3. Business-level strategies detail commitments and actions taken to provide value to customers and gain
competitive advantage by exploiting core competencies in
a. the selection of industries in which the firm will compete.
b. specific product markets.
c. primary value chain activities.
d. particular geographic locations.
ANS: B
PTS: 1
DIF: Medium
REF: 98
DIF: Easy
REF: 98
4. A firm’s core strategy is its ____ strategy.
a. corporate
b. business
c. pricing
d. international
ANS: B
PTS: 1
5. When selecting a business level strategy, the firm must determine all of the following EXCEPT
a. How will the customer’s needs be satisfied?
b. Who is the customer?
c. What are the customers’ needs?
d. Why should these customers’ needs be satisfied?
ANS: D
PTS: 1
DIF: Medium
REF: 99
7. Which of the following is TRUE?
a. As customer loyalty increases, customers are more sensitive to price increases.
b. Customer loyalty has a positive relationship with firm profitability.
c. Customer loyalty is fragile and cannot reliably be considered a factor in firm success.
d. Customer loyalty is of importance only to firms using a differentiation strategy.
ANS: B
PTS: 1
DIF: Medium
REF: 100
8. Although both companies have Internet access to potential customers, the most striking difference
between Barnes and Noble’s access to customers and Amazon.com’s access to customers is the
difference in the ____ dimension of relationships with customers.
a. responsiveness
b. richness
c. affiliation
d. reach
ANS: D
PTS: 1
DIF: Medium
REF: 100
9. Amazon has built capabilities around Internet technology and e-commerce to facilitate information
exchanges with its customers in a cost effective manner. This represents which of the three service
dimension?
a. Reach
b. Richness
c. Affiliation
d. None of the above
ANS: B
PTS: 1
DIF: Medium
REF: 100-101
10. Viewing the world through the customer’s eyes and constantly seeking ways to create more value for the
company enhances
a.
b.
c.
d.
the reach of the company toward the customer.
the ability to identify the customer.
the richness of the relationship with the customer.
affiliation with the customer.
ANS: D
PTS: 1
DIF: Medium
REF: 100-101
11. Before the firm decides what products to offer and what benefits and features they will have, the firm
must decide all the following questions EXCEPT
a. who the firm should serve.
b. when the customer’s needs should be satisfied.
c. what needs the firm should satisfy.
d. what core competencies are needed to satisfy customer needs.
ANS: B
PTS: 1
DIF: Medium
REF: 101-103
12. Subway is targeting a more narrow market segment among college students than the segment on which
McDonald’s focuses. Subway is focusing on students interested in healthy fast food. To select this
business strategy, Subway would have used information from all the following categories EXCEPT
a. demographic factors.
b. psychological factors.
c. consumption-pattern factors.
d. end-use segments.
ANS: D
PTS: 1
DIF: Hard
REF: 102 (Table 4.1)
13. Demographic segments include generational identifications. Which segment of the population was
previously financially conservative, but is now willing to spend money?
a. Baby Boomers
b. Swing Generation
c. World War II Generation
d. Generation X
ANS: B
PTS: 1
DIF: Easy
REF: 101 | 102 (Table 4.1)
14. Because of their sensitivity to hype, and their insistence that products deliver as promised, ____ would
be less likely to develop product loyalties that would protect a differentiating firm from potential
entrants.
a. members of the Swing generation
b. Baby Boomers
c. members of the Lost Generation
d. Generation Xers
ANS: D
PTS: 1
DIF: Medium
REF: 101-102
15. An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his
spouse’s company transferred her to St. Paul. The decorator is distressed because the customers in his
target market have, in his words, “banal and bourgeois taste.” What is the decorator’s problem?
a. The decorator does not understand that customer needs are neither right nor wrong, good
nor bad.
b. The decorator has no core competencies that will transfer to his new geographic market.
c. The decorator should choose a strategy of cost-leadership in this environment.
d. The decorator is highly affiliated with the new target market and understands how he can
create value for it.
ANS: A
PTS: 1
DIF: Hard
REF: 102-103
16. In order to meet and exceed customer’s expectations, firms must
a. constantly manipulate customers’ perceptions of their needs.
b. answer the questions: who, what, when, where, how, and why as they apply to customers.
c. continuously improve, innovate, and upgrade their core competencies.
d. successfully defend their established core competencies from imitation by competitors.
