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

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Question 1

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Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform

A) at about the same level as firms that achieve either cost or differentiation advantages.
B) higher than firms that achieve either a cost or a differentiation advantage.
C) about the same as firms that are stuck-in-the-middle.
D) lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.

E) None of the above
F) A) and D)

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Question 2

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Southwest Airlines uses an overall cost leadership strategy.This could fail if it

A) cannot maintain parity on differentiation dimensions requested by customers.
B) maintains parity with competitors on low cost.
C) exceeds customer expectations.
D) increases its sales prices while maintaining competitor parity.

E) All of the above
F) None of the above

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Question 3

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Rapid changes in technology,globalization,and actions by rivals cannot erode company advantages.

Competitive advantage can be found in just-in-time manufacturing processes.

In the __________ stage of the industry life cycle,there are many segments,competition is very intense,and the emphasis on process design is high.

The overall value proposition of Walmart makes potential substitute products such as Internet competitors a more viable threat.

Given the attractiveness of premium pricing during the growth stage of the market life cycle,managers should emphasize short-term results to increase profits.

An overall ______ position enables a firm to achieve above-average returns because it protects firms against powerful buyers.

Mature firms tend to have assets that continue to produce significant returns.

A disadvantage of firms that successfully integrate overall cost leadership and a differentiation strategy is that they are relatively easy for competitors to imitate.

A successful differentiation strategy lowers entry barriers because of customer loyalty and the ability of the firm to provide uniqueness in its products and services.

Renault has found a way to generate high profits on low-priced cards by using simple designs that incorporate components from older car designs and a no-discount retail policy.They are using a(n) ______________ strategy.

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

Atlas Door created competitive advantage by reducing the time to receive and process an order and through installing a just-in-time logistics operation.Which of the following is not a reason for their favorable position relative to the five forces of industry competition?

An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost.

Firms may fail to accurately assess sources of revenue and profits in their value chain.This might be a result of an unbiased manager.

The three generic strategies that Michael Porter believes a firm can use to overcome the five forces and achieve competitive advantage include overall price leadership.

Outside the flight experience itself,airlines are generating revenue by charging fees for credit cards,frequent-flyer programs,and access to airport lounges.This serves to

A potential pitfall of a focus strategy is that cost advantages will not change over time.

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?