Chapter 5

Which of the following is NOT one of the five generic types of competitive strategy? A. A low-cost provider strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. A market share dominator strategy

A market share dominator strategy

A company that succeeds in differentiating its product offering from those of its rivals can usually: A. avoid having to compete on the basis of simply a low price. B. command a premium price for its product. C. increase unit sales. D. gain buyer loyalty to its brand. E. All of these.

All of these

A company's strategy is likely to succeed if: A. it is predicated on leveraging a competitively valuable collection of resources and capabilities that match the strategy. B. the company has the resources and capabilities needed to keep its costs competitive. C. it has the expertise to cost-effectively manage value chain activities over rivals. D. it has the innovative capabilities to bypass certain value chain activities of rivals. E. All of these.

All of these

Achieving a differentiation-based competitive advantage can involve: A. incorporating product attributes and user features that lower a buyer's overall cost of using the product. B. incorporating features that raise the performance a buyer gets from using the product. C. incorporating features that enhance buyer satisfaction in non-economic or intangible ways. D. delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match. E. All of these.

All of these

Approaches to enhancing differentiation through changes in the value chain include: A. coordinating with channel allies to enhance customer perception of value. B. coordinating with suppliers to better address customer needs. C. working closely on those activities performed by upstream suppliers and downstream by distributors and retailers to enhance customer value proposition. D. collaborating with suppliers to improve many dimensions affecting product features and quality. E. All of these.

All of these

Which of the following is NOT one of the four basic routes to achieving a differentiation-based competitive advantage? A. Delivering value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well-matched to the requirements of the strategy B. Incorporating tangible features that raise product performance and increase customer satisfaction with the product C. Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D. Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes E. Incorporating features that enhance buyer satisfaction in intangible or non-economic ways

Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes

A factor that has a strong influence on a company's costs is termed: A. a cost driver. B. economies of scale. C. an expense reduction program. D. operating margin shortfalls. E. All of these.

a cost driver.

Which of the following is NOT an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively? A. Striving to capture all available economies of scale and taking advantage of experience and learning-curve effects B. Trying to operate facilities at full capacity C. Adopting labor-saving operating methods D. Improving supply chain efficiency E. Eliminate product features that might have market appeal, but excessively increase production costs

Eliminate product features that might have market appeal, but excessively increase production costs

Which of the following is NOT one of the ways that a company can achieve a cost advantage by revamping its value chain? A. Bypassing the activities and costs of distributors and dealers by selling direct to customers B. Replacing certain value chain activities with faster and cheaper online systems C. Increasing production capacity and then striving hard to operate at full capacity D. Relocating facilities so as to curb the cost for shipping and handling activities E. Streamlining operations by eliminating low value-added or unnecessary work steps and activities

Increasing production capacity and then striving hard to operate at full capacity

Which one of the following generic types of competitive strategy is typically the "best" strategy for a company to employ? A. A low-cost leadership strategy B. A broad and narrow differentiation strategy C. A best-cost provider strategy D. A focused low-cost differentiation leadership provider strategy E. One that is customized to fit the macro-environment, industry and competitive conditions, and the company's own resources and competitive capabilities

One that is customized to fit the macro-environment, industry and competitive conditions, and the company's own resources and competitive capabilities

Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy? A. Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than be content with weak product differentiation B. Offer trivial improvements in quality, service, or performance features C. Overcharging for the differentiating features D. Adding so many frills and extra features that the product exceeds the needs of buyers E. Overspending on efforts to differentiate the company's product offering

Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than be content with weak product differentiation

Which of the following is NOT one of the ways managers can enhance differentiation based on uniqueness drivers? A. Striving to create superior product features, design, and performance B. Striving for innovation and technological advances C. Pursuing continuous quality improvement D. Increasing the intensity of marketing, brand building. and sales activities E. Seeking out low-quality inputs

Seeking out low-quality inputs

Which of the following is NOT one of the pitfalls of a low-cost provider strategy? A. Overly aggressive price-cutting B. Setting the industry's price ceiling to capture volume gains and achieve economies of scale C. Relying on an approach to reduce costs that can be easily copied D. Becoming too fixated on cost reduction E. Having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms

Setting the industry's price ceiling to capture volume gains and achieve economies of scale

