Test Bank For Competing For Advantage 3rd Edition Hoskisson

Test Bank for Competing for Advantage, 3rd Edition : Hoskisson
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Chapter 5 - Business-Level Strategy
TRUE/FALSE
1. A strategy is an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
ANS: T PTS: 1 DIF: med REF: p. 142

OBJ: 1 NOT: knowledge
2. Business-level strategy can be thought of as the firm’s core strategy.

3. A business-level strategy reflects a firm’s beliefs about what products and services it should be
offering to customers, how to manufacture or create them, and how to distribute them to the
marketplace.

4. Firms can be most effective if they develop business-level strategies that will serve the needs of the
“average customer.”
ANS: F PTS: 1 DIF: hard REF: p. 144

OBJ: 2 NOT: comprehension
5. Common characteristics on which customers’ needs vary include demographic variables and physical
characteristics.
ANS: F PTS: 1 DIF: hard REF: p. 147 (Table 5.1)

6. Business-level strategies are concerned with a firm’s ability to reach its maximum profit potential.

7. The functional structure is most appropriate for larger firms implementing a strategy that includes high
levels of diversification.
ANS: F PTS: 1 DIF: med REF: p. 149

8. The primary factors that cause firms to change from a functional structure to a multidivisional
structure are the CEO’s increasingly limited ability to set a strategic direction for the firm and the
focus of functional managers on local issues.

9. Firms implementing cost leadership strategies often sell no-frills standardized goods or services to the
industry’s most typical customers.

10. Human Resources and other support functions are not value-creating activities in the value chain, only
the value chain activities create value.
ANS: F PTS: 1 DIF: hard REF: p. 150 (Figure 5.2)

11. Once a competitor has achieved a cost leadership position, the firm must continue a consistent focus
on driving costs lower.

12. A cost leadership strategy is not a valuable defense against rivals when competing on the basis of
price.

13. A low-cost leader may create entry barriers to potential entrants by continually improving its levels of
efficiency.

14. Specialization refers to the extent to which authority for decision-making is retained at higher
managerial levels.

15. A differentiator’s premium price is typically less than that of a cost leader.

16. A firm using a differentiation strategy seeks to be different from its competitors on a single crucial
dimension of value to customers.

17. Companies without the core competencies to link value chain activities and support functions required
to create value are still able to successfully implement a differentiation strategy.

18. Because firms need to respond quickly to environmental opportunities and threats, the implementation
of the differentiation strategy is positively affected when the firm is centralized and formalized.
ANS: F PTS: 1 DIF: hard REF: p. 157|p. 158

19. The finance and R&D functions are emphasized in the differentiation strategy's functional structure.

20. Unlike a cost leadership and a differentiation strategy, the focus strategy is less dependent on the
completion of various value chain activities and support functions in order to compete in a superior
manner.

21. A risk of a focus strategy is that the needs of the customer within a narrow competitive segment may
become more similar to those needs of customers as a whole.

22. Firms successfully implementing an integrated cost leadership/differentiation strategy earn

above-average returns because the benefits of the strategy are additive.
ANS: T PTS: 1 DIF: hard REF: p. 162

23. A flexible manufacturing system is a computer-controlled process used to produce a variety of

products in moderate, flexible quantities with minimal manual intervention.

24. One of the benefits of the integrated cost leadership/differentiation strategy is that it is NOT associated
with substantial risk.

25. A firm is “stuck in the middle” when its industry is in the middle of a rapid technological change.

26. Firms following a “stuck in the middle” strategy are able to successfully deal with the five competitive
forces and earn above-average returns.

27. Outsourcing is a common method of reducing costs, often used in reaction to competitor moves.
28. The risk of obsolescence is lower in firms which outsource major activities.

