Question 1

A factor that has a strong influence on a company's costs is termed:

Accepted Answer

A cost driver is a factor that causes a change in the cost of a specific business activity. By identifying cost drivers, a company can take steps to control or reduce costs effectively. Therefore, a cost driver has a strong influence on a company's costs. The other choices - B, C, and D - are related to cost management but are not direct factors that influence a company's costs.

Question 2

There are several basic approaches to competing successfully and gaining a competitive advantage over rivals,such as:

Accepted Answer

Delivering more value to customers or doing so more efficiently than rivals are fundamental strategies for gaining a competitive advantage.

Question 3

Which of the following is NOT one of the five generic types of competitive strategy?

Accepted Answer

Market share dominator strategy is not one of the five generic types of competitive strategy. The five generic types are low-cost provider strategy, broad differentiation strategy, best-cost provider strategy, focused low-cost provider strategy, and focused differentiation strategy.

Question 4

Whatever strategic approach is adopted by a company to deliver value,it nearly always:

Accepted Answer

The strategic approach mentioned in the question refers to performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match or trump. Option D best describes this approach. Option A and C may be relevant to planning and execution, but they are not specific to the strategic approach mentioned in the question. Option B is important but does not directly relate to the strategic approach mentioned in the question. Therefore, option E can be eliminated as it includes all choices but not all are relevant to the specific strategic approach mentioned.

Question 5

A low-cost leader translates its low-cost advantage over rivals into superior profit performance by:

Accepted Answer

A low-cost leader can choose to either lower the price to attract more customers or maintain the present price and earn a higher profit margin on each unit sold due to the lower cost advantage. This enables the company to raise total profits and overall return on investment, which is the primary objective of a low-cost strategy. Option C, D, and E are not a part of the low-cost leader's strategy.

Question 6

The culture of a company can be a cost-efficient value chain activity because it can:

Accepted Answer

The answer of The culture of a company can be...

Question 7

To succeed with a low-cost provider strategy,company managers have to:

Accepted Answer

The low-cost provider strategy requires performing value chain activities more cost-effectively than competitors, as well as proactively revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. Pursuing backward or forward integration (A), moving all activities to low-wage countries (B), selling direct to users (C), or outsourcing the majority of activities (E) may not necessarily achieve these goals or may not be feasible for all companies.

Question 8

The generic types of competitive strategies include:

Accepted Answer

The generic types of competitive strategies are low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation. These strategies are commonly known as Porter's generic strategies and are widely used in the industry to gain a competitive advantage. Option A, B, D, and E do not represent the correct generic types of competitive strategies.

Question 9

Low-cost leaders,who have the lowest industry costs,are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable:

Accepted Answer

Low-cost leaders are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable. This means that they are able to offer affordable products at mass market quality.

Question 10

How valuable a low-cost leader's cost advantage is depends on:

Accepted Answer

The value of a low-cost leader's cost advantage depends on how easy or inexpensive it is for rivals to copy the low-cost leader's methods or match its low costs. If it is easy for rivals to do so, then the advantage may not be as significant.

Question 11

Which of the following is NOT an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively?

Accepted Answer

Eliminating product features that might have market appeal but excessively increase production costs may not necessarily lead to performing value chain activities more cost-effectively. It could also result in a decrease in overall customer satisfaction and may make the product less competitive in the market.

Question 12

The major avenues for achieving a cost advantage over rivals include:

Accepted Answer

Performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities is the most sustainable and effective way to achieve a cost advantage over rivals. The other options may provide short-term cost savings but may not be sustainable or may compromise the quality of the product or service.

Question 13

A low-cost leader's basis for competitive advantage is:

Accepted Answer

The basis for a low-cost leader's competitive advantage is having meaningfully lower overall costs than rivals on comparable products. This allows for the ability to offer lower prices while still maintaining profitability, which can attract price-sensitive customers and potentially gain market share from competitors who cannot match the low prices.

Question 14

While there are many routes to competitive advantage,the two biggest factors that distinguish one competitive strategy from another involves:

Accepted Answer

The two biggest factors that distinguish one competitive strategy from another involve whether a company's target market is broad or narrow (i.e., the scope of the business) and whether the company is pursuing a competitive advantage linked to low costs or differentiation (i.e., the basis of competition). This is known as Porter's Generic Strategies framework. Option A is a component of brand management, which is important for competitive advantage, but not the biggest factor. Option C is one of the generic strategies (i.e., cost leadership), but the other component in the framework is missing. Option D is not a framework for competitive strategy. Option E is not a concept in competitive strategy.

Question 15

Achieving a cost advantage over rivals entails:

Accepted Answer

Achieving a cost advantage over rivals involves performing value chain activities more cost-effectively than competitors and finding ways to eliminate or bypass some cost-producing activities altogether. This option allows companies to offer products at lower prices and gain a cost advantage over their rivals. The other options may not always lead to a cost advantage and can even be detrimental to the company's operations in certain circumstances.

Question 16

A company's competitive strategy deals with:

Accepted Answer

A company's competitive strategy deals specifically with its game plan for competing successfully, including efforts to please customers, strengthen its market position, counter rival maneuvers, and achieve a particular competitive advantage. The other options listed (B, C, D, E) may be elements of a company's overall strategy, but they are not the primary focus of its competitive strategy.

Question 17

Which one of the following generic types of competitive strategy is typically the "best" strategy for a company to employ?

Accepted Answer

There is no one-size-fits-all answer to this question as it depends on the specific company's situation, industry, and competitive environment. A customized strategy that fits these unique factors will likely be the most effective approach.

Question 18

Cost-efficient management of a company's overall value chain activities requires that management:

Accepted Answer

Cost-efficient management of a company's overall value chain activities requires that management ferret out cost-saving opportunities in every part of the value chain. This means that management should continuously look for ways to reduce costs and optimize processes in all areas of the value chain, from procurement to production to distribution and marketing. While undertaking an operations functionality redesign or establishing sales productivity and operating practices guidelines may be part of this process, the primary focus should be on identifying cost-saving opportunities across the value chain. Re-creating rivals' assembly plant structuration savings may not be relevant or applicable to every company.

Question 19

Which of the following is NOT one of the ways that a company can achieve cost-efficient management of its value chain activities?

Accepted Answer

Ensuring a corporate diversity policy and effective controls may be important for ethical reasons or to attract and retain talent, but it is not directly related to achieving cost-efficient management of value chain activities. The other options listed are all ways that a company can achieve cost efficiency in its value chain activities.

Question 20

The biggest and most important differences among the competitive strategies of different companies boil down to:

Accepted Answer

The market target and competitive advantage are two key elements that define a company's competitive strategy. A broad or narrow market target and a low cost or differentiation focus are major determinants of a company's competitive position. Different companies choose different combinations of these factors to gain an advantage in the marketplace. While the other options are important considerations, they are not the most significant differences in competitive strategies among companies.

Quiz 5: The Five Generic Competitive Strategies: Which One to Employ