Question 1

The growth stage of the industry life cycle is characterized by

Accepted Answer

The growth stage is the second stage of the product life cycle, characterized by strong increases in sales and growing competition.

Question 2

Which of the following statements about the introduction stage of the market life cycle is TRUE?

Accepted Answer

In the introduction stage, products are unfamiliar to consumers. Market segments are not well defined, and product features are not clearly specified.

Question 3

Which of the following is not a potential pitfall of a focus strategy?

Accepted Answer

Potential pitfalls of focus strategies include: erosion of cost advantages within the narrow segment; the idea that even product and service offerings that are highly focused are subject to competition from new entrants; and focusers that become too focused to satisfy buyer needs.

Question 4

One of the main reasons the Internet is eroding sustainable competitive advantages is that _______.

Accepted Answer

Many experts agree that the net effect of the digital economy is fewer rather than more opportunities for sustainable advantages. This means strategic thinking becomes more important. More specifically, the Internet has provided all companies with greater tools for managing costs.

Question 5

Which statement regarding competitive advantages is true?

Accepted Answer

Potential pitfalls of a differentiation strategy include the idea that perceptions of differentiation may vary between buyers and sellers. The issue here is that beauty is in the eye of the beholder. Companies must realize that although they may perceive their products and services as differentiated, their customers may view them as commodities.

Question 6

Which of the following is not a reason for the possible erosion of company competitive advantage?

Accepted Answer

Nothing is forever, when it comes to competitive advantages. Rapid changes in technology, globalization, and actions by rivals from within and outside of the industry can quickly erode company advantages. It is becoming increasingly important to recognize that the duration of competitive advantages is declining, especially in technology intensive industries.

Question 7

Atlas Door created competitive advantage by reducing the time to receive and process and order and through installing a just in time logistics operation.Which of the following is not a reason for their favorable position relative to the five forces of industry competition?

Accepted Answer

When Atlas began operations, distributors had little interest in its product. The established distributors already carried the door line of a much larger competitor and saw little to no reason to switch suppliers except, perhaps, for a major price concession. But as a startup, Atlas was too small to compete on price alone. Instead, it positioned itself as the door supplier of last resort, that is, the company people came to if the established supplier could not deliver or missed a key date. With an average industry order fulfillment time of almost four months, some calls inevitably came to Atlas. And when it did get the call, Atlas commanded a higher price because of its faster delivery. Atlas not only got a higher price, but its effective integration of value-creating activities saved time and lowered costs. Thus, it enjoyed the best of both worlds.

Question 8

In the __________ stage of the industry life cycle,there are many segments,competition is very intense,and the emphasis on process design is high.

Accepted Answer

In the maturity stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.

Question 9

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages.Which of the following is not one of these three approaches?

Accepted Answer

Three approaches to combining overall low cost and differentiation include: automated and flexible manufacturing systems, exploiting the profit pool concept for competitive advantage, and coordinating the extended value chain by way of information technology.

Question 10

A firm following a focus strategy must focus on _____________.

Accepted Answer

A focus strategy is based on the choice of a narrow competitive scope within an industry. A firm following this strategy selects a segment or a group of segments and tailors its strategy to serve them. The essence of focus is the exploitation of a particular market niche.

Question 11

Due to the Internet,firms that use a focus strategy have new opportunities to _________.

Accepted Answer

With focus strategies, the Internet offers new avenues in which to compete because they can access markets less expensively (low cost) and provide more services and features (differentiation). Some claim that the Internet has opened up a new world of opportunities for niche players who seek to access small markets in a highly specialized fashion.

Question 12

Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies?

Accepted Answer

Among the most striking differentiation trends are new ways to interact with consumers. In particular, the Internet has created new ways of differentiating by enabling mass customization, which improves the response to customer wishes.

Question 13

Which of these statements regarding the industry life cycle is correct?

Accepted Answer

Industry life cycles are important because the emphasis on various generic strategies, functional areas, value-creating activities, and overall objectives varies over the course of an industry life cycle.

Question 14

Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them.This capability is an example of _____________.

Accepted Answer

Among the most striking differentiation trends are new ways to interact with consumers. In particular, the Internet has created new ways of differentiating by enabling mass customization, which improves the response to customer wishes.

Question 15

In a given market,key technology no longer has patent protection,experience is not an advantage,and there is a growing need to compete on price.What stage of its life cycle is the market in?

Accepted Answer

In the maturity stage of the industry life cycle, rivalry among existing rivals intensifies because of fierce price competition at the same time that expenses associated with attracting new buyers are rising. Advantages based on efficient manufacturing operations and process engineering become more important for keeping costs low as customers become more price sensitive. It also becomes more difficult for firms to differentiate their offerings, because users have a greater understanding of products and services.

Question 16

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?

Accepted Answer

The pitfalls of integrated overall cost leadership and differentiation include: firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle; underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain; and miscalculating sources of revenue and profit pools in the company industry.

Question 17

In the __________ stage of the industry life cycle,the emphasis on product design is very high,the intensity of competition is low,and the market growth rate is low.

Accepted Answer

In the introduction stage, products are unfamiliar to consumers. Market segments are not well defined, and product features are not clearly specified. The early development of an industry typically involves low sales growth, rapid technological change, operating losses, and the need for strong sources of cash to finance operations. Since there are few players and not much growth, competition tends to be limited.

Question 18

A narrow market focus is to a differentiation-based strategy as a __________________.

Accepted Answer

A narrow market focus is to a differentiation-based strategy as a broadly-defined target market is to a cost leadership strategy.

Question 19

A __________ can be defined as the total profits in an industry at all points along the industry value chain.

Accepted Answer

A profit pool is defined as the total profits in an industry at all points along the industry value chain.

Question 20

Which of the following is NOT one of the ways the Internet is lowering transaction costs?

Accepted Answer

Hiring new employees, meeting with customers, ordering supplies, and addressing government regulations; all have some costs associated with them that can be lowered with the use of the Internet. Removing intermediaries also lowers transaction costs, and Internet search reduces the need for travel.

Quiz 5: Business-Level Strategy: Creating Andsustaining Competitive Advantages