Chap 005

Chapter 05 - The Five Generic Competitive Strategies

Chapter 05 The Five Generic Competitive Strategies Multiple Choice Questions

 The Concepts of Competitive Competitive Strategy and Competitive Competitive Advantage

1. (p. 133) A company's competitive strategy deals ith A. !anagement's game plan for competing s"ccessf"lly#the speci$c e%orts to please c"stomers& o%ensive and defensive moves to co"nter the mane"vers of rivals& the reactions and responses to hatever maret conditions prevail at the moment and the initiatives "ndertaen to improve the company's maret position (. )hat (.  )hat its strategy ill *e in s"ch f"nctional areas as +,& prod"ction& sales and mareting& distri*"tion& $nance and acco"nting and so on C. ts C.  ts e%orts to change its position on the ind"stry's strategic gro"p map . ts .  ts plans for entering into strategic alliances& "tili/ing mergers or ac"isitions to strengthen its maret position& o"tso"rcing some in-ho"se activities to o"tside specialists and integrating forard or *acard . ts .  ts plans for overcoming the $ve competitive forces

 AACSB: 3 Difculty: Medium Taxonomy: Knowlede

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Chapter 05 - The Five Generic Competitive Strategies

2. (p. 133) The o*3ective of competitive strategy is to A. Contend A.  Contend s"ccessf"lly ith the ind"stry's 5 competitive forces forces B. 4noc the socs o% rival companies *y doing a *etter 3o* of satisfying sa tisfying *"yer needs and preferences preferences C. Get C.  Get the company into the *est strategic gro"p and then dominate it . sta*lish .  sta*lish a competitively competitively poerf"l val"e chain . Gro .  Gro reven"es at a faster ann"al rate than rivals are a*le to gro their reven"es

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

2. (p. 133) The o*3ective of competitive strategy is to A. Contend A.  Contend s"ccessf"lly ith the ind"stry's 5 competitive forces forces B. 4noc the socs o% rival companies *y doing a *etter 3o* of satisfying sa tisfying *"yer needs and preferences preferences C. Get C.  Get the company into the *est strategic gro"p and then dominate it . sta*lish .  sta*lish a competitively competitively poerf"l val"e chain . Gro .  Gro reven"es at a faster ann"al rate than rivals are a*le to gro their reven"es

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

. (p. 133) A company achieves competitive advantage henever A. t A.  t is the acnoledged maret share leader (. t (.  t is the ind"stry's acnoledged technology leader C. t C.  t has greater $nancial reso"rces reso"rces than its rivals . t .  t has a ell-non and ell-regarded *rand name& prefers o%ensive strategies to defensive strategies and has a strong *alance sheet E. t has some type of edge over rivals in attracting c"stomers and coping ith competitive forces

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

6. (p. 133) A company can *e said to have competitive advantage if A. t A.  t is the acnoledged leader in prod"ct "ality (. t (.  t has a di%erent val"e chain than rivals C. t has some type of edge over rivals in attracting c"stomers and coping ith competitive forces . t .  t earns the largest pro$ts of any $rm in the ind"stry . t .  t has more reso"rce strengths strengths than eanesses

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

5-

Chapter 05 - The Five Generic Competitive Strategies

5. (p. 133) )hile there are many ro"tes to competitive advantage& they all involve A. ("ilding A.  ("ilding a *rand name image that *"yers tr"st B. elivering s"perior val"e to *"yers and *"ilding competencies and reso"rce reso"rce strengths in performing val"e chain activities that rivals cannot readily match C. Achieving C.  Achieving loer costs than rivals and *ecoming the ind"stry's sales and maret share leader . Finding .  Finding e%ective and e7cient ays to strengthen the company's competitive assets and to red"ce its competitive lia*ilities . Getting .  Getting in the *est strategic gro"p and dominating it

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

The Five Generic Competitive Strategies Strategies

8. (p. 13$) The *iggest and most important di%erences among the competitive strategies of di%erent companies companies *oil don to A. 9o A.  9o they go a*o"t *"ilding a *rand name image that *"yers tr"st and hether they are a ris-taer or ris-avoider (. The (.  The di%erent ays that companies try to cope ith the $ve competitive forces C. )hether a company's maret target is *road or narro and hether the company is p"rs"ing a competitive advantage lined to lo cost or di%erentiation . The .  The inds of actions companies tae to improve their competitive assets and red"ce their competitive lia*ilities . The .  The relative emphasis they place on o%ensive vers"s defensive strategies

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

:. (p. 13$ % 13&) )hich of the folloing is not one of the $ve generic types of competitive strategy; A. A A.  A lo-cost provider strategy (. A (.  A *road di%erentiatio di%erentiation n strategy C. A C.  A *est-cost provider strategy . A .  A foc"sed lo-cost provider strategy E. A maret share share dominator strategy

 AACSB: 3 Difculty: 'a#y  Taxonomy: Knowlede

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Chapter 05 - The Five Generic Competitive Strategies

oer prices than rival $rms (. Dsing a lo cost?lo price approach to gain the *iggest maret share C. 9igh *"yer sitching costs D. !eaningf"lly loer overall costs than competitors . 9igher "nit sales than rivals

