Business Strategy : Differentiation, Cost Leadership, Blue Oceans

Which type of strategy is being used if a company offers a product at a lower cost than its competitors?

cost-leadership strategy

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with ______.

cutting costs & increasing value at the same time

A ______ strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay.

differentiation

A successful blue ocean strategy requires strategists to reconcile the trade-offs between ______.

differentiation & cost leadership

Which of the following are input factors?

information technology services labor raw materials capital

An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.

input

Which of the following are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?

maintaining a domestic call center that is open 24 hours per day offering a "no questions asked" return policy

Larger output allows firms to invest in more specialized systems such as ______.

manufacturing robots enterprise resource planning software

Why do many firms fail to successfully implement a blue ocean strategy?

because they end up being "stuck in the middle," unable to increase value and lower costs at the same time

Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.

complements

The perceived value that a company creates for consumers less the company's costs to create the value equals ______.

the economic value created

Different value drivers contribute to competitive advantage only if ______.

the increase in perceived value exceeds the corresponding cost increase

rue or false: Formulating a business strategy is a relatively easy task because only a few strategic options are available.

False

What is the relationship between fixed costs and economies of scale?

The amount of fixed costs allocated to each unit of output decreases as output increases.

What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?

To achieve strategic positioning, firms must make important trade-offs.

In addition to having the lowest cost, a low-cost leader is likely to have ______.

a large market share

A company's goal-directed plans regarding how to compete for advantage is known as the firm's ______.

business-level strategy

The goal of a _____________ strategy is to achieve expenses below those of competitors while maintaining similar value. A firm with this strategy could or could not achieve differentiation parity.

cost leadership

Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods?

an increase in demand from the market

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.

cost leadership

Which of the following are considered the two generic business-level strategies?

cost leadership & differentiation

Economies of scale are _________________

decreases in cost per unit as output increases

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.

economies of scale

Why does the learning curve go down when productivity is considered?

As workers repeatedly engage in an activity, they become more efficient, driving down costs.

Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.

scope

Which competitive forces can result in erosion of margins for both differentiation and cost-leadership business strategies?

threat of entry power of buyers power of suppliers

A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.

differentiation

A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______.

value innovation

By using a differentiation strategy, a firm aims to ____

add unique features that will increase the perceived value of a product

If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from

an experience-curve effect based on process innovation.

Which of the following scenarios would result in strengthening a firm's strategic position?

A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm.

Business-level strategy addresses which overarching question?

How should we compete?

As JetBlue grew, which of the following occurred during the years following 2007?

It suffered a competitive disadvantage.

Which capability is required to create superior product features?

R&D

Which of the following best defines economies of scope?

They are the savings that come from producing two or more outputs at less cost than producing each output individually.

True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.

True

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.

change premium pricing

A tablet manufacturer that includes a free stylus with every purchase is using ______ to enhance users' experiences and increase the perceived value of its tablets.

complements

The concept of a(n) ______ attempts to combine both learning effects and process improvements.

experience curve

The cube-square rule makes it _______ for smaller stores to compete with larger retailers.

harder

Two important features that managers can adjust in an effort to improve the firm's strategic position are ______.

product features & customer service

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 another losing it. This is an example of a ______ ocean.

red

A cost leader can achieve a competitive advantage by ______.

reducing costs below those of competitors while maintaining a similar value

A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an economy of ______ , reducing overall production costs by finding multiple uses for its components and facilities.

scope

Economies of scale present an opportunity to increase profits because as the number of units within the relevant range increases, fixed costs ______.

stay the same

Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ______.

value innovation

In terms of business strategy, blue oceans represent which of the following?

untapped market space increased demand

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?

Differentiation provides protection against an increase in input prices.

How to compete on a business level is defined by the variables value and cost. Together they define the ______.

economic value created

A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?

the ability to charge a premium price less intense competition from imitators

According to the ______ rule, increasing the surface area (size) of a storage unit or retail facility results in a disproportionate increase in volume (space).

cube square

The Ritz-Carlton provides a personalized customer experience based on sophisticated analysis of data gathered about each guest. This focus on ______ allows the hotel to increase its perceived value

customer service

In terms of productivity, which of the following is true of learning curves?

they go down

Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?

differentiation and cost leadership

Positive adjustments in product features, customer service, and complements may enable managers to _____

improve the firm's strategic position