Business Policy Exam Two

Delish Corp is a chain of supermarkets that sells its fruits and vegetables at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Delish Corp adopted in this scenario?

Delish Corp is probably pursuing a differentiation strategy.

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.?

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?

GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)

Industry

Which of the following statements is true of an oligopoly?

It is often analyzed using game theory.

Fones Inc. and Speed Dial Corp. are two competitors in the mobile phone market. The cost incurred by each company to manufacture smartphones is $200 per unit. Although both the companies sell their smartphones at the same price, Speed Dial Corp. has a larger market share in the smartphone industry. What does this imply?

Speed Dial Corp. has been able to offer more perceived value than Fones Inc.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?

They can demand better terms from their suppliers.

Which of the following firms most likely has the lowest bargaining power as a buyer?

a cell phone company that requires highly customized software for its phones

Supreme Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Cheap Beans, in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Vale's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Cheap Beans. In this scenario, Vale's Coffee is following a

blue ocean strategy.

If costs are equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm

can charge a premium price for its products and services.

Strategic-group mapping establishes that

competitive rivalry is strongest between firms that are within the same strategic group.

Oberlo Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Oberlo Autos applying in this scenario?

cost-leadership strategy

Firms pursuing a cost-leadership strategy seek to

deliver products or services at a lower cost than competitors.

In a focused differentiation strategy, a firm seeks to

deliver products or services with unique features to a specific, narrow part of the market.

MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to

forward integrate.

In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)

monopolistically competitive structure.

A blue ocean strategy typically allows a firm to

offer a differentiated product or service at low cost.

Owners of coffee plantations in the country of Cantonica grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Cantonica best illustrates a(n) ________ structure.

perfectly competitive

As differentiation and cost-leadership are distinct strategic positions that require important trade-offs, it is

quite difficult to translate a blue ocean strategy into reality.

The two primary competitive levers that managers can use in order to answer the question of how to compete are

value and cost