Q&A Hero

Q: Vertical integration can lower costs by: A. expanding supplier power. B. facilitating the coordination of production flows and avoiding bottlenecks. C. establishing the framework for operating. D. creating control factors across the value chain. E. accommodating shifting buyer preferences.

Q: For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company: A. must first be a proficient manufacturer. B. must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C. must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. D. needs to have a wide product line, so it can supply parts and components for many products. E. should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

Q: When firms are involved in a mix of in-house and outsourced activity in any given stage of the vertical chain, it is called: A. tapered integration. B. partial integration. C. full integration. D. forward integration. E. backward integration.

Q: A vertical integration strategy can expand the firm's range of activities: A. backward into sources of supply and/or forward toward end users. B. backward into other industry business-lines and/or forward to suppliers of raw materials. C. to enable the supply chain the opportunity for expansion. D. to complement the industry's horizontal value chain line of profitability. E. to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

Q: A good example of vertical integration is a: A. global public accounting firm acquiring a small local or regional public accounting firm. B. large supermarket chain getting into convenience food stores. C. crude oil refiner purchasing a firm engaged in drilling and exploring for oil. D. hospital opening up a nursing home for the aged. E. railroad company acquiring a trucking company specializing in long-haul freight.

Q: The best reason for investing company resources in vertical integration (either forward or backward) is to: A. expand into foreign markets and/or control more of the industry value chain. B. broaden the firm's product line and/or avoid the need for outsourcing. C. gain a first-mover advantage over rivals in revamping the industry value chain. D. add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability. E. achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.

Q: Vertical integration strategies: A. extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. B. are one of the best strategic options for helping companies win the race for global market leadership. C. offer good potential to expand a company's lineup of products and services. D. are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E. area good strategy option for helping a company revamp its value chain and bypass low value-added activities.

Q: A primary reason for why mergers and acquisitions sometimes fail is due to the: A. misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes. B. execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue. C. development of effective integration plans conducive to employee satisfaction. D. advertising message detailing the merger announcement. E. creation of management-employee programs in order to foster better communication.

Q: Mergers and acquisitions: A. are nearly always successful in achieving their desired purpose. B. frequently do not produce the hoped-for outcomes. C. are generally less effective than forming alliances or partnerships with these same companies. D. are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. E. are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

Q: Which of the following is NOT among the intended outcomes of horizontal merger and acquisition strategies? A. Expanding a company's geographic coverage B. Gaining quick access to new technologies or complementary resources and capabilities C. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities D. Extending the company's business into new product categories E. Suppressing a rival's breakthroughs in management or technology

Q: Merger and acquisition strategies: A. are nearly always superior alternatives to forming alliances or partnerships with these same companies. B. may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C. are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy. D. seldom are superior alternatives to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. are one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

Q: Mergers and acquisitions are often driven by such strategic objectives as: A. expanding a company's geographic coverage or extending its business into new product categories. B. reducing the number of industry key success factors. C. reducing the number of strategic groups in the industry. D. facilitating a company's shift from a low-cost leadership strategy to a focused low-cost strategy. E. lengthening a company's value chain and thereby putting it in a better position to deliver superior value to buyers.

Q: Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions? A. To gain quick access to new technologies or other resources and capabilities B. To create a more cost-efficient operation out of the combined companies C. To expand a company's geographic coverage D. To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy E. To extend a company's business into new product categories

Q: The difference between a merger and an acquisition relates to: A. strategy and competitive advantage. B. the presence of available resources and competitive capabilities. C. whether the end result is related to horizontal or vertical scope. D. creating a more cost-efficient operation out of the combined companies. E. the details of ownership, management control, and the financial arrangements.

Q: The difference between a merger and an acquisition is that: A. a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. B. a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired). C. in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D. a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies. E. a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

Q: The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as:A. horizontal scale.B. vertical scope.C. outsourcing scope.D. cooperative scaled scope.E. focal scope.

Q: The range of product and service segments that the firm serves within its market is known as the firm's: A. horizontal scope. B. vertical integration. C. vertical scope. D. product outsourcing. E. joint venture partnership.

Q: What does the scope of the firm refer to? A. The range of activities the firm performs externally and its social responsibility activities B. To gain competitive advantage based on where it locates its various value chain activities C. The firm's capability to employ vertical integration strategies D. The range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses E. To prevent foreign competition from affecting the market

Q: Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask? A. Does market takeoff depend on the new development of complementary products? B. Is a new infrastructure required before buyer demand can surge? C. Will buyers encounter high switching costs to move? D. Are there influential competitors in a position to delay or derail the efforts? E. Did the company pour too many resources into getting ahead of the market opportunity?

