IBPS Ex
Power Juice is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Power Juice has decided to pursue a differentiation strategy. In this case, she should A) focus on adding unique features to her product that customers will value.B) concentrate on improving process technologies to achieve economies of scale.C) enforce strict budget controls at all levels of the organization.D) devote all resources to reducing the value gap.
A) focus on adding unique features to her product that customers will value.
Whole Foods focuses on a small market segment, affluent consumers who want to buy high-end, organic groceries. What is the appropriate name for Whole Foods's scope of competition? A) focusedB) broadC) specificD) general
A) focused
Incumbent firms prefer to focus on incremental innovations which reinforce their established organizational structure and power distribution and avoid radical innovation that could disrupt their existing power distribution. This is known as A)organizational inertia.B)organization culture.C)organizational design.D)organization complexity.
A)organizational inertia
You are the CEO of a tech company and have recently undertaken a review of your company's strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed? A) Consider this evidence of a sustainable competitive advantage and maintain your current strategy. B) Compare the current valuations with past valuations to determine a trend. C) Assume your current strategy has failed and begin to formulate a new one. D) Compare your valuation to firms in another industry.
B) Compare the current valuations with past valuations to determine a trend.
3) Bioplex requires its members to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate? A)razor-razor-blade B)pay-as-you-go C)subscription-based D)freemium
C)subscription-based
Which of the following is a competitive benefit experienced by the first-mover firm in an industry? A)The first mover will be able to achieve a less steep learning curve.B)The first mover will be able to reduce the switching costs.C)The first mover will not have to patent its products or technology.D)The first mover will be able to reduce costs through economies of scale.
D)The first mover will be able to reduce costs through economies of scale.
Which of the following examples uses a focused differentiation strategy? A)a tennis pro shop that sells low-quality racquets priced at 150 dollars per racquetB)a coffee shop that offers mediocre lattes at a price of five dollars for a small latteC)a hotel chain that offers high-quality furnishings and service with room rates of under 75 dollars per nightD)a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle
D)a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle
When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be A)economies of scale.B)learning-curve effects.C)experience-curve effects.D)availability of complements.
D)availability of complements.
At the time when Laura decided to purchase a tablet computer, the product had just become accessible to the mass market. She did not purchase the tablet until after she was convinced that the benefits it would offer her would far exceed its price. Also, she waited for her friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Laura best represent? A)laggardsB)technology enthusiastsC)early adoptersD)early majority
D)early majority
Afya Limited is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Afya Limited emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage? A)advanced capabilitiesB)the company's outsider statusC)sleek and trendy designD)ease of use
D)ease of use
Jerry is the owner of All Hinges Inc. and has recently modified his firm's strategic objective based on a shift in his industry. Jerry is responding to a(n) ________ life cycle. A)entrepreneurialB)economicC)growthD)industry
D)industry
Sugar Flakes and Cinnamon Texas Toast both produce similar puffed rice breakfast cereals. For both companies, the cost of producing a box of cereal is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other? A) Increase total perceived consumer benefits through differentiation. B) Raise prices above the current reservation price. C) Lower prices to the break-even price. D) Increase the number of stock market shares available to investors.
A) Increase total perceived consumer benefits through differentiation.
SonronMedia sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called A) an agency. B) bundling. C) wholesale. D) a freemium.
A) an agency.
1) The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator? A) high price, high comfort, high customer service, high concessions variety, low hours of operation B) low price, high comfort, high customer service, high concessions variety, low hours of operation C) high price, low comfort, low customer service, high concessions variety, low hours of operation D) low price, low comfort, low customer service, low concessions variety, low hours of operation
A) high price, high comfort, high customer service, high concessions variety, low hours of operation
Which of the conditions prevail when an industry is at the end of its life cycle? A)The level of process innovation reaches its maximum as firms attempt to lower cost.B)The industry structure is perfectly competitive with a large number of buyers and sellers.C)The strategic objectives of businesses will involve gaining market acceptance.D)The market reaches its maximum size at this stage.
