68.
As markets mature the magnitude of differentiation and cost leadership advantages among competitors
decrease.
69.
With reverse positioning, a strategy to be used during the mature stage of the industry life cycle, a
product escapes its category by deliberately associating with a different one.
70.
Businesses that compete in markets that are in decline should simply be harvested or divested since they
are no longer profitable.
71.
During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a
product going without significantly reducing marketing support, technological development, or other
investments, while hoping that competitors will exit the market.
72.
The decline stage of the industry life cycle stage is inevitably followed by death.
73.
The Commerce Bank stripped away all of what customers expected including lots of choices and peak
The Commerce Bank gains customers by using reverse positioning to structure its offers. It pared down
its offers to just four checking accounts.
74.
Swatch defined its watches as playful fashion accessories which were showily promoted. This is an
example of reverse positioning.
75.
The desktop computer is in the decline stage of the industry life cycle, but it is not dead because
companies have found ways to improve the price-performance trade-off.
76.
Many firms facing a turnaround situation try to reduce their costs by outsourcing the production of
many inputs.
77.
A need for turnaround occurs only during the maturity or declining stage of the life cycle.
78.
profitable areas. For example, in 2014, Procter and Gamble announced that it would sell off or close
Procter and Gamble successfully implemented a turnaround strategy by discontinuing brands and
focusing all resources on a few core brands.
79.
Few turnarounds require firms to analyze both the external and internal environments relevant to their
firm.
80.
Mature firms tend to have assets that continue to produce significant returns.
81.
Firms in turnaround situations find that cutting administrative expenses and inventories and speeding up
collection of receivables provide no real value.
82.
Piecemeal productivity improvements can be used by a mature business in need of a turnaround.
83.
Grossman managed a successful turnaround of HSN by first finding value in engaging with employees.
During her first day at HSN, she choose to go through the same new-employee orientation that all
HSN CEO Mindy Grossman managed a successful turnaround by first engaging with employees.
84.
HSN CEO Mindy Grossman tailored the company offerings to meet the changing needs of her customer
base in her quest to turnaround the company.
85.
When company performance severely erodes, no strategies exist that can help to reverse its situation and
enhance its competitive position.
86.
Piecemeal productivity improvements are not useful as a turnaround strategy because they are not
cumulative.
87.
Firms in turnaround situations find that cutting administrative expenses and inventories and speeding up
collection of receivables are ineffective strategies.
88.
When a company finds that its performance is in decline at any stage in the life cycle, it can look toward
a turnaround strategy that is designed to help it to grow but not necessarily to be profitable.
Multiple Choice Questions
89.
The primary aim of strategic management at the business level is
90.
Primary value chain activities that involve the effective layout of receiving dock operations (inbound
logistics) and support value chain activities that include expertise in process engineering (technology
development) characterize which generic strategy?
91.
A manufacturing business pursuing cost leadership is likely to
92.
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs.
Experience effects are achieved by
93.
With experience, unit costs of production decline as _________ increases in most industries.
94.
Research has consistently shown that firms that achieve both cost leadership and differentiation
advantages tend to perform
95.
Global logistics firms such as DHL Supply Chain and Global Forwarding or C. H. Robinson Worldwide
compete using an overall cost leadership strategy in primary activities such as
96.
Overhead costs associated with the number of layers of management in a firm are part of the _________
activities of the value chain.
97.
Renault has found a way to generate high profits on low-priced cards by using simple designs that
incorporate components from older car designs and a no-discount retail policy. They are using a(n)
______________ strategy.
98.
Tesco is saving 3 million USD a year alone in landfill taxes by simply sending its used cooking oil and
chicken fat to be used to generate bioenergy rather than putting it in a landfill. This is an example of an
overall cost leadership strategy because it
99.
A business that strives for a low-cost advantage must attain a(n) _______ cost advantage over rivals.
100.
Southwest Airlines uses an overall cost leadership strategy. This could fail if it
101.
Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the
ability to better withstand cost increases from suppliers characterize which type of competitive
strategy?
102.
An overall low-cost position enables a firm to achieve ______ returns despite strong competition.
103.
An overall low-cost position protects a firm against rivalry from competitors, because _________ allow
a firm to earn returns even if its competitors eroded their profits through intense rivalry.
104.
An overall ______ position enables a firm to achieve above-average returns because it protects firms
against powerful buyers.
105.
A low-cost position permits buyers to exert power to drive ____ prices only to the level of the next most
efficient producer.
106.
A low-cost position provides _______ flexibility to cope with demands from powerful suppliers for
input cost increases.
107.
The factors that lead to a low-cost position also provide a substantial ____ barriers position with respect
to _______ products introduced by new and existing competitors.
108.
Which of the following is a risk (or potential pitfall) of cost leadership?
109.
A firm can achieve differentiation through all of the following means except
110.
Support value chain activities that involve excellent applications engineering support (technology
development) and facilities that promote a positive firm image (firm infrastructure) characterize which
generic strategy?
111.
High product differentiation is generally accompanied by
112.
Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its
competitive position relative to the Porter five forces model?
113.
A differentiation strategy enables a business to address the five competitive forces by
114.
Which of the following is not a potential pitfall of a differentiation strategy?
115.
Which statement regarding competitive advantages is true?
116.
Porsche has enhanced power over buyers because its strong reputation makes buyers more willing to
pay a premium price. This ______ rivalry, since buyers become _____ price-sensitive.
117.
A firm following a focus strategy must focus on
118.
Which of the following is not a potential pitfall of a focus strategy?