Chapter 1, 2, 5
True
17. A differentiation strategy also creates benefits relative to potential new entrants.
False
26. A focus strategy typically implies that a firm forgoes any attempt to develop expertise about the goods and services that it offers.
False
29. A firm's business-level strategy should involve trying to serve the varied needs of every different segment of customers in an industry.
True
4. One of the ways that cost leaders generally keep their costs low is by not spending much on advertising.
a. focused cost leadership
58. A(n) _____ strategy requires competing based on price to target a narrow market. a. focused cost leadership b. pull leadership c. focused differentiation d. adaptive e. differentiation
False
6. Cost leaders are companies that sell inferior, poor quality goods and services for rock-bottom prices.
19. A(n) _____ strategy is the strategy that an organization actually follows.
Realized
1. _____ examines how actions and events involving top executives, firms, and industries influence a firm's success or failure.
Strategic management
43. Who wrote the book, "The World is Flat: A Brief History of the Twenty-First Century"?
Thomas Friedman
36. _____ refer to CEOs possessing both fame and strong reputations.
b. Icons
13. Which of the following statements describes the "realistic" aspect of a goal?
b. The achievement of the goal is feasible.
e. It can charge very high prices.
68. A real estate company provides housing services to retired individuals. It basically helps individuals above the age of sixty to search for houses with peaceful surroundings. Which of the following statements holds true for the real estate company? a. It depends on its ability to reduce the price to drive competition out of the market. b. It does not face damaging attacks from larger firms. c. It growth is never stymied irrespective of the fact that it serves a niche market. d. Its area of operation cannot be made to disappear or be taken over by larger competitors. e. It can charge very high prices.
21. A _____ strategy is the parts of the intended strategy that an organization continues to pursue over time.
Deliberate
22. Quattro is a pizza shop that delivers pizzas without any extra charge. It also refunded the entire amount of the order when the pizza was not delivered within 30 minutes from the order placement. After two years it stopped this policy, but it still delivers pizzas without any extra charge. The fact that it continues to deliver pizzas to households without any extra charge is an example of a _____ strategy. a. make over
Deliberate
18. Roomz, a mid-range hotel, used to provide only food and accommodation facilities. It soon realized that most of its customers are foreign tourists who constantly ask for directions and advice on places to visit. The hotel then decided to start a travel desk which would help tourists select and visit places of historical and cultural significance. This is an example of a(n) _____ strategy.
Emergent
33. A(n) _____ fee refers to the upfront fee paid by an organization which gets the right to use another organization's brand name, products, and processes.
Franchise
31. An organization which gets the right to use another organization's brand name, products, and processes is referred to as a _____.
Franchisee
32. Marty's, a clothing company, has a number of outlets which are owned and managed by private individuals. These outlets are allowed to use the brand name and products of Marty's after paying a fee to the company. They also pay a part of their revenues to Marty's. Each of these outlets is a:
Franchisee
29. A _____ is an organization which grants the right to use its brand name, products, and processes to other organizations.
Franchisor
16. A pizza shop plans to deliver pizzas to households. The delivery would be made without any extra charge. It hopes to execute this strategy in the suburbs. This is an example of a(n) _____ strategy.
Intended
41. Which of the following statements holds true for the book "The World is Flat: A Brief History of the Twenty-First Century"?
It argued that many of the advantages that firms in developed countries like the United States, Japan, and Great Britain take for granted are disappearing.
42. Which of the following statements holds true for the "capstone" course recommended by The Ford Foundation?
It emphasized student's critical thinking skills in general and the notion that multiple ways of addressing a problem could be equally successful in particular.
40. Which of the following statements holds true for the book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors"?
It offered concepts such as Five Forces Analysis and Generic Strategies that continue to strongly influence how executives choose strategies.
24. Quattro is a pizza shop that delivers pizzas without any extra charge. It also refunded the entire amount of the order when the pizza was not delivered within 30 minutes from the order placement. After two years it stopped this policy, but it still delivers pizzas without any extra charge. The fact that it stopped the policy of refunds in case of a delay of more than 30 minutes is an example of a _____ strategy.
