SEVI 3013H Final Exam Questions and Answers
generic strategies - Answerbasic types of business level strategies based on breadth of
target market (industrywide versus narrow market segment) and type of competitive
advantage (low cost versus uniqueness)
/.1. overall cost leadership
2. differentiation
3. focus - AnswerWhat are the three types of generic strategies?
/.overall cost leadership strategy - Answera firm's generic strategy based on appeal to
the industrywide market using a competitive advantage based on low cost
/.overall cost leadership - AnswerPotential pitfalls of _______________ strategies
include: too much focus on one or a few value-chain activities, increase in the cost of
the inputs on which the advantage is based, a strategy that can be imitated too easily, a
lack of parity on differentiation, reduced flexibility, and obsolescence of the basis of cost
advantage.
/.experience curve - Answerthe decline in unit costs of production as cumulative output
increases
/.competitive parity - Answera firm's achievement of similarity, or being "on par," with
competitors with respect to low cost, differentiation, or other strategic product
characteristic
/.differentiation strategy - Answera firm's generic strategy based on creating differences
in the firm's product or service offering by creating something that is perceived
industrywide as unique and valued by customers
/.differentiation - AnswerPotential pitfalls of _______________ strategies include:
uniqueness that is not valuable, too much differentiation, too high a price premium,
differentiation that is easily imitated, dilution of brand identification through product-line
extensions, and perceptions of differentiation that vary between buyers and sellers.
/.focus strategy - Answera firm's generic strategy based on appeal to a narrow market
segment within an industry
/.focus - AnswerPotential pitfalls of ___________ strategies include: cost advantages
may erode within the narrow segment, facing competition from new entrants and from
imitation, and becoming too focused to satisfy buyer needs.
/.overall cost leadership; differentiation, imitate - AnswerCombining (or integrating)
_______________ and ______________ strategies can enable a firm to enjoy superior
, performance and improve its competitive position. Such positions are typically difficult
for rivals to ______________.
/.mass customization - Answera firm's ability to manufacture unique products in small
quantities at low cost
/.profit pool - Answerthe total profits in an industry at all points along the industry's value
chain
/.combination strategies - Answerfirms' integrations of various strategies to provide
multiple types of value to customers
/.industry life cycle - Answerthe stages of introduction, growth, maturity, and decline that
typically occur over the life of an industry
/.introduction stage - Answerthe first stage of the industry life cycle, characterized by (1)
new products that are not known to customers, (2) poorly defined market segments, (3)
unspecified product features, (4) low sales growth, (5) rapid technological change, (6)
operating losses, and (7) a need for financial support
/.growth stage - Answerthe second stage of the product life cycle, characterized by (1)
strong increases in sales; (2) growing competition; (3) developing brand recognition;
and (4) a need for financing complementary value-chain activities such as marketing,
sales, customer service, and research and development
/.maturity stage - Answerthe third stage of the product life cycle, characterized by (1)
slowing demand growth, (2) saturated markets, (3) direct competition, (4) price
competition, and (5) strategic emphasis on efficient operations
/.decline stage - Answerthe fourth stage of the product life cycle, characterized by (1)
falling sales and profits, (2) increasing price competition, and (3) industry consolidation
/.reverse positioning - Answera break in industry tendency to continuously augment
products, characteristic of the product life cycle, by offering products with fewer product
attributes and lower prices
/.breakaway positioning - Answera break in industry tendency to incrementally improve
products along specific dimensions, characteristic of the product life cycle, by offering
products that are still in the industry but that are perceived by customers as being
different
/.harvesting strategy - Answera strategy of wringing as much profit as possible out of a
business in the short to medium term by reducing costs
/.consolidation strategy - Answera firm's acquiring or merging with other firms in an
industry in order to enhance market power and gain valuable assets
