67) Research on architectural competence in pharmaceutical firms suggests that
A) not only do some firms possess this competence, but that other firms do not; firms without
this competence have, on average, been able develop it with minimal investment.
B) very few firms possess this competence, but firms without this competence, on average, are
able to develop it.
C) not only do some firms possess this competence, but also that other firms do not and firms
without this competence have, on average, been unable to develop it.
D) virtually every firm possesses this competence to some extent.
68) Which of the following bases of product differentiation is generally viewed as the most
difficult to duplicate?
A) Product features
B) Reputation
C) Linkages with other firms
D) Location
69) The U-form structure used to implement a product-differentiation strategy
A) rarely uses temporary cross-divisional and cross-functional teams to manage the development
and implementation of new, innovative, and highly differentiated products.
B) has simple reporting relationships.
C) often uses temporary cross-divisional and cross-functional teams to manage the development
and implementation of new, innovative, and highly differentiated products.
D) has a small corporate staff.
70) A ________ structure exists when individuals in a firm have two or more bosses
simultaneously.
A) U-form
B) multidivisional
C) cross-divisional
D) matrix
71) The Lockheed Corporation Skunk Works is an example of a(n)
A) cross-divisional or cross-functional team.
B) M-form structure.
C) U-form structure.
D) multidivisional structure.
72) Small entrepreneurial firms
A) have numerous bureaucratic controls that impede cross-functional communication and thus
slow innovation.
B) have relatively few bureaucratic controls that allow information and ideas to flow freely and
to facilitate innovation.
C) have relatively few bureaucratic controls that impede cross-functional communication and
thus slow innovation.
D) have numerous bureaucratic controls but information and ideas still flow freely and facilitate
innovation.
73) A ________ exists when firms are committed to engage in several related product-
differentiation strategies simultaneously.
A) policy of substitution
B) policy of extrapolation
C) policy of exploration
D) policy of experimentation
74) In developing a compensation policy used to implement a product-differentiation strategy,
firms will
A) hold individuals responsible for experiments that fail.
B) punish individuals for taking risks when their projects are not successful.
C) simultaneously use multiple dimensions to examine employee performance.
D) provide appropriate incentives for managers and employees to reduce costs.
75) More recent work in the area of strategic management regarding Porter’s assertion about
being stuck in the middle
A) supports Porter’s argument that firms that attempt to simultaneously pursue cost leadership
and product differentiation will find themselves at a competitive disadvantage.
B) contradicts Porter’s argument and finds that firms that successfully pursue cost leadership and
product differentiation simultaneously can often expect to gain a sustained competitive
advantage.
C) partially contradicts Porter’s argument and finds that firms that successfully simultaneously
pursue cost leadership and product differentiation can only expect to gain a temporary
competitive advantage.
D) partially contradicts Porter’s argument and finds that only firms in certain select industries can
successfully simultaneously pursue cost leadership and product differentiation and gain a
temporary competitive advantage.
76) According to Porter, firms that are stuck in the middle attempt to sell
A) high-priced products and gain small market share.
B) low-priced products and gain large market share.
C) high-priced products and gain a large market share.
D) medium-priced products and gain medium market share.
77) While cost leadership requires rewards for cost reduction, product differentiation requires
rewards for ________.
A) creative flair
B) efficiency
C) quantitative goals
D) production goals
78) Recent research suggests that ________ firms must have competitive levels of cost to
survive.
A) low-cost
B) all
C) domestic
D) product-differentiation
79) Recent research shows that firms can simultaneously implement cost-leadership and product-
differentiation strategies if they learn how to manage the ________ inherent in these two
strategies.
A) consistencies
B) similarities
C) contradictions
D) superfluousness
80) Cross-functional product development teams are suitable for a firm pursuing a ________
strategy.
A) cost-leadership
B) confrontation
C) product-differentiation
D) stuck-in-the-middle
81) Which generic business level strategy is Coach pursuing?
A) Cost leadership
B) Related diversification
C) Product differentiation
D) Unrelated diversification
82) The price premium that customers are willing to pay for the superior quality and perceived
prestige of Coach’s products over the prices of similar products are known as
A) marginal prices.
B) hedonic prices.
C) heroic prices.
D) elastic prices.
83) Which of the following bases of product differentiation does Coach appear to be employing?
A) Product features, product complexity, and consumer marketing
B) Location, linkages between functions, and reputation
C) Reputation, consumer marketing, and product features
D) Distribution channels, service and support, and links with other firms
84) Which of the following bases of Coach’s competitive advantage is likely to be the most
difficult to duplicate?
A) Product features
B) Consumer marketing
C) Location
D) Reputation
85) Which of the following bases of Coach’s competitive advantage is likely to be the easiest to
duplicate?
A) Product features
B) Consumer marketing
C) Location
D) Reputation
86) The business level strategy Coach is pursuing is likely to
A) reduce the threat of rivalry to virtually zero.
B) increase the threat of substitutes due to premium pricing.
C) decrease the threat of new entrants due to the additional cost they would face to overcome
Coach’s reputation advantages.
D) decrease the threat of buyers since Coach can lower its prices due to its efficient
manufacturing operations.
87) Given that the leather handbag market that Coach largely competes in can be considered a
mature market, Coach should focus its product-differentiation efforts on
A) exploiting a first-mover advantage as a basis of product differentiation.
B) introducing radically new technologies as a basis of product differentiation.
C) seeking a viable market niche that will enable it to survive.
D) refining products as a basis of product differentiation.
88) Coach’s agreement with Lexus to produce automobiles with Coach leather interior is an
example of
A) co-branding.
B) architectural competence.
C) skunk works.
D) product placement.
89) If Coach had an organizational structure that used cross-functional teams, the members of
which reported not only to their functional boss (i.e. the head of production) but also to the head
of the team, Coach could be said to be using which organizational structure?
A) Product divisional
B) Matrix
C) U-form
D) Multi-domestic
90) One feature of Coach’s compensation policies is likely to be
A) rewards for cost reduction.
B) rewards for efficiency.
C) rewards for creative flair.
D) rewards for manufacturing efficiency.
91) Define product differentiation and discuss the role that customer perceptions play in product
differentiation.
92) Identify the three broad categories of product differentiation and identify two bases of
differentiation under each category.
93) What is the relationship between product differentiation and managerial creativity?
94) What is the impact of product differentiation on each of the environmental threats identified
in the five forces framework?
95) Describe the role of product differentiation and how product differentiation helps firms take
advantage of opportunities in fragmented industries, in emerging industries, in mature industries
and in declining industries.
96) Identify which bases of product differentiation are likely to be almost always easy to
duplicate, which can sometimes be costly to duplicate and which are usually costly to duplicate
and discuss under what conditions a bases of differentiation is likely to be costly to imitate and
can be a source of sustained competitive advantage.
97) Identify the two primary forms that the substitutes for bases of product differentiation can
take.
98) Discuss the similarities and differences of the organizational structures used by firms
pursuing a cost-leadership and a product-differentiation strategy and discuss the importance of
broad decision-making authority within a product-differentiation strategy.
99) Is it possible for a firm to implement a cost-leadership and product-differentiation strategy
simultaneously?
100) “Firms can simultaneously implement cost-leadership and product-differentiation strategies
if they learn how to manage the contradictions inherent in these two strategies.” Explain the
statement.