Chapter 6 Business Level Strategy

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will a. Focus its research and development on product technologies to add uniqueness b. Concentrate on leveraging its economies of scale through process technologies c. Build an organization structure that relies on strict budget controls d. Create a lower economic value as compared to its competitors

a. Focus its research and development on product technologies to add uniqueness

Which of the following is more of a value driver than a cost driver? a. Superior customer service b. Economies of scale c. Learning-curve effects d. Experience-curve effects

a. Superior customer service

Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has home Smart adopted in this scenario? a. Cost-leadership b. Differentiation c. Market penetration d. Product diversification

b. Differentiation

In a focused cost-leadership strategy, a firm, a. Caters to the segment of the market that is least cost-sensitive b. Provides high-priced products for many different segments of the mass market c. Delivers low-cost products and services to a specific, narrow part of the market d. Focuses on reducing the economic value created to drive down costs

c. Delivers low-cost products and services to a specific, narrow part of the market

Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as it's: a. Learning curve is not steeper than that of its competitors b. Per-unit costs are higher than that of its competitors c. Economic value creation exceeds that of its competitors d. Value gap is lower than that of its competitors

c. Economic value creation exceeds that of its competitors

Which of the following situations will have greater effects from economies of scale than from learning effects? a. When conducting surgeries b. When practicing corporate law c. When mass manufacturing pens d. When making business decisions

c. When mass manufacturing pens

Which of the following is a firm effect that has an impact on the competitive advantage of a firm? a. The exit barrier within the industry in which the firm operates b. The number of companies operating in the industry in which the firm operates c. The intensity of rivalry among existing companies in the firm's chosen industry d. The value and the cost position of the firm relative to its competitors

d. The value and the cost position of the firm relative to its competitors

To be cost-competitive, a firm should a. Position itself below the productivity frontier b. Operate at the minimum efficient scale c. Attain the highest cost position d. Avoid moving on to a stepper experience curve

b. Operate at the minimum efficient scale

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy? a. Competition switching from non-price attributes to pricing b. Innovation that allows competitors to emerge with more economical replacements c. New entrants with small production scale d. Suppliers requesting a 2% price increase across the industry

b. Innovation that allows competitors to emerge with more economical replacements

Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the BEST reason for this development? a. It failed to drive up the perceived customer value b. It failed to refine its strategic position over time c. It failed to move into a non-contested market space d. It failed to offer enough strategic trade-offs

b. It failed to refine its strategic position over time