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Capstone 1 Part 2

100 Questions
Student Quizzes & Trivia

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Questions and Answers
  • 1. 
    Kim's T-shirt factory was expert at providing unique, high-quality, but costly to make shirts. Even though the designs were very nice and the amount of detail increased over time, the high price meant that few customers bought shirts from her and her factory went bankrupt. Kim's factory failed due to
    • A. 

      Inertia.

    • B. 

      Prior strategic commitments.

    • C. 

      The Icarus paradox.

    • D. 

      Lack of distinctive competencies.

    • E. 

      Lack of capabilities.

  • 2. 
    When a firm produces products that customers perceive as having higher utility than those of its rivals, this firm's source of competitive advantage is
    • A. 

      Design.

    • B. 

      Low innovation.

    • C. 

      Superior quality.

    • D. 

      Efficiency.

    • E. 

      Customer responsiveness.

  • 3. 
    Factors that help a company to build and sustain competitive advantage include which of the following?
    • A. 

      Superior efficiency

    • B. 

      Product quality

    • C. 

      Innovation

    • D. 

      Customer responsiveness

    • E. 

      All of the above

  • 4. 
    Efficiency is
    • A. 

      Defined as the time it takes to produce a product.

    • B. 

      Defined as the cost of inputs required to produce a given output.

    • C. 

      Pursued only by cost leaders.

    • D. 

      Measured by looking at a product's price.

    • E. 

      Lower when the output is high-quality.

  • 5. 
    Which primary activity in the value chain is concerned with the design of products and production processes?
    • A. 

      Research and development

    • B. 

      Marketing and sales

    • C. 

      Materials management

    • D. 

      Production

    • E. 

      Company infrastructure

  • 6. 
    The concept of quality applies to
    • A. 

      All products.

    • B. 

      The products consumers believe to be high-quality products.

    • C. 

      Products with a high per-unit cost.

    • D. 

      Custom-made products only.

    • E. 

      Only those products that have been redesigned

  • 7. 
    A company's competitive advantage will not endure for long when that competitive advantage can be
    • A. 

      Quickly or easily duplicated by other companies.

    • B. 

      Protected by patents.

    • C. 

      Protected by significant barriers to imitation.

    • D. 

      Shared with other companies in the industry.

    • E. 

      Shielded by copyrights.

  • 8. 
    The Icarus paradox suggests that
    • A. 

      Companies should stick to a narrowly defined line of products.

    • B. 

      Better-than-average profitability is an elusive goal.

    • C. 

      Companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.

    • D. 

      Companies often pursue too many strategies at once.

    • E. 

      Companies should change strategies before strategies need changing.

  • 9. 
    Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?
    • A. 

      Research and development

    • B. 

      Marketing and sales

    • C. 

      After-sales service and support

    • D. 

      Production

    • E. 

      Human resources

  • 10. 
    A company's competitive advantage is more durable when
    • A. 

      Barriers to imitation are low and there are few capable competitors.

    • B. 

      Barriers to imitation are high and there are many capable competitors.

    • C. 

      Barriers to imitation are high.

    • D. 

      The industry is stable and there are many capable competitors.

    • E. 

      The industry is stable and barriers to imitation are low.

  • 11. 
    Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?
    • A. 

      Research and development

    • B. 

      Marketing and sales

    • C. 

      Human resources

    • D. 

      Production

    • E. 

      After-sales service and support

  • 12. 
    Industry dynamism refers to
    • A. 

      The gradual erosion of a company's customer base over time.

    • B. 

      Shifts in product profitability.

    • C. 

      A rapidly changing industry environment.

    • D. 

      Increasing per-unit costs.

    • E. 

      None of the above.

  • 13. 
    Capabilities refer to a company's
    • A. 

      Tangible resources.

    • B. 

      Intangible resources.

    • C. 

      Skills at coordinating its resources and putting them to productive use.

    • D. 

      Strategy as expressed in the firm's business model.

    • E. 

      Policies.

  • 14. 
    Cost of goods sold is determined by examining which of the following?
    • A. 

      The balance sheet

    • B. 

      Sources and uses of the financial statement

    • C. 

      The cash budget

    • D. 

      The income statement

    • E. 

      The overhead and administrative expense statement

  • 15. 
    The intellectual property of an organization is a(n)
    • A. 

      Tangible resource.

