Chapter 5

B) buyer needs and uses of the product are diverse.

A broad differentiation strategy generally produces the best results in situations where A) buyer brand loyalty is low. B) buyer needs and uses of the product are diverse. C) new and improved products are introduced only infrequently. D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E) price competition is vigorous.

C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or

Achieving a cost advantage over rivals entails A) concentrating on the primary activities portion of the value chain and outsourcing all support activities. B) being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether. D) minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E) producing a standard product, redesigning the product infrequently, and having minimal advertising.

D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its

Successful differentiation allows a firm to A) be the industry's best-cost provider. B) set the industry ceiling on price. C) avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E) take sales and market share away from rivals by undercutting them on price.

C) whether a company's market target is broad or narrow and whether the company is pursuing a

The biggest and most important differences among the competitive strategies of different companies boil down to A) how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider. B) the different ways that companies try to cope with the five competitive forces. C) whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation. D) the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities. E) the relative emphasis they place on offensive versus defensive strategies.

A) the size of the buyer group that a company is trying to appeal to.

The chief difference between a broad differentiation strategy and a focused differentiation is A) the size of the buyer group that a company is trying to appeal to. B) the degree of bargaining power that buyers have. C) whether the product is strongly differentiated or weakly differentiated from rivals. D) the type of value chain being used to achieve a differentiation-based competitive advantage. E) the number of upscale attributes incorporated into the product offering.

C) the size of the buyer group that a company is trying to appeal to.

The chief difference between a low-cost provider strategy and a focused low-cost strategy is A) whether the product is strongly differentiated or weakly differentiated from rivals. B) the degree of bargaining power that buyers have. C) the size of the buyer group that a company is trying to appeal to. D) the type of value chain being used to achieve a low-cost competitive advantage. E) the number of upscale attributes incorporated into the product offering.

C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar

The competitive advantage of a best-cost provider is A) having the best value chain in the industry. B) its brand name reputation. C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. D) a distinctive competence in delivering top-notch quality and customer service. E) a distinctive competence in supply chain management.

C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat

The competitive objective of a best-cost provider strategy is to A) outmatch the resource strengths of both low-cost providers and differentiators. B) position the company outside the competitive arena of low-cost producers and differentiators. C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D) deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E) identify and concentrate on those differentiating features that are inexpensive to incorporate.

D) the extra price the product commands exceeds the added costs of achieving the differentiation.

A broad differentiation strategy improves profitability when A) it is focused on product innovation. B) differentiating enhances product performance. C) the differentiating features appeal to sophisticated and prestigious buyers. D) the extra price the product commands exceeds the added costs of achieving the differentiation. E) the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

E) technological change is fast-paced and competition revolves around rapidly evolving product

A broad differentiation strategy works best in situations where A) technological change is slow-paced and new or improved products are infrequent. B) buyer needs and uses of the product are very similar. C) buyers incur low costs in switching their purchases to rival brands. D) buyers have a low degree of bargaining power and purchase the product frequently. E) technological change is fast-paced and competition revolves around rapidly evolving product features.

D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals.

A company achieves best-cost provider status by A) selling a product with the best cost at the best price. B) having the best cost (as compared to rivals) for each activity in the industry's value chain. C) providing buyers with the best attributes at the best cost. D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals. E) doing a better job than rivals of adopting the best operating practices.

E) it has some type of edge over rivals in attracting customers and coping with competitive forces.

A company achieves competitive advantage whenever A) it is the acknowledged market share leader. B) it is the industry's acknowledged technology leader. C) it has greater financial resources than its rivals. D) it has a well-known and well-regarded brand name, prefers offensive strategies to defensive strategies, and has a strong balance sheet. E) it has some type of edge over rivals in attracting customers and coping with competitive forces.

A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has

A company attempting to be successful with a broad differentiation strategy has to A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B) incorporate more differentiating features into its product/service than rivals. C) concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D) have a widely known and highly respected brand name image. E) provide a top-of-the-line product and sell it at premium prices.

C) it has some type of edge over rivals in attracting customers and coping with competitive forces.

A company can be said to have competitive advantage if A) it is the acknowledged leader in product quality. B) it has a different value chain than rivals. C) it has some type of edge over rivals in attracting customers and coping with competitive forces. D) it earns the largest profits of any firm in the industry. E) it has more resource strengths than weaknesses.

E) All of the above.

A company that succeeds in differentiating its product offering from those of its rivals can usually A) avoid having to compete on the basis of simply a low price. B) charge a price premium for its product. C) increase unit sales. D) gain buyer loyalty to its brand. E) All of the above.

A) management's game plan for competing successfully—the specific efforts to please customers,offensive and defensive moves to counter the maneuvers of rivals, the responses to current market conditions, and the initiatives undertaken to improve the company's market position.