ANS: C
PTS: 1
DIF: Medium
REF: 103
17. Business-level strategies are concerned specifically with
a. creating differences between the firm’s position and its rivals.
b. selecting the industries in which the firm will compete.
c. how functional areas will be organized within the firm.
d. how a business with multiple physical locations will operate one of those locations.
ANS: A
PTS: 1
DIF: Medium
REF: 103
18. An entrepreneur is investigating starting a company that provides tax advice to small companies. In
order to position his company differently from the existing competitors, the entrepreneur must
a. analyze the reach, richness, and affiliation the company must have with its customers.
b. provide tax advice either in a different manner or provide a different kind of tax service than
competitors.
c. offer tax advice at a price lower than the cheapest competitor.
d. offer tax advice at a higher quality than the best competitor.
ANS: B
PTS: 1
DIF: Medium
REF: 103
19. Which value creating strategies best satisfy customer needs?
a. Firm resources
b. Capabilities
c. Core competencies
d. None of the above.
ANS: C
PTS: 1
DIF: Medium
REF: 103-104
20. The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how
a. the organizational culture of Southwest Airlines is the key to the success of the organization.
b. understanding of the profit pool in an industry indicates to companies where above-average
returns can be earned.
c. it is hard for rivals to match an array of interlocked activities.
d. the primary and support activities of a successful company capture value all along the value
chain.
ANS: C
PTS: 1
DIF: Hard
REF: 104
21. By examining the ____ of Southwest Airlines, one can identify the strategic themes around which it has
developed its business strategy. These themes include limited passenger service, high aircraft utilization,
highly productive ground and gate crews, and so forth.
a. activity map
b. profit pool
c. value diagram
d. five forces model
ANS: A
PTS: 1
DIF: Medium
REF: 104
22. If Southwest Airlines employees lost their high enthusiasm and commitment to the company,
a. the airline could continue without problems because its cost-leadership strategy is
dependent on its efficient internal procedures.
b. replacement employees could be hired from rival airlines that are laying off employees
easily merged into the Southwest culture.
c. there would be no impact on Southwest’s profitability because Southwest’s customers value
the low fares rather than being “entertained” by the employees.
d. Southwest would have lost one of its competitive advantages and its performance would be
threatened.
ANS: D
PTS: 1
DIF: Hard
REF: 104
23. Michael Porter points out that strategic fit among many activities is fundamental to
a. the development of core competencies for a firm.
b. the breadth of competitive scope for a firm.
c. sustainability of a firm’s competitive advantage.
d. the integrity of the firm’s value chain.
ANS: C
PTS: 1
DIF: Medium
REF: 105
24. All of the following are considered generic business-level strategies EXCEPT
a. product diversification.
b. cost leadership.
c. focused differentiation.
d. integrated cost leadership/differentiation.
ANS: A
PTS: 1
DIF: Easy
REF: 105 (Figure 4.2)
25. A company using a narrow scope in its business strategy is
a. following a cost leadership business strategy.
b. focusing on a broad array of geographic markets.
c. limiting the group of customer segments served.
d. decreasing the number of activities on its value chain.
ANS: C
PTS: 1
DIF: Hard
REF: 105 (Figure 4.2)
26. As the television industry has changed in the last few decades from just three major networks to a
multiplicity of networks, one of the major aspects of business strategy for the newer networks is ____
than the traditional networks.
a. broader competitive scope
b. narrower competitive scope
c. increased use of primary activities to capture value
d. increased use of support activities to capture value
ANS: B
PTS: 1
DIF: Medium
REF: 105
27. The effectiveness of any of the generic business-level strategies is contingent upon
a. customer needs and competitors’ strategies.
b. the match between the opportunities and threats in its external market and the strengths of its
internal environment.
c. the trends in the general consumer base and the robustness of the global and industry
economy.
d. the firm’s competitive scope and its competitive advantage.
ANS: B
PTS: 1
DIF: Medium
REF: 105-106
28. A cost leadership strategy provides goods or services with features that are
a.
b.
c.
d.
acceptable.
unique.
substandard.
mediocre.
ANS: A
PTS: 1
DIF: Easy
REF: 106
29. A cost leadership strategy targets the industry’s ____ customers.
a. most typical
b. poorest
c. least educated
d. most frugal
ANS: A
PTS: 1
DIF: Easy
REF: 106
30. Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as
schools, prisons, and public administration buildings. It has always competed on a cost leadership basis.
Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on
these construction firms for selling its product. Durable Ceramic’s next most-efficient competitor,
Cost-Less Ceramics, Inc., earns average returns, while Durable earns above-average returns. The
commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its
prices below those of Cost-Less’s prices, it is likely that
a. both Durable and Cost-Less will devise additional ways to become more efficient in their
production processes.
b. Durable will be unable to absorb the lower cost, and will go out of business.
c. both Cost-Less and Durable will go out of business, leaving the customers with fewer
alternative sources of low-cost tile.
d. Cost-Less will go out of business, and Durable will gain higher power over its customers.
ANS: D
PTS: 1
DIF: Hard
REF: 106-110
31. Big Lots is able to compete against Wal-Mart with a cost leadership strategy because of its strengths in
highly disciplined merchandise cost and inventory management system. This illustrates the
a. ability of Big Lots to imitate Wal-Mart’s tightly integrated activity map.
b. ability to survive against a dominant competitor by changing from a broad competitive
scope to a narrow competitive scope.
c. fact that support activities in the firm can provide sources of cost reduction.
d. importance of effective use of primary activities in the value chain.
ANS: C
PTS: 1
DIF: Hard
REF: 107
32. Research suggests that having a competitive advantage in ____ creates more value in the cost leadership
strategy than it does in the differentiation strategy.
a. marketing and sales
b. technology development
c. inbound and outbound logistics
d. human resource management
ANS: C
PTS: 1
DIF: Medium
REF: 107
33. A river barge company can offer cheaper, although slower, per pound transportation of products to
companies when compared with transportation by air, truck, or rail. The river barge company should
first target customers whose companies use
a. the integrated cost leadership/differentiation strategy.
b. either of the focus strategies.
c. the cost-leadership strategy.
d. any of the strategies except the focused differentiation strategy.
ANS: C
PTS: 1
DIF: Easy
REF: 107 | 108 (Figure 4.3)
34. A company pursuing the differentiation or focused differentiation strategy would tend to
a. have highly efficient systems linking suppliers’ products with the firm’s production
processes.
b. use economies of scale.
c. have strong capabilities in basic research.
d. make investments in easy-to-use manufacturing technologies.
ANS: C
PTS: 1
DIF: Medium
35. When the costs of supplies increase in an industry, the low-cost leader
a. may continue competing with rivals on the basis of product features.
b. will lose customers as a result of price increases.
c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit
margins.
d. may be the only firm able to pay the higher prices and continue to earn average or aboveaverage returns.
ANS: D
PTS: 1
DIF: Hard
REF: 109
36. Ever improving levels of efficiency enhance profit margins for a cost leader. This effects which of the
five forces of industry structure most directly?
a. Potential entrants
b. Substitutes
c. Buyer power
d. Supplier power
ANS: A
PTS: 1
DIF: Medium
REF: 109
37. The typical risks of a cost leadership strategy include
a. the inability to balance high differentiation and low price.
b. production and distribution processes becoming obsolete.
c. excessive differentiation to the point where the customer base is too small.
d. loss of customer loyalty.
ANS: B
PTS: 1
DIF: Medium
REF: 109
38. When a product’s unique attributes provide value to customers, the firm is implementing
a. a differentiation strategy.
b. a cost leadership strategy.
c. an integrated cost leadership/differentiation strategy.
d. a single-product strategy.
ANS: A
PTS: 1
DIF: Medium
REF: 110
39. A firm successfully implementing a differentiation strategy would expect
a. customers to be sensitive to price increases.
b. to charge premium prices.
c. customers to perceive the product as standard.
d. to have high levels of power over suppliers.
ANS: B
PTS: 1
DIF: Medium
REF: 110
40. The products or services that are differentiated from others have qualities that are
a. perceived by the customer to add value for which they will pay a premium.
b. valued by the typical industry customer.
c. perceived as standardized by the customer.
d. seen as classic attributes rather than passing fads.
ANS: A
PTS: 1
DIF: Hard
REF: 110
41. Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are
indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is
an example of
a. the perception of uniqueness being important to firms following the differentiation strategy.
b. the importance of high-quality raw materials when using the differentiation strategy.
c. the risk of product imitation by competitors.
d. the danger counterfeiting holds for firms pursuing the differentiation strategy.