A)The level of process innovation reaches its maximum as firms attempt to lower cost.
The group of customers referred to as the ________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage. A)early majorityB)laggardsC)late majorityD)early adopters
A)early majority
NuLiver Corp. has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will most likely be the result of this innovation? A)jumps to a steeper learning curve B)destabilizes a steeper learning curve C)stabilizes the existing learning curve D)moves down the existing learning curve
A)jumps to a steeper learning curve
TalkaLot Corp. incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario? A) $350 B) $450 C) $800 D) $200
B) $450 Economic value creation equals consumer surplus plus firm profit, or the sum of consumer and producer surplus. In this case, the economic value created is ($800 - $600) + ($600 - $350) = $450.
James is a novice investor who wants to decide between purchasing shares in Captial-UP or Mainframe Inc. Captial-UP's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Mainframe Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell James? A) Mainframe Inc. is more likely to create value while Captial-UP is more likely to destroy value. B) Captial-UP is more likely to create value while Mainframe Inc. is more likely to destroy value. C) Both Mainframe Inc. and Captial-UP are likely to create value. D) Neither Mainframe Inc. nor Captial-UP are likely to create value.
B) Captial-UP is more likely to create value while Mainframe Inc. is more likely to destroy value. If a firm's ROIC is greater than its cost of capital, it generates value; If it is less than the cost of capital, the firm destroys value. Mainframe Inc. had a cost of capital that exceeded its ROIC, and thus more likely to destroy value. James would be wise to invest his money in Captial-UP.
Hottechi Laminate has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Hottechi Laminate will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Hottechi Laminate to ask in order to put its strategy into action? A) Why does the business model create value? B) What activities need to be performed to create and deliver the offerings to consumers? C) How are the offerings to the customers created? D) Who are the main stakeholders who will be performing the activities?
B) What activities need to be performed to create and deliver the offerings to consumers?
Threadless allows customers to submit their own designs and to vote on which designs they would like to see printed on a T-shirt. This business uses a ________ technique. A) offshoring B) crowdsourcing C) peer-to-peer D) binge watching
B) crowdsourcing
Blackzim Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate? A) razor-razor-blade B) subscription-based C) pay-as-you-go D) freemium
B) pay-as-you-go
Ticker Inc. is a wristwatch company known for its luxury watches, and it follows a differentiation strategy. In this scenario, Ticker Inc. should ideally compare its strategic position with a A) watch retailer that sells pre-owned watches. B) watch maker that sells high-end, premium watches. C) watch maker that manufactures low-priced watches. D) watch maker that follows a differentiation strategy.
B) watch maker that sells high-end, premium watches.
At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n) A)80 percent learning curve. B)90 percent learning curve. C)60 percent learning curve. D)54 percent learning curve.
B)90 percent learning curve.
What must a cost-leadership strategy accomplish to be successful? A)It must increase the firm's cost above that of its competitors while offering adequate value.B)It must reduce the firm's cost below that of its competitors while offering adequate value.C)It must increase the firm's cost above that of its competitors while offering superior value.D)It must reduce the firm's cost below that of its competitors while offering superior value.
B)It must reduce the firm's cost below that of its competitors while offering adequate value.
While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true? A)The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. B)While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation. C)While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits. D)The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be nonprice.
B)While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation.