    • B. 

      Tangible competence.

    • C. 

      Tangible capability.

    • D. 

      Intangible capability.

    • E. 

      Intangible resource.

  • 16. 
    The Icarus paradox can be overcome if a company
    • A. 

      Achieves superior innovation.

    • B. 

      Balances its pursuit of distinctive competencies.

    • C. 

      Develops its marketing expertise.

    • D. 

      Pursues a growth strategy.

    • E. 

      Achieves superior quality at a low cost.

  • 17. 
    Which of the following is not a way that companies can avoid failure?
    • A. 

      Benchmarking

    • B. 

      Continuous learning

    • C. 

      Developing distinctive competencies

    • D. 

      Exploiting luck

    • E. 

      Investing in specialized assets

  • 18. 
    __________ is a way to avoid failure.
    • A. 

      Benchmarking

    • B. 

      Gaining access to resources

    • C. 

      Ignoring prior strategic commitments

    • D. 

      Avoiding organizational commitments

    • E. 

      The Icarus paradox

  • 19. 
    Which of the follow support activities in the value chain refers to the companywide context within which all the other value creation activities take place?
    • A. 

      Human resources

    • B. 

      Information systems

    • C. 

      Company infrastructure

    • D. 

      Materials management

    • E. 

      Operations

  • 20. 
    Innovation refers to the act of
    • A. 

      Seeking patent protection for new products.

    • B. 

      Creating new products and processes.

    • C. 

      Repackaging current products to make them more appealing to consumers.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 21. 
    Traditional manufacturing
    • A. 

      Is no longer used.

    • B. 

      Requires a tradeoff between unit costs and product variety.

    • C. 

      Has higher unit costs than does flexible manufacturing.

    • D. 

      Produces a variety of products in high volume.

    • E. 

      Has higher unit costs than does flexible manufacturing and requires a tradeoff between unit costs and product variety.

  • 22. 
    Customer defection rates are
    • A. 

      A reflection of customer loyalty.

    • B. 

      An indication of a company's ability to satisfy its customers.

    • C. 

      Important to consider because of their potential impact on advertising and marketing costs.

    • D. 

      An important consideration because of their effect on sales volumes.

    • E. 

      All of the above.

  • 23. 
    Which of the following recommendations would not be appropriate for a manager who was starting a cross-functional product-development team?
    • A. 

      Let the team members co-manage the team.

    • B. 

      Locate team members in the same physical space.

    • C. 

      Allow the team to develop its own communication and conflict resolution processes.

    • D. 

      Compose the team with members from each of the key functional areas.

    • E. 

      Give the team the task of developing one project all the way from initial idea to market introduction.

  • 24. 
    The resources and capabilities that lead to the formation of distinctive competencies are mostly created at which level of the organization?
    • A. 

      Business

    • B. 

      Functional

    • C. 

      Corporate

    • D. 

      Global

    • E. 

      Industry

  • 25. 
    Quality can best be thought of as
    • A. 

      Product usefulness.

    • B. 

      Quality as reliability and quality as excellence.

    • C. 

      Product innovation.

    • D. 

      A matter for a company's managers to decide for themselves without external input.

    • E. 

      A matter for the marketing function of a company to decide.

  • 26. 
    Which of the following is not correct concerning self-managed teams?
    • A. 

      Increased responsibility and empowerment are seen as motivators.

    • B. 

      Performance bonuses linked to team production and quality targets are seen as motivators.

    • C. 

      Cost savings arise from eliminating supervisors.

    • D. 

      A flatter organizational hierarchy is created.

    • E. 

      All of the above.

  • 27. 
    Formulating a plan to close the quality gap
    • A. 

      Requires a strong customer focus.

    • B. 

      Is the exclusive responsibility of top management.

    • C. 

      Is an example of finding ways to measure quality.

    • D. 

      Is the responsibility of manufacturing.

    • E. 

      Should be done by qualified TQM consultants.

  • 28. 
    Which of the following is a tactical step for getting down the experience curve ahead of competitors?
    • A. 

      Premium pricing to create an image of uniqueness in consumers' minds

    • B. 

      Pursuing a distinctive competence in focused marketing

    • C. 

      Constructing a manufacturing plant of less than minimum efficient scale

    • D. 

      Using aggressive pricing and promotions to expand sales volume as rapidly as possible

    • E. 