Q: For every emerging opportunity there exists: A. a market penetration curve, and this typically has an inflection point where the business model falls into place. B. an opportunity to achieve first-mover status, which depends on analyzing the competitive status curve where all the potential rivals are encoded. C. an emerging pitfall that is a counterpoint to the intended growth. D. a normal curve scenario which signifies the average growth curve will be opportunistic. E. an intense competition that constrains the company's prospects for rapid growth and superior profitability.

Q: The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when: A. new industry or market segments are yet to be developed and create altogether new consumer demand. B. fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. C. the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. D. entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. E. there are nearly always big advantages to being a slow mover rather than an early mover, especially in regards to avoiding the "mistakes" of first or early movers.

Q: Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is: A. to be the first mover. B. to be a fast follower. C. to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneerfirst-mover disadvantages usually overwhelm first-mover advantages). D. to be the last-moverplaying catch-up is usually fairly easy and almost always is much cheaper than any other option. E. to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

Q: In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise? A. When the costs of pioneering are much higher than being a follower and only negligible learning/experience benefits accrue to the pioneer B. When the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover C. When the pioneer's products are somewhat primitive and are easily bested by late movers D. When opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand E. When technological change is rapid and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own

Q: First-mover disadvantages (or late-mover advantages) rarely ever arise when: A. the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own. C. the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D. the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E. the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

Q: In which of the following instances is being a first-mover NOT particularly advantageous? A. When moving first with a preemptive strike makes imitation difficult or unlikely B. When first-time buyers remain strongly loyal to pioneering firms in making repeat purchases C. When early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals D. When markets are slow to accept the innovative product offering of a first-mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover E. When being a pioneer helps build a firm's image and reputation with buyers

Q: Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when: A. pioneering helps build up a firm's image and reputation and creates strong brand loyalty. B. buyers remain strongly loyal to pioneering firms because of incentives and switching costs barriers. C. there is a steep learning curve and when learning can be kept proprietary. D. moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E. market uncertainties make it difficult to ascertain what will eventually succeed.

Q: Which of the following signals would NOT warn challengers that strong retaliation is likely? A. Publicly announcing management's commitment to maintain market share B. Publicly committing to a company policy of matching competitors' terms or pricing C. Maintaining a war chest of cash and marketable securities D. Making a strong counter-response to the moves of weak competitors E. Announcing strong quarterly earnings potential to financial analysts

Q: What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack? A. To alleviate their fears by committing to reduce the costs of value chain activities B. To cause the challenger to begin the attack instead of waiting C. To dissuade challengers from attacking or diverting them into using less threatening options D. To create collaborative relationships with challengers E. To insulate other firms from adverse impacts resulting from the challenge

Q: Which of the following ways are employed by defending companies to fend off a competitive attack? A. Remain steadfast to current product features and models to ensure resources are not diverted toward unproductive efforts. B. Exclude volume discounts or better financing terms from the strategic response in order to maintain current profitability levels. C. Gain product line exclusivity to force competitors to use other distributors. D. Trimming the length of warranties to save money. E. Stay away from competitor's clients since their loyalty will not allow them to switch.

Q: Which of the following is NOT a purpose of a defensive strategy? A. To increase the risk of having to defend an attack B. To weaken the impact of any attack that occurs C. To pressure challengers to aim their efforts at other rivals D. To help protect a competitive advantage E. To decrease the risk of being attacked

Q: All firms are subject to offensive challenges from rivals. Which of the following is NOT among the intent of the best defensive move? A. Lower the risk of being attacked B. Weaken the impact of any attack that occurs C. Pressure challengers to aim their efforts at other rivals D. Help protect a competitive advantage E. Harm the firm's competitive position

Q: Which of the following is NOT an example of a company that uses blue-ocean market strategy? A. eBay's online auction industry B. NetJets' fractional jet ownership C. Drybar's hair blowouts D. Cirque de Soleil's live entertainment E. Walmart's logistics and distribution

Q: A blue-ocean strategy: A. is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B. involves an unexpected (out-of- the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

Q: Challenging a struggling rival can do all of the following EXCEPT: A. sap the rival's financial strength and competitive position. B. weaken the rival's resolve. C. accelerate the rival's exit from the market. D. threaten the rival's overall survival in the market. E. strengthen the rival's loyal following.

Q: Which of the following rivals make the best targets for an offensive attack? A. Firms with weaknesses in areas where the challenger is strong B. Companies that are financially strong and possess favorable competitive market positioning C. Large national firms with vast capabilities and intermittent trivial resource deficiencies D. Strong and financially secure market leaders E. Small local and regional firms with unrestrained capabilities

Q: An offensive to yield good results can be short if: A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign). B. competition creates an appealing new product. C. the technology needs debugging. D. new production capacity needs to be installed. E. consumer acceptance of an innovative product takes time.

