Question 1

Company competitive advantages can be eroded by all of the following except
A) rapid changes in technology.
B) globalization.
C) actions by rivals within the industry.
D) actions by workers outside of the industry.

Accepted Answer

Clearly, nothing is forever when it comes to competitive advantages. Rapid changes in technology, globalization, and actions by rivals from within as well as outside the industry can quickly erode company advantages.

Question 2

Dell lost its competitive advantage starting in 2007 because it
A) did not deliver innovations to respond to changing market demand.
B) developed a highly performant just-in-time delivery system.
C) did not reward its employees.
D) let suppliers have dominant power.

Accepted Answer

Dell went from being the Fortune magazine darling in 2005 to a weak competitor in 2007 when cracks began to appear. Its competitive position has recently been severely eroded both by its traditional competitors and by an onslaught of firms selling tablets and other mobile devices. In short, Dell focused so much on operational efficiency and perfecting its direct model that it failed to deliver innovations that an increasingly sophisticated market demanded.

Question 3

Corporations increasingly collect and analyze data on their customers.This is known as
A) profit analysis.
B) big data.
C) cost reduction.
D) automated analysis.

Accepted Answer

Corporations are increasingly collecting and analyzing data on their customers, including data on customer characteristics, purchasing patterns, employee productivity, and physical asset utilization. These efforts, commonly referred to as Big Data, have the potential to allow firms to better customize their product and service offerings to customers while more efficiently and fully using the resources of the company.

Question 4

Which of the following is not a reason for the possible erosion of company competitive advantage?
A) rapid change in technology
B) globalization
C) actions by rivals from within and outside of the industry
D) company commitment to innovation

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 5

Mass customization permits companies to manufacture unique products in relatively _________ quantities at ______ costs.
A) large; higher
B) large; lower
C) small; higher
D) small; lower

Accepted Answer

Given the advances in manufacturing technologies such as CAD-CAM (computer aided design and computer aided manufacturing) as well as information technologies, many firms have been able to manufacture unique products in relatively small quantities at lower costs. This is a concept known as mass customization.

Question 6

Anderson Windows lowered costs,enhanced quality and variety,and improved its response time to customers by
A) creating a new paper-based catalog.
B) creating an interactive computer version of its paper catalogs.
C) creating an integrated computer system of catalogs, products, orders, and manufacturing.
D) creating a manufacturing system for ordering parts.

Accepted Answer

Andersen developed an interactive computer version of its paper catalogs that it sold to distributors and retailers. Salespersons can now customize each window to meet customer needs, check the design for structural soundness, and provide a price quote. The system is virtually error-free, customers get exactly what they want, and the time to develop the design and furnish a quotation has been cut by 75 percent. Each showroom computer is connected to the factory, and customers are assigned a code number that permits them to track the order. The manufacturing system has been developed to use some common finished parts, but it also allows considerable variation in the final products.

Question 7

A risk for a firm that tries to attain both cost and differentiation advantages is that it can be stuck in the middle.An example of this is supermarkets because their _____ structure is _____ than discount retailers and customers do not value their products and services as being high-end such as those offered by Whole Foods.
A) cost; higher
B) price; higher
C) price; lower
D) cost; lower

Accepted Answer

A key issue in strategic management is the creation of competitive advantages that enable a firm to enjoy above-average returns. Some firms may become stuck in the middle if they try to attain both cost and differentiation advantages. Mainline supermarket chains find themselves stuck in the middle as their cost structure is higher than discount retailers offering groceries and their products and services are not seen by consumers as being as valuable as those of high-end grocery chains, such as Whole Foods.

Question 8

Atlas Door created competitive advantage by reducing the time to receive and process an 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?
A) The service was easily imitable.
B) It created high entry barriers for new entrants.
C) The integration of many company value-chain activities provided causal ambiguity and path dependency.
D) It exerted power over its customers.

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 9

Atlas Door tightly controlled logistics so that it always shipped only fully complete orders to construction sites.In regards to the five forces model,which of the following is a reason this might give them competitive advantage?
A) It helps to reduce the threat of new entrants.
B) It created low entry barriers for new entrants.
C) It created a high threat of substitution.
D) It gave more power to buyers.

Accepted Answer

Atlas tightly controlled logistics so that it always shipped only fully complete orders to construction sites. Orders require many components, and gathering all of them at the factory and making sure that they are with the correct order can be a time-consuming task. Of course, it is even more time-consuming to get the correct parts to the job site after the order has been shipped. Atlas developed a system to track the parts in production and the purchased parts for each order. This helped to ensure the arrival of all necessary parts at the shipping dock in time. This time-saving efficiency also had cost benefits that make it difficult for new entrants to compete successfully, at least in the short run.

Question 10

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to
A) increase competition.
B) expand the profit pool.
C) provide better customer service.
D) satisfy regulators.

Accepted Answer

Outside the flight experience itself, airlines are generating revenue by charging fees for credit cards, frequent-flyer programs, and access to airport lounges. This serves to expand the profit pool.

