MGT 499 Exam 2
A company is offering a single passenger automated car. It is most suitable for in-city driving. If it is perceived as being consistent with the needs of potential adopters, it contributes the _____ factor to market growth rate.
.compatibility
Which of these examples represents a company that has selected a differentiation strategy?
A grocery store chain is converting its local neighborhood stores to warehouses and having customers select items online or through an app and pick them up in a drive-through without having to leave their vehicles.
Which of these companies is achieving a competitive advantage through a low-cost strategy?
A high-volume, quick-serve restaurant chain that is controlling costs through centralized food production and a streamlined supply chain
Which of these functional-level strategies is designed to improve quality in terms of reliability for a company pursuing a low-cost strategy?
A manufacturer implements a Six Sigma training program with a goal to double the number of Six Sigma black belts within five years.
While working for a start-up software company with an innovative product in an embryonic industry, Diane has been asked to suggest a strategy for developing a mass market for the company. Which of these strategies should Diane recommend?
A strategy to increase the efficiency of the product, lowering its cost and price to consumers
_____ is a cost advantage that is enjoyed by incumbents of an industry and that new entrants cannot expect to match.
Absolute cost advantage
Of the many factors that motivated Amazon's acquisition of Whole Foods, which of the following provides the largest benefit to Amazon beyond its entry into grocery delivery?
Access to data it didn't have before will help Amazon better gauge purchaser behavior both online and offline.
After a company has developed a value innovation in a fragmented industry, it often needs to scale up. Which of these is a strategy for growing a business with multiple corporate-owned locations?
Chaining
Which of the following statements is true regarding Andrew Grove's sixth force, which Porter did not recognize?
Complementors are companies that sell products that add value to the products of a company in an industry.
What is the importance of complements in a format war?
Complements stimulate the incentive to buy the original product because customers will then have a large supply of complements to use in conjunction with the main product.
A restaurant conducted an internal review of its resources and distinctive competencies. It concluded that customers perceive the company's dessert menu to be more delicious and of greater value than that of the competitors. Which business-level strategy should the company consider?
Differentiation strategy
Amazon's home delivery of groceries and Instacart's delivery of Whole Foods items are found where on the market development curve?
Early adopters
A differentiation strategy allows a company to charge a low price for its products, if it chooses to do so.
False
Alpha Corporation owns and controls several retail outlets and is pursuing a strategy called franchising.
False
Technical standards do NOT play any role in product differentiation.
False
The franchisor typically owns and funds each of its franchisees.
False
Using her beloved grandmother's recipe for fruit-filled empanadas, Yeolan opens a drive-up kiosk specializing in these sweet treats. The concept is profitable and gains a lot of media attention. Yeolan wants to open additional locations, but she doesn't have a lot of start-up capital. Which of these consolidation strategies for fragmented industries could she utilize?
Franchising
Which of these designations indicates a type of technology industry in which the underlying scientific knowledge that companies use is rapidly advancing, as are the attributes of the products and services that result from its application?
High-tech
Which of the following companies uses a focus differentiation strategy?
Nordstrom. Nordstrom uses a focus differentiation strategy, customizing its offerings to the needs of its particular segment (chic fashion apparel customers) through unique features and functions (high-end designer clothing and accessories sold in an upscale retail environment).
What value innovation did Amazon hope to achieve through its purchase of Whole Foods?
Offer value to customers through home delivery of high-quality groceries
If adoption accelerates as the technology becomes better understood and utilized by the mass market, which of the following best describes the situation Amazon and Whole Foods would be facing?
The market will become saturated.
A company can lower costs through functional-level strategy and organization by:
achieving economies of scale, using information systems to automate business processes, and adopting lean production technologies.
The business-level strategies that support a differentiation strategy are:
based around ensuring that customers perceive a product to have greater value targeted to the unique needs of a single customer niche.
For a company that develops and sells video games, when price is graphed as a function of output, average costs:
decrease exponentially.. When a conventional producer expands output, marginal costs increase exponentially due to the law of diminishing returns. Marginal costs are nearly zero for a high-tech company, such as a video game developer. As a result, average costs decrease exponentially as the high fixed costs are spread out over a greater volume.
Nonprice competition is a group of market strategies that companies utilize to manage rivalry without price cutting and price wars. To employ one of these strategies, a company must:
define its differentiation through products or market segments.
