00:39:40 FINISH

SAVE QUIZ
 SM QUIZ 3  (STRATEGIC MANAGEMENT)
S M I UA C QU IZ 3
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1. Competitive strategies that provide distinctive industry
positioning and competitive advantage involve _______________

a.  D. Developing a better credit rating than rivals.

b.  E. Choosing between (1) a market target that is either

broad or narrow, and (2) whether the company should
pursue a competitive advantage linked to low costs or
product diff erentiation.

c.  B. Striving for a high degree of customer loyalty to the

company's brand.

d.  C. Assembling a wide portfolio of company resources,

competitive capabilities, and core competencies.

e.  A. A customer value proposition, profi t formula, and

collection of valuable resources.
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2. A competitive strategy of striving to be the low-cost provider is
particularly attractive when _______________

a.  E. most rivals are pursuing best-cost or broad

diff erentiation strategies.

b.  C. there are many ways to achieve higher product

quality that have value to buyers.

c.  D. buyers are not swayed by advertising and are not

very brand-loyal.

d.  A. buyers are large and incur low costs in switching

their purchases from one seller to another.
 e.  B. most rivals are trying to diff erentiate their product
off ering from those of rivals.
S M I UA C QU IZ 3
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3. A blue ocean type of off ensive strategy _______________

a.  A. is a preemptive strike type of price-cutting off ensive

used by a market leader to steal customers away from
higher-priced rivals.

b.  C. involves abandoning eff orts to beat out competitors

in existing markets and, instead, inventing a new industry
or distinctive market segment that renders existing
competitors largely irrelevant and allows a company to
create and capture altogether new demand.

c.  E. employs highly creative, never-used-before strategic

moves to attack the competitive weaknesses of rivals.

d.  D. involves using innovative advertising and deep price

discounts to grab sales and market share from complacent
or distracted rivals.

e.  B. involves deliberately attacking those market

segments where a key rival makes big profi ts.
S M I UA C QU IZ 3
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4. Being fi rst to initiate a particular move can have a high payoff
when _______________

a.  A. pioneering helps build up a fi rm's image and

reputation with buyers.

b.  E. All of these.

c.  D. moving fi rst constitutes a preemptive strike, making

imitation extra hard or unlikely.

d.  B. early commitments to new technologies, new-style

components, new or emerging distribution channels, and so
on, can produce an absolute cost advantage over rivals.
 e.  C. fi rst-time customers remain strongly loyal to
pioneering fi rms in making repeat purchases.
S M I UA C QU IZ 3
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5. The fi ve generic types of competitive strategies include
_______________

a.  B. Low-cost provider, broad diff erentiation, focused

low-cost, focused diff erentiation, and best-cost provider.

b.  D. Low-price strategies, premium price strategies,

middle-of-the-road strategies, and market share leadership
strategies.

c.  E. Attacking competitor strengths, attacking

competitor weaknesses, market leadership strategies, and
product superiority strategies.

d.  A. Off ensive strategies, defensive strategies,

diff erentiation strategies, and low-cost strategies.

e.  C. Off ensive strategies, defensive strategies,

technological leadership strategies, and product innovation
strategies.
S M I UA C QU IZ 3
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6. Which of the following is not a distinguishing feature of a low-
cost provider strategy?

a.  A. The product line consists of a few basic models

having minimal frills and acceptable quality.

b.  E. Sustaining the strategy revolves around managing

costs down year-after-year and delivering good value at
economical prices.

c.  D. The strategic target is value-conscious buyers and

sustaining the strategy depends on frequent advances in
technology and occasional product innovations.

d.  B. The production emphasis is on continuously

searching for ways to reduce costs without sacrifi cing
acceptable quality and essential features.
 e.  C. The marketing emphasis is on making virtues out of
product features that lead to low cost.
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7. In which of the following cases are fi rst-mover disadvantages
not likely to arise?

a.  D. When customer loyalty to the pioneer is low.

b.  E. When technological change is rapid and following

rivals fi nd it easy to leapfrog the pioneer with next-
generation products of their own.

c.  B. When new infrastructure is needed before market

demand can surge.

d.  A. When the costs of pioneering are much higher than

being a follower and only negligible buyer loyalty or cost
savings accrue to the pioneer.

e.  C. When the pioneer's skills, know-how, and products

are easily copied or even bested by late movers.
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8. A hit-and-run or guerrilla warfare type of off ensive strategy
involves _______________

a.  A. random off ensive attacks used by a market leader to

steal customers away from unsuspecting smaller rivals.

b.  C. tactics that work best if the guerrilla is the

industry's low-cost leader.

c.  E. surprising moves by small challengers that have

neither the resources nor the market visibility to mount a
full-fl edged attack on industry leaders.

d.  B. undertaking surprise moves to secure an

advantageous position in a fast-growing and profi table
market segment; usually the guerrilla signals rivals that it
will use deep price cuts to defend its newly won position.
 e.  D. pitting a small company's own competitive strengths
head-on against the strengths of much larger rivals.
S M I UA C QU IZ 3
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9. A company's competitive strategy deals with _____________

a.  E. The specifi c actions management intends to take to

strongly diff erentiate its product off ering from the off erings
of rival companies in the industry.

b.  B. How it plans to unify its functional and operating

strategies into a cohesive eff ort aimed at successfully
taking customers away from rivals.

c.  C. The specifi cs of management's game plan for

securing a competitive advantage vis-à-vis rivals.

d.  A. The specifi c actions management plans to take to

develop a better value chain than rivals.

e.  D. Its plans for underpricing rivals and achieving

product superiority.
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10. Which of the following is typically the strategic impetus for
forward vertical integration?

a.  D. To achieve greater control over advertising and in-

store retail merchandising.

b.  C. To gain better access to end users and better

market visibility.

c.  A. To charge lower retail prices and thereby attract a

bigger, more loyal clientele of customers.

d.  B. To charge lower retail prices and thereby attract a

bigger, more loyal clientele of customers.

e.  E. To gain better access to greater economies of scale.

