Chapter 7 - MADM 760

generic strategies

Strategies that can be adopted by business units to guide their organizations.

intrapreneurship

The creation of new business ventures within an existing firm.

False

The focus-differentiation strategy emphasizes low overall costs while serving a narrow segment of the market.

True

The generic strategy typologies developed by Porter and Miles and Snow possess both similarities and differences.

A

Which of the following is not an option within Porter's generic strategy typology? A. analyzer B. differentiation C. low-cost D. all of the above

A

Which of the following is very important to low-cost businesses? A. efficiency B. quality-sensitive customers C. high quality raw materials D. all of the above

business unit

An organizational entity with its own unique mission, set of competitors, and industry

A

Emerging markets are often more attractive than developed ones because __________. A. competition is not as intense B. consumer incomes in emerging markets are not a concern C. the infrastructure in emerging markets is already developed D. none of the above

B

Improvements aimed at modifying products, services, and activities in order to maximize the value delivered to customers are called: A. process innovations B. value innovations C. structural innovations D. product innovations

False

The combination strategy can also be referred to as multiple strategies.

differentiation strategy

a generic business unit strategy in which a larger business produces and markets to the entire industry products or services that can be readily distinguished from those of its competitors

low-cost-differentiation strategy

a generic business unit strategy in which a larger business unit maintains low costs while producing distinct products or services industry-wide for a large market with a relatively inelastic demand

focus-differentiation strategy

a generic business unit strategy in which a smaller business produces highly differentiated products or services for the specialized needs of a market niche

focus low-cost-differentiation strategy

a generic business unit strategy in which a smaller business produces highly differentiated products or services for the specialized needs of a select group of customers while keeping its costs low

strategic group

a select group of direct competitors who have similar strategic profiles

competitive advantage

a stage whereby a business unit's successful strategies cannot be easily duplicated by its competitors

business strategy

a strategy delineating how a business unit competes with its rivals; also called competitive strategy

product innovations

b business unit's activities that enhance the differentiation of its products or services

first-move advantages

benefits derived from being the first firm to offer a new or modified product or service

micro-localization

customizing products and services to suit the tastes and needs of diverse consumers across a nation or region

quality

the features and characteristics of a product or service that allow it to satisfy stated or implied needs

True

A business unit is an organizational entity with its own mission, set of competitors, and industry.

process innovations

A business unit's activities that increase the efficiency of operations and distribution.

True

A commitment to quality can support an effort to combine low-cost and differentiation strategies.

focus-low-cost strategy

A generic business unit strategy in which a smaller business keeps overall costs low while producing no-frills products or services for a market niche with elastic demand.

A

A no-frills product targeted at the market at large is consistent with the __________. A. low-cost strategy B. differentiation strategy C. focus strategy D. none of the above

D

A state whereby a firm's successful strategies cannot be easily duplicated by its competitors is known as: A. comparative advantage B. core competency C. innovative capacity D. none of the above

multiple strategies

A strategic alternative for a larger business unit in which the organization simultaneously employs more than one of the generic business strategies.

C

Analyzers __________. A. seek first-mover advantages B. control a distinct segment of the market C. display some of the characteristics of both prospectors and defenders D. none of the above

False

Analyzers perceive a dynamic, uncertain environment and maintain flexibility to combat environmental change.

True

Both low-cost and focus-low-cost businesses are highly vulnerable to intense price competition.

C

Businesses adopting the same generic strategy are referred to as ¬__________. A. low-cost businesses B. differentiated businesses C. a strategic group D. none of the above

False

Businesses that employ the focus strategy produce and market to the entire industry products or services that can be readily distinguished from those of their competitors.

C

For a differentiation strategy to be successful, A. the cost position of the firm must be fairly close to that of low-cost businesses B. a mix of products must be offered C. the basis of the differentiation must be well-defined. D. all of the above

True

Michael Porter labeled business units attempting to emphasize both cost leadership and differentiation simultaneously as "stuck in the middle."

True

Midsize businesses tend to be outperformed by their smaller and larger counterparts.

D

Miles and Snow's reactor strategic type is somewhat analogous to Porter's: A. low cost strategy B. differentiation strategy C. focus strategy D. none of the above

value innovations

Modifying products, services, and activities to maximize the value delivered to customers.

D

Modifying the structure of the organization and/or the business model to improve competitiveness is consistent with __________. A. the low-cost strategy B. the focus strategy C. the differentiation strategy D. the low-cost-differentiation strategy

structural innovations

Modifying the structure of the organization and/or the business model to improve competitiveness.

D

Scholars agree that the low-cost and differentiation strategies: A. can be combined in all cases. B. can be combined in some cases. C. cannot be combined in any cases. D. none of the above

A

Selecting a generic strategy A. is the first step in business strategy formulation B. precedes the selection of the corporate strategy C. requires an understanding of comparative advantage D. all of the above

B

The idea that a business organization would emphasize the synergy created by serving multiple markets globally, but formulate a distinct competitive strategy for each specific market that is tailored to its unique situation is known as: A. thinking globally, acting globally B. thinking globally, acting locally C. thinking locally, acting locally D. thinking locally, acting globally

B

The strategy associated with stability and control is the: A. prospector strategy B. defender strategy C. analyzer strategy D. reactor strategy

True

There is no advantage to the reactor strategic type.

B

Which of the following is not a key advantage of the low-cost-differentiation strategy? A. It enables the business to compete from a cost leadership position. B. It is easier to implement than either the low-cost or differentiation strategy. C. It allows the business to distinguish its products from the competition. D. It offers the prospects of high profitability.