Although these companies are in the same industry, their customer segments will most likely
overlap very little, and they will not be direct competitors. That is because each firm has chosen a
distinct but different strategic position; both can win if they have a distinct and well-executed
competitive strategy.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
72.
Award: 1.00 point
For a firm that operates in an industry where competition is high, which of the following practices
will result in inferior performance?
choosing a distinct but different strategic position in the industry
working toward increasing the difference between value creation and cost
trying to be everything to everybody by combining different competitive strategies
focusing on creating value for customers rather than destroying rivals
Because resources are limited, managers must carefully consider their strategic choices in the quest
for competitive advantage. Trying to be everything to everybody will likely result in inferior
performance. Although the idea of combining different business strategies seems appealing, it is
actually quite difficult to execute.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
73.
Award: 1.00 point
If a company wants to gain a competitive advantage in a highly competitive industry, it should
ideally
execute an integrated cost-leadership and differentiation position.
copy the strategies of other firms through competitive benchmarking.
provide goods or services similar to its competitors at higher prices.
stake out a unique position within the industry.
The key to successful strategy is to combine a set of activities to stake out a unique position within
an industry. Competitive advantage has to come from performing different activities or performing
the same activities differently than rivals are doing. Competing to be similar but just a bit better than
a competitor is likely to be a recipe for cutthroat competition and low profit potential.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
74.
Award: 1.00 point
Yellow Ride Service is a new entrant to the taxi industry. It has achieved success by staking out a
unique position in the industry. How did Yellow Ride Service mostly likely achieve this position?
providing long-distance cab fares at a higher rate than competitors; servicing a larger area
than competitors
providing long-distance cab fares at a lower rate than competitors; servicing a smaller area
than competitors
providing long-distance cab fares at a higher rate than competitors; servicing the same
area as competitors
providing long-distance cab fares at a lower rate than competitors; servicing the same area
as competitors
Yellow Ride Service achieved a unique position in the industry by providing long-distance cab fares
at a lower rate than competitors while servicing the same area as competitors. To stake out a unique
position, a company must either perform the same activities as competitors in a way that is better
for customers or perform different activities. Also, this company must provide an advantage for
customers without trading the benefit with a disadvantage.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
75.
Award: 1.00 point
Lil Anthony’s and Amelia’s are two restaurants serving Italian cuisine. While Lil Anthony’s focuses on
providing quick, affordable pasta dishes for the lunch crowd, Amelia’s focuses on serving home-
style dishes in an upscale, romantic setting. Both companies have been able to gain a competitive
advantage. This is most likely because the companies have
benefitted from economies of scale.
entered into a cartel arrangement.
pursued distinct strategic positions.
engaged in direct imitation and substitution.
In this scenario, the two firms have gained a competitive advantage by pursuing distinct strategic
positions. Cost-leadership and differentiation are distinct strategic positions. The key to successful