Question Details

A cost leadership strategy targets the industry






1.	A cost leadership strategy targets the industry- ____ customers.
a.	most typical
b.	poorest
c.	least educated
d.	most frugal



	2.	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- 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- 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.



3.	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- 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.



	4.	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

	

	5.	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.





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