ANS: A
PTS: 1
DIF: Hard
REF: 110-111
42. All of the following are examples of differentiated products EXCEPT
a. Toyota’s Prius gas-electric hybrid car.
b. Tempur-Pedic mattresses.
c. store brand beef and pork.
d. Starbuck’s coffee.
ANS: B
PTS: 1
DIF: Medium
REF: 110-111
43. The use of a differentiation strategy would be expected to be LEAST effective in which of the following
markets?
a. Commodity goods
b. Motion pictures
c. Popular music
d. Writing instruments
ANS: A
PTS: 1
DIF: Medium
REF: 110-111
44. The differentiation strategy can be effective in controlling the power of rivalry with existing competitors
in an industry because
a. customers will seek out the lowest cost product.
b. customers of non-differentiated products are sensitive to price increases.
c. customers are loyal to brands that are differentiated in meaningful ways.
d. the differentiation strategy benefits from rivalry because it forces the firm to innovate.
ANS: C
PTS: 1
DIF: Medium
REF: 110-111
45. Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from
all-natural ingredients and organically-raised lamb. This brand has a strong following and is
recommended by veterinarians who practice in affluent neighborhoods. Wholesome’s main supplier of
lamb has announced that the price for lamb will be 15 percent higher next year.
a. Wholesome will probably be able to pass the cost on to its customers because they are less
sensitive to price increases than the average buyer.
b. Companies pursuing Wholesome’s business strategy are especially vulnerable to this risk.
c. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as
Purina.
d. Wholesome probably operates on very thin margins, and a cost increase will threaten its
ability to earn average returns.
ANS: A
PTS: 1
DIF: Medium
REF: 110-111
46. Which of the following is NOT a value-creating activity associated with the differentiation strategy?
a. intensive training programs to improve employee effectiveness and efficiency
b. strong capability in basic research
c. rapid and timely deliveries to customers
d. procurement systems focused on finding the highest quality raw materials
ANS: A
PTS: 1
DIF: Hard
REF: 112 (Figure 4.4)
47. A differentiation strategy can be effective in controlling the power of substitutes in an industry because
a. customers have low switching costs.
b. substitute products are lower quality.
c. a differentiating firm can always lower prices.
d. customers develop brand loyalty.
ANS: D
PTS: 1
DIF: Medium
REF: 113
48. Recently, the only type of car available for Anthony to rent on a business trip was a compact,
fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is
in the market for a new car and had previously considered only buying another luxury SUV. Now, he is
thinking about the significant cost savings he would have if he bought the compact vehicle rather than a
new SUV. This is an example of the competitive risk that
a. a competitor’s products can convey a product’s differentiated features to a customer at a
significantly reduced price.
b. a product imitation can cause customers to perceive that competitors offer essentially the
same good.
c. experience can narrow a customer’s perceptions of the value of a product’s differentiated
features.
d. brand loyalty insulates a company from rivalry with competitors.
ANS: C
PTS: 1
DIF: Medium
REF: 113
49. A manufacturer of jewelry imitates the style of a popular and expensive brand using manufactured
stones rather than real gemstones and lesser grade metals rather than silver and gold. The manufacturer
packages the jewelry in boxes of the same color imprinted with an almost identical logo. About 85
percent of the company’s sales are through Internet sales. This example illustrates the competitive risk of
____ that threatens companies that use the differentiation strategy.
a. customer sensitive to price differentials
b. threat by the cost leader
c. customer experience
d. counterfeiting
ANS: D
PTS: 1
DIF: Medium
REF: 113
50. The typical risks of a differentiation strategy do NOT include which of the following?
a. Customers may find the price differential between the low-cost product and the
differentiated product too large.
b. Customers’ experience with other products may narrow customers’ perception of the value
of a product’s differentiated features.
c. Counterfeit goods are widely available and acceptable to customers.
d. Suppliers of raw materials erode the firm’s profit margin with price increases.
ANS: D
PTS: 1
DIF: Hard
REF: 113
51. Caribou Coffee, with 430 stores, is the nation’s second largest chain of coffee shops behind Starbucks.
Both chains seek to provide the highest quality product and service. Which of the following statements is
accurate?
a. Because Caribou has fewer outlets, it is using a focused strategy.
b. Because Starbucks was first in the market, it is the differentiated firm.
c. Both Caribou and Starbucks are using the cost leadership strategy based on economies of
scale.
d. Caribou is trying to out differentiate Starbucks based on store atmosphere, being
environmentally friendly, and free WiFi.
