I just got demolished by SS11 Question Bank Exam from Schewser CD with 44%…those god damn competitive strategies are so all over the place; I got none of them right… any guidelines you guys use to verify what strategy the co. is using? Thanks
I would be really interested in an explanation for this one too. I think i know the question you are referrring to and I think i got 1 right (out of 6) in that one.
why don’t you post those questions here?
Medley International, Inc. (Medley) is a conglomerate business who has seen its profit margins deteriorate in the last several years. To help increase profitability, it has decided to abandon its approach of cost leadership in all business lines and instead use the most appropriate competitive strategy for each business line. Listed below is a brief description of Medley’s six business divisions. Restaurant Services Medley is a recycler of food processing by-products. It collects and recycles animal processing by-products, and used cooking oil from food service establishments. It processes materials, at 5 facilities located along the east coast of the United States, into finished products such as tallow, protein, and yellow grease. Rendering consists of the collection and processing of animal by-products from butcher shops, grocery stores, independent meat and poultry processors, converting these wastes into similar products such as useable oils and proteins, soaps, pet foods, and livestock feed that it sells to large distributors servicing agricultural and oleo-chemical industries. This segment represented 66.4 percent of net external sales for the restaurant services division during the most recent fiscal year. The collection of used cooking oils from food service establishments and recycling them into similar products such as high-energy animal feed ingredients and industrial oils accounted for the remaining net external sales in the most recent fiscal year for the restaurant services division. Technology Equipment Medley also is a manufacturer of high-performance engineered materials serving the global telecommunications and computer, optical media, automotive electronics, industrial components, aerospace and defense, and appliance markets. Alloy Products, comprises the largest unit within the technology equipment division. It manufactures and sells copper and nickel-based alloy systems, the majority of which also contains beryllium. These products are metallurgically tailored to meet specific customer performance requirements. They are used in plastic tooling and heavy equipment product applications. Medley has recently gone on-line with its fourth production facility following the opening of its third major factory only two years earlier and the refurbishing of its other two production facilities over a five-year period. The new factory is best described as a state of the art plant able to deal equally well with long production runs and with short runs due to its flexible set up that significantly reduces retooling time. Medley now maintains operations in North America, South America, Europe, and East Asia. Financial Services Medley’s financial services division has operations in two business segments: Commercial Banking and Trust and Asset Management. The Commercial Banking segment provides lending, business checking and deposits, cash management, merchant card services, and other traditional and e-commerce commercial banking services to large customers. Medley conducts business in 30 locations throughout northern Indiana and south-central Missouri. Medley provides commercial banking and related financial services at attractive prices to a limited range of large customers. In recent years it has developed a loyal customer base by demonstrating its willingness to go the extra mile to ensure customer satisfaction. TheTrust and Asset Management segment provides trust, investment management, and employee benefit recordkeeping and administration, and brokerage services. Many commercial banking clients also subscribe to the Medley’s Trust and Asset Management services. Customers can get real-time stock market quotes and investment account information and place trades 24 hours a day, 7 days a week. Prices are among the most competitive in the industry. Aerospace and Defense Medley is a specialized manufacturer serving aerospace and defense customers. It operates this division in three segments: Avionics and Controls, Sensors and Systems, and Advanced Materials. The Avionics and Controls segment designs and manufactures technology interface systems for military and commercial aircraft and land- and sea-based military vehicles, secure communications systems, specialized medical equipment, and other industrial applications. The Sensors and Systems segment produces high-precision temperature and pressure sensors, fluid control components, micro-motors, motion control sensors, and other related systems, principally for aerospace and defense customers. The Advanced Materials segment develops and manufactures high-performance elastomer products used in a range of commercial aerospace and military applications and combustible ordnance components and electronic warfare countermeasure devices for military customers. Medley’s proprietary products meet critical operational requirements and provide customers with technological advantages in such areas as night vision compatibility and backlighting for active-matrix liquid-crystal displays. It has sales offices in 32 countries around the world and deals with the who’s who of the aerospace and defense industry. Retail Services Medley is engaged in the business of providing general merchandise and retail health services, through two main business segments. One segment consists of a multi-department retailer located primarily in mid-size and larger communities. The retail stores are committed to offering merchandise, services, and value to meet customers’ needs for home, family basics, casual apparel, and seasonal products, along with a special emphasis on retail health through its in-store pharmacies and optical centers. As of the most recent fiscal year, Medley had 98 retail stores operating in 11 Midwest, Pacific Northwest, and Western Mountain states. Its other retail segment is a general merchandise retailer, which serves smaller and more rural communities, offering a convenient, one-stop shopping format. Stores are designed for simplicity, speed and ease of the shopping experience. This segment operates at 10 locations in 9 Midwest, North Central and Rocky Mountain states. Computer Networking Medley’s computer networking