Non-realized
11. Strategy as _____ focuses on the extent to which a firm's actions over time are consistent.
Pattern
7. A strategic _____ is a specific move designed to outwit or trick competitors.
Ploy
20. Pizzas at Home, a pizza shop, plans to deliver pizzas to households. Deliveries would be made without any extra charge. It put this plan in place.its plans to good effect. Soon, Pizzas at Home realizes it must start charging a nominal fee for delivery. Many other pizzerias start following the same strategy. Pizzas at Home then starts offering free pizzas if they are not delivered within 30 minutes of the order placement. The strategy followed by Pizzas at Home is an example of a(n) _____ strategy.
Realized
35. A(n) _____ fee refers to the percentage of franchisees' revenues paid to an organization which has granted the right to use its brand name, products, and processes.
Royalty
5. Economies of _____ refer to a cost advantage that is created when a firm can produce a good or service at a lower per unit price due to producing the good or service in large quantities.
Scale
6. Myshirts.com, a company that manufactures shirts, buys large batches of dressing material from a supplier. The
Scale
39. Which two pivotal events that took place in 1980 led to the establishment of strategic management as a field of study?
The creation of the Strategic Management Journal and the publication of Competitive Strategy: Techniques for Analyzing Industries and Competitors
9. Which of the following statements describes the "measurable" aspect of a goal?
a. The goal that is achieved is quantifiable.
28. A take-out restaurant specializing in pizzas completes the order for a single pizza in 15 minutes. The employees of the restaurant are trained to deliver orders within the specified period. This is an example of a(n) _____ measure used to assess organizational performance.
a. internal business process
14. An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The company has the required technology and the required finances to come up with such a car. Therefore the plan seems to be feasible. The fact that the plan is viable and practicable reflects the _____ dimension of a goal.
a. realistic
34. The _____ aspect of a performance measuring framework makes sure that organizations act in a way that promotes environmental sustainability.
c. Planet
False
25. In the case of focus differentiation, a company lacks the ability to charge high prices.
True
27. One route toward a best-cost strategy is for a firm to adopt a business model whose fixed costs and overhead are very low relative to the costs that competitors are absorbing.
d. Economies of scale
38. Which of the following are created when the costs of offering goods and services decreases as a firm is able to sell more items? a. Economies of cost b. Economies of demand c. Economies of distribution d. Economies of scale e. Economies of supply
True
5. A firm may not match every characteristic that its generic strategy entails.
d. It invests heavily in advertising and brand building.
50. A health drink company is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotic flavored drinks. It also charges higher than what other health drink companies charge. Which of the following statements would hold true for this company? a. It offers generic and standardized products. b. It does not invest in the field of market research. c. It spends little on research and development. d. It invests heavily in advertising and brand building. e. It competes with its rivals on the basis of price.
True
7. Most cost leaders spend little on advertising, market research, or research and development in order to be efficient.
True
9. Cost leaders are often large companies, and this allows them to demand price concessions from their suppliers.
43. Which of the following statements describes the term "innovativeness" as a dimension of entrepreneurial orientation?
b. It refers to the tendency to pursue creativity and experimentation.
24. The stock price of an oil and natural gas exploration concern is $100 per share. The value of the share is increasing by the day. This is an example of a(n) _____ measure used to assess organizational performance.
c. financial
18. Performance _____ refers to a metric such as profits, stock price, and sales along which organizations can be gauged.
d. measure
4. A company that manufactures soaps could not sell its products despite spending a good amount on advertisements. Therefore, management decided to use the concept of direct marketing. They thought of appointing a large number of salespersons who would do door-to-door selling of the product. This is an example of a strategic:
plan
False
18. A differentiation strategy helps break barriers to entry that protect the firm and its industry from new competition.
False
22. The nature of the narrow target market remains constant across firms that use a focused cost leadership strategy.
b. generic
32. Jeff wants to open a new coffee shop in town. There are already two other coffee shops in his town. In order to attract more customers to his new shop, James decides to charge less price for each cup of coffee than what is charged by the other two coffee shops. This is an example of a(n) _____ strategy. a. established b. generic c. marked d. general e. standard
b. cost leadership
33. A firm following a(n) _____ strategy offers products or services with acceptable quality and features to a broad set of customers at a low price. a. pull b. cost leadership c. focused differentiation d. adaptive e. differentiation
c. cost leadership
34. A company introduces a new helmet for bikers. The company prices the helmets at a price which is much lower than that of other helmets offered in the market. This enables the company to attract a lot of customers. This is an example of a(n) _____ strategy. a. focused differentiation b. pull c. cost leadership d. adaptive e. differentiation
a. cost leadership
35. Mike opens a new gym in his hometown. He charges a lower membership and monthly fees than what is offered by the other four gyms in town. This results in the migration of customers from the other gyms to Mike's gym. This enables the company to attract a lot of customers. This is an example of a(n) _____ strategy. a. cost leadership b. adaptive c. differentiation d. focused differentiation e. pull
e. economies of scale.
