BA 405 Sloan- Chapter 5

In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in?

maturity

Which of the following is a risk (or potential pitfall) of cost leadership?

Cost cutting may lead to the loss of desirable features.

Corporations increasingly collect and analyze data on their customers. This is known as

big data

Southwest Airlines uses an overall cost leadership strategy. This could fail if it

cannot maintain parity on differentiation dimensions requested by customers.

Which of the following is not a reason for the possible erosion of company competitive advantage?

company commitment to innovation

In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.

maturity

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?

maturity

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by

repeating a process until a task becomes easier.

Proctor and Gamble announced that it would sell off or close down up to 100 of its brands. This is an example of which turnaround strategy used by successful companies?

selective product and market pruning

Mass customization permits companies to manufacture unique products in relatively _________ quantities at ______ costs.

small; lower

Rivals would find it difficult to challenge Atlas Door in the short run because of

strong customer loyalty.

Which of the following is most often true of mature markets?

Advantages that cannot be duplicated by other competitors are difficult to achieve.

Which of the following is not a potential pitfall of a differentiation strategy?

All rivals share a common input or raw material.

Which of the following is not a potential pitfall of a focus strategy?

All rivals share a common input or raw material. Potential pitfalls of focus strategies include: erosion of cost advantages

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?

Firms that target too large a market that causes unit costs to increase.

Which statement regarding competitive advantages is true?

If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

Which of these statements regarding the industry life cycle is true?

It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

Atlas Door could lose competitive advantage for all of the following reasons except

It has strong power over its distributors.

Atlas Door tightly controlled logistics so that it always shipped only fully complete orders to construction sites. In regards to the five forces model, which of the following is a reason this might give them competitive advantage?

It helps to reduce the threat of new entrants.

Which of the following statements about the introduction stage of the market life cycle is true?

Products offered by pioneers may be perceived as differentiated because they are new.

Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model?

Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.

At one CVS drugstore, a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD. The Duracell market share dropped 2 percent in a recent two-year period, and its profits declined over 30 percent. Why did this happen?

The price differential was too high.

Atlas Door created competitive advantage by reducing the time to receive and process an order and through installing a just-in-time logistics operation. Which of the following is not a reason for their favorable position relative to the five forces of industry competition?

The service was easily imitable.

A firm following a focus strategy must focus on

a market segment or group of segments.

An overall low-cost position enables a firm to achieve ______ returns despite strong competition.

above average

A business that strives for a low-cost advantage must attain a(n) _______ cost advantage over rivals.

absolute

The primary aim of strategic management at the business level is

achieving competitive advantage

Company competitive advantages can be eroded by all of the following except

actions by workers outside of the industry.

Outright sales or sale and leaseback free up considerable cash and improve returns. This is an example of which turnaround strategy used by successful companies?

asset and cost surgery

A risk for a firm that tries to attain both cost and differentiation advantages is that it can be stuck in the middle. An example of this is supermarkets because their _____ structure is _____ than discount retailers and customers do not value their products and services as being high-end such as those offered by Whole Foods.

cost; higher

Anderson Windows lowered costs, enhanced quality and variety, and improved its response time to customers by

creating an integrated computer system of catalogs, products, orders, and manufacturing.

The Pepsi algorithm that permits it to lower out of stock inventory is a result of using

data analytics

In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance.

decline

The most likely time to pursue a harvest strategy is in a situation of

decline

High product differentiation is generally accompanied by

decreased emphasis on competition based on price.

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. Which of the following is not one of these three approaches?

deriving benefits from highly focused and high technology markets

Dell lost its competitive advantage starting in 2007 because it

did not deliver innovations to respond to changing market demand.

Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize which generic strategy?

differentiation

A low-cost position permits buyers to exert power to drive ____ prices only to the level of the next most efficient producer.

down

In evaluating the sustainability of the Atlas Door competitive advantages over the long run, it is important to evaluate the ability of rivals to

easily imitate its strategy.

