepted Answer

A)   It represents possible strategic positions a firm can take.
B)   It reflects the relationship between strategic positions, value creation, and costs.
C)   It helps a firm determine cost-differentiation trade-offs.
D)   It reflects which global markets will be the most productive to pursue in the future.

Question 13

When it comes to strategic positioning and generic business strategies,which of the following is TRUE:

Accepted Answer

A)   All of the business strategies are equally difficult to adopt.
B)   Only a few exceptional firms are able to balance the value-cost strategic trade-offs and adopt an integration strategy successfully.
C)   Once a firm has established itself with a strategy, it should stick with what it knows.
D)   Strategic positioning is not as critical to competitive advantage as is the firm's resources and economic environment.

Question 14

_________ is when a firm is searching for new knowledge that could enhance future performance.

Accepted Answer

A)   Boundary spanning
B)   Channel communication
C)   Exploitation
D)   Exploration

Question 15

Between 2007 and 2009,Microsoft spent close to $25 billion on R&D,the majority of which went to its new Windows 7 operating system.These costs were fixed.However,after Windows 7 hit the market,the marginal costs were basically zero.Since Microsoft expects to sell several hundred million copies of Windows 7,it can be said that:

Accepted Answer

A)   Microsoft has a competitive advantage because it has already spent the capital required for its new offering.
B)   Microsoft has a competitive advantage because it will be able to drive down per-unit costs of Windows 7 with each additional copy it sells.
C)   Since Microsoft will sell so many units of Windows 7, it has attained competitive parity within its strategic group.
D)   Microsoft will be at a competitive disadvantage unless it exceeds its sales forecasts because its marginal costs will change.

Question 16

Under the five forces model,a risk to a business with a cost-leadership strategy is:

Accepted Answer

A)   Competition switches from customer service to pricing.
B)   When technological innovations open up cost reductions for substitutes or competitors.
C)   New entrants are all start-up firms with low volumes.
D)   Suppliers request a 2% price increase across the industry. B

Question 17

Achieving differentiation parity along with lower costs is important to a low-cost leader because:

Accepted Answer

A)   The firm is then able to target a less price-sensitive customer market.
B)   Creating the same value as the competition, combined with lower costs, gives the firm a competitive advantage.
C)   The firm is then able to incorporate differentiating features that cause buyers to prefer its products.
D)   All of these.

Question 18

Strategy Highlight 6.1 discusses Toyota's recall challenges with its Lexus brand.All of the following are true EXCEPT:

Accepted Answer

A)   Toyota used the value driver of customer service when it called each owner individually for recommended repairs.
B)   By exceeding customer expectations, Toyota turned a serious threat into an opportunity by establishing brand reputation for superior customer service.
C)   Toyota's customer responsiveness enabled the firm to influence early adopters who became opinion leaders for influencing others to purchase a Lexus.
D)   Since the Lexus recall of the 1990s, Toyota leveraged firm experience effects and has successfully maintained quality leadership in the automobile industry with no major challenges.

Question 19

When the focus of competition is on differentiation,a firm tends to use all of these levers EXCEPT:

Accepted Answer

A)   New product launches.
B)   Cost input factors.
C)   Marketing and promotion.
D)   Unique product features.

Question 20

What is the difference between economies of scale and diseconomies of scale?

Accepted Answer

In economies of scale,each additional it...

Exam 6: Business Strategy: Differentiation, Cost Leadership, and Integration

When competing on the basis of low-cost leadership,a primary objective is to:

Correct Answer
verified
D

How are the benefits different for cost leadership versus differentiation when analyzing the power of suppliers to the industry?

Correct Answer
verified
Cost leaders are in the best position to...
View Answer

The opening case of Chapter 6 highlights the business-level strategy of Whole Foods.All of the following are part of this strategy EXCEPT:

Correct Answer
verified
C

How does an experience curve help a business gain competitive advantage?

Correct Answer
verified
An experience curve captures both econom...
View Answer

When pursuing a cost-leadership strategy,a business must remember that:

Correct Answer
verified

Why are differentiation and cost-leadership described as generic business strategies?

