Business Strategy: Differentiation, Cost Leadership, And Blue Oceans

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Questions Bank

What Is Strategy
Strategic Leadership: Managing the Strategy Process
External Analysis: Industry Structure, Competitive Forces, and Strategic Groups
Internal Analysis: Resources, Capabilities, and Core Competencies
Competitive Advantage, Firm Performance, and Business Models
Business Strategy: Differentiation, Cost Leadership, and Blue Oceans
Business Strategy: Innovation, Entrepreneurship, and Platforms
Corporate Strategy: Vertical Integration and Diversification
Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions
Global Strategy: Competing Around the World
Organizational Design: Structure, Culture, and Control
Corporate Governance and Business Ethics

All Questions

Question 1

Free

True/False

Differentiation and cost leadership strategies are only effective in manufacturing industries.

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False

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Question 2

Free

True/False

The goal of the differentiator is to have a smaller value gap than competitors.

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True

False

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Question 3

Free

True/False

The major value drivers that managers have at their disposal include product features, customer service, and complements.

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True

False

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Question 4

Free

True/False

When a firm operates at the minimum efficient scale, there is still opportunity for it to further reduce its cost per unit through economies of scale.

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True

False

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Question 5

Free

True/False

A firm operating on a 70 percent learning curve will achieve lower per-unit costs after doubling its output than a firm operating on an 80 percent learning curve will.

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True

False

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Question 6

True/False

A differentiator will always benefit when products have become commoditized.

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True

False

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Question 7

True/False

A cost leader is the firm most likely to survive a price war.

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True

False

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Question 8

True/False

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.

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True

False

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Question 9

True/False

Differentiators tend to score highly on most competitive elements on a strategy canvas, while cost leaders tend to hover near the bottom of the strategy canvas.

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True

False

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Question 10

True/False

A value curve that zig-zags across the strategy canvas indicates a focused strategy that is likely to achieve a sustainable competitive advantage.

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True

False

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Question 11

Multiple Choice

A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

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business-level strategy

code of ethics

mission statement

functional-level strategy

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Question 12

Multiple Choice

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

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the exit barriers within the industry in which the firm operates

the number of companies operating in the industry in which the firm operates

the intensity of rivalry among existing companies in the firm's chosen industry

the value and the cost position of the firm relative to its competitors

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Question 13

Multiple Choice

A firm's business strategy can lead to a competitive advantage if it allows the firm to

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execute the same activities performed by the rivals in a similar manner.

reduce the value gap.

perform different activities than its rivals.

position itself below the productivity frontier.

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Question 14

Multiple Choice

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

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collective bargaining.

strategic trade-offs.

arbitration.

mediation.

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Question 15

Multiple Choice

Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Beach Grub adopted in this scenario?

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cost-leadership

differentiation

market penetration

product diversification

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Question 16

Multiple Choice

Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Bargain Styles applying?

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cost-leadership

differentiation

niche marketing

product diversification

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Question 17

Multiple Choice

Which of the following examples uses a focused differentiation strategy?

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a tennis pro shop that sells low-quality racquets priced at 150 dollars per racquet

a coffee shop that offers mediocre lattes at a price of five dollars for a small latte

a hotel chain that offers high-quality furnishings and service with room rates of under 75 dollars per night

a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle

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Question 18

Multiple Choice

Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly-qualified team members, Thomas is unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a competitive advantage?

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Offer similar services as competitors but raise prices to increase profits.

Lower prices but continue employing high-paid expert gardeners.

Narrow the scope of competition and focus on unique features such as the use of organic materials.

Maintain prices but replace all the expert employees with less-skilled workers to control costs.

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Question 19

Multiple Choice

Tangles Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Tangles using?

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cost-leadership

differentiation

niche marketing

product diversification

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Question 20

Multiple Choice

Which of the following best describes a strategic trade-off?

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the tension between innovation and keeping manufacturing costs down

the tension between maintaining both high-quality products and service

the tension between value creation and the pressure to keep costs in check

the tension between raising prices and keeping a loyal clientele

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