Chapter 06 Quiz Business Strategy

Power Juice is a firm that produces sports drinks. Because a number of firms in the industry are competing on cost, Power Juice executives have decided to pursue a differentiation strategy. In this case, the company should

focus on adding unique product or packaging features that customers will value.

A differentiation strategy works best when a

firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

Bath & Chill is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Bath & Chill is following a

focused differentiation strategy

A value curve that zig zags across the strategy canvas indicates a lack of effectiveness in a firm's strategic profile, suggesting the firm has experienced inferior performance and a sustained competitive disadvantage.

False

Which of the following provides an example of a firm in a red ocean?

Foley Office Supply offered printers at a low price but failed to differentiate its product as being exclusive.

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?

It failed to refine its strategic position over time.

Fatima is the owner of a remodeling company that caters to a very wealthy clientele. Her company has struggled to differentiate itself from the other high-end remodelers in the area, but because she has hired several expensive but highly qualified team members, Fatima is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage?

Narrow the scope of competition and focus on unique features such as using premium materials.

Which of the following describes an airline that is most likely stuck in the middle?

Skypath offers high-quality beverages and meals, plush airport lounges, only a few connections via domestic hubs, poor customer service, and low prices.

Which of the following statements about business-level strategies is true?

After choosing a strategy, firms must define the scope of competition.

Due to the dynamic nature of business competition, firms must constantly evaluate and adjust their strategic position over time.

True

Which of the following examples uses a focused differentiation strategy?

a tennis pro shop that sells high-quality, custom racquets priced at $350 dollars per racquet

In a successful ________strategy, the trade-offs between differentiation and low cost are reconciled.

blue ocean

In the multiplex industry, Home Again Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Movies-for-Less Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is Just Right Films Inc., which offers a customer experience comparable to that of Home Again Movies at a price almost as low as that of Movies-for-Less. What strategy is Just Right Films pursuing in this scenario?

blue ocean strategy

When pursuing a cost-leadership strategy, a business must remember that

buyers will be reluctant to pay for a product unless the quality is acceptable.

The fact that both Whole Foods (a high-end grocery store) and Aldi (an inexpensive grocery store) have a competitive advantage in the grocery store industry is an indication that Multiple Choice

following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization.

The broad question that business-level strategy answers is ________Blank the firm will compete.

how

When a firm combines experience-based learning and process innovation, the firm

jumps to a steeper learning curve.

Which of the following sources of differential appeal is most effective in helping a firm sustain its advantage?

superior customer experience

Which of the following best describes a strategic tradeoff?

the tension between value creation and the pressure to keep costs in check

One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that

they maximize their scale efficiencies by stocking more inventory and handling it more efficiently.