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Strategic Management Chapter 4
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Chapter 4—Business-Level StrategyTRUE/FALSE
1. As shown in the Chapter 4 Opening Case, because of its lower overhead cost structure, Acer is able to
price its products below those of its competitors.
ANS: T PTS: 1 DIF: Easy REF: 99
OBJ: 04-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
2. According to the Chapter 4 Opening Case, the decision to sell through wholesalers and to manufacture
all product in-house are examples of actions taken by Acer to reduce its costs.
ANS: F PTS: 1 DIF: Medium REF: 99
OBJ: 04-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
3. According to the Chapter 4 Opening Case, Acer’s strategy of running a business with lower costs is
good when markets are not growing (as occurred during the global recession) but even better when
markets are growing.
ANS: F PTS: 1 DIF: Hard REF: 99
OBJ: 04-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
4. The goal of business-level strategy is to earn above-average returns.
ANS: T PTS: 1 DIF: Medium REF: 100
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
5. A business-level strategy is an integrated and coordinated set of commitments and actions designed to
exploit core competencies and gain a competitive advantage in specific product markets.
ANS: T PTS: 1 DIF: Medium REF: 100
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
6. Every firm uses all levels of strategy: corporate, acquisition and restructuring, international and
cooperative.
ANS: F PTS: 1 DIF: Easy REF: 100
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
, 7. Business-level strategy can be thought of as the firm’s core strategy.
ANS: T PTS: 1 DIF: Medium REF: 100
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation
8. When selecting a business level strategy, the firm determines who will be served, what customer needs
will be satisfied, and how those needs will be satisfied.
ANS: T PTS: 1 DIF: Easy REF: 100-101
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation
9. Global competition has increased the options for consumers and has made it more imperative for firms
to identify the needs of customers in order to earn above-average returns.
ANS: T PTS: 1 DIF: Medium REF: 101
OBJ: 04-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing
strategy & innovation
10. Effective use of the generic business strategies allows the firm to favorably position itself relative to
the five forces.
ANS: T PTS: 1 DIF: Easy REF: 101
OBJ: 04-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation
11. Almost any identifiable human or organizational characteristic can be used to subdivide a market into
segments that differ from one another on a given characteristic.
ANS: T PTS: 1 DIF: Easy REF: 103
OBJ: 04-02 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation
12. The generalized forms of value that goods and services provide are either lower cost with acceptable
features or highly differentiated features with acceptable cost.
ANS: F PTS: 1 DIF: Easy REF: 104
OBJ: 04-02 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff
& Rubin: Managing strategy & innovation
13. An English professor spends her summers writing low-brow romance novels that sell directly to
paperback. She writes under a fictional name because she is embarrassed to admit to her colleagues
and students how she earns the extra money for foreign vacations. The professor is correct in her
concern that she is serving customer needs that are objectively inferior and bad.
ANS: F PTS: 1 DIF: Hard REF: 104
OBJ: 04-02 TYPE: application
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