Global Marketing, 6e (Keegan/Green) Chapter 16 Strategic Elements of Competitive Advantage

Global Marketing, 6e (Keegan/Green) Chapter 16 Strategic Elements of Competitive Advantage 1) IKEA, the global furniture powerhouse, faces increasing competition from hypermarkets, "do- it-yourself" retailers such as Wal-Mart and supermarkets that are expanding into home furnishings.

Answer: TRUE

Diff: 2 Page Ref: 484

AACSB: Reflective Thinking

2) IKEA stores exteriors are painted bright blue and yellow: Denmark's national colors.

Answer: FALSE

Diff: 2 Page Ref: 484 3) The essence of marketing strategy is successfully relating the strengths of an organization to its environment.

Answer: TRUE

Diff: 2 Page Ref: 485

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4) Competition in an industry tends to drive rates of return on invested capital up towards the level of "perfect competition."

Answer: FALSE

Diff: 2 Page Ref: 485

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5) "Switching costs" are one of the barriers to entry in Porter's five forces model.

Answer: TRUE

Diff: 2 Page Ref: 486

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6) Unique product attributes represent a barrier to industry entry known as differentiation.

Answer: FALSE

Diff: 2 Page Ref: 486

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7) In many industries, the digital revolution has altered the nature of competition by increasing the cost for potential new entrants to an industry.

Answer: TRUE

Diff: 3 Page Ref: 487

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8) Analyzed in terms of Porter's five forces model, online music file sharing services represent a threat to the music industry in the form of a substitute product.

Answer: TRUE

Diff: 2 Page Ref: 487

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9) Analyzed in terms of Porter's five forces model, Wal-Mart's ability to dictate terms to the music industry is one indication of the retail giant's supplier power.

Answer: FALSE

Diff: 2 Page Ref: 487-488

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10) Microsoft and Intel are two companies that illustrate the concept of "bargaining power of suppliers" in Porter's five forces model of industry competition.

Answer: TRUE

Diff: 2 Page Ref: 488

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11) In Michael Porter's model, "buyers" refers to manufacturers (e.g., GM) and retailers (e.g.Wal-Mart), rather than consumers.

Answer: TRUE

Diff: 2 Page Ref: 487

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12) If suppliers have enough leverage over industry firms, they can raise prices high enough to significantly influence the profitability of their organizational customers.

Answer: TRUE

Diff: 2 Page Ref: 487

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13) Rivalry among firms refers to all the actions taken by firms in the industry to improve their positions and gain advantage over each other.

Answer: FALSE

Diff: 2 Page Ref: 488

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14) Michael Porter's four generic strategies for achieving competitive advantage are product differentiation, price leadership, promotion power, and distribution efficiency.

Answer: FALSE

Diff: 2 Page Ref: 485-487

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15) Michael Porter's generic strategy framework is derived from the basic types of competitive advantage and the scope of the target market served.

Answer: TRUE

Diff: 2 Page Ref: 490

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16) Cost leadership advantage is based on a firm's position as the industry's low-cost leader in a broad market.

Answer: TRUE

Diff: 2 Page Ref: 490

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17) According to the generic strategy framework, cost leadership is a sustainable source of competitive advantage if barriers exist that prevents competitors from achieving the same low costs.

Answer: TRUE

Diff: 2 Page Ref: 490-491

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18) Maytag has been called "the Rolls-Royce of washers and dryers;" and it can be said that it has achieved a competitive advantage by means of differentiation.

Answer: TRUE

Diff: 2 Page Ref: 491-492

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19) Michael Porter's five forces model and Rugman and D'Cruz's flagship model are both based on the concept of corporate individualism.

Answer: FALSE

Diff: 2 Page Ref: 493-494

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20) Rugman and D'Cruz's development of the flagship model was influenced by their study of Japanese keiretsu.

Answer: TRUE

Diff: 2 Page Ref: 493-494

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21) Rugman and D'Cruz cite Benetton as an example of a flagship firm that excels at building partnerships.

Answer: TRUE

Diff: 2 Page Ref: 493-494

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22) Key suppliers, key customers, and key consumers are all elements of a flagship company's partner network.

Answer: TRUE

Diff: 2 Page Ref: 493-495

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23) Few competitive advantages are long lasting.

Answer: TRUE

Diff: 2 Page Ref: 495

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24) Benetton's success in the global fashion industry illustrates the flagship model.

Answer: TRUE

Diff: 2 Page Ref: 494-495

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25) The Komatsu-Caterpillar saga is just one example of how more than the pursuit of generic 3

strategies can shape global competitive battles.

Answer: TRUE

Diff: 2 Page Ref: 496

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26) The central concept of the strategic intent model of competitive advantage is an obsession of winning.

Answer: TRUE

Diff: 2 Page Ref: 495-496

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27) The "layers of advantage" approach to global competitive innovation is based on using know-how developed by other companies.

Answer: FALSE

Diff: 3 Page Ref: 496-497

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28) Intel's focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices. In the strategic intent model of competitive advantage, this is an example of "loose bricks."

Answer: TRUE

Diff: 3 Page Ref: 497

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29) In the strategic intent model of competitive advantage, Canon's successful entry into the photocopier market is an example of changing the rules of engagement.

Answer: TRUE

Diff: 3 Page Ref: 497

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30) "Active competition for demanding customers in the home market keeps companies under pressure to constantly innovate." This statement is consistent with Michael Porter's thesis regarding the competitive advantage of nations.

Answer: TRUE

Diff: 2 Page Ref: 495-496

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31) "Active competition for demanding customers in the home market keeps companies under pressure to constantly innovate." This statement is an integral part of Hamel and Prahalad's concept of "strategic intent."

Answer: FALSE

Diff: 2 Page Ref: 495-496

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