Exam 2 review (5)

Isolating mechanisms are: (a) Barriers that slow or stop the equalization of profits between firms, such as barriers to imitation. (b) Mechanisms that speed up the equalization of profits between firms. (c) Barriers that prevent potential entrants from grabbing a significant market share in the industry. (d) Mechanisms that limit or enhance the ex post equilibration of rents among individual firms, depending on their relative bargaining powers.

A

Two basic questions concern corporate and business strategy: (a) Where and how to compete? (b) How and when to compete? (c) What are the best arenas and structures to compete? (d) When and where to compete?

A

Which of the following is a risk (or potential pitfall) of cost leadership? (a) Cost cutting may lead to the loss of desirable features. (b) Attempts to stay ahead of the competition may lead to gold plating. (c) Cost differences increase as the market matures. (d) Producers are more able to withstand increases in suppliers' cost.

A

A manufacturing business pursuing cost leadership will likely (a) focus on a narrow market segment. (b) rely on experience effects to raise efficiency. (c) use advertising to build brand image. (d) put heavy emphasis on product engineering.

B

Cost leadership means a firm must: (a) Exploit all sources of cost advantage before tailoring the product to each customer (b) Exploit all sources of cost advantage in providing customers with a standardized product (c) Exploit all sources of cost advantage in providing each customer with unique products (d) Exploit all sources of cost advantage while providing every customer an individual service

B

Differentiation is when a firm: (a) Offers customers a standardized product or service (b) Offers customers something valuable and unique other than a low price (c) Offers customers a uniquely low price (d) Offers customers products with many additional features

B

Once established, competitive advantage is: (a) Relatively stable over time (b) Subject to erosion by competitors or entrants (c) A firm's reward for leading the industry (d) Easily maintained unless entry barriers are high

B

A reduction in costs per unit due to increases in efficiency of production as the number of goods being produced increases best defines the term _____. (a) economies of scope (b) economies of finance (c) economies of scale (d) economies of wealth

C

An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of (a) threat of entry. (b) backward integration. (c) forward integration. (d) threat of substitute products.

C

Starbuck's was able to revolutionize the coffee drinking experience through its business level strategy of (a) focused cost. (b) cost leadership. (c) differentiation. (d) stuck-in-the-middle.

C

Being 'stuck in the middle' gives low profits because: (a) the firm loses those customers who want the lowest prices (b) the firm loses those customers who want the best product on the market (c) employees become confused about what the firm's goals and strategy really are (d) all of above

D

Which of the following is incorrect about the Uppsala internationalization model? (a) Uppsala model has described the internationalization of a firm as a process of experiential learning. (b) Firms intensify their commitment towards foreign markets as their experience grows. (c) The model argues that firms first choose to enter nearby markets with low market commitment. (a) Firms, from its inceptions stages, seek competitive advantage by using resources from different countries and by selling its products in multiple countries.

D

Companies without the core competencies in their value chain activities and support functions are still able to implement successfully a either a cost leadership or a differentiation strategy, although they cannot implement an integrated cost leadership/differentiation strategy. True or False?

False

Isolating mechanisms are forces tending to equalize profit rates among firms, i.e. phenomena that erode a firm's competitive advantages. True or False?

False

The differentiation strategy is effective for products that are expensive, luxury consumer goods. It is not effective for common, inexpensive products such as doughnuts. True or False?

False

A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in specific product markets. True or False?

True

A firm can pre-empt imitation by introducing new products to fill each niche, investing in capacity ahead of market growth and filing many patents. True or False?

True

A key question of business-level strategy is how to create differences between the firm's position and its rivals; either to perform activities differently or to perform different activities. True or False?

True

A risk of a focus strategy is that the needs of the customer within a narrow competitive segment may become more similar to those needs of customers in the whole market. True or False?

True

A risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value for which customers are willing to pay. True or False?

True

Firms implementing cost leadership strategies often sell no-frills standardized goods or services (but with competitive levels of differentiation) to the industry's most typical customers. True or False?

True

One benefit of outsourcing is that it allows a firm to focus on those few value chain activities where it can produce the greatest value. True or False?

True

To position itself differently from competitors, a firm must decide to either perform activities differently or to perform different activities. True or False?

True

True or False? For a firm to imitate the strategy of another firm, it must do four things: identify the target firm, incentivize the rival, diagnose the sources of competitive advantage, and acquire the resources needed.

True

When selecting a business level strategy, the firm determines who will be served, what customer needs will be satisfied, and how those needs will be satisfied. True or False?

True