Q: Which of the following is NOT a principal offensive strategy option? A. Leapfrogging competitors by being first to market with next-generation products B. Using hit-and-run or guerrilla warfare tactics to grab sales and market share C. Launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating D. Pursuing continuous product innovation to draw sales and market share away from rivals E. Being the final competitor to market a next-generation product so as to guarantee the product is operationally sound

Q: The principal offensive strategy options include all of the following EXCEPT: A. using a cost advantage to attack competitors on the basis of lower price or better product value. B. using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent or distracted rivals. C. launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating. D. pursuing continuous product innovation to draw sales and market share away from less innovative rivals. E. initiating a market threat and counterattack simultaneously to effect a distraction.

Q: Strategic offensives should, as a general rule, be based on: A. exploiting a company's strongest competitive assetsits most valuable resources and capabilities. B. instigating and executing the chosen strategy efficiently and effectively. C. scoping and scaling an organization's internal and external situation. D. molding an organization's character and identity. E. satisfying the buyer's needs that the company seeks to meet.

Q: Which of the following is NOT a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A. Whether to focus on building competitive advantages B. Whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for C. Whether to employ a market share leadership strategy D. Whether to display a strong bias for swift, decisive, and overwhelming actions to overpower E. Whether to create and deploy company resources to cause rivals to defend themselves

Q: Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, EXCEPT whether to: A. focus on building competitive advantages. B. employ the element of surprise as opposed to doing what rivals expect and are prepared for. C. display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. D. create and deploy company resources to cause rivals to defend themselves. E. pay special attention to buyer segments that a rival is already serving.

Q: Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT: A. focusing relentlessly on building a competitive advantage. B. applying resources where rivals are least able to defend themselves. C. using a strategic offense to allow the company to leverage its weaknesses to strengthen operating vulnerabilities. D. employing the elements of surprise as opposed to doing what rivals expect and are prepared for. E. displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

Q: Focusing carries several risks, one of which is the: A. chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market. C. potential for the segment to be highly vulnerable to economic cycles. D. potential for the segment to become too specialized for other multi-segmented rivals to enter. E. inability of a company to compete industry-wide.

Q: The risks of a focused strategy based on either low-cost or differentiation include the: A. chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market. C. potential for the segment to be highly vulnerable to economic cycles. D. potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. potential for the segment to become too specialized for other multi-segmented rivals to enter.

Q: A government oil company is having trouble with the private refineries and transporters to whom it delegates important stages of production. It decides to become more active along the entire supply chain from locating deposits to retailing the fuel to consumers. Which of the following does it intend to achieve? A. Outsourcing B. Economies of scale C. Increase inputs D. Advanced production technology E. Vertical integration

Q: A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult. Which of the following will be most helpful in solving the manufacturer's problem? A. Outsourcing B. Achieving economies of scale C. Lowering input costs D. Increasing bargaining power E. Going for a vertical integration with a distributor

Q: A focused differentiation strategy aims at securing competitive advantage by: A. providing niche members with a top-of-the-line product at a premium price. B. catering to buyers looking for an upscale product at an attractively low price. C. offering a product carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D. developing product attributes that no other company in the industry has. E. convincing a narrow, well-defined group of buyers that the company has a truly world-class product.

Q: A focused low-cost strategy can lead to attractive competitive advantage when: A. buyers are looking for the best value at the best price. B. buyers are looking for a budget-priced product. C. buyers are price sensitive and are attracted to brands with low switching costs. D. a market is emerging and demand in the target market niche is growing rapidly and is served by industry-wide competitors E. a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

Q: The chief difference between a low-cost provider strategy and a focused low-cost strategy is:A. whether the product is strongly differentiated or weakly differentiated from rivals.B. the degree of bargaining power that buyers have.C. the size of the buyer group that a company is trying to appeal to.D. the type of value chain being used to achieve a low-cost competitive advantage.E. the number of upscale attributes incorporated into the product offering.

Q: A focused low-cost strategy seeks to achieve competitive advantage by: A. outmatching competitors in offering niche members an absolute rock-bottom price. B. delivering more value for the lesser money than other competitors. C. performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D. dominating more market niches in the industry via a lower cost and a lower price than any other rival. E. serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

Q: What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is: A. the extra attention paid to top-notch product performance and product quality. B. their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C. greater opportunity for competitive advantage. D. their suitability for market situations where most industry rivals have weakly differentiated products. E. their objective of delivering more value for the least money.

