Q&A Hero

Q: Under the framework of competitive action and response, "ability" refers to an attacking or responding firm's knowledge of the competitive market characteristics. a. True b. False

Q: Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets. a. True b. False

Q: To be a first mover, the firm must have readily available resources to invest in R&D as well as to rapidly and successfully produce and market a stream of innovative products. a. True b. False

Q: Two firms, such as a small local, family-owned Italian restaurant and Olive Garden share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors. a. True b. False

Q: Extensive market commonality guarantees intense competition in an industry. a. True b. False

Q: It is more likely that locally owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town. a. True b. False

Q: In general, strategic actions elicit fewer competitive responses than do tactical actions. a. True b. False

Q: Walmart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Walmart's competitive actions is a viable long-term option, because although the companies have high market commonality they have little resource similarity. These small retailers are correct in their decision. a. True b. False

Q: An organization with high profitability, such as Walmart, will be able to develop high organizational slack. a. True b. False

Q: Disney is an example of a firm in a slow-cycle market because its animated characters are shielded from imitation by copyrights and trademarks. a. True b. False

Q: "Competitive dynamics" indicates that firms and their strategic actions are independent. a. True b. False

Q: Carl has just graduated with a management degree. He has a good understanding of his personal strengths and weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target firms in slow-cycle markets. a. True b. False

Q: Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but who remain flexible and act like small firms (i.e., are able to launch a variety of actions) will be more successful against rivals. a. True b. False

Q: Patent laws and regulatory requirements such as required FDA (Food and Drug Administration) approval to launch new products shield pharmaceutical companies' positions in this slow-cycle market. a. True b. False

Q: Bayou Belle Water sells water drawn only from a single artesian well in Southern Louisiana. It has a loyal following in its region. Because Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do, Bayou Belle has high resource similarity with these international firms. a. True b. False

Q: Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action. a. True b. False

Q: Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate. a. True b. False

Q: Even if the effects of a competitor's strategic action on the focal firm are significant (e.g., loss of market share), little response is likely from that firm. a. True b. False

Q: A firm can predict that a competitor whose products suffer from poor quality is likely to be less aggressive in its competitive actions until those quality problems are corrected. a. True b. False

Q: The need for quality products and services is so high that quality alone can assure a firm that it will achieve strategic competitiveness and earn above-average returns. a. True b. False

Q: A strategy's success is determined not only by the firm's initial competitive actions but also by how well it anticipates competitors' responses to them and by how well the firm anticipates and responds to its competitors initial actions. a. True b. False

Q: Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each. a. True b. False

Q: The satellite dish at Faye's weekend home has malfunctioned. When she calls to have the dish repaired, the service representative tells her that the dish is obsolete and that parts for it are no longer made. Faye must replace the old dish with a new dish. This is an example of lack of firm loyalty to a product in a fast-cycle market. a. True b. False

Q: Define strategy and business-level strategy. What is the difference between these two concepts?

Q: Describe how a differentiation strategy can help a firm earn above-average returns.

Q: What are the risks of an integrated cost leadership/differentiation strategy?

Q: When a firm chooses a business-level strategy, it must answer the questions "Who? What? and How?" What are these questions and why are they important?

Q: Describe the additional risks undertaken by firms pursuing a focus strategy.

Q: Describe a firm with which you are familiar. Which business-level strategy does it use and what are the risk to that particular firm?

Q: Describe the advantages of integrating cost leadership and differentiation strategies.

Q: How do focused differentiation and focused cost leadership strategies differ from their non-focused counterparts?

Q: Discuss how a cost leadership strategy can allow a firm to earn above-average returns in spite of strong competitive forces. Address each of the five competitive forces.

Q: Describe the risks of a differentiation strategy.

Q: Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy. a. marketing and sales b. technology development c. logistics d. human resource management

Q: Which of the following is NOT a value-creating activity associated with the differentiation strategy? a. Developing policies to ensure efficient hiring and retention to keep costs low and implement training to ensure high employee efficiency. b. Providing accurate and timely delivery of goods to customers. c. Ensuring receipt of high quality supplies (raw materials and other goods). d. Developing flexible systems that allow rapid response to customers' changing needs.

Q: The benefit of a flexible manufacturing system is that: a. the lot size needed to manufacture a firm's product efficiently is reduced. b. the necessary skill levels of workers are reduced, allowing the firm to reduce costs. c. it lends itself to empowerment of employees. d. it captures the cost savings of economies of scale.

Q: Which of the following is TRUE? a. As customer loyalty increases, customers are more sensitive to price increases. b. Customer loyalty has a positive relationship with firm profitability. c. Customer loyalty is fragile and cannot reliably be considered a factor in firm success. d. Customer loyalty is of importance only to firms using the differentiation strategy.

