Transcript
Test Bank, Chapter 5
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Chapter 5: The Five Generic Competitive Strategies—Which One to Employ? Multiple Choice uestions The Concepts o! Competitive Strategy an" Competitive #"vantage 1. A company's competitive strategy deals with A) management’ management’ss game plan plan or competing competing s!ccess!lly"the s!ccess!lly"the speciic speciic eorts eorts to please please c!stomers, oensive and deensive moves to co!nter the mane!vers o rivals, the reactions and responses to whatever market conditions prevail at the moment, and the initiatives !ndertaken to improve the company’s market position. B) what its strategy will will #e in in s!ch !nctional !nctional areas as $%&, prod!ction, prod!ction, sales sales and marketing, marketing, distri#!tion,, inance and acco!nting, and so on. distri#!tion C) its eorts eorts to change change its position on on the ind!stry’ ind!stry’ss strategic gro!p map. &) its plans or or entering into into strategic alliances, alliances, !tiliing !tiliing mergers or ac(!isitions to strengthen its market position, o!tso!rcing some inho!se activities to o!tside specialists, and integrating orward or #ackward. *) its plans plans or or overcomi overcoming ng the ive ive competi competitive tive orces orces.. Answer+ A age+ 1-- &iic!lty+ &iic!lty+ edi!m Ta/onomy+ 0nowledge AACB+ -
2. The o#3ective o competitive strategy is to A) contend s!ccess!lly with the the ind!stry’ ind!stry’ss 5 competitive orces. B) knock the socks o o rival companies companies #y doing a #etter #etter 3o# o satisying satisying #!yer needs and preerences. C) get the company company into into the #est #est strategi strategicc gro!p and and then dominat dominatee it. &) esta# esta#lish lish a competi competitivel tively y power!l power!l val!e val!e chain. chain. *) grow reven!e reven!ess at a aster ann!al ann!al rate rate than rivals rivals are a#le a#le to grow their their reven!es. reven!es. Answer+ B age+ 1-- &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
-. A company achieves competitive advantage w henever A) it is the the acknowled acknowledged ged market market share share leader leader.. B) it is the ind!st ind!stry's ry's acknowl acknowledged edged techn technolog ology y leader. leader. C) it has greate greaterr inancial inancial reso!r reso!rces ces than than its rivals. rivals. &) it has a wellknown and wellregarded wellregarded #rand name, preers oensive oensive strategies strategies to deensive strategies, and has a strong #alance sheet. *) it has some type o edge over over rivals in attracting attracting c!stomers and coping with competitive competitive orces. Answer+ * age+ 1-- &iic!l &iic!lty+ ty+ edi!m Ta/onomy+ Comprehension AACB+ -
Test Bank, Chapter 5
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4. A company can #e said to have competitive advantage i A) it is the acknowl acknowledged edged leader leader in prod!c prod!ctt (!ality (!ality.. B) it has has a di dierent erent val! val!ee chain chain than than rivals. rivals. C) it has some type o edge over over rivals in attracting attracting c!stomers and coping with competitive competitive orces. &) it earns earns the largest largest proits proits o any irm irm in the ind!s ind!stry try.. *) it has has more more reso!rc reso!rcee strength strengthss than than weakness weaknesses. es. Answer+ C age+ 1-- &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
5. hile there are many ro!tes to competitive advantage, they all involve A) #!il #!ilding ding a #rand #rand name name image image that #!yers #!yers tr!st. tr!st. B) delivering s!perior s!perior val!e val!e to #!yers #!yers and #!ilding #!ilding competencies competencies and reso!rce strengths strengths in perorming val!e chain activities that rivals cannot readily match. C) achieving lower lower costs than rivals and #ecoming #ecoming the ind!stry’ ind!stry’ss sales and market market share leader. leader. &) inding eective eective and eicient eicient ways to strengthen the the company’s company’s competitive assets assets and to red!ce its competitive lia#ilities. *) gett getting ing in the the #est stra strategic tegic gro!p gro!p and and dominatin dominating g it. Answer+ B age+ 1-- &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