ANS: D
PTS: 1
DIF: Medium
REF: 114
52. When implementing a focus strategy, the firm seeks to
a. offer products that are both differentiated and low cost.
b. move into the global market.
c. target the typical customer in an industry.
d. serve the specialized needs of a market segment.
ANS: D
PTS: 1
DIF: Easy
REF: 115-116
53. Ikea offers young customers a limited selection of standardized home furnishings featuring good design,
function, and acceptable quality at low prices. Ikea is using which business level strategy?
a. Cost leadership
b. Focused cost
c. Differentiation
d. Focused differentiation
ANS: B
PTS: 1
DIF: Easy
REF: 115-116
54. The focused differentiation strategy differs from the differentiation strategy in that
a. the focused differentiators have a broader competitive scope.
b. the value-creating activities of focused differentiators are more constrained.
c. focused differentiators target a narrower customer market.
d. there are fewer risks with the focused differentiation strategy.
ANS: C
PTS: 1
DIF: Medium
REF: 116-117
55. Chico’s is a clothing retailer that targets middle-aged women who want stylish and appealing clothes
that are suitable for the mature figure. Chico’s has an extensive customer list, a frequent-buyer discount
card, and frequent sales promotions to Chico’s customers based on their spending levels. Chico’s uses a
____ strategy.
a. focused differentiation based on a buyer group
b. focused differentiation based on a product line segment
c. generic differentiation
d. integrated cost leadership/differentiation
ANS: A
PTS: 1
DIF: Medium
REF: 116
56. Although they are radically different companies, Godiva (chocolate) and Maserati (cars) share a
business strategy, which is
a. cost leadership.
b. focused differentiation.
c. integrated cost leadership/differentiation.
d. differentiation.
ANS: B
PTS: 1
DIF: Medium
REF: 116
57. The Monteleone Company pays large fees to a highly-recognizable, prestigious individual to be the
spokesperson for the company’s products, luxury private jets. Monteleone is probably following the
a. focused cost-leadership strategy.
b. focused differentiation strategy.
c. integrated cost leadership/differentiation strategy.
d. total quality strategy.
ANS: B
PTS: 1
DIF: Medium
REF: 116
58. The risks of a focus strategy include
a. a competitor’s ability to use its core competencies to outfocus the focuser by serving an
even more narrowly defined segment.
b. a competitor’s ability to use its core competencies to outfocus the focuser by serving an
even more broadly defined segment.
c. decisions by industry-wide competitors to use their resources to serve a wider range of
customers’ needs than the focuser has been serving.
d. decisions by focused competitors to use their resources to serve a wider range of customers’
needs.
ANS: A
PTS: 1
DIF: Medium
REF: 117
59. Focus strategies are
a. sheltered from the risks associated with industry-wide strategies because of their niche
focus.
b. able to avoid global risk by focusing on niches in national or regional markets.
c. faced with additional types of risks than are industry-wide strategies.
d. more subject to failure than industry-wide strategies.
ANS: C
PTS: 1
DIF: Medium
REF: 117
60. New Balance Athletic Shoes target Baby Boomers’ needs for well-fitting shoes. The company is unique
in that it offers a very broad range of shoe widths. A realistic potential risk New Balance runs in this
focused differentiation strategy includes the possibility that:
a. Baby Boomers may find that they do not need well-fitting shoes, since they will become
increasingly sedentary as they age.
b. A competitor may be able to better use flexible manufacturing systems to make shoes with
an individualized fit.
c. Athletic shoes may go out of style.
d. New Balance shoes may begin to appeal to a wider market, thus losing New Balance’s focus
advantage.
ANS: B
PTS: 1
DIF: Medium
REF: 117
61. Zara has developed capabilities to compete in the “fast fashion” portion of the clothing market, including
quickly copying runway fashions; vertical integration from design to point of sale; flexible, just-in-time
manufacturing systems; and a time to market for new items of just three weeks compared to an industry
average of nine months. These are all characteristics of what business level strategy?
a. Cost leadership
b. Differentiation
c. Integrated, low-cost differentiated
d. Stuck-in-the-middle
ANS: C
PTS: 1
DIF: Medium
REF: 117 | 119
62. It is more common for firms to attempt to use the integrated cost leadership/differentiation strategy now
than in the past because
a. other firms have established unassailable market dominance with the other four strategies.
b. global markets allow for much broader competitive scope.
c. customers have increasingly high expectations when purchasing a good or service.
d. one strategy is not enough for most large firms.
