MGT 4800J QUIZ #2 | QUESTIONS AND ANSWERS | LATEST UPDATE | WITH COMPLETE
SOLUTION.
Why is an examination of generic strategies valuable? - (ANSWER)Focusing on generic strategies allows
executives to concentrate on the core elements of firms' business-level strategies
What are the four main generic strategies? - (ANSWER)(1) cost leadership,
(2) differentiation,
(3) focused cost leadership, and
(4) focused differentiation
What is a best-cost strategy? - (ANSWER)firms are able to offer both low prices and unique features that
customers find desirable
What does it mean to be "stuck in the middle"? - (ANSWER)Firms that are not able to offer low prices or
appealing unique features are referred to as "stuck in the middle."
two dimensions that are critical to defining business-level strategy - (ANSWER)1. the source of
competitive advantage (cost or uniqueness) and
2. the scope of operations (broad or narrow).
limitations of generic strategies - (ANSWER)(1) Keeping costs low - limit advertising spending
Business-level strategy addresses the question of how a firm will __________ in a particular industry -
(ANSWER)compete
A _____________ ___________ is a general way of positioning a firm within an industry -
(ANSWER)generic strategy
2 types of scope of operations - (ANSWER)1. broad target
2. narrow target
2 types of competitive advantage - (ANSWER)1. cost
,MGT 4800J QUIZ #2 | QUESTIONS AND ANSWERS | LATEST UPDATE | WITH COMPLETE
SOLUTION.
2. uniqueness
Differentiation is a ________ target and ____________ type of competitive advantage -
(ANSWER)broad, unique
Focused differentiation is a ________ target and ____________ type of competitive advantage -
(ANSWER)narrow, unique
Cost leadership is a ________ target and ____________ type of competitive advantage -
(ANSWER)broad, cost
Focused cost leadership is a ________ target and ____________ type of competitive advantage -
(ANSWER)narrow, cost
•Business-level _________________ examine how firms compete in a given industry. Firms derive such
strategies by executives making decisions about whether their source of _________________
_______________ is based on ______________ or _____________ and whether their scope of
operations targets a ___________ or _____________ market. - (ANSWER)strategies, competitive
advantage, price or differentiation, broad or narrow
Examining business-level strategy in terms of generic strategies has ____________________ -
(ANSWER)limitations
Firms that compete based on _____________ and target a _______________ target market are
following a cost leadership strategy - (ANSWER)price, broad
Many cost leaders rely on _______________of _______________ to achieve efficiency -
(ANSWER)economies of scale
Economies of scale are created when the costs of offering goods and services __________________ as a
firm is able to sell more items. This occurs because expenses are ________________ across a greater
number of items (= efficiency) - (ANSWER)decreases, distributed
, MGT 4800J QUIZ #2 | QUESTIONS AND ANSWERS | LATEST UPDATE | WITH COMPLETE
SOLUTION.
What are 3 pros of cost leadership - (ANSWER)(1) benefits relative to potential entrants - discourages
new and existing firms, because comp doesnt want to compete directly with an efficient cost leaders'
prices
(2) attract large market share
What are 3 cons of cost leadership - (ANSWER)(1) need for high sales - brand loyalty - requires upfront
investments in production or capacity
(2) minimizing ad, market research, R&D can be costly in long run (lagging rivals)
•Cost leadership is an effective business-level strategy to the extent that a firm offers ________ prices,
provides ___________ quality, and attracts ____________ customers to be profitable - (ANSWER)low,
satisfactory, enough
What are three industries in which a cost leadership strategy would be difficult to implement? -
(ANSWER)1. beverage industry - customer loyalty
2. cigarette brands - customer loyalty
3. laptop brands - functionality
Firms that compete on _______________ and target a ____________ market are following a
differentiation strategy - (ANSWER)uniqueness, broad
A firm following a differentiation strategy attempts to convince customers to pay a _____________
price for its good or services by providing _____________ and _____________ features -
(ANSWER)premium, unique and desirable
In terms of the two competitive dimensions described by Michael Porter, using a differentiation strategy
means that a firm is competing based on _____________ rather than ___________ and is seeking to
attract a _____________ market - (ANSWER)uniqueness, price, broad
In the case of differentiation, a key advantage is that effective differentiation creates an ability to
obtain__________ ___________ from customers - (ANSWER)premium prices
SOLUTION.
