Principles Of Management! Exam

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  • 1/42 Questions

    Focus strategy can be defined as:

    • the strategy of merging with an established company in order to gain monopoly over the market.
    • the strategy a company uses when it decides to allocate the company resources equally among all the marketing segments
    • the strategy a company uses when it decides to serve a limited number of segments, or just one segment of the market.
    • the strategy a company uses when it decides to ignore the different needs of different market segments, and produce one standardized product for all the customers.
    • the strategy of closing down one or more business units in order to minimize the losses.
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About This Quiz

The 'Principles of Management! Exam' assesses understanding of strategic management concepts. It covers focus strategies, competitive strategies, product differentiation, and market segmentation, essential for business management and strategic planning skills.

Principles Of Management! Exam - Quiz

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  • 2. 

    Which of the following generic competitive strategies is a producer of commodity steel most likely to pursue?

    • Exclusive dealing

    • Broad differentiation

    • Focus differentiation

    • Broad low-cost

    • Horizontal integration

    Correct Answer
    A. Broad low-cost
    Explanation
    A producer of commodity steel is most likely to pursue the broad low-cost generic competitive strategy. This strategy focuses on achieving the lowest possible cost of production in order to offer products at a competitive price. In the case of commodity steel, where the product is standardized and there is intense price competition, a producer would aim to minimize costs through economies of scale, efficient production processes, and cost-cutting measures. This allows them to offer steel at a lower price compared to competitors, attracting a wider customer base and gaining a competitive advantage in the market.

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  • 3. 

    Companies that successfully differentiate a product often charge _____ prices for them.

    • premium

    • exorbitant

    • low

    • average

    • escalating

    Correct Answer
    A. premium
    Explanation
    Companies that successfully differentiate a product often charge premium prices for them. This means that they charge higher prices compared to their competitors because their product offers unique features, superior quality, or a brand image that sets it apart from other similar products in the market. This pricing strategy allows companies to position their product as a luxury or high-end option, appealing to customers who are willing to pay more for the perceived value and exclusivity that comes with it.

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  • 4. 

     A differentiated product is a product that:

    • has a greater resale value than rival products.

    • provides greater reliability than rival products.

    • is offered free of cost on purchase of a company's standard product.

    • always costs more than rival products.

    • always costs less than rival products.

    Correct Answer
    A. provides greater reliability than rival products.
    Explanation
    A differentiated product is a product that provides greater reliability than rival products. This means that the product is more dependable and trustworthy compared to similar products offered by competitors. The emphasis is on the product's reliability and not its resale value, cost, or any other factor.

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  • 5. 

    Cool Looks produces a variety of clothing for various customer groups. Which of the following strategies is the firm most likely pursuing?

    • Cost leadership

    • Differentiation

    • Product substitution

    • Focus

    • Share building

    Correct Answer
    A. Differentiation
    Explanation
    Cool Looks is most likely pursuing a differentiation strategy. This means that the firm is focusing on creating unique and distinctive clothing products that set them apart from their competitors. By offering a variety of clothing options for different customer groups, Cool Looks is able to cater to the specific needs and preferences of each group. This strategy allows the firm to differentiate themselves in the market and attract customers who are looking for unique and high-quality clothing options.

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  • 6. 

    When a company produces a wide range of products for various customer groups, it is following a _____ strategy.

    • cost leadership

    • differentiation

    • customer retention

    • market concentration

    • share building

    Correct Answer
    A. differentiation
    Explanation
    When a company produces a wide range of products for various customer groups, it is following a differentiation strategy. This means that the company is focusing on creating unique and distinct products that stand out from competitors in order to attract and retain customers. By offering a diverse range of products that cater to different customer needs and preferences, the company is able to differentiate itself in the market and gain a competitive advantage. This strategy often involves investing in research and development, innovation, and marketing to create and promote these differentiated products.

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  • 7. 

    Compared to a differentiator, the company that follows a low-cost strategy:

    • distinguishes its products from those of rivals by offering something that they find hard to match.

    • absorbs cost increases by powerful suppliers while keeping to their lower pricing.

    • allows the company to charge a premium price for its good or service.

    • uses perceived superior value to generate growth in demand among customers.

    • creates entry barriers for rivals with greater brand loyalty to the specific products offered.

