Strategic Management: Strategic Managment

Gregory G. Dess, University of Texas at Dallas
G.T. Lumpkin, University of Illinois--Chicago

Business-Level Strategy: Creating and Sustaining Competitive Advantages

Multiple Choice Quiz


1	Businesses without a competitive advantage are not likely to earn more than "normal" profits in the long run. Normal profits are
		A)	profits one would expect to earn on investments that have a similar level of risk.
		B)	profits received by corporations in the normal course of business.
		C)	what one would receive on U.S. Treasury securities.
		D)	profits earned by a corporation on a diversified portfolio of stocks.


2	Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
		A)	differentiation
		B)	overall cost leadership
		C)	differentiation focus
		D)	stuck-in-the-middle


3	Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?
		A)	by increasing a firm's margins, it avoids the need for a low cost position
		B)	it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives
		C)	supplier power is increased because suppliers will be able to charge higher prices for their inputs
		D)	firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors


4	A narrow market focus is to a differentiation-based strategy as a
		A)	growth market is to a differentiation-based strategy.
		B)	growth market is to a cost-based strategy.
		C)	technological innovation is to a cost-based strategy.
		D)	broadly-defined target market is to a cost leadership strategy.


5	The total profits in an industry at all points along the industry's value chain is called the
		A)	profit maximizer.
		B)	revenue enhancer.
		C)	profit outsourcing.
		D)	profit pool.


6	The emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low in the ______ stage of the industry life cycle.
		A)	maturity
		B)	growth
		C)	introduction
		D)	decline


7	In the _______ stage of the industry life cycle, there are numerous segments, competition is very intense, and the emphasis on process design is high.
		A)	introduction
		B)	maturity
		C)	growth
		D)	decline


8	As markets mature
		A)	there is increasing emphasis on efficiency.
		B)	costs continue to increase.
		C)	application for patents increase.
		D)	differentiation opportunities increase.


9	The most probable time to pursue a harvest strategy is in a situation of
		A)	high growth.
		B)	decline in the market life cycle.
		C)	strong competitive advantage.
		D)	mergers and acquisitions.

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