Question 1

An example of a company following a cost focus strategy is Potlach Corporation,which makes house brands of toilet paper for Safeway and other grocery store chains.

Accepted Answer

Potlatch Corporation's strategy of making house brands of toilet paper for grocery store chains is a cost focus strategy that involves producing low-cost products for a specific market segment.

Question 2

Incentives based on meeting strict quantitative targets are a common organizational requirement for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Accepted Answer

Incentives based on meeting strict quantitative targets are commonly associated with cost leadership as this strategy focuses on reducing costs and increasing efficiency, which can be measured through quantitative targets.

Question 3

According to Barney,under which condition would tacit collusion most likely be successful?
A) There is a large number of identifiable competitors.
B) Costs vary among firms.
C) One firm tends to act as the price leader.
D) Sales are characterized by a low frequency of large orders.
E) There are low barriers to entry in the industry.

Accepted Answer

When one firm tends to act as the price leader, it becomes easier for the competing firms to follow their lead and engage in tacit collusion. This is because the price leader's actions are visible and observable, making it easier for competitors to coordinate their own prices accordingly.

Question 4

An example of a company that was "stuck in the middle" was K-Mart as the company tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy.

Accepted Answer

K-Mart tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy, resulting in being "stuck in the middle."

Question 5

Tacit collusion
A) involves direct communication among competing firms.
B) is most likely to be successful if there are many competitors.
C) is seen with conscious parallelism as practiced by GE and Westinghouse in the pricing of turbine engines.
D) is not illegal.
E) is most effective when the industry does not have a firm that acts as a price leader.

Accepted Answer

Tacit collusion involves firms indirectly coordinating their actions without explicit communication. Conscious parallelism, as practiced by GE and Westinghouse in the pricing of turbine engines, is an example of tacit collusion. It is not illegal unless the behavior results in anti-competitive effects in the market. The number of competitors in the market or the presence of a price leader does not necessarily determine the success of tacit collusion.

Question 6

A secret salary cap was the contention in a 2012 collusion lawsuit filed against
A) KFC.
B) The National Football League.
C) GE.
D) Major League Baseball.
E) ESPN.

Accepted Answer

The National Football League was sued in 2012 for collusion, and one of the allegations was that there was a secret salary cap among the teams.

Question 7

When firms follow each other's lead to reduce the level of competition such as GE and Westinghouse did in steam turbines,it is referred to as
A) explicit collusion.
B) a strategic alliance.
C) a mutual service consortium.
D) conscious parallelism.
E) partnering.

Accepted Answer

Conscious parallelism is a situation where firms follow each other's lead to reduce the level of competition, without explicitly coordinating their actions. It is a form of implicit collusion where firms independently make similar decisions in response to common market conditions, without any formal agreement or communication. The example given of GE and Westinghouse engaging in similar actions to reduce competition in steam turbines is typical of conscious parallelism.

Question 8

Collusion
A) may be explicit or tacit.
B) may be tacit and therefore legal.
C) is rarely practiced by competing firms.
D) cannot occur without direct communication among firms.
E) is a popular competitive strategy.

Accepted Answer

Collusion can occur through explicit communication (such as formal agreements or meetings) or tacit understanding between competitors. Tacit collusion, however, may not always be illegal or detected by authorities.

Question 9

One skill required of the cost leadership strategy is a strong marketing ability.

Accepted Answer

While marketing is important for any business, the cost leadership strategy relies more on operational efficiency and cost-saving measures rather than heavy marketing expenditures. The primary focus is on providing goods or services at a lower cost than competitors, not on aggressive marketing campaigns.

Question 10

One risk of a cost leadership strategy is that the technology for production or of products may change.

Accepted Answer

If the technology changes, it may no longer be possible to maintain the same cost advantage, putting the success of the cost leadership strategy at risk.

Question 11

The two general types of cooperative strategies are
A) competitive and functional.
B) collusion and competitive.
C) strategic alliances and collusion.
D) strategic alliances and competitive.
E) competitive and collusive alliances.

Accepted Answer

Strategic alliances and collusion are the two general types of cooperative strategies. Strategic alliances involve two or more firms working together to achieve strategic goals, while collusion typically involves firms working together in secret to limit competition, often in ways that are illegal or regulated.

Question 12

Product engineering,creative flair,and strong cooperation from channels are commonly required skills and resources for which of Porter's generic strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Accepted Answer

Product engineering and creative flair are important skills for a company pursuing differentiation strategy. Strong cooperation from channels is also necessary to effectively reach the target market with a unique product or service offering.

Question 13

Intense supervision of labor,sustained capital investment and access to capital are commonly required skills and resources for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Accepted Answer

The answer of Intense supervision of labor,sustained capital investment and...