MULTIPLE CHOICE
1. An integrated and coordinated set of commitments and actions designed to exploit core competencies
and gain a competitive advantage is the definition of:
a. strategy. c. sustained competitive advantage.
b. core competencies. d. strategic mission.
ANS: A PTS: 1 DIF: med REF: p. 142
2. A firm’s core strategy is its ____.

a. corporate strategy
b. business strategy
c. acquisitions and restructuring strategy
d. international strategy
ANS: B PTS: 1 DIF: med REF: p. 143
3. Business-level strategies detail commitments and actions taken to provide value to customers and gain
competitive advantage by exploiting core competencies in:
a. the selection of industries in which the firm will compete.
b. specific product markets.
c. specific functional departments.
d. specific plant locations.
ANS: B PTS: 1 DIF: hard REF: p. 142
4. A ____ reflects where and how the firm has an advantage over its rivals.
a. business-level strategy c. differentiated-cost strategy
b. strategy d. core competence profile
5. In evaluating its customers, which of the following questions should the firm NOT ask?
a. How will core competencies meet the customer’s needs?
b. Who is the customer?
c. What are the customers’ needs?
d. How will our top management team interact with the customer?
ANS: D PTS: 1 DIF: med REF: p. 143|p. 147
6. Customer needs are related to the:

a. characteristics that can be used to subdivide a large market into segments.
b. set of values exhibited by a group of customers.
c. use of core competencies to implement a strategy.
d. benefits and features of a good or service that customers want to purchase.
ANS: D PTS: 1 DIF: med REF: p. 143|p. 147
7. The example of General Motors dropping the Oldsmobile brand illustrates the fact that
a. brands are ultimately unimportant to the customer, regardless of their history.
b. this brand appealed to a generation which is no longer actively spending money.
c. this brand no longer conveyed specific benefits and features that satisfied target customer
needs.
d. brands are fungible properties of products.
ANS: C PTS: 1 DIF: hard REF: p. 147
OBJ: 2 NOT: application
8. Among college students, Subway targets a more narrow market segment than the segment on which
McDonald’s focuses. Subway focuses on students interested in healthy fast food. This is a result of
studying all EXCEPT which of the following?
a. demographic factors. c. consumption-pattern factors.
b. psychological factors. d. geographic factors.
ANS: D PTS: 1 DIF: med REF: p. 147 (Table 5.1)
9. SAS Institute is the world’s largest privately owned software company. Its core competence is ____ on
which it allocates over 30 percent of its revenues.
a. research and development c. employee training
b. marketing and sales d. inbound and outbound logistics
10. Business-level strategies are concerned specifically with:

a. creating differences between the firm’s position and its rivals.
b. the industries in which the firm will compete.
c. how functional areas will be organized within the firm.
d. how a business with multiple physical locations will operate one of those locations.
11. Which of the following is NOT considered a generic strategy?

a. Product diversification
b. Cost leadership
c. Focused differentiation
d. Integrated cost leadership/differentiation
12. The four generic business-level strategies a firm can implement include all of the following EXCEPT:
a. focused cost leadership. c. differentiation.
b. cost leadership. d. leadership.
ANS: D PTS: 1 DIF: med REF: p. 144
13. A company using a narrow scope in its business strategy is:

a. following a cost leadership business strategy.
b. focusing on a broad array of geographic markets.
c. limiting the group of product segments served.
d. likely to earn only average returns.
ANS: C PTS: 1 DIF: med REF: p. 144|p. 145
14. The effectiveness of any of the generic business-level strategies is contingent upon:
a. customer needs and competitors’ strategies.
b. the firm’s resources, capabilities, and core competencies and the opportunities/threats of
the environment.
c. product line scope and national economic conditions.
d. management’s leadership style and the wealth of the firm’s target market.
15. A simple structure can be described by all of the following EXCEPT:

a. informal relationships.
b. limited task specialization.
c. active involvement by a chief executive officer.
d. few rules.
16. The functional structure allows for effective:

a. control of strategic issues by functional managers.
b. control of potentially time-consuming activities by the chief executive.
c. control of any myopic vision.
d. development of professional expertise in functional areas.
17. Functional structures work best for firms with:

a. diversified products.
b. diversified markets.
c. single and dominant business strategies.
d. conglomerate strategies.
ANS: C PTS: 1 DIF: med REF: p. 149
18. One disadvantage of the functional structure is that:

