Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Differentiation provides lower margins that enable a firm to deal with supplier power.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.

Accepted Answer

A) True 
 B)False

Question 5

A firm following a focus strategy

Accepted Answer

A)   must focus on governmental regulations.
B)   must focus on a market segment or group of segments.
C)   must focus on the rising cost of inputs.
D)   must avoid entering international markets.E) A) and B)
F) B) and D)

Question 6

Research has consistently shown firms that achieve both cost and differentiation advantages tend to perform

Accepted Answer

A)   at about the same level as firms that achieve either cost or differentiation advantages.
B)   about the same as firms that are "stuck-in-the-middle."
C)   lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
D)   higher than firms that achieve either a cost or a differentiation advantage.E) A) and D)
F) B) and C)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Focus, by itself, often constitutes a competitive advantage.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

A)   Differentiation
B)   Overall cost leadership
C)   Differentiation focus
D)   Stuck-in-the middleE) All of the above
F) None of the above

Question 10

Which of the following is a disadvantage of a cost leadership strategy?

Accepted Answer

A)   The strategy is too easily imitated.
B)   It attempts to stay ahead of the competition may lead to gold plating.
C)   Cost differences increase as the market matures.
D)   Producers are more able to withstand increases in suppliers' cost.E) None of the above
F) C) and D)

Question 11

Staple's strategy in Canada is to deliberately limit its product selection to:

Accepted Answer

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

Question 12

A manufacturing business pursuing cost leadership will likely

Accepted Answer

A)   focus on a narrow market segment.
B)   rely on experience effects to raise efficiency.
C)   use advertising to build brand image.
D)   overemphasize product engineering.E) A) and B)
F) None of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

Accepted Answer

A) True 
 B)False

Question 16

Firms that compete on overall cost are vulnerable if all rivals share a common input or raw material that contributes a significant amount to total costs.

Accepted Answer

A) True 
 B)False

Question 17

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

Accepted Answer

An overall low-cost position enables a f...

Question 18

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.

Accepted Answer

A) True 
 B)False

Question 19

Generic strategies include all, except

Accepted Answer

A)   differentiation.
B)   resources exploitation.
C)   cost leadership.
D)   focus.E) C) and D)
F) B) and C)

Question 20

A ____________ can be defined as the total profits in an industry at all points along the industry's value chain.

Accepted Answer

A)   profit maximizer
B)   revenue enhancer
C)   profit pool
D)   profit outsourcerE) A) and B)
F) B) and C)

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

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.

Correct AnswerverifiedShow Answer

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

Correct AnswerverifiedAn overall low-cost position enables a f...View AnswerShow Answer

A manufacturing business pursuing cost leadership will likely

Correct AnswerverifiedShow Answer

Firms that compete on overall cost are vulnerable if all rivals share a common input or raw material that contributes a significant amount to total costs.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Staple's strategy in Canada is to deliberately limit its product selection to:

Correct AnswerverifiedShow Answer

Generic strategies include all, except

Correct AnswerverifiedShow Answer

A firm following a focus strategy

Correct AnswerverifiedShow Answer

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?

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Which of the following is a disadvantage of a cost leadership strategy?

Correct AnswerverifiedShow Answer

Research has consistently shown firms that achieve both cost and differentiation advantages tend to perform

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Focus, by itself, often constitutes a competitive advantage.

Correct AnswerverifiedShow Answer

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A ____________ can be defined as the total profits in an industry at all points along the industry's value chain.

Correct AnswerverifiedShow Answer

Differentiation provides lower margins that enable a firm to deal with supplier power.

Correct AnswerverifiedShow Answer

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An overall low-cost position enables a f...
View Answer

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