Q&A Hero

Q: (p. 107) The starting point for industry definition is A. The firm's mission statement B. A focus group session with the firm's top managers C. The federal government's definition of the industry D. A definition of the industry in global terms

Q: More recent work contradicts Porter's assertion about being "stuck in the middle" and suggests that firms that are successful in both cost leadership and product differentiation often can expect to gain a sustained competitive advantage.

Q: (p. 106) Defining industry boundaries is a very difficult task because A. Industry evolution creates industries within industries B. Industries are becoming very narrow in scope C. Industries do not evolve over time D. Industries remain static over time

Q: Firms pursuing a differentiation strategy often use temporary cross-divisional and cross-functional teams to manage the development and implementation of new, innovative and highly differentiated products.

Q: (p. 105) Designing viable strategies for a firm requires a thorough understanding of the firm's: A. Earnings B. Growth rate C. Market share D. Competition

Q: While the U-form structure for a firm pursuing cost leadership is relatively simple, the U-form structure for a firm implementing a product-differentiation strategy can be somewhat more complex.

Q: (p. 105) Which of the following is NOT a reason why defining an industry's boundaries is important? A. It helps executives determine the arena in which their firm is competing B. It focuses attention on the firm's competitors C. It helps executives determine key factors for success D. Stakeholders demand it

Q: Timing, location, distribution channels, and service and support are all very similar bases of product differentiation and can act as substitutes for each other.

Q: Product features, product customization, and product complexity have few obvious close substitutes and may be sources of sustained competitive advantages.

Q: (p. 105) The definition of an industry's boundaries is important because A. It has to be included in the mission statement B. It helps executives determine the arena in which their firm is competing C. It has to be reported to stockholders D. It helps set the prices for the firm's products

Q: (p. 105) Designing viable strategies for a firm requires a thorough understanding of the firm's industry and competition. Which one of the following is NOT a question the firm's executives need to address? A. Who are our customers? B. What are the boundaries of the industry? C. What is the structure of the industry? D. Which firms are our competitors?

Q: While product features, by themselves, are usually not a source of sustained competitive advantage, they can be a source of a temporary competitive advantage.

Q: Product features as a basis for product differentiation are generally not easy to duplicate.

Q: (p. 104) Which one of the following is NOT a tactic used by competitors when they jockey for position? A. Price competition B. Reduced advertising C. Advertising slugfests D. Product introduction

Q: (p. 105) In intense rivalry, rivals are: A. Similar in strategies B. Diverse in origins C. Similar in personality D. Few

Q: Knowing how a firm is differentiating its products necessarily means that competitors will be able to duplicate a firm's product-differentiation strategy at a lower cost.

Q: Firms that pursue a product-differentiation strategy can choose whether or not they want to reveal this strategic choice to their competition by adjusting their prices.

Q: (p. 104) In intense competition, competitors are characteristically: A. Few B. Of unequal power C. Equal in size D. Not foreign

Q: (p. 104) Industry growth has what characteristic(s) intense competitive rivalry? A. Fast growth B. Moderate growth C. Slow growth D. Sporadic growth

Q: The concept of product differentiation generally assumes that the number of firms that have been able to differentiate their products in a particular way is, at some point in time, less than the number of firms needed to generate perfect competition dynamics.

Q: (p. 104) Which one of the following is a tactic typically used by firms to jockey for position? A. Economies of scale B. Advertising slugfests C. Access to distribution D. Product withdrawal

Q: In emerging industries, product-differentiation efforts often focus on product refinement as a basis for product differentiation.

Q: (p. 104) High fixed costs is a factor in which of the five forces? A. Threat of entry B. Substitute products C. Jockeying for position D. Powerful suppliers

Q: In fragmented industries firms can use product differentiation to help consolidate a market.

Q: (p. 104) In intense rivalry among manufacturing firms, fixed costs are: A. High B. Low C. Medium D. Less critical than variable costs

Q: When a firm sells a highly differentiated product, it enjoys a quasi-monopoly in that segment of the market.

