SEVI 3013 Exam 2 Ch.5/8/Nintendo
UPDATED ACTUAL Exam Questions and
CORRECT Answers
business level strategy - CORRECT ANSWER - an integrated and coordinated set of
commitments and actions the firm uses to gain a competitive advantage by exploiting core
competencies in specific product markets
key questions for business strategy - CORRECT ANSWER - - what is our value proposition
to our customers?
- where are you going to compete?
- how will we win against our key competitors?
- what business systems are required to achieve success?
- what capabilities are needed to achieve success?
Three generic business-level strategies - CORRECT ANSWER - 1) overall cost leadership:
lowest cost/broad target.ex: walmart
2) broad differentiation: superior perceived value/broad target.
ex: target
3) focused cost leadership: lowest cost/narrow target.
ex: aldi
4) focused differentiation: superior perceived value/narrow target.
ex: whole foods
cost leadership - CORRECT ANSWER - a firm's generic strategy based on appeal to the
industrywide market using a comp. adv. based on low cost
focus on producing goods/services with features that are acceptable to customers at the lowest
cost
,based on:
- creating a low-cost position relative to competitors
- managing the value chain to lower costs
Differentiation - 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
- products/services that are unique and valued and emphasis on non-price attributes for which
customers will pay a premium for
many forms: prestige/brand name, quality, technology, innovation, features, customer service,
dealer network
focus strategy - CORRECT ANSWER - based on appeal to a narrow market segment within
an industry
- narrow product lines, buyer segments, or targeted geographies
- advantage through cost leadership or differentiation
cost-focus strategy - CORRECT ANSWER - creates a cost advantage in its target segments
differentiation-focus strategy - CORRECT ANSWER - Differentiates itself in its target
market, Exploits the special needs of buyers
Risks of Overall Cost Leadership - CORRECT ANSWER - - too much focus on one or a few
value chain activities
- increase in the cost of the inputs on which the advantage is based
- strategy can be easily imitated
- lack of parity on differentiation
, - reduced flexibility
- obsolescence of the basis of a cost advantage
Risks of Differentiation Strategy - CORRECT ANSWER - -Customers may decide that cost of
uniqueness is too great
-Competitors may learn to imitate value chain or counterfeit products
-The means of uniqueness may no longer be valued by customers
- dilution of brand identity through product line extensions
Risks of Focus Strategies - CORRECT ANSWER - - erosion of cost advantages within narrow
segments
- highly focused products/services still subject to competition from new entrants and from
imitation
- focusers become too focused to satisfy buyer needs
cost leadership and five forces - CORRECT ANSWER - - protects a firm against rivalry,
powerful buyers
- provides more flexibility to cope with increased input costs from powerful suppliers
- provides entry barriers through economies of scale
- puts a firm in favorable position in respect to substitutes
differentiation and five forces - CORRECT ANSWER - - Creates higher entry barriers due to
customer loyalty
- Provides higher margins that enable the firm to deal with supplier power
- reduces buyer power because buyers lack suitable alternatives
- establishes customer loyalty which reduces threat from substitutes
focus and five forces - CORRECT ANSWER - - creates higher entry barriers due to cost
leadership or differentiation or both
- can provide higher margins that enable firm to deal with supplier power
UPDATED ACTUAL Exam Questions and
CORRECT Answers
business level strategy - CORRECT ANSWER - an integrated and coordinated set of
commitments and actions the firm uses to gain a competitive advantage by exploiting core
competencies in specific product markets
key questions for business strategy - CORRECT ANSWER - - what is our value proposition
to our customers?
- where are you going to compete?
- how will we win against our key competitors?
- what business systems are required to achieve success?
- what capabilities are needed to achieve success?
Three generic business-level strategies - CORRECT ANSWER - 1) overall cost leadership:
lowest cost/broad target.ex: walmart
2) broad differentiation: superior perceived value/broad target.
ex: target
3) focused cost leadership: lowest cost/narrow target.
ex: aldi
4) focused differentiation: superior perceived value/narrow target.
ex: whole foods
cost leadership - CORRECT ANSWER - a firm's generic strategy based on appeal to the
industrywide market using a comp. adv. based on low cost
focus on producing goods/services with features that are acceptable to customers at the lowest
cost
,based on:
- creating a low-cost position relative to competitors
- managing the value chain to lower costs
Differentiation - 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
- products/services that are unique and valued and emphasis on non-price attributes for which
customers will pay a premium for
many forms: prestige/brand name, quality, technology, innovation, features, customer service,
dealer network
focus strategy - CORRECT ANSWER - based on appeal to a narrow market segment within
an industry
- narrow product lines, buyer segments, or targeted geographies
- advantage through cost leadership or differentiation
cost-focus strategy - CORRECT ANSWER - creates a cost advantage in its target segments
differentiation-focus strategy - CORRECT ANSWER - Differentiates itself in its target
market, Exploits the special needs of buyers
Risks of Overall Cost Leadership - CORRECT ANSWER - - too much focus on one or a few
value chain activities
- increase in the cost of the inputs on which the advantage is based
- strategy can be easily imitated
- lack of parity on differentiation
, - reduced flexibility
- obsolescence of the basis of a cost advantage
Risks of Differentiation Strategy - CORRECT ANSWER - -Customers may decide that cost of
uniqueness is too great
-Competitors may learn to imitate value chain or counterfeit products
-The means of uniqueness may no longer be valued by customers
- dilution of brand identity through product line extensions
Risks of Focus Strategies - CORRECT ANSWER - - erosion of cost advantages within narrow
segments
- highly focused products/services still subject to competition from new entrants and from
imitation
- focusers become too focused to satisfy buyer needs
cost leadership and five forces - CORRECT ANSWER - - protects a firm against rivalry,
powerful buyers
- provides more flexibility to cope with increased input costs from powerful suppliers
- provides entry barriers through economies of scale
- puts a firm in favorable position in respect to substitutes
differentiation and five forces - CORRECT ANSWER - - Creates higher entry barriers due to
customer loyalty
- Provides higher margins that enable the firm to deal with supplier power
- reduces buyer power because buyers lack suitable alternatives
- establishes customer loyalty which reduces threat from substitutes
focus and five forces - CORRECT ANSWER - - creates higher entry barriers due to cost
leadership or differentiation or both
- can provide higher margins that enable firm to deal with supplier power
