Question 1

An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

A)   overall cost leadership
B)   differentiation
C)   differentiation focus
D)   cost leadership focusE) A) and C)
F) A) and B) A

Question 3

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?

Accepted Answer

A)   by increasing a firm's margins, it avoids the need for a low-cost position
B)   it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives
C)   supplier power is increased because suppliers will be able to charge higher prices for their inputs
D)   firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitorsE) None of the above
F) A) and D)

Question 5

The case of Cott beverages explains how this company

Accepted Answer

A)   employed a poor strategy.
B)   failed to secure a long-term agreement with RC Cola.
C)   faced high marketing and distribution costs by adopting the retailer's brand.
D)   built success from selling private label products to Loblaw.E) A) and B)
F) None of the above

Question 6

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

Accepted Answer

A) True 
 B)False

Question 7

Discuss the risks associated with each of these forms of competitive advantage-cost leadership, differentiation, and focus.

Accepted Answer

Cost leadership: must pay attention to all aspects of value chain and manage overall costs; firm is vulnerable to raw material cost increases; the strategy is easily imitated; need to maintain parity on differentiation but lower prices.
Differentiation: risk that differentiation is not deemed as valuable; too much differentiation could make product or service less attractive; price premium can be higher than customers willing to pay; differentiation can be imitated; brand can be diluted through product line extensions; perceptions of differentiation may vary.
Focus: cost advantage may erode over time; competition may come from new entrants and imitation; there can be too much focus to satisfy buyer needs.

Question 8

The Keg Steakhouse & Bar has a simple operating formula. The Keg

Accepted Answer

A)   purposefully limited its menu and has stayed away from food fashions and fads.
B)   expanded its menu and embraced food fashions and fads.
C)   cut expenses from suppliers.
D)   purposefully limited its menu and has stayed away from food fashions and fads, and cut expenses from suppliers.E) C) and D)
F) B) and C)

Question 9

All of the following are potential pitfalls of a focus strategy except

Accepted Answer

A)   erosion of cost advantages within the narrow segment.
B)   all rivals share a common input or raw material.
C)   even product and service offerings that are highly focused are subject to competition from new entrants and from imitation.
D)   focusers can become too focused to satisfy buyer needs.E) B) and C)
F) None of the above

Question 10

A firm striving for cost leadership will typically spend relatively more on product related R&D than on process related R&D.

Accepted Answer

A) True 
 B)False

Question 11

Developing uniqueness that is not valuable is:

Accepted Answer

A)   an essential feature of a differentiation strategy.
B)   the result of having brand-loyal customers become more sensitive to prices.
C)   a potential pitfall of a differentiation strategy.
D)   an necessary evil of a cost-leadership strategy.E) C) and D)
F) B) and D)

Question 12

The experience curve suggests that cutting prices is a good strategy

Accepted Answer

A)   if it can induce greater demand and thereby help a firm travel down the experience curve faster.
B)   in industries characterized by high economies of scale.
C)   in the maturity stage of the industry life cycle.
D)   in the decline stage of the industry life cycle.E) A) and B)
F) A) and C)

Question 13

Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.

Accepted Answer

A) True 
 B)False  False

Question 14

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

Accepted Answer

A)   at about the same level as firms that achieve either cost or differentiation advantages.
B)   about the same as firms that are "stuck-in-the-middle."
C)   lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
D)   higher than firms that achieve either a cost or a differentiation advantage.E) A) and C)
F) A) and B)

Question 15

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

Accepted Answer

An overall low-cost position enables a f...

Question 16

What are the benefits and risks associated with combining overall cost leadership and differentiation strategies?

Accepted Answer

Firms that successfully integrate both d...

Question 17

A manufacturing business pursuing cost leadership will likely

Accepted Answer

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.E) None of the above
F) B) and C)

Question 18

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

Accepted Answer

A)   the strategy is too easily imitated
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' costE) C) and D)
F) A) and B)

Question 19

Differentiation provides protection against rivalry since brand loyalty lowers customer sensitivity to price and raises customer switching cost.

Accepted Answer

A) True 
 B)False

Question 20

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.

Accepted Answer

A) True 
 B)False

Exam 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.

Correct Answer
verified

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?

Correct Answer
verified
A

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.

Correct Answer
verified

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?

Correct Answer
verified

The case of Cott beverages explains how this company

Correct Answer
verified

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

Correct Answer
verified

Discuss the risks associated with each of these forms of competitive advantage-cost leadership, differentiation, and focus.

The Keg Steakhouse & Bar has a simple operating formula. The Keg

Correct Answer
verified

All of the following are potential pitfalls of a focus strategy except

Correct Answer
verified

A firm striving for cost leadership will typically spend relatively more on product related R&D than on process related R&D.

Correct Answer
verified

Developing uniqueness that is not valuable is:

Correct Answer
verified

The experience curve suggests that cutting prices is a good strategy

Correct Answer
verified

Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.

Correct Answer
verified
False

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

Correct Answer
verified

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

Correct Answer
verified
An overall low-cost position enables a f...
View Answer

What are the benefits and risks associated with combining overall cost leadership and differentiation strategies?

Correct Answer
verified
Firms that successfully integrate both d...
View Answer

A manufacturing business pursuing cost leadership will likely

Correct Answer
verified

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

Correct Answer
verified

Differentiation provides protection against rivalry since brand loyalty lowers customer sensitivity to price and raises customer switching cost.

Correct Answer
verified

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.

Correct Answer
verified

Exam 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedA

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.

Correct AnswerverifiedShow Answer

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?

Correct AnswerverifiedShow Answer

The case of Cott beverages explains how this company

Correct AnswerverifiedShow Answer

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

Correct AnswerverifiedShow Answer

Discuss the risks associated with each of these forms of competitive advantage-cost leadership, differentiation, and focus.

The Keg Steakhouse & Bar has a simple operating formula. The Keg

Correct AnswerverifiedShow Answer

All of the following are potential pitfalls of a focus strategy except

Correct AnswerverifiedShow Answer

A firm striving for cost leadership will typically spend relatively more on product related R&D than on process related R&D.

Correct AnswerverifiedShow Answer

Developing uniqueness that is not valuable is:

Correct AnswerverifiedShow Answer

The experience curve suggests that cutting prices is a good strategy

Correct AnswerverifiedShow Answer

Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

Correct AnswerverifiedAn overall low-cost position enables a f...View AnswerShow Answer

What are the benefits and risks associated with combining overall cost leadership and differentiation strategies?

Correct AnswerverifiedFirms that successfully integrate both d...View AnswerShow Answer

A manufacturing business pursuing cost leadership will likely

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Differentiation provides protection against rivalry since brand loyalty lowers customer sensitivity to price and raises customer switching cost.

Correct AnswerverifiedShow Answer

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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A

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Correct Answer
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Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
verified
An overall low-cost position enables a f...
View Answer

Correct Answer
verified
Firms that successfully integrate both d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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