Global logistics firms such as DHL Supply Chain and Global Forwarding or C. H. Robinson Worldwide compete using an overall cost leadership strategy in primary activities such as

effective layout of receiving dock operations.

The factors that lead to a low-cost position also provide a substantial ____ barriers position with respect to _______ products introduced by new and existing competitors.

entry; substitute

Outside the flight experience itself, airlines are generating revenue by charging fees for credit cards, frequent-flyer programs, and access to airport lounges. This serves to

expand the profit pool

Piecemeal productivity improvements during a turnaround typically do not involve

expansion of company product market scope.

Most turnarounds require a firm to carefully analyze its relevant environments. The _______ analysis leads to identification of market segments or customer groups that may still find the product attractive.

external

Overhead costs associated with the number of layers of management in a firm are part of the _________ activities of the value chain.

firm infrastructure

Tesco is saving 3 million USD a year alone in landfill taxes by simply sending its used cooking oil and chicken fat to be used to generate bioenergy rather than putting it in a landfill. This is an example of an overall cost leadership strategy because it

gives them competitive advantage by reducing energy costs.

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

global expansion

Rivals would find it difficult to challenge Atlas Door in the short run because of

high barriers to entry.

Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform

higher than firms that achieve either a cost or a differentiation advantage.

Atlas Door relies on technologies that are rather well known and non-proprietary. This opens it up to the potential of

imitation by rivals

The growth stage of the industry life cycle is characterized by

in-kind competition (from the same type of product).

Many firms have achieved success by integrating activities throughout the extended value chain by using _______ to link their own value chain with the value chains of their customers and suppliers.

information technology

Most turnarounds require a firm to carefully analyze its relevant environments. ________ analysis results in actions aimed at reduced costs and higher efficiency.

internal

In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.

introduction

Porsche has enhanced power over buyers because its strong reputation makes buyers more willing to pay a premium price. This ______ rivalry, since buyers become _____ price-sensitive.

lessens; less

Atlas Door created competitive advantages in overall low cost and differentiation by creating ___________ among value-chain activities.

linkages

An overall low-cost position protects a firm against rivalry from competitors, because _________ allow a firm to earn returns even if its competitors eroded their profits through intense rivalry.

lower costs

Which of the following is not a reason for the successful turnaround HSN experienced by 2014 under CEO Mindy Grossman?

making all best efforts to offer something for everyone

A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage?

maturity

A low-cost position provides _______ flexibility to cope with demands from powerful suppliers for input cost increases.

more

A firm can achieve differentiation through all of the following means except

offering lower prices to frequent customers.

With experience, unit costs of production decline as _________ increases in most industries.

output

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize which generic strategy?

overall cost leadership

Renault has found a way to generate high profits on low-priced cards by using simple designs that incorporate components from older car designs and a no-discount retail policy. They are using a(n) ______________ strategy.

overall cost leadership

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?

overall low-cost leadership

Improving business processes by reengineering them, benchmarking specific activities against industry leaders, encouraging employee input to identify excess costs, increasing capacity utilization, and improving employee productivity lead to a significant overall gain. These are examples of which turnaround strategy used by successful companies?

piecemeal productivity improvements

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ______ integration of cost leadership and differentiation.

poor

A __________ can be defined as the total profits in an industry at all points along the industry value chain.

profit pool

By separating the value of the actual flight from the services associated with flying, airlines have greatly expanded the __________ associated with flying.

profit pool

A differentiation strategy enables a business to address the five competitive forces by

providing protection against rivalry

A manufacturing business pursuing cost leadership is likely to

rely on experience effects to raise efficiency.

Barnes and Noble lost its market share in book retailing to Amazon. It tried to regain market share by offering a similar electronic reader, the Nook, to the Amazon Kindle series. This demonstrates that Barnes and Noble lacked

sustainable competitive advantage.

As markets mature,

there is increasing emphasis on efficiency