Question 1

All of the following are examples of differentiated products EXCEPT:

Accepted Answer

The Great Value brand at Walmart is an undifferentiated product, meaning that it is a generic, low-priced item that does not vary significantly from its competitors. This is in contrast to Mont Blanc pens, Caterpillar's heavy-duty earth-moving equipment, and Prada fashion, which are all examples of differentiated products because they offer unique features or qualities that set them apart from their competitors.

Question 2

A cost leadership strategy targets the industry's ____ customers.

Accepted Answer

The answer of A cost leadership strategy targets the industry's...

Question 3

Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools, prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on these construction firms for selling its product. Durable Ceramic's next most-efficient competitor, Cost-Less Ceramics, Inc., earns average returns, whereas Durable earns above-average returns. The commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below those of Cost-Less's prices, it is likely that:

Accepted Answer

The answer of Durable Ceramics, Inc., provides inexpensive ceramic tile...

Question 4

When a firm is able to produce nonstandardized (that is, distinctive) products for customers who value differentiated features more than they value low cost, the firm is successfully implementing:

Accepted Answer

A differentiation strategy involves creating a unique product or service that offers something of value that competitors cannot match. This is achieved by adding unique features and attributes that are perceived as valuable by a specific group of customers. By doing so, the firm is able to charge a premium price for its products or services, as customers are willing to pay more for the added value.

Question 5

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy.

Accepted Answer

Research suggests that having a competitive advantage in logistics creates more value in the cost leadership strategy than it does in the differentiation strategy. This is because logistics is a critical aspect of the cost leadership strategy, as it involves efficient and cost-effective management of the supply chain and distribution channels. In contrast, the differentiation strategy focuses on creating unique and high-quality products or services that stand out in the market, which may not necessarily require as much emphasis on logistics. Therefore, although having a competitive advantage in other areas such as marketing, technology development, and human resource management can also create value, logistics is particularly important for the cost leadership strategy.

Question 6

When the costs of supplies increase in an industry, the low-cost leader:

Accepted Answer

As the low-cost leader operates on very narrow profit margins, they may be the only firm able to pay the higher prices and still earn average or above-average returns. Their ability to do so can give them a competitive advantage over rivals who may struggle to maintain profitability with the increased costs. Therefore, option D is the best choice.

Question 7

Walmart went against business-level strategy and made changes to attract upscale customers. These changes had which of the following results?

Accepted Answer

Walmart's attempt to attract upscale customers made it vulnerable to competitors like Dollar Stores and Amazon, as it deviated from its core strategy of offering low prices.

Question 8

All of the following are ways that a good or service can be differentiated EXCEPT:

Accepted Answer

Economies of scale and efficient operations do not differentiate a good or service from its competitors. They are important for internal operations and cost management but do not necessarily set the good or service apart in the eyes of the consumer. Responsive customer service, perceived prestige and status, and engineering design and performance are all ways that a good or service can differentiate itself from competitors.

Question 9

A company pursuing the differentiation or focused differentiation strategy would tend to:

Accepted Answer

Companies pursuing differentiation strategies aim to set themselves apart from competitors through unique features or capabilities. This requires flexibility and the ability to quickly adapt to changing customer needs, which can be achieved through the development of flexible systems. Building economies of scale or efficient operations (A) would be more important for companies pursuing a cost leadership strategy, while developing and maintaining cost-effective MIS operations (B) would be important for any company, regardless of strategy. Relationships with suppliers (D) may be important for any company, but are not directly related to differentiation or focused differentiation strategies.

Question 10

Ever-improving levels of efficiency enhance profit margins for a cost-leader. This effects which of the five forces of industry structure most directly?

Accepted Answer

Improving efficiency and enhancing profit margins can create barriers to entry, making it harder for potential entrants to compete with established cost-leaders.

