Striving to be the low-cost provider is a particularly attractive competitive strategy when

Crafting and executive strategy- Ch 5

The Five Generic Competitive Strategies--Which One to Employ?
Your Results:
The answer for each question is indicated by a .

1
A company's competitive strategy deals with
A)
the specific actions management plans to take to gain a competitive advantage over rivals.
B)
how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals.
C)
how to compete successfully-its plans for positioning the company in the marketplace, its specific efforts to please customers and improve its competitive strength, and the type of competitive advantage it intends to establish.
D)
its plans for under-pricing rivals and achieving product superiority.
E)
the specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry.

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2
A company achieves competitive advantage whenever
A)
it has a product offering that is differentiated from the product offerings of rivals.
B)
its customers exhibit a high degree of loyalty to the company's brand.
C)
it has more core competences than its rivals.
D)
it has a better credit rating than rivals.
E)
it has an edge over rivals in attracting customers and coping with competitive forces.

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3
The generic types of competitive strategies include
A)
offensive strategies, defensive strategies, end-run strategies, a pre-emptive strike strategy, and a low-cost leader strategy.
B)
low-cost leadership, broad differentiation, best-cost provider, focused low-cost, and focused differentiation.
C)
offensive strategies, defensive strategies, striving to be a market leader, technological leadership strategies, and technological follower strategies.
D)
single-business concentration, vertical integration, merger and acquisition strategies, outsourcing strategies, and diversification strategies.
E)
attacking competitor strengths, attacking competitor weaknesses, market leadership strategies, technological leadership strategies, and product superiority strategies.

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4
A low-cost leader's basis for competitive advantage is
A)
using an everyday low pricing strategy to gain the biggest market share.
B)
bigger profit margins than rival firms.
C)
high buyer switching costs because of the company's differentiated product offering.
D)
meaningfully lower overall costs than competitors.
E)
a reputation for charging the lowest prices in the industry.

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5
A competitive strategy of striving to be the low-cost provider is particularly attractive when
A)
buyers are large, have significant power to bargain down prices, use the product in much the same ways, and have common user requirements.
B)
most rivals are trying to differentiate their product offering from those of rivals.
C)
there are many ways to achieve higher product quality that have value to buyers.
D)
buyers are not swayed by advertising and are not very brand-loyal.
E)
most rivals are pursuing best-cost or broad differentiation strategies.

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6
Which of the following is not a "cost-driver" that a company can control to manage the costs of its value chain activities downward and thus be more cost-efficient than rivals?
A)
Economies or diseconomies of scale
B)
The benefits of vertical integration versus outsourcing
C)
The costs of alliances/partnerships with other companies
D)
The cost of key resource inputs and sharing opportunities with other organizational or business units within the enterprise
E)
The percentage of capacity utilization and the strategic choices and operating decisions that managers make

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7
Striving to be the industry's low-cost provider and achieving lower costs than rivals entails
A)
out-managing rivals in controlling the drivers of cost.
B)
having a smaller labor force than rivals.
C)
revamping the existing value chain to bypass or eliminate some cost-producing activities that produce little value added insofar as customers are concerned.
D)
adopting an everyday low pricing philosophy.
E)
Both A and C.

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8
Which of the following is not characteristic of a low-cost leadership strategy?
A)
The product line consists of a few basic models having minimal frills and acceptable quality
B)
The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features
C)
The marketing emphasis is on making virtues out of product features that lead to low cost
D)
The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations
E)
Sustaining the strategy revolves around managing costs down year-after-year and delivering good value at economical prices

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9
Which of the following is not an accurate characterization of a strategy to be the industry's overall low-cost provider?
A)
A low-cost provider strategy works well in market situations where many buyers are price-sensitive and price competition among rival sellers is especially vigorous.
B)
A low-cost provider strategy entails pursuing cost-saving initiatives that are difficult for rivals to copy or match.
C)
A low-cost provider strategy entails making a frills-free product and striving to achieve the absolute lowest cost per unit that is possible.
D)
A low-cost provider strategy is quite suitable for situations where there are few ways to achieve product differentiation that have value to buyers, where most buyers utilize the product in the same ways, and buyer switching costs are low.
E)
A low-cost provider strategy is a particularly powerful strategy when the industry's product is essentially the same from rival to rival, many buyers are price sensitive, and industry newcomers are using the attraction of a low price to attract buyers and build a customer base.

