Strategic MGMT chapter 5 quiz

A cost leadership strategy generally leads to an increase in flexibility.

False

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively difficult for competitors to imitate.

False

A firm that competes on cost leadership can be vulnerable if there is a decrease in the cost of the inputs on which the advantage is based.

False

A profit pool is defined as the total revenue in an industry at all points along the industry supply chain.

False

Competitive advantage that is based solely on a focus strategy on a narrow competitive scope is always sufficient for assuring the sustainability of the strategy.

False

In technology intensive industries, the competitive advantages tend to increase over time.

False

Many firms facing a turnaround situation try to fix their situation by increasing the financial investment in administrative expenses and inventories.

False

The fashion retailer, Primark, focuses on selling clothes at low prices by streamlining logistics, spending a significant part of its budget on marketing, and using its scale to get the best supplier prices.

False

The three generic strategies presented by Michael Porter can be shown on two dimensions: competitive advantage and product life cycle.

False

The industry life cycle is important because

The emphasis on various generic strategies varies over the course of an industry life cycle.

If a company is using a cost leadership strategy, which of the following potential pitfalls is not a characteristic of that strategy?

The strategy is not easily imitated.

A cost leadership strategy can put the firm at a competitive disadvantage due to a declining basis of cost advantage.

True

Coca-Cola and Caterpillar used first mover advantage in the building of their global presence.

True

Competitive advantage is affected by the rate of globalization in an industry.

True

Firms that act as intermediaries between two sets of platform users (buyers and sellers) often thrive because they are not manufacturers of a product themselves.

True

If a company focuses on only a small number of value-chain activities, it can be lead to a pitfall of the overall cost leadership strategy.

True

A profit pool can be defined as the total profits in an industry at all points along the industry _____ chain.

Value

Products are unfamiliar to consumers in the ___________stage of a business life cycle.

Introduction

Which of the following is not a reason that company competitive advantage can be eroded?

Length of time a company is in business

Platform businesses need to master all of the following except

Limit the use of data analytics in creating services.

Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds?

Market expansion

Emphasis on process design is high during the __________ stage of the industry life cycle

Maturity

Atlas Door created its competitive advantages in the marketplace by doing all of the following except

Not emphasizing a differentiation strategy.

If a firm achieves above-average returns despite intense rivalry, it is likely to be using __________ strategy.

Overall cost leadership

If primary value-chain activities involve effective management of inbound logistics and support activities include increased efforts in technology development, this is representative of which type of competitive advantage?

Overall cost leadership