Which of the following is NOT one of the ways that a company can achieve cost-efficient management of its value chain activities? A. Striving to ensure a corporate diversity policy is introduced with effective controls B. Using the company's bargaining power vis-à-vis suppliers or others in the value chain C. Being alert to the cost advantages of outsourcing or vertical integration D. Striving to capture all available economies of scale E. Motivating employees through incentives and company culture

Striving to ensure a corporate diversity policy is introduced with effective controls

What is the primary target market for a best cost-provider? A. Value hunting buyers B. Price-conscious buyers C. Best-price driven buyers D. Value-conscious buyers E. Brand-conscious buyer

Value-conscious buyers

In which of the following circumstances is a strategy to be the industry's overall low-cost provider NOT particularly well-matched to the market situation? A. When the offerings of rival firms are essentially identical and readily available from many eager sellers. B. When there are few ways to achieve differentiation that have value to buyers. C. When price competition among rival sellers is especially vigorous. D. When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high. E. When the majority of industry sales are made to a few, large-volume buyers.

When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high.

In which one of the following market circumstances is a broad differentiation strategy generally NOT well-suited? A. When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B. When few rivals are pursuing a similar differentiation approach C. When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart D. When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E. When technological change is fast-paced and competition revolves around rapidly evolving product features

When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart

A focused low-cost strategy can lead to attractive competitive advantage when: A. buyers are looking for the best value at the best price. B. buyers are looking for a budget-priced product. C. buyers are price sensitive and are attracted to brands with low switching costs. D. demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies. E. a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

Best-cost provider strategies are: A. a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/service attributes while beating rivals on price. B. rewarded by providing buyers with the best attributes at the best cost. C. those strategy elements related to the low-cost provider in the largest and fastest growing (or best) market segment. D. those that stake out a middle ground between a focused advantage and low-cost advantage and appeal to broad market segments and narrowly defined customer propositions. E. All of these

a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/service attributes while beating rivals on price.

Success with a best-cost provider strategy designed to outcompete high-end differentiators requires: A. achieving significantly lower costs in providing the upscale features B. providing significantly better product attributes in order to justify a price above what low-cost leaders are charging. C. matching the company's resources and capabilities to a low-cost provider status. D. motivating buyers to purchase upscale features that match rivals. E. All of these.

achieving significantly lower costs in providing the upscale features

The culture of a company can be a cost-efficient value chain activity because it can: A. allow for safeguarding internalized operating benefits. B. distinguish a company's capacity integration efforts. C. spur worker pride in productivity and continuous improvement. D. foster quality technological enhancements. E. All of these.

allow for safeguarding internalized operating benefits.

Broad differentiation strategies generally work best in market circumstances where: A. buyer needs and uses of the product are diverse and they are not fully satisfied by a standardized product. B. most buyers have similar needs and use the product in the same ways. C. the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D. buyers are price sensitive and buying switching costs are quite low. E. the five competitive forces are strong.

buyer needs and uses of the product are diverse and they are not fully satisfied by a standardized product.

Perceived value and signaling value are often an important part of a successful differentiation strategy because: A. of the diversity of buyer needs and preferences. B. buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be. C. buyer satisfaction can be enhanced by clever ads that signal value that relates to the buyer. D. differentiation is all about smoke and mirrors. E. there are no other ways to differentiate a commodity product.

buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.

Opportunities to differentiate a company's product offering: A. are most reliably found in the R&D portion of the value chain. B. are typically located in the sales and marketing portion of the value chain. C. can exist in activities all along an industry's value chain. D. usually are tied to product quality and customer service. E. are most frequently attached to a company's manufacturing expertise and to its ability to achieve scale economies in production.

can exist in activities all along an industry's value chain.

Easy-to-copy differentiating features: A. cannot produce sustainable competitive advantage. B. seldom are perceived by buyers as having much value. C. tend to give buyers a high degree of power in bargaining for a lower price. D. should never be incorporated in a company's product offering if its differentiation strategy is to succeed. E. lead to vigorous price competition.

cannot produce sustainable competitive advantage.

Successful differentiation allows a firm to: A. be the industry's best-cost provider. B. set the industry ceiling on price. C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D. command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E. take sales and market share away from rivals by undercutting them on price.

command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.