Q: (p. 105) As an industry matures, its: A. Growth rate is unchanged B. Profits are higher C. Growth rate changes D. New firms enter

Q: Firms with highly differentiated products may have loyal customers, or customers who are unable to purchase similar products or services from other firms and are therefore more likely to accept increased prices due to a firm passing on increased costs by a powerful supplier.

Q: Product differentiation increases the threat of substitutes by making a firm's current products appear less attractive than substitutes.

Q: (p. 104) Rivalry among existing competitors takes the familiar form of: A. Substitute products B. Jockeying for position C. Positioning the company D. Influencing the balance

Q: (p. 105) Exit barriers represent a determinant of A. Entry B. Rivalry C. Buyer power D. Supplier power

Q: Product differentiation effectively reduces rivalry to zero.

Q: (p. 105) In intense competitive rivalry, barriers to exit are: A. High B. Low C. Medium D. Changing

Q: Product differentiation helps reduce the threat of new entry by forcing potential entrants to an industry to absorb not only the standard costs of beginning business but also the additional costs associated with overcoming incumbent firms' product-differentiation advantages.

Q: (p. 104) Substitute products that deserve the most attention strategically are those that are: A. Subject to trends B. Produced by industries earning low profits C. Most expensive to produce D. Slow coming into play

Q: Edward Chamberlin described firms selling differentiated products and facing a downward-sloping demand curve as being in an industry characterized by monopolistic competition.

Q: (p. 104) Which of the following are considered competitors? A. Low substitutability products B. Firms with dissimilar scope C. Substitute products D. Uncommitted firms

Q: Firms selling differentiated products face a horizontal demand curve.

Q: (p. 104) If price ceilings exist, substitute products are limited, unless: A. The quality of the product can be reduced B. The quality of the product can be upgraded C. The quantities of the product available can be increased D. The product can not be differentiated

Q: It is reasonable to expect that in the near future a marketing specialist will develop a definitive list of bases of product differentiation.

Q: (p. 103) Customers have the power to: A. Raise prices B. Demand higher quality C. Lower service quality D. Coordinate competitors

Q: Product differentiation is ultimately an expression of the creativity of individuals and groups within firms and is limited only by the opportunities that exist, or that can be created, in a particular industry and by the willingness and ability of firms to creatively explore ways to take advantage of those opportunities.

Q: (p. 103) A buyer group is powerful if: A. The buyers pose a credible threat to make the industry's product B. The industry product saves the buyer money C. It earns high profit D. The industry has high exit barriers

Q: In the information technology business, interconnectivity is a relatively unimportant basis of potential product differentiation.

Q: (p. 103) Highly profitable buyers are usually: A. Less price sensitive B. More price sensitive C. Very quantity oriented D. Not very quantity oriented

Q: When firms place their products in movies, this is known as co-branding.

Q: (p. 103) A buyer group is powerful if: A. It earns low profits B. The industry's product is important to the quality of the buyer's products or services C. The industry's product saves the buyer money D. It is not concentrated

Q: The ability to use organization structure to facilitate coordination among scientific disciplines to conduct research is known as architectural competence.

Q: (p. 102) A supplier group is powerful if: A. Its product is undifferentiated B. Its product is unique C. Its market is unique D. It must contend with other products

Q: Once developed, a firm's reputation can last a long time, even if the basis for that reputation no longer exists.

Q: (p. 102) A supplier group is powerful if: A. It is not concentrated B. It is not obligated to contend with other products for sale to the industry C. Raw materials are the major input cost D. Its product is not unique

Q: Through advertising and other consumer marketing efforts, firms attempt to alter the perceptions of current and potential customers, but only when specific attributes of a firm's products or services are altered.