Question 11

A __________ can be defined as the total profits in an industry at all points along the industry value chain.
A) profit maximizer
B) revenue enhancer
C) profit pool
D) profit outsourcing

Accepted Answer

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

Question 12

By separating the value of the actual flight from the services associated with flying,airlines have greatly expanded the __________ associated with flying.
A) costs
B) services
C) profit pool
D) difficulties

Accepted Answer

By separating the value of the actual flight from the services associated with flying, airlines have greatly expanded the profit pool associated with flying.

Question 13

Many firms have achieved success by integrating activities throughout the extended value chain by using _______ to link their own value chain with the value chains of their customers and suppliers.
A) customization
B) information technology
C) human resources
D) competitive advantage

Accepted Answer

Many firms have achieved success by integrating activities throughout the extended value chain by using information technology to link their own value chain with the value chains of their customers and suppliers.

Question 14

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?
A) Firms that target too large a market that causes unit costs to increase.
B) Firms that underestimate the expenses associated with coordinating value-creating activities in the extended value chain.
C) Firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle.
D) Firms that miscalculate sources of revenue and profit pools in the company industry.

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 15

Barnes and Noble lost its market share in book retailing to Amazon.It tried to regain market share by offering a similar electronic reader,the Nook,to the Amazon Kindle series.This demonstrates that Barnes and Noble lacked
A) a short term strategy.
B) a company-wide strategy.
C) sustainable competitive advantage.
D) good suppliers.

Accepted Answer

Even in industries that are normally viewed as low tech, the increasing use of technology has suddenly made competitive advantages less sustainable. The Amazon success in book retailing at the cost of Barnes and Noble, the former industry leader, as well as BlackBerry difficulties in responding to Apple innovations in the smartphone market, serves to illustrate how difficult it has become for industry leaders to sustain competitive advantages that they once thought would last forever.

Question 16

In evaluating the sustainability of the Atlas Door competitive advantages over the long run,it is important to evaluate the ability of rivals to
A) easily imitate its strategy.
B) communicate with its customers.
C) consistently overprice their products.
D) find new suppliers.

Accepted Answer

It is important, of course, to assume that the Atlas Door strategy is unique in the industry, and the central issue becomes whether or not rivals will be able to easily imitate its strategy or create a viable substitute strategy.

Question 17

Atlas Door created competitive advantages in overall low cost and differentiation by creating ___________ among value-chain activities.
A) substitutes
B) advantages
C) disadvantages
D) linkages

Accepted Answer

Atlas Door has created competitive advantages in both overall low cost and differentiation. Its strong linkages among value-chain activities, a requirement for its just-in-time operations, not only lower costs but enable the company to respond quickly to customer orders. As noted in Exhibit 5.4, many of the value-chain activities associated with a differentiation strategy reflect the element of speed or quick response.

Question 18

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ______ integration of cost leadership and differentiation.
A) good
B) poor
C) intentional
D) structured

Accepted Answer

The pitfalls of integrated overall cost leadership and differentiation include: firms underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain.

Question 19

The Pepsi algorithm that permits it to lower out of stock inventory is a result of using
A) purchasing patterns.
B) data analytics.
C) physical plant.
D) flooding the market with ads.

Accepted Answer

Pepsi used data analytics to develop an algorithm that lowers the rate of inventory out-of-stocks and has shared the algorithm with partners and retailers.

Question 20

Atlas Door relies on technologies that are rather well known and non-proprietary.This opens it up to the potential of
A) imitation by rivals.
B) customer abandonment.
C) increased supplier power.
D) government regulation.

Accepted Answer

An argument could be made that much of the Atlas Door strategy relies on technologies that are rather well known and nonproprietary. Over time, a well-financed rival could imitate its strategy (via trial and error), achieve a tight integration among its value-creating activities, and implement a just-in-time manufacturing process.

Quiz 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

Company competitive advantages can be eroded by all of the following except

Dell lost its competitive advantage starting in 2007 because it

Corporations increasingly collect and analyze data on their customers.This is known as

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

Mass customization permits companies to manufacture unique products in relatively ___ quantities at costs.

Anderson Windows lowered costs,enhanced quality and variety,and improved its response time to customers by

Atlas Door created competitive advantage by reducing the time to receive and process an 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?

Atlas Door tightly controlled logistics so that it always shipped only fully complete orders to construction sites.In regards to the five forces model,which of the following is a reason this might give them competitive advantage?

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to

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

By separating the value of the actual flight from the services associated with flying,airlines have greatly expanded the __________ associated with flying.

Many firms have achieved success by integrating activities throughout the extended value chain by using _______ to link their own value chain with the value chains of their customers and suppliers.

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

Barnes and Noble lost its market share in book retailing to Amazon.It tried to regain market share by offering a similar electronic reader,the Nook,to the Amazon Kindle series.This demonstrates that Barnes and Noble lacked

In evaluating the sustainability of the Atlas Door competitive advantages over the long run,it is important to evaluate the ability of rivals to

Atlas Door created competitive advantages in overall low cost and differentiation by creating ___________ among value-chain activities.

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of ______ integration of cost leadership and differentiation.

The Pepsi algorithm that permits it to lower out of stock inventory is a result of using

Atlas Door relies on technologies that are rather well known and non-proprietary.This opens it up to the potential of