The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to: A. tout the company's lower prices. B. tout the lack of frills and extras. C. out-advertise rivals and make frequent use of discount coupons. D. communicate the attractive features of a budget-priced product offering that fits niche members' expectations. E. communicate the product's ability to serve the customer's every need.

communicate the attractive features of a budget-priced product offering that fits niche members' expectations.

Each of the five generic strategies positions the company differently, except when it concerns: A. its market and competitive environment. B. establishing a central theme for how the company will endeavor to outcompete rivals. C. creating differentiation barriers within economies of scope. D. defining differences in terms of product line, production emphasis, marketing emphasis and the means of maintaining strategy. E. its required resources and capabilities.

creating differentiation barriers within economies of scope.

The objective of a best-cost provider strategy is to: A. deliver superior value to value-conscious buyers at a comparatively lower price than rivals B. offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C. attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D. out-compete rivals using low-cost provider strategies. E. translate its best-cost status into achieving the highest profit margins of any firm in the industry.

deliver superior value to value-conscious buyers at a comparatively lower price than rivals

There are several basic approaches to competing successfully and gaining a competitive advantage over rivals, such as: A. finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. B. delivering more value to its customers than rivals or delivering value more efficiently than rivals (or both). C. getting in the best strategic group and establishing a dominating role. D. entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E. All of these.

delivering more value to its customers than rivals or delivering value more efficiently than rivals (or both).

Best-cost provider strategies are appealing in those market situations where: A. diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase mid-range products. B. a company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance. C. buyers are more quality-conscious than price-conscious. D. there are numerous buyer segments, buyer needs are diverse across these segments, only a few of the segments are growing rapidly, and seller's products are strongly differentiated. E. buyers are more performance-conscious than value-conscious.

diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase mid-range products.

To succeed with a low-cost provider strategy, company managers have to: A. pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage. B. move the performance of most all value chain activities to low-wage countries. C. sell direct to users of their product or service and eliminate the use of wholesale and retail intermediaries. D. do two things: (1) perform value chain activities more cost-effectively than rivals, and (2) act proactively in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. E. outsource the biggest majority of value chain activities.

do two things: (1) perform value chain activities more cost-effectively than rivals, and (2) act proactively in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities.

A low-cost leader translates its low-cost advantage over rivals into superior profit performance by: A. cutting its price to levels significantly below the prices of rivals. B. either using its lower-cost edge to under-price competitors and attract price-sensitive buyers in great enough numbers to increase total profits or maintain the present price, and using the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising total profits and overall return on investment. C. going all out to use its cost advantage to capture a dominant share of the market. D. spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry it can, and then using this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long term. E. out-producing rivals and thus having more units available to sell.

either using its lower-cost edge to under-price competitors and attract price-sensitive buyers in great enough numbers to increase total profits or maintain the present price, and using the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising total profits and overall return on investment.

The production emphasis of a company pursuing a broad differentiation strategy usually involves: A. eliminating cost reduction and decreasing quality and essential features to boost profitability. B. strong efforts to be a leader in manufacturing process innovation. C. emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations. D. the aggressive pursuit of economies of scale and experience-curve effects. E. developing a distinctive competence in zero-defect manufacturing techniques.

emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations.

Cost-efficient management of a company's overall value chain activities requires that management: A. ferret out cost-saving opportunities in every part of the value chain. B. undertake an operations functionality redesign. C. establish sales productivity and operating practices guidelines. D. re-create rivals' assembly plant structuration savings. E. All of these.

ferret out cost-saving opportunities in every part of the value chain.

A broad differentiation strategy generally produces the best results in situations where: A. buyer brand loyalty is low. B. few rival firms are following a similar differentiation approach. C. new and improved products are introduced only infrequently. D. most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E. price competition is vigorous.

few rival firms are following a similar differentiation approach.