    Correct Answer
    A. absorbs cost increases by powerful suppliers while keeping to their lower pricing.
    Explanation
    The correct answer suggests that a company following a low-cost strategy is able to absorb cost increases by powerful suppliers while still maintaining their lower pricing. This means that the company is able to negotiate with suppliers and find ways to keep their costs low, even if the suppliers try to increase their prices. This allows the company to offer competitive pricing to customers and maintain their low-cost strategy.

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  • 8. 

    A differentiation strategy is based on creating a product that customers perceive as being:

    • the same as other available products.

    • distinct from other available products.

    • the least costly product in the industry.

    • the most costly product in the industry.

    • cheaper, but inferior to the available products.

    Correct Answer
    A. distinct from other available products.
    Explanation
    A differentiation strategy focuses on creating a product that stands out and is unique compared to other available products. This means that customers perceive the product as being distinct and different from its competitors. By offering unique features, benefits, or attributes, the company can attract customers who are looking for something different and are willing to pay a premium for it. This strategy aims to create a competitive advantage by positioning the product as unique and superior in the market.

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  • 9. 

    When a company recognizes that the needs of one market segment is not the same as another and accordingly customizes its product offerings, it is said to be pursuing:

    • stuck-in-the-middle strategy.

    • rapid-growth strategy.

    • differentiation strategy.

    • focus strategy.

    • low-cost strategy.

    Correct Answer
    A. differentiation strategy.
    Explanation
    When a company recognizes that the needs of one market segment is not the same as another and accordingly customizes its product offerings, it is pursuing a differentiation strategy. This strategy involves creating unique and distinctive products or services that are perceived as valuable by customers in order to gain a competitive advantage. By tailoring their offerings to specific market segments, companies can meet the unique needs and preferences of different customer groups, which can lead to increased customer loyalty and higher profitability.

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  • 10. 

    A market segment consists of a group of:

    • similar products.

    • customers who have similar needs.

    • products that are considered obsolete.

    • diverse products produced by the same manufacturer.

    • customers who have diverse needs.

    Correct Answer
    A. customers who have similar needs.
    Explanation
    A market segment consists of a group of customers who have similar needs. This means that the customers within a market segment share common characteristics and preferences, and therefore have similar requirements for a particular product or service. By identifying and targeting specific market segments, businesses can tailor their marketing strategies and offerings to better meet the needs of these customers, resulting in more effective marketing and higher customer satisfaction.

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  • 11. 

     A segmentation strategy requires that a company:

    • standardize its products.

    • offer its products at low costs.

    • customize its products.

    • produce one basic offering.

    • attain high economies of scale by achieving a high volume of sales.

    Correct Answer
    A. customize its products.
    Explanation
    A segmentation strategy requires a company to customize its products in order to meet the specific needs and preferences of different market segments. This involves adapting the product features, design, packaging, pricing, and marketing messages to target different customer segments effectively. By customizing its products, a company can better cater to the diverse requirements of different market segments and gain a competitive advantage by providing tailored solutions to customers. This approach helps in attracting and retaining customers, increasing customer satisfaction, and driving sales growth.

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  • 12. 

    Which of the following is NOT a main approach to market segmentation?

    • Marketing a product targeted toward average or typical customers

    • Marketing a product to a group of people who are more likely to purchase it

    • Making customized products to suit the unique requirements of customers

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

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

    Correct Answer
    A. Making one product aimed toward a general, rather than a specific subset of customers
    Explanation
    The correct answer is making one product aimed toward a general, rather than a specific subset of customers. This option does not align with the main approaches to market segmentation, which involve targeting specific groups of customers based on their characteristics, needs, or preferences. The other options all involve some form of segmentation, such as targeting average customers, a group more likely to purchase the product, customizing products for unique requirements, or meeting the specific needs of a narrow group of customers.

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  • 13. 

    Differentiation allows a company to:

    • respond to demands of deep price demands from powerful buyers and still make money.

    • lower its cost structure.

    • charge a premium price for its good or service.

    • charge low prices and still make profits.

    • initiate a price war in order to grow volume and drive its weaker rivals out of the industry.

    Correct Answer
    A. charge a premium price for its good or service.
    Explanation
    Differentiation allows a company to charge a premium price for its good or service. This means that the company is able to differentiate its product or service from competitors in a way that customers perceive it as unique or superior, thus justifying a higher price. By offering unique features, superior quality, or exceptional customer service, the company can create a perception of value that allows it to charge a higher price and still attract customers. This strategy can be effective in capturing a niche market or targeting customers who are willing to pay more for a differentiated product.

