Question 1

The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation, such as an engaging culture.

Accepted Answer

False

Question 2

Almost any identifiable human or organizational characteristic can be used to subdivide a market into segments that differ from one another on a given characteristic.

Accepted Answer

Market segmentation involves dividing a broad target market into subsets of consumers with common needs or characteristics, and almost any identifiable characteristic can be used for this purpose.

Question 3

A business-level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets.

Accepted Answer

A business-level strategy focuses on how a firm competes in a particular market by leveraging its strengths and resources to achieve a competitive edge.

Question 4

When selecting a business-level strategy, the firm determines who will be served, what needs those target customers have that it will satisfy, and how those needs will be satisfied.

Accepted Answer

A business-level strategy involves identifying the target market, understanding their needs, and determining how to meet those needs effectively.

Question 5

A low-cost position in the industry is not a valuable defense against rivals when competing on the basis of price.

Accepted Answer

A low-cost position is a valuable defense against rivals when competing on price, as it allows a company to maintain profitability while offering lower prices than competitors.

Question 6

Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.

Accepted Answer

Tightly integrated activities create a unique system that is harder for competitors to replicate, thus making the cost leadership strategy less vulnerable to imitation.

Question 7

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

Accepted Answer

Companies without core competencies in their value-chain activities and support functions are unlikely to successfully implement any competitive strategy, including cost leadership or differentiation, as these strategies require specific strengths and capabilities to be effective.

Question 8

The difference between the cost leadership and differentiation business-level strategies on the one hand, and the focused cost leadership and focused differentiation strategies on the other, are their basis for customer value.

Accepted Answer

The difference lies in the scope of the target market; cost leadership and differentiation target a broad market, while focused strategies target a narrow market segment.

Question 9

Strategic fit among the many activities in the value chain is critical for competitive advantage because it is more difficult for a competitor to match a configuration of integrated activities than to imitate a particular activity, such as sales promotion or a process technology.

Accepted Answer

Strategic fit among activities creates a complex system that is harder to replicate, providing a sustainable competitive advantage compared to isolated activities.

Question 10

A business-level strategy describes what a firm does to create, deliver, and capture value for its stakeholders.

Accepted Answer

The answer of A business-level strategy describes what a firm...

Question 11

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.

Accepted Answer

Cost leadership strategies focus on minimizing costs and offering standardized products to attract a broad customer base, often with minimal differentiation.

Question 12

Every firm uses all levels of strategy: corporate-level, merger and acquisition, international, and cooperative.

Accepted Answer

Not every firm engages in mergers and acquisitions, operates internationally, or forms cooperative strategies. Some firms may only focus on corporate-level strategies.

Question 13

To position itself differently from competitors, a firm must decide whether it intends to perform activities differently or to perform different activities.

Accepted Answer

A firm can achieve a competitive advantage by either performing the same activities as competitors in a more efficient way or by performing entirely different activities that deliver unique value to customers.

Question 14

Changing consumer needs are illustrated by Starbucks' enabling consumers to have an experience and design their own drinks rather than just a cup of coffee.

Accepted Answer

Starbucks' strategy to allow customers to personalize their drinks and create an experience reflects a response to evolving consumer preferences for customization and experiential purchases.

Question 15

Global competition has increased the options for consumers and has made it more imperative for firms to identify the needs of customers to earn above-average returns.

Accepted Answer

Global competition has expanded consumer choices, forcing firms to better understand and meet customer needs to differentiate themselves and achieve higher profitability.

Question 16

Effective use of the generic business strategies allows a firm to favorably position itself relative to the five competitive forces in the industry.

Accepted Answer

Generic business strategies, such as cost leadership, differentiation, and focus, help a firm to effectively navigate and position itself against the five competitive forces identified by Michael Porter: threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and industry rivalry.

Question 17

A business model should be selected with great care because it cannot be changed, or even adjusted, once a firm begins to use the model to implement its business-level strategy.

Accepted Answer

A business model can be changed or adjusted as a firm evolves, learns, and responds to market conditions and competitive pressures.

Question 18

A business-level strategy is a framework for how the firm will create value, while a business model creates the path a firm intends to follow to gain competitive advantage.

Accepted Answer

A business-level strategy outlines how a firm will compete in a particular market, while a business model describes how a firm creates, delivers, and captures value.

Question 19

The generalized forms of value that goods and services provide are either low cost with acceptable features or highly differentiated features with acceptable cost.

Accepted Answer

This statement describes the two primary competitive strategies in business: cost leadership (offering low-cost products with acceptable features) and differentiation (offering unique features at an acceptable cost).

Question 20

Cost leaders usually concentrate on the value-chain activities of inbound logistics and outbound logistics as a means to reduce costs.

Accepted Answer

Cost leaders focus on optimizing inbound and outbound logistics to minimize expenses and enhance efficiency, which helps in maintaining their competitive pricing strategy.

Quiz 4: Business-Level Strategy