72) A drink manufacturer finds setting up a plant to make its own bottle caps expensive and
technically difficult. Which of the following will be most helpful in solving the manufacturer’s
problem?
A) outsourcing
B) achieving economies of scale
C) lowering input costs
D) increasing bargaining power
E) going for a vertical integration with a distributor
73) A government oil company is having trouble with the private refineries and transporters to
whom it delegates important stages of production. It decides to become more active along the
entire supply chain from locating deposits to retailing the fuel to consumers. Which of the
following does it intend to achieve?
A) outsourcing
B) economies of scale
C) increase inputs
D) advanced production technology
E) vertical integration
74) The risks of a focused strategy for a company like Canada Goose are the
A) chance that niche customers will bargain more aggressively for good deals than customers in
the overall marketplace.
B) potential for the preferences and needs of niche members to shift over time toward product
attributes desired by buyers in the mainstream portion of the market.
C) potential for the segment to be highly vulnerable to economic cycles.
D) potential for segment growth to race beyond the production or service capabilities of
incumbent firms.
E) potential for the segment to become too specialized for other multisegmented rivals to enter.
75) Focusing carries several risks, one of which is the
A) chance that niche customers will bargain more aggressively for good deals than customers in
the overall marketplace.
B) chance that competitors will find effective ways to match the focused firm’s capabilities in
serving the target market.
C) potential for the segment to be highly vulnerable to economic cycles.
D) potential for the segment to become too specialized for other multisegmented rivals to enter.
E) inability of a company to compete industry-wide.
76) Focusing the ability can secure a competitive edge but also carries some risks that could be
detrimental to the focused firm, such as
A) the likelihood that a focused company will become so cost efficient it will achieve excessive
profits.
B) the potential for the preferences and needs of niche members to shift over time toward
mainstream provider product attributes.
C) the potential for the niche to become so attractive it will not attract new competitors thereby
providing excessive market segment profits.
D) the potential for technological advances to favor only low-cost providers.
E) the likelihood that a focused company will become so cost inefficient it will achieve excessive
profits.
77) Best-cost provider strategies are those that
A) are a hybrid of low-cost provider and differentiation strategies that aim at providing desired
attributes while beating rivals on price.
B) are rewarded by providing buyers with the best attributes at a premium.
C) have strategy elements related to the lowest-cost provider in the largest and fastest growing
(or best) market segment.
D) look for a low-cost advantage rather than a differentiation advantage.
E) look for a differentiation advantage rather than a low-cost advantage.
78) To profitably employ a best-cost provider strategy, a company must have the resources and
capabilities to
A) sell a product with the best cost at the best price.
B) have the best cost (as compared to rivals) for each activity in the industry’s value chain.
C) provide buyers with the best attributes at the best cost.
D) incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.
E) do a better job than rivals of adopting the best operating practices.
79) A firm pursuing a best-cost provider strategy
A) seeks to be the low-cost provider in the largest and fastest growing (or best) market segment.
B) tries to have the best cost (as compared to rivals) for each activity in the industry’s value
chain.
C) tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best
price.
D) seeks to deliver superior value to buyers by satisfying their expectations on key attributes and
beating rivals in meeting customer expectations on price.
E) seeks to achieve the best costs by using the best operating practices and incorporating the best
features and attributes.
80) The objective of a best-cost provider strategy is to
A) deliver superior value to value-conscious buyers at a comparatively lower price than rivals.
B) offer buyers the industry’s best-performing product at the best cost and best (lowest) price in
the industry.
C) attract buyers on the basis of having the industry’s overall best-performing product at a price
that is slightly below the industry-average price.
D) outcompete rivals using low-cost provider strategies.
E) translate its best-cost status into achieving the highest profit margins of any firm in the
industry.
81) The competitive objective of a best-cost provider strategy is to
A) outmatch the resource strengths of both low-cost providers and differentiators.
B) position the company outside the competitive arena of low-cost producers and differentiators.
C) meet or exceed buyer expectations on key quality/performance/features/service attributes and
beat their expectations on price (given what rivals are charging for much the same attributes).
D) deliver superior value to buyers by doing such a good job of cost control that it ends up with
the best cost (as compared to rivals) in performing each activity in its value chain.
E) identify and concentrate on those differentiating features that are inexpensive to incorporate.
82) What is the primary target market for a best-cost provider?
A) value-hunting buyers
B) price-conscious buyers
C) best-price driven buyers
D) value-conscious buyers
E) brand-conscious buyer
83) The competitive advantage of a best-cost provider like Trader Joe’s is
A) having the best value chain in the industry.
B) its brand name reputation.
C) its capability to incorporate upscale or attractive attributes into its product offerings at lower
costs than rivals.
D) a distinctive competence in delivering top-notch quality and customer service.
E) a distinctive competence in supply chain management.
84) For a best-cost provider strategy to be successful, a company must have
A) excellent marketing and sales skills in convincing buyers to pay a premium price for the
attributes/features incorporated in its product.
B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes
at lower costs than rivals whose products have similar upscale attributes.
C) access to greater learning/experience curve effects and scale economies than rivals.