a. career paths and professional development are not facilitated.
b. it does not allow for functional specialization.
c. the CEO cannot coordinate and control the efforts of functional level employees.
d. communication is hindered among organizational functions.
ANS: D PTS: 1 DIF: hard REF: p. 149
19. Which of the following does NOT cause a firm to move from a functional structure to a
multidivisional structure?
a. Increasing diversification
b. Coordination and control issues
c. Decreasing sales revenues
d. Greater amounts of data and information to process
20. A cost leadership strategy can be summarized as:

a. providing products with features acceptable to customers at the lowest competitive price.
b. providing products with features that are very inexpensive so that the price of the product
is very low.
c. providing products that are so unique that customers are willing to pay a premium.
d. focusing on a few unique features for which customers are willing to pay a premium.
21. To achieve strategic competitiveness, Ryanair has relied upon:

a. becoming the low-cost provider.
b. adding services that make the airline more like large carriers.
c. offering luxury-based in-flight amenities.
d. cutting down on fuel costs.
22. Research suggests that having a competitive advantage in ____ creates more value in the cost
leadership strategy than in the differentiation strategy.
a. marketing and sales c. inbound and outbound logistics
b. technology development d. human resource management
23. The firm successfully implementing the cost leadership strategy would expect:
a. competitors to compete against it primarily on the basis of prices charged.
b. to constantly face challenges from a steady stream of new entrants to the industry.
c. to be able to fend off the challenge of product substitutes.
d. to focus on its own cost structure, but not its competitors’ cost structures.
24. When the costs of supplies increase in an industry, the low-cost leader may:
a. continue competing with rivals on the basis of product features.
b. lose customers as a result of price increases.
c. make it difficult for new entrants to the industry to achieve above-average returns.
d. be the only firm able to pay the higher prices and continue to earn average or
above-average returns.
25. ____ is the degree to which rules and procedures govern the activities of an organization.
a. Formalization c. Specialization
b. Centralization d. Unification
26. Firms implementing a cost leadership strategy should use a ____ structure.
a. highly formalized, simple c. product line
b. specialized multidivisional d. highly centralized, functional
27. Wal-Mart’s effective strategy/structure configuration is:

a. cost leadership/functional structure.
b. related-linked/SBU multidivisional structure.
c. unrelated diversification/competitive form multidivisional structure.
d. cost leadership/differentiation/functional structure.
28. The risks of a cost leadership strategy include:

a. becoming “stuck in the middle.”
b. production and distribution processes becoming obsolete.
c. the ability of competing firms to provide similar features in a product.
d. customers deciding the product isn’t worth what the firm must charge for it.
29. The risks of a cost leadership strategy include all of the following EXCEPT:
a. manufacturing equipment can become obsolete due to innovation.
b. firms may fail to understand customers’ perceptions of competitive levels of
differentiation.
c. competitors may learn how to successfully imitate their strategy.
d. firms may fail to include enough unique features in the product.
30. The products or services that differentiate often have qualities that are:
a. perceived by the customer to add value.
b. valued by the typical industry customer.
c. appealing to the customer regardless of price.
d. seen as classic attributes rather than passing fads.
ANS: A PTS: 1 DIF: hard REF: p. 154|p. 155
31. When a product’s unique attributes provide value to customers, the firm is implementing:
a. a differentiation strategy.
b. a cost leadership strategy.
c. an integrated cost leadership/differentiation strategy.
d. a single-product strategy.
32. The differentiation strategy calls for a firm to provide products that:
a. are at the lowest cost possible.
b. have acceptable features.
c. incorporate features for which the customer will pay a premium.
d. solve the problem of being “stuck in the middle.”
33. All of the following are examples of differentiated products EXCEPT:

a. Toyota’s Lexus.
b. Acer Computer Corporation’s PCs.
c. McKinsey & Co’s consulting services.
d. Caterpillar’s heavy equipment.
34. Firms pursuing a differentiation strategy want to be differentiated from competitors:

a. on only one central dimension.
b. only to the point where the features of their products are adequate.
c. along as many dimensions as possible.
d. on only two or three central dimensions.
35. The firm successfully implementing a differentiation strategy would expect all of the following
EXCEPT:
a. customers to be more sensitive to price increases.
b. to be able to charge a premium price for its product.
c. to be able to pass additional costs of supplies to the customer.
d. to be partially insulated from competitive rivalry.
ANS: A PTS: 1 DIF: hard REF: p. 155
36. A firm successfully implementing a differentiation strategy would expect:

