4860 Ch. 6 study guide
Economies of scale
decreases in cost per unit as output increases
the most important cost drivers are...
experience curve effects learning curve effects economies of scale cost of input factors
industry and firm effects
how a firms competitive advantage is defined
manufacturing robots and enterprise resource planning software
larger output allows firms to invest in more specialized systems such as...
economies of scope
reducing overall production costs by finding multiple uses for its components and facilities
product features complements customer service
the 3 most important value drivers that managers can use to create a competitive advantage
protection against an increase in input prices
the beneficial effect of a differentiation strategy on the power of suppliers in an industry
differentiation and cost leadership
the business strategy Jet Blue pursues in order to gain a competitive advantage
bring down
the minimum efficient scale indicates the level of output needed to __________ the cost per unit as much as possible
minimum efficient scale
the range of output needed to minimize the cost per unit as much as possible
the amount of fixed costs allocated to each unit of output decreases as output increases
the relationship between fixed costs and economies of scale
narrow or broad
the scope of competition is considered....
cost leadership strategy
the strategy that involves getting the lowest costs in industry and acceptable value
cost and value
2 variables mangers primarily use to manipulate in order to answer the question "how should we compete?"
labor capital IT services Raw Materials
4 input factors
1. which product factors to eliminate 2. which product factors to raise above the industry standard 3. which product factors to reduce below the industry standard 4. which new product factors to create
4 questions mangers must answer when pursuing value innovation
1. charge a higher price than then cost leader 2. charge a lower price than the differentiator
a firm pursuing a blue ocean strategy can increase its profits by implementing two pricing options
control costs
an important requirement for increasing economic value creation under a differentiation strategy
red ocean strategy
Products in the affordable "business-casual" clothing market have largely become commoditized, and most retailers have begun to compete mainly on price rather than product features. In this environment, it is impossible for one retailer to gain market share without losing it. What strategy is this an example of?
value innovation
a firm that manages to avoid competition entirely by offering a product or service that creates a uncontested market space is engaging in....
strategic trade-off
a situation that requires choosing between a cost or value positions
cutting costs and increasing value at the same time
a struggling retailer seeking to implement a blue ocean strategy is likely to experience this difficulty
compliments
a tablet manufacturer that includes a free stylus with every purchase is using __________ to enhance users' experience and increase the perceived value of its tablets
input factors
an auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of....
the most important value drivers that mangers can use to create a competitive advantage are....
compliments, product features, and customer service
cost-leadership and differentiation
two basic business level strategies
product features and customer service
two important features that managers can adjust in an effort to improve the firms strategic position
cube-square rule
this rule makes it harder for smaller stores to compete with larger retailers
diseconomies of scale
when a firm increases output and it results in an increase in costs
cost leadership strategy
when the goal is to achieve costs below those of competitors while maintaining similar value.
because they end up being "stuck in the middle," unable to increase value and lower cost at the same time
why do many firms fail to successfully implement an integration strategy?
