Competitive Strategy Quiz

The objective of competitive strategy is to

• provide detail to the company's business model.

• build competitive advantage in the marketplace by giving buyers superior value relative to the offerings of rival sellers.

• get the company into the best strategic group and then dominate it.

• establish a competitively powerful value chain.

• grow revenues at a faster annual rate than rivals are able to grow their revenues.

While there are many routes to competitive advantage, they all involve

• building a brand name image that buyers trust.

• delivering superior value to buyers in ways rivals cannot readily match.

• achieving lower costs than rivals and becoming the industry's sales and market share leader.

• finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities.

• getting in the best strategic group and dominating it.

A company's competitive strategy deals with

• management's game plan for securing a competitive advantage relative to rivals.

• what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on.

• its efforts to change its position on the industry's strategic group map.

• its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward.

• All of these.

Which of the following is not one of the five generic types of competitive strategy?

• Focused low-cost provider strategy

• Broad differentiation strategy

• Overall low-cost provider strategy

• Focused differentiation strategy

• Market share dominator strategy

The generic types of competitive strategies include

• build market share, maintain market share, and slowly surrender market share.

• offensive strategies and defensive strategies.

• low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider strategies.

• low-cost/low-price strategies, high-quality/high-price strategies, medium-quality/medium-price strategies, low-cost/high-price strategies.

• price leader strategies, price follower strategies, technology leader strategies, first-mover strategies, offensive strategies, and defensive strategies.

A low-cost leader's basis for competitive advantage is

• lower prices than rival firms.

• using a low-cost/low-price approach to gain the biggest market share.

• high buyer switching costs.

• lower overall costs than competitors.

• higher unit sales than rivals.

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

• cutting its price to levels significantly below the prices of rivals.

• using its low-cost edge to underprice competitors and attract price-sensitive buyers in large enough numbers to increase total profits or refraining from price cutting and using the low-cost advantage to earn a higher profit margin on each unit sold.

• going all out to use its cost advantage to capture a dominant share of the market.

• spending heavily on advertising to promote the fact that it charges the lowest prices in the industry.

• outproducing rivals and thus having more units available to sell.

The major avenues for achieving a cost advantage over rivals include

• eliminating or curbing nonessential cost-producing activities and performing essential value chain activities more cost-effectively that rivals.

• having a management team that accepts below-market salaries.

• being a first mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture.

• outsourcing high-cost activities to offshore vendors.

• paying lower wages to hourly workers than what rivals are paying workers.

To succeed with a low-cost provider strategy, company managers have to

• pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage.

• move the performance of most all value chain activities to low-wage countries.

• sell direct to users of their product or service and eliminate use of wholesale and retail intermediaries.

• do two things: (1) perform value chain activities more cost-effectively than rivals and (2) be proactive in revamping the firm's overall value chain to eliminate or bypass 'nonessential' cost-producing activities.

• outsource the majority of value chain activities.

Achieving a cost advantage over rivals entails

• concentrating on the primary activities portion of the value chain and outsourcing all support activities.

• being a first mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible.

• performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities.

• minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs.

• producing a standard product, redesigning the product infrequently, and having minimal advertising.