      Making the assembly of the product as complex as possible because this results in greater learning effects

  • 29. 
    According to the TQM philosophy, who should be the primary evaluator of product quality?
    • A. 

      Top management

    • B. 

      Manufacturing workers

    • C. 

      Quality consultants

    • D. 

      The federal government

    • E. 

      Customers

  • 30. 
    When a company successfully implements Six Sigma quality, how many units will be defective?
    • A. 

      17% (one-sixth of the units)

    • B. 

      6%

    • C. 

      0.6%

    • D. 

      Three per million

    • E. 

      Three per 10 million

  • 31. 
    Economies of scale may be found
    • A. 

      In several of a company's departments.

    • B. 

      Only in manufacturing operations.

    • C. 

      Principally in research and development activities.

    • D. 

      Primarily in administrative areas of a company.

    • E. 

      None of the above.

  • 32. 
    Quality circles are a valuable tool for TQM because they
    • A. 

      Solicit employee suggestions for improvement.

    • B. 

      Identify and rework defective products.

    • C. 

      Are used by top managers to communicate their intentions to workers.

    • D. 

      Design high-quality products.

    • E. 

      Survey customer attitudes about quality.

  • 33. 
    Self-managing work teams
    • A. 

      Increase per-unit costs of manufactured items.

    • B. 

      Perform all workplace tasks except the making of hiring decisions.

    • C. 

      Increase the cycle time of manufacturing items.

    • D. 

      Require greater task specialization by members of the team.

    • E. 

      Tend to increase productivity.

  • 34. 
    Just-in-time inventory systems
    • A. 

      Are used only by manufacturing firms.

    • B. 

      Are implemented primarily by the manufacturing function.

    • C. 

      Have components arrive at a manufacturing plant just in time to enter the production process.

    • D. 

      Are valuable when there is a labor dispute with a key supplier.

    • E. 

      Always keep extra inventory on hand for emergencies.

  • 35. 
    ______________ refers to unit cost increases associated with a large scale of output.
    • A. 

      Economies of scale

    • B. 

      Learning effects

    • C. 

      Diseconomies of scale

    • D. 

      Flexible manufacturing

    • E. 

      Mass customization

  • 36. 
    The concept of the development funnel suggests that*
    • A. 

      Senior managers should decide whether to accept or reject a project at the end of the idea generation phase.

    • B. 

      Senior managers should decide whether to accept or reject a project at the end of the project refinement phase.

    • C. 

      Cross-functional teams should decide whether to accept or reject a project at the end of the idea generation phase.

    • D. 

      Cross-functional teams should decide whether to accept or reject a project at the end of the project refinement phase.

    • E. 

      Project proposals should be implemented by the marketing function.

  • 37. 
    Effective employee training within an organization
    • A. 

      Results in more productive employees.

    • B. 

      Increases employee efficiency.

    • C. 

      Raises employee skill levels.

    • D. 

      Enables employees to perform tasks faster.

    • E. 

      All of the above.

  • 38. 
    Which of the following is one of the important skills required for effective project management?
    • A. 

      Ability to generate as many good ideas as possible

    • B. 

      Ability to select among competing projects at an early stage of development so that the most promising receive funding and potential costly failures are killed off

    • C. 

      Ability to minimize time to market

    • D. 

      All of the above

    • E. 

      None of the above

  • 39. 
    The experience curve refers to the
    • A. 

      Learning by doing technique.

    • B. 

      Company's overall experience in a particular industry.

    • C. 

      Systematic lowering of the cost structure and unit cost reductions.

    • D. 

      Diseconomies of scale caused by inexperienced workers.

    • E. 

      Increases in unit costs experienced over time.

  • 40. 
    The philosophy underlying TQM includes which of the following?
    • A. 

      Improved quality results in cost decreases.

    • B. 

      Better quality leads to higher market share.

    • C. 

      Better quality increases a company's profitability.

    • D. 

      Management should create an environment in which employees do not fear expressing themselves.

    • E. 

      All of the above.

  • 41. 
    The use of self-managing teams
    • A. 

      Is limited to only very large organizations.

    • B. 

      Requires members to coordinate their own activities and make decisions.

    • C. 

      Typically increases the need for supervisors.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 42. 
    A company's infrastructure includes the company's
    • A. 

      Organization structure, culture, and style of leadership.