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  • 14. 

    The main difference between companies following a broad low-cost strategy and those following a focus low-cost strategy is in the:

    • standardized market price.

    • industry life cycle stage.

    • degree of market segmentation.

    • age of the market.

    • market trajectory.

    Correct Answer
    A. degree of market segmentation.
    Explanation
    The main difference between companies following a broad low-cost strategy and those following a focus low-cost strategy is the degree of market segmentation. A company following a broad low-cost strategy targets a wide range of customers and offers a low-cost product or service to the mass market. On the other hand, a company following a focus low-cost strategy narrows down its target market and focuses on serving a specific segment of customers with a low-cost offering. This allows the company to tailor its products or services to meet the specific needs and preferences of the targeted segment.

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  • 15. 

    A company that follows the _____ strategy customizes its offering to a particular niche in order to outsell its rivals.

    • focused differentiation

    • broad low-cost

    • market standardization

    • rapid growth

    • stuck in the middle

    Correct Answer
    A. focused differentiation
    Explanation
    A company that follows the focused differentiation strategy customizes its offering to a particular niche in order to outsell its rivals. This means that the company focuses on a specific target market and offers unique and specialized products or services to differentiate itself from competitors. By doing so, the company is able to attract customers who value the unique features or benefits of its offerings, leading to increased sales and a competitive advantage over rivals. This strategy is effective in capturing the loyalty of niche customers and can lead to higher profitability for the company.

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  • 16. 

    Production of a large product variety without a large cost penalty is known as:

    • market concentration.

    • market segmentation.

    • focused differentiation.

    • mass production.

    • mass customization.

    Correct Answer
    A. mass customization.
    Explanation
    Mass customization refers to the ability to produce a large variety of products without incurring a large cost penalty. It combines the benefits of mass production (efficiency and cost-effectiveness) with the benefits of customization (meeting individual customer needs and preferences). By using flexible manufacturing systems and advanced technology, companies can offer a wide range of product options while still maintaining efficient production processes. This allows them to cater to the diverse preferences of customers without sacrificing profitability.

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  • 17. 

    When a company offers a wide variety of products at lower prices than its rivals, it is most likely:

    • pursuing a low-cost strategy.

    • pursuing a differentiation strategy.

    • pursuing a focus strategy.

    • pursuing an exit strategy.

    • pursuing a divestment strategy.

    Correct Answer
    A. pursuing a low-cost strategy.
    Explanation
    When a company offers a wide variety of products at lower prices than its rivals, it is most likely pursuing a low-cost strategy. This means that the company aims to minimize its costs in order to offer products at lower prices than its competitors. By doing so, the company can attract price-sensitive customers and gain a competitive advantage in the market. This strategy is often associated with high volume sales and economies of scale, allowing the company to achieve profitability through a large customer base.

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  • 18. 

    A focused differentiator has the advantage of:

    • selling on non-price factors, such as design or customer service.

    • producing a large product variety without a large cost penalty.

    • producing a basic offering that is relatively inexpensive to produce and deliver.

    • being able to respond to demands for deep price discounts.

    • being able to initiate a price war in order to grow volume and drive its weaker rivals out of the industry.

    Correct Answer
    A. selling on non-price factors, such as design or customer service.
    Explanation
    A focused differentiator has the advantage of selling on non-price factors, such as design or customer service. This means that the company can differentiate itself from competitors by offering unique and high-quality products or by providing exceptional customer service. By focusing on these non-price factors, the company can attract customers who are willing to pay a premium for these added benefits, allowing the company to maintain higher profit margins. This strategy also helps to build customer loyalty and differentiate the company from competitors who may be competing primarily on price.

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  • 19. 

    Lucy’s Swimwear Boutique offers swimwear that is targeted at affluent people who can afford to buy expensive, handmade swimsuits. Which of the following approaches to market segmentation is Lucy’s Swimwear Boutique using?

    • Broad differentiation strategy

    • Low market segmentation

    • Medium market segmentation strategy

    • Broad high-cost strategy

    • Focus differentiation strategy

    Correct Answer
    A. Focus differentiation strategy
    Explanation
    Lucy's Swimwear Boutique is using a focus differentiation strategy. This means that they are targeting a specific market segment, in this case, affluent people who can afford expensive, handmade swimsuits. By focusing on this specific group, Lucy's Swimwear Boutique is able to differentiate themselves from competitors and offer a unique product that meets the needs and preferences of this target market. This strategy allows them to charge higher prices and cater to a niche market.

