Question 1

A company that chooses to pursue a business-level strategy in which it targets a narrow geographic area or a limited group of customers who have particular needs is following a ________ strategy.

Accepted Answer

A focus strategy involves targeting a narrow market segment, which can be based on geographic area or specific customer needs, to serve them better than competitors.

Question 2

Which of the following is not one of the generic, business-level strategies?

Accepted Answer

"Premium price" is not typically recognized as a generic business-level strategy. The generic strategies are overall low cost, broad differentiation, and integrated low cost and differentiation.

Question 3

The idea that companies must maintain relative equality with other companies in the industry on the dimensions of their strategies not important to their basic competitive approaches is expressed by the notion of ________.

Accepted Answer

Parity refers to maintaining relative equality with competitors on dimensions not central to a company's competitive strategy.

Question 4

Which of the following is not a factor which can lead to a low-cost position in the industry?

Accepted Answer

Market research is typically used to understand consumer needs and preferences, not directly to achieve a low-cost position.

Question 5

Which of the following is one of the risks of a low-cost strategy?

Accepted Answer

A low-cost strategy can be risky if competitors replicate the cost advantages, if customers don't appreciate the cost benefits, or if the firm is not the absolute cost leader, leading to competitive disadvantages.

Question 6

In which of the following cases would you recommend that the business use a low-cost strategy?

Accepted Answer

A low-cost strategy is suitable for a farmer producing soybeans because it is a commodity product sold at market price, where differentiation is minimal and cost efficiency is crucial for competitiveness.

Question 7

Which of the following is not an important performance dimension of products and services?

Accepted Answer

Similarity to the offerings of rivals is not a performance dimension; it relates more to competitive strategy rather than the intrinsic performance of a product or service.

Question 8

Which of the following is a risk of a differentiation strategy?

Accepted Answer

Customers do not value the benefits derived from differentiation.

Question 9

The two strategies which target narrow customer segments or geographic areas are

Accepted Answer

The answer of The two strategies which target narrow customer...

Question 10

What is a likely way for a company to successfully adopt an integrated low cost/differentiation strategy?

Accepted Answer

Migrating from a pure low cost or differentiated position allows a company to blend elements of both strategies, potentially achieving a competitive advantage by offering unique products at lower costs.

Question 11

Perhaps the greatest risk for a company that chooses to pursue an integrated low cost/differentiation strategy is that it will

Accepted Answer

An integrated low cost/differentiation strategy can lead to a company becoming "stuck in the middle," meaning it fails to achieve either low cost or differentiation effectively, thus not gaining a competitive advantage.

Question 12

Outsourcing can be recommended when

Accepted Answer

Outsourcing is beneficial when it enhances the company's strategic position or allows the company to offload activities where it lacks special competence, as these can lead to cost savings and efficiency improvements.

Question 13

When is it inappropriate to outsource an activity?

Accepted Answer

Outsourcing is inappropriate when it risks losing control over costs or differentiation values, as these are critical to maintaining competitive advantage.

Question 14

Describe the two fundamental decisions that companies make that result in their pursuing one of the five generic (business-level) strategies.

Accepted Answer

The answer of Describe the two fundamental decisions that companies...

Question 15

Under what circumstances does outsourcing contribute to better performance? When might it be inappropriate?

Accepted Answer

The answer of Under what circumstances does outsourcing contribute to...

Quiz 7: Business-Level Strategy