    • B. 

      Organization structure and morale level.

    • C. 

      Culture and productivity levels.

    • D. 

      Overall profitability levels.

    • E. 

      Short-run objectives.

  • 43. 
    Managers should not become complacent about efficiency-based cost advantages because
    • A. 

      Neither learning effects nor economics of scale go on forever.

    • B. 

      The experience curve is likely to bottom out at some point.

    • C. 

      Cost advantages gained from experience effects can be made obsolete by the development of new technologies.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 44. 
    Which of the following is not one of the principles commonly found in companies that have successfully embraced the TQM philosophy?
    • A. 

      Building an organizational commitment to quality

    • B. 

      Finding ways to measure quality

    • C. 

      A strong customer focus

    • D. 

      Close supplier relations

    • E. 

      Creating a separate quality department within the firm

  • 45. 
    Instead of completing one task before starting another, Perry's team begins each task as soon as possible, allowing tasks to overlap where possible. Perry's team is using
    • A. 

      A self-managing team.

    • B. 

      A sequential process.

    • C. 

      TQM.

    • D. 

      Customization.

    • E. 

      A partly parallel process.

  • 46. 
    Poor commercialization of new products
    • A. 

      Is the result of inefficient manufacturing technology.

    • B. 

      Occurs when a company markets a product for which there is not enough demand.

    • C. 

      Occurs when a product is not well adapted to a customer's needs.

    • D. 

      Is due to poor quality.

    • E. 

      Is the result of uncertainty.

  • 47. 
    Which of the following statements about customer focus is false?
    • A. 

      It must start at the top of the organization.

    • B. 

      It is a central part of TQM.

    • C. 

      It can be facilitated by soliciting feedback from the customer.

    • D. 

      It requires that all employees see the customer as the focus of their activity.

    • E. 

      It can be achieved by mass customization.

  • 48. 
    Pay for performance tends to
    • A. 

      Increase per-unit costs.

    • B. 

      Decrease employee output.

    • C. 

      Increase employee output.

    • D. 

      Have little effect on employee output.

    • E. 

      Be used only for individual workers, not for teams.

  • 49. 
    Marina's new paint formulation builds on other product innovations to create paint with fewer toxic fumes. Marina's new paint is
    • A. 

      Lower cost.

    • B. 

      Poorly commercialized.

    • C. 

      Efficient.

    • D. 

      A quantum innovation.

    • E. 

      An incremental innovation.

  • 50. 
    Flexible manufacturing technologies allow companies to
    • A. 

      Mass-produce a standardized output at a low delivered cost.

    • B. 

      Avoid plant-level diseconomies of scale.

    • C. 

      Produce small batches of high-quality customized products at a high cost.

    • D. 

      Ride down the experience curve more rapidly than competitors.

    • E. 

      Produce small batches of customized products at a relatively low cost.

  • 51. 
    The experience curve concept
    • A. 

      Is a result of a combination of learning effects and economies of scale.

    • B. 

      Is a result of a combination of learning effects and economies of scale and suggests that unit manufacturing costs decline by a certain amount each time output is doubled.

    • C. 

      Suggests that achieving low costs allows a firm to charge a premium price.

    • D. 

      Is most important for specialized or customized production.

    • E. 

      Suggests that unit manufacturing costs decline by a certain amount each time output is doubled.

  • 52. 
    If a product is to be properly commercialized, there must be integration between
    • A. 

      Research and development (R&D) and marketing.

    • B. 

      R&D and materials management.

    • C. 

      Marketing and materials management.

    • D. 

      Finance and marketing.

    • E. 

      Marketing and after-sales support.

  • 53. 
    Economies of scale are
    • A. 

      Unit cost reductions associated with learning effects.

    • B. 

      Unit cost reductions associated with superior customer responsiveness.

    • C. 

      Realized when output is as large as possible.

    • D. 

      Realized when the point of maximum efficient scale is reached.

    • E. 

      Unit cost reductions associated with a large-scale output.

  • 54. 
    Which of the following is not a product attribute?
    • A. 

      Form

    • B. 

      Features

    • C. 

      Style

    • D. 

      Price

    • E. 

      Reliability

  • 55. 
    Flexible production technology is sometimes referred to as
    • A. 

      Just-in-time manufacturing.

    • B. 

      Quick technology

    • C. 

