SM QUIZ 3 (STRATEGIC MANAGEMENT)

SM IUAC QUIZ 3

MCQS

MARKS : 0.25

A broad differentiation strategy _____

 A. is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be
satisfied by a product that is essentially identical from seller to seller.

 C. works best when the basis for differentiation is superior performance features and buyer switching
costs are low.

 D. offers a better chance for gaining market share than low-cost or best-cost provider strategies, and
typically allows a firm to charge the highest price in the industry.

 E. Both A and B.

 B. can produce sustainable competitive advantage if the differentiating features possess strong buyer
appeal and can't be copied or easily matched by rivals.

SM IUAC QUIZ 3
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Competitive strategies that provide distinctive industry positioning and competitive advantage involve
_____

 E. Choosing between (1) a market target that is either broad or narrow, and (2) whether the company
should pursue a competitive advantage linked to low costs or product differentiation.

 C. Assembling a wide portfolio of company resources, competitive capabilities, and core competencies.

 D. Developing a better credit rating than rivals.

 B. Striving for a high degree of customer loyalty to the company's brand.

 A. A customer value proposition, profit formula, and collection of valuable resources.

SM IUAC QUIZ 3

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A blue ocean type of offensive strategy _____

 B. involves deliberately attacking those market segments where a key rival makes big profits.

 C. involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new
industry or distinctive market segment that renders existing competitors largely irrelevant and allows a
company to create and capture altogether new demand.

 E. employs highly creative, never-used-before strategic moves to attack the competitive weaknesses of
rivals.

 A. is a preemptive strike type of price-cutting offensive used by a market leader to steal customers away
from higher-priced rivals.

SM IUAC QUIZ 3

MCQS

MARKS : 0.25

Which of the following is not one of the principal offensive strategy options?

 B. Launching preemptive strikes.

 D. Attacking competitors' weaknesses.

 E. Offering an equal or better product at a lower price.

 A. Adopting and improving on the good ideas of other companies.

SM IUAC QUIZ 3

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A company's competitive strategy deals with _____

 C. The specifics of management's game plan for securing a competitive advantage vis-à-vis rivals.

 E. The specific actions management intends to take to strongly differentiate its product offering from
the offerings of rival companies in the industry.

 D. Its plans for underpricing rivals and achieving product superiority.

 A. The specific actions management plans to take to develop a better value chain than rivals.

 B. How it plans to unify its functional and operating strategies into a cohesive effort aimed at
successfully taking customers away from rivals.
SM IUAC QUIZ 3

MCQS

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The five generic types of competitive strategies include _____

 A. Offensive strategies, defensive strategies, differentiation strategies, and low-cost strategies.

 D. Low-price strategies, premium price strategies, middle-of-the-road strategies, and market share
leadership strategies.

 C. Offensive strategies, defensive strategies, technological leadership strategies, and product innovation
strategies.

 B. Low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost
provider.

 E. Attacking competitor strengths, attacking competitor weaknesses, market leadership strategies, and
product superiority strategies.

SM IUAC QUIZ 3

MCQS

MARKS : 0.25
Being first to initiate a particular move can have a high payoff when _____

 D. moving first constitutes a preemptive strike, making imitation extra hard or unlikely.

 C. first-time customers remain strongly loyal to pioneering firms in making repeat purchases.

 B. early commitments to new technologies, new-style components, new or emerging distribution
channels, and so on, can produce an absolute cost advantage over rivals.

 E. All of these.

 A. pioneering helps build up a firm's image and reputation with buyers.

SM IUAC QUIZ 3

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A hit-and-run or guerrilla warfare type of offensive strategy involves _____

 E. surprising moves by small challengers that have neither the resources nor the market visibility to
mount a full-fledged attack on industry leaders.

 C. tactics that work best if the guerrilla is the industry's low-cost leader.
 B. undertaking surprise moves to secure an advantageous position in a fast-growing and profitable
market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly
won position.

 D. pitting a small company's own competitive strengths head-on against the strengths of much larger
rivals.

 A. random offensive attacks used by a market leader to steal customers away from unsuspecting
smaller rivals.

SM IUAC QUIZ 3

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The purposes of defensive strategies are to _____

 C. Guard against adverse changes in the company's macro-environment and insulate the company from
the impact of industry-driving forces.

 E. eliminate a company's resource weaknesses and competitive deficiencies, thereby making it
invulnerable to competitive attack from would-be challengers.

 D. strengthen a company's competitive advantage and reduce its exposure to business risk.

 A. aggressively retaliate against rivals pursuing offensive strategies and prevent price wars.
 B. restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and
influence challengers to aim their offensive efforts at other rivals.