A company's competitive strategy deals with A) management's game plan for competing successfully—the specific efforts to please customers,offensive and defensive moves to counter the maneuvers of rivals, the responses to current market conditions, and the initiatives undertaken to improve the company's market position. B) what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on. C) its efforts to change its position on the industry's strategic group map. D) its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E) its plans for overcoming the five competitive forces.

D) buyers are large and have significant power to bargain down prices and buyers use the product in much the same ways.

A competitive strategy of striving to be the low-cost provider is particularly attractive when A) buyers are not very brand-conscious. B) most rivals are trying to be best-cost providers. C) there are many ways to achieve product differentiation that have value to buyers. D) buyers are large and have significant power to bargain down prices and buyers use the product in much the same ways. E) most rivals are pursuing focused low-cost or focused differentiation strategies.

C) price competition is especially vigorous and the offerings of rival firms are essentially identical,

A competitive strategy predicated on low-cost leadership tends to work best when A) there are widely varying needs and preferences among the various buyers of the product or service. B) there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C) price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E) buyers have high switching costs and there is considerable diversity in how buyers use the product.

E) All of these.

A competitive strategy to be the low-cost provider in an industry works well when A) price competition among rival sellers is especially vigorous. B) there are few ways to achieve product differentiation that have value to buyers. C) buyers incur low costs in switching their purchases from one seller/brand to another. D) industry newcomers use low introductory prices to attract buyers and build a customer base. E) All of these.

D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/

A firm pursuing a best-cost provider strategy A) seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/ features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes). E) seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow,

A focused differentiation strategy aims at securing competitive advantage A) by providing niche members with a top-of-the-line product at a premium price. B) by catering to buyers looking for an upscale product at an attractively low price. C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D) by developing product attributes that no other company in the industry has. E) by convincing a narrow, well-defined group of buyers that the company has a true world class product.

E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

A focused low-cost strategy can lead to attractive competitive advantage when A) buyers are looking for the best value at the best price. B) buyers are looking for a budget-priced product. C) buyers are price sensitive and are attracted to brands with low switching costs. D) demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies. E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

E) serving buyers in the target market niche at a lower cost and lower price than rivals.

A focused low-cost strategy seeks to achieve competitive advantage by A) outmatching competitors in offering niche members an absolute rock-bottom price. B) delivering more value for the money than other competitors. C) performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D) dominating more market niches in the industry via a lower cost and a lower price than any other rival. E) serving buyers in the target market niche at a lower cost and lower price than rivals.

B) either using its low-cost edge to underprice competitors and attract price sensitive buyers in large

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by A) cutting its price to levels significantly below the prices of rivals. B) either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold. C) going all out to use its cost advantage to capture a dominant share of the market. D) spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry-it can then use this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long-term. E) outproducing rivals and thus having more units available to sell.

D) meaningfully lower overall costs than competitors.

A low-cost leader's basis for competitive advantage is A) lower prices than rival firms. B) using a low cost/low price approach to gain the biggest market share. C) high buyer switching costs. D) meaningfully lower overall costs than competitors. E) higher unit sales than rivals.

C) the offerings of rival firms are essentially identical, standardized, commodity-like products.

A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when A) there are many ways to achieve product differentiation that buyers find appealing. B) buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C) the offerings of rival firms are essentially identical, standardized, commodity-like products. D) entry barriers are high and competition from substitutes is relatively weak. E) the market is composed of many distinct segments with varying buyer needs and expectations.

C) putting a firm in position to win the business of price sensitive customers, set the floor on market price,

Being the overall low-cost provider in an industry has the attractive advantage of A) building strong customer loyalty and locking customers into its product (because customers have such high switching costs). B) giving the firm a very appealing brand image. C) putting a firm in position to win the business of price sensitive customers, set the floor on market price, and still earn a profit. D) putting the company in strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of key suppliers.

A) there are many ways to differentiate the product or service and many buyers perceive these differences

Broad differentiation strategies are well-suited for market circumstances where A) there are many ways to differentiate the product or service and many buyers perceive these differences as having value. B) most buyers have the same needs and use the product in the same ways. C) buyers are susceptible to clever advertising. D) barriers to entry are high and suppliers have a low degree of bargaining power. E) price competition is especially vigorous.

A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product.

Broad differentiation strategies generally work best in market circumstances where A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product. B) most buyers have similar needs and use the product in the same ways. C) the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D) buyers are price sensitive and buying switching costs are quite low. E) the five competitive forces are strong.

B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower

For a best-cost provider strategy to be successful, a company must have A) excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/ features incorporated in its product. B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C) access to greater learning/experience curve effects and scale economies than rivals. D) one of the best-known and most respected brand names in the industry. E) a short, low-cost value chain.

A) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match

How valuable a low-cost leader's cost advantage depends on A) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B) how easy it is for the low-cost leader to gain the biggest market share. C) the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D) the leader's ability to combine the cost advantage with a reputation for good quality. E) the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs.

