Ch. 2 Competitive Advantage
9. What determines a superior market position compared to rivals? a. the difference between value and cost b. superior technology c. economies of scope d. cost leadership
A
10. The buyer's surplus is: a. a source of customer sensitivity b. the difference between a product's value and its market price c. the difference between the cost to produce the product and its market price d. a firm's total economic contribution
B
5. A firm creates a one-sided network externality when: a. customers using the product speak to each other b. the benefit customers receive from using the firm's product increases as new customers are added c. the products are produced using network technologies d. all its products are connected
B
1. What determines the value of a product? a. its technology b. its market price c. the price the customer would be willing to pay for it in the absence of competing products and given budget constraints d. the market prices of competing products
C
3. Which of the following are value drivers: 1. the product's technology, 2. the firm's risk assumption, 3. economies of scale, 4. network externalities? a. 1 and 2 b. 1, 2 and 3 c. 1, 2 and 4 d. all
C
4. Which of the following are cost drivers: 1. the learning curve, 2. complementary products, 3.breadth of product line, 4. economies of scope? a. 1 and 2 b. 3 and 4 c. 1 and 4 d. 1, 3 and 4
C
8. If a firm is neither a cost leader nor a differentiator, it is called a. competitively disadvantaged b. poorly positioned c. stuck in the middle d. lost in competitive space
C
2. Which of the following are isolating mechanisms? a. causal ambiguity b. property rights c. search costs d. all of the above
D
6. Time compression diseconomies are larger when: a. a firm's capability's contribution to a its V-C position is path dependent b. a firm's capability resides win an individual employee c. the knowledge underlying a firm's capability is organization specific. d. a and c
D
7. Which of the following value drivers is less likely to contribute to customer retention through switching costs? a. customization b. product line breadth c. network externalities d. brand
D
1. A generic strategy always represents a superior market position.
FALSE
10. Competitive advantage depends on being at one end of the high value - low cost continuum.
FALSE
2. A superior market position compared to rivals is sufficient to achieve a sustainable competitive advantage.
FALSE
3. Reducing costs provides a greater return than increasing value when the marginal customer is value, not price, sensitive.
FALSE
4. The price customers pay always represents the full value of the product.
FALSE
8. Cost reduction, compared to increasing value, is more attractive when the firms in an industry have access to the same process innovations.
FALSE
9. The benefit of customer one-stop shopping pertains to the value driver of complements.
FALSE
5. Sunk costs in imitating a capability increase when it is tied to complementary practices.
TRUE
6. A key assumption regarding the disadvantage of being stuck in the middle is that demand is insufficient to allow the firm to improve its position.
TRUE
7. Investing in cost drivers can improve the firm's profits by allowing it to lower prices.
TRUE
