MGMT 490 TEST 2 QUESTIONS AND VERIFIED
ANSWERS
Vanguard has achieved a low-cost advantage over its rivals in the investment
management industry through which of the following? - Answers - underpricing rivals to
attract price-sensitive buyers
Vanguard's low-cost advantage results primarily from its ability to do which of the
following? - Answers - do a better job than rivals of performing value chain activities
cost efficiently
Vanguard has been particularly effective in managing which of the following value chain
cost drivers? - Answers - economies of scale, learning and experience, capacity
utilization, communication systems, and information technology
A low-cost provider strategy is appropriate for use in the investment management
industry for all except which of the following choices? - Answers - consumer buyers,
who have significant power to bargain down prices
In what way has Vanguard failed to some degree in the execution of its low-cost
provider strategy? - Answers - Vanguard has not failed in the execution of its low-cost
provider strategy.
When Frank sells a pie to Jean instead of Sarah, the economic value created in society
is lower because of the difference in - Answers - consumer surplus.
Frank the baker has been growing the number of pies he has been selling so much that
he is now able to negotiate more favorable terms from his suppliers. This change is
likely to impact - Answers - producer surplus.
Frank the baker has imported some specialty baking flour from Italy that is especially
prized by Sarah. Frank's use of this flour, in his transaction with Sarah, should impact
the - Answers - reservation price.
Firms focusing on operating a cost leadership strategy are most likely to develop their
product or service to emphasize the - Answers - functional aspects.
Mont Blanc uses a differentiation strategy that focuses on the social and emotional
aspects of their product to appeal to a specific consumer segment. Which of the
following initiatives would most be in keeping with their strategy? - Answers - an
engraving service for pen owners who may wish to will their pens to loved ones
, Which of the following would NOT be a reason for Bic to decide to compete in Mont
Blanc's market? - Answers - Bic is a large publicly traded company with significant
financial resources.
Southwest Airlines' low-cost advantage results primarily from its ability to - Answers -
outdo its rivals in performing value chain activities cost efficiently.
A company achieves low-cost leadership when it - Answers - becomes the industry's
lowest-cost provider rather than just being one of several competitors with
comparatively low costs
What are the two ways a company can translate its low-cost advantage over rivals into
attractive profit performance? - Answers - either using its low-cost edge to underprice
competitors and attract price-sensitive buyers in large enough numbers to increase total
profits or refraining from price cutting and using the low-cost advantage to earn a bigger
profit margin on each unit sold
Which strategic approach works best when price competition among rival sellers is
vigorous, the market is large, and there are few ways to achieve product differentiation?
- Answers - low-cost provider strategy
Which of the following is not a route to achieving a differentiation-based competitive
advantage? - Answers - separating marketing from brand-building activities
Hilton Hotels has diversified its lodging brands by adding Curio Collection, Tapestry
Collection, and Canopy by Hilton, properties that offer stylish, distinctive decors and
personalized services that appeal to young professionals seeking distinctive lodging
alternatives. Managers can enhance the differentiation of these new brands based on
all of the following value drivers except - Answers - seeking out low-quality inputs.
A focused low-cost strategy based on low cost aims at - Answers - securing a
competitive advantage by serving buyers in the target market niche at a lower cost than
those of rival competitors.
The strategic target of a best-cost provider is - Answers - value-conscious buyers in a
middle-market range.
What best-cost provider strategy would you be most unlikely to recommend for a small-
sized company entering a highly segmented market, each segment with a complex set
of needs and spending power? - Answers - evolving the capabilities to simultaneously
deliver lower cost and higher-quality/differentiated features
All other things being equal, the "best" generic competitive strategy for a company to
employ is a strategy that - Answers - is well matched to a company's internal situation;
underpinned by an appropriate set of resources, know-how, and competitive
capabilities; and difficult for rivals to match.
ANSWERS
Vanguard has achieved a low-cost advantage over its rivals in the investment
management industry through which of the following? - Answers - underpricing rivals to
attract price-sensitive buyers
Vanguard's low-cost advantage results primarily from its ability to do which of the
following? - Answers - do a better job than rivals of performing value chain activities
cost efficiently
Vanguard has been particularly effective in managing which of the following value chain
cost drivers? - Answers - economies of scale, learning and experience, capacity
utilization, communication systems, and information technology
A low-cost provider strategy is appropriate for use in the investment management
industry for all except which of the following choices? - Answers - consumer buyers,
who have significant power to bargain down prices
In what way has Vanguard failed to some degree in the execution of its low-cost
provider strategy? - Answers - Vanguard has not failed in the execution of its low-cost
provider strategy.
When Frank sells a pie to Jean instead of Sarah, the economic value created in society
is lower because of the difference in - Answers - consumer surplus.
Frank the baker has been growing the number of pies he has been selling so much that
he is now able to negotiate more favorable terms from his suppliers. This change is
likely to impact - Answers - producer surplus.
Frank the baker has imported some specialty baking flour from Italy that is especially
prized by Sarah. Frank's use of this flour, in his transaction with Sarah, should impact
the - Answers - reservation price.
Firms focusing on operating a cost leadership strategy are most likely to develop their
product or service to emphasize the - Answers - functional aspects.
Mont Blanc uses a differentiation strategy that focuses on the social and emotional
aspects of their product to appeal to a specific consumer segment. Which of the
following initiatives would most be in keeping with their strategy? - Answers - an
engraving service for pen owners who may wish to will their pens to loved ones
, Which of the following would NOT be a reason for Bic to decide to compete in Mont
Blanc's market? - Answers - Bic is a large publicly traded company with significant
financial resources.
Southwest Airlines' low-cost advantage results primarily from its ability to - Answers -
outdo its rivals in performing value chain activities cost efficiently.
A company achieves low-cost leadership when it - Answers - becomes the industry's
lowest-cost provider rather than just being one of several competitors with
comparatively low costs
What are the two ways a company can translate its low-cost advantage over rivals into
attractive profit performance? - Answers - either using its low-cost edge to underprice
competitors and attract price-sensitive buyers in large enough numbers to increase total
profits or refraining from price cutting and using the low-cost advantage to earn a bigger
profit margin on each unit sold
Which strategic approach works best when price competition among rival sellers is
vigorous, the market is large, and there are few ways to achieve product differentiation?
- Answers - low-cost provider strategy
Which of the following is not a route to achieving a differentiation-based competitive
advantage? - Answers - separating marketing from brand-building activities
Hilton Hotels has diversified its lodging brands by adding Curio Collection, Tapestry
Collection, and Canopy by Hilton, properties that offer stylish, distinctive decors and
personalized services that appeal to young professionals seeking distinctive lodging
alternatives. Managers can enhance the differentiation of these new brands based on
all of the following value drivers except - Answers - seeking out low-quality inputs.
A focused low-cost strategy based on low cost aims at - Answers - securing a
competitive advantage by serving buyers in the target market niche at a lower cost than
those of rival competitors.
The strategic target of a best-cost provider is - Answers - value-conscious buyers in a
middle-market range.
What best-cost provider strategy would you be most unlikely to recommend for a small-
sized company entering a highly segmented market, each segment with a complex set
of needs and spending power? - Answers - evolving the capabilities to simultaneously
deliver lower cost and higher-quality/differentiated features
All other things being equal, the "best" generic competitive strategy for a company to
employ is a strategy that - Answers - is well matched to a company's internal situation;
underpinned by an appropriate set of resources, know-how, and competitive
capabilities; and difficult for rivals to match.