39. A national grocery chain sets up a store in a small town. It sources most of its produce from the local farmers. Since it sources the produce in bulk, it demands discounts from the suppliers. The store passes some of these savings to the customers in the form of low prices for the products. The price is lower than what is offered by the local grocery stores. The large quantities of products sold compensates for the lower price. This is an example of: a. economies of distribution. b. economies of cost. c. economies of demand. d. economies of supply. e. economies of scale.
a. economies of scale.
40. A company that sells dairy products purchases large quantities of milk from the local dairy farms. Since the quantity purchased is very high, the company is able to demand and get price concessions from the dairy farms. The company prices its dairy products at a lower rate than its competitors. The greater quantity of products sold compensates for the low price. This is an example of: a. economies of scale. b. economies of supply. c. economies of demand. d. economies of distribution. e. economies of cost.
e. differentiation strategy
45. A(n) _____ means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market. a. focused cost leadership strategy b. cost leadership strategy c. pull strategy d. adaptive strategy e. differentiation strategy
c. differentiation
46. Pete opens a new pizzeria in town. He promises home delivery of pizzas within a period of thirty minutes. He also makes a unique offer that if the pizzas are not delivered within thirty minutes of placing the order, then the customer would not be charged for the pizza. None of the other pizzerias in his town offer such a deal. This is an example of a(n) _____ strategy. a. cost leadership b. adaptive c. differentiation d. pull e. focused cost leadership
e. differentiation
47. A company regularly launches products with features that are different from what are offered in the market. It has now launched a new electronic device in the market. The device can be fitted to vehicles. It can be programmed in such a way that it automatically dials the police emergency number, provide them with all the required location details, and guide them to the location in case of an emergency. This is an example of a(n) _____ strategy. a. focused cost leadership b. cost leadership c. pull d. adaptive e. differentiation
True
8. Economies of scale occur because expenses are distributed across a greater number of items.
30. Marty's, a clothing company, has a number of outlets that are owned and managed by private individuals. These outlets are allowed to use the brand name and products of the clothing line after paying a fee to Marty's. They also pay a part of their revenues to Marty's. Marty's is an example of a:
Franchisor
13. Strategy as _____ refers to how executives interpret the competitive landscape around them.
Perspective
14. Dormer is the only fine dining restaurant in a small town. The opening of a new restaurant is viewed as a threat by some of the employees at Dormer. Others see it as an opportunity for Dormer to strengthen itself by looking out for its weaknesses and ironing them out. This is an example of strategy as: a. ploy.
Perspective
8. A coffee chain was losing its customers to its competitors, and wanted to increase its sales. Therefore it started offering complimentary pastries with every cup of coffee, to outwit its competitors. Soon, the company registered an increase in its sales. This is an example of a strategic:
Ploy
10. A company that manufactures cars aims to sell them to customers in the premium market segment. This is an example of strategy as:
Position
20. A performance _____ is a benchmark used to make sense of an organization's standing along a performance measure.
b. referent
15. Which of the following statements describes the "time-bound" aspect of a goal?
c. The goal is achieved through the creation of deadlines.
16. An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The fact that the company has a set target date to complete the task reflects the _____ dimension of a goal.
d. time-bound
23. Which of the following statements describes financial measures as a part of the balanced scorecard?
e. They relate to organizational effectiveness and profits.
3. A strategic _____ is a carefully crafted set of steps that a firm intends to follow in order to be successful.
plan
True
30. In many cases, firms become stuck in the middle because firms are simply outmaneuvered by their rivals.
e. Cost leaders, in general, emphasize on efficiency
36. Which of the following statements holds true for the cost leadership strategy? a. Cost leaders, in general, encourage expensive advertising campaigns. b. Cost leaders, in general, invest heavily in market research. c. Cost leaders, in general, spend substantial funds on research and development. d. Cost leaders, in general, make an effort to offer unique features to the customers. e. Cost leaders, in general, emphasize on efficiency.
b. best-cost
71. Firms that charge relatively low prices and offer substantial differentiation are following a _____ strategy. a. generic cost b. best-cost c. standardized cost d. stuck in the middle e. marked
17. A(n) _____ strategy is an unplanned strategy that arises in response to unexpected opportunities and challenges.
Emergent
26. _____ published a book titled The Principles of Scientific Management.
