References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
68.
Award: 1.00 point
BuyNow Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through
services like cash on delivery, easy return, and online tracking, the company has created more
customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the
company’s costs are substantially lower than its competitors because of minimal investments in
operation and administration. In this scenario, BuyNow Inc. has most likely been able to provide
superior value and cost control through
strategic parity.
strategic profiling.
strategic liquidation.
strategic positioning.
In this scenario, BuyNow Inc. has been able to provide superior value and control its costs through
strategic positioning. Strategy is about creating superior value, while containing the cost to create it.
Managers achieve this combination of value and cost through strategic positioning. That is, they
stake out a unique position within an industry that allows the firm to provide value to customers,
while controlling costs.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
69.
Award: 1.00 point
As the strategic manager of ShRPer Scissors, you are tasked with producing a strategy for
introducing a new line of premium scissors. Your competitor produces a line of similar scissors at a
cost of $1 and sells them for $12. Because your company has inferior production capabilities, your
scissors will cost $3 each to produce. However, your handle is proven to be more comfortable than
your competitors’. Assuming you are guaranteed to sell the same number of units as your
competitor, which of the following strategies is most likely to achieve a competitive advantage?
Reduce the quality of materials used in ShRPer scissors to bring unit costs down to $1, then
sell the scissors for $12.
Continue to produce ShRPer scissors for $3 but set the price at $10.
Offer a buy-one-get-one-free sale on ShRPer scissors.
Market ShRPer scissors as a higher-quality alternative and sell them for $15.
By emphasizing the quality and comfort of ShRPer scissors, you differentiate the product and create
superior value for customers. Although your scissors are more expensive to make at $3 each, the
increased perceived value of your product allows you to sell them for $15, making the difference
between value creation and cost greater than your competitor’s. The greater the difference
between value creation and cost, the greater the firm’s economic contribution and the more likely it
will gain competitive advantage.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
70.
Award: 1.00 point
A firm always has a competitive disadvantage when its return on invested capital is
below the industry average.
2 percent or lower in a declining industry.
about the same as its closest competitor.
declining steadily over two or more years.
A firm always has a competitive disadvantage when its return on invested capital is below the
industry average.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
71.
Award: 1.00 point
Good Ole Cinemas Inc. and HD Inc. are two companies that own and run movie theaters in malls
and other commercial areas. While Good Ole Cinemas Inc. pursues a cost-leadership strategy, HD
Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this
scenario?
Good Ole Cinemas will charge a premium price for its customers, while HD will implement
everyday low pricing.
HD and Good Ole Cinemas will not be direct competitors to each other, and their customer
segments will overlap very little.
HD will keep its customer service at an acceptable level, while Good Ole Cinemas will
provide superior customer service.
Good Ole Cinemas and HD will use a similar approach to create value for customers by
attempting to offer everything to everybody.