      Lean production.

    • D. 

      Stable production.

    • E. 

      Unscheduled manufacturing.

  • 56. 
    The failure rate of innovative products is
    • A. 

      High.

    • B. 

      Low.

    • C. 

      Consistent with failure rates in other areas of a company's operations

    • D. 

      Moderate.

    • E. 

      Too difficult to assess.

  • 57. 
    Learning effects are a result of
    • A. 

      Automation.

    • B. 

      Learning by doing.

    • C. 

      Sound product planning tactics.

    • D. 

      Diseconomies of scale.

    • E. 

      Product standardization.

  • 58. 
    The role played by infrastructure leadership in implementing reliability methodologies includes which of the following?
    • A. 

      Providing leadership and commitment quality

    • B. 

      Finding ways to manage quality

    • C. 

      Setting goals and creating incentives

    • D. 

      Soliciting input from employees

    • E. 

      All of the above

  • 59. 
    Quality improvement efforts should focus on the
    • A. 

      Product.

    • B. 

      External environment.

    • C. 

      Customer.

    • D. 

      Material costs.

    • E. 

      Internal operations.

  • 60. 
    Which of the following trends has led to the fragmentation of many consumer markets?
    • A. 

      Self-managing teams

    • B. 

      Project management

    • C. 

      TQM

    • D. 

      Customization

    • E. 

      Increased response time

  • 61. 
    Market segmentation is best described as what type of process?
    • A. 

      Static

    • B. 

      Regressive

    • C. 

      Evolving

    • D. 

      Normative

    • E. 

      Revolving

  • 62. 
    A cost leader could reasonably be expected to reduce costs by developing distinctive competencies in all but
    • A. 

      Manufacturing.

    • B. 

      Materials management.

    • C. 

      Marketing and sales.

    • D. 

      Information technology.

    • E. 

      Learning organizational structure.

  • 63. 
    A firm makes complex telecommunications products, such as cellular telephones. Because this company has a distinctive competency in research and development, it should try to differentiate its product through
    • A. 

      Reliability.

    • B. 

      Innovation.

    • C. 

      Advertising

    • D. 

      Service.

    • E. 

      Low price.

  • 64. 
    Companies are now able to pursue cost leadership and differentiation simultaneously because
    • A. 

      Of the emergence of flexible manufacturing technologies and new information technologies.

    • B. 

      Markets have become more homogeneous.

    • C. 

      Industries have become consolidated.

    • D. 

      Barriers to entry have fallen.

    • E. 

      Government regulation has diminished.

  • 65. 
    Generally speaking, a differentiator chooses to divide its market into
    • A. 

      Many segments and niches.

    • B. 

      Two or three major segments.

    • C. 

      Only segments in which customers will pay premium prices.

    • D. 

      As few segments as possible.

    • E. 

      A and C.

  • 66. 
    A competitor's ability to ____________ a cost leader's methods is a threat to a cost-leadership strategy
    • A. 

      Negate

    • B. 

      Subvert

    • C. 

      Control

    • D. 

      Repudiate

    • E. 

      Imitate

  • 67. 
    A radio station has a distinctive competency in developing new products (shows) and wants to serve the upscale market. Which of the following is the most appropriate generic strategy for this company?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Both cost leadership and differentiation

    • D. 

      Focused low-cost approach

    • E. 

      Focused differentiation approach

  • 68. 
    Product differentiation is often
    • A. 

      Inexpensive.

    • B. 

      Expensive.

    • C. 

      Cheaper than producing a single undifferentiated product.

    • D. 

      Not likely to be successful.

    • E. 

      Unnecessary because customer needs and wants are essentially alike.

  • 69. 
    Compared to a differentiator, the cost leader has the advantage over its rivals of
    • A. 

      Making higher profit margins.

    • B. 

      Being better able to withstand the negative influence of powerful suppliers and buyers.

    • C. 

      Having inimitable production methods.

    • D. 

      Enjoying higher brand loyalty.

    • E. 

      Being preferred by investors.

  • 70. 
    When technological change is low and customer needs are well established and standardized, the most appropriate generic strategy to pursue is
    • A. 

      Market concentration.

    • B. 

      Differentiation.

    • C. 

      Focus.

    • D. 

      Asset reduction.

    • E. 

      Cost leadership.

