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Explain how a differentiation strategy enables a business to address the five competitive forces in such a way that it can enjoy high levels of profitability.

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Differentiation provides protection agai...

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Firms that successfully integrate both differentiation and cost advantages create an enviable position relative to industry forces.

A) True
B) False

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Discuss the risks associated with each of these forms of competitive advantage-cost leadership, differentiation, and focus.

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Cost leadership: must pay attention to a...

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High product differentiation is generally accompanied by


A) higher market share.
B) decreased emphasis on competition based on price.
C) higher profit margins and lower costs.
D) significant economies of scale.

E) A) and B)
F) A) and D)

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Which of the following is not a potential pitfall of a differentiation strategy?


A) Perceptions of differentiation may vary between buyers and sellers
B) Too high a premium price
C) It is easily imitated
D) Highly valued uniqueness

E) C) and D)
F) B) and D)

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The Keg Steakhouse & Bar has a simple operating formula. The Keg


A) purposefully limited its menu and has stayed away from food fashions and fads.
B) expanded its menu and embraced food fashions and fads.
C) cut expenses from suppliers.
D) purposefully limited its menu and has stayed away from food fashions and fads and cut expenses from suppliers.

E) A) and C)
F) None of the above

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A pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.

A) True
B) False

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Discuss how a competitive advantage can be attained through cost leadership using the value chain concept.

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The emphasis is core functions and would...

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Developing uniqueness that is not valuable is:


A) an essential feature of a differentiation strategy.
B) the result of having brand-loyal customers become more sensitive to prices.
C) a potential pitfall of a differentiation strategy.
D) a necessary evil of a cost-leadership strategy.

E) B) and C)
F) All of the above

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Differentiation improves a firm's competitive position by:


A) increasing the buyer's power
B) creating high entry barriers
C) providing buyer's with comparable alternatives
D) creating the need for a low-cost position

E) A) and B)
F) A) and C)

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Evaluating strategic choices should involve four tests:


A) consistency, consonance, competitive advantages, and differentiation
B) competitive advantages, differentiation, feasibility, and consistency
C) competitive advantages, consistency, feasibility, and consonance
D) consistency, consonance, cost leadership, and feasibility

E) A) and B)
F) A) and C)

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Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.

A) True
B) False

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Both the positioning school and the resource-based school of strategic management take an 'inside-out' perspective.

A) True
B) False

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The following are potential pitfalls of an integrated overall low cost and differentiation strategy, except:


A) firms that fail to attain both strategies may end up with neither and become 'stuck-in-the-middle.'
B) targeting too large a market that causes unit costs to increase.
C) underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain.
D) miscalculating sources of revenue and profit pools in the firm's industry.

E) None of the above
F) B) and D)

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Mass customization enables manufacturers to be more responsive to customer demands for high quality products.

A) True
B) False

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