Question 1

Proctor and Gamble announced that it would sell off or close down up to 100 of its brands. This is an example of which turnaround strategy used by successful companies?

Accepted Answer

A)  asset and cost surgery
B)  selective product and market pruning
C)  piecemeal productivity improvements
D)  global expansionE) B) and C)
F) A) and B)

Question 2

A differentiation strategy enables a business to address the five competitive forces by

Accepted Answer

A)  having brand-loyal customers become more sensitive to prices.
B)  increasing economies of scale.
C)  providing protection against rivalry.
D)  serving a broader market segment.E) All of the above
F) None of the above

Question 3

The decline stage of the industry life cycle stage is inevitably followed by death.

Accepted Answer

A) True 
 B)False

Question 4

A cost leadership strategy is not susceptible to the risk of reduced flexibility.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?

Accepted Answer

A)  Firms that target too large a market that causes unit costs to increase.
B)  Firms that underestimate the expenses associated with coordinating value-creating activities in the extended value chain.
C)  Firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle.
D)  Firms that miscalculate sources of revenue and profit pools in the company industry.E) A) and D)
F) C) and D)

Question 6

The primary aim of strategic management at the business level is

Accepted Answer

A)  maximizing risk-return tradeoffs through diversification.
B)  achieving competitive advantage.
C)  maximizing differentiation of products and/or services.
D)  achieving a low cost position.E) None of the above
F) B) and D)

Question 7

A low-cost position protects firms against powerful buyers.

Accepted Answer

A) True 
 B)False

Question 8

The Commerce Bank gains customers by using reverse positioning to structure its offers. It pared down its offers to just four checking accounts.

Accepted Answer

A) True 
 B)False

Question 9

A firm can attain an overall cost leadership position by increasing the management layers in order to reduce overhead costs.

Accepted Answer

A) True 
 B)False

Question 10

Most turnarounds require a firm to carefully analyze its relevant environments. The _______ analysis leads to identification of market segments or customer groups that may still find the product attractive.

Accepted Answer

A)  external
B)  internal
C)  global
D)  environmentalE) C) and D)
F) B) and D)

Question 11

A cost leadership strategy can be at risk of becoming obsolete and must be evaluated regularly in terms of current competitor responses.

Accepted Answer

A) True 
 B)False

Question 12

A low-cost position provides more flexibility to cope with demands from powerful suppliers for input cost decreases.

Accepted Answer

A) True 
 B)False

Question 13

An important potential pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become stuck in the middle.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a risk (or potential pitfall)  of cost leadership?

Accepted Answer

A)  Cost cutting may lead to the loss of desirable features.
B)  Attempts to stay ahead of the competition may lead to gold plating.
C)  Cost differences increase as the market matures.
D)  Producers are more able to withstand increases in supplier costs.E) B) and C)
F) None of the above

Question 15

The reason Dell lost its competitive advantage is that it focused too much on operational efficiency and not enough on innovations demanded by the changing market.

Accepted Answer

A) True 
 B)False

Question 16

Firms in turnaround situations find that cutting administrative expenses and inventories and speeding up collection of receivables provide no real value.

Accepted Answer

A) True 
 B)False

Question 17

If a firm has a successful differentiation strategy, it is necessary to attain parity on cost.

Accepted Answer

A) True 
 B)False

Question 18

Corporations increasingly collect and analyze data on their customers. This is known as

Accepted Answer

A)  profit analysis.
B)  big data.
C)  cost reduction.
D)  automated analysis.E) B) and D)
F) B) and C)

Question 19

At one CVS drugstore, a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD. The Duracell market share dropped 2 percent in a recent two-year period, and its profits declined over 30 percent. Why did this happen?

Accepted Answer

A)  The price differential was too high.
B)  The market for batteries is saturated.
C)  The customer perceived the products to be different.
D)  There are valid alternatives for batteries.E) A) and D)
F) B) and D)

Question 20

An important idea behind the profit pool concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.

Accepted Answer

A) True 
 B)False

Exam 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages

A cost leadership strategy is not susceptible to the risk of reduced flexibility.

Correct AnswerverifiedShow Answer

A low-cost position protects firms against powerful buyers.

Correct AnswerverifiedShow Answer

The reason Dell lost its competitive advantage is that it focused too much on operational efficiency and not enough on innovations demanded by the changing market.

Correct AnswerverifiedShow Answer

A low-cost position provides more flexibility to cope with demands from powerful suppliers for input cost decreases.

Correct AnswerverifiedShow Answer

The decline stage of the industry life cycle stage is inevitably followed by death.

Correct AnswerverifiedShow Answer

A cost leadership strategy can be at risk of becoming obsolete and must be evaluated regularly in terms of current competitor responses.

Correct AnswerverifiedShow Answer

At one CVS drugstore, a four-pack of Energizer AA batteries was on sale at 2.99 USD compared with a Duracell four-pack at 4.59 USD. The Duracell market share dropped 2 percent in a recent two-year period, and its profits declined over 30 percent. Why did this happen?

Correct AnswerverifiedShow Answer

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?

Correct AnswerverifiedShow Answer

The primary aim of strategic management at the business level is

Correct AnswerverifiedShow Answer

Firms in turnaround situations find that cutting administrative expenses and inventories and speeding up collection of receivables provide no real value.

Correct AnswerverifiedShow Answer

An important idea behind the profit pool concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.

Correct AnswerverifiedShow Answer

Which of the following is a risk (or potential pitfall) of cost leadership?

Correct AnswerverifiedShow Answer

If a firm has a successful differentiation strategy, it is necessary to attain parity on cost.

Correct AnswerverifiedShow Answer

A differentiation strategy enables a business to address the five competitive forces by

Correct AnswerverifiedShow Answer

Corporations increasingly collect and analyze data on their customers. This is known as

Correct AnswerverifiedShow Answer

Most turnarounds require a firm to carefully analyze its relevant environments. The _______ analysis leads to identification of market segments or customer groups that may still find the product attractive.

Correct AnswerverifiedShow Answer

Proctor and Gamble announced that it would sell off or close down up to 100 of its brands. This is an example of which turnaround strategy used by successful companies?

Correct AnswerverifiedShow Answer

The Commerce Bank gains customers by using reverse positioning to structure its offers. It pared down its offers to just four checking accounts.

Correct AnswerverifiedShow Answer

A firm can attain an overall cost leadership position by increasing the management layers in order to reduce overhead costs.

Correct AnswerverifiedShow Answer

An important potential pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become stuck in the middle.

Correct AnswerverifiedShow Answer

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