MGT-4073 EXAM #2 REVIEW QUESTIONS AND ANSWERS | MGT-4073 EXAM 2 STUDY GUIDE &
PRACTICE TEST 2026/2027
Generic Strategies - ANS ✔✔basic types of business level strategies based on breadth of target market
(industrywide versus narrow market segment) and type of competitive advantage (low cost versus
uniqueness)
overall cost leadership - ANS ✔✔a firm's generic strategy based on appeal to the industrywide market
using a competitive advantage based on low cost
experience curve - ANS ✔✔the decline in unit costs of production as cumulative output increases
competitive parity - ANS ✔✔a firm's achievement of similarity, or being "on par," with competitors with
respect to low cost, differentiation, or other strategic product characteristic.
Differentiation strategy - ANS ✔✔a firm's generic strategy based on creating differences in the firm's
product or service offering by creating something that is perceived industrywide as unique and valued by
customers
focus strategy - ANS ✔✔a firm's generic strategy based on appeal to a narrow market segment within an
industry
profit pool - ANS ✔✔the total profits in an industry at all points along the industry's value chain
mass customization - ANS ✔✔a firm's ability to manufacture unique products in small quantities at low
cost.
combination strategies - ANS ✔✔firms' integrations of various strategies to provide multiple types of
value to customers
industry life cycle - ANS ✔✔the stages of introduction, growth, maturity, and decline that typically occur
over the life of an industry.
introduction stage - ANS ✔✔the first stage of the industry life cycle, characterized by (1) new products
that are not known to customers, (2) poorly defined market segments, (3) unspecified product features,
(4) low sales growth, (5) rapid technological change, (6) operating losses, and (7) a need for financial
support.
growth stage - ANS ✔✔the second stage of the product life cycle, characterized by (1) strong increases in
sales; (2) growing competition; (3) developing brand recognition; and (4) a need for financing
complementary value-chain activities such as marketing, sales, customer service, and research and
development
maturity stage - ANS ✔✔the third stage of the product life cycle, characterized by (1) slowing demand
growth, (2) saturated markets, (3) direct competition, (4) price competition, and (5) strategic emphasis
on efficient operations.
, decline stage - ANS ✔✔the fourth stage of the product life cycle, characterized by (1) falling sales and
profits, (2) increasing price competition, and (3) industry consolidation.
harvesting strategy - ANS ✔✔a strategy of wringing as much profit as possible out of a business in the
short to medium term by reducing costs
consolidation strategy - ANS ✔✔a firm's acquiring or merging with other firms in an industry in order to
enhance market power and gain valuable assets
turnaround strategy - ANS ✔✔a strategy that reverses a firm's decline in performance and returns it to
growth and profitability
Southwest uses the following operational model:
a.Luxury carrier.
b.Point-to-point.
c.Hub-and-spoke.
Base of operations - ANS ✔✔b. Point-to-point
The largest contributors to Southwest's expenses are:
a.Salaries, wages and benefits.
b.Jet fuel.
c.New planes. - ANS ✔✔a. Salaries, wages and benefits.
diversification - ANS ✔✔the process of firms expanding their operations by entering new businesses.
related diversification - ANS ✔✔a firm entering a different business in which it can benefit from
leveraging core competencies, sharing activities, or building market power
economies of scope - ANS ✔✔cost savings from leveraging core competencies or sharing related
activities among businesses in a corporation.
core competencies - ANS ✔✔a firm's strategic resources that reflect the collective learning in the
organization.
sharing activities - ANS ✔✔having activities of two or more businesses' value chains done by one of the
businesses.
Sharing core competencies is one of the primary potential advantages of diversification. In order for
diversification to be most successful, it is important that
A.the similarity required for sharing core competencies must be in the value chain, not in the product.
B.the products use similar distribution channels.
C.the target market is the same, even if the products are very different.
