a differentiation strategy

-In which of the following situations does a differentiation strategy make the most sense?

The industry is fragmented into different customer groups, each of which has different needs.

Customer needs are primarily satisfied by the price of the product.

There is a lot of technological change.

There are low barriers to entry and exit.

The industry is in the maturity stage of the life cycle.

-A shrinking market segment poses the greatest threat to a company pursuing which of the following strategies?

Cost leadership


Focused differentiation


Both cost leadership and differentiation simultaneously

-Jordan’s ice cream stand offers different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic strategy is Jordan following in the restaurant industry?

Cost leadership


Focused cost leadership

Focused differentiation

Both cost leadership and differentiation simultaneously

-Market segmentation is best described as what type of process?






-Companies that successfully differentiate a product often charge blank____ prices for them.



below cost


none of these choices

-A company pursuing a cost-leadership strategy does which of the following?

Includes substandard components in the product to keep costs low

Chooses strategies that keep costs as low as feasible and are effective

Keeps advertising expenses at a maximum

Relies on patent protections to keep costs low

None of these choices

-If a company uses a focused cost-leadership strategy, it competes in the market segments where

it can operate at no cost disadvantage

where cost is not a high concern.

it can operate at a minimal cost disadvantage.

there is frequently little or no competition.

none of these choices.

-A strategic group is a group of companies within a particular industry

with the same overhead costs.

with the same cost structure.

that are pursuing a similar business model.

that are using the same suppliers.

all of these choices.

SECTION 5 Corporate-Level Strategy: Horizontal

Integration, Vertical Integration, And

Strategic Outsourcing

-The final part of the strategy formulation process is

formulation of business-level strategies.

formulation of functional-level strategies.

formulation of corporate-level strategies

development of functional-level goals.

development of business-level goals.

-When a company decides to expand into new industries, it must

construct its business models at two levels.

secure government approval from the Securities and Exchange Commission (SEC).

select a new CEO.

all of these choices.

none of these choices.

-A specialized asset is one that is designed to

perform a multitude of generic tasks.

perform a specified sequence of tasks.

perform several nonsequential tasks.

perform a specific task.

none of these choices.

-Many industries have experienced increased consolidation over the last decade due to an increase in

strategic alliances.

vertical integration.

horizontal integration.



-Which of the following is a benefit that firms should expect to gain from the use of horizontal integration?

Expanded control over stages of the supply chain

Better realization of economies of scale

Shared risk with another firm

Reduced risk of holdup

Reduced investments in noncore activities

-Horizontal integration in an industry tends to

increase rivalry among firms.

reduce rivalry among firms.

have little effect on rivalry among firms.

reduce the number of consumers buying the products.

none of these choices

-Antitrust regulation

favors large companies.

reduces industry competition

is concerned with companies’ abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.

tends to raise prices for consumers.

enables the achievement of market power.

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