SM IUAC QUIZ 3

MCQS

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Easy-to-copy differentiating features _____

 C. tend to satisfy the needs of most buyers.

 D. should be patented before other companies imitate the features.

 A. lead to excessive price competition.

 E. do not offer the promise of sustainable competitive advantage.

 B. are less expensive to integrate into a product or service offering.

SM IUAC QUIZ 3

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Striving to be the industry's low-cost provider and achieving lower costs than rivals entails _____

 D. Aggressive use of activity-based costing, utilizing more best practices than rivals, and having a
narrower product line than rivals.

 B. Having a smaller labor force than rivals, paying lower wages than rivals, locating all facilities in
countries where labor costs are low, and outsourcing many value chain activities to suppliers with
world-class technological capabilities.

 E. Both A and C.

 C. Doing a better job than rivals in performing essential activities.

 A. Eliminating or curbing nonessential activities.

SM IUAC QUIZ 3

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Which of the following is not a distinguishing feature of a low-cost provider strategy?

 D. The strategic target is value-conscious buyers and sustaining the strategy depends on frequent
advances in technology and occasional product innovations.
 B. The production emphasis is on continuously searching for ways to reduce costs without sacrificing
acceptable quality and essential features.

 A. The product line consists of a few basic models having minimal frills and acceptable quality.

 E. Sustaining the strategy revolves around managing costs down year-after-year and delivering good
value at economical prices.

 C. The marketing emphasis is on making virtues out of product features that lead to low cost.

SM IUAC QUIZ 3

MCQS

MARKS : 0.25

In which of the following situations is being first to initiate a particular move not likely to result in a
positive payoff?

 B. When pioneering helps build up a firm's image and reputation with buyers.

 E. When moving first can result in a cost advantage over rivals.

 C. When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases.

 D. When moving first can constitute a preemptive strike, making imitation extra hard or unlikely.
 A. When potential buyers are skeptical about the benefits of a new technology or product being
pioneered by a first mover.

SM IUAC QUIZ 3

MCQS

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Successful differentiation allows a firm to _____

 A. gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating
features and bond with the company and its products).

 B. earn the highest profit margins of any company in the industry.

 E. Both A and D.

 D. command a premium price for its product and/or increase unit sales (because additional buyers are
won over by the differentiating features).

 C. attract many more buyers by charging a lower price than rivals and thereby take sales and market
share away from rivals.

SM IUAC QUIZ 3
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Which of the following is typically the strategic impetus for forward vertical integration?

 A. To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers.

 C. To gain better access to end users and better market visibility.

 B. To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers.

 D. To achieve greater control over advertising and in-store retail merchandising.

 E. To gain better access to greater economies of scale.

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Which one of the following is not a good type of rival for an offensive-minded company to target?

 D. Other offensive-minded companies with a sizable war chest of cash and marketable securities.
 A. Market leaders that are vulnerable.

 E. Struggling enterprises that are on the verge of going under.

 B. Runner-up firms with weaknesses in areas where the challenger is strong.

 C. Small local and regional companies with limited capabilities.

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A competitive strategy of striving to be the low-cost provider is particularly attractive when _____

 B. most rivals are trying to differentiate their product offering from those of rivals.

 E. most rivals are pursuing best-cost or broad differentiation strategies.

 A. buyers are large and incur low costs in switching their purchases from one seller to another.

 D. buyers are not swayed by advertising and are not very brand-loyal.
 C. there are many ways to achieve higher product quality that have value to buyers.

SM IUAC QUIZ 3

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In which of the following cases are first-mover disadvantages not likely to arise?

 D. When customer loyalty to the pioneer is low.

 A. When the costs of pioneering are much higher than being a follower and only negligible buyer loyalty
or cost savings accrue to the pioneer.

 B. When new infrastructure is needed before market demand can surge.

 E. When technological change is rapid and following rivals find it easy to leapfrog the pioneer with next-
generation products of their own.

 C. When the pioneer's skills, know-how, and products are easily copied or even bested by late movers.

SM IUAC QUIZ 3

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Which of the following is not a strategic disadvantage of vertical integration?

 B. Vertical integration increases a firm's capital investment in the industry.

 C. Integrating into more industry value chain segments increases business risk if industry growth and
profitability sour.

 D. Vertically integrated companies are often slow to embrace technological advances or more efficient
production methods when they are saddled with older technology or facilities.

 A. It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest
possible operating costs.

 E. Integrating backward potentially results in less flexibility in accommodating shifting buyer
preferences when a new product design doesn't include parts and components that the company makes
in-house.

SM IUAC QUIZ 3