Frederick W. Taylor
15. A(n) _____ strategy is the strategy that an organization hopes to execute.
Intended
4. An organization's _____ describes the reasons for an organization's existence.
Mission
23. A _____ strategy refers to the parts of the intended strategy that are abandoned.
Non-realized
12.. A department store consistently keeps low prices, and this strategy helps the store to attract many customers. This is an example of a strategic:
Pattern
37. Alfred Chandler's book focused on:
Strategy and Structure
1. An organization's _____ describes what the organization hopes to become in the future.
Vision
3. A steel manufacturing company wants to be among the fortune 500 companies in the next one year. This is an example of the _____ of the company.
Vision
44. Which of the following statements describes the term "proactiveness" as a dimension of entrepreneurial orientation?
a. It refers to the tendency to anticipate and act on future needs.
38. Which of the following statements holds true for the book "Strategy and Structure: Chapters in the History of the Industrial Enterprise"?
a. It stressed on how strategy and organizational structure need to be consistent with each other in order to ensure strong firm performance.
40. Entrepreneurial _____ is a term that refers to the processes, practices, and decision-making styles of organizations that act entrepreneurially.
a. Orientation
25. Which of the following statements describes customer measures as a part of the balanced scorecard?
a. They relate to client attraction, satisfaction, and retention.
29. Which of the following statements describes learning and growth measures as a part of the balanced scorecard?
b. They focus on innovation and proceeds with an understanding that strategies change over time.
41. Which of the following statements describes the term "autonomy" as a dimension of entrepreneurial orientation?
c. It tells whether an individual or team of individuals within an organization has the freedom to develop an entrepreneurial idea and then see it through to completion.
33. A supermarket purchases its vegetables from local farmers. It also ensures that it purchases the vegetables from farmers located closest to the supermarket so that the distance covered in transport is minimal. This reduces pollution. The supermarket also earns good profits. The fact that the supermarket purchases its vegetables from local farmers and demonstrates social responsibility reflects the _____ aspect of the triple bottom line framework.
c. People
27. Which of the following statements describes internal business process measures as a part of the balanced scorecard?
c. They relate to organizational efficiency.
34. Marty's, a clothing company, has a number of outlets that are owned and managed by private individuals. These outlets are allowed to use the brand name and products of Marty's after paying a fee to the company. They also pay a part of their revenues to Marty's. The upfront payment these outlets make to Marty's for using the Marty's brand name is referred to as a(n):
c. franchise fee.
27. The book "The Principles of Scientific Management" _____.
c. stressed on how organizations could become more efficient through identifying the "one best way" of performing important tasks
38. _____ are CEOs who lack fame but possess positive reputations.
d. Hidden gems
42. Which of the following statements describes the term "competitive aggressiveness" as a dimension of entrepreneurial orientation?
d. It refers to the tendency to intensely and directly challenge competitors.
32. The _____ aspect of a performance measuring framework makes sure that the actions of an organization are socially responsible.
d. People
7. Which of the following statements describes the "specific" aspect of a goal?
d. The goal is explicit rather than vague.
31. _____ refers to an approach to assessing performance that emphasizes the concerns of people and the planet in addition to profit.
d. The triple bottom line
45. Which of the following statements describes the term "risk-taking" as a dimension of entrepreneurial orientation?
e. It refers to the tendency to engage in bold rather than cautious actions.
17. _____ refers to how well a company is doing reaching its vision, mission, and goals.
e. Organizational performance
37. _____ refer to CEOs displaying high levels of relative fame but low levels of reputation.
e. Scoundrels
30. The management of a football club regularly encourages and funds its coaches and trainers to take courses on sports' science. They believes that the application of scientific principles and techniques helps its players to improve their performance on the field. This is an example of a(n) _____ measure used to assess organizational performance.
e. learning and growth
True
28. The best cost strategy is difficult to execute in part because creating unique features and communicating them generally raises a firm's costs of doing business.