Why is an examination of generic strategies valuable? - (ANSWER)Focusing on generic strategies allows
executives to concentrate on the core elements of firms' business-level strategies
What are the four main generic strategies? - (ANSWER)(1) cost leadership,
(2) differentiation,
(3) focused cost leadership, and
(4) focused differentiation
What is a best-cost strategy? - (ANSWER)firms are able to offer both low prices and unique features that
customers find desirable
What does it mean to be "stuck in the middle"? - (ANSWER)Firms that are not able to offer low prices or
appealing unique features are referred to as "stuck in the middle."
two dimensions that are critical to defining business-level strategy - (ANSWER)1. the source of
competitive advantage (cost or uniqueness) and
2. the scope of operations (broad or narrow).
limitations of generic strategies - (ANSWER)(1) Keeping costs low - limit advertising spending
Business-level strategy addresses the question of how a firm will __________ in a particular industry -
(ANSWER)compete
A _____________ ___________ is a general way of positioning a firm within an industry -
(ANSWER)generic strategy
2 types of scope of operations - (ANSWER)1. broad target
2. narrow target
2 types of competitive advantage - (ANSWER)1. cost
,MGT 4800J QUIZ #2 | QUESTIONS AND ANSWERS | LATEST UPDATE | WITH COMPLETE
SOLUTION.
2. uniqueness
Differentiation is a ________ target and ____________ type of competitive advantage -
(ANSWER)broad, unique
Focused differentiation is a ________ target and ____________ type of competitive advantage -
(ANSWER)narrow, unique
Cost leadership is a ________ target and ____________ type of competitive advantage -
(ANSWER)broad, cost
Focused cost leadership is a ________ target and ____________ type of competitive advantage -
(ANSWER)narrow, cost
•Business-level _________________ examine how firms compete in a given industry. Firms derive such
strategies by executives making decisions about whether their source of _________________
_______________ is based on ______________ or _____________ and whether their scope of
operations targets a ___________ or _____________ market. - (ANSWER)strategies, competitive
advantage, price or differentiation, broad or narrow
Examining business-level strategy in terms of generic strategies has ____________________ -
(ANSWER)limitations
Firms that compete based on _____________ and target a _______________ target market are
following a cost leadership strategy - (ANSWER)price, broad
Many cost leaders rely on _______________of _______________ to achieve efficiency -
(ANSWER)economies of scale
Economies of scale are created when the costs of offering goods and services __________________ as a
firm is able to sell more items. This occurs because expenses are ________________ across a greater
number of items (= efficiency) - (ANSWER)decreases, distributed
, MGT 4800J QUIZ #2 | QUESTIONS AND ANSWERS | LATEST UPDATE | WITH COMPLETE
SOLUTION.
What are 3 pros of cost leadership - (ANSWER)(1) benefits relative to potential entrants - discourages
new and existing firms, because comp doesnt want to compete directly with an efficient cost leaders'
prices
(2) attract large market share
What are 3 cons of cost leadership - (ANSWER)(1) need for high sales - brand loyalty - requires upfront
investments in production or capacity
(2) minimizing ad, market research, R&D can be costly in long run (lagging rivals)
•Cost leadership is an effective business-level strategy to the extent that a firm offers ________ prices,
provides ___________ quality, and attracts ____________ customers to be profitable - (ANSWER)low,
satisfactory, enough
What are three industries in which a cost leadership strategy would be difficult to implement? -
(ANSWER)1. beverage industry - customer loyalty
2. cigarette brands - customer loyalty
3. laptop brands - functionality
Firms that compete on _______________ and target a ____________ market are following a
differentiation strategy - (ANSWER)uniqueness, broad
A firm following a differentiation strategy attempts to convince customers to pay a _____________
price for its good or services by providing _____________ and _____________ features -
(ANSWER)premium, unique and desirable
In terms of the two competitive dimensions described by Michael Porter, using a differentiation strategy
means that a firm is competing based on _____________ rather than ___________ and is seeking to
attract a _____________ market - (ANSWER)uniqueness, price, broad
In the case of differentiation, a key advantage is that effective differentiation creates an ability to
obtain__________ ___________ from customers - (ANSWER)premium prices