D.the methods of production are the same. - ANS ✔✔A. the similarity required for sharing core
competencies must be in the value chain, not in the product.
PRACTICE TEST 2026/2027
Generic Strategies - ANS ✔✔basic types of business level strategies based on breadth of target market
(industrywide versus narrow market segment) and type of competitive advantage (low cost versus
uniqueness)
overall cost leadership - ANS ✔✔a firm's generic strategy based on appeal to the industrywide market
using a competitive advantage based on low cost
experience curve - ANS ✔✔the decline in unit costs of production as cumulative output increases
competitive parity - ANS ✔✔a firm's achievement of similarity, or being "on par," with competitors with
respect to low cost, differentiation, or other strategic product characteristic.
Differentiation strategy - ANS ✔✔a firm's generic strategy based on creating differences in the firm's
product or service offering by creating something that is perceived industrywide as unique and valued by
customers
focus strategy - ANS ✔✔a firm's generic strategy based on appeal to a narrow market segment within an
industry
profit pool - ANS ✔✔the total profits in an industry at all points along the industry's value chain
mass customization - ANS ✔✔a firm's ability to manufacture unique products in small quantities at low
cost.
combination strategies - ANS ✔✔firms' integrations of various strategies to provide multiple types of
value to customers
industry life cycle - ANS ✔✔the stages of introduction, growth, maturity, and decline that typically occur
over the life of an industry.
introduction stage - ANS ✔✔the first stage of the industry life cycle, characterized by (1) new products
that are not known to customers, (2) poorly defined market segments, (3) unspecified product features,
(4) low sales growth, (5) rapid technological change, (6) operating losses, and (7) a need for financial
support.
growth stage - ANS ✔✔the second stage of the product life cycle, characterized by (1) strong increases in
sales; (2) growing competition; (3) developing brand recognition; and (4) a need for financing
complementary value-chain activities such as marketing, sales, customer service, and research and
development
maturity stage - ANS ✔✔the third stage of the product life cycle, characterized by (1) slowing demand
growth, (2) saturated markets, (3) direct competition, (4) price competition, and (5) strategic emphasis
on efficient operations.
, decline stage - ANS ✔✔the fourth stage of the product life cycle, characterized by (1) falling sales and
profits, (2) increasing price competition, and (3) industry consolidation.
harvesting strategy - ANS ✔✔a strategy of wringing as much profit as possible out of a business in the
short to medium term by reducing costs
consolidation strategy - ANS ✔✔a firm's acquiring or merging with other firms in an industry in order to
enhance market power and gain valuable assets
turnaround strategy - ANS ✔✔a strategy that reverses a firm's decline in performance and returns it to
growth and profitability
Southwest uses the following operational model:
a.Luxury carrier.
b.Point-to-point.
c.Hub-and-spoke.
Base of operations - ANS ✔✔b. Point-to-point
The largest contributors to Southwest's expenses are:
a.Salaries, wages and benefits.
b.Jet fuel.
c.New planes. - ANS ✔✔a. Salaries, wages and benefits.
diversification - ANS ✔✔the process of firms expanding their operations by entering new businesses.
related diversification - ANS ✔✔a firm entering a different business in which it can benefit from
leveraging core competencies, sharing activities, or building market power
economies of scope - ANS ✔✔cost savings from leveraging core competencies or sharing related
activities among businesses in a corporation.
core competencies - ANS ✔✔a firm's strategic resources that reflect the collective learning in the
organization.
sharing activities - ANS ✔✔having activities of two or more businesses' value chains done by one of the
businesses.
Sharing core competencies is one of the primary potential advantages of diversification. In order for
diversification to be most successful, it is important that
A.the similarity required for sharing core competencies must be in the value chain, not in the product.
B.the products use similar distribution channels.
C.the target market is the same, even if the products are very different.
D.the methods of production are the same. - ANS ✔✔A. the similarity required for sharing core
competencies must be in the value chain, not in the product.
