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Exam 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

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Question 21

Multiple Choice

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Staples Business Depot's strategy in Canada is to deliberately limit its product selection for the purpose of:

A) focusing on quality.
B) focusing on quantity.
C) shedding customers.
D) building the brand.

E) A) and D)
F) A) and C)

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Question 22

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Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

A) differentiation
B) overall cost leadership
C) differentiation focus
D) stuck-in-the-middle

E) A) and C)
F) A) and B)

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Question 23

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Generic strategies include all except

To generate above average returns, a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers.

Which of the following are good examples of firms that follows the strategy of differentiation on the basis of prestige or brand image?

One pitfall of a differentiation strategy is that a brand's identification in the marketplace may become diluted through excessive product line extensions.

One of the advantages of high differentiation is that even if many competitors follow the same strategy, differentiation still exists for all.

The focus strategy refers to focusing on the "non-price" attributes of a company's products.

High product differentiation is generally accompanied by

Explain how a differentiation strategy enables a business to address the five competitive forces in such a way that it can enjoy high levels of profitability.

Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders.

Use the value chain as a framework to explain how the competitive advantage of differentiation can create products and/or services that are highly valued by customers.

Which of the following is not a potential pitfall of a differentiation strategy?

An important pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become "stuck-in-the-middle."

Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle.

Differentiation improves a firm's competitive position by:

Focus, by itself, often constitutes a competitive advantage.

Support value chain activities that involve excellent applications, engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?

A firm following a focus strategy

A pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.