Finger Lickin' BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage? A)lowering the quality of ingredients below what customers expect to control costs B)eliminating brick-and-mortar locations and offering delivery from a central kitchen C)raising prices without improving on the quality of food D)marketing itself as a high-end restaurant and competing with more refined restaurants in the
B)eliminating brick-and-mortar locations and offering delivery from a central kitchen
The leading producer of cell phone backup batteries, Progyny, has achieved great success because they produce high-quality battery backups that are not too expensive. Even so, another company that produces lower-quality batteries at the same price has also achieved some success, but not as much as Progyny. Also, in general, the price of backup batteries has declined because of economies of scale and learning. In addition, Progyny has added complementary assets, such as a carrying case. Considering all of these factors, the backup battery industry is most likely in the ________ stage. A)introductionB)growthC)shakeoutD)maturity
B)growth
A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario? A) $250 B) $200 C) $180 D) $100
C) $180 total perceived consumer benefits equals the maximum willingness to pay
Food Tiger Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against Food Tiger's low prices. Thus, Food Tiger has a competitive advantage due to its A) superior customer service.B) time compression economies.C) economies of scale.D) learning-curve effects.
C) economies of scale
Susan is the founder of the restaurant chain Right and Fresh. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and all packaging is manufactured from recycled material. Also, her company sources ingredients from farms within 100 miles from her locations. Susan's belief is that her restaurants should be able to support the community at large. Which of the following terms best describes Susan? A) headhunter B) category captain C) social entrepreneur D) trade creditor
C) social entrepreneur
Pete's Bikes enjoys a competitive advantage as a cost-leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Pete's Bikes? A)Pete's leading competitor develops a new low-sodium product. B)Pete's most reliable production worker takes a job in another industry. C)A major winter storm shuts down Pete's production for several days. D)A wheat shortage raises input costs across the industry.
C)A major winter storm shuts down Pete's production for several days.
Which of the following is not an advantage when it comes to "first-mover advantages"? A)First movers may be able to lock-in key suppliers.B)First movers may benefit from network effects.C)First movers must educate potential customers about the product.D)First movers may hold important intellectual property such as critical patents.
C)First movers must educate potential customers about the product
In a focused cost-leadership strategy, a firm A)caters to the segment of the market that is least cost sensitive.B)provides high-priced products for many different segments of the mass market.C)delivers low-cost products and services to a specific, narrow part of the market.D)focuses on reducing the economic value created to drive down costs.
C)delivers low-cost products and services to a specific, narrow part of the market.
Due to its large sales volume and low-cost structure, Bunny's Lo-Cost enjoys a cost-leadership position. Which of the following scenarios might threaten Bunny's competitive advantage? A) Existing competitors in the same industry lower their prices to match those of Bunny's.B) Industry suppliers raise their prices.C) Competitors engage in an all-out price war.D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout that Bunny's doesn't offer.
D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout that Bunny's doesn't offer.
How does a sustainable strategy typically help a firm? A) It helps the firm focus solely on its financial goals. B) It reduces the need for corporate social responsibility within the firm. C) It facilitates the firm in effectively isolating its external stakeholders. D) It helps the firm achieve positive results along the social and ecological dimensions.
D) It helps the firm achieve positive results along the social and ecological dimensions.
7) LinkedIn, a professional social media website, allows its users to create their profiles for free, but charges a premium price for additional services. This is an example of a ________ business model. A) subscription-based B) peer-to-peer C) crowdsourcing D) freemium
D) freemium
How does availability of complements act as a value driver? A)Complements add value to a product by offering an inferior substitute to it.B)Complements add value to a product by competing with it.C)Complements add value to a product when they imitate it.D)Complements add value to a product when they are consumed in tandem with it.
D)Complements add value to a product when they are consumed in tandem with it.
When a firm is able to successfully employ a blue ocean strategy, it will create a competitive advantage by A)combining high quality and product features to provide service that customers truly value.B)using a first-mover advantage to be the lowest price in the market.C)winning market share with a highly differentiated product.D)beating rivals on product attributes while offering a better price.
D)beating rivals on product attributes while offering a better price.
Digital photography replacing film photography is an example of which type of innovation? A)incrementalB)architecturalC)radicalD)disruptive
D)disruptive
The question that business-level strategy answers is ________ the firm will compete. A)whenB)whereC)whoD)how
D)how