D) one of the best-known and most respected brand names in the industry.
E) a short, low-cost value chain.
85) The target market of a best-cost provider is
A) value-conscious buyers.
B) brand-conscious buyers.
C) price-sensitive buyers.
D) middle-income buyers.
E) young adults (in the 18–35 age group).
86) Best-cost provider strategies are appealing in those market situations where
A) diverse buyer preferences make product differentiation the norm and where a large number of
value-conscious buyers can be induced to purchase mid-range products.
B) a company is positioned between competitors who have ultra-low prices and competitors who
have top-notch products in terms of both quality and performance.
C) buyers are more quality-conscious than price-conscious.
D) there are numerous buyer segments, buyer needs are diverse across these segments, only a
few of the segments are growing rapidly, and sellers’ products are strongly differentiated.
E) buyers are more performance-conscious than value-conscious.
87) The big danger or risk of a best-cost provider strategy is
A) that buyers will be highly skeptical about paying a relatively low price for upscale
attributes/features.
B) not establishing strong alliances and partnerships with key suppliers.
C) that rivals with low-cost provider strategies will be able to steal away some customers on the
basis of a lower price, and high-end differentiators will be able to steal away customers with the
appeal of better product attributes.
D) that it will be unable to achieve top-notch quality at a rock-bottom cost.
E) becoming too highly integrated and not relying enough on outsourcing.
88) Trader Joe’s biggest vulnerability in employing a best-cost provider strategy is
A) relying too heavily on outsourcing.
B) getting squeezed between the strategies of firms employing low-cost provider strategies and
high-end differentiation strategies.
C) getting trapped in a price war with low-cost leaders.
D) being timid in cutting its prices far enough below high-end differentiators to win away many
of their customers.
E) not having a sustainable distinctive competence in cost reduction.
89) Success with a best-cost provider strategy designed to outcompete high-end differentiators
requires
A) achieving significantly lower costs in providing the upscale features.
B) providing significantly better product attributes in order to justify a price above what low-cost
leaders are charging.
C) matching the company’s resources and capabilities to a low-cost provider status.
D) motivating buyers to purchase upscale features that match rivals.
E) achieving the lowest costs in the industry.
90) For all types of generic strategies, a company’s success in sustaining its competitive edge
depends on
A) its market and competitive environment, a defensible niche, and a homogeneous strategic
group.
B) establishing a central theme for how the company will endeavor to outcompete its rivals and
engage complementors with cooperative strategies.
C) having resources and capabilities that rivals have trouble duplicating and for which there are
no good substitutes.
D) defining its differences in terms of product line, production emphasis, location, joint ventures,
and strategic alliances.
E) defining its differences in terms of marketing emphasis, strategic group intracompetition, and
the means of maintaining strategy.
91) The production emphasis of a company pursuing a broad differentiation strategy usually
involves
A) eliminating cost reduction and decreasing quality and essential features to boost profitability.
B) strong efforts to be a leader in manufacturing process innovation.
C) emphasis on building differentiating features that buyers are willing to pay for and includes
wide selection and many product variations.
D) the aggressive pursuit of economies of scale and experience-curve effects.
E) developing a distinctive competence in zero-defect manufacturing techniques.
92) The marketing emphasis of a company pursuing a broad differentiation strategy usually is to
A) underprice rival brands with comparable features.
B) tout differentiating features and charge a premium price that more than covers the extra costs
of differentiating features.
C) out-advertise rivals and make frequent use of discount coupons.
D) emphasize selling directly to end users and promoting personalized customer service.
E) communicate the product’s ability to serve the customer’s every need.
93) The keys to maintaining a broad differentiation strategy are to
A) stress constant innovation to stay ahead of imitative rivals and to concentrate on a few
differentiating features.
B) charge a premium price that more than covers the extra costs of differentiating features and to
convince customers to be brand loyal.
C) out-innovate and out-advertise rivals.
D) emphasize personalized customer service and to add as many differentiating features as
possible.
E) keep prices close to the average of all rivals and to spend heavily on new product R&D.
94) The marketing emphasis of a company pursuing a focused low-cost provider strategy usually
is to
A) tout the company’s lower prices.
B) tout the lack of frills and extras.
C) out-advertise rivals and make frequent use of discount coupons.
D) communicate the attractive features of a budget-priced product offering that fits niche
members’ expectations.
E) communicate the product’s ability to serve the customer’s every need.
95) The underlying criteria of a best-cost provider strategy usually is found in the ability of a
company to
A) offer better goods at attractive prices.
B) create attributes that appeal specifically to niche members.
C) lower overall costs more than rivals in serving niche members.
D) offer buyers something attractively different from competitors’ offerings.
E) offer the best product at the industry’s lowest possible price.
96) A production-based emphasis toward a low-cost provider strategy usually requires a
company to strive for
A) product superiority.
B) continuous cost reductions without sacrificing acceptable quality and essential features.
C) small-scale production or custom-made products that match the tastes and requirements of
niche members.
D) appealing features and better quality at lower costs than rivals.
E) whatever differentiating features buyers are willing to pay for.