Chapter 4 (True or False)
A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in specific product markets.
TRUE
A flexible manufacturing system is a computer-controlled process used to produce a variety of products in moderate, flexible quantities with minimal manual intervention.
TRUE
A low-cost leader may create entry barriers to potential entrants by continually improving its levels of efficiency.
TRUE
A new generation of lunch trucks in cities such as New York, San francisco, and Los Angeles serving high-end fare such as hamburgers made from grass-fed cattle, escargot and crème brulee illustrate the focus cost leadership strategy.
TRUE
A risk of a focus strategy is that the needs of the customer within a narrow competitive segment may become more similar to those needs of customers in the whole market.
TRUE
A risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value for which customers are willing to pay.
TRUE
Almost any identifiable human or organizational characteristic can be used to subdivide a market into segments that differ from one another on a given characteristic.
TRUE
Although it is a cost leader, IKEA also offers differentiated features that appeal to its target customers, including its unique furniture designs, in-store playrooms for children, wheelchairs for customer use, and extended hours.
TRUE
An examination of a company's activity map will reveal its strategic themes.
TRUE
As shown in the Chapter 4 Opening Case, Starbucks was unable to control the quality of its experience across the thousands of its stores and hence lost its differentation.
TRUE
Business-level strategy can be thought of as the firm's core strategy.
TRUE
Counterfeit products are a serious problem for firms following the differentiation strategy.
TRUE
Effective use of the generic business strategies allows the firm to favorably position itself relative to the five forces.
TRUE
Essentially, there are only two basic competitive advantages: lower cost than rivals and the ability to differentiate.
TRUE
Firms implementing cost leadership strategies often sell no-frills standardized goods or services (but with competitive levels of differentation) to the industry's most typical customers.
TRUE
Global competition has increased the options for consumers and has made it more imperative for firms to identify the needs of customers in order to earn above-average returns.
TRUE
Low-cost leaders usually concentrate on the value chain activities of inbound logistics and outbound logistics as a means to reduce costs.
TRUE
The goal of business-level strategy is to earn above-average returns.
TRUE
The hazard of getting "stuck in the middle" applies to firms using any business strategy.
TRUE
To position itself differently from competitors, a firm must decide to either perform activities differently or to perform different activities.
TRUE
Virtually anything can be a basis for a firm to create a differentiated product or service.
TRUE
Walmart's actions (Chapter 4 Strategic Focus) of becoming more upscale with the intent of taking sales away from Target provided an opening for competitors such as Amazon and Family Dollar to better compete on the basis of price and attract several of Walmart's customer.
TRUE
When selecting a business level strategy, the firm determines who will be served, what customer needs will be satisfied, and how those needs will be satisfied.
TRUE
Zara offers current and desirable fashion goods at relatively low prices. To implement this strategy, Zara has sophisticated designers and effective means of managing costs. Zara is an example of the integrated cost leadership/differentiation strategy.
TRUE
Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity such as sales promotion or a process technology.
FALSE
The Li Ning Company's move from a cost leadership strategy to an integrated cost leadership/differentation strategy in the sportswear industry was so successful in China that both Nike and Adidas exited the Chinese market (Chapter 4 Strategic Focus).
FALSE
The activities in the value chains of companies using focus strategies are quite different than the activities in the value chains of companies using industry-wide business strategies.
FALSE
The best of the generic business strategies is the integrated cost leadership/differentiation strategy
FALSE
The difference between the cost leadership and differentiation business-level strategies, and the focused cost leadership and focused differentiation strategies, is their basis for customer value.
FALSE
The differentiation strategy is effective for products that are expensive, luxury consumer goods. It is not effective for common, inexpensive products such as doughnuts.
FALSE
The generalized forms of value that goods and services provide are either lower cost with acceptable features or highly differentiated features with acceptable cost.
FALSE
The integrated cost leadership/differentiation strategy is superior to the other business-level strategies.
FALSE
The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentation such as an engaging culture.
FALSE
The value-creating activities associated with the cost leadership strategy and differentation strategy are the same.
FALSE
Unlike a cost leadership and a differentiation strategy, both focus strategies are less dependent on the completion of various value chain and support activities in order to compete in a superior manner.
FALSE
A low-cost position in the industry is not a valuable defense against rivals when competing on the basis of price.
FALSE
A risk of The Li Ning Company's integrated cost leadership/differentation strategy is that it may end up "stuck-n-the-middle," i.e., not having either a low cost or a uniqueness advantage (Chapter 4 Strategic Focus).
FALSE
According to the Chapter 4 Opening Case, part of Starbucks' success in 2011 was the decision to cease introducing new products and to discontinue international expansion in order to focus on reinvigorating its primary brand - the Starbuck's coffee house.
FALSE
According to the Chapter 4 Strategic Focus, Walmart's change in strategy to attract more upscale customers was particularly successful especially against Family Dollar and Amazon.
FALSE
An English professor spends her summers writing low-brow romance novels that sell directly to paperback. She writes under a fictional name because she is embarrassed to admit to her colleagues and students how she earns the extra money for foreign vacations. The professor is correct in her concern that she is serving customer needs that are objectively inferior and bad.
FALSE
Because of its focus on innovation and quality manufacturing, Total Quality Management is not useful for firms which follow a cost leadership strategy.
FALSE
Changing consumer needs is illustrated by Starbucks' allowing consumers to have an experience rather than just a cup of coffee and to design their own drinks.
FALSE
Companies without the core competencies in their value chain activities and and support functions are still able to implement successfully a either a cost leadership or a differentiation strategy, although they cannot implement an integrated cost leadership/differentiation strategy.
FALSE
Every firm uses all levels of strategy: corporate, acquisition and restructuring, international and cooperative.
FALSE
Flexible manufacturing systems, information networks, and total quality management are three techniques that make it possible for firms to implement the focused differentiation strategy.
FALSE
Human resources and other support functions are not value-creating activities in the value chain; only the value chain activities create value.
FALSE
In general, firms can be most effective if they develop business-level strategies that will serve the needs of the "typical customer" in the industry.
FALSE
Kazoo Toys has successfully implemented an integrated cost leadership /differentiation strategy by creating value for parents and children interested in purchasing unique toys while simultaneously having access to unique services
FALSE
One of the benefits of the integrated cost leadership/differentiation strategy is that it is less risky than either the cost leadership or differentiation strategies.
FALSE
Research shows that firms using a hybrid strategy (i.e., integrated cost leadership/differentation) often outperform firms using pure strategies ( i.e., cost leadership or differentation).
FALSE
Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.
FALSE