The Five Generic Competitive Strategies 6. The #iggest and most important dierences among the competitive strategies o dierent companies #oil down to A) how they go a#o!t #!ilding #!ilding a #rand name image that #!yers #!yers tr!st and whether they are are a risk taker or riskavoider. B) the dierent dierent ways that companies companies try to cope with the the ive competitive orces. C) whether a company’ company’ss market target target is #road or narrow and whether the the company is p!rs!ing a competitive advantage linked to low cost or dierentiation. &) the kinds o actions companies take take to improve improve their competitive assets assets and red!ce their competitive lia#ilities. *) the relative relative emphasis emphasis they they place on oensi oensive ve vers!s vers!s deensive deensive strategies strategies.. Answer+ C age+ 1-4 &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
7. hich hich o the ollowing ollowing is not one o the the ive generic generic types o competit competitive ive strategy8 strategy8 A) A lowcost lowcost provider provider strategy strategy B) A #road dierent dierentiati iation on strate strategy gy C) A #est #estcos costt provid provider er strate strategy gy &) A oc!sed oc!sed lowcos lowcostt provide providerr strategy strategy *) A marke markett share share domin dominato atorr strate strategy gy Answer+ * age+ 1-4 1-5 &iic!lty+ *asy Ta/onomy+ 0nowledge AACB+ -
Test Bank, Chapter 5
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9. The generic types o competitive strategies incl!de A) #!ild market market share, maintain market share, share, and slowly slowly s!rrender s!rrender market market share. B) o oensiv ensivee strategies strategies and deensi deensive ve strategi strategies. es. C) lowcost provider provider,, #road dierentiation, dierentiation, #estcost #estcost provider, provider, oc!sed oc!sed lowcost, lowcost, and oc!sed oc!sed dierentiation. &) lowcost:lo lowcost:low w price strategies, high(!ality:h high(!ality:high igh price strategies, and medi!m medi!m (!ality:medi!m (!ality:medi!m price strategies. *) price leader leader strategies, strategies, price price ollower ollower strategies, strategies, technology technology leader strategies, irstmover strategies, oensive strategies, and deensive strategies. Answer+ C age+ 1-4 1-5 &iic!lty+ edi!m Ta/onomy+ 0nowledge AACB+ -
;. hich one o the ollowing ollowing generic generic types o competitive competitive strategy is typically typically the #est #est strategy or a company to employ8 A) A lowcost lowcost leadershi leadership p strate strategy gy B) A #road dierent dierentiati iation on strate strategy gy C) A #est #estcos costt provid provider er strate strategy gy &) A oc!sed oc!sed lowcos lowcostt provide providerr strategy strategy *) There is no s!ch thing as a <#est= competitive competitive strategy> strategy> a company’s company’s <#est= strategy is always one that is c!stomied to it #oth ind!stry and competitive conditions and the company’s own reso!rces and competitive capa#ilities. Answer+ * age+ 1-4 &iic!lty+ &iic!lty+ *asy Ta/onomy+ Comprehension AACB+ -
$o%&Cost 'rovi"er Strategies 1?. A lowcost leader's #asis or competitive advantage is A) low lower er price pricess than than rival rival irms irms.. B) !sin !sing g a low cost:low cost:low price price approach approach to gain gain the #iggest #iggest market market share. share. C) hi high gh #!yer #!yer swit switchi ching ng costs costs.. &) meani meaning! ng!lly lly lower lower overall overall costs costs than competi competitors. tors. *) hi highe gherr !nit !nit sale saless than than riv rivals als.. Answer+ & age age++ 1-5 &iic!lty+ edi!m Ta/onomy+ Comprehension Comprehen sion AACB+ -
