Question 1

How does value innovation achieve sustained competitive advantage for the innovating company?

Accepted Answer

A) It shifts the basis of competition. 
B) It can catch rivals off guard and make it difficult for them to catch up. 
C) It forces the innovative company to think differently than rivals in order to create an offering and strategic position that is unique. 
D) Rivals are unable to change focus from prior strategic commitments. 
E) All of these are reasons why value innovation can achieve sustained competitive advantage for an innovating company.

Question 2

A differentiation strategy allows a company to charge a low price for its products, if it chooses to do so.

Accepted Answer

A) True 
 B)False

Question 3

At its most basic, a firm's business-level strategy is about whom a company decides to serve, what customer needs and desires the company is trying to satisfy, and how the company decides to satisfy those needs and desires.

Accepted Answer

A) True 
 B)False

Question 4

The only way to exploit successful differentiation is to keep prices the same or only increase them moderately, leading to increased demand, economies of scale and lower costs which results in higher profitability and profit growth.

Accepted Answer

A) True 
 B)False

Question 5

Info Tech, Inc. makes complex telecommunications products, such as cellular telephones. Since this company has a distinctive competency in research and development, it should try to differentiate its product through:

Accepted Answer

A)  reliability. 
B)  innovation. 
C)  advertising. 
D)  service. 
E)  low pricing.

Question 6

By focusing on a niche, and customizing the offering to that segment, a differentiated company can often outsell differentiated rivals that target a broader market.

Accepted Answer

A) True 
 B)False

Question 7

A differentiated product is a product that:

Accepted Answer

A)  has a greater resale value than a rival product. 
B)  provides greater reliability than a rival product. 
C)  is offered free of cost on purchase of a company's standard product. 
D)  always costs more than a rival product. 
E)  always costs less than a rival product.

Question 8

Successful value innovation achieves sustainable competitive advantage due to the inability of rivals to change their strategies in a timely manner without breaking prior commitments.

Accepted Answer

A) True 
 B)False

Question 9

Jordan's Ice Creams is strategically located near a university. After realizing that most of its customers, who are mostly students, prefer a wide range of flavors, it started offering different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic business-level strategy is Jordan pursuing?

Accepted Answer

A)  Broad low-cost strategy 
B)  Broad differentiation strategy 
C)  Focus low-cost strategy 
D)  Focus differentiation strategy 
E)  Product substitution strategy

Question 10

An efficiency frontier shows of the complete picture of all the different positions that a company can adopt with regard to differentiation and low cost, assuming that its internal functions and organizational arrangements are configured efficiently to support a particular position.

Accepted Answer

A) True 
 B)False

Question 11

Yankee Candle Company offers customers candles that burn for 50-60 hours, much longer than most department store candle brands. Therefore, customers are willing to pay a higher price for these candles. Which of the following strategies is Yankee Candle Company following?

Accepted Answer

A)  Cost leadership strategy 
B)  Rapid growth strategy 
C)  Market segmentation strategy 
D)  Differentiation strategy 
E)  Stuck-in-the-middle strategy

Question 12

Which of the following is NOT true of a company that follows a niche strategy?

Accepted Answer

A)  The company is focused on just one or a few segments of the market. 
B)  They can try to become the low-cost player in a particular niche. 
C)  They can try to customize their offering to the needs of their particular segment. 
D)  The company is focused on serving the average customer. 
E)  Customization can occur through the addition of new features and functions.

Question 13

Which generic business-level strategy is based on the intent to lower costs so that a company can lower prices and still make a profit?

Accepted Answer

A)  Broad low-cost strategy 
B)  Price differentiation strategy 
C)  Broad differentiation strategy 
D)  Focus differentiation strategy 
E)  Focus low-cost strategy

Question 14

In commodity markets, competitive advantage goes to the company that has the lowest costs.

Accepted Answer

A) True 
 B)False

Question 15

When a company decides to pursue a segmentation strategy, customization can cause costs to increase and it is difficult to achieve economies of scale.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following allows a company to lower cost through functional strategy and organization?

