Badm 204 Final Exam Questions And Answers.
What are the pros and cons of in pursuing a broad differentiation strategy? Give an example/s of a
company/companies who have both pros and cons? - Pros: Premium prices for products, Increased
unit sales & Brand loyalty
Cons: others trying to copy the unique traits of the product , costly, and it takes time to build the
brand
Examples: BMW, PROS: Quality, and performance
Cons: car companies like Honda have started to offer cars with similar qualities for less &
replacement parts for BMW are expensive
Broad differentiation - offer a unique product attributes that a wide range of buyers find appealing
and worth paying for -
Focused low-cost strategy - concentrating on a narrow buyer segment and outcompeting rivals on
cost
overall low-cost provider - striving to achieve lower overall cost than rivals on comparable products
that attract a broad spectrum of buyers (underpricing rivals)
focused differentiation - concentrating on a narrow buyer segment and outcompeting rivals by
offering niche members customized attributes that meet their tastes
best-cost provider - giving customers more value for their money by satisfying buyer expectations
What market conditions and circumstances make a low-cost provider strategy attractive? What are
the pitfalls in pursuing a low-cost provider strategy? What can go wrong? Give an example - low-cost
provider strategy is attractive to buyers in markets with many price sensitive buyers
Pitfalls: higher unit sales and market shares do not automatically translate into higher profits, relying
on an approach to reduce costs that can be easily copied by rivals , becoming too fixated on cost
reduction. -Concorde Jets was a supersonic commercial plane which failed
Example: Walmart failed in Germany , Walmart was not an attractive brand to Germans as the
culture was very different causing them not to be able to cover their costs because of lack of
merchandise sold
https://www.stuvia.com/
, What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain
what a company has to do to achieve this advantage? Give an example - achieve low cost advantage
& a differentiation advantage and between appealing to the broad market as a whole and a narrow
market niche. Company needs to give customers more value for their money
Example: Chipotle, fast servie with a good quality and quantity food for a reasonable price
In what market and competitive circumstances are focused low-cost and focused differentiation
strategies attractive? Provide examples of each - -The target market niche is big enough to be
profitable and offers good growth potential.
-Industry leaders do not see that having a presence in the niche is crucial to their own success.
-It is costly or difficult for multisegment competitors to meet the needs of target market niche
buyers.
-The industry has many different niches and segments.
-Rivals have little or no interest in the target segment.
-The focuser has a reservoir of buyer goodwill and long-term loyalty.
Low-cost provider: No name brand
Focused Differentiation : Whole foods
There are a number of offensive strategy options for improving market positions using cost-based
and blue-ocean type strategies. Define the terms and suggest ways in which the strategies could be
operationalized. Give examples - cost-based: cost-efficient in performing value chain activities -
acquiring a regional supplier that produces the right type at the lowest possible price -chipotle
Blue-ocean strategy: offers growth in revenues and profits by discovering or inventing new industry
segments that create altogether new demand -pursuing continuous product innovations to draw
sales -Example: Ebay , Cirque du Soleil
1) Identify and briefly explain what is meant by each of the following terms and give examples of
each:
a. horizontal scope
b. vertical scope
c. scope of the firm - horizontal scope is the range of product and service segments that a firm serves
within its focal market- Apple with their line of products
https://www.stuvia.com/
What are the pros and cons of in pursuing a broad differentiation strategy? Give an example/s of a
company/companies who have both pros and cons? - Pros: Premium prices for products, Increased
unit sales & Brand loyalty
Cons: others trying to copy the unique traits of the product , costly, and it takes time to build the
brand
Examples: BMW, PROS: Quality, and performance
Cons: car companies like Honda have started to offer cars with similar qualities for less &
replacement parts for BMW are expensive
Broad differentiation - offer a unique product attributes that a wide range of buyers find appealing
and worth paying for -
Focused low-cost strategy - concentrating on a narrow buyer segment and outcompeting rivals on
cost
overall low-cost provider - striving to achieve lower overall cost than rivals on comparable products
that attract a broad spectrum of buyers (underpricing rivals)
focused differentiation - concentrating on a narrow buyer segment and outcompeting rivals by
offering niche members customized attributes that meet their tastes
best-cost provider - giving customers more value for their money by satisfying buyer expectations
What market conditions and circumstances make a low-cost provider strategy attractive? What are
the pitfalls in pursuing a low-cost provider strategy? What can go wrong? Give an example - low-cost
provider strategy is attractive to buyers in markets with many price sensitive buyers
Pitfalls: higher unit sales and market shares do not automatically translate into higher profits, relying
on an approach to reduce costs that can be easily copied by rivals , becoming too fixated on cost
reduction. -Concorde Jets was a supersonic commercial plane which failed
Example: Walmart failed in Germany , Walmart was not an attractive brand to Germans as the
culture was very different causing them not to be able to cover their costs because of lack of
merchandise sold
https://www.stuvia.com/
, What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain
what a company has to do to achieve this advantage? Give an example - achieve low cost advantage
& a differentiation advantage and between appealing to the broad market as a whole and a narrow
market niche. Company needs to give customers more value for their money
Example: Chipotle, fast servie with a good quality and quantity food for a reasonable price
In what market and competitive circumstances are focused low-cost and focused differentiation
strategies attractive? Provide examples of each - -The target market niche is big enough to be
profitable and offers good growth potential.
-Industry leaders do not see that having a presence in the niche is crucial to their own success.
-It is costly or difficult for multisegment competitors to meet the needs of target market niche
buyers.
-The industry has many different niches and segments.
-Rivals have little or no interest in the target segment.
-The focuser has a reservoir of buyer goodwill and long-term loyalty.
Low-cost provider: No name brand
Focused Differentiation : Whole foods
There are a number of offensive strategy options for improving market positions using cost-based
and blue-ocean type strategies. Define the terms and suggest ways in which the strategies could be
operationalized. Give examples - cost-based: cost-efficient in performing value chain activities -
acquiring a regional supplier that produces the right type at the lowest possible price -chipotle
Blue-ocean strategy: offers growth in revenues and profits by discovering or inventing new industry
segments that create altogether new demand -pursuing continuous product innovations to draw
sales -Example: Ebay , Cirque du Soleil
1) Identify and briefly explain what is meant by each of the following terms and give examples of
each:
a. horizontal scope
b. vertical scope
c. scope of the firm - horizontal scope is the range of product and service segments that a firm serves
within its focal market- Apple with their line of products
https://www.stuvia.com/