11. @ow val!a#le a lowcost leader's cost advantage is depends on A) whether it is easy or ine/pensive ine/pensive or rivals rivals to copy copy the lowcost leader’s leader’s methods methods or otherwise match its low costs. B) how easy easy it is or the the lowcost lowcost leader leader to gain the the #iggest #iggest market market share. share. C) the aggressiveness aggressiveness with which the lowcost leader p!rs!es converting converting the the cost advantage advantage into the a#sol!te lowest possi#le costs. &) the leader's a#ility a#ility to com#ine com#ine the cost advantage with a rep!tation or good (!ality (!ality.. *) the lowcost lowcost leader's a#ility to #e the ind!stry leader leader in man!act!ring man!act!ring innovation innovation so as to keep lowering its man!act!ring costs. Answer+ A age+ 1-5 &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
Test Bank, Chapter 5
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12. A lowcost leader can translate its lowcost advantage over rivals into s!perior proit perormance #y A) c!tting its price price to levels signiicantly signiicantly #elow the prices o rivals. rivals. B) either !sing its lowcost lowcost edge to to !nderprice competitors and attract price sensitive sensitive #!yers in large eno!gh n!m#ers to increase total proits or reraining rom pricec!tting and !sing the lowcost advantage to earn a #igger proit margin on each !nit sold. C) goin going g all o!t to !se its cost cost advantage advantage to capt!re capt!re a dominant dominant share o the market. market. &) spending heavily heavily on advertising advertising to promote promote its cost advantage and the the act that it charges the lowest prices in the ind!stry it it can then !se this rep!tation or low prices to #!ild very strong c!stomer loyalty, loyalty, gain repeat sales year ater year, and earn s!stained proits over the longterm. *) o!tp o!tprod! rod!cing cing rivals rivals and th!s th!s having having more more !nits !nits availa#le availa#le to sell. sell. Answer+ B age+ 1-5 &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
1-. The ma3or ma3or aven!es aven!es or achievi achieving ng a cost advantag advantagee over rivals rivals incl!de incl!de A) revamping the the irm's val!e val!e chain to to eliminate or #ypass some costprod!cing costprod!cing activities activities and:or and:or o!tmanaging rivals in the eiciency with which val!e chain activities are perormed. B) havi having ng a management management team team that is highly highly skille skilled d in c!tting c!tting costs. costs. C) #eing a irstmover in adopting adopting the the latest stateotheart technologies technologies,, especially especially those relating to lowcost man!act!re. &) o!ts o!tso!rci o!rcing ng highcost highcost activitie activitiess to cost coste eicie icient nt vendors. vendors. *) payi paying ng lower lower wages wages and salari salaries es than than rivals rivals.. Answer+ A age+ 1-7 &iic!lty+ edi!m Ta/onomy+ Comprehen Comprehension sion AACB+ -
14. A competitive strategy o striving to to #e the lowcost provider provider is partic!larly attractive when when A) #!yers #!yers are are not not very very #randc #randconsc onscio!s io!s.. B) most rival rivalss are trying trying to to #e #estco #estcost st provid providers. ers. C) there are many ways to achieve achieve prod!ct dierentiation dierentiation that have val!e val!e to #!yers. &) #!yers are large large and have signiicant signiicant power to to #argain down prices> #!yers !se the the prod!ct in m!ch the same ways> and #!yers have low switching costs. *) most rivals rivals are p!rs!ing oc!sed lowcost or oc!sed oc!sed dierentiatio dierentiation n strategies. strategies. Answer+ & age+ 14- &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
15. hich o the ollowing is not an action that a company can take to do a #etter 3o# than rivals o perorming val!e chain activities more costeectiv costeectively8 ely8 A) triving to capt!re all availa#le economies economies o scale and learning:e/peri learning:e/perience ence c!rve eects eects B) Tr Trying ying to to operate operate acili acilities ties at at !ll !ll capacity capacity C) Adop Adopting ting la#or la#orsavi saving ng operati operating ng method methodss &) mpro mproving ving s!pp s!pply ly chain chain ei eicienc ciency y *) !ts !tso!rci o!rcing ng all prod prod!cti !ctionre onrelated lated acti activiti vities es Answer+ * age+ 1-- &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
Test Bank, Chapter 5
