Business Strategy UPDATED Questions
and CORRECT Answers
A plan to achieve competitive advantage is - CORRECT ANSWER✔✔- a company's
business strategy
What are the four key choices to formulating a strategy? - CORRECT ANSWER✔✔- 1)
Markets to pursue
2) Unique value to offer the customers
3) Resources and capabilities that will allow firm to deliver unique value better than
competition
4) Create barriers to imitation
Three sources of advantage and examples of each
(these are also barriers to imitation) - CORRECT ANSWER✔✔- 1- low costs : Walmart
2- product differentiation : Apple
3- best value : Costco
What could value be defined as? - CORRECT ANSWER✔✔- providing a combination o
features and price between low priced and premium value offerings
Strategy rests on _____________ that allow firms to deliver unique value - CORRECT
ANSWER✔✔- Competencies (activities)
Two components of competitive advantage and exampels - CORRECT ANSWER✔✔- 1-
doing different things : skype
2- Doing similar things differently : Skywest
Questions to ask when creating barriers to imitation - CORRECT ANSWER✔✔- 1. What is
the cost of the strategic initiative?
2. How long will it take for competitors to imitate the strategic initiative?
3. Is there a barrier to imitation?
,What are the two sources of superior profitability? - CORRECT ANSWER✔✔- 1. Attractive
industry
2. Superior profitability
What are the five forces of porter's model? - CORRECT ANSWER✔✔- 1. Rivalry
2. Buyer Power
3. Supplier power
4. Threat of new entrants
5. Threat of substitutes
What factors keep competitors out? (barriers to entry) 8 - CORRECT ANSWER✔✔- 1.
Capital requirements
2. Higher scale economies
3. Scope economies (can make multiple products because of manufacturing equipment)
4. Switching costs
5. Access to scarce resources
6. Learning curve
7. Product complexity
8. Entry deterring regulations
Threat of substitutes - CORRECT ANSWER✔✔- serves the same function with a different
set of characteristics
What is the best way to limit threat of substitutes - CORRECT ANSWER✔✔- Be your own
substitute
Ex: Starbucks acquired Seattle's best coffee
What are the 6 factors that determine competitiveness?
(threat of rivalry) - CORRECT ANSWER✔✔- 1. Number of direct competitors and
substitutes
2. Industry growth rates
, 3. Exit barriers - high when difficult to exit
4. Fixed costs - high fixed costs > variable costs
5. Lack of product differentiation
6. Switching costs
What can be done to neutralize bargaining power of buyers? (3) - CORRECT ANSWER✔✔-
1. Differentiate your offering so that it uniquely responds to only certain buyer needs
(buyers have less power when your product offers something that is unique)
2. Narrow the options of the buyer through market consolidation or exclusive alliances
(buyers have less options when there are fewer options)
3. Create switching costs for your buyers
(Buyers have less power when there are greater costs to switch)
What can be done to neutralize bargaining power of suppliers? (4) - CORRECT
ANSWER✔✔- 1. Narrow the sell options of the supplier through market consolidation,
merger or alliances
2. Develop alternative sources of supply
3. Ally with a supplier and encourage the supplier to make investments to provide you the
lowest cost possible
4. Diversify your product offerings to diminish dependence of your business on any particular
supplier
How to launch an indirect assault.
Combine 2 of the 3.... - CORRECT ANSWER✔✔- 1. leverage existing assets
2. Reconfigure the value chain
3. Exploit a niche
and CORRECT Answers
A plan to achieve competitive advantage is - CORRECT ANSWER✔✔- a company's
business strategy
What are the four key choices to formulating a strategy? - CORRECT ANSWER✔✔- 1)
Markets to pursue
2) Unique value to offer the customers
3) Resources and capabilities that will allow firm to deliver unique value better than
competition
4) Create barriers to imitation
Three sources of advantage and examples of each
(these are also barriers to imitation) - CORRECT ANSWER✔✔- 1- low costs : Walmart
2- product differentiation : Apple
3- best value : Costco
What could value be defined as? - CORRECT ANSWER✔✔- providing a combination o
features and price between low priced and premium value offerings
Strategy rests on _____________ that allow firms to deliver unique value - CORRECT
ANSWER✔✔- Competencies (activities)
Two components of competitive advantage and exampels - CORRECT ANSWER✔✔- 1-
doing different things : skype
2- Doing similar things differently : Skywest
Questions to ask when creating barriers to imitation - CORRECT ANSWER✔✔- 1. What is
the cost of the strategic initiative?
2. How long will it take for competitors to imitate the strategic initiative?
3. Is there a barrier to imitation?
,What are the two sources of superior profitability? - CORRECT ANSWER✔✔- 1. Attractive
industry
2. Superior profitability
What are the five forces of porter's model? - CORRECT ANSWER✔✔- 1. Rivalry
2. Buyer Power
3. Supplier power
4. Threat of new entrants
5. Threat of substitutes
What factors keep competitors out? (barriers to entry) 8 - CORRECT ANSWER✔✔- 1.
Capital requirements
2. Higher scale economies
3. Scope economies (can make multiple products because of manufacturing equipment)
4. Switching costs
5. Access to scarce resources
6. Learning curve
7. Product complexity
8. Entry deterring regulations
Threat of substitutes - CORRECT ANSWER✔✔- serves the same function with a different
set of characteristics
What is the best way to limit threat of substitutes - CORRECT ANSWER✔✔- Be your own
substitute
Ex: Starbucks acquired Seattle's best coffee
What are the 6 factors that determine competitiveness?
(threat of rivalry) - CORRECT ANSWER✔✔- 1. Number of direct competitors and
substitutes
2. Industry growth rates
, 3. Exit barriers - high when difficult to exit
4. Fixed costs - high fixed costs > variable costs
5. Lack of product differentiation
6. Switching costs
What can be done to neutralize bargaining power of buyers? (3) - CORRECT ANSWER✔✔-
1. Differentiate your offering so that it uniquely responds to only certain buyer needs
(buyers have less power when your product offers something that is unique)
2. Narrow the options of the buyer through market consolidation or exclusive alliances
(buyers have less options when there are fewer options)
3. Create switching costs for your buyers
(Buyers have less power when there are greater costs to switch)
What can be done to neutralize bargaining power of suppliers? (4) - CORRECT
ANSWER✔✔- 1. Narrow the sell options of the supplier through market consolidation,
merger or alliances
2. Develop alternative sources of supply
3. Ally with a supplier and encourage the supplier to make investments to provide you the
lowest cost possible
4. Diversify your product offerings to diminish dependence of your business on any particular
supplier
How to launch an indirect assault.
Combine 2 of the 3.... - CORRECT ANSWER✔✔- 1. leverage existing assets
2. Reconfigure the value chain
3. Exploit a niche
