Name: Class: Date:
Chapter 04: Business-Level Strategy
True / False
1. A business-level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a
competitive advantage by exploiting core competencies in specific product markets.
a. True
b. False
ANSWER: True
2. Every firm uses all levels of strategy: corporate-level, merger and acquisition, international, and cooperative.
a. True
b. False
ANSWER: False
3. When selecting a business-level strategy, the firm determines who will be served, what needs those target customers
have that it will satisfy, and how those needs will be satisfied.
a. True
b. False
ANSWER: True
4. Global competition has increased the options for consumers and has made it more imperative for firms to identify the
needs of customers to earn above-average returns.
a. True
b. False
ANSWER: True
5. Effective use of the generic business strategies allows a firm to favorably position itself relative to the five competitive
forces in the industry.
a. True
b. False
ANSWER: True
6. Almost any identifiable human or organizational characteristic can be used to subdivide a market into segments that
differ from one another on a given characteristic.
a. True
b. False
ANSWER: True
7. The generalized forms of value that goods and services provide are either low cost with acceptable features or highly
differentiated features with acceptable cost.
a. True
b. False
ANSWER: True
8. Changing consumer needs are illustrated by Starbucks' enabling consumers to have an experience and design their own
drinks rather than just a cup of coffee.
a. True
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Chapter 4:
Introduction
Strategy: Increasingly important to a firm’s success and concerned with making choices among two or more
alternatives.
Choices dictated by:
oExternal environment (Opportunities and Threats)
oInternal resources, capabilities and core competencies (Strengths and Weaknesses)
Business level-strategy - Integrated and coordinated set of commitments and actions the firm uses to gain a
competitive advantage by exploiting core competencies in a specific product markets or industry
Responsibility of business level managers
How a firm intends to compete in an individual product market or industry
All firms must develop and implement business level strategy
Single business firms compete in one industry and have one business level strategy
Multi-business firms compete in multiple industries and have a separate business level strategy for each
business unit or industry they compete in
Business level strategy must be consistent with the firms internal and external environments
Business-Level Strategies
Purpose: To create differences between position of a firm and its competitors (think strategic group map from
Module 3)
Firm must make a deliberate choice to:
oPerform activities differently (low cost)
oPerform different activities (differentiation)
Impacts how value chain activities will be performed to create unique value
No strategy better than others
Contingent on internal and external environment
Competitive Advantage and Scope
Two types of competitive advantage firms must choose between:
oHaving Lower Cost than rivals (performing activities differently)
oThe ability to Differentiate and command a premium price that exceeds the extra cost of doing so
(performing different activities)
Two types of competitive scope firms must choose between:
oBroad target - competing industry wide
oNarrow target - serving the needs of a narrow customer group
Five Business-Level Strategies
Competitive advantage and competitive scope combine to yield 5 Business-Level Strategies
These are the five strategic options that firms have for competing in a particular industry or product
market
Can potentially be used by any organization competing in any industry
None is inherently or universally superior to the other
Choice is contingent on the firms internal and external environment
Cost Leadership Strategy