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16. hich o the ollowing ollowing is not one o the the ways that that a company company can achieve a cost cost advantage advantage #y revamping its val!e chain8 A) C!tting o!t distri#!tors distri#!tors and dealers dealers #y selling direct to c!stomers B) $eplacing certain certain val!e val!e chain activities with aster aster and cheaper online online technology technology C) ncreasing prod!ction capacity and then striving hard to operate at !ll capacity capacity &) $elocating acilities acilities so as to c!r# c!r# the need need or shipping shipping and handling activities activities *) treamlining operations #y eliminating eliminating low low val!eadded or !nnecessary !nnecessary work steps and and activities Answer+ C age+ 1-; 14? &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
17. To s!cceed s!cceed with a lowcost lowcost provider provider strategy strategy,, company manager managerss have to A) p!rs!e #ackward or orward integration to deto!r s!ppliers or #!yers with with considera#le considera#le #argaining power and leverage. B) move the perorma perormance nce o most all val!e val!e chain activit activities ies to lowwage lowwage co!ntri co!ntries. es. C) sell direct direct to !sers o their prod!ct or service and eliminate !se !se o wholesale wholesale and retail intermediaries. &) do two things+ things+ 1) do a #etter 3o# than rivals o p!rs!ing cost cost savings thro!gho!t thro!gho!t the val!e chain and 2) #e proactive in revamping the irm’s irm’s overall val!e chain to eliminate low val!e added activities and #ypass its two options or achieving a lowcost advantage are 1) o!tmanaging rivals in controlling the actors that drive costs and 2) reconig!ring its val!e chain in ways that deliver a cost edge over rivals. Answer+ * age+ 15- &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
69. The chie dierence #etween a #road dierentiation strategy and a oc!sed dierentiation is A) the sie sie o the #!yer #!yer gro!p gro!p that a company company is trying trying to appeal appeal to. to. B) the degree degree o o #argaini #argaining ng power power that that #!yers #!yers have. have. C) whether the the prod!ct is strongly strongly dierentiated dierentiated or weakly dierentiated dierentiated rom rivals. rivals. &) the type o val!e chain #eing !sed to achieve achieve a dierentiatio dierentiation#ased n#ased competitive competitive advantage. *) the n!m#er n!m#er o !pscale !pscale attri#!tes attri#!tes incorpo incorporated rated into into the prod!ct prod!ct oering oering.. Answer+ A age age++ 15- &iic!lty+ edi!m Ta/onomy+ Comprehension Comprehen sion AACB+ -
Test Bank, Chapter 5
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6;. hich one one o the ollowing ollowing does does not represent market market circ!mstances circ!mstances that that make a oc!sed low low cost or oc!sed dierentiation dierentiation strategy attractive8 A) hen it is costly or diic!lt diic!lt or m!ltisegment m!ltisegment competitors competitors to p!t p!t capa#ilities in place to meet the specialied needs o the target market niche and at the same time satisy the e/pectations o their mainstream c!stomers B) hen the ind!stry has many dierent dierent segments segments and market niches, niches, there#y allowing allowing a oc!ser to pick an attractive niche s!ited to its reso!rce strengths and capa#ilities capa#ilities C) hen ind!stry ind!stry leaders do not not see that having having a presence in in the niche is is cr!cial to their their own s!ccess &) hen the target target market niche niche is not overcrowded overcrowded with a n!m#er o other other rivals attempting attempting to oc!s on the same niche *) hen #!yers #!yers are not strongly #rand loyal and most ind!stry competitors competitors are p!rs!ing some some sort o a oc!sed strategy Answer+ * age+ 154 155 &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