True
1. Focusing on generic strategies allows executives to concentrate on the core elements of firms' business-level strategies.
False
10. Cost leaders' emphasis on efficiency makes them vulnerable to price competition from rivals.
False
11. The presence of a cost leader in an industry encourages new firms to enter the business.
False
12. The need for efficiency means that cost leaders' profit margins are often higher than the margins enjoyed by other firms.
False
13. Markets that involve a lot of brand loyalty offer great opportunities to cost leaders to attract a large segment of customers.
5. A charitable organization provides education to poor children. It aims at providing education to every child who cannot afford to pay for his or her own education. This is an example of the _____ of the organization.
Mission
b. Companies following the focused differentiation strategy can charge very high prices.
67. Which of the following holds true for companies following the focused differentiation strategy? a. The niche that is an area of operation of one company cannot be made to disappear or be taken over by larger competitors. b. Companies following the focused differentiation strategy can charge very high prices. c. Companies following this strategy depend on their ability to reduce the price to drive competition out of the market. d. Damaging attacks do come not from larger firms. e. Companies following the focused differentiation strategy hardly have their growth stymied irrespective of the size of the market.
a. Companies following the focused differentiation strategy can charge very high prices.
69. Which of the following is an advantage of a company following a focused strategy? a. Companies following the focused differentiation strategy can charge very high prices. b. Damaging attacks never comes from larger firms c. The companies are protected from the damaging attacks of smaller firms that adopt an even narrower focus. a. Companies following the focused differentiation strategy never have their growth stymied irrespective of the fact that they serve a niche market. d. The niche that is an area of operation of one company cannot be made to disappear or be taken over by larger competitors.
True
23. In many cases, the target market is defined by the sales channel used to reach customers.
True
24. The unique features provided by firms following a focused differentiation strategy are often very specialized.
6. An organization's _____ describes the narrower aims that organizations pursue in an effort to serve their visions and missions.
Goal
True
19. The big risk when using a differentiation strategy is that customers will not be willing to pay extra to obtain the unique features that a firm is trying to build its strategy.
True
2. Firms that are able to offer both low prices and unique features that customer find desirable are said to be stuck in the middle.
True
20. Customers, in many cases, may simply prefer a cheaper alternative to a unique product sold at a premium price.
False
21. A firm following the focused cost strategy necessarily charges the lowest prices in the industry.
False
3. Firms that are not able to offer low prices or appealing unique features said to be following the best-cost strategy.
d. generic strategy
31. A(n) _____ is a general way of positioning a firm within an industry. a. micro-strategy b. standard strategy c. established strategy d. generic strategy e. marked strategy
2. Skyway manufactures fighter jets. It aims to be the top aircraft manufacturing company in the world. This is an example of the _____ of the company.
Vision
e. It can charge very high prices.
70. Car manufacturers such as Lamborghini compete in the small super car category. These cars offer more than just transportation. They are known for their styling and state of art technology. Which of the following is an advantage for such a company? a. It depends on its ability to reduce the price to drive competition out of the market. b. It does not face damaging attacks from larger firms. c. It growth is never stymied irrespective of the fact that it serves a niche market. d. Its area of operation cannot be made to disappear or be taken over by larger competitors. e. It can charge very high prices.
b. best-cost
72. A sneaker manufacturing company targets teenagers. It sells the sneakers to these teenagers at a price which is lower than what is offered in the market. It also has a website where the customers can design their own shoes. They then can order the shoes and it will be delivered at their address. This is an example of a (n) _____ strategy. a. generic cost b. best-cost c. standardized cost d. stuck in the middle e. marked
d. stuck in the middle
73. A firm is said to be _____ if it does not offer features that are unique enough to convince customers to buy its offerings and its prices are too high to effectively compete on based on price. a. paste-up b. runner c. rack jobber d. stuck in the middle e. preretailing
b. stuck in the middle
74. A watch manufacturing company has priced its goods at a rate which is higher than what other companies offer. The watches made by this company do not have any stand out feature to differentiate itself from the other companies or justify its high price. This company would be considered as a _____ firm. a. rack jobber b. stuck in the middle c. paste-up d. runner e. preretailing
e. stuck in the middle
75. A hotel chain offers rooms which are priced higher than what other hotels in the same category offer. The services provided by the hotel are similar in quality when compared to the other firms. This situation makes it impossible for the hotel chain to compete either on the basis of price or on the basis of standout features. This hotel chain is a _____ organization. a. runner b. preretailing c. paste-up d. rack jobber e. stuck in the middle
c. The company emphasizes on efficiency.