A company's biggest vulnerability in employing a best-cost provider strategy is: A. relying too heavily on outsourcing. B. getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies. C. getting trapped in a price war with low-cost leaders. D. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E. not having a sustainable distinctive competence in cost reduction.

getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to: A. sell a product with the best cost at the best price. B. have the best cost (as compared to rivals) for each activity in the industry's value chain. C. provide buyers with the best attributes at the best cost. D. incorporate attractive or upscale attributes into its product offering at a lower cost than rivals. E. do a better job than rivals of adopting the best operating practices.

incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

A route to take in developing a differentiation advantage includes: A. incorporating product attributes and user features that raise the buyer's overall costs. B. incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling. C. incorporating specific signals of differentiation. D. incorporating intangible features that enhance buyer satisfaction in economic ways. E. All of these.

incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling.

Brands create customer loyalty, which in turn: A. increases the perceived cost of switching to another product. B. strengthens the product's quality. C. validates the motivation for alternate products. D. provides monetary incentive for using the product. E. All of these.

increases the perceived cost of switching to another product.

A competitive strategy to be the low-cost provider in an industry works well when: A. price competition among rival sellers is especially sluggish. B. there are numerous ways to achieve product differentiation that have no value to buyers. C. buyers incur high costs in switching their purchases from one seller/brand to another. D. industry newcomers use introductory low prices to attract buyers and build a customer base. E. industry newcomers use high introductory prices to let buyers know they have a superior product to build a customer base.

industry newcomers use introductory low prices to attract buyers and build a customer base.

The objective of differentiation: A. is to offer customers something rivals can't, at least in terms of the level of satisfaction. B. is to develop strategies that are different from those of rivals. C. is to establish objectives that are measurable and meaningful when it comes to sales growth. D. is to offer customers a sustainable competitive advantage. E. All of these.

is to offer customers something rivals can't, at least in terms of the level of satisfaction.

Pursuing continuous quality improvement as a uniqueness factor is sound because: A. it can be perceived to add differentiation features for new buyers. B. it can acknowledge the firm's strategic intent to compete aggressively. C. it can often reduce product defects, improve economy of use, and result in more end-user convenience. D. it always provides a competitive advantage. E. it is a sound approach to drive profit enhancement.

it can often reduce product defects, improve economy of use, and result in more end-user convenience.

The competitive advantage of a best-cost provider is: A. having the best value chain in the industry. B. its brand name reputation. C. its capability to incorporate upscale or attractive attributes into its product offering at lower costs than rivals. D. a distinctive competence in delivering top-notch quality and customer service. E. a distinctive competence in supply chain management.

its capability to incorporate upscale or attractive attributes into its product offering at lower costs than rivals.

The generic types of competitive strategies include: A. market share growth provider, sales revenue leader strategy, and market share retention strategy. B. offensive strategies, defensive strategies and counter maneuvers strategies. C. low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation strategies. D. low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E. price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies.

low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation strategies.

A low-cost leader's basis for competitive advantage is: A. meaningfully lower prices than rival firms. B. using a low cost/low price approach to gain the biggest market share. C. high buyer switching costs. D. meaningfully lower overall costs than rivals on comparable products. E. higher unit sales than rivals.

meaningfully lower overall costs than rivals on comparable products.

The competitive objective of a best-cost provider strategy is to: A. outmatch the resource strengths of both low-cost providers and differentiators. B. position the company outside the competitive arena of low-cost producers and differentiators. C. meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D. deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E. identify and concentrate on those differentiating features that are inexpensive to incorporate.

meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes).

Uniqueness drivers are a: A. set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect. B. company's hidden success factor for creating over-the-top product features that will command the highest price in the industry. C. technique for easily identifying factors that validate the firm's performance. D. set of factors that verify the unique nature of the firm. E. All of these.

set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect.

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether: A. many buyers view the product's differentiating features as having value. B. most buyers have similar needs and use the product in the same ways. C. most buyers accept the customer value proposition as unique and the product can command a higher price or produce sufficiently bigger unit sales to cover the added costs of achieving the differentiation. D. buyer switching costs are low and customer loyalty to any one brand is low. E. buyers are prone to shop the market for sellers having the best price.

most buyers accept the customer value proposition as unique and the product can command a higher price or produce sufficiently bigger unit sales to cover the added costs of achieving the differentiation.