7?. The risks risks o a oc!sed strategy strategy #ased #ased on either either lowcost lowcost or dierenti dierentiatio ation n incl!de incl!de A) the chance that competitors o!tside o!tside the niche niche will ind eective ways to match the oc!ser’s capa#ilities in serving the target niche. B) the potential potential or the the preerences and needs o niche mem#ers to shit over time towards towards many o the same prod!ct attri#!tes and capa#ilities desired #y #!yers in the mainstream portion o the market. C) the potential potential or the the segment to #ecome so so attractive that it is soon in!ndated with with competitors, intensiying rivalry and splintering sales, proits, and growth prospects. &) the potential or segment growth growth to slow to s!ch a small small rate that a oc!ser's prospects prospects or !t!re sales and proit gains #ecome !naccepta#ly dim. *) All All o thes these. e. Answer+ * age+ 156 &iic!lty+ &iic!lty+ *asy Ta/onomy+ Comprehension AACB+ -
The Contrasting Features o! the Five Generic Strategies 71. The prod!ction prod!ction emphasis o a company company p!rs!ing a #road dierentiation dierentiation strategy !s!ally involves involves A) a search or or contin!o!s contin!o!s cost red!ction witho!t witho!t sacriicing sacriicing accepta#le (!ality and and essential eat!res. B) strong strong eorts eorts to #e a leader in man!act! man!act!ring ring process process innovati innovation. on. C) eorts to to #!ildin whatever dierentiating dierentiating eat!res that #!yers are willing willing to to pay or and striving or prod!ct s!periority. &) aggressiv aggressivee p!rs!it o economies economies o scale and e/perien e/perience ce c!rve eects. eects. *) developin developing g a distincti distinctive ve competence competence in erodeect erodeect man!act!ri man!act!ring ng techni(!es. techni(!es. Answer+ C age+ 157 &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
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72. The marketing emphasis o a company p!rs!ing a #road dierentiation dierentiation strategy strategy !s!ally !s!ally is to A) !nderpric !nderpricee rival #rands #rands with with compara#l compara#lee eat!res. eat!res. B) to!t dierentiating dierentiating eat!res eat!res and charge charge a premi!m premi!m price that more than covers the e/tra costs o dierentiating eat!res. C) o!tadver o!tadvertise tise rivals rivals and make re(!en re(!entt !se o disco!nt disco!nt co!pons. co!pons. &) emphasie selling selling direct direct to end!sers and promoting promoting personalied personalied c!stomer c!stomer service. service. *) comm!nicat comm!nicatee the prod!ct's prod!ct's a#ili a#ility ty to serve serve the c!stomer' c!stomer'ss every need. need. Answer+ B age+ 157 &iic!lty+ &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
7-. The keys keys to s!staini s!staining ng a #road #road dierent dierentiati iation on strategy strategy are are A) to stress constant constant innovation innovation to stay ahead o imitative imitative rivals and to concentrate on a ew dierentiating dierentiating eat!res. B) to charge charge a premi!m price that more than covers the e/tra costs o dierentiating dierentiating eat!res eat!res and to convince c!stomers to #e #rand loyal. C) to o!tinn o!tinnovat ovatee and o!tadver o!tadvertise tise rivals. rivals. &) to emphasie emphasie personalied c!stomer service service and to add as many many dierentiating dierentiating eat!res eat!res as possi#le. *) to keep prices prices close to the the average o all rivals rivals and to spend spend heavily heavily on new prod!ct prod!ct $%&. Answer+ A age+ 157 &iic!lty+ edi!m Ta/onomy+ Comprehension Comprehen sion AACB+ -
74. The marketing emphasis o a company p!rs!ing a oc!sed lowcost lowcost provider provider strategy !s!ally is to A) to!t the compan company’ y’ss lower lower price prices. s. B) to!t to!t the lack lack o ril rills ls and e/tr e/tras. as. C) o!tadver o!tadvertise tise rivals rivals and make re(!en re(!entt !se o disco!nt disco!nt co!pons. co!pons. &) comm!nicate the the attractive eat!res o a #!dgetpriced #!dgetpriced prod!ct oering that that its niche mem#ers’ e/pectations. *) comm!nicat comm!nicatee the prod!ct's prod!ct's a#ili a#ility ty to serve serve the c!stomer' c!stomer'ss every need. need. Answer+ & age+ 157 &iic!lty+ edi!m Ta/onomy+ Comprehension AACB+ -
75. ne o the the #ig dangers dangers in crating crating a competitive competitive strategy strategy is that managers, torn #etween the pros and cons o the vario!s generic strategies, will opt or A) a lowcost provider provider strategy #eca!se #eca!se it is !s!ally the saest, least risky risky competitive strategy. strategy. B) a