MGT 4073 EXAM 2 REVIEW QUESTIONS AND ANSWERS | MGT 4073 EXAM 2
STUDY GUIDE & PRACTICE TEST 2026/2027
What does a change curve actually represent? - correct answer ✔✔A possibilities curve
What are Porter's three generic strategies? - correct answer ✔✔1. Overall cost leadership
2. Differentiation
3. Focus (Cost and Differentiation)
What is the basis of overall cost leadership? - correct answer ✔✔Creating a low-cost position relative to
a firm's peers
Managing relationships throughout the entire value chain to lower costs
What is the implication of differentiation? - correct answer ✔✔Products and/or services are unique and
valued
Emphasis on nonprice attributes for which customers will gladly pay a premium
What are the requirements for a focus strategy? - correct answer ✔✔Narrow product lines, buyer
segments, or targeted geographic markets
Advantages are obtained either through differentiation or overall cost leadership
Which of Porter's three generic strategies provides for the greatest return on investment? - correct
answer ✔✔Differentiation and cost
Which of Porter's three generic strategies provides for the greatest sales growth? - correct answer
✔✔Cost and focus
Which of Porter's three generic strategies provides for the greatest gain in market share? - correct
answer ✔✔Cost and focus
What are some things involved in overall cost leadership? - correct answer ✔✔Aggressive construction
of efficient scale facilities,
Vigorous pursuit of cost reductions from experience,
Tight cost and overhead control,
Avoidance of marginal customer accounts,
Cost minimization in all activities in the firm's value chain, such as research and development, service,
sales force, and advertising
How does cost leadership lower costs? - correct answer ✔✔The experience curve
What is the experience curve? - correct answer ✔✔With experience, unit costs of production processes
decline as output increases
, What is competitive parity? - correct answer ✔✔Being "on par" with competitors with respect to low-
cost, differentiation, or other strategic product characteristics
What are some of the pitfalls of cost leadership? - correct answer ✔✔Too much focus on one or a few
value chain activities,
Increase in the cost of inputs,
Strategy can be easily imitated,
A lack of parity on differentiation,
Reduced flexibility,
Obsolescence
What are some forms a differentiation strategy can take? - correct answer ✔✔Prestige or brand image,
Quality,
Technology,
Innovation,
Features,
Customer service,
Dealer network
What are some requirements of differentiation? - correct answer ✔✔A level of cost parity relative to
competitors,
Integration of multiple points along the value chain,
Differentiation on multiple fronts
What are some of the pitfalls of differentiation? - correct answer ✔✔Uniqueness that is not valuable,
Too much differentiation,
Too high a price premium,
Easily inimititable,
Dilusion of brand identification through product line extensions,
Perceptions of differentiation may very between buyers and sellers
What is a focus strategy based on? - correct answer ✔✔The choice of a narrow competitive scope within
an industry
A firm selects a segment or group of segments (or niche) and tailors its strategy to serve them
What are the two variants of a focus strategy? - correct answer ✔✔1. Cost focus
2. Differentiation focus
What is a cost focus strategy? - correct answer ✔✔It creates a cost advantage in its target segment
Exploits differences in cost behavior
What is a differentiation focus strategy? - correct answer ✔✔Differentiates itself in its target market
Exploits the special needs of buyers
STUDY GUIDE & PRACTICE TEST 2026/2027
What does a change curve actually represent? - correct answer ✔✔A possibilities curve
What are Porter's three generic strategies? - correct answer ✔✔1. Overall cost leadership
2. Differentiation
3. Focus (Cost and Differentiation)
What is the basis of overall cost leadership? - correct answer ✔✔Creating a low-cost position relative to
a firm's peers
Managing relationships throughout the entire value chain to lower costs
What is the implication of differentiation? - correct answer ✔✔Products and/or services are unique and
valued
Emphasis on nonprice attributes for which customers will gladly pay a premium
What are the requirements for a focus strategy? - correct answer ✔✔Narrow product lines, buyer
segments, or targeted geographic markets
Advantages are obtained either through differentiation or overall cost leadership
Which of Porter's three generic strategies provides for the greatest return on investment? - correct
answer ✔✔Differentiation and cost
Which of Porter's three generic strategies provides for the greatest sales growth? - correct answer
✔✔Cost and focus
Which of Porter's three generic strategies provides for the greatest gain in market share? - correct
answer ✔✔Cost and focus
What are some things involved in overall cost leadership? - correct answer ✔✔Aggressive construction
of efficient scale facilities,
Vigorous pursuit of cost reductions from experience,
Tight cost and overhead control,
Avoidance of marginal customer accounts,
Cost minimization in all activities in the firm's value chain, such as research and development, service,
sales force, and advertising
How does cost leadership lower costs? - correct answer ✔✔The experience curve
What is the experience curve? - correct answer ✔✔With experience, unit costs of production processes
decline as output increases
, What is competitive parity? - correct answer ✔✔Being "on par" with competitors with respect to low-
cost, differentiation, or other strategic product characteristics
What are some of the pitfalls of cost leadership? - correct answer ✔✔Too much focus on one or a few
value chain activities,
Increase in the cost of inputs,
Strategy can be easily imitated,
A lack of parity on differentiation,
Reduced flexibility,
Obsolescence
What are some forms a differentiation strategy can take? - correct answer ✔✔Prestige or brand image,
Quality,
Technology,
Innovation,
Features,
Customer service,
Dealer network
What are some requirements of differentiation? - correct answer ✔✔A level of cost parity relative to
competitors,
Integration of multiple points along the value chain,
Differentiation on multiple fronts
What are some of the pitfalls of differentiation? - correct answer ✔✔Uniqueness that is not valuable,
Too much differentiation,
Too high a price premium,
Easily inimititable,
Dilusion of brand identification through product line extensions,
Perceptions of differentiation may very between buyers and sellers
What is a focus strategy based on? - correct answer ✔✔The choice of a narrow competitive scope within
an industry
A firm selects a segment or group of segments (or niche) and tailors its strategy to serve them
What are the two variants of a focus strategy? - correct answer ✔✔1. Cost focus
2. Differentiation focus
What is a cost focus strategy? - correct answer ✔✔It creates a cost advantage in its target segment
Exploits differences in cost behavior
What is a differentiation focus strategy? - correct answer ✔✔Differentiates itself in its target market
Exploits the special needs of buyers