37. A company introduces a new product in the market. The company decides that the only way it could attract customers is to keep the price of the product lower than what its competitors offer in the market. Which of the statements would hold true for such a strategy? a. The company invests heavily in market research. b. The company makes an effort to offer unique features to the customers. c. The company emphasizes on efficiency. d. The company must spend substantial funds on research and development. e. The company encourages expensive advertising campaigns.
10. An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The progress of the project can be easily calculated and assessed. The fact that this project can be easily assessed reflects the _____ dimension of a goal.
c. measurable
26. A law firm wants to increase its client strength. Therefore it has promised to offer free service to senior citizens. This has helped the organization gain new clients, as friends and relatives of the senior citizens having started using this law firm's services. Good legal counseling has helped it to retain its clients. This is an example of _____ measures used to assess organizational performance.
d. customer
19. A bakery generally makes a sale of $4,000 every month. But during Christmas time it made a sale of $6,000. That is, it registered an increase in its sales. The sales factor is a performance _____ to judge organizational performance.
d. measure
11. Which of the following statements describes the "aggressive" aspect of a goal?
e. The goal presents a significant challenge to the organization.
8. An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. The fact that the company has an explicit goal reflects the _____ dimension of a goal.
e. specific
9. Strategy as _____ refers to a firm's place in the industry relative to its competitors.
Position
True
14. A relative lack of market research can lead cost leaders to be not as skilled as other firms at detecting important environmental changes.
True
15. A firm following a differentiation strategy attempts to convince customers to pay a premium price for its good or services by providing unique and desirable features.
True
16. Effective differentiation creates an ability to obtain premium prices from customers.
a. It makes a firm following this strategy well positioned to withstand price competition from rivals.
41. Which of the following is an advantage of cost leadership? a. It makes a firm following this strategy well positioned to withstand price competition from rivals. b. The need for high sales volume requires low upfront investments in production and/or distribution capacity. c. In markets that involve a lot of brand loyalty, cost leadership companies command the largest share in the market. d. Low expenditure on market research helps firms following the cost leadership strategy to detect important environmental changes at a lower cost. e. Highly fragmented markets offer firms following this strategy greater opportunities to attract a large segment of customers.
d. It makes them well positioned to withstand price competition from rivals.
42. A company introduces a new product in the market. The company decides that the only way it could attract customers is to keep the price of the product lower than what its competitors charge. What advantage would the company enjoy because of the strategy it proposes to follow? a. If the market involves a lot of brand loyalty, the company would command the largest share in the market. b. Low expenditure on market research would help it to detect important environmental changes at a lower cost. c. If the market is highly fragmented the company would avail greater opportunities to attract a large segment of customers. d. It makes them well positioned to withstand price competition from rivals. e. The need for high sales volume would require low upfront investments in production and/or distribution capacity.
c. Downplaying research and development can slow cost leaders' ability to respond to changes once they are detected.
43. Which of the following is a disadvantage of cost leadership? a. The presence of a cost leader in an industry tends to discourage new firms from entering the business. b. Low prices for goods and services always lead to low customer base. c. Downplaying research and development can slow cost leaders' ability to respond to changes once they are detected. d. Cost leadership strategy makes companies vulnerable to price competition from rivals. e. Cost leadership strategy breaks down barriers to entry that protect the firm from new competition.
b. Downplaying research and development can slow the company's ability to respond to changes once they are detected.
44. A company introduces a new product in the market. The company decides that the only way it could attract customers is to keep the price of the product lower than what its competitors charge. Which of the following disadvantage would the company face because of the strategy it proposes to follow? a. Low prices for goods and services always lead to low customer base for the company. b. Downplaying research and development can slow the company's ability to respond to changes once they are detected. c. The company's strategy would make it vulnerable to price competition from rivals. d. The company's strategy would break down barriers to entry that protects the firm from new competition. e. The presence such a company would have the effect of discouraging new firms from entering the business.
d. Advertising in general and brand building in particular are very important to them.