Accepted Answer

A)  Implementing just-in-time inventory control systems 
B)  Customizing the product offering and marketing mix to different market segments 
C)  Focusing marketing efforts on brand building and perceived differentiation from rivals 
D)  Designing strategies to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world 
E)  Adopting rigid manufacturing technologies

Question 17

Which of the following is a difference between a standardization and segmentation strategy?

Accepted Answer

A)  A standardization strategy has several advantages over a segmentation strategy 
B)  Standardization allows the company to capture incremental revenues by customizing its offerings while segmentation has products aimed at the average consumer 
C)  A standardization strategy may lose sales from customers who desire more functions and features and are prepared to pay more for them while a segmentation strategy meets the needs of different groups of consumers and thus sells more in total. 
D)  A standardization strategy prices product to allow for a wider customer base while segmentation may lose sales from customers who cannot afford to purchase the average product. 
E)  Standardization strategy may have higher costs than a segmentation strategy

Question 18

A generic business-level strategy is a strategy that gives a company a specific form of competitive position and advantage vis-à-vis its rivals, resulting in above-average profitability.

Accepted Answer

A) True 
 B)False

Question 19

A company that focuses on a lower-income market segment:

Accepted Answer

A)  sells on non-price factors such as design and customer service. 
B)  produces a basic offering to reduce cost structures. 
C)  focuses its marketing efforts on brand building. 
D)  relies on patent protections to keep costs low. 
E)  customizes its marketing mix to different market segments.

Question 20

Which of the following is an example of a differentiated company's attention to efficiency?

Accepted Answer

A)  To not cut costs so deeply that it harms its capability to differentiate its offering from that of rivals. 
B)  To be careful and aware of all costs and not let them get out of control. 
C)  To not waver in its choice of how to compete and maintain this focus in all strategic decisions. 
D)  Managers are confident in their business-level strategy, have clear logic for pursuing that strategy, have an offering that matches their strategy, and have aligned functional activities and organizational arrangements with that strategy in order to execute it well. 
E)  All of these are ways a differentiated company's shows attention to efficiency.

Exam 5: Business-Level Strategy

How does value innovation achieve sustained competitive advantage for the innovating company?

A differentiation strategy allows a company to charge a low price for its products, if it chooses to do so.

At its most basic, a firm's business-level strategy is about whom a company decides to serve, what customer needs and desires the company is trying to satisfy, and how the company decides to satisfy those needs and desires.

The only way to exploit successful differentiation is to keep prices the same or only increase them moderately, leading to increased demand, economies of scale and lower costs which results in higher profitability and profit growth.

Info Tech, Inc. makes complex telecommunications products, such as cellular telephones. Since this company has a distinctive competency in research and development, it should try to differentiate its product through:

By focusing on a niche, and customizing the offering to that segment, a differentiated company can often outsell differentiated rivals that target a broader market.

A differentiated product is a product that:

Successful value innovation achieves sustainable competitive advantage due to the inability of rivals to change their strategies in a timely manner without breaking prior commitments.

An efficiency frontier shows of the complete picture of all the different positions that a company can adopt with regard to differentiation and low cost, assuming that its internal functions and organizational arrangements are configured efficiently to support a particular position.

Yankee Candle Company offers customers candles that burn for 50-60 hours, much longer than most department store candle brands. Therefore, customers are willing to pay a higher price for these candles. Which of the following strategies is Yankee Candle Company following?

Which of the following is NOT true of a company that follows a niche strategy?

Which generic business-level strategy is based on the intent to lower costs so that a company can lower prices and still make a profit?

In commodity markets, competitive advantage goes to the company that has the lowest costs.

When a company decides to pursue a segmentation strategy, customization can cause costs to increase and it is difficult to achieve economies of scale.

Which of the following allows a company to lower cost through functional strategy and organization?

Which of the following is a difference between a standardization and segmentation strategy?

A generic business-level strategy is a strategy that gives a company a specific form of competitive position and advantage vis-à-vis its rivals, resulting in above-average profitability.

A company that focuses on a lower-income market segment:

Which of the following is an example of a differentiated company's attention to efficiency?