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  • 20. 

    At The Luxury Hotel in Miami, Florida, three hotel employees serve the needs of each guest. In every room, a guest can summon a chef, a maid, or a valet by pressing a button at his/her bedside. Which generic business-level strategy is The Luxury Hotel utilizing?

    • Cost leadership

    • Differentiation

    • Vertical integration

    • Razor and blade

    • Brand loyalty

    Correct Answer
    A. Differentiation
    Explanation
    The Luxury Hotel is utilizing the differentiation generic business-level strategy. By offering the unique service of summoning a chef, maid, or valet at the guest's bedside, they are differentiating themselves from other hotels in the market. This unique feature sets them apart and provides a competitive advantage by offering a higher level of personalized service to their guests.

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  • 21. 

    The advantage that focused companies have over their broad market rivals is that they:

    • can sells on non-price factors, such as design or customer service.

    • can respond to demands for deep price discounts.

    • sell fewer products in bulk to outsell their rivals.

    • can initiate a price war in order to grow volume and drive its weaker rivals out of the industry.

    • can absorb cost increases that may be passed on downstream by powerful suppliers.

    Correct Answer
    A. sell fewer products in bulk to outsell their rivals.
    Explanation
    Focused companies have an advantage over their broad market rivals because they can sell fewer products in bulk to outsell their rivals. This means that they can target a specific niche market and tailor their products or services to meet the specific needs and preferences of that market. By doing so, they can differentiate themselves from their competitors and attract customers who value the unique offerings of the focused company. This allows them to outsell their rivals and gain a competitive edge in the industry.

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  • 22. 

    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?

    • Broad low-cost

    • Broad differentiation

    • Vertical integration

    • Right-time marketing

    • Rapid growth

    Correct Answer
    A. Broad differentiation
    Explanation
    The advertisement of flying "anywhere, anytime" suggests that Delta Airlines is positioning itself as a provider of high-quality air travel service that is accessible to a wide range of customers. This aligns with the strategy of broad differentiation, as the airline is differentiating itself from competitors by offering a unique and diverse range of destinations and flight times. This strategy allows Delta Airlines to attract a larger customer base and command a premium price for its differentiated service.

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  • 23. 

    A company pursuing a focus strategy:

    • attempts to serve all market segments.

    • concentrates on building market share in one market segment.

    • typically has more resources at its disposal than a differentiator does.

    • has a greater impact on costs and revenues.

    • produce different offerings for different segments.

    Correct Answer
    A. concentrates on building market share in one market segment.
    Explanation
    A company pursuing a focus strategy concentrates on building market share in one market segment. This means that the company focuses its efforts and resources on serving a specific niche or target market. By doing so, the company can tailor its products or services to meet the specific needs and preferences of that market segment, allowing it to gain a competitive advantage and attract loyal customers. This strategy allows the company to become a specialist in that particular market segment, rather than attempting to serve all market segments.

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  • 24. 

     Which of the following statements is true of differentiation and cost structure?

    • Differentiation and cost structure decisions affect one another.

    • Differentiation and cost structure decisions do not affect one another.

    • Companies that focus on the higher-value end of the market have a lower cost structure.

    • Differentiation decisions do not affect a company's profitability.

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

    Correct Answer
    A. Differentiation and cost structure decisions affect one another.
    Explanation
    Differentiation and cost structure decisions affect one another because the level of differentiation a company chooses will impact its cost structure. When a company decides to differentiate its products or services, it often incurs additional costs to create and maintain that differentiation. These costs can include research and development, marketing, and customer service. On the other hand, a company that focuses on a low-cost strategy may have a different cost structure that allows them to offer lower prices to customers. Therefore, the decisions made regarding differentiation and cost structure are interconnected and can influence each other.

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  • 25. 

     Nick, a professional magician, is often invited to perform magic tricks at birthday parties and other social gatherings from across the country. However, he offers his services only to clients who stay in the same city as him. He is also known to charge less than other magicians in the city. Nick is pursuing which generic business strategy?