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

11. (p. 13&) 9o val"a*le a lo-cost leader's cost advantage is depends on A. )hether it is easy or ineEpensive for rivals to copy the lo-cost leader's methods or otherise match its lo costs (. 9o easy it is for the lo-cost leader to gain the *iggest maret share C. The aggressiveness ith hich the lo-cost leader p"rs"es converting the cost advantage into the a*sol"te loest possi*le costs . The leader's a*ility to com*ine the cost advantage ith a rep"tation for good "ality . The lo-cost leader's a*ility to *e the ind"stry leader in man"fact"ring innovation so as to eep loering its man"fact"ring costs

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

12. (p. 13&) A lo-cost leader can translate its lo-cost advantage over rivals into s"perior pro$t performance *y A. C"tting its price to levels signi$cantly *elo the prices of rivals B. ither "sing its lo-cost edge to "nderprice competitors and attract price sensitive *"yers in large eno"gh n"m*ers to increase total pro$ts or refraining from price-c"tting and "sing the lo-cost advantage to earn a *igger pro$t margin on each "nit sold C. Going all o"t to "se its cost advantage to capt"re a dominant share of the maret . Spending heavily on advertising to promote its cost advantage and the fact that it charges the loest prices in the ind"stry  it can then "se this rep"tation for lo prices to *"ild very strong c"stomer loyalty& gain repeat sales year after year and earn s"stained pro$ts over the long-term . ="tprod"cing rivals and th"s having more "nits availa*le to sell

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

1. (p. 13) The ma3or aven"es for achieving a cost advantage over rivals incl"de A. +evamping the $rm's val"e chain to eliminate or *ypass some costprod"cing activities and?or o"t-managing rivals in the e7ciency ith hich val"e chain activities are performed (. 9aving a management team that is highly silled in c"tting costs C. (eing a $rst-mover in adopting the latest state-of-the-art technologies& especially those relating to lo-cost man"fact"re . ="tso"rcing high-cost activities to cost-e7cient vendors . @aying loer ages and salaries than rivals

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

16. (p. 1$3) A competitive strategy of striving to *e the lo-cost provider is partic"larly attractive hen A. ("yers are not very *rand-conscio"s (. !ost rivals are trying to *e *est-cost providers C. There are many ays to achieve prod"ct di%erentiation that have val"e to *"yers D. ("yers are large and have signi$cant poer to *argain don prices *"yers "se the prod"ct in m"ch the same ays and *"yers have lo sitching costs . !ost rivals are p"rs"ing foc"sed lo-cost or foc"sed di%erentiation strategies

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

15. (p. 133) )hich of the folloing is not an action that a company can tae to do a *etter 3o* than rivals of performing val"e chain activities more cost-e%ectively; A. Striving to capt"re all availa*le economies of scale and learning?eEperience c"rve e%ects (. Trying to operate facilities at f"ll capacity C. Adopting la*or-saving operating methods . mproving s"pply chain e7ciency E. ="tso"rcing all prod"ction-related activities

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

18. (p. 13 % 1$*) )hich of the folloing is not one of the ays that a company can achieve a cost advantage *y revamping its val"e chain; A. C"tting o"t distri*"tors and dealers *y selling direct to c"stomers (. +eplacing certain val"e chain activities ith faster and cheaper online technology C. ncreasing prod"ction capacity and then striving hard to operate at f"ll capacity . +elocating facilities so as to c"r* the need for shipping and handling activities . Streamlining operations *y eliminating lo val"e-added or "nnecessary or steps and activities

 AACSB: 3 Difculty: Medium Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

1:. (p. 13) To s"cceed ith a lo-cost provider strategy& company managers have to A. @"rs"e *acard or forard integration to deto"r s"ppliers or *"yers ith considera*le *argaining poer and leverage (. !ove the performance of most all val"e chain activities to lo-age co"ntries C. Sell direct to "sers of their prod"ct or service and eliminate "se of holesale and retail intermediaries D. o to things 1H do a *etter 3o* than rivals of p"rs"ing cost savings thro"gho"t the val"e chain and 2H *e proactive in revamping the $rm's overall val"e chain to eliminate lo val"e-added activities and *ypass BnonessentialB cost-prod"cing activities . ="tso"rce the *iggest ma3ority of val"e chain activities

 AACSB: 3 Difculty: 'a#y  Taxonomy: Comp!e"en#ion

1ead to vigoro"s price competition

 AACSB: 3 Difculty: 'a#y  Taxonomy: Comp!e"en#ion

:. (p. 1$&) The most appealing approaches to di%erentiation are A. Those that are also *eing p"rs"ed *y other rivals ith di%erentiation strategies (. Those that are the most costly to incorporate *eca"se eEpensive attri*"tes are perceived *y *"yers as more val"a*le and orth paying more forH C. Those that can *e made even more attractive to *"yers via clever advertising . Generally related to Iavor and taste or sophisticated "se of nternet technology applications E. Those that are hard or eEpensive for rivals to d"plicate and that also have considera*le *"yer appeal

 AACSB: 3 Difculty: ,a!d Taxonomy: Comp!e"en#ion

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Chapter 05 - The Five Generic Competitive Strategies

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