Business Strategies and Competitive Advantage

What is the main focus of a low-cost strategy?

• Increasing the value of a product

• Offering goods and services at a reasonable price

• Developing new products

• Enhancing customer service

Which of the following companies is NOT mentioned as an example of a low-cost strategy?

• Wal-Mart

• Dell Inc.

• Rolex

• Southwest Airlines

What is a key characteristic of a differentiation strategy?

• Reducing production costs

• Increasing the value of a product

• Minimizing customer service

• Offering discounts

What advantage do firms gain by achieving economies of scale?

• Higher product prices

• Cost advantages from a large sales volume

• Increased product differentiation

• Enhanced customer loyalty

What is one way Starbucks has differentiated its product offering from its rivals?

• By lowering prices significantly

• By offering a wider variety of drinks

• By the excellent quality of its coffee-based drinks

• By reducing the size of its stores

What challenge do managers face after differentiating their product?

• Reducing the number of employees

• Translating competitive advantage into sustained high profitability

• Increasing the number of stores

• Lowering the quality of the product

What is one potential downside of differentiation mentioned in the text?

• It always decreases consumer demand

• It can raise the cost structure of the firm

• It leads to a decrease in product quality

• It reduces brand recognition

What is one option for exploiting differentiation according to Figure 6.4?

• Increase prices more than costs

• Decrease prices significantly

• Ignore market trends

• Reduce product quality

What is a benefit of successful differentiation mentioned in the text?

• Increased demand

• Decreased employee productivity

• Higher production costs

• Lower market share

How can markets be segmented according to the text?

• By product color

• By value preferences, income, age, and tastes

• By store location

• By advertising budget