Strategic Management Theory and Cases An Integrated Approach 12th Edition – Test Bank

Chapter 5 Business Level Strategy TRUE FALSE

1. A firm’s business model should contain three components: what is to be satisfied, who is to be satisfied, and how they will be satisfied.

(A) True
(B) False Answer : (A)

2. The way a product is differentiated from other products of its type and the price of the product determine which product a customer chooses to satisfy his or her needs.

(A) True
(B) False Answer : (A)

3. Companies with a differentiation advantage tend to charge a lower price for their products. (A) True
(B) False
Answer : (B)

4. In commodity markets, competitive advantage goes to the company that has the lowest costs. (A) True
(B) False
Answer : (A)

5. A company has a competitive advantage if it can increase costs relative to rivals. (A) True
(B) False
Answer : (B)

6. Differentiation can help a company to grow overall demand and capture market share from its rivals.

(A) True

(B) False Answer : (A)

7. Differentiation leads to high brand loyalty, which in turn significantly increases the threat of new firms entering the industry.

(A) True
(B) False Answer : (B)

8. Market segmentation refers to the process of subdividing a market into clearly identifiable groups of customers with similar needs, desires, and demand characteristics.

(A) True
(B) False Answer : (A)