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mana chap 5

The opening case of Food Lion, Inc. illustrates the point that
firms that overemphasize overall cost leadership thoughout their value chain can experience low performance.
The primary aim of strategic management at the business level is
achieving competitive advantage(s)
In the long run, businesses without a competitive advantage are unlikely to earn more than “normal” profits. Normal profits are
profits one would expect to earn on investments that have a similar level of risk.
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?
overall cost leadership
Which of the following is a risk (or pitfall) of cost leadership?
cost cutting may lead to the loss of desirable features
A manufacturing business pursuing cost leadership will likely
rely on experience effects to raise efficiency.
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 what generic strategy?
overall cost leadership
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by
repeating a process until a task becomes easier.
The experience curve suggests that cutting prices is a good strategy
if it can induce greater demand and thereby help a firm travel down the experience curve faster
A firm can achieve differentiation through all of the following means except
offering lower prices to frequent customers
High product differentiation is generally accompanied by
decreased emphasis on competition based on price
Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?
differentiation
Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter’s five forces?
supplier power is increased because suppliers will be able to charge higher prices for their inputs
A differentiation strategy enables a business to address the five competitive forces by
lessening competitive rivalry by distinguishing itself.
All of the following are potential pitfalls of a differentiation strategy except:
all rivals share a common input or raw material
Which statement regarding competitive advantages is true?
If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
A narrow market focus is to a differentiation-based strategy as a
broadly-defined target market is to a cost leadership strategy
A firm following a focus strategy
must focus on a market segment or group of segments
All of the following are potential pitfalls of a focus strategy except
all rivals share a common input or raw material
Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform
higher than firms that achieve either a cost or a differentiation advantage
The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except
deriving benefits from highly focused and high technology markets.
A ____________ can be defined as the total profits in an industry at all points along the industry’s value chain.
profit pool
All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy except:
targeting too large a market that causes unit costs to increase
Which of these statements regarding the market life cycle is correct?
It provides a “shorthand” for thinking about differences in strategic situations.
Which of the following statements about the introduction stage of the market life cycle is true?
Products or services offered by pioneers may be perceived as differentiated simply because they are new
In the ______ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low
introduction
Which of the following descriptions of a product in the growth stage is true?
There is an emphasis on product variety, prices are declining rapidly, and although the firm may be making a profit, cash flows may be negative.
The growth market is characterized by
premium pricing.
Which of the following is considered an accurate statement for a product in the growth period of its life cycle?
It is easier to develop technology in the growth phase.
In the _______ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.
maturity
In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in?
maturity
A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage:
maturity
As markets mature, firms should attempt to compete on the basis of
differentiation
As markets mature
there is increasing emphasis on efficiency
The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?
maturity
Which of the following is most often true of mature markets?
Advantages that cannot be duplicated by other competitors are difficult to achieve.
In the _________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance.
decline
The most likely time to pursue a harvest strategy is in a situation of
decline in the market life cycle.
During the decline stage of the industry life cycle, _______ refers to obtaining as much profit as possible and requires that costs be decreased quickly.
harvesting
Research shows that the following are all strategies used by firms engaged in successful turnarounds except
global expansion.
Piecemeal productivity improvements during a turnaround typically does not involve
expansion of a firm’s product market scope.

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