If a company's strategy is to deliver products with superior functions and features, it is using a:
differentiation strategy.
In the market demand S-shaped growth curve, the early majority is the:
group of customers who begin purchasing a product at the beginning of an industry's transition from embryonic to growing.
A leadership strategy makes the most sense when a company:
has distinctive strengths that allow it to capture market share in a declining industry.
A company can incorporate differentiation as a path to competitive advantage in all of the following ways EXCEPT:
higher prices to reflect the superior quality of the commodity.company can differentiate itself from rivals in many ways. A product can be differentiated by superior reliability, better design, superior functions and features, better point-of-sale service, and better after-sales service and support. Commodities are undifferentiated products.
When Toshiba manufactures a computer, it uses the TCP/IP standard for communication between the computer and the internet. However, the TCP/IP standard does not constitute a competitive advantage for Toshiba because it is:
in the public domain.
For companies to successfully implement a divestment strategy, they must
recognize the signs of an industry's decline earlier than their competitors to divest while the company still has something to offer.
As a customer group, innovators are:
skilled in technology and able to experiment with systems that have glitches and failures.
Sets of technical specifications that producers adhere to when making a product or a component of it are known as:
technical standards.
A low-cost strategy is one in which a company:
undercuts its rivals on price to gain market share while still making a profit.
Business-level strategy defines each of the following EXCEPT:
why a company serves the market segments that it does. At its most basic, business-level strategy is about whom a company decides to serve (which customer segments), what customer needs and desires the company is trying to satisfy, and how the company decides to satisfy those needs and desires. Why a company has chosen to target certain market segments may explain the company's choice of business-level strategy but is not defined by it.
___ exists when consumers have a preference for the products of established companies.
Brand loyalty
Module Quizzes
Break
Famous Footwear sells many different types of shoes with an emphasis on price over quality. What type of generic business-level strategy does Famous Footwear pursue?
Broad low-cost
_____ can determine the demand for a company's products and thus are important whenever customers routinely borrow money to finance their purchase of those products.
Interest rates
The video listed seven ways in which the Amazon-Whole Foods collaboration is a game-changer. Amazon is working to tailor its business model to a changing industry environment in a number of ways. Which of the following would NOT be among those game-changers?
It is moving away from prepared foods and restaurant focuses in brick-and-mortar and online processes.
To manage rivalry, Thurston Co. uses which of the following strategies when it creates new or improved products to replace existing ones?
Product development
In a mature industry, PhysEdCo should use which of the following strategies to forestall the entry of new competitors by making sure every niche or segment in the marketplace is well served?
Product proliferation
For a company that sells high-quality handmade saxophones, when price is graphed as a function of output, marginal costs:
Rise exponentially. When a conventional producer (such as a handmade saxophone manufacturer) expands output, marginal costs increase exponentially due to the law of diminishing returns.
Which of these companies is pursuing a differentiation strategy to gain a competitive advantage?
Starbucks utilizes an upscale customer experience, high-quality coffee drinks, and brand building to charge a premium price for its products.
In regard to technological forces, which of the following statements is true?
Technological change can render established products obsolete overnight while creating a host of new product possibilities.
Because the Whole Foods and Amazon delivery industry is in the early adopter stage of development, which of the following best describes the customers who are using this service?
Technologically sophisticated
An industry moves from the embryonic stage to the growth stage when a mass market starts to develop for its product. What three things spur a mass market to emerge?
Technology advances to make the product easier to use, complementary products are developed, and the industry finds ways to reduce the cost of the product and lower prices.
Over time, which of the following companies and products would most likely have a sharply increasing marginal cost when graphed as a function of output if the company decides to expand its output?
Toro's line of lawn mowers. Marginal costs are nearly zero for a high-tech company like Microsoft. However, when a conventional producer (such as a lawn mower manufacturer like Toro) expands output, marginal costs increase exponentially due to the law of diminishing returns.
Compared to the trajectory of customer demands, the trajectory for technology advancements is:
Upward sloping and steeper.
______ are companies who have figured out a way to offer more value to their customer set and to do so at a lower cost.
Value innovators. A mover and shaker is a powerful person who initiates actions and influences people. Companies who have figured out a way to offer more value to their customer set and to do so at a lower cost are known as value innovators.
Which of the following is an example of a retail company that has implemented a low-cost strategy similar to those used in commodity markets?
Wal-Mart