Question 1

The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is

Accepted Answer

The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is the degree of market segmentation. Cost leaders target the broader market and aim to achieve the lowest costs in the industry through economies of scale and efficient operations. Focused cost leaders, on the other hand, target specific segments of the market where they can dominate through cost leadership. They focus on a narrow market segment, such as a particular product type or customer group, and strive to offer the lowest costs in that segment. Therefore, the degree of market segmentation is the key distinguishing factor between these two strategies.

Question 2

A differentiation business model is based on pursuing a set of generic strategies that allows a company to achieve a competitive advantage by creating a product that customers perceive as different or distinct in some important way.

Accepted Answer

A differentiation business model is indeed based on pursuing generic strategies that create a unique product that stands out in the market and gives the company a competitive edge.

Question 3

Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure?

Accepted Answer

The generic business-level strategy based on the intent to outperform competitors by doing everything a company can to lower its cost structure is cost leadership. This strategy aims to achieve lower costs than competitors while offering similar or better value to customers.

Question 4

To pursue a cost leadership strategy,strategic managers need to incorporate all the latest technology into their products.

Accepted Answer

Pursuing a cost leadership strategy does not necessarily require the incorporation of all the latest technology, as such investments in technology may add to the cost of production and thus reduce the firm's ability to compete on cost. Rather, cost leadership strategy typically involves finding ways to produce and deliver products or services more efficiently and economically than competitors, such as through process improvements, economies of scale, or low-cost sourcing of inputs.

Question 5

Companies are now able to pursue cost leadership and differentiation simultaneously because

Accepted Answer

The emergence of flexible manufacturing technologies and new information technologies have enabled companies to pursue both cost leadership and differentiation strategies simultaneously. These technologies have made it possible for companies to customize their products and services while maintaining cost efficiency. Consequently, companies are now able to differentiate their products and services based on customer needs and preferences, while keeping costs low.

Question 6

For any company,building new competencies in the functions that sustain its differentiation means neglecting its cost structure.

Accepted Answer

Building new competencies does not necessarily mean neglecting cost structure. A company can invest in both functions that sustain its differentiation and its cost structure. It all depends on the company's priorities, resources, and strategies.

Question 7

A differentiated product is a product that

Accepted Answer

A differentiated product is a product that better satisfies customer needs than rival products do. The differentiation can be achieved through various features such as design, functionality, or customer service. Cost is not necessarily a defining factor in differentiation, as a differentiated product can either cost more or less than rival products, depending on the specific market and customer base.

Question 8

Within the funiture market,Jacob and Edward are both consumers who want to buy furniture for its looks rather than its functionality.Jacob and Edward are both members of the same customer group.

Accepted Answer

Both Jacob and Edward want to buy furniture for its looks, indicating that they have similar preferences and belong to the same customer group.

Question 9

A producer of commodity steel should pursue which of the following generic competitive strategies?

Accepted Answer

A producer of commodity steel, which is a low-priced, standardized product, should pursue the cost leadership strategy to remain competitive. This strategy focuses on achieving the lowest possible cost for production, which allows the company to price its product lower than competitors and still generate a profit. This type of strategy is appropriate for businesses in commodity industries where there is intense competition and little differentiation between products.

Question 10

To create a successful business model,managers must choose a set of business-level strategies that

Accepted Answer

A successful business model involves choosing a set of business-level strategies that work together to provide the company with a competitive advantage over its rivals in the industry. These strategies help the company differentiate itself, lower costs, and/or focus on a specific market segment or product/service. By choosing strategies that work together in a complementary way, the company can create a sustainable competitive advantage that allows it to outperform its rivals.

Question 11

A radio station has a distinctive competency in developing new products (shows)and wants to serve the upscale market.Which of the following is the most appropriate generic strategy for this company?

Accepted Answer

A focused differentiation approach is most appropriate as it targets a specific upscale market segment by offering unique and high-quality shows, leveraging the station's competency in developing new products.

Question 12

Ryanair,based in Dublin,Ireland,used the cost-leadership business model pioneered by Southwest Airlines in the United States to become a leading player in the European air travel market.

Accepted Answer

The statement is true as Ryanair's business model is based on low cost, no-frills flights, similar to Southwest Airlines' approach in the US.

Question 13

A product's appeal to customers' psychological desires cannot be considered a source of differentiation.

Accepted Answer

A product's appeal to customers' psychological desires can be a source of differentiation, as it can create a unique image or brand identity for the product and make it stand out among other similar products. This can lead to customer loyalty and higher sales.

Question 14

Apple,Amazon.com,and eBay have used the Internet as a way to become broad differentiators.

Accepted Answer

Apple, Amazon.com, and eBay have used the Internet to offer unique products, services, and customer experiences that differentiate them from their competitors. This has enabled them to reach a broad audience and maintain their competitive advantage.

Question 15

A cost leader could reasonably be expected to reduce costs by developing distinctive competencies in all but

Accepted Answer

The answer of A cost leader could reasonably be expected...

Question 16

The most expensive competitive strategy to pursue is

Accepted Answer

Pursuing a differentiation strategy can be extremely expensive as it requires significant investment in research and development, marketing, and creating unique product features that set the company apart from competitors. This can result in higher production costs and potentially higher pricing for the differentiated product. Therefore, it is the most expensive competitive strategy to pursue.

Question 17

A large company produces a variety of clothing for different customer groups.This firm is pursuing which of the following strategies?

Accepted Answer

The company is pursuing a differentiation strategy by producing a variety of clothing for different customer groups. This means that they are focusing on offering unique products and services to meet the specific needs and preferences of each customer group.

Question 18

The problem facing differentiators,such as L.L.Bean,is how to protect the distinctiveness of their products from imitators who are constantly searching for ways to steal away customers by offering similar products at lower prices.

Accepted Answer

The statement accurately describes the challenge faced by differentiators like L.L.Bean. They must find ways to maintain their unique product offerings and brand identity despite the threat of imitators offering lower prices.

Question 19

Which of the following is not a generic competitive strategy?

Accepted Answer

Innovation is not a generic competitive strategy. It is a way of creating new products, services, or processes to meet customer needs and create a competitive advantage. The four generic competitive strategies are cost leadership, differentiation, focused cost leadership, and focused differentiation.

Question 20

Clothing companies Aeropostale and Forever 21 compete for the same group of customers which consists of females aged 18-24.These two companies would be part of different strategic groups because they use different marketing strategies to reach their customers.

Accepted Answer

Strategic groups consist of companies within an industry that have similar business models or strategies. If Aeropostale and Forever 21 target the same customer group, they are likely part of the same strategic group, even if their marketing strategies differ.

Quiz 5: Building Competitive Advantage Through Business-Level Strategy