Chapter 13 Defensive Strategies
1) In general, businesses in high-share positions in growing or mature markets will use which type of
strategic market plans to maintain cash flow that supports short-run profit performance and shareholder
value?
A) offensive strategic market plans
B) defensive strategic market plans
C) decentralized strategic market plans
D) concentrated strategic market plans
E) multi-segment strategic market plans
2) Which of the following core defensive strategies is appropriate when a business is operating in a very
unattractive market and has a very weak competitive advantage?
A) a harvest strategy
B) a monetize strategy
C) an optimize strategy
D) a protect strategy
E) an invest strategy
3) Which core defensive strategy is appropriate for a business with a very strong competitive advantage
operating in a very attractive market?
A) a harvest strategy
B) a monetize strategy
C) an optimize strategy
D) a protect strategy
E) an invest strategy
4) Which of the following is the strategic objective of the defensive core strategies: monetize, harvest,
and divest?
A) maintain profits
B) grow in existing markets
C) maximize cash flow
D) diversify growth
E) improve competitive position
5) To achieve above-average levels of profitability, low-share niche businesses need to focus on their
products and ________.
A) keep their market share high
B) divest for cash flow
C) keep expenses low
D) harvest for cash flow
E) expand their product line
6) Which of the following statements is true?
A) The average profiles for profitable high-share and profitable low-share businesses are almost
identical.
B) A low-share business with above-average customer value is more profitable than a high-share
business with below-average customer value.
C) A low-share niche business's prices are slightly above the average relative price index of 100.
D) Profitable low-share niche businesses tend to have a wide product breadth.
E) Profitable low-share niche businesses tend to spend more on advertising relative to the competition.
7) Customer value equals ________.
A) relative benefits divided by number of customers
B) relative price divided by number of customers
C) relative price plus relative benefits
D) relative benefits minus relative price
E) relative price minus relative benefits
8) Calculate the customer value for the product of a business that has an average relative price of 125
and the relative product quality of 200.
A) 325
B) 75
C) -75
D) -125
E) 200
9) Calculate the average relative price of the product of a business that has a customer value of 36, and a
below-average relative product quality of 114.
A) -78
B) -36
C) 150
D) 78
E) 36
10) Calculate the average relative product quality of the product, if the business has a customer value of
25, and above-average relative price of 125.
A) -25
B) 5
C) -100
D) 100
E) 150
11) Calculate the gross profit generated if 2 million units are sold at a margin price of $200 per unit.
A) $200 million
B) $400 million
C) $100 million
D) $100,000
E) $400,000
12) Calculate the margin per unit if 250,000 units generates a gross profit of $50 million.
A) $2,000
B) $125
C) $1,250
D) $200
E) $500
13) Calculate the volume(units) if a firm has a gross profit of $60 million and a margin price of $300 per
unit.
A) 180,000 units
B) 18,000 units
C) 200,000 units
D) 30,000 units
E) 16,000 units
14) Calculate the gross profit if the net marketing contribution is $40 million, the market share is 5%,
the acquisition cost is $10 million and the retention cost is $7 million.
A) $57 million
B) $23 million
C) $230,000
D) $60 million
E) $2.85 million
15) A firm has a gross profit of $60 million and a net marketing contribution of $14 million. The firm
has a market share of 6% and a margin per unit of $70. Calculate the marketing and sales expenses of
the firm.
A) $46 million
B) $70 million
C) $ 420,000
D) $10,000
E) $14 million
16) The main purpose of a reduced-market-focus strategy is to ________.
A) enter new market-segments
B) become more efficient
C) increase market share
D) develop new markets
E) increase customer loyalty
17) In case of monetize, harvest, and divest defensive strategies, each strategy is designed to ________.
A) maximize immediate cash flow
B) maximize brand equity
C) increase customer loyalty
D) facilitate long-run growth in market share
E) diversify growth
18) When additional profits can be made with a slow exit from a market, a(n) ________ strategy can be
a good source of short-run profits.
A) monetize
B) invest
C) divest
D) harvest
E) optimize
19) Which strategy would be used if a business is losing money in a given market and decides to pursue
a quick market exit?
A) a monetize market strategy
B) a disintermediation market strategy
C) a harvest market strategy
D) a divest market strategy
E) an optimize market strategy
20) A ________ strategy continues to raise prices slowly with expected decreases in volume until the
business has exited the market.
A) diversify growth
B) harvest price
C) divest market
D) reduce-market-focus
E) monetize cash flow