  • 71. 
    At their simplest level, customer needs can be defined as
    • A. 

      Desires.

    • B. 

      Wants.

    • C. 

      Cravings.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 72. 
    The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is
    • A. 

      Standardized market price.

    • B. 

      Industry life cycle stage.

    • C. 

      Degree of market segmentation.

    • D. 

      Age of the market.

    • E. 

      Market trajectory.

  • 73. 
    Which of the following statements is true?
    • A. 

      Differentiation and cost structure decisions affect one another.

    • B. 

      Differentiation and cost structure decisions do not affect one another.

    • C. 

      Differentiation and cost structure decisions have little effect on a company's profitability.

    • D. 

      Differentiation decisions do not affect a company's profitability.

    • E. 

      Cost structure decisions do not affect a company's profitability.

  • 74. 
    The principal dangers of a cost leadership approach include all of the following except
    • A. 

      Powerful buyers.

    • B. 

      Technological change.

    • C. 

      Imitation of production techniques.

    • D. 

      Changes in consumer tastes.

    • E. 

      Rivals lowering their costs.

  • 75. 
    Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Broad differentiation

    • D. 

      Focused differentiation

    • E. 

      None of the above

  • 76. 
    Which of the following is not a generic competitive strategy?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Focused cost leadership

    • D. 

      Focused differentiation

    • E. 

      Innovation

  • 77. 
    A differentiation strategy is based on creating a product that customers perceive as being
    • A. 

      About the same as other available products.

    • B. 

      Distinct.

    • C. 

      The least costly product in the industry.

    • D. 

      The most costly product in the industry.

    • E. 

      Somewhat faddish in nature.

  • 78. 
    For a cost lead in manufacturing,  ____________ functions are the center of attention.
    • A. 

      Research and development

    • B. 

      Cost accounting

    • C. 

      Sales management

    • D. 

      Materials-management

    • E. 

      Advertising

  • 79. 
    Jordan's ice cream stand offers different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic strategy is Jordan following in the restaurant industry?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Focused cost leadership

    • D. 

      Focused differentiation

    • E. 

      Both cost leadership and differentiation simultaneously

  • 80. 
    Differentiated products should be targeted at multiple market segments (instead of a particular segment) if a company has a distinctive competency in
    • A. 

      Marketing.

    • B. 

      Research and development.

    • C. 

      Accounting.

    • D. 

      Materials management.

    • E. 

      Human resources.

  • 81. 
    Differentiators have higher costs than cost leaders do for all of the following reasons except that they
    • A. 

      Invest more in research and development.

    • B. 

      Invest in materials management techniques.

    • C. 

      Provide a wider range of products.

    • D. 

      Serve more market segments.

    • E. 

      Have larger marketing departments.

  • 82. 
    A shrinking market segment poses the greatest threat to a company pursuing which of the following strategies?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Focused differentiation

    • D. 

      Growth

    • E. 

      Both cost leadership and differentiation simultaneously

  • 83. 
    Which of the following automobile manufacturers have found it difficult to differentiate their cars?
    • A. 

      Lincoln

    • B. 

      Audi

    • C. 

      Acura

    • D. 

      All of the above

    • E. 

      None of the above

  • 84. 
    A large company produces a variety of clothing for different customer groups. This firm is pursuing which of the following strategies?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Both cost and differentiation

    • D. 

      Focus

    • E. 

      Share building

  • 85. 
    Nick is often asked to perform his clown act for birthday parties and school groups, but he offers his most inexpensive services only to children's hospitals. Nick is pursuing which generic business strategy?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Focused cost leadership

    • D. 

      Focused differentiation

    • E. 

      Stuck in the middle

  • 86. 
    Which firm has the greatest probability of achieving a competitive advantage by successfully managing its strategy?
    • A. 

      A steel manufacturer that continues to use large plants instead of new technology to achieve economies of scale

    • B. 

      A retailer that sells a wide range of clothes to the mass market

    • C. 

      A pharmaceutical firm with brand loyalty that decreases administrative costs but continues to invest in research and development

    • D. 

      A large defense contractor that offers an undifferentiated product only to a few market segments

    • E. 

      A jeans manufacturer that keeps its production within the United States rather than moving to less expensive, overseas factories

  • 87. 
    Delta Airlines used to advertise its high-quality air travel service by saying it flew “anywhere, anytime.” What generic strategy is represented by this advertisement?
    • A. 