Q: Focused strategies keyed either to low cost or differentiation are especially appropriate for situations where: A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B. most other rival firms are using a best-cost producer strategy. C. buyers have strong bargaining power and entry barriers are low. D. most industry rivals have weakly differentiated products. E. most industry participants are also using a focused differentiation strategy.

Q: Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy? A. Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than being content with weak product differentiation B. Offering trivial improvements in quality, service, or performance features C. Overcharging for the differentiating features D. Adding so many frills and extra features that the product exceeds the needs of buyers E. Overspending on efforts to differentiate the company's product offering

Q: A pitfall to avoid in pursuing a differentiation strategy is: A. trying to differentiate on the basis of attributes or features that are easily and quickly copied. B. choosing a product offering that supports buyers' indifference to rival brands' offerings. C. charging a premium price for the differentiating features. D. meeting and exceeding the meaningful gaps in quality, performance, service, and other attractive differentiating attributes offered by rivals. E. spending on activities to differentiate the company's product to enhance profitability.

Q: In which of the following market circumstances is a broad differentiation strategy generally NOT well-suited? A. When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B. When few rivals are pursuing a similar differentiation approach C. When the products of rivals are weakly differentiated D. When there are many ways to differentiate a product or a service and many buyers perceive these differences valuable E. When technological change is fast-paced and competition revolves around rapidly evolving product features

Q: A broad differentiation strategy generally produces the best results in situations where: A. buyer brand loyalty is low. B. few rival firms are following a similar differentiation approach. C. new and improved products are introduced only infrequently. D. most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E. perceived value of a product is not of great importance.

Q: A broad differentiation strategy works best in situations where: A. technological change is slow-paced and new or improved products are infrequent. B. buyer needs and uses of the product are very similar. C. buyers incur low costs in switching their purchases to rival brands. D. buyers have a low degree of bargaining power and purchase the product frequently. E. technological change is fast-paced and competition revolves around rapidly evolving product features.

Q: Broad differentiation strategies generally work best in market circumstances where: A. buyer needs and uses of a product are diverse and not fully satisfied by a standardized product. B. most buyers have similar needs and use the product in the same ways. C. the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D. buyers are price sensitive and product switching costs are quite low. E. market competition revolves around slowly evolving product features.

Q: Broad differentiation strategies are well-suited for market circumstances where: A. there are many ways to differentiate the product or service that have value to buyers. B. most buyers have the same needs and use the product in the same ways. C. technological changes are slow-paced. D. barriers to entry are high and suppliers have a low degree of bargaining power. E. price competition is especially vigorous.

Q: Perceived value and signaling value are often an important part of a successful differentiation strategy because: A. of the standardization of buyer needs and preferences. B. buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be. C. buyer satisfaction cannot be achieved until a product's value is promoted through clever ads. D. differentiation is all about selling products to sophisticated buyers. E. there are no other ways to differentiate a product.

Q: Achieving a differentiation-based competitive advantage does NOT involve: A. incorporating product attributes and user features that lower a buyer's overall cost of using the product. B. incorporating features that raise the performance a buyer gets from using the product. C. incorporating features that enhance buyer satisfaction in noneconomic or intangible ways. D. delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match. E. appealing to buyers on the basis of attributes that rivals are emphasizing

Q: Which of the following is NOT one of the four basic routes to achieving a differentiation-based competitive advantage? A. Delivering value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well-matched to the requirements of the strategy B. Incorporating tangible features that raise product performance and increase customer satisfaction with the product C. Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D. Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes E. Incorporating features that enhance buyer satisfaction in intangible or noneconomic ways

Q: A differentiation-based competitive advantage: A. nearly always is attached to the quality and service aspects of a company's product offering. B. usually is the result of highly effective marketing and advertising to enhance the brand, raise awareness, and build consistent customer experience. C. requires developing at least one distinctive competence that buyers consider valuable. D. hinges on a company's success in developing top-of-the-line product features that will command the highest price premium in the industry. E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or noneconomic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

Q: An organic foods manufacturer insists on portraying the cleanliness of its farms in its advertisements, charges a higher price for its products, and sells its products only through reputable distributors. What strategy is the manufacturer using to deliver superior value to customers? A. Signaling the value of the company's product offering to buyers B. Incorporating intangible features C. Incorporating tangible features D. Lowering the buyer's overall cost E. Lowering the overall bargaining power from suppliers

Q: A route to take in developing a differentiation advantage includes: A. incorporating product attributes and user features that raise the buyer's overall costs, but keep the price minimal. B. incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling. C. signaling value by targeting sophisticated buyers. D. incorporating intangible features that enhance buyer satisfaction in economic ways. E. emphasizing high quality and performance of products through a standard and simple, no-fuss packaging.