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10
Differentiation strategies
A)
are an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller.
B)
can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.
C)
work best when the basis for differentiation is superior performance features and usually win out over a low-cost provider strategy unless buyers are inclined to shop solely on low price.
D)
usually offer the best chance for gaining market share, as compared to low-cost or best-cost provider strategies and typically result in much greater buyer loyalty than low-cost provider strategies.
E)
Both A and B.

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11
Creating buyer value via a differentiation strategy
A)
has to be grounded in providing buyers with unique extras that deliver real value rather than perceived value.
B)
allows a company to command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features).
C)
can be achieved anywhere along the industry value chain and can involve incorporating product attributes and user features that either lower buyers' overall costs of using the product or raise the performance a buyer gets from the product.
D)
is an attractive competitive strategy when there are few ways to achieve differentiation that have value to buyers.
E)
Both B and C.

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12
To be successful with a differentiation strategy, a company has to
A)
study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for.
B)
incorporate more differentiating features into its product/service offering than rivals and also charge a price no higher than the prices charged by rivals.
C)
have a state-of-the-art value chain and concentrate on providing buyers with a technologically superior product.
D)
outspend rivals on R&D in order to have differentiating attributes that rivals don't have.
E)
Concentrate on differentiating its product on the basis of superior product quality or personalized customer service.

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13
Successful differentiation allows a firm to
A)
gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal).
B)
set the industry ceiling on price.
C)
attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals.
D)
command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or.
E)
Both A and D.

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14
The trick to a profitable broad differentiation strategy is
A)
to concentrate differentiation efforts on superior technology and product innovation.
B)
either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits.
C)
to concentrate differentiation efforts on superior customer service and appealing to sophisticated and prestigious buyers.
D)
differentiating on the basis of attributes that enhance product performance.
E)
having as many differentiating features as management can think up.

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15
Broad differentiation strategies are an attractive competitive approach whenever
A)
buyer needs and preferences are too diverse to be fully satisfied by a standardized product or by sellers with very similar capabilities.
B)
buyers are quick to switch brands when a product fails to meet their expectations.
C)
no other rivals have a strong brand name reputation.
D)
price competition is especially vigorous.
E)
buyer switching costs are high and the industry's products are weakly differentiated.

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16
A strategy of being a best-cost provider
A)
is the easiest of the five generic types of competitive strategies to copy or imitate.
B)
combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance.
C)
is almost always more profitable than focused or market niche strategies because of the potential for selling more units and realizing higher revenues.
D)
is the most attractive of all the competitive strategies because it combines the best features of the four other generic types of competitive strategies.
E)
is usually somewhat less profitable than either top-of-the-line differentiation or low-cost leadership strategies because it is based on achieving a weaker type of competitive advantage.

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17
Which of the following accurately characterize a best-cost provider strategy?
A)
The strategic target is price-conscious buyers
B)
A marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes
C)
A product line that stresses wide selection, many product variations, and emphasis on differentiating features
D)
A competitive advantage based on more value for the money
E)
Using constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy

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18
A focused low-cost strategy
A)
involves a marketing emphasis that communicates the attractiveness of a budget-priced product tailored to fit the expectations of buyers comprising the target market niche.
B)
is the hardest of the five generic types of competitive strategies to employ successfully.
C)
involves the use of guerrilla offensives to capture customers.
D)
entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques.
E)
cannot be sustained over time unless the focuser is aggressive in entering other segments where it also can achieve a low-cost advantage.

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19
A focused strategy based on differentiation aims at securing competitive advantage by
A)
providing buyers in the target market niche with the best performance features at the best price.
B)
catering to buyers looking for a medium-quality product at an average price.
C)
offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.
D)
developing unique product attributes.
E)
convincing buyers that the company is a true leader in product innovation.

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20
A focused strategy based on low-cost can lead to attractive competitive advantage when
A)
buyers in the target market niche are looking for a no-frills product at a rock-bottom price.
B)
a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment that is less costly to satisfy as compared to other parts of the market.
C)
buyers are not very brand loyal and are always on the lookout for something new and different at a bargain price.
D)
demand in the target market niche is growing rapidly and no other rivals are very cost-conscious.
E)
there are few, if any, rivals offering low-priced products.

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21
A focuser's basis for competitive advantage is
A)
nearly always created in the distribution channel portion of the industry value chain.
B)
lower costs than competitors in serving the target market niche or else an ability to outmatch other competitors in offering niche members something they perceive is better suited to their own unique tastes and preferences.
C)
being fully vertically integrated and thus in position to perform all of the value chain activities needed to serve the target market niche.
D)
being the only company serving buyers in the target market niche.
E)
delivering more value for the money than other competitors.