    • Improved services

    • Right-time marketing

    • Focused low-cost

    • Broad low-cost

    • Deterrence strategy

    Correct Answer
    A. Focused low-cost
    Explanation
    Nick is pursuing a focused low-cost strategy. He focuses on a specific target market (clients in the same city) and offers his services at a lower cost compared to other magicians in the city. This allows him to differentiate himself from competitors and attract customers who are looking for affordable magic tricks.

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  • 26. 

    Yankee Candle Company offers customers candles that burn for 50-60 hours, much longer than most department store candle brands. Therefore, customers are willing to pay a higher price for these candles. Which of the following strategies is Yankee Candle Company following?

    • Cost leadership

    • Rapid growth

    • Market segmentation

    • Differentiation

    • Stuck in the middle

    Correct Answer
    A. Differentiation
    Explanation
    The correct answer is "Differentiation." Yankee Candle Company is differentiating itself from other candle brands by offering a longer burning time for their candles. This unique feature sets them apart from their competitors and allows them to charge a higher price. By focusing on this differentiation strategy, Yankee Candle Company is able to attract customers who are willing to pay more for a longer-lasting candle.

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  • 27. 

     Lilly’s Beauty Company sells haircare products such as shampoo, conditioner, and hairspray. The company does not sell new or customized products in order to meet the specific needs of certain groups of people. Which of the following approaches is illustrated in this scenario?

    • Standardization strategy

    • Focus strategy

    • Medium market segmentation

    • High market segmentation

    • Focused market segmentation

    Correct Answer
    A. Standardization strategy
    Explanation
    The correct answer is "Standardization strategy". This is because Lilly's Beauty Company does not sell new or customized products, indicating that they have a standardized approach to their product offerings. They sell haircare products such as shampoo, conditioner, and hairspray, which are likely designed to appeal to a broad market rather than specific groups of people. This suggests that they focus on offering a standardized range of products to a wide customer base.

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  • 28. 

    A company that follows a low-cost strategy could reasonably be expected to reduce costs by:

    • increasing the number of business processes.

    • adopting lean production and flexible manufacturing technologies.

    • implementing first-in-first-out inventory control systems.

    • taking steps to increase customer churn.

    • abandoning economies of scale and learning effects.

    Correct Answer
    A. adopting lean production and flexible manufacturing technologies.
    Explanation
    A company that follows a low-cost strategy aims to reduce costs in order to offer products or services at a lower price than competitors. Adopting lean production and flexible manufacturing technologies can help achieve this goal by improving efficiency, reducing waste, and increasing productivity. Lean production focuses on eliminating non-value-added activities and streamlining processes, while flexible manufacturing technologies allow for quicker and more cost-effective production adjustments. By implementing these strategies, the company can lower production costs and ultimately offer products at a lower price.

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  • 29. 

    When a company targets a certain segment or niche, and customizes its offering to the needs of that particular segment through the addition of features and functions, the company is pursuing a _____ strategy.

    • broad low-cost

    • broad differentiation

    • product substitution

    • focus low-cost

    • focus differentiation

    Correct Answer
    A. focus differentiation
    Explanation
    When a company targets a certain segment or niche and customizes its offering to the needs of that particular segment through the addition of features and functions, it is pursuing a focus differentiation strategy. This strategy involves focusing on a specific market segment and differentiating the company's products or services to meet the unique needs and preferences of that segment. By doing so, the company can create a competitive advantage and attract customers who are willing to pay a premium for the specialized offering.

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  • 30. 

     Which of the following generic business-level strategies is based on the intent to lower costs so that a company can lower prices and still make a profit?

    • Broad low-cost strategy

    • Price differentiation strategy

    • Broad differentiation strategy

    • Focused differentiation strategy

    • Focused low-cost strategy

    Correct Answer
    A. Broad low-cost strategy
    Explanation
    The broad low-cost strategy is based on the intent to lower costs so that a company can lower prices and still make a profit. This strategy focuses on achieving a competitive advantage by being the lowest-cost producer in the industry while maintaining a broad target market. By minimizing costs, the company can offer products or services at lower prices than its competitors, attracting price-sensitive customers and capturing a larger market share. This strategy requires efficient operations, economies of scale, and effective cost management to achieve cost leadership and profitability.

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  • 31. 

    Which of the following is NOT a generic business-level strategy?