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11. Which one of the following is not a good type of rival for an
off ensive-minded company to target?

a.  D. Other off ensive-minded companies with a sizable

war chest of cash and marketable securities.

b.  A. Market leaders that are vulnerable.

c.  B. Runner-up fi rms with weaknesses in areas where the

challenger is strong.

d.  C. Small local and regional companies with limited

capabilities.

e.  E. Struggling enterprises that are on the verge of

going under.
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12. In which of the following situations is being fi rst to initiate a
particular move not likely to result in a positive payoff ?

a.  A. When potential buyers are skeptical about the

benefi ts of a new technology or product being pioneered by
a fi rst mover.

b.  B. When pioneering helps build up a fi rm's image and

reputation with buyers.

c.  D. When moving fi rst can constitute a preemptive

strike, making imitation extra hard or unlikely.

d.  E. When moving fi rst can result in a cost advantage

over rivals.

e.  C. When fi rst-time buyers remain strongly loyal to a

pioneering fi rm in making repeat purchases.
S M I UA C QU IZ 3
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13. Easy-to-copy diff erentiating features _______________

a.  C. tend to satisfy the needs of most buyers.

 b.  B. are less expensive to integrate into a product or
service off ering.

c.  D. should be patented before other companies imitate

the features.

d.  A. lead to excessive price competition.

e.  E. do not off er the promise of sustainable competitive

advantage.
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14. Which of the following is not one of the principal off ensive
strategy options?

a.  D. Attacking competitors' weaknesses.

b.  A. Adopting and improving on the good ideas of other

companies.

c.  E. Off ering an equal or better product at a lower price.

d.  C. Blocking the avenues open to challengers.

e.  B. Launching preemptive strikes.

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15. Striving to be the industry's low-cost provider and achieving
lower costs than rivals entails _______________

a.  A. Eliminating or curbing nonessential activities.

b.  B. Having a smaller labor force than rivals, paying

lower wages than rivals, locating all facilities in countries
where labor costs are low, and outsourcing many value
chain activities to suppliers with world-class technological
capabilities.

c.  D. Aggressive use of activity-based costing, utilizing

more best practices than rivals, and having a narrower
product line than rivals.
 d.  C. Doing a better job than rivals in performing
essential activities.

e.  E. Both A and C.

S M I UA C QU IZ 3
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16. Successful diff erentiation allows a fi rm to _______________

a.  B. earn the highest profi t margins of any company in

the industry.

b.  E. Both A and D.

c.  D. command a premium price for its product and/or

increase unit sales (because additional buyers are won over
by the diff erentiating features).

d.  A. gain buyer loyalty to its brand (because some

buyers are strongly attracted to the diff erentiating features
and bond with the company and its products).

e.  C. attract many more buyers by charging a lower price

than rivals and thereby take sales and market share away
from rivals.
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17. The purposes of defensive strategies are to _______________

a.  E. eliminate a company's resource weaknesses and

competitive defi ciencies, thereby making it invulnerable to
competitive attack from would-be challengers.

b.  B. restrict a competitive attack by a challenger,

weaken the impact of any attack that occurs, and infl uence
challengers to aim their off ensive eff orts at other rivals.

c.  C. Guard against adverse changes in the company's

macro-environment and insulate the company from the
impact of industry-driving forces.

d.  A. aggressively retaliate against rivals pursuing

off ensive strategies and prevent price wars.
 e.  D. strengthen a company's competitive advantage and
reduce its exposure to business risk.
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18. A low-cost provider's basis for competitive advantage is
_______________

a.  C. High buyer switching costs because of the

company's diff erentiated product off ering.

b.  B. Bigger profi t margins than rival fi rms.

c.  D. Meaningfully lower overall costs than competitors.

d.  A. Using an everyday low pricing strategy to gain the

biggest market share.

e.  E. A reputation for charging the lowest prices in the

industry.
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19. A broad diff erentiation strategy _______________

a.  C. works best when the basis for diff erentiation is

superior performance features and buyer switching costs
are low.

b.  A. is an attractive competitive approach whenever

buyers' needs and preferences are too diverse to be
satisfi ed by a product that is essentially identical from
seller to seller.

c.  E. Both A and B.

d.  B. can produce sustainable competitive advantage if

the diff erentiating features possess strong buyer appeal
and can't be copied or easily matched by rivals.

e.  D. off ers a better chance for gaining market share than
low-cost or best-cost provider strategies, and typically
allows a fi rm to charge the highest price in the industry.
S M I UA C QU IZ 3
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20. Which of the following is not a strategic disadvantage of
vertical integration?

a.  A. It greatly reduces the opportunity for capturing

maximum scale economies and achieving the lowest
possible operating costs.

b.  E. Integrating backward potentially results in less

fl exibility in accommodating shifting buyer preferences
when a new product design doesn't include parts and
components that the company makes in-house.

c.  D. Vertically integrated companies are often slow to

embrace technological advances or more effi cient
production methods when they are saddled with older
technology or facilities.

d.  B. Vertical integration increases a fi rm's capital

investment in the industry.

e.  C. Integrating into more industry value chain segments

increases business risk if industry growth and profi tability
sour.

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