Question 11

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of:

Accepted Answer

This phenomenon is a clear example of consumers associating high prices with quality, and perceiving prestige and status as a means of differentiation. The taste-test results suggest that there is no actual difference in the product itself, yet consumers are willing to pay more for the perception of a higher quality product.

Question 12

The products or services that are differentiated from others, have qualities that are:

Accepted Answer

Differentiation is about offering unique and perceived value to customers that they are willing to pay a premium for. Therefore, the qualities of the product or service must be perceived by the customer to add value. The other options do not necessarily relate to differentiation.

Question 13

Walmart's same store sales have been declining and those of rivals Family Dollar and Amazon have been increasing. What could explain this recent change?

Accepted Answer

Walmart's decline in same store sales could potentially be attributed to a shift in strategy to attract more upscale customers, which may have resulted in a loss of its traditional customer base. Meanwhile, rivals such as Amazon and Family Dollar have been increasing their same store sales, potentially due to their ability to appeal to a wider range of customers, including both budget-conscious and upscale shoppers. Option A is possible, but lacks evidence to support it. Option B and C are unlikely scenarios as there is no indication of strategy changes from Amazon or Family Dollar, and Walmart has yet to fully embrace a focused differentiation strategy.

Question 14

As the television industry has changed in the last few decades from just three major networks to a multiplicity of networks, one of the major aspects of business strategy for the newer networks is ____ than the traditional networks.

Accepted Answer

As the number of networks has increased, the newer networks have had to differentiate themselves by targeting a narrower, more specific market segment than the traditional networks. This strategy allows them to create programming that is more tailored to the interests of their target audience, thus increasing their chances of attracting and retaining viewers.

Question 15

The effectiveness of any of the generic business-level strategies is contingent upon:

Accepted Answer

The match between the opportunities and threats in its external market and the strengths of its internal environment is crucial for the effectiveness of any business-level strategy. The generic strategies need to align with the company's strengths and the external market conditions to be effective. The other choices may also have an impact, but they are not as critical as the match between the external market conditions and the internal strengths.

Question 16

The typical risks of a cost leadership strategy include:

Accepted Answer

The risk of a cost leadership strategy is that the production and distribution processes may become obsolete over time, as competitors may also adopt similar cost-cutting measures. This could lead to a loss of cost advantages and ultimately erode the company's profitability. The other options are not typical risks of a cost leadership strategy.

Question 17

A firm successfully implementing a differentiation strategy would expect:

Accepted Answer

A differentiation strategy involves creating a unique product or service that sets the firm apart from its competitors, and as a result, customers are willing to pay a premium price for it. This means that the firm can charge higher prices without customers being too sensitive to price increases. Customers perceive the product as unique and valuable, which gives the firm a competitive advantage. Having high levels of power over suppliers is not necessarily a characteristic of a successful differentiation strategy.

Question 18

A cost leadership strategy provides goods or services with features that are:

Accepted Answer

A cost leadership strategy aims to provide goods or services at lower costs while maintaining acceptable features. This means that the quality of the product or service should be sufficient enough to meet customers' basic needs and expectations. Providing substandard or mediocre features would not be acceptable to customers and could negatively impact the success of the cost leadership strategy. "Unique" features would also not be a focus of a cost leadership strategy, as they typically involve additional costs.

Question 19

A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use:

Accepted Answer

The river barge company is offering cheaper transportation, which is consistent with a cost leadership strategy. Therefore, the company should first target customers whose companies use the cost leadership strategy.

Question 20

The use of a differentiation strategy would be expected to be LEAST effective in which of the following markets?

Accepted Answer

A differentiation strategy is least effective in commodity goods because they are usually standardized and not easily differentiated. Customers in this market are often interested in price more than other factors, which makes it difficult to command a premium price based on differentiation alone. However, in markets like motion pictures, popular music, and writing instruments, there are opportunities to differentiate based on aspects such as quality, style, and brand identity, thereby creating value for customers and the potential for a competitive advantage.

Quiz 4: Business-Level Strategy