      Cost leadership

    • B. 

      Differentiation

    • C. 

      Stuck in the middle

    • D. 

      Focused differentiation

    • E. 

      Both cost leadership and differentiation simultaneously

  • 88. 
    Differentiation is least effective when it is based on
    • A. 

      Physical features.

    • B. 

      Service quality.

    • C. 

      An appeal to the customer's psychological needs.

    • D. 

      Reliability.

    • E. 

      Product quality.

  • 89. 
    A focused differentiator has the advantage of
    • A. 

      Charging a premium price because of its low costs.

    • B. 

      Pursuing differentiation and low-cost strategies simultaneously.

    • C. 

      Being close to the customer.

    • D. 

      Superior materials management.

    • E. 

      Protection against price wars.

  • 90. 
    The most expensive competitive strategy to pursue is
    • A. 

      Differentiation.

    • B. 

      Cost leadership

    • C. 

      Focus.

    • D. 

      Growth.

    • E. 

      Hypercompetition.

  • 91. 
    A market segment consists of a group of
    • A. 

      Similar products.

    • B. 

      Customers who have similar needs.

    • C. 

      Companies who produce similar products.

    • D. 

      Diverse products produced by one manufacturer.

    • E. 

      Customers who have diverse needs.

  • 92. 
    Which of the following is not a main approach to market segmentation?
    • A. 

      Marketing a product targeted toward average or typical customers

    • B. 

      Marketing a product targeted toward most or all of the different market segments

    • C. 

      Making customized products to meet the specific needs of customers

    • D. 

      Making products to meet the specific needs of a narrow group of customers

    • E. 

      Making one product aimed toward a general rather than a specific subset of customers

  • 93. 
    A producer of commodity steel should pursue which of the following generic competitive strategies?
    • A. 

      Growth

    • B. 

      Differentiation

    • C. 

      Focus

    • D. 

      Cost leadership

    • E. 

      Profit

  • 94. 
    Market fragmentation has occurred in many industries because of the
    • A. 

      Emergence of flexible technologies.

    • B. 

      Homogenization of markets.

    • C. 

      Implementation of just-in-time inventories.

    • D. 

      Increased strength of large competitors.

    • E. 

      Increased internationalization of business.

  • 95. 
    Cost leadership is most appropriate when
    • A. 

      The power of buyers is low and barriers to entry are high.

    • B. 

      Economies of scale are relatively unimportant in manufacturing products.

    • C. 

      Customers have very different needs and uses for the industry's products.

    • D. 

      Product innovation is the key competitive factor.

    • E. 

      Industry rivalry is high and customers are very sensitive to prices.

  • 96. 
    Mercedes-Benz automobiles are a good example of
    • A. 

      Moderately priced products.

    • B. 

      Imitative products.

    • C. 

      Differentiated products.

    • D. 

      Products that are struggling to differentiate.

    • E. 

      Highly competitive products.

  • 97. 
    When a company produces a wide range of products for different customer groups, it is following a strategy of
    • A. 

      Cost leadership.

    • B. 

      Differentiation.

    • C. 

      Focus.

    • D. 

      Market concentration.

    • E. 

      Share building.

  • 98. 
    When a company services the broad market and has a low degree of product differentiation, it is most likely
    • A. 

      Pursuing a cost-leadership strategy.

    • B. 

      Pursuing a differentiation strategy

    • C. 

      Pursuing a focus strategy.

    • D. 

      Stuck in the middle.

    • E. 

      Pursuing both cost leadership and differentiation.

  • 99. 
    A business model based on differentiation requires a company to
    • A. 

      Make strategic choices that reinforce each other and increase the value of a good or service in the eyes of customers.

    • B. 

      Serve several market segments simultaneously to take full advantage of differentiation.

    • C. 

      Systematically raise its prices at stipulated times.

    • D. 

      Develop a functional organization structure.

    • E. 

      All of the above.

  • 100. 
    A disadvantage of pursuing a cost leadership strategy is that
    • A. 

      Technological change can make production methods obsolete.

    • B. 

      Price wars make it hard to compete with differentiators.

    • C. 

      It costs more than a differentiation strategy because of the necessity of high capital investments

    • D. 

      Powerful buyers are a major threat.

    • E. 

      No quality control exists.