SEVI 3013H Exam 2 UPDATED Exam
Questions and CORRECT Answers
generic strategies - CORRECT ANSWER - 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)
1. overall cost leadership
2. differentiation
3. focus - CORRECT ANSWER - What are the three types of generic strategies?
overall cost leadership strategy - CORRECT ANSWER - a firm's generic strategy based on
appeal to the industrywide market using a competitive advantage based on low cost
overall cost leadership - CORRECT ANSWER - Potential pitfalls of _______________
strategies include: too much focus on one or a few value-chain activities, increase in the cost of
the inputs on which the advantage is based, a strategy that can be imitated too easily, a lack of
parity on differentiation, reduced flexibility, and obsolescence of the basis of cost advantage.
experience curve - CORRECT ANSWER - the decline in unit costs of production as
cumulative output increases
competitive parity - CORRECT ANSWER - 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 - CORRECT ANSWER - 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
differentiation - CORRECT ANSWER - Potential pitfalls of _______________ strategies
include: uniqueness that is not valuable, too much differentiation, too high a price premium,
, differentiation that is easily imitated, dilution of brand identification through product-line
extensions, and perceptions of differentiation that vary between buyers and sellers.
focus strategy - CORRECT ANSWER - a firm's generic strategy based on appeal to a narrow
market segment within an industry
focus - CORRECT ANSWER - Potential pitfalls of ___________ strategies include: cost
advantages may erode within the narrow segment, facing competition from new entrants and
from imitation, and becoming too focused to satisfy buyer needs.
overall cost leadership; differentiation, imitate - CORRECT ANSWER - Combining (or
integrating) _______________ and ______________ strategies can enable a firm to enjoy
superior performance and improve its competitive position. Such positions are typically difficult
for rivals to ______________.
mass customization - CORRECT ANSWER - a firm's ability to manufacture unique products
in small quantities at low cost
profit pool - CORRECT ANSWER - the total profits in an industry at all points along the
industry's value chain
combination strategies - CORRECT ANSWER - firms' integrations of various strategies to
provide multiple types of value to customers
industry life cycle - CORRECT ANSWER - the stages of introduction, growth, maturity, and
decline that typically occur over the life of an industry
introduction stage - CORRECT ANSWER - 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
Questions and CORRECT Answers
generic strategies - CORRECT ANSWER - 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)
1. overall cost leadership
2. differentiation
3. focus - CORRECT ANSWER - What are the three types of generic strategies?
overall cost leadership strategy - CORRECT ANSWER - a firm's generic strategy based on
appeal to the industrywide market using a competitive advantage based on low cost
overall cost leadership - CORRECT ANSWER - Potential pitfalls of _______________
strategies include: too much focus on one or a few value-chain activities, increase in the cost of
the inputs on which the advantage is based, a strategy that can be imitated too easily, a lack of
parity on differentiation, reduced flexibility, and obsolescence of the basis of cost advantage.
experience curve - CORRECT ANSWER - the decline in unit costs of production as
cumulative output increases
competitive parity - CORRECT ANSWER - 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 - CORRECT ANSWER - 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
differentiation - CORRECT ANSWER - Potential pitfalls of _______________ strategies
include: uniqueness that is not valuable, too much differentiation, too high a price premium,
, differentiation that is easily imitated, dilution of brand identification through product-line
extensions, and perceptions of differentiation that vary between buyers and sellers.
focus strategy - CORRECT ANSWER - a firm's generic strategy based on appeal to a narrow
market segment within an industry
focus - CORRECT ANSWER - Potential pitfalls of ___________ strategies include: cost
advantages may erode within the narrow segment, facing competition from new entrants and
from imitation, and becoming too focused to satisfy buyer needs.
overall cost leadership; differentiation, imitate - CORRECT ANSWER - Combining (or
integrating) _______________ and ______________ strategies can enable a firm to enjoy
superior performance and improve its competitive position. Such positions are typically difficult
for rivals to ______________.
mass customization - CORRECT ANSWER - a firm's ability to manufacture unique products
in small quantities at low cost
profit pool - CORRECT ANSWER - the total profits in an industry at all points along the
industry's value chain
combination strategies - CORRECT ANSWER - firms' integrations of various strategies to
provide multiple types of value to customers
industry life cycle - CORRECT ANSWER - the stages of introduction, growth, maturity, and
decline that typically occur over the life of an industry
introduction stage - CORRECT ANSWER - 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
