Chapter 9 Quiz Questions

15. Which of the following is false with respect to the strategy of cost leadership? a) A firm following a strategy of cost leadership is following a generic strategy narrow in scope b) A firm can follow a cost leadership strategy through achieving benefit parity by making products with the same B, but at a lower C than its rivals c) A firm can follow a cost leadership strategy through achieving benefit proximity by offering a B that is not much less than those of competitors d) A firm following a strategy of cost leadership creates more value than its competitors by offering products that have a lower C than those of its rivals e) A firm can follow a cost leadership strategy by offering a product that is qualitatively different from that of its rivals

a) A firm following a strategy of cost leadership is following a generic strategy narrow in scope

25. Which of the following statements best describes a characteristic of geographic specialization focus strategies? a) Offers a variety of products and/or sells to a variety of customer groups within a narrow geography b) Offers an array of product varieties to a limited class of customers c) Caters to the particular needs of the customer group served d) Offers a limited set of products to an array of different customer groups e) Does an especially good job satisfying a subset of the needs of the consumer groups being served

a) Offers a variety of products and/or sells to a variety of customer groups within a narrow geography

6. Select the letter corresponding to the best answer. For a given consumer, any price-quality combination along the indifference curve yields the _______________. a) Same consumer surplus b) Same maximum willingness-to-pay c) High consumer surplus d) Low consumer surplus e) Same competitive advantage

a) Same consumer surplus

7. The steepness (slope) of an indifference curve indicates which of the following? a) The tradeoff a consumer is willing to make between price and quality b) The change in price holding product benefit constant c) The change in benefit holding price constant d) The tradeoff between consumer surplus and producer surplus e) None of the above

a) The tradeoff a consumer is willing to make between price and quality

10. What term describes the process of using market prices of unfinished and semifinished goods to estimate the incremental value-created by distinctive parts of the value chain? a) Value-added analysis b) Value creation analysis c) Market value analysis d) Value benefit drivers e) Value cost drivers

a) Value-added analysis

1. What term describes the situation when a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market? a) Industry effect b) Competitive advantage c) Business unit effect d) Competitive position e) Market profitability economics

b) Competitive advantage

14. Which of the following is a concept developed by Michael Porter that describes, in broad terms, how it positions itself to compete in the market it serves? a) Value chain b) Generic strategy c) Benefit leadership d) Cost Leadership e) Focus

b) Generic strategy

18. What type of good is one whose quality is relatively easy to evaluate before purchase? a) Consumer packaged good b) Search good c) Experience good d) Automobile e) Appliance

b) Search good

16. What kind of strategy is one by which a firm exploits its benefit or cost advantage through a higher market share rather than through high price-cost margins? a) Pricing strategy b) Share strategy c) Margin strategy d) Focus strategy e) Generic strategy

b) Share strategy

2. What is the perceived benefit of a product per unit consumed minus the product's monetary price? a) Value creation b) Competitive advantage c) Consumer surplus d) Maximum willingness-to-pay e) Value chain

c) Consumer surplus

4. What is one way to measure a firm's willingness-to-pay? a) Marginal profit per unit of production b) Value added analysis c) Cost-benefit analysis d) Input-output analysis e) Sales-per-cost analysis

c) Cost-benefit analysis???

19. What type of good is one whose quality can be assessed only after the customer has used it for a while? a) Apparel b) Search good c) Experience good d) Office furniture e) Airline tickets

c) Experience good

23. Under what type of strategy does a firm either offer a narrow set of varieties, serve a narrow set of customers, or do both? a) Generic strategy b) Margin strategy c) Focus strategy d) Share strategy e) Broad-coverage strategy

c) Focus strategy

17. What kind of strategy is one by which a firm maintains price parity with its competitors and profits from its benefit or cost advantage primarily through high price-cost margins, rather than through a higher market share? a) Pricing strategy b) Share strategy c) Margin strategy d) Focus strategy e) Generic strategy

c) Margin strategy

13. Which of the following is not a common characteristic of capabilities? a) They are valuable across multiple products or markets b) They are tacit c) They are easy to reduce to simple algorithms or procedure guides d) They are embedded in what Richard Nelson and Sidney Winter call organizational routines - well- honed patterns of performing activities inside an organization e) They can persist even though individuals leave the organization

c) They are easy to reduce to simple algorithms or procedure guides

9. Which of the following terms is a concept, developed by Michael Porter, which describes the activities within firms and across firms that add value along the way to the ultimate transacted good or service? a) Five forces b) Value creation c) Value chain d) Consumer surplus e) Producer surplus

c) Value chain

10. Which of the following represents consumer surplus in the value creation equation, (B-P) + (P-C)? a) B b) P c) C d) B-P e) P-C

d) B-P

8. When multiple firms' price-quality positions line up along the same indifference curve offering a consumer the same amount of consumer surplus, what term describes the situation? a) Price-quality parity b) Price matching c) Maximum willingness-to-pay d) Consumer surplus parity e) Consumer surplus

d) Consumer surplus parity

21. What term coined by Michael Porter describes a tool that can be used to show how nearly every industry can be broken down into smaller pieces known as segments? a) Industry breakdown matrix b) Industry five forces matrix c) Industry value creation matrix d) Industry segmentation matrix e) Industry dimensions matrix

d) Industry segmentation matrix

3. What term describes the price at which a consumer is indifferent between buying a product and going without it? a) Value creation b) Competitive advantage c) Consumer surplus d) Maximum willingness-to-pay e) Value chain

d) Maximum willingness-to-pay

20. What term coined by Michael Porter describes a firm that pursues elements of cost leadership and benefit leadership at the same time and in the process fails to achieve either a cost advantage or a benefit advantage? a) Five forces b) Value creation c) Value chain d) Stuck in the middle e) Generic strategy

d) Stuck in the middle

12. Which of the following is a resource? a) Brand promotion skills b) Yield management capabilities c) Ability to manage sourcing and procurement functions d) Workers with firm-specific expertise or know-how e) Ability to integrate order-taking, procurement, manufacturing and out-bound logistics

d) Workers with firm-specific expertise or know-how

22. What type of strategy seeks to serve all customer groups in the market by offering a full line of related products? a) Generic strategy b) Margin strategy c) Focus strategy d) Share strategy e) Broad-coverage strategy

e) Broad-coverage strategy

24. What term best describes a targeting strategy in which the firm offers a variety or related products to a particular class of customers? a) Broad-coverage strategy b) Focus Strategy c) Geographic specialization d) Product specialization e) Customer specialization

e) Customer specialization

5. What type of curve can be used to describe the set of price-quality combinations that yields the same consumer surplus to an individual? a) Frontier curve b) Learning curve c) Level curve d) Implicit curve e) Indifference curve

e) Indifference curve

9. Which of the following represents producer surplus in the value creation equation, (B-P) + (P-C)? a) B b) P c) C d) B-P e) P-C

e) P-C

11. Which of the following is a capability? a) Patents and trademarks b) Brand-name reputation c) Installed base d) Organizational culture e) Sourcing skills

e) Sourcing skills