a. customers to be sensitive to price increases.
b. to charge premium prices.
c. customers to perceive the product as standard.
d. to automatically have high levels of power over suppliers.
37. Which of the following is NOT a value-creating activity associated with the differentiation strategy?
a. intensive training programs to improve employee effectiveness and efficiency
b. strong capability in basic research.
c. rapid and timely deliveries to customers.
d. procurement systems focused on finding the highest quality raw materials.
38. The differentiation strategy can be effective in controlling the power of rivalry in an industry because:
a. customers will seek out the lowest cost product.
b. customers have no loyalty.
c. customers are loyal to brands that are differentiated in meaningful ways.
d. the differentiation strategy benefits from rivalry.
ANS: C PTS: 1 DIF: med REF: p. 156|p. 157
39. A differentiation strategy can be effective in controlling the power of substitutes in an industry
because:
a. buyers are not brand loyal.
b. substitute products are from a different industry.
c. customers want the low-cost product.
d. customers are loyal to a brand offering differentiated features that they value.
40. Firms seeking to differentiate particularly need support from the ____ and ____ functions.
a. finance, accounting c. product R&D, marketing
b. finance, record keeping d. management information, finance
41. Which of the following is a true statement about organizational structures for implementing
business-level strategies?
a. A cost leadership strategy requires a simple structure emphasizing high specialization,
centralization, and structured job roles.
b. A differentiation strategy requires a functional structure with limited formalization, broad
job descriptions, and an emphasis on the R&D and marketing functions.
c. An integrated cost leadership/differentiation strategy requires a multidivisional structure
using high formalization, decentralized decision-making, and vertical coordination.
d. A focused strategy requires a functional structure featuring high levels of both
specialization and formalization.
ANS: B PTS: 1 DIF: hard REF: p. 157|p. 158
42. Typically, a successful firm pursuing a differentiation strategy will:

a. have a very hierarchical structure.
b. require a structure which is very formal.
c. use cross-functional development teams.
d. develop free-standing business units.
43. Successful implementation of the differentiation strategy requires that:

a. decision making be centralized.
b. decision making be decentralized.
c. the finance function be the dominant function.
d. the accounting function be the dominant function.
ANS: B PTS: 1 DIF: med REF: p. 157|p. 158
44. The risks of a differentiation strategy do NOT include which of the following?
a. Customers may find the price differential between the low-cost producer and the
differentiated product too large.
b. Customers’ learning can narrow a customer’s perception of the value of a firm’s
differentiated features.
c. The means of differentiation no longer provide value to the customer.
d. The differentiation strategy is built on product features that the customer values.
45. One risk of the differentiation strategy is that:

a. a competitor may generate process innovations.
b. equipment may quickly become obsolete.
c. the firm may offer differentiated features that exceed the customers’ needs.
d. the firm may fail to detect competitors’ efforts to differentiate the commodity product.
46. The risks of the differentiation strategy include:

a. being “stuck in the middle.”
b. other firms being able to match the low cost.
c. customers being willing to pay a premium for the features.
d. a decision that the differentiated features are not worth the price.
47. When implementing a focus strategy, the firm seeks:

a. to be the lowest cost producer in an industry.
b. to offer products with unique features for which customers will pay a premium.
c. to avoid being stuck in the middle.
d. to serve the specialized needs of a market segment.
48. A focus strategy seeks to exploit core competencies:

a. on an industry-wide basis.
b. by serving the needs of a certain industry segment.
c. by servicing one particular corporation within a given industry.
d. by servicing several professions.
49. Focus strategies are:

a. associated only with cost leadership.
b. associated only with differentiation.
c. associated with both cost leadership and differentiation strategies.
d. typically avoided due to their high risk.
50. The risks of a focus strategy do NOT include:

a. a competitor outfocuses the focuser.
b. a firm pursuing an industry-wide strategy decides that the segment being served by the
focuser is attractive.
c. the needs of customers in the narrow segment served by the focuser grow more similar to
those of customers in the entire industry.
d. the top management team deciding to change strategies.
51. The risks of a focus strategy include:

