Upgrade to remove ads
Only $35.99/year

Chapter 5

Terms in this set (79)

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.
t
Both 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.
t
Companies with a differentiation advantage must charge a lower price for their products.
f
A company searching for a successful business model has to group customers according to the similarities or differences in their needs to discover what kinds of products to develop that will best meet the needs of different kinds of customers.
t
Market segmentation addresses the "what" portion of a firm's business model.
f
Maximizing the profitability of a company's business model is about making the right choices with regard to value creation through differentiation, costs, and pricing given both the demand conditions in the company's market and the competitive conditions in the company's industry.
t
Companies that successfully pursue a cost leadership strategy generally have a distinctive competency in research and development.
f
All focus strategies entail serving a specific market segment using a differentiation approach.
f
A cost leader must respond to the strategic moves of its differentiated competitors.
t
Differentiation on the basis of innovation and technological competency depends on the research and development function.
t
A major problem with a differentiation strategy centers on the long-term ability to maintain a product's perceived difference or distinctness in customers' eyes.
t
Once a focused differentiator gains competitive advantage in its market, the threat of competitive rivalry is greatly reduced.
f
Differentiation leads to high brand loyalty, which in turn reduces the threat of new firms entering the industry.
t
Market segmentation is an evolving, ongoing process that presents considerable opportunities for strategic managers to improve their company's business model.
t
Focusers are vulnerable to shifting consumer tastes, which can eliminate their market niche.
t
Sets found in the same folder