Question 1

The basic proposition of the blue ocean strategy is that many successful companies have built their competitive advantage by:

Accepted Answer

A)  redefining their product offering through value innovation and creating a new market space. 
B)  initiating a price war to grow volume and drive their weaker rivals out of the industry. 
C)  developing brand loyalty to protect them from intense price rivalry within their industry. 
D)  charging premium prices for their goods or services. 
E)  adopting lean production and flexible manufacturing technologies.

Question 2

Describe how business-level strategies give a company a competitive advantage over actual and potential rivals.

Accepted Answer

The answer of Describe how business-level strategies give a company...

Question 3

The generic business-level strategies are cost leadership, differentiation, and mass marketing.

Accepted Answer

A) True 
 B)False

Question 4

Actions taken at the functional level should support the business-level strategy, as should the organizational arrangements of the enterprise.

Accepted Answer

A) True 
 B)False

Question 5

A company develops a new innovative technique that improves efficiency within the industry. This improvement of performance through innovation causes the efficiency frontier to remain static and not deviate from its original curve.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT true about the implications for cost and revenue and market segmentation?

Accepted Answer

A)  A segmentation strategy is typically associated with lower costs than a standardization strategy. 
B)  A standardization strategy involves a company producing one basic offering and trying to attain economies of scale by achieving high-volume sales. 
C)  A segmentation strategy requires that a company customize its product offering to different segment which causes it to sell less of each offering, making it harder to achieve economies of scale. 
D)  A segmentation strategy requires that a company customize its product offering to different segments and products targeted at segments at the higher-income end of the market may require more functions and features, which can raise the costs of production and delivery. 
E)  A segmentation strategy can allow a company to capture incremental revenues by customizing its offerings to the needs of different groups of consumers and thus selling more in total.

Question 7

Companies that follow a standardization strategy ignore the many different market segments in an industry and position their products to appeal to the average customer.

Accepted Answer

A) True 
 B)False

Question 8

The brand loyalty enjoyed by the differentiated company does not protect it from substitute goods and services.

Accepted Answer

A) True 
 B)False

Question 9

A company has a competitive advantage if it can increase costs relative to rivals.

Accepted Answer

A) True 
 B)False

Question 10

In what situation can a company have both differentiation and a low-cost position?

Accepted Answer

A)  With innovation, a company can push out the efficiency frontier in its industry and can deliver more differentiation at a lower cost than its rivals. 
B)  The company chooses to focus on the commodity market. 
C)  The company focuses on improving the reliability of its product. 
D)  The company improves its customer service on point-of sale and after-sale customer interactions. 
E)  It is impossible to achieve both differentiation and a low-cost position.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The effect of value innovation on the efficiency frontier is that a product can be offered at a greater value at a lower cost than was thought possible.

Accepted Answer

A) True 
 B)False

Question 13

A low-cost company is often best positioned to survive price rivalry in its industry.

Accepted Answer

A) True 
 B)False

Question 14

Differentiation can help a company grow overall demand and capture market share from its rivals.

Accepted Answer

A) True 
 B)False

Question 15

Since there is only one way to compete in a particular industry, a manager must be dedicated to pursuing this strategy and align functional activities and organizational arrangements with that strategy in order to execute it well.

Accepted Answer

A) True 
 B)False

Question 16

Lucy's Swimwear Boutique offers swimwear that is targeted at affluent people who can afford to buy expensive, handmade swimsuits. Which of the following approaches to market segmentation is Lucy's Swimwear Boutique using?

Accepted Answer

A)  Broad differentiation strategy 
B)  Low market segmentation strategy 
C)  Medium market segmentation strategy 
D)  Broad high-cost strategy 
E)  Focus differentiation strategy

Question 17

In which of the following situations is a differentiation strategy used?

Accepted Answer

A)  The industry is fragmented into customer groups based on needs. 
B)  Customer needs are primarily satisfied by the price of the product. 
C)  A company's cost structure needs to be reduced. 
D)  There is a demand for deep price discounts from powerful buyers. 
E)  The industry is not allowed to charge a premium price for its products.

Question 18

A differentiation strategy is based on creating a product that customers perceive as being:

Accepted Answer

A)  the same as other available products. 
B)  superior to other available products. 
C)  the least costly product in the industry. 
D)  the most expensive product in the industry. 
E)  cheaper, but inferior to the available products.

Question 19

Which of the following matches the correct company with the generic business-level strategy that it practices?

Accepted Answer

A)  Wal-Mart practices a broad differentiation strategy. 
B)  Toyota practices a broad low-cost strategy. 
C)  Southwest Airlines practices a focus low cost strategy. 
D)  Costco practices a focus differentiation strategy. 
E)  Nordstrom practices a focus low cost strategy.

Question 20

When a company is seeking to create a new market space through value innovation, they need to consider factors that must be eliminated, reduced, raised and created in order to change the market and craft new strategies.

Accepted Answer

A) True 
 B)False

Exam 5: Business-Level Strategy

The basic proposition of the blue ocean strategy is that many successful companies have built their competitive advantage by:

Describe how business-level strategies give a company a competitive advantage over actual and potential rivals.

The generic business-level strategies are cost leadership, differentiation, and mass marketing.

Actions taken at the functional level should support the business-level strategy, as should the organizational arrangements of the enterprise.

A company develops a new innovative technique that improves efficiency within the industry. This improvement of performance through innovation causes the efficiency frontier to remain static and not deviate from its original curve.

Which of the following is NOT true about the implications for cost and revenue and market segmentation?

Companies that follow a standardization strategy ignore the many different market segments in an industry and position their products to appeal to the average customer.

The brand loyalty enjoyed by the differentiated company does not protect it from substitute goods and services.

A company has a competitive advantage if it can increase costs relative to rivals.

In what situation can a company have both differentiation and a low-cost position?

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

The effect of value innovation on the efficiency frontier is that a product can be offered at a greater value at a lower cost than was thought possible.

A low-cost company is often best positioned to survive price rivalry in its industry.

Differentiation can help a company grow overall demand and capture market share from its rivals.

Since there is only one way to compete in a particular industry, a manager must be dedicated to pursuing this strategy and align functional activities and organizational arrangements with that strategy in order to execute it well.

Lucy's Swimwear Boutique offers swimwear that is targeted at affluent people who can afford to buy expensive, handmade swimsuits. Which of the following approaches to market segmentation is Lucy's Swimwear Boutique using?

In which of the following situations is a differentiation strategy used?

A differentiation strategy is based on creating a product that customers perceive as being:

Which of the following matches the correct company with the generic business-level strategy that it practices?

When a company is seeking to create a new market space through value innovation, they need to consider factors that must be eliminated, reduced, raised and created in order to change the market and craft new strategies.