Question

1. To use a company's resources and distinctive competencies to gain a competitive advantage over its rival in a market or industry, a ____ strategy is the plan of action that strategic managers could adopt.

a. stakeholder-level

b. business-level

c. customer-level

d. product-level

2. The process by which companies increase or decrease product prices to convey their competitive intention to other companies and so influence the way they price their products is called

a. price signaling

b. price cutting

c. horizontal integration

d. horizontal mergers

3. Outsourcing functional activities

a. reorders the steps in a firm's value chain.

b. moves one or more of its own value creation functions and contracts with another company to perform that activity on their behalf

c. reduces the firm's dependence on its value chain.

d. strengthens the firm's capabilities in each value chain function.

e. eliminates the need for a value chain

4. Of the following attributes, which one(s) are not a drawback to licensing?

a. A company does not have tight control over operations in foreign countries.

b. Licensing limits a company's ability to coordinate strategy.

c. A company's brand could become damaged if the licensee does not perform up to established standards

d. A & B only

e. B & C on

5. Market segmentation to gain a competitive advantages occurs when a company

a. allows its managers to ignore costs.

b. helps firms keep costs to a minimum.

c. groups customers on the basis of important differences in their needs

d. is focused on corporate-level strategy.

e. creates, makes, and sells a product in a way that better satisfies customer needs than its rivals.

Answer 1

1. The answer is option “b” – business level strategy.

Business level strategy consists of integrated and coordinated set of actions that are used to gain competitive advantage in the long run.

2. The answer is option “a” – price signaling.

The price signaling strategy usually occurs when competitors can produce at two different quality levels.

3. The answer is option “d” - strengthens the firm's capabilities in each value chain function.

When functional activities are outsourced then the firm can focus on one or a few core value chain functions. It will not be bothered by the functional activities.

4. The answer is option “c” – A company's brand could become damaged if the licensee does not perform up to established standards.

Licensing has three drawbacks – dilution of control, difficulty in co-ordination and risk associated with licensing technological knowhow.

5. The answer is option “c” - groups customers on the basis of important differences in their needs.

Market segmentation is basically dividing the customers in different groups on the basis of their needs and preferences for a product.