A competitive strategy of striving to be the low-cost provider is particularly attractive when: A. buyers are not very brand-conscious. B. most rivals are trying to be best-cost providers. C. there are many ways to achieve product differentiation that have value to buyers. D. most buyers use the product in much the same ways, with user requirements calling for a standardized product. E. most rivals are pursuing focused low-cost or focused differentiation strategies.

most buyers use the product in much the same ways, with user requirements calling for a standardized product.

The underlying criteria of a best-cost provider strategy usually is found in the ability of a company to: A. offer similar goods at more attractive prices. B. create attributes that appeal specifically to niche members. C. lower overall costs more than rivals in serving niche members. D. offer buyers something attractively different from competitors' offerings. E. None of these.

offer similar goods at more attractive prices.

The essence of a broad differentiation strategy is to: A. appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers. B. incorporate a greater number of differentiating features into its product/service than rivals. C. lower buyer switching costs. D. outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

A differentiation-based competitive advantage: A. nearly always is attached to the quality and service aspects of a company's product offering. B. most usually is the result of highly effective marketing and advertising to enhance the brand, raise awareness, and build consistent customer experience. C. requires developing at least one distinctive competence that buyers consider valuable. D. hinges on a company's success in developing top-of-the-line product features that will command the highest price premium in the industry. E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or non-economic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or non-economic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

Success in achieving a low-cost edge over rivals comes from: A. strong efforts to be a leader in manufacturing process innovation. B. communicating the product's ability to serve the customer's every need. C. employing an aggressive offense to gain market share or a conservative defense to D. protecting its market position. E. out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost efficiently.

out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost efficiently.

Achieving a cost advantage over rivals entails: A. concentrating on the primary activities portion of the value chain and outsourcing all support activities. B. being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C. performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether. D. minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E. producing a standard product, redesigning the product infrequently, and having minimal advertising.

performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether.

The major avenues for achieving a cost advantage over rivals include: A. performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities. B. having a management team that is highly skilled in cutting costs. C. being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. D. outsourcing high-cost activities to cost-efficient vendors. E. paying lower wages and salaries than rivals.

performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities.

Low-cost leaders, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable: A. positioned to deliver affordable luxury products at mass market quality. B. encouraged to exit the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. C. considered favorites to win the game of strategy in the long run. D. understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers.

positioned to deliver affordable luxury products at mass market quality.

A competitive strategy predicated on low-cost leadership tends to work best when: A. there are widely varying needs and preferences among the various buyers of the product or service. B. there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C. price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D. buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E. buyers have high switching costs and there is considerable diversity in how buyers use the product.

price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products.

Being the overall low-cost provider in an industry has the attractive advantage of: A. building strong customer loyalty and locking customers into its product (because customers have such high switching costs). B. giving the firm a very appealing brand image. C. putting a firm in the best position to win the business of price-sensitive customers, set the floor on market price, and still earn a profit. D. putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy. E. greatly reducing the strong bargaining power of key suppliers.

putting a firm in the best position to win the business of price-sensitive customers, set the floor on market price, and still earn a profit.

Whatever strategic approach is adopted by a company to deliver value, it nearly always: A. requires that management undertake formal planning sessions with functional departments to ensure productivity improvement. B. requires the identification of strengths and weaknesses within the company. C. requires matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D. requires performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match or trump. E. All of these.

requires performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match or trump.

For a best-cost provider strategy to be successful, a company must have: A. excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/features incorporated in its product. B. resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C. access to greater learning/experience curve effects and scale economies than rivals. D. one of the best-known and most respected brand names in the industry. E. a short, low-cost value chain.

resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.

A firm pursuing a best-cost provider strategy: A. seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B. tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C. tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D. seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes). E. seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes).

While low-cost providers are champions of frugality, they: A. seldom hesitate to spend aggressively on resources and capabilities that promise to drive costs out of the business. B. are never hesitant to eliminate costs so as to remain the low-cost provider. C. are not blinded by cost reduction, preferring product differentiation strategies that reflect cost-reductions rather than buyer needs and wants. D. are also champions of profitability by having prices lower than costs to gain volume gains. E. always anticipate negative feedback from stakeholders because of their spending habits.

seldom hesitate to spend aggressively on resources and capabilities that promise to drive costs out of the business.