    • Broad differentiation strategy

    • Broad low-cost strategy

    • Focused low-cost strategy

    • Focused differentiation strategy

    • Focused innovation strategy

    Correct Answer
    A. Focused innovation strategy
    Explanation
    The correct answer is "Focused innovation strategy" because it is not a generic business-level strategy. The other options, such as broad differentiation strategy, broad low-cost strategy, focused low-cost strategy, and focused differentiation strategy, are all examples of generic business-level strategies.

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  • 32. 

    Jordan's Ice Creams is strategically located near a university. After realizing that most of its customers, who are mostly students, prefer a wide range of flavors, it started offering different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic strategy is Jordan pursuing?

    • Broad low-cost strategy

    • Broad differentiation strategy

    • Focused low-cost strategy

    • Focused differentiation strategy

    • Product substitution strategy

    Correct Answer
    A. Focused differentiation strategy
    Explanation
    Jordan's Ice Creams is pursuing a focused differentiation strategy. This is evident from the fact that they have strategically located their shop near a university, targeting a specific customer segment - students. They have also recognized the preference of their customers for a wide range of flavors and have started offering customized products with different combinations of premium flavors, cones, and toppings. By focusing on this specific customer segment and offering unique and extravagant products, Jordan's Ice Creams is differentiating itself from competitors and creating a niche market for themselves.

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  • 33. 

    A low-cost position is most appropriate when:

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

    • economies of scale are relatively unimportant in manufacturing products.

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

    • product innovation is the key competitive factor.

    • industry rivalry is high and customers are very sensitive to prices.

    Correct Answer
    A. industry rivalry is high and customers are very sensitive to prices.
    Explanation
    A low-cost position is most appropriate when industry rivalry is high and customers are very sensitive to prices. In a highly competitive industry with high rivalry, companies need to focus on cost reduction in order to stay competitive. Additionally, if customers are price-sensitive, offering a low-cost product can attract more customers and increase market share. By offering competitive prices, companies can gain a competitive advantage and attract price-sensitive customers, leading to increased sales and profitability.

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  • 34. 

     In which of the following situations is a differentiation strategy used?

    • The industry is fragmented into customer groups based on needs.

    • Customer needs are primarily satisfied by the price of the product.

    • A company's cost structure needs to be reduced.

    • There is a demand for deep price discounts from powerful buyers.

    • The industry is not allowed to charge a premium price for its products.

    Correct Answer
    A. The industry is fragmented into customer groups based on needs.
    Explanation
    A differentiation strategy is used when the industry is fragmented into customer groups based on needs. This means that different customer segments have different preferences and requirements, and the company aims to target and serve each segment with unique products or services that meet their specific needs. By doing so, the company can differentiate itself from competitors and create a competitive advantage in the market.

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  • 35. 

    A disadvantage of pursuing a low-cost strategy is that:

    • it makes it difficult for firms to customize their product offerings .

    • price wars make it hard to compete with differentiators.

    • it costs more than a differentiation strategy because of the necessity of high capital investments.

    • powerful buyers are a major threat.

    • it reduces customer retention.

    Correct Answer
    A. it makes it difficult for firms to customize their product offerings .
    Explanation
    A low-cost strategy focuses on reducing costs and offering products at a lower price compared to competitors. However, this strategy often limits the ability of firms to customize their product offerings. Customization requires additional resources and investments, which can increase costs and undermine the low-cost advantage. Therefore, pursuing a low-cost strategy can make it difficult for firms to meet the unique needs and preferences of individual customers, potentially leading to a loss of market share.

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  • 36. 

     Functional strategies to improve differentiation should include:

    • product offerings designed to be can be produced and delivered at as low a cost as possible

    • standardization of the product offering and marketing mix to different market segments.

    • hiring and employee development strategies designed to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world.

    • initiation of a price war in order to grow volume and drive its weaker rivals out of the industry.

    • products that have lower prices to allow a company to erect an economic moat around its business that keeps higher-cost rivals out.

    Correct Answer
    A. hiring and employee development strategies designed to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world.
    Explanation
    This answer is correct because hiring and employee development strategies that align with the company's desired image can help improve differentiation. When employees act in a manner consistent with the company's image, it enhances the brand perception and creates a unique value proposition for customers. This can differentiate the company from its competitors and attract customers who resonate with the company's values and image.

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  • 37. 

    Which of the following is NOT a principal danger of a low-cost position approach?

