Question 1

Given the attractiveness of premium pricing during the growth stage of the market life cycle, managers should emphasize short-term results to increase profits.

Accepted Answer

A) True 
 B)False

Question 2

Which type of competitive strategy is characterized by convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers?

Accepted Answer

A)   differentiation
B)   overall low-cost leadership
C)   differentiation focus
D)   cost leadership focusE) None of the above
F) C) and D)

Question 3

At one CVS drugstore, a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD. The Duracell market share dropped 2 percent in a recenttwo-year period, and its profits declined over 30 percent. Why did this happen?

Accepted Answer

A)   The price differential was too high.
B)   The market for batteries is saturated.
C)   The customer perceived the products to be different.
D)   There are valid alternatives for batteries.E) B) and D)
F) B) and C)

Question 4

Ryanair and Spirit Airlines depend upon revenue from services not related to the actual flight. These services increase their

Accepted Answer

A)   costs.
B)   services.
C)   profit pool.
D)   difficulties.E) B) and D)
F) All of the above

Question 5

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?

Accepted Answer

A)   introduction
B)   growth
C)   maturity
D)   declineE) C) and D)
F) None of the above

Question 6

Rivals would find it difficult to challenge Atlas Door in the short run because of

Accepted Answer

A)   strong customer loyalty.
B)   low barriers to entry.
C)   high threat of substitution.
D)   low buyer switching costs.E) None of the above
F) All of the above

Question 7

Overhead costs associated with the number of layers of management in a firm are part of the ________ activities of the value chain.

Accepted Answer

A)   human resources management
B)   firm infrastructure
C)   operations
D)   marketing and salesE) All of the above
F) B) and C)

Question 8

A platform business is like a matchmaker in that it can bring together buyers and sellers. An example of a successful platform provider is Facebook. By attracting and retaining users through expanding services it differentiates itself from more narrowly-focused competitors such as Twitter.

Accepted Answer

A) True 
 B)False

Question 9

An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost.

Accepted Answer

A) True 
 B)False

Question 10

Zulily, an online retailer, competes with Amazon and other online retailers by

Accepted Answer

A)   maintaining a large inventory of products.
B)   running a labor-intensive distribution system.
C)   ordering products from vendors to keep in stock until a customer order comes in.
D)   keeping little inventory and ordering only when customers purchase a product.E) B) and D)
F) B) and C)

Question 11

Which of the following is most often true of mature markets?

Accepted Answer

A)   Some competitors enjoy a significant operating advantage due to increasing experience effects.
B)   The market supports premium pricing, which attracts additional competitors.
C)   Advantages that cannot be duplicated by other competitors are difficult to achieve.
D)   The magnitude of pricing differences and product differentiation is larger than in the growth stage.E) A) and B)
F) A) and C)

Question 12

Which of these statements regarding the industry life cycle is true?

Accepted Answer

A)   Partial power of the market life cycle is its ability to serve as a short-run forecasting device.
B)   Trends suggested by the market life cycle model are generally not reversible or repeatable.
C)   It points out the need to maintain a differentiation advantage and a low cost advantage.
D)   It is important for company generic strategies, functional areas, value-creating activities, and overall objectives.E) A) and B)
F) A) and C)

Question 13

A firm following a focus strategy must focus on

Accepted Answer

A)   governmental regulations.
B)   a market segment or group of segments.
C)   rising cost of inputs.
D)   avoiding entering international markets.E) C) and D)
F) All of the above

Question 14

Which of the following statements about the introduction stage of the market life cycle is true?

Accepted Answer

A)   It produces relatively large, positive cash flows.
B)   Strong brand recognition seldom serves as an important switching cost.
C)   Market share gains by pioneers are usually easily sustained for many years.
D)   Products offered by pioneers may be perceived as differentiated because they are new.E) B) and D)
F) None of the above

Question 15

Proctor and Gamble announced that it would sell off or close down up to 100 of its brands. This is an example of which turnaround strategy used by successful companies?

Accepted Answer

A)   asset and cost surgery
B)   selective product and market pruning
C)   piecemeal productivity improvements
D)   global expansionE) All of the above
F) A) and B)

Question 16

Research shows that which one of the following is not a strategy used by firms engaged in successful turnarounds?