A focused low-cost strategy seeks to achieve competitive advantage by: A. outmatching competitors in offering niche members an absolute rock-bottom price. B. delivering more value for the money than other competitors. C. performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D. dominating more market niches in the industry via a lower cost and a lower price than any other rival. E. serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

At the heart of a production-based emphasis toward a low-cost provider strategy usually requires a company to: A. strive for product superiority. B. strive for continuous cost reductions without sacrificing acceptable quality and essential features. C. strive for small-scale production or custom-made products that match the tastes and requirements of niche members. D. strive to build in appealing features and better quality at lower costs than rivals. E. All of these.

strive for continuous cost reductions without sacrificing acceptable quality and essential features.

A company attempting to be successful with a broad differentiation strategy has to: A. study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B. incorporate more differentiating features into its product/service than rivals. C. concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D. have a widely known and highly respected brand name image. E. provide a top-of-the-line product and sell it at premium prices.

study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for.

A low-cost provider's product does NOT have to always: A. contain enough attributes to be attractive to prospective buyers. B. suggest that a low price, by itself, is not always that appealing to buyers. C. a signal value to buyers. D. provide high margins per unit sold to bring in enough unit sales. E. be valuable and appealing to a wide range of buyers.

suggest that a low price, by itself, is not always that appealing to buyers.

A broad differentiation strategy works best in situations where: A. technological change is slow-paced and new or improved products are infrequent. B. buyer needs and uses of the product are very similar. C. buyers incur low costs in switching their purchases to rival brands. D. buyers have a low degree of bargaining power and purchase the product frequently. E. technological change is fast-paced and competition revolves around rapidly evolving product features.

technological change is fast-paced and competition revolves around rapidly evolving product features.

The big danger or risk of a best-cost provider strategy is: A. that buyers will be highly skeptical about paying a relatively low price for upscale attributes/features. B. not establishing strong alliances and partnerships with key suppliers. C. that rivals, with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes. D. that it will be unable to achieve top-notch quality at a rock-bottom cost. E. becoming too highly integrated and not relying enough on outsourcing.

that rivals, with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes.

Focusing carries several risks, one of which is: A. the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. the chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market. C. the potential for the segment to be highly vulnerable to economic cycles. D. the potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. All of these.

the chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market.

A broad differentiation strategy improves profitability when: A. it is focused on product innovation. B. differentiating enhances product performance and quality. C. the differentiating features appeal to sophisticated and prestigious buyers. D. the higher price the product commands exceeds the added costs of achieving the differentiation. E. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

the higher price the product commands exceeds the added costs of achieving the differentiation.

Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where: A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B. most other rival firms are using a best-cost producer strategy. C. buyers have strong bargaining power and entry barriers are low. D. most industry rivals have weakly differentiated products. E. most industry participants are also using focused low-cost or focused differentiation strategies.

the market is composed of distinctly different buyer groups who have different needs or use the product in different ways.

A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when: A. there are many ways to achieve product differentiation that buyers find appealing. B. buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C. the offerings of rival firms are essentially identical, standardized, commodity-like products. D. entry barriers are high and competition from substitutes is relatively weak. E. the market is composed of many distinct segments with varying buyer needs and expectations.

the offerings of rival firms are essentially identical, standardized, commodity-like products.

The risks of a focused strategy based on either low-cost or differentiation include: A. the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. the potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market. C. the potential for the segment to be highly vulnerable to economic cycles. D. the potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. All of these.

the potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market.

The chief difference between a broad differentiation strategy and a focused differentiation is: A. the size of the buyer group that a company is trying to appeal to. B. the degree of bargaining power that buyers have. C. whether the product is strongly differentiated or weakly differentiated from rivals. D. the type of value chain being used to achieve a differentiation-based competitive advantage. E. the number of upscale attributes incorporated into the product offering.

the size of the buyer group that a company is trying to appeal to.

The chief difference between a low-cost provider strategy and a focused low-cost strategy is: A. whether the product is strongly differentiated or weakly differentiated from rivals. B. the degree of bargaining power that buyers have. C. the size of the buyer group that a company is trying to appeal to. D. the type of value chain being used to achieve a low-cost competitive advantage. E. the number of upscale attributes incorporated into the product offering.

the size of the buyer group that a company is trying to appeal to.