a. a competitor’s ability to use its core competencies to outfocus the focuser by serving an
even more narrowly defined segment.
b. a competitor’s ability to use its core competencies to outfocus the focuser by serving an
even more broadly defined segment.
c. decisions by industry-wide competitors to use their resources to serve a wider range of
customers’ specialized needs than the focuser has been serving.
d. decisions by focused competitors to use their resources to serve a wider range of
customers’ needs.
52. The integration of a cost leadership and a differentiation strategy will:

a. not be used extensively in the future.
b. allow a firm to adapt more quickly.
c. slow the ability of a firm to respond.
d. lower the risks of the firm.
53. Some believe integrated strategies (combining attributes of both cost leadership and differentiation
strategies):
a. have been used successfully in the U.S. since the end of World War II.
b. are essential to establishing and exploiting competitive advantage in a global economy.
c. can only be implemented in specific, competitive industries.
d. blend perfectly with the types of corporate-level strategies implemented by many of
today’s large diversified companies.
54. Companies successfully implementing an integrated cost leadership/differentiation strategy are better
positioned to do all of the following EXCEPT:
a. learn new skills.
b. adapt quickly to a changing environment.
c. continue using current technology.
d. leverage core competencies across business units.
55. The integration of a cost leadership strategy and a differentiation strategy leads to a competitive
advantage because:
a. the managers have greater flexibility in the actions they can take.
b. different firms need different types of strategies to be successful.
c. it allows the firm to offer two types of value–some differentiated features and a relatively
low cost.
d. one strategy is not enough for most large firms.
56. The integrated cost leadership/differentiation strategy is difficult to implement mostly because:
a. the value chain activities and support functions required to implement the cost leadership
and differentiation strategies are not the same.
b. this strategic approach demands more flexibility than most firms can manage.
c. it is difficult to balance the structural emphasis between the two strategies.
d. the cost leadership strategy requires less structured job roles than does the differentiation
strategy.
57. The ____ structure is the most appropriate structure for implementing the integrated cost
leadership/differentiation strategy.
a. simple c. multidivisional
b. functional d. flexible
58. As explained in the text, three approaches to organizational work that can increase strategic flexibility
are:
a. Flexible Manufacturing, Management by Walking Around, and Total Quality
Management.
b. Open Book Management, Reengineering, and Flexible Manufacturing.
c. Reengineering, Total Quality Management, and Information Networks.
d. Flexible Manufacturing, Total Quality Management, and Information Networks.
59. The conditions that make it possible for firms to gain a competitive advantage through implementation
of the integrated cost leadership/differentiation strategy include all of the following EXCEPT:
a. flexible manufacturing.
b. total quality management systems.
c. information networks across firms.
d. downsizing of the organization.
60. A flexible manufacturing system is a:

a. manufacturing system where the output produced varies each month.
b. computer-controlled process that is used to produce a variety of products in moderate,
flexible quantities with minimal human intervention.
c. system of manufacturing where humans and machines are used interchangeably.
d. system where firms may choose to produce a product in any given month.
61. The benefit of a flexible manufacturing system is that:

a. the lot size needed to manufacture a firm’s product efficiently is reduced.
b. workers are no longer needed in the numbers required by standard manufacturing systems.
c. the technological advantage of the company is expanded.
d. the company is further enabled to shut down during periods of economic decline.
ANS: A PTS: 1 DIF: med REF: p. 163|p. 164
62. Elaborate enterprise resource planning (ERP) software systems improve firm efficiency by:
a. allowing workforce reductions without corresponding losses in productivity.
b. making it possible to share information quickly with everyone in the industry.
c. reducing the time required to design and test new products.
d. identifying the resources required across the firm to receive, record, procure and ship
customer orders.
63. Which of the following is an assumption of TQM systems?