Accepted Answer

A)   asset and cost surgery
B)   selective product and market pruning
C)   piecemeal productivity improvements
D)   global expansionE) A) and D)
F) B) and C)

Question 17

Hardware chains such as Ace and True Value are losing market share to rivals such as Lowe's and Home Depot in spite of them using a focus strategy. Why?

Accepted Answer

A)   Achieving parity on costs for specialty retailers is difficult.
B)   They have too broad a product line.
C)   They have equivalent purchasing power as the national chains.
D)   Their costs are the same as those of the national chains.E) None of the above
F) A) and B)

Question 18

A firm typically achieves an absolute cost advantage by offering a ________ product or service to a ________ target market using standardization to derive the greatest benefits from economies of scale and experience.

Accepted Answer

A)   no frills; narrow
B)   complex; narrow
C)   no frills; broad
D)   complex; diverseE) A) and C)
F) B) and C)

Question 19

Most turnarounds require a firm to carefully analyze its relevant environments. ________ analysis results in actions aimed at reduced costs and higher efficiency.

Accepted Answer

A)   External
B)   Internal
C)   Global
D)   EnvironmentalE) C) and D)
F) All of the above

Question 20

Outright sales or sale and leaseback free up considerable cash and improve returns. This is an example of which turnaround strategy used by successful companies?

Accepted Answer

A)   asset and cost surgery
B)   selective product and market pruning
C)   piecemeal productivity improvements
D)   global expansionE) All of the above
F) A) and C)

Exam 5: Business-Level Strategy Creating and Sustaining Competitive Advantages

Which type of competitive strategy is characterized by convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers?

Correct AnswerverifiedShow Answer

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?

Correct AnswerverifiedShow Answer

Most turnarounds require a firm to carefully analyze its relevant environments. ________ analysis results in actions aimed at reduced costs and higher efficiency.

Correct AnswerverifiedShow Answer

Research shows that which one of the following is not a strategy used by firms engaged in successful turnarounds?

Correct AnswerverifiedShow Answer

Which of these statements regarding the industry life cycle is true?

Correct AnswerverifiedShow Answer

Given the attractiveness of premium pricing during the growth stage of the market life cycle, managers should emphasize short-term results to increase profits.

Correct AnswerverifiedShow Answer

Proctor and Gamble announced that it would sell off or close down up to 100 of its brands. This is an example of which turnaround strategy used by successful companies?

Correct AnswerverifiedShow Answer

A firm following a focus strategy must focus on

Correct AnswerverifiedShow Answer

Rivals would find it difficult to challenge Atlas Door in the short run because of

Correct AnswerverifiedShow Answer

A firm typically achieves an absolute cost advantage by offering a ________ product or service to a ________ target market using standardization to derive the greatest benefits from economies of scale and experience.

Correct AnswerverifiedShow Answer

Which of the following is most often true of mature markets?

Correct AnswerverifiedShow Answer

Zulily, an online retailer, competes with Amazon and other online retailers by

Correct AnswerverifiedShow Answer

At one CVS drugstore, a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD. The Duracell market share dropped 2 percent in a recenttwo-year period, and its profits declined over 30 percent. Why did this happen?

Correct AnswerverifiedShow Answer

Ryanair and Spirit Airlines depend upon revenue from services not related to the actual flight. These services increase their

Correct AnswerverifiedShow Answer

Hardware chains such as Ace and True Value are losing market share to rivals such as Lowe's and Home Depot in spite of them using a focus strategy. Why?

Correct AnswerverifiedShow Answer

An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost.

Correct AnswerverifiedShow Answer

Which of the following statements about the introduction stage of the market life cycle is true?

Correct AnswerverifiedShow Answer

Overhead costs associated with the number of layers of management in a firm are part of the ________ activities of the value chain.

Correct AnswerverifiedShow Answer

A platform business is like a matchmaker in that it can bring together buyers and sellers. An example of a successful platform provider is Facebook. By attracting and retaining users through expanding services it differentiates itself from more narrowly-focused competitors such as Twitter.

Correct AnswerverifiedShow Answer

Outright sales or sale and leaseback free up considerable cash and improve returns. This is an example of which turnaround strategy used by successful companies?

Correct AnswerverifiedShow Answer

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A firm typically achieves an absolute cost advantage by offering a product or service to a target market using standardization to derive the greatest benefits from economies of scale and experience.

Correct Answer
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