Question 1

According to the Chapter 4 Strategic Focus, while counterfeiting creates jobs, these jobs pay less and the companies and employees pay few if any taxes.

Accepted Answer

Counterfeiting typically involves illegal and unregulated activities, and the profits are often not reported, resulting in little or no tax revenue for governments. Additionally, workers involved in counterfeiting operations may be paid lower wages without proper legal protection and benefits.

Question 2

Support activities in the value chain are generic across business strategies.

Accepted Answer

Support activities in the value chain can vary based on the specific business strategy and the needs of the organization. For example, a cost leadership strategy may prioritize efficiency in support activities such as procurement and operations, while a differentiation strategy may place more emphasis on research and development or marketing and sales.

Question 3

Unlike a cost leadership and a differentiation strategy, both focus strategies are less dependent on the completion of various primary and secondary activities in order to compete in a superior manner.

Accepted Answer

Focus strategies still require the completion of primary and secondary activities to effectively target a specific market segment, even if the scope is narrower than cost leadership or differentiation strategies.

Question 4

Counterfeit products are a serious problem for firms following the differentiation strategy.

Accepted Answer

Counterfeit products can mimic the unique features and value propositions of a firm's differentiated products, thereby eroding their competitive advantage and profitability. This makes it a serious problem for firms following the differentiation strategy.

Question 5

McDonald's brand recognition is a fundamental source of differentiation, while the rigorous standardization of processes allows it to lower costs. Thus, McDonalds is a classic example of the focused differentiation strategy.

Accepted Answer

McDonald's is an example of a cost leadership strategy, not focused differentiation, as it emphasizes low-cost operations and broad market appeal rather than targeting a narrow market segment with unique offerings.

Question 6

Low-cost leaders usually concentrate on the primary activities of inbound logistics and outbound logistics as a means to reduce costs.

Accepted Answer

Low-cost leaders aim to reduce costs, and one way to achieve this is by focusing on inbound logistics (such as transportation, receiving, and warehousing of raw materials) and outbound logistics (such as transportation and distribution of finished products) to optimize efficiency and reduce expenses.

Question 7

According to the Chapter 4 Strategic Focus, Kazoo Toys focuses on the market of children from birth to age 12 and differentiates by providing unique toys and services.

Accepted Answer

This is stated in Chapter 4 of the textbook.

Question 8

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.

Accepted Answer

This is because as the focus strategy becomes successful, competitors may start to enter the narrow competitive segment, leading to an increase in competition and potentially making the needs of the customers more similar to those in the whole market. Additionally, changes in technology or consumer preferences could also cause the needs of the narrow segment to change and become more similar to those in the whole market.

Question 9

A low-cost leader may create entry barriers to potential entrants by continually improving its levels of efficiency.

Accepted Answer

By continually improving its levels of efficiency, a low-cost leader can reduce its costs and lower its prices, making it difficult for new competitors to enter the market and compete on cost. This is because the low-cost leader has already established strong cost advantages and economies of scale, making it difficult for new entrants to match its prices and profits.

Question 10

The Chapter 4 Strategic Focus notes that counterfeiting actually makes a positive contribution to society through job creation and tax payments.

Accepted Answer

The statement is false. Counterfeiting is illegal and contributes to negative consequences such as economic harm, loss of trust in brands and products, and potentially dangerous products being on the market.

Question 11

The best of the generic business strategies is the integrated cost leadership/differentiation strategy.

Accepted Answer

The answer of The best of the generic business strategies...

Question 12

The activities in the value chains of companies using focus strategies are quite different than the activities in the value chains of companies using industry-wide business strategies.

Accepted Answer

The answer of The activities in the value chains of...

Question 13

Virtually anything can be a basis for a firm to create a differentiated product or service.

Accepted Answer

A business can differentiate its product or service on a variety of characteristics like quality, price, features, brand, customer service, packaging, delivery methods, etc. Therefore, virtually anything can be a basis for a firm to create a differentiated product or service.

Question 14

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.

Accepted Answer

This is a known risk of the differentiation strategy, as customers' preferences and demands may evolve over time and the firm's differentiation may become irrelevant or less valuable to them. Therefore, the firm must continually update and innovate its differentiation to stay relevant and maintain a competitive edge.

Question 15

Zara offers current and desirable fashion goods at relatively low prices. To implement this strategy, Zara has sophisticated designers and effective means of managing costs. Zara is an example of the integrated cost leadership/differentiation strategy.

Accepted Answer

Zara's strategy involves both cost leadership and differentiation by offering current and desirable fashion goods at relatively low prices through sophisticated designers and effective cost management. This falls under the integrated cost leadership/differentiation strategy.

Question 16

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 in the industry can be a valuable defense against rivals when competing on the basis of price. By offering lower prices, a company with a low-cost position can attract price-sensitive customers and potentially gain market share.

Question 17

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

Accepted Answer

While the differentiation strategy may be more commonly associated with luxury goods, it can still be effective for common and inexpensive products such as doughnuts. Differentiating a product through factors such as unique flavors, high-quality ingredients, or specialty branding can still set it apart from competitors and attract customers.

Question 18

According to the Chapter 4 Strategic Focus, Kazoo Toys has successfully implemented an integrated cost leadership /differentiation strategy by creating value for parents and children interested in purchasing unique toys while simultaneously having access to unique services.

Accepted Answer

The answer of According to the Chapter 4 Strategic Focus,...

Question 19

Human resources and other support activities are not value-creating activities in the value chain; only the primary activities create value.

Accepted Answer

This statement is false. Human resources and other support activities do create value in the value chain by enabling and supporting primary activities such as production, marketing, and sales. They may not directly produce the final product or service, but they are crucial for the smooth functioning and success of the primary activities.

Question 20

The Chapter 4 Strategic Focus, counterfeiting contributed to Hewlett-Packard not only losing revenue, but also risk to the company's brand reputation.

Accepted Answer

The answer of The Chapter 4 Strategic Focus, counterfeiting contributed...

Quiz 4: Business Level Strategy