Question Details

Ever improving levels of efficiency enhance profit margins





1.	A company pursuing the differentiation or focused differentiation strategy would tend to
a.	have highly efficient systems linking suppliers’ products with the firm- production processes.
b.	use economies of scale.
c.	have strong capabilities in basic research.
d.	make investments in easy-to-use manufacturing technologies.

	

	2.	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 above- average returns.



	3.	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

	

	4.	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.



	5.	When a product- 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.





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