48. Which of the following statements holds true for companies following the differentiation strategy? a. They offer generic and standardized products. b. They do not invest in the field of market research. c. They spend little on research and development. d. Advertising in general and brand building in particular are very important to them. e. They compete with their rivals on the basis of price.
e. It invests heavily in advertising and brand building.
49. Mekcin is a company that regularly launches products with features that are different from what are offered in the market. It has now launched a new electronic device in the market. The device can be fitted to vehicles. It can be programmed in such a way that it automatically dials the police emergency number, provide them with all the required location details, and guide them to the location, in case of an emergency. Which of the following statements would hold true for Mekcin? a. It competes with rivals on the basis of price. b. It offers generic and standardized products. c. It does not invest in the field of market research. d. It spends little on research and development. e. It invests heavily in advertising and brand building.
a. It creates an ability to obtain premium prices from customers.
51. Which of the following constitutes an advantage of the differentiation strategy? a. It creates an ability to obtain premium prices from customers. b. Companies following this strategy do not need to spend significant funds on advertising. c. Companies following this strategy depend on their ability to reduce the price to drive competition out of the market. d. Customers always prefer a product with features rather than a cheaper alternative. e. Customers are always eager to pay extra to obtain the unique features that a firm is trying to build its strategy around.
a. focused differentiation strategy.
66. A company that manufactures laundry detergent makes use of salespersons for door-to-door selling to directly sell the products to the customers. The company allows customers to make payments for the products within a period of one month. This is an example of a(n): a. focused differentiation strategy. b. focused cost leadership strategy. c. cost leadership strategy. d. pull strategy. e. adaptive strategy.
c. It has an ability to obtain premium prices from customers
52. A health drink company is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotic flavored drinks. It also charges higher than what other health drink companies charge. What advantage would the company enjoy because of the strategy it follows? a. It can depend on its ability to reduce the price to drive competition out of the market. b. Customers always prefer a product with features rather than a cheaper alternative. c. It has an ability to obtain premium prices from customers. d. It does not need to spend significant funds on advertising. e. Customers are always eager to pay extra to obtain the unique features that a firm is trying to build its strategy around.
b. Competitors are able to imitate the features well enough that they are no longer unique.
53. Which of the following constitutes a disadvantage of the differentiation strategy? a. A differentiation strategy lacks the capacity to generate buyer loyalty. b. Competitors are able to imitate the features well enough that they are no longer unique. c. The firm needs to attract huge numbers of customers in order to have a good overall level of profit. d. Differentiation lacks an ability to obtain premium prices from customers. e. A differentiation strategy allows the entrance of new companies in the market.
e. Competitors may be able to imitate the features well enough that they are no longer unique.
54. Mekcin is a company that regularly launches products with features that are different from what are offered in the market. It has now launched a new electronic device in the market. The device can be fitted to vehicles. It can be programmed in such a way that it automatically dials the police emergency number, provide them with the required location details, and guide them to the location in case of an emergency. It also charges higher for its products than what other companies charge for their products. What disadvantage would the company face because of the strategy it follows? a. The firm needs to attract huge numbers of customers in order to have a good overall level of profit. b. This company lacks an ability to obtain premium prices from customers. c. This differentiation strategy allows the entrance of new companies in the market. d. This strategy lacks the capacity to generate buyer loyalty. e. Competitors may be able to imitate the features well enough that they are no longer unique.
e. Competitors may be able to imitate the features well enough that they are no longer unique.
55. A health drink company is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotically flavored drinks. It also charges higher than the other health drink companies. What disadvantage would the company face because of the strategy it follows? a. The firm needs to attract huge numbers of customers in order to have a good overall level of profit. b. Differentiation lacks an ability to obtain premium prices from customers. c. A differentiation strategy allows the entrance of new companies in the market. d. A differentiation strategy lacks the capacity to generate buyer loyalty. e. Competitors may be able to imitate the features well enough that they are no longer unique.
d. Price sensitivity
56. _____ refers to the extent to which an increase in the cost of the product makes a buyer less likely to purchase an item. a. Affective conflict b. Palming off c. Party selling d. Price sensitivity e. All-you-can-afford budgeting
a. price sensitivity
57. Healthie is a health drink company that is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotically flavored drinks. It also charges higher than the other health drink companies. Another company offers the same drinks a lower price. Customers who were once loyal to Healthie immediately switch over to the new company which is charging a lower price for the same drinks. This is an example of _____. a. price sensitivity b. affective conflict c. party selling d. palming off e. all-you-can-afford budgeting
a. focused cost leadership strategy.