A company's competitive strategy deals with: A. the specifics of management's game plan for competing successfully—its specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular kind of competitive advantage. B. what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on. C. its efforts to change its position on the industry's strategic group map. D. its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E. its plans for overcoming the five competitive forces.

the specifics of management's game plan for competing successfully—its specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular kind of competitive advantage.

A focused strategy aimed at securing a competitive edge and which is based either on low cost or differentiation becomes more attractive when: A. it is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers. B. the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities. C. industry leaders do not see that having a presence in the niche is crucial to their own success. D. the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche. E. the target market niche is small enough to limit profitability and the outlook is ripe for differentiating.

the target market niche is small enough to limit profitability and the outlook is ripe for differentiating.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is: A. the extra attention paid to top-notch product performance and product quality. B. their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C. greater opportunity for competitive advantage. D. their suitability for market situations where most industry rivals have weakly differentiated products. E. their objective of delivering more value for the money.

their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.

Broad differentiation strategies are well-suited for market circumstances where: A. there are many ways to differentiate the product or service that have value to buyers. B. most buyers have the same needs and use the product in the same ways. C. buyers are susceptible to clever advertising. D. barriers to entry are high and suppliers have a low degree of bargaining power. E. price competition is especially vigorous.

there are many ways to differentiate the product or service that have value to buyers.

An example of how companies can revamp their value chain to reduce costs is: A. to increase service availability while reducing staffing requirements. B. to continue to utilize traditional methods of distribution and sales. C. to not make any changes in product manufacturing but change end distribution methods. D. to increase extra services to increase staffing requirements. E. to facilitate the learning curve by providing superior training to new employees.

to increase service availability while reducing staffing requirements.

The keys to maintaining a broad differentiation strategy are: A. to stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features. B. to charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal. C. to out-innovate and out-advertise rivals. D. to emphasize personalized customer service and to add as many differentiating features as possible. E. to keep prices close to the average of all rivals and to spend heavily on new product R&D.

to stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features.

The marketing emphasis of a company pursuing a broad differentiation strategy usually is to: A. under price rival brands with comparable features. B. tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features. C. out-advertise rivals and make frequent use of discount coupons. D. emphasize selling directly to end-users and promoting personalized customer service. E. communicate the product's ability to serve the customer's every need.

tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features.

A pitfall to avoid in pursuing a differentiation strategy is: A. trying to differentiate on the basis of attributes or features that are easily and quickly copied. B. choosing a product offering that supports buyer's indifference to rival brands' offerings. C. charging a premium price for the differentiating features. D. meeting and exceeding the meaningful gaps in quality, performance, service, and other attractive differentiating attributes offered by rivals. E. spending on activities to differentiate the company's product offering to enhance profitability.

trying to differentiate on the basis of attributes or features that are easily and quickly copied.

The target market of a best-cost provider is: A. value-conscious buyers. B. brand-conscious buyers. C. price-sensitive buyers. D. middle-income buyers. E. young adults (in the 18-35 age group).

value-conscious buyers.

The biggest and most important differences among the competitive strategies of different companies boil down to: A. how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider. B. the different ways those companies try to cope with the five competitive forces. C. whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation. D. the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities. E. the relative emphasis they place on offensive versus defensive strategies.

whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation.

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another involves: A. whether a company can build a brand name and an image that buyers trust. B. whether a company's target market is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation. C. whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader role. D. finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. E. getting in the best strategic group and establishing a dominating role.

whether a company's target market is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation.

How valuable a low-cost leader's cost advantage is depends on: A. whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B. how easy it is for the low-cost leader to gain the biggest market share. C. the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D. the leader's ability to combine the cost advantage with a reputation for good quality. E. the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs.

whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.

A focused differentiation strategy aims at securing competitive advantage: A. by providing niche members with a top-of-the-line product at a premium price. B. by catering to buyers looking for an upscale product at an attractively low price. C. with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D. by developing product attributes that no other company in the industry has. E. by convincing a narrow, well-defined group of buyers that the company has a truly world-class product.

with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.