a. The costs of poor quality are greater than costs of developing new processes to produce
high quality products.
b. Total quality of processes requires total control of employees by management.
c. Quality and costs are tradeoffs.
d. Finding the “one best way” and adhering to it results in continuously improving quality.
64. The term “stuck in the middle” means:

a. a middle of the road strategy.
b. the customers of the firm are willing to pay only a mid-range price for the product.
c. the customers of the firm have only moderate expectations regarding product quality.
d. the firm using an integrated strategy fails to establish a leadership position.
65. The integrated cost leadership/differentiation strategy:

a. is one of the most common successful business strategies.
b. has been shown by research to be consistently correlated with above-average returns.
c. is more risky to implement than the cost-leadership or differentiation business strategies.
d. is a more stable business strategy once the firm is established in a leadership position.
ESSAY
1. Define strategy and business-level strategy.
ANS:
Strategy is an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage. A business-level strategy is an integrated and
coordinated set of commitments and actions designed to provide value to customers and gain a
competitive advantage by exploiting core competencies in specific product markets. The
business-level strategy is concerned with the who, what and how of a firm’s advantage over its
competitors.
PTS: 1 REF: p. 142|p. 143 OBJ: 1
2. In analyzing a firm’s customers, discuss the classic three questions a firm must answer and the various
characteristics of each.
ANS:
Customers are the foundation of successful business-level strategies. When considering customers,
firms simultaneously examine three issues: who, what, and how. Respectively, these issues cause the
firm to determine the customer groups it will serve, the needs those customers have that it seeks to
satisfy, and the core competencies it possesses that can be used to satisfy customers’ needs. The
increasing segmentation of markets occurring throughout the world creates multiple opportunities for
firms to identify unique customer needs.
PTS: 1 REF: p. 143|p. 148 OBJ: 2
3. Discuss how a cost leadership strategy can allow a firm to earn above-average returns in spite of strong
competitive forces.
ANS:
Rivalry: Having the low-cost position serves as a valuable defense against rivals. Because of the cost
leader’s advantageous position, rivals hesitate to compete based on price. Buyers: The cost leadership
strategy also provides protection against the power of customers. Powerful customers can drive prices
lower, but they are not likely to be driven below that of the next most efficient industry competitor.
Suppliers: The cost leadership strategy also allows a firm to better absorb any cost increases forced on
it by powerful suppliers. Entrants: The cost leadership strategy also discourages new entrants because
the new entrant must be willing to accept no better than average returns until they gain the experience
required to approach the efficiency of the cost leader. Substitutes: For substitutes to be used, they must
not only perform a similar function but also be cheaper than the cost leader’s product.
PTS: 1 REF: p. 143|p. 148 OBJ: 6
4. Describe a cost leadership strategy and its risks.
ANS:
In a cost leadership strategy, the producer seeks to offer products with acceptable features to customers
at the lowest competitive price. One risk of a cost leadership strategy is that the firm’s investment in
manufacturing equipment is made obsolete through technological innovations by competitors.
Additionally, a firm with a cost leadership strategy may focus on cost reduction at the expense of
trying to understand customers’ needs and/or competitive concerns. Finally, competitors may be able
to imitate a cost leader’s competitive advantages in their own unique strategic actions.
PTS: 1 REF: p. 149|p. 154 OBJ: 7
5. Describe the risks of a differentiation strategy.
ANS:
The risks of a differentiation strategy include the fact that the price differential between the low cost
producer and the differentiated firm’s product may be too high for the customer. Thus, while the
customer may value the features incorporated by the producer, they are unwilling or unable to pay the
price necessary to purchase them. Additionally, differentiation may cease to provide value for which
customers are willing to pay. A third risk is that customer learning can narrow the customer’s
perception of the value of the firm’s differentiated product. The example used in the text is that of IBM
and personal computers. As individuals grew more knowledgeable about personal computers, the
differentiation associated with IBM became less important in the buying decision. Finally, counterfeit
goods might represent a risk to a differentiation strategy if these provide differentiated features to
customers at reduced prices.
PTS: 1 REF: p. 159 OBJ: 7
6. Describe a focus strategy and its additional risks.
ANS:
Focus firms face three additional risks beyond these general risks. First, a competitor may be able to
focus on a more narrowly defined competitive segment and “outfocus” the focuser. Second, a
competitor may decide the market segment is attractive and worthy of competitive pursuit. Finally, the
needs of this customer group may become more similar to the needs of industry-wide customers as a
whole, thereby eliminating the advantages of a focus strategy.
PTS: 1 REF: p. 159|p. 161 OBJ: 7
7. Describe the advantages of integrating cost leadership and differentiation strategies.
ANS:
In an increasingly competitive world where firms must compete on a global basis, the integration of
cost leadership and differentiation strategies is becoming more common. Such an integration of
strategies allows firms to adapt quickly to environmental changes, learn new skills and technologies,
and effectively leverage their core competencies across business units and business lines. Evidence is
showing that successful use of integrated strategies yields above-average returns.
PTS: 1 REF: p. 162|p. 166 OBJ: 3
8. What are the risks of an integrated cost leadership/differentiation strategy?
ANS:
Test Bank for Competing for Advantage, 3rd Edition : Hoskisson
Integrated strategies present risks that go beyond those that arise from the pursuit of any single
strategy by itself. Principal among these risks is that a firm becomes “stuck in the middle.” In such a
situation a firm fails to implement either the differentiation or the cost leadership strategy effectively.
The firm will not be able to earn above-average returns, and without favorable conditions, it will earn
below-average returns.
PTS: 1 REF: p. 165|p. 166 OBJ: 7
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ANS: T PTS: 1 DIF: med REF: p. 142

