strategy is to combine a set of activities to stake out a unique position within an industry.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
76.
Award: 1.00 point
Which of the following is an implication of all firms in an industry pursuing a low-cost position
through application of competitive benchmarking?
No firm would face direct competition from others in the industry; hence, profit potential
would be high.
Each firm would be catering to a different customer segment.
The firms would eventually have no resources to invest in product and process
improvements.
Each firm would be in a better position to gain a competitive advantage.
If all firms in the same industry pursued a low-cost position through application of competitive
benchmarking, all firms would have identical cost structures. None could gain a competitive
advantage. There would be little if any value creation for customers because companies would have
no resources to invest in product and process improvements.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
77.
Award: 1.00 point
Toy sales have declined by 10 percent each year, forcing many retailers to exit the industry. To
eliminate its remaining competition, Bargain Toys sells all of its product at a loss and relies on its
significant cash holdings to cover costs until its competition is forced to exit the industry. Is this an
example of a successful strategy? Why or why not?
Yes. Any strategy that forces competition from the market is by definition successful.
Yes. Bargain has achieved a sustainable competitive advantage by selling its toys at a
lower price than competitors.
No. Bargain has failed to create value for its customers.
No. Bargain’s strategy and competitive advantage are unsustainable.
Strategy is not a zero-sum game. Competition focuses on creating value for customers rather than
destroying rivals. Although Bargain Toys has created temporary value for its customers by offering
its goods below cost, the advantage it achieved is unsustainable. When Bleaker runs out of cash to
cover its operating expenses, it will no longer be able to offer its toys at such a low cost and will
either be forced to raise prices or exit the industry.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
78.
Award: 1.00 point
Which of the following statements should ideally reflect a firm’s strategy for competitive advantage?
Our strategy is to win at any cost.
We will be number one in the industry.
Our aim is to create superior customer value while controlling costs.
We want to be the market leader by replicating our competitor’s strategy.
The statement that should ideally reflect a firm’s strategy for competitive advantage is “Our aim is to
create superior customer value while controlling costs.” Strategy is about creating superior value,
while containing the cost to create it. Grandiose statements are not strategy; they provide little
managerial guidance and frequently fail to address the economic fundamentals.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
79.
Award: 1.00 point
Suger & Sweet Sodas has seen its market share erode in recent years, as consumers increasingly
turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle
interest in sugary sodas, Suger & Sweet decides to produce a limited run of “throwback” cans using
labeling first introduced in the 1980s. What is wrong with this strategy?
It fails to face the competitive challenge.
It does not involve concrete actions.
It lacks strategic commitments.
It tries to be everything to everybody.
Suger & Sweet’s strategy fails to face the competitive challenge of changing consumer tastes.
Instead of trying to give customers what they want by producing its own line of sparkling waters,
Suger & Sweet simply continues to produce the same sugary sodas and is likely to see its market