MQM 385 CHAPTER 5 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026

MQM 385 CHAPTER 5 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026 To create a successful business model, managers must choose a set of business-level strategies that a. allow the company to better compete with rivals within an industry. b. help them decide what businesses to enter and exit. c. help build an organizational structure that contains multiple businesses. d. work together to give a company a competitive advantage over its rivals. e. help it to diversify to better leverage distinctive competencies. - Answers d. work together to give a company a competitive advantage over its rivals. Competitive advantage with product differentiation occurs when a company a. creates competitive advantage by grouping customers on the basis of important differences in their needs. b. helps firms keep costs to a minimum. c. creates, makes, and sells a product in a way that better satisfies customer needs than its rivals do. d. is focused on corporate-level strategy. e. allows its managers to ignore costs. - Answers d. is focused on corporate-level strategy. Which of the following is not a generic competitive strategy? a. Cost leadership b. Differentiation c. Focused cost leadership d. Focused differentiation e. Innovation - Answers e. Innovation Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure? a. Cost leadership b. Differentiation c. Broad differentiation d. Focused differentiation e. None of these choices - Answers a. Cost leadership A cost leader could reasonably be expected to reduce costs by developing distinctive competencies in all but a. manufacturing. b. materials management. c. marketing and sales. d. information technology. e. learning organizational structure. - Answers b. Materials management The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is a. standardized market price. b. industry life cycle stage. c. degree of market segmentation. d. age of the market. e. market trajectory. - Answers c. degree of market segmentation Companies are now able to pursue cost leadership and differentiation simultaneously because a. of the emergence of flexible manufacturing technologies and new information technologies. b. markets have become more homogeneous. c. industries have become consolidated. d. barriers to entry have fallen. e. government regulation has diminished. - Answers a. of the emergence of flexible manufacturing technologies and new information technologies. Market fragmentation has occurred in many industries because of the a. emergence of flexible technologies. b. homogenization of markets. c. implementation of just-in-time inventories. d. increased strength of large competitors. e. increased internationalization of business. - Answers a. emergence of flexible technologies A radio station has a distinctive competency in developing new products (shows) and wants to serve the upscale market. Which of the following is the most appropriate generic strategy for this company? a. Cost leadership b. Differentiation c. Both cost leadership and differentiation d. Focused low-cost approach e. Focused differentiation approach - Answers e. Focused differentiation approach At their simplest level, customer needs can be defined as a. desires. b. wants. c. cravings. d. all of these choices. e. none of these choices. - Answers d. all of these choices A differentiated product is a product that a. looks different from rival products. b. better satisfies customer needs than rival products do. c. is packaged in a unique and eye-appealing manner. d. always costs more than rival products. e. always costs less than rival products. - Answers b. better satisfies customer needs than rival products do. A large company produces a variety of clothing for different customer groups. This firm is pursuing which of the following strategies? a. Cost leadership b. Differentiation c. Both cost and differentiation d. Focus e. Share building - Answers b. differentiation A producer of commodity steel should pursue which of the following generic competitive strategies? a. Growth b. Differentiation c. Focus d. Cost leadership e. Profit - Answers d. cost leadership Which firm has the greatest probability of achieving a competitive advantage by successfully managing its strategy? a. A steel manufacturer that continues to use large plants instead of new technology to achieve economies of scale b. A retailer that sells a wide range of clothes to the mass market c. A pharmaceutical firm with brand loyalty that decreases administrative costs but continues to invest in research and development d. A large defense contractor that offers an undifferentiated product only to a few market segments e. A jeans manufacturer that keeps its production within the United States rather than moving to less expensive, overseas factories - Answers c. A pharmaceutical firm with brand loyalty that decreases administrative costs but continues to invest in research and development The most expensive competitive strategy to pursue is a. differentiation. b. cost leadership. c. focus. d. growth. e. hypercompetition. - Answers a. Differentiation When a company produces a wide range of products for different customer groups, it is following a strategy of a. cost leadership. b. differentiation. c. focus. d. market concentration. e. share building. - Answers B. Differentiation When technological change is low and customer needs are well established and standardized, the most appropriate generic strategy to pursue is a. market concentration. b. differentiation. c. focus. d. asset reduction. e. cost leadership. - Answers e. Cost leadership Cost leadership is most appropriate when a. the power of buyers is low and barriers to entry are high. b. economies of scale are relatively unimportant in manufacturing products. c. customers have very different needs and uses for the industry's products. d. product innovation is the key competitive factor. e. industry rivalry is high and customers are very sensitive to prices. - Answers e. industry rivalry is high and customers are very sensitive to prices. In which of the following situations does a differentiation strategy make the most sense? a. The industry is fragmented into different customer groups, each of which has different needs. b. Customer needs are primarily satisfied by the price of the product. c. There is a lot of technological change. d. There are low barriers to entry and exit. e. The industry is in the maturity stage of the life cycle. - Answers a. The industry is fragmented into different customer groups, each of which has different needs. When a company services the broad market and has a low degree of product differentiation, it is most likely a. pursuing a cost-leadership strategy. b. pursuing a differentiation strategy. c. pursuing a focus strategy. d. stuck in the middle. e. pursuing both cost leadership and differentiation. - Answers a. pursuing a cost-leadership strategy. Compared to a differentiator, the cost leader has the advantage over its rivals of a. making higher profit margins. b. being better able to withstand the negative influence of powerful suppliers and buyers. c. having inimitable production methods. d. enjoying higher brand loyalty. e. being preferred by investors. - Answers b. being better able to withstand the negative influence of powerful suppliers and buyers. A disadvantage of pursuing a cost leadership strategy is that a. technological change can make production methods obsolete. b. price wars make it hard to compete with differentiators. c. it costs more than a differentiation strategy because of the necessity of high capital investments. d. powerful buyers are a major threat. e. no quality control exists. - Answers a. technological change can make production methods obsolete. A differentiation strategy is based on creating a product that customers perceive as being a. about the same as other available products. b. distinct. c. the least costly product in the industry. d. the most costly product in the industry. e. somewhat faddish in nature. - Answers b. distinct Mercedes-Benz automobiles are a good example of a. moderately priced products. b. imitative products. c. differentiated products. d. products that are struggling to differentiate. e. highly competitive products. - Answers c. differentiated products Differentiation is least effective when it is based on a. physical features. b. service quality. c. an appeal to the customer's psychological needs. d. reliability. e. product quality. - Answers a. physical features A firm makes complex telecommunications products, such as cellular telephones. Because this company has a distinctive competency in research and development, it should try to differentiate its product through a. reliability. b. innovation. c. advertising. d. service. e. low price. - Answers b. innovation A shrinking market segment poses the greatest threat to a company pursuing which of the following strategies? a. Cost leadership b. Differentiation c. Focused differentiation d. Growth e. Both cost leadership and differentiation simultaneously - Answers c. Focused differentiation A focused differentiator has the advantage of a. charging a premium price because of its low costs. b. pursuing differentiation and low-cost strategies simultaneously. c. being close to the customer. d. superior materials management. e. protection against price wars. - Answers c. being close to the customer