    • Powerful buyers

    • Technological change

    • Imitation of production techniques

    • Changes in consumer tastes

    • Rivals lowering their costs

    Correct Answer
    A. Powerful buyers
    Explanation
    The principal danger of a low-cost position approach is that rivals may lower their costs, which could potentially undercut the company's low-cost advantage. Powerful buyers, technological change, imitation of production techniques, and changes in consumer tastes are all potential risks and challenges that a company may face when pursuing a low-cost position approach.

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  • 38. 

    A company pursuing a low-cost strategy:

    • Improves non-price factors such as design and customer service

    • Produces a basic offering to reduce cost structures

    • Keeps advertising expenses at a maximum

    • Relies on patent protections to keep costs low

    • Customizes marketing mix to different market segments

    Correct Answer
    A. Produces a basic offering to reduce cost structures
    Explanation
    A company pursuing a low-cost strategy aims to reduce its cost structures by producing a basic offering. This means that the company focuses on providing a simple and cost-effective product or service without any unnecessary features or frills. By doing so, the company can minimize production and operational costs, allowing them to offer their products at a lower price compared to competitors. This strategy is often employed by companies that target price-sensitive customers or operate in highly competitive markets.

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  • 39. 

     Which of the following allows a company to lower cost through functional strategy and organization?

    • Implementing just-in-time inventory control systems

    • Customizing the product offering and marketing mix to different market segments

    • Focusing marketing efforts on brand building and perceived differentiation from rivals

    • Designing strategies to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world

    • Adopting rigid manufacturing technologies

    Correct Answer
    A. Implementing just-in-time inventory control systems
    Explanation
    Implementing just-in-time inventory control systems allows a company to lower costs through functional strategy and organization. Just-in-time inventory control systems involve holding minimal inventory levels and only ordering or producing items when they are needed. This eliminates the need for large storage spaces and reduces the risk of holding excess inventory that may become obsolete or spoil. By implementing this system, a company can reduce inventory carrying costs, minimize waste, and improve operational efficiency, ultimately leading to cost savings.

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  • 40. 

    Info Tech, Inc. makes complex telecommunications products, such as cellular telephones. Since this company has a distinctive competency in research and development, it should try to differentiate its product through:

    • reliability.

    • innovation.

    • advertising.

    • service.

    • low pricing.

    Correct Answer
    A. innovation.
    Explanation
    Given that Info Tech, Inc. has a distinctive competency in research and development, it suggests that the company has a strong capability to innovate and come up with new and unique products. Therefore, to differentiate its products from competitors, Info Tech, Inc. should focus on innovation, as it aligns with its core competency and can help the company stand out in the market.

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  • 41. 

    The term value innovation is used to describe:

    • the way a company decides to group customers based on important differences in their needs to gain a competitive advantage.

    • a business’s overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings.

    • what happens when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible.

    • what happens when a company decides to ignore different segments, and produce a standardized product for the average consumer.

    • what happens when a company decides to serve many segments, or even the entire market, producing different offerings for different segments.

    Correct Answer
    A. what happens when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible.
    Explanation
    Value innovation occurs when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible. This means that companies are able to provide unique and valuable products or services that stand out from the competition while also reducing costs. Value innovation is a strategy that allows companies to gain a competitive advantage by offering something new and different to customers that they find valuable, all while achieving cost savings.

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  • 42. 

     The basic proposition of the blue ocean strategy is that many successful companies have built their competitive advantage by:

    • redefining their product offering through value innovation and creating a new market space.

    • initiating a price war in order to grow volume and drive its weaker rivals out of the industry.

    • developing brand loyalty to protect them from intense price rivalry within their industry.

    • charging premium prices for their goods or services.

    • adopting lean production and flexible manufacturing technologies.

    Correct Answer
    A. redefining their product offering through value innovation and creating a new market space.
    Explanation
    The correct answer is redefining their product offering through value innovation and creating a new market space. This is because the blue ocean strategy emphasizes the importance of finding uncontested market spaces where companies can create new demand and differentiate themselves from competitors. By redefining their product offering through value innovation, companies can create unique value for customers and attract new customers in a market space that is not yet crowded. This approach allows companies to avoid intense price rivalry and instead focus on creating new market opportunities.

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Quiz Review Timeline (Updated): Nov 16, 2023 +

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  • Current Version
  • Nov 16, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 25, 2020
    Quiz Created by
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