division has been operating since 1974 and provides multi-capable storage network solutions that enable end customers worldwide to better consolidate and utilize their storage infrastructure, manage the storage network and implement business continuance solutions. Its solutions include hardware and software products, professional services, and education that enable businesses to scale their operations globally. In August, 2003, Medley acquired a provider of native Internet protocol (IP) storage switching solutions that builds open storage networking products based on IP and Ethernet, both international networking standards. Later in 2003, Medley acquired a producer of intelligent director class switching platform technologies. It provides customers with solutions that solve customer problems such as consolidation and data protection allowing the customers to focus on their business mission with the assurance of high availability and functionality. Medley does business with the leaders in the industry who recognize that higher quality comes with higher prices. The competitive strategy that best applies to Medley’s restaurant services division is: A) differentiation focus. B) cost leadership. C) differentiation. D) cost focus. Your answer: C was incorrect. The correct answer was A) differentiation focus. Medley’s restaurant services division operates to a large degree in a limited geographical area along the eastern coast of the U.S. It attempts to differentiate itself through its choice of a limited range of products and through its target market comprised of large distributors who service several specific industrial sectors. -------------------------------------------------------------------------------- The competitive strategy that best applies to Medley’s technology equipment business is: A) cost leadership. B) differentiation. C) cost focus. D) differentiation focus. Your answer: C was incorrect. The correct answer was A) cost leadership. Cost leadership seems to be the main strategy here as the Medley has extensive operations on 4 continents. Additionally, in an effort to become the industry’s cost leader, it has invested substantial sums of money in recent years to become more efficient by modernizing and upgrading its main production facilities. -------------------------------------------------------------------------------- The competitive strategy that best applies to Medley’s financial services division is: A) cost leadership. B) differentiation. C) cost focus. D) differentiation focus. Your answer: A was incorrect. The correct answer was C) cost focus. Medley’s financial services business operates in a narrow geographic region and seeks a competitive advantage by locating its facilities in order to be close to most of its customers. Medley has also made a conscious decision to specialize in several key areas of the financial services sector while avoiding sectors that have strong price competition such as mortgage lending. -------------------------------------------------------------------------------- The competitive strategy that best applies to Medley’s aerospace and defense division is: A) differentiation. B) cost leadership. C) cost focus. D) differentiation focus. Your answer: D was incorrect. The correct answer was A) differentiation. Differentiation seems to be the predominant strategy here. The fact that this business operates in 32 countries worldwide coupled with their specialized range of products seems to make this strategy appear to be fairly obvious. -------------------------------------------------------------------------------- The competitive strategy that best applies to Medley’s retail services business is: A) cost leadership. B) cost focus. C) differentiation. D) differentiation focus. Your answer: A was incorrect. The correct answer was B) cost focus. Medley sells its products in a limited area. Medley therefore has a narrow scope. It is attempting to be the cost leader in the industry by positioning its stores in convenient locations in a limited number of states so that it is readily accessible to its core customers. -------------------------------------------------------------------------------- The competitive strategy that best applies to Medley computer networking division is: A) cost leadership. B) differentiation. C) cost focus. D) differentiation focus. Your answer: B was correct! Medley’s computer networking division is well-established and operates on a broad basis. It attempts to differentiate itself from competitors by offering higher quality products and services at higher prices. Medley has been successful in creating the impression that they offer value.
I seem to get the strategy right everytime but not the focus or general part…
I went 1 for 6 on this one too, and checked out the actual CFAI text to see if there was a better guideline, but there were no practice questions!! I just hope that its a little less convoluted on the actual exam. Any repeaters to qualm out fears??
Im working the qbank on this right now. Throwing up a whooping 45% so far… hopefully someone has a few good tips.
it was brutal …
There is a thread that goes into these questions and may be helpful. Its from a couple months ago.
customer base segmented -> focus then either differentiation or cost
Glad I wasn’t the only one who was disturbed by this question!
can you clarify “segmented”? thanks in advanced!
comp strategies is horrible… anyone know how to make a qbank exam with only level II like questions?
akanska Wrote: ------------------------------------------------------- > can you clarify “segmented”? thanks in advanced! limited geographic area or easily identifiable narrow target group
There was definitely an exact question like this on the exam last year so its good to get it ironed out-it was a full item set and one of those questions that was hard to focus on because there was so much to read…
sterling76 Wrote: ------------------------------------------------------- > comp strategies is horrible… > > anyone know how to make a qbank exam with only > level II like questions? under test mgmt select advanced q-s only
the little chart on the bottom of pg 82 in Schweser is decent-just note the cost-leader profit margin charge an avg price but have lower costs and the differentiatior profit margin have age cost but can charge higher price-then if its narrow (ie limited distribution) its focus vs being “worldwide”…
Yes. This is my No 1 weak area. I think it is easier to tell if something is cost leader or differentiaion, but it is tricky to tell if it is focus or not focused.