Q: A firm's core strategy is its ____ strategy. a. corporate b. business c. pricing d. international

Q: An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouse's company transferred her to St. Paul. The decorator is distressed because the customers in his target market have, in his words, "banal and bourgeois taste." What is the decorator's problem? a. The decorator does not understand that customer needs are neither right nor wrong, good nor bad. b. The decorator has no core competencies that will transfer to his new geographic market. c. The decorator should choose a strategy of cost leadership in this environment. d. The decorator is highly affiliated with the new target market and understands how he can create value for it.

Q: A company using a narrow target market in its business strategy is: a. following a cost leadership business strategy. b. focusing on a broad array of geographic markets. c. limiting the group of customer segments served. d. decreasing the number of activities on its value chain.

Q: The products or services that are differentiated from others, have qualities that are: a. perceived by the customer to add value that they will pay a premium to purchase. b. valued by the typical industry customer. c. perceived as standardized by the customer. d. seen as classic attributes rather than passing fads.

Q: Target's brand promise "Expect More. Pay Less" and appeal to higher-income, fashion-conscious discount shoppers illustrates the _____ strategy. a. cost leadership b. differentiation c. focused differentiation d. integrated cost leadership/differentiation

Q: Chelsea Milling Company makes Jiffy packaged baking mixes. It was established in 1930. It has never spent one cent on advertising, which is one reason it is able to pursue a(n) ______ strategy. a. differentiation b. focused differentiation c. integrated cost leadership/differentiation d. cost leadership

Q: The typical risks of a cost leadership strategy include: a. the inability to balance high differentiation and low price. b. production and distribution processes becoming obsolete. c. excessive differentiation to the point where the customer base is too small. d. loss of customer loyalty.

Q: Three sources of flexibility in completing primary and support activities are particularly useful for firms using the integrated strategy. These are: a. flexible manufacturing systems, reengineering, and Total Quality Management. b. outsourcing, reengineering, and flexible manufacturing systems. c. outsourcing, Total Quality Management, and information networks. d. flexible manufacturing systems, Total Quality Management, and information networks.

Q: The integration of a cost leadership and a differentiation strategy: a. is challenging because it increases the number of value-chain activities and support functions in which the firm must become competent. b. forces a firm to adapt more slowly to changes in its environment. c. allows the firm to avoid being "stuck in the middle." d. requires such a large customer base that it is most practical for firms in the global marketplace.

Q: Reach is an especially critical dimension for which firm? a. Google b. J.C. Penney c. Blockbuster d. Colgate-Palmolive

Q: A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use: a. the integrated cost leadership/differentiation strategy. b. either of the focus strategies. c. the cost leadership strategy. d. any of the strategies except the focused differentiation strategy.

Q: In the animal food products business, food-product needs of owners of companion animals pets (e.g., dogs and cats) differ from the needs for food and health-related products of those owning production animals (e.g., livestock). Which of the following aspects of managing customer relationships does this choice refer to? a. Who: Determining the Customers to Serve b. What: Determining Which Customer Needs to Satisfy c. How: Determining Core Competencies Necessary to satisfy Customer Needs d. When: Determining When to Satisfy Customer Needs

Q: All of the following are considered generic business-level strategies EXCEPT: a. product diversification. b. cost leadership. c. focused differentiation. d. integrated cost leadership/differentiation.

Q: A cost leadership strategy provides goods or services with features that are: a. acceptable. b. unique. c. substandard. d. mediocre.

Q: By linking companies with their suppliers, distributors, and customers, ____ provide a company with flexibility. a. flexible manufacturing systems b. information networks c. Total Quality Management systems d. capabilities

Q: When implementing a focus strategy, the firm seeks to: a. offer products that are both differentiated and low cost. b. move into the global market. c. target the typical customer in an industry. d. serve the specialized needs of a market segment.

Q: A firm successfully implementing a differentiation strategy would expect: a. customers to be sensitive to price increases. b. to charge premium prices. c. customers to perceive the product as standard. d. to have high levels of power over suppliers.

Q: The Monteleone Company pays large fees to a highly recognizable, prestigious individual to be the spokesperson for the company's products, luxury private jets. Monteleone is probably following the: a. focused cost leadership strategy. b. focused differentiation strategy. c. integrated cost leadership/differentiation strategy. d. total quality strategy.

Q: Starbuck's determined that all of the following customer needs were important EXCEPT: a. low price. b. the experience associated with drinking coffee, not just the coffee. c. the actual product of service (e.g., a cup of coffee), not the experience. d. allowing customer to design their own drinks.