Q: The objective of differentiation is to:A. offer customers something rivals can't, at least in terms of the level of satisfaction.B. develop strategies that are different from those of rivals.C. establish objectives that are measurable and meaningful when it comes to sales growth.D. offer customers a sustainable competitive advantage.E. offer a diverse range of comparable products with low switching costs.

Q: Approaches to enhancing differentiation through changes in the value chain do NOT include: A. coordinating with retailers to enhance the buying experience and building a company's image. B. coordinating with suppliers to speed up new product development cycles. C. coordinating with distributors or shippers to lower shipping costs. D. collaborating with suppliers to improve many dimensions affecting product features and quality. E. coordinating with employees to create a greater incentive systems to encourage worker productivity

Q: Pursuing continuous quality improvement as a uniqueness factor is sound because it:A. can create differentiation even if little tangible differentiation exists otherwise.B. bestows the first-mover-in-the-market advantage on companies practicing it.C. can often reduce product defects and improve economy of use.D. always provides a competitive advantage.E. provides wider product variety and selection through product versioning.

Q: Brands create customer loyalty, which in turn: A. increases the perceived cost of switching to another product. B. strengthens the product's quality. C. validates the motivation for alternate products. D. provides monetary incentive for using the product. E. allows a company to operate facilities at full capacity.

Q: Which of the following is NOT one of the ways managers can enhance differentiation based on value drivers? A. Striving to create superior product features, design, and performance B. Striving for innovation and technological advances C. Pursuing continuous quality improvement D. Increasing the intensity of marketing, brand building, and sales activities E. Seeking out low-quality inputs

Q: What are value drivers? A. A set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect B. A firm's hidden success factor for creating over-the-top product features that will command the highest price in the industry C. A technique for easily identifying factors that validate a firm's performance D. A set of factors that verify the unique nature of a firm E. A set of guidelines for identifying the most promising upscale attributes to incorporate into a product

Q: Opportunities to differentiate a company's product offering:A. are most reliably found in the R&D portion of the value chain.B. are typically located in the sales and marketing portion of the value chain.C. can exist in activities all along an industry's value chain.D. usually are tied to product quality and customer service.E. are most frequently attached to a company's manufacturing expertise and to its ability to achieve economies of scale in production.

Q: Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether: A. many buyers view the product's differentiating features as having value. B. most buyers have similar needs and use the product in the same ways. C. most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation. D. buyer switching costs are low and customer loyalty to any one brand is low. E. buyers are prone to shop the market for sellers offering the best price.

Q: A broad differentiation strategy improves profitability when: A. it is focused on product innovation. B. differentiating enhances product performance and quality. C. the differentiating features appeal to sophisticated and prestigious buyers. D. the higher price the product commands exceeds the added costs of achieving the differentiation. E. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

Q: Which of the following is NOT true of a company that succeeds in differentiating its product offering from those of its rivals? A. It can avoid having to compete on the basis of simply a low price. B. It commands a premium price for its product. C. It usually increases unit sales. D. It gains buyer loyalty to its brand. E. It attracts mainly price-conscious buyers.

Q: Successful broad differentiation allows a firm to: A. be the industry's best-cost provider. B. set the industry ceiling on price. C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D. command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E. take sales and market share away from rivals by undercutting them on price.

Q: A company attempting to be successful with a broad differentiation strategy has to: A. study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B. incorporate more differentiating features into its product/service than rivals. C. concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D. over-differentiate so that product quality, features, or service levels exceed the needs of most buyers E. concentrate on offering advanced features, whether or not they have value to the customers, to create unique products

Q: The essence of a broad differentiation strategy is to: A. appeal to the high-end part of the market and concentrate on providing a top-of-the-line product to consumers. B. incorporate a greater number of differentiating features into its product/service than rivals. C. lower buyer switching costs. D. outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

Q: A low-cost provider's product does NOT have to always: A. contain enough attributes to be attractive to prospective buyers. B. suggest strong rather than weak product differentiation. C. signal value to buyers. D. provide high margins per unit sold to bring in enough unit sales. E. be valuable and appealing to a wide range of buyers.

Q: Which of the following is NOT one of the pitfalls of a low-cost provider strategy? A. Overly aggressive price-cutting B. Setting the industry's price ceiling to capture volume gains and achieve economies of scale C. Relying on an approach to reduce costs that can be easily copied D. Becoming too fixated on cost reduction E. Having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms