MQM 385 Formulation Exam | Questions with Verified Answers
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MQM 385 Formulation Exam | Questions with Verified Answers (T/F) Applying the five forces model to business-level strategy allows for managers to asses the benefits and risks of both cost-leadership and differentiation strategies True (T/F) Differentiation and cost-leadership strategies are only...
(T/F) Applying the five forces model to business-level strategy allows for managers to
asses the benefits and risks of both cost-leadership and differentiation strategies
True
(T/F) Differentiation and cost-leadership strategies are only effective in manufacturing
industries
False
(T/F) A cost-leader is the firm most likely to survive a price war
True
Business Level Strategy Questions
1. Who are the customer segments we will serve?
2. What customer needs, wishes and desires will we satisfy?
3. Why do we want to satisfy them?
4. How will we satisfy them?
(T/F) When a firm operates at the minimum efficient scale, there is still opportunity for it
to further reduce its cost per unit through economies of scale.
False
Value drivers contribute to a firm's competitive advantage only if
the increase in value creation exceeds the increase in costs.
Pete's Bikes enjoys a competitive advantage as a cost-leader because high demand for
its products has allowed it to operate at the minimum efficient scale. Which of the
following scenarios would be most concerning to the managers of Pete's Bikes?
A major winter storm shuts down Pete's production for several days.
Which of the following is primarily a value driver?
complements
The goal of a strategic position is to create the largest gap possible between the
________ that a firm creates through its offerings and the ________ required to create
these offerings.
value; cost
Mohawk is a leader in sustainable and innovative carpeting and floorings, as evidenced
by its signature product, the world's first organic cotton carpet. Its product is unique and
has appealing customer attributes. If Mohawk's raw material costs increased by 12
percent this year, what would be the likely outcome?
, Mohawk would pass a major portion of this increase along as a price increase to its
customers.
The fact that both Whole Foods (a high-end grocery store) and Aldi (an inexpensive
grocery store) have a competitive advantage in the grocery store industry is an
indication that
following a different generic business strategy within the same industry can lead to a
competitive advantage for more than one organization.
When examining all the generic strategies, which of the following below is inherently
superior in every industry?
There is no single superior business-level strategy.
Power Juice is the owner of a firm that produces sports drinks. Since there are a
number of firms in the industry competing on cost, Power Juice has decided to pursue a
differentiation strategy. In this case, she should
focus on adding unique features to her product that customers will value.
One of the reasons that big box retailers like Home Depot are able to achieve
economies of scale is that
they are able to take advantage of physical properties and maximize their scale
efficiencies by stocking more merchandise and handling inventory more efficiently
Both Tom's Car Repair and Fast Engines. incur a cost of $9,000 to manufacture a
vehicle. However, the economic value created by Fast Engines. is more than that
created by Tom's Car Repair. What does this indicate?
Fast Engines can charge a premium price on its automobiles.
Which of the following examples uses a focused differentiation strategy?
a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars
per bottle
Bath & Chill is a spa that caters to the needs of a small percentage of highly health-
conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since
there are very few spas that offer the same unique services, customers are willing to
pay a premium price for its products and services. In this scenario, Bath & Chill is
following a
focused differentiation strategy.
Food Tiger Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive
operation. The company's marketing and sales, logistics, administrative, and other such
related costs get divided between a large number of product units stocked in its stores.
This makes it difficult for smaller retail stores and supermarkets to compete against
Food Tiger's low prices. Thus, Food Tiger has a competitive advantage due to its
economies of scale.
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