Q: When firms use core competencies to implement value-creating strategies they are answering the "______" question. a. who b. what c. why d. how

Q: Chico's is a clothing retailer that targets middle-aged women who want stylish and appealing clothes that are suitable for the mature figure. Chico's has an extensive customer list, a frequent-buyer discount card, and frequent sales promotions to Chico's customers based on their spending levels. Chico's uses a ____ strategy. a. focused differentiation based on a buyer group b. focused differentiation based on a product line segment c. generic differentiation d. integrated cost leadership/differentiation

Q: Stage in the family life cycle is a ______ factor. a. demographic b. socioeconomic c. psychological d. perceptual

Q: The new generation of lunch trucks serving high-end fare in cities such as New York, San Francisco, and Los Angeles share which of the following a business strategies? a. Cost leadership b. Focused differentiation c. Integrated cost leadership/differentiation d. Differentiation

Q: A flexible manufacturing system is: a. based on the use of temporary and part-time employees as well as outsourcing. b. a computer-controlled process that is used to produce a variety of products in moderate, flexible quantities with minimal human intervention. c. based on a 360-degree view of the company's relationships with customers. d. a system that identifies "the one best way" to produce each product in the company's line.

Q: Viewing the world through the customer's eyes and constantly seeking ways to create more value for the company enhances: a. the reach of the company toward the customer. b. the ability to identify the customer. c. the richness of the relationship with the customer. d. affiliation with the customer.

Q: Mercedes mass produces luxury vehicles at a premium price. It uses a(n) ______ strategy. a. differentiation b. focused differentiation c. integrated cost leadership/differentiation d. focused cost leadership

Q: Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in: a. the selection of industries in which the firm will compete. b. specific product markets. c. primary value chain activities. d. particular geographic locations.

Q: Amazon has built capabilities around Internet technology and e-commerce to facilitate information exchanges with its customers in a cost effective manner. This represents which of the three service dimension? a. Reach b. Richness c. Affiliation d. None of the these options are correct.

Q: All of the following are ways that a good or service can be differentiated EXCEPT: a. responsive customer service. b. perceived prestige and status. c. economies of scale and efficient operations. d. engineering design and performance.

Q: The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because: a. customers will seek out the lowest-cost product. b. customers of nondifferentiated products are sensitive to price increases. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry because it forces the firm to innovate.

Q: A nationwide chain of pet stores wishes to identify the tradeoffs that its customers are willing to make between low-cost products such as generic pet foods and differentiated features such as pick-up and delivery of pets for grooming. The best technique for this firm to learn this information would be to use: a. information networks. b. a flexible manufacturing system. c. differentiation development planning. d. Enterprise Resource Planning.

Q: TQM is most helpful to firms following the ____ business strategy. a. cost leadership b. integrated cost leadership/differentiation c. focused cost leadership d. focused differentiation

Q: Hyundai allows customers to return their cars if they lose their job within 12 months of purchase. Which of the following aspects of managing customer relationships is Hyundai engaged in? a. Who: Determining the Customers to Serve b. What: Determining Which Customer Needs to Satisfy c. How: Determining Core Competencies Necessary to satisfy Customer Needs d. When: Determining When to Satisfy Customer Needs

Q: Strategic fit among many activities (in an activity map) is fundamental to: a. the development of core competencies for a firm. b. the breadth of competitive scope for a firm. c. sustainability of a firm's competitive advantage. d. the integrity of the firm's value chain.

Q: The ______ dimension of relationships with customers is concerned with the firm's access and connection to customers. a. loyalty b. reach c. richness d. affiliation

Q: Business-level strategies are concerned specifically with: a. creating differences between the firm's position and its competitors. b. selecting the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.

Q: Zara has pioneered "cheap chic" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which business level strategy? a. Cost leadership b. Differentiation c. Integrated cost leadership/differentiation d. Stuck in the middle

Q: Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of: a. the perception of perceived prestige and status as a means of differentiating a product. b. the importance of high-quality raw materials when using the differentiation strategy. c. the risk of product imitation by competitors. d. the danger counterfeiting holds for firms pursuing the differentiation strategy.

Q: The term "stuck in the middle": a. means adhering to a middle of the road strategy in the face of negative outcomes. b. indicates that the customers of the firm are willing to pay only a mid-range price for the product. c. reflects the fact that the customers of the firm have only moderate expectations regarding product quality. d. means that the firm's cost structure is not low enough to allow it to attractively price its products and that its products are not sufficiently differentiated to create value for its target customer.

Q: The effectiveness of any of the generic business-level strategies is contingent upon: a. customer needs and competitors' strategies. b. the match between the opportunities and threats in its external market and the strengths of its internal environment. c. the trends in the general consumer base and the robustness of the global and industry economy. d. the firm's competitive scope and its competitive advantage.

Q: A company selling diapers knows the market is for people with young children. However, within that segment they can further divide the market by a demographic factor like: a. culture. b. lifestyle. c. consumption pattern. d. income.

Q: The typical risks of a differentiation strategy do NOT include which of the following? a. Customers may find the price differential between the low-cost product and the differentiated product too large. b. Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features. c. Counterfeit goods are widely available and acceptable to customers. d. Suppliers of raw materials erode the firm's profit margin with price increases.

Q: A company pursuing the differentiation or focused differentiation strategy would tend to: a. build economies of scale and efficient operations. b. develop and maintain cost-effective MIS operations. c. develop flexible systems that allow rapid response to customers' changing needs. d. have relationships with suppliers to maintain efficient flow of supplies for operations.