Chapter 5 Flashcards
A business-level strategy is a strategy designed for a multi-business company that competes across
multiple businesses.
F. A business-level strategy is a strategy designed for a firm or a division of a firm that competes within a
single business.
The primary aim of strategic management at the business level is
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.
B
What does a business-level strategy primarily focus on?
A) Managing company finances
B) Competing within a single business or division
C) Mergers and acquisitions
D) Setting corporate social responsibility goals
B
Why is the concept of competitive advantage central to strategic management?
A) Because it ensures product diversification
B) Because it helps firms outperform competitors and sustain success over time
C) Because it reduces the cost of production
D) Because it focuses on market share
B
What is a key issue in strategic management?
A) Determining company size
B) Identifying why some firms outperform others and sustain competitive advantages
C) Developing a product development roadmap
D) Managing public relations and brand image
B
What is the focus of business-level strategy in terms of competitive advantage?
A) Short-term gains
B) Achieving lasting competitive advantage
C) Focusing only on financial growth
D) Ensuring market saturation
B
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.
F. Michael Porter presented three generic strategies that a firm can use to overcome the five forces and
achieve competitive advantage. The strategies are: overall cost leadership, differentiation, and focus.
Which of the following is NOT one of the three generic strategies identified by Michael Porter?
A) Overall cost leadership
B) Differentiation
C) Focus
D) Product innovation
D
Who presented the three generic strategies to overcome the five forces and achieve competitive advantage?
A) Henry Mintzberg
B) Peter Drucker
C) Michael Porter
D) Clayton Christensen
C
Concentrating solely on one form of competitive advantage generally leads to the highest possible level
of profitability.
F. Observation and research support the notion that firms that identify with one or more of the forms of
competitive advantage outperform those that do not. One study found that businesses combining forms
of competitive advantage (differentiation and overall cost leadership) outperformed those using a single
form.
What is the primary idea supported by observation and research in the statement?
A) Firms that use a single form of competitive advantage outperform those using multiple forms.
B) Firms that identify with one or more forms of competitive advantage outperform those that do not.
C) Firms focusing on cost leadership are the most successful.
D) Differentiation is the only key to success for businesses.
B
According to the study mentioned in the statement, which firms tend to outperform others?
A) Businesses using only differentiation as their competitive advantage.
B) Businesses combining differentiation and cost leadership.
C) Businesses with a focus on overall cost leadership.
D) Businesses that do not focus on competitive advantages.
B
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.
b
What is the primary goal of overall cost leadership?
A) To achieve the highest level of product differentiation.
B) To achieve the lowest cost of operation in an industry.
C) To focus solely on customer service.
D) To offer a diverse range of products at high prices.
B
Which tactic involves constructing large-scale production facilities to maximize efficiency?
A) Cost Reduction Pursuit
B) Tight Cost and Overhead Control
C) Efficient-Scale Facilities
D) Selective Customer Accounts
C
According to the definition, what is a key tactic to ensure continuous cost reduction?
A) Offering a wide range of products at varying price points.
B) Continuously seeking cost reductions through operational experience.
C) Focusing on high-end customer accounts.
D) Minimizing the size of production facilities.
B
What does “tight cost and overhead control” refer to in the context of overall cost leadership?
A) A focus on increasing overhead costs to improve quality.
B) Strict oversight of both costs and overhead to maintain low operational costs.
C) Ignoring overhead costs in favor of production speed.
D) Offering incentives to increase overhead expenses.
B
- Which of the following is NOT a key tactic for overall cost leadership?
A) Focusing on minimizing costs across the value chain.
B) Engaging with all customer accounts, regardless of profitability.
C) Seeking cost reductions through operational experience.
D) Avoiding marginal customer accounts that do not contribute significantly to profits.
B
What does the tactic of “selective customer accounts” involve?
A) Engaging with all potential customers to maximize market share.
B) Avoiding customer accounts that do not contribute significantly to profits.
C) Focusing on the highest-paying customers only.
D) Offering discounts to customers who generate high volumes of sales.
B
In the context of overall cost leadership, which of the following activities is focused on minimizing costs?
A) Research and Development (R&D), service, sales, and advertising.
B) Increasing product features to differentiate from competitors.
C) Offering premium customer service to all customers.
D) Allocating high budgets to marketing and advertising.
A
What does the overall cost leadership strategy focus on across all activities in the value chain?
A) Increasing product features to enhance differentiation.
B) Cost minimization across all activities to reduce overall operational costs.
C) Focusing on premium pricing strategies.
D) Increasing customer satisfaction at all costs.
B
Which of the following is a key feature of the overall cost leadership strategy?
A) Maximizing innovation and differentiation at the cost of efficiency.
B) Using a combination of tactics to achieve the lowest cost in the industry.
C) Focusing on high-end, niche markets with high margins.
D) Expanding production to increase market share regardless of cost.
B
A firm striving for cost leadership will typically spend relatively more on product-related research and
development than on process-related research and development.
F
The experience curve concept suggests that production costs tend to decrease as production increases.
T