2. Business-level strategy can be thought of as the firm’s core strategy.

ANS: T PTS: 1 DIF: med REF: p. 143

ANS: T PTS: 1 DIF: med REF: p. 144

ANS: F PTS: 1 DIF: hard REF: p. 144

ANS: F PTS: 1 DIF: hard REF: p. 147 (Table 5.1)

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ANS: F PTS: 1 DIF: med REF: p. 149

ANS: F PTS: 1 DIF: hard REF: p. 149

ANS: T PTS: 1 DIF: med REF: p. 149

ANS: F PTS: 1 DIF: hard REF: p. 150 (Figure 5.2)

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ANS: F PTS: 1 DIF: med REF: p. 155

ANS: F PTS: 1 DIF: hard REF: p. 157|p. 158

ANS: F PTS: 1 DIF: hard REF: p. 158

ANS: F PTS: 1 DIF: hard REF: p. 160

ANS: T PTS: 1 DIF: med REF: p. 161

22. Firms successfully implementing an integrated cost leadership/differentiation strategy earn

ANS: T PTS: 1 DIF: hard REF: p. 162

23. A flexible manufacturing system is a computer-controlled process used to produce a variety of

ANS: T PTS: 1 DIF: med REF: p. 163

ANS: F PTS: 1 DIF: hard REF: p. 165

ANS: F PTS: 1 DIF: hard REF: p. 165

ANS: F PTS: 1 DIF: hard REF: p. 165

ANS: F PTS: 1 DIF: med REF: p. 154

2. A firm’s core strategy is its ____.

6. Customer needs are related to the:

10. Business-level strategies are concerned specifically with:

11. Which of the following is NOT considered a generic strategy?

13. A company using a narrow scope in its business strategy is:

15. A simple structure can be described by all of the following EXCEPT:

16. The functional structure allows for effective:

17. Functional structures work best for firms with:

18. One disadvantage of the functional structure is that:

20. A cost leadership strategy can be summarized as:

21. To achieve strategic competitiveness, Ryanair has relied upon:

27. Wal-Mart’s effective strategy/structure configuration is:

28. The risks of a cost leadership strategy include:

33. All of the following are examples of differentiated products EXCEPT:

34. Firms pursuing a differentiation strategy want to be differentiated from competitors:

36. A firm successfully implementing a differentiation strategy would expect:

42. Typically, a successful firm pursuing a differentiation strategy will:

43. Successful implementation of the differentiation strategy requires that:

45. One risk of the differentiation strategy is that:

46. The risks of the differentiation strategy include:

47. When implementing a focus strategy, the firm seeks:

48. A focus strategy seeks to exploit core competencies:

49. Focus strategies are:

50. The risks of a focus strategy do NOT include:

51. The risks of a focus strategy include:

52. The integration of a cost leadership and a differentiation strategy will:

60. A flexible manufacturing system is a:

61. The benefit of a flexible manufacturing system is that:

63. Which of the following is an assumption of TQM systems?