Question 1

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 2

Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in:

Accepted Answer

Business-level strategies focus on providing value to customers and gaining a competitive advantage in specific product markets. They involve leveraging a firm's core competencies to differentiate their product offering and create unique value for customers in a particular market. While industry selection, primary value chain activities, and geographic location can all play a role in shaping a firm's overall strategy, they are not the primary focus of business-level strategies.

Question 3

Although it is a cost leader, IKEA also offers differentiated features that appeal to its target customers, including its unique furniture designs, in-store playrooms for children, and extended hours.

Accepted Answer

The statement correctly identifies IKEA as a cost leader, but also acknowledges the differentiated features that IKEA offers, such as unique furniture designs, in-store playrooms for children, and extended hours.

Question 4

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 statement is true as customers' preferences and needs may change over time, leading to a decline in the perceived value of the differentiated features offered by the firm. Therefore, the differentiation strategy should be continuously evaluated and adapted to stay relevant in the market.

Question 5

Because of its focus on innovation and quality manufacturing, Total Quality Management is not useful for firms that follow a cost leadership strategy.

Accepted Answer

Total Quality Management can be useful for firms that follow a cost leadership strategy as it helps in reducing costs and increasing efficiency in manufacturing processes. It can also help in improving product quality and reducing defects, which can lead to cost savings in the long run. TQM is not just about innovation but also about process improvement and continuous quality improvement, which are relevant to firms following a cost leadership strategy.

Question 6

Research shows that firms using a hybrid strategy (i.e., integrated cost leadership/differentiation) often outperform firms using pure strategies ( i.e., cost leadership or differentiation).

Accepted Answer

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Question 7

Walmart's actions to become more upscale with the aim of taking sales away from Target provided an opening for competitors such as Amazon and Family Dollar to better compete on the basis of price and attract some of Walmart's customers.

Accepted Answer

Walmart's shift towards upscale products and attempts to compete with Target may have driven away some price-conscious customers, creating an opportunity for competitors like Amazon and Family Dollar to win over those customers.

Question 8

A flexible manufacturing system is a computer-controlled process used to produce a variety of products in moderate, flexible quantities with minimal manual intervention.

Accepted Answer

A flexible manufacturing system (FMS) is indeed a computer-controlled production process designed to manufacture a variety of products in flexible quantities with minimal manual intervention. It is designed to help manufacturers quickly and easily switch from making one product to another and produce goods in lower volumes. FMS is highly automated and employs robotics, computer-aided design (CAD), and other sophisticated technologies to control and streamline the production process.

Question 9

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

Accepted Answer

While human resources and support functions may not directly create value for the customer, they do support and enable the value chain activities that do create value. Therefore, they can be considered value-adding activities in the broader context of the value chain.

Question 10

One of the benefits of the integrated cost leadership/differentiation strategy is that it is less risky than either the cost leadership or differentiation strategies.

Accepted Answer

The answer of One of the benefits of the integrated...

Question 11

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

Accepted Answer

Focus strategies, whether cost focus or differentiation focus, still rely on the completion of value chain and support activities to effectively target a specific market segment and compete successfully.

Question 12

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

When a company focuses on serving a narrow competitive segment, there is a risk that the specific needs and preferences of that segment may start resembling those of the broader market. This may lead to increased competition and reduced differentiation, ultimately resulting in lower profits for the company.

Question 13

A firm's core strategy is its ____ strategy.

Accepted Answer

A core strategy refers to the main competitive approach of a firm in a particular business or industry. This is what shapes the firm's decisions and actions in terms of product offerings, target market, marketing tactics, and resource allocation. The corporate strategy, on the other hand, pertains to the overall direction and scope of the entire company, including diversification, mergers and acquisitions, and other strategic initiatives. Pricing and international strategies are specific functional or geographic strategies that may support or complement the core strategy of the firm, but they are not necessarily the main driver of its competitive advantage.

Question 14

In general, firms can be most effective if they develop business-level strategies that will serve the needs of the "typical customer" in the industry.

Accepted Answer

Firms are often more effective when they target specific customer segments rather than a "typical customer," as this allows them to tailor their strategies to meet the unique needs and preferences of those segments, leading to a competitive advantage.

Question 15

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

Accepted Answer

While the differentiation strategy may be more commonly used for luxury goods, it can still be effective for common, inexpensive products such as donuts. Differentiating a product through unique flavors, packaging, or marketing can help it stand out in a crowded market and appeal to specific target audiences. Therefore, the statement is false.

Question 16

The value-creating activities associated with the cost leadership strategy and differentiation strategy are the same.

Accepted Answer

The value-creating activities associated with the cost leadership strategy focus on achieving operational efficiency and reducing costs, while those associated with the differentiation strategy focus on creating unique products or services that customers are willing to pay a premium price for. While both strategies involve creating value for customers, the specific activities involved are different.

Question 17

The hazard of getting "stuck in the middle" applies to firms using any business strategy.

Accepted Answer

The answer of The hazard of getting "stuck in the...

Question 18

Flexible manufacturing systems, information networks, and total quality management are three techniques that make it possible for firms to implement the focused differentiation strategy.

Accepted Answer

The answer of Flexible manufacturing systems, information networks, and total...

Question 19

A new generation of lunch trucks in cities such as New York, San Francisco, and Los Angeles serving high-end fare such as hamburgers made from grass-fed cattle, escargot, and crème brulee, at less expensive prices than sit-down restaurants.  This illustrates a focus cost leadership strategy.

Accepted Answer

A focus cost leadership strategy involves targeting a specific market segment and offering products at lower prices than competitors, which is what these lunch trucks are doing by serving high-end fare at less expensive prices.

Question 20

When selecting a business level strategy, the firm must determine all of the following EXCEPT:

Accepted Answer

The firm must determine how to satisfy the customers' needs, who the customers are, and what the customers' needs are in order to select an effective business level strategy. The only option that is not necessary to consider is "why should these customers' needs be satisfied," as it is assumed that satisfying customers' needs will lead to business success.

Quiz 4: Business-Level Strategy