5-T/F
A cost leadership strategy is not susceptible to the risk of reduced flexibility.
FALSE
Many firms facing a turnaround situation try to reduce their costs by outsourcing the production of many inputs.
TRUE
A disadvantage of firms that successfully integrate overall cost leadership and a differentiation strategy is that they are relatively easy for competitors to imitate.
FALSE
A firm can attain an overall cost leadership position by increasing the management layers in order to reduce overhead costs.
FALSE
A firm striving for cost leadership will typically spend relatively more on product related R&D than on process related R&D.
FALSE
A need for turnaround occurs only during the maturity or declining stage of the life cycle.
FALSE
A successful differentiation strategy increases rivalry since buyers become more price-sensitive.
FALSE
A successful differentiation strategy lowers entry barriers because of customer loyalty and the ability of the firm to provide uniqueness in its products and services.
FALSE
An important idea behind the profit pool concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.
FALSE
Businesses that compete in markets that are in decline should simply be harvested or divested since they are no longer profitable.
FALSE
Competitive advantage is not affected by actions by rivals from within and outside of the industry.
FALSE
Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.
FALSE
During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development, or other investments, while hoping that competitors will exit the market.
FALSE
During the growth stage of the market life cycle, customers are very likely to establish brand loyalty.
FALSE
Focus, by itself, often constitutes a competitive advantage.
FALSE
Given the attractiveness of premium pricing during the growth stage of the market life cycle, managers should emphasize short-term results to increase profits.
FALSE
If a firm has a successful differentiation strategy, it is necessary to attain parity on cost.
FALSE
The Internet has provided a small subset of companies with greater tools for managing costs.
FALSE
The Internet offers few advantages for focusers because niche players and small companies cannot implement capabilities as effectively as their larger competitors.
FALSE
The decline stage of the industry life cycle stage is inevitably followed by death.
FALSE
The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur
FALSE
The three generic strategies presented by Michael Porter can be shown on two dimensions: competitive advantage and product life cycle.
FALSE
The three generic strategies that Michael Porter believes a firm can use to overcome the five forces and achieve competitive advantage include overall price leadership.
FALSE
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.
FALSE
With reverse positioning, a strategy to be used during the mature stage of the industry life cycle, a product escapes its category by deliberately associating with a different one.
FALSE
A cost leadership strategy can be at risk of obsolescence of the basis of the cost advantage.
TRUE
A firm can attain an overall cost leadership position by purchasing media in large blocks and maximizing sales force utilization through territory management.
TRUE
A firm can attain an overall cost leadership position by using automated technology to reduce scrappage rates.
TRUE
A potential pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.
TRUE
A potential pitfall of a focus strategy is that over time the cost advantages in a narrow market niche can erode, leaving the company with little profit.
TRUE
An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost.
TRUE
An important potential 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.
TRUE
As markets mature the magnitude of differentiation and cost leadership advantages among competitors decrease.
TRUE
As markets mature, competition on the basis of differentiation is preferable to price competition.
TRUE
Firms that compete on overall cost leadership are vulnerable if there is an increase in the cost of the inputs on which the advantage is based.
TRUE
In technology intensive industries, the duration of competitive advantages is declining.
TRUE
Incumbent firms that thought a niche market was too small to enter in the past may use Internet technologies to enter that segment with focusers.
TRUE
Mass customization enables manufacturers to be more responsive to customer demands for high quality products.
TRUE
Most analysts agree that use of the Internet will lower transaction costs.
TRUE
One potential pitfall of a differentiation strategy is that identification of the brand in the marketplace may become diluted through excessive product line extensions.
TRUE
One way the Internet and digital technologies are creating opportunities for firms with differentiation strategies is by enabling mass customization.
TRUE
The French automobile maker, Renault, attains competitive advantage by revamping cars to be more cost efficient.
TRUE
The example of Lexus automobiles in the text points out that a firm can strengthen its differentiation strategy by achieving integration at multiple points along the value chain.
TRUE
The experience curve concept suggests that production costs tend to decrease as production increases.
TRUE
The software maker, Intuit, successfully implemented a turnaround strategy by discontinuing product lines and focusing all resources on a few core profitable areas.
TRUE
Too much focus on one or a few value-chain activities can be a pitfall of the overall cost leadership strategy.
TRUE
