Quiz #6

Center Street Supply Co. has successfully achieved a competitive advantage in the detergent and cleaning solution industry as a differentiator. Which of the following scenarios would undermine Center Street's position?

Center Street's customers start to consider cleaning solutions a commodity.

How is differentiation parity different from cost parity?

Differentiation parity deals with value not cost.

How is a cost-leader protected from threats from powerful suppliers?

It is more able to absorb price increases through accepting lower profit margins.

What must a cost-leadership strategy accomplish to be successful?

It must reduce the firm's cost below that of its competitors while offering adequate value.

Fatima is the owner of a remodeling company that caters to a very wealthy clientele. Her company has struggled to differentiate itself from the other high-end remodelers in the area, but because she has hired several expensive but highly qualified team members, Fatima is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage?

Narrow the scope of competition and focus on unique features such as using premium materials.

Which of the following questions should strategic leaders ask while formulating a business-level strategy?

What customer needs, wishes, and desires will we satisfy?

Which of the following examples uses a focused differentiation strategy?

a tennis pro shop that sells high-quality, custom racquets priced at $350 dollars per racquet

A differentiator is at least likely to be threatened by increases in input prices due to powerful suppliers when the

differentiator is able to create a significant difference between perceived value and current market prices.

Vita Nova Inc. has recently introduced a new production method that will make the manufacture of its patient-monitoring devices more cost-effective. Which of the following will most likely be the result of this innovation?

jumps to a steeper learning curve

In order for a firm to formulate an effective business-level strategy, it is important to remember that competitive advantage is determined by

the characteristics of both the industry and the firm.