ANS: C
PTS: 1
DIF: Hard
REF: 117 | 119
63. The integration of a cost leadership and a differentiation strategy
a. is challenging because of the inherent difficulties in balancing primary and support
activities.
b. forces a firm to adapt more slowly to changes in its environment.
c. allows the firm to avoid being “stuck in the middle.”
d. requires such a large customer base that it is most practical for firms in the global
marketplace.
ANS: A
PTS: 1
DIF: Hard
REF: 117 | 119
64. Target has been able to flourish in locations with Wal-Mart stores because
a. Wal-Mart has suffered from the inertia that comes with long success and reliance on the
same core competencies.
b. Target is using a focused cost-leadership strategy and has a much narrower competitive
scope than Wal-Mart.
c. Target is able to offer lower prices than Wal-Mart through capturing more value in the value
chain.
d. Target uses an integrated cost leadership/differentiation strategy and appeals to a different
customer than does Wal-Mart.
ANS: D
PTS: 1
DIF: Medium
REF: 117 | 119
65. Companies successfully implementing an integrated cost leadership/differentiation strategy are better
positioned than firms pursuing the other four business strategies to do all of the following EXCEPT
a. learn new skills.
b. adapt quickly to a changing environment.
c. reduce the risks for stakeholders of the firm.
d. have more primary and support activities in which they are competent.
ANS: C
PTS: 1
DIF: Hard
REF: 117 | 119
66. Three sources of flexibility in completing primary and support activities are particularly useful for firms
using the integrated strategy. These are
a. Flexible Manufacturing Systems, Reengineering, and Total Quality Management.
b. Outsourcing, Reengineering, and Flexible Manufacturing Systems.
c. Outsourcing, Total Quality Management, and Information Networks.
d. Flexible Manufacturing Systems, Total Quality Management, and Information Networks.
ANS: D
PTS: 1
DIF: Medium
REF: 119-120
67. The benefit of a flexible manufacturing system is that
a. the lot size needed to manufacture a firm’s product efficiently is reduced.
b. the necessary skill levels of workers are reduced, allowing the firm to reduce costs.
c. it lends itself to empowerment of employees.
d. it captures the cost savings of economies of scale.
ANS: A
PTS: 1
DIF: Medium
REF: 119-120
68. A flexible manufacturing system is
a. based on the use of temporary and part-time employees as well as outsourcing.
b. a computer-controlled process that is used to produce a variety of products in moderate,
flexible quantities with minimal human intervention.
c. based on a 360-degree view of the company’s relationships with customers.
d. a system that identifies “the one best way” to produce each product in the company’s line.
ANS: B
PTS: 1
DIF: Medium
REF: 119
69. Land’s End offers jeans personally tailored to the customer’s individual body measurements, resulting in
a garment that is uniquely sized. This is an example of
a. Total Quality Management.
b. an enterprise resource planning system.
c. a flexible manufacturing system.
d. a customer relationship management system.
ANS: C
PTS: 1
DIF: Medium
REF: 119
70. A nationwide chain of pet stores wishes to identify the tradeoffs that its customers are willing to make
between low-cost products such as generic pet foods and differentiated features such as pick-up and
delivery of pets for grooming. The best technique for this firm to learn this information would be to use
a. customer relationship management.
b. a flexible manufacturing system.
c. differentiation development planning.
d. Enterprise Resource Planning.
ANS: A
PTS: 1
DIF: Easy
REF: 119
71. By linking companies with their suppliers, distributors, and customers, ____ provide a company with
flexibility.
a. Flexible manufacturing systems
b. Information networks
c. Total quality management systems
d. Capabilities
ANS: B
PTS: 1
DIF: Medium
REF: 119-120
72. TQM is most helpful to firms following the ____ business strategy.
a. cost-leadership
b. integrated cost-leadership/differentiation
c. focused cost-leadership
d. focused differentiation
ANS: B
PTS: 1
DIF: Medium
REF: 120
73. The term "stuck in the middle"
a. means adhering to a middle of the road strategy in the face of negative outcomes.
b. indicates that the customers of the firm are willing to pay only a mid-range price for the
product.
c. reflects the fact that the customers of the firm have only moderate expectations regarding
product quality.
d. describes a firm that fails to optimally perform its primary and support activities.
ANS: D
PTS: 1
DIF: Medium
REF: 120-121