D) When buyers have widely varying needs and special requirements and the prices of substitute products

In which of the following circumstances is a strategy to be the industry's overall low-cost provider not particularly well matched to the market situation? A) When the offerings of rival firms are essentially identical, standardized, commodity-like products B) When there are few ways to achieve differentiation that have value to buyers C) When price competition is especially vigorous D) When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high E) When entry barriers are low and there is a stream of newcomers to the industry

C) When the products of rivals are weakly differentiated and most competitors are resorting to clever

In which one of the following market circumstances is a broad differentiation strategy generally not well- suited? A) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B) When few rivals are pursuing a similar differentiation approach C) When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart D) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E) When technological change is fast-paced and competition revolves around rapidly evolving product features

E) be unique in ways that are valuable and appealing to a wide range of buyers.

The essence of a broad differentiation strategy is to A) appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers. B) incorporate a greater number of differentiating features into its product/service than rivals. C) lower buyer switching costs. D) outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E) be unique in ways that are valuable and appealing to a wide range of buyers.

C) low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused

The generic types of competitive strategies include A) build market share, maintain market share, and slowly surrender market share. B) offensive strategies and defensive strategies. C) low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation. D) low-cost/low price strategies, high-quality/high price strategies, and medium quality/medium price strategies. E) price leader strategies, price follower strategies, technology leader strategies, first-mover strategies, offensive strategies, and defensive strategies.

A) revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out-

The major avenues for achieving a cost advantage over rivals include A) revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out- managing rivals in the efficiency with which value chain activities are performed. B) having a management team that is highly skilled in cutting costs. C) being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low- cost manufacture. D) outsourcing high-cost activities to cost-efficient vendors. E) paying lower wages and salaries than rivals.

A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/

The objective of a best-cost provider strategy is to A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes). B) offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C) attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D) outcompete rivals using low-cost provider strategies. E) translate its best-cost status into achieving the highest profit margins of any firm in the industry.

B) knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences.

The objective of competitive strategy is to A) contend successfully with the industry's 5 competitive forces. B) knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences. C) get the company into the best strategic group and then dominate it. D) establish a competitively powerful value chain. E) grow revenues at a faster annual rate than rivals are able to grow their revenues.

A) value-conscious buyers.

The target market of a best-cost provider is A) value-conscious buyers. B) brand-conscious buyers. C) price-sensitive buyers. D) middle-income buyers. E) young adults (in the 18-35 age group).

D) do two things: (1) perform value chain activities more cost-effectively than rivals and (2) be proactive

To succeed with a low-cost provider strategy, c ompany managers have to A) pursue backward or forward integration to detour suppliers or buyers with considerable bargaining succeed with a low-cost provider strategy, company managers have to power and leverage. B) move the performance of most all value chain activities to low-wage countries. C) sell direct to users of their product or service and eliminate use of wholesale and retail intermediaries. D) do two things: (1) perform value chain activities more cost-effectively than rivals and (2) be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. E) outsource the biggest majority of value chain activities.

C) the extra price the product commands exceeds the added costs of achieving the differentiation.

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether A) many buyers view the product's differentiating features as having value. B) most buyers have similar needs and use the product in the same ways. C) the extra price the product commands exceeds the added costs of achieving the differentiation. D) buyer switching costs are low and customer loyalty to any one brand is low. E) buyers are prone to shop the market for sellers having the best price.

E) Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively? A) Striving to capture all available economies of scale and learning/experience curve effects B) Trying to operate facilities at full capacity C) Adopting labor-saving operating methods D) Improving supply chain efficiency E) Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

E) A market share dominator strategy

Which of the following is not one of the five generic types of competitive strategy? A) A low-cost provider strategy B) A broad differentiation strategy C) A best-cost provider strategy D) A focused low-cost provider strategy E) A market share dominator strategy

C) Increasing production capacity and then striving hard to operate at full capacity

Which of the following is not one of the ways that a company can achieve a cost advantage by revamping its value chain? A) Cutting out distributors and dealers by selling direct to customers B) Replacing certain value chain activities with faster and cheaper online technology C) Increasing production capacity and then striving hard to operate at full capacity D) Relocating facilities so as to curb the need for shipping and handling activities E) Streamlining operations by eliminating low value-added or unnecessary work steps and activities

E) There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that

Which one of the following generic types of competitive strategy is typically the best strategy for a company to employ? A) A low-cost leadership strategy B) A broad differentiation strategy C) A best-cost provider strategy D) A focused low-cost provider strategy E) There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities.

B) delivering superior value to buyers and building competencies and resource strengths in performing

While there are many routes to competitive advantage, they all involve A) building a brand name image that buyers trust. B) delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match. C) achieving lower costs than rivals and becoming the industry's sales and market share leader. D) finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. E) getting in the best strategic group and dominating it.