Q: (p. 102) The power of each supplier depends on: A. Low concentration B. Its commodity-like product C. Relative importance of purchases D. Its inability to integrate forward

Q: (p. 102) Suppliers can exert bargaining power on participants in an industry by: A. Stabilizing their cost bas B. Lowering prices C. Raising prices D. Increasing the quality of services

Q: Products can be differentiated by the extent to which they are customized for particular customer applications.

Q: (p. 101) Entrenched companies may have cost advantages not available to potential rivals. This is an example of: A. Capital requirements B. Cost disadvantage independent of size C. Economies of scale D. Government policy

Q: The physical location of a firm cannot be a source of product differentiation.

Q: (p. 101) The learning curve effect is an example of which barrier to entry? A. Cost disadvantages independent of size B. Product differentiation C. Economies of scale D. Government policy

Q: Timing-based product differentiation relies solely on being a first mover.

Q: To the extent that differences in product complexity lead customers to conclude that the products of some firms are more valuable than the product of other firms, then product complexity can be a basis of product differentiation.

Q: (p. 101) Cost disadvantages independent of size is a factor relevant to A. Threat of new entrants B. Powerful suppliers C. Jockeying for position D. Powerful buyers

Q: (p. 101) The need to invest large financial resources in order to compete creates A. Increased supplier power B. Increased buyer power C. Increased jockeying for position D. A barrier to entry

Q: Chryslers' introduction of the "cab forward" design was an attempt at differentiation through product features.

Q: (p. 102) Which of the following can limit or even foreclose entry to industries with such controls as license requirements? A. Equal opportunity employer B. Federal trade commission C. Government policy D. Securities and exchange commission

Q: A hedonic price is that part of a products' or services' actual price that is not attributable to a particular attribute of that product or service.

Q: (p. 101) When aspirants are forced to accept either a large scale disadvantage of a cost disadvantage, they are face with problems of: A. Product differentiation B. Cost disadvantage and economies of scale C. Capital requirements D. Distribution

Q: If products or services are perceived as being different in a way that is valued by customers, even if there is no physical differentiation, then product differentiation exists.

Q: (p. 100-102) Which of the following is NOT a major barrier to entry? A. Economies of scale B. Product differentiation C. Market breadth D. Cost disadvantages independent of size

Q: While firms often alter the objective properties of their products or services in order to implement a product-differentiation strategy, the existence of product differentiation is always a matter of customer perception.

Q: (p. 100) Which is perhaps the most important entry barrier in the soft drink, over-the-counter drugs, cosmetics, investment banking and public account industries? A. Capital requirements B. Market differentiation C. Economies of scale D. Product differentiation

Q: Attempts to create differences in the relative perceived value of a firm's products or services are rarely made by altering the objective properties of those products or services.

Q: (p. 100) Which of the following factors is NOT commonly seen as fostering brand identification? A. Being first in the industry B. Product differences C. Customer service D. Customer credit

Q: Product differentiation is a business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firms' products or services.

Q: (p. 100) Barriers to entry: A. Can be cyclical B. Can involve the legal constraints leveling the playing field C. Can include customer loyalty D. Are not important to small firms

Q: Wal-Mart exemplifies a firm pursuing a product-differentiation strategy while Victoria's Secret exemplifies a firm pursuing a cost-leadership strategy.

Q: (p. 100) Which of the following is a factor that does NOT foster brand identification? A. Advertising B. Customer service C. Product differences D. Price

Q: What are the responsibilities of the CEO in a functional organization?.

Q: (p. 100) Economies of scale in an industry refers to: A. Savings that companies within the industry achieve due to increased volume B. Declining average short run costs per unit C. Improved contractual agreements with suppliers in the near term D. Decreased barriers to entry to new firms attempting to enter the industry

Q: Identify the types of compensation policies that are appropriate for firms pursuing a cost-leadership strategy.

Q: (p. 100) New entrants to an industry bring: A. New capacity B. New customers C. Few resources D. Bigger margins