Correct Answer
verified
These two strategies are called generic ...
View Answer

Value drivers are tools that help managers:

Correct Answer
verified

When pursuing an integration strategy,managers use levers to help them simultaneously increase perceived value and lower costs.Which of the following is NOT one of these levers?

Correct Answer
verified

Applying the five forces model to business-level strategy allows managers to assess the benefits and risks of both cost-leadership and differentiation strategies.

Correct Answer
verified

Succeeding at an integration strategy is typically easy for a firm.

Correct Answer
verified

Correct Answer
verified

Understanding the productivity frontier is useful because of all of the following EXCEPT:

Correct Answer
verified

When it comes to strategic positioning and generic business strategies,which of the following is TRUE:

Correct Answer
verified

_________ is when a firm is searching for new knowledge that could enhance future performance.

Correct Answer
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Correct Answer
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Under the five forces model,a risk to a business with a cost-leadership strategy is:

Correct Answer
verified
B

Achieving differentiation parity along with lower costs is important to a low-cost leader because:

Correct Answer
verified

Strategy Highlight 6.1 discusses Toyota's recall challenges with its Lexus brand.All of the following are true EXCEPT:

Correct Answer
verified

When the focus of competition is on differentiation,a firm tends to use all of these levers EXCEPT:

Correct Answer
verified

What is the difference between economies of scale and diseconomies of scale?

Correct Answer
verified
In economies of scale,each additional it...
View Answer

Exam 6: Business Strategy: Differentiation, Cost Leadership, and Integration

When competing on the basis of low-cost leadership,a primary objective is to:

Correct AnswerverifiedD

How are the benefits different for cost leadership versus differentiation when analyzing the power of suppliers to the industry?

Correct AnswerverifiedCost leaders are in the best position to...View AnswerShow Answer

The opening case of Chapter 6 highlights the business-level strategy of Whole Foods.All of the following are part of this strategy EXCEPT:

Correct AnswerverifiedC

How does an experience curve help a business gain competitive advantage?

Correct AnswerverifiedAn experience curve captures both econom...View AnswerShow Answer

When pursuing a cost-leadership strategy,a business must remember that:

Correct AnswerverifiedShow Answer

Why are differentiation and cost-leadership described as generic business strategies?

Correct AnswerverifiedThese two strategies are called generic ...View AnswerShow Answer

Value drivers are tools that help managers:

Correct AnswerverifiedShow Answer

When pursuing an integration strategy,managers use levers to help them simultaneously increase perceived value and lower costs.Which of the following is NOT one of these levers?

Correct AnswerverifiedShow Answer

Applying the five forces model to business-level strategy allows managers to assess the benefits and risks of both cost-leadership and differentiation strategies.

Correct AnswerverifiedShow Answer

Succeeding at an integration strategy is typically easy for a firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Understanding the productivity frontier is useful because of all of the following EXCEPT:

Correct AnswerverifiedShow Answer

When it comes to strategic positioning and generic business strategies,which of the following is TRUE:

Correct AnswerverifiedShow Answer

_________ is when a firm is searching for new knowledge that could enhance future performance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the five forces model,a risk to a business with a cost-leadership strategy is:

Correct AnswerverifiedB

Achieving differentiation parity along with lower costs is important to a low-cost leader because:

Correct AnswerverifiedShow Answer

Strategy Highlight 6.1 discusses Toyota's recall challenges with its Lexus brand.All of the following are true EXCEPT:

Correct AnswerverifiedShow Answer

When the focus of competition is on differentiation,a firm tends to use all of these levers EXCEPT:

Correct AnswerverifiedShow Answer

What is the difference between economies of scale and diseconomies of scale?

Correct AnswerverifiedIn economies of scale,each additional it...View AnswerShow Answer

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D

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Cost leaders are in the best position to...
View Answer

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C

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An experience curve captures both econom...
View Answer

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These two strategies are called generic ...
View Answer

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B

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In economies of scale,each additional it...
View Answer