Question 14

If it is to be successful,Porter advises that a division possess strong marketing abilities,product engineering,a creative flair,strong capability in basic research and a corporate reputation for quality or technological leadership,for which one of the following generic competitive strategies?
A) focus
B) differentiation
C) overall cost leadership
D) vertical growth
E) concentration

Accepted Answer

Porter's advice for a division to possess strong marketing abilities, product engineering, a creative flair, strong capability in basic research and a corporate reputation for quality or technological leadership aligns with the differentiation generic competitive strategy. To successfully differentiate themselves from competitors, companies must focus on creating unique and desirable products or services that are valued by customers. Strong marketing abilities, product engineering, and a creative flair are all important elements in developing a differentiated product or service. Additionally, a focus on basic research can help a company identify new and innovative ways to differentiate their offerings, while a corporate reputation for quality or technological leadership can help build trust and confidence in the unique value proposition of the company's products or services.

Question 15

Cost leadership is the ability of a company or business unit to design,produce,and market a comparable product more efficiently than its competitors.

Accepted Answer

Cost leadership refers to a company's ability to offer a product at a lower cost than its competitors, while maintaining its quality and profitability. This is achieved through efficient processes, economies of scale, and cost-cutting measures.

Question 16

When a company following a differentiation strategy ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition,the company is using the process of
A) low-cost differentiation.
B) cost leadership.
C) cost proximity.
D) basic differentiation.
E) price fixing.

Accepted Answer

Cost proximity refers to a pricing strategy in which a company ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition. This helps the company remain competitive while still differentiating itself through quality. Low-cost differentiation and cost leadership are not applicable in this scenario, as the company is not primarily focused on cost competitiveness. Basic differentiation and price fixing are not relevant options.

Question 17

A cost leader's lower costs allow it to continue to earn profits during times of heavy competition.

Accepted Answer

A cost leader typically has lower costs than its competitors, which allows it to offer lower prices or earn higher profits even during times of heavy competition. This can give it a sustainable advantage in the market.

Question 18

Business strategy focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves.

Accepted Answer

Business strategy is all about improving the competitive position of a company's products or services within a specific market segment or industry.

Question 19

The active cooperation of firms within an industry to reduce output and raise prices to get around the normal law of supply and demand is referred to as
A) a strategic alliance.
B) collusion.
C) a strategic roll up.
D) a merger.
E) licensing.

Accepted Answer

Collusion involves firms within an industry conspiring to limit output and increase prices, which is a violation of antitrust laws. This behavior is anti-competitive and ultimately harms consumers by driving up prices.

Question 20

Amenities to attract highly skilled labor,scientists,or creative people are a common organizational requirement for which of Porter's generic competitive strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion

Accepted Answer

Amenities to attract highly skilled labor, scientists, or creative people are part of differentiation strategy as it is differentiated from competitors by providing unique and attractive features. This can help in gaining a competitive advantage and attracting top talent.

Quiz 6: Strategy Formulation: Business Strategy

An example of a company following a cost focus strategy is Potlach Corporation,which makes house brands of toilet paper for Safeway and other grocery store chains.

Incentives based on meeting strict quantitative targets are a common organizational requirement for which of Porter's generic competitive strategies?

According to Barney,under which condition would tacit collusion most likely be successful?

An example of a company that was "stuck in the middle" was K-Mart as the company tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy.

Tacit collusion

A secret salary cap was the contention in a 2012 collusion lawsuit filed against

When firms follow each other's lead to reduce the level of competition such as GE and Westinghouse did in steam turbines,it is referred to as

Collusion

One skill required of the cost leadership strategy is a strong marketing ability.

One risk of a cost leadership strategy is that the technology for production or of products may change.

The two general types of cooperative strategies are

Product engineering,creative flair,and strong cooperation from channels are commonly required skills and resources for which of Porter's generic strategies?

Intense supervision of labor,sustained capital investment and access to capital are commonly required skills and resources for which of Porter's generic competitive strategies?

If it is to be successful,Porter advises that a division possess strong marketing abilities,product engineering,a creative flair,strong capability in basic research and a corporate reputation for quality or technological leadership,for which one of the following generic competitive strategies?

Cost leadership is the ability of a company or business unit to design,produce,and market a comparable product more efficiently than its competitors.

When a company following a differentiation strategy ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition,the company is using the process of

A cost leader's lower costs allow it to continue to earn profits during times of heavy competition.

Business strategy focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves.

The active cooperation of firms within an industry to reduce output and raise prices to get around the normal law of supply and demand is referred to as

Amenities to attract highly skilled labor,scientists,or creative people are a common organizational requirement for which of Porter's generic competitive strategies?