59. A sneaker manufacturing company targets teenagers. It sells the sneakers to these teenagers at a price which is lower than what is offered in the market. The fact that it offers low sneakers to teenagers is an example of a(n): a. focused cost leadership strategy. b. pull strategy. c. focused differentiation strategy. d. adaptive strategy. e. differentiation strategy.
c. focused cost leadership strategy.
60. A bike manufacturing company targets college going kids. The price of the bikes offered by this company is lower than what the other companies offer in the market. The fact that it offers low priced bikes to college going kids is an example of a(n): a. adaptive strategy. b. differentiation strategy. c. focused cost leadership strategy. d. pull strategy. e. focused differentiation strategy.
c. focused differentiation
61. A(n) _____ strategy requires offering unique features that fulfill the demands of a narrow market. a. focused cost leadership b. cost leadership c. focused differentiation d. adaptive e. pull
e. focused differentiation strategy.
62. A real estate company provides housing services to retired individuals. It basically helps individuals above the age of sixty to search for houses with peaceful surroundings. The fact that the company provides housing services to retired individuals is an example of a(n): a. adaptive strategy. b. pull strategy. c. focused cost leadership strategy. d. cost leadership strategy. e. focused differentiation strategy.
d. focused differentiation strategy.
63. A company provides baby sitting services to single working mothers. This is the example of a(n): a. adaptive strategy. b. pull strategy. c. cost leadership strategy. d. focused differentiation strategy. e. focused cost leadership strategy.
a. focused differentiation strategy.
64. A company sells computers only over the internet. Customers can decide their own computer configuration at the company's website and then place the order for the computer. This is an example of: a. focused differentiation strategy. b. focused cost leadership strategy. c. cost leadership strategy. d. pull strategy. e. adaptive strategy.
e. focused differentiation strategy.
65. Car manufacturers such as Lamborghini and Ferrari compete in the small super car category. These cars offer more than just transportation. They are known for their styling and state of art technology. This is an example of a(n): a. adaptive strategy. b. pull strategy. c. focused cost leadership strategy. d. cost leadership strategy. e. focused differentiation strategy.
25. _____ involves an organization granting the right to use its brand name, products, and processes to other organizations in exchange for an upfront payment and a percentage of revenues generated by the other organizations.
Franchising
28. A clothing line company has a number of outlets which are owned and managed by private individuals. These outlets are allowed to use the brand name and products of the clothing line after paying a fee to the clothing line company. They also pay a part of their revenue to the clothing line. This is an example of:
Franchising
36. Marty's, a clothing company, has a number of outlets which are owned and managed by private individuals. These outlets are allowed to use the brand name and products of Marty's after paying a fee to the company. They also pay a part of their revenues to the clothing line. The part of the revenues paid by the outlets to Marty's is referred to as:
Royalty Fee
35. A supermarket purchases its vegetables from local farmers. It also ensures that it purchases the vegetables from farmers located closest to the supermarket so that the distance covered in transport is minimal. This reduces pollution. The supermarket also earns good profits. The fact that the supermarket tries to make a reasonable contribution to lessening pollution reflects the _____ aspect of the triple bottom line framework.
b. Planet
12. An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The task presents a challenge to the engineering skills of the organization. The fact that the task presents a challenge to the organization reflects the _____ dimension of a goal.
b. aggressive
21. A bakery generally makes a sale of $4,000 every month. But during Christmas time it made a sale of $6,000. That is, it registered a 50% increase in its sales during Christmas. During the same time other bakeries registered sales in excess of $10,000. The fact that other bakeries registered sales in excess of $10,000 can be used a yardstick to measure the performance of this particular bakery. This is referred to as the performance _____.
b. referent
39. _____ refer to CEOs who are overlooked and ignored sources of harm to their firms.
c. Silent killers
22. _____ refers to an approach to assessing performance that targets managers' attention on four areas: financial, customer, internal business process, and learning and growth.
c. The balanced scorecard
2. A viable business model requires that a firm:
sell goods or services for more than it costs the firm to create and distribute those goods.
