Chapter 6 LearnSmart

A __ outlines the steps a manager will take to achieve competitive advantage in a single product market. -financial analysis -corporate-level strategy -competitive position -business-level strategy

business-level strategy

A firm's competitive advantage is determined jointly by __ effects and firm effects.

industry

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

Managers can increase the perceived value of their firms' product or service offerings by focusing on __. -salient costs -supply chains -customer service -strategic contributions

customer service

Economies of scale present an opportunity to increase profits because as the number of units within the relevant range increases, fixed costs __. -vary only depending on the number of units produced -increase only slightly -stay the same -decrease dramatically

stay the same

Determining the products the customer wants and needs answers the __ question of competition. -why -who -how -what

what

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

cost-leadership

Which type of strategy is being used if a company offers a product at a lower cost than its competitors? -cost-leadership strategy -differentiation strategy -blue ocean strategy -focused differentiation strategy

cost-leadership strategy

A firm experience __ when an increase in output results in an increase in costs. -minimum efficient scales -diseconomies of scale -economies of scale -benefits leadership strategy

diseconomies of scales

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of __. -competitive parity -complements -economies of scale -diseconomies of scale

economies of scale

In a focused cost-leadership strategy, a firm provides __. -low-cost products to a wide market -differentiated products to a wide market -low-cost products to a niche market -differentiated products to a niche market

low-cost products to a niche market

In the relationship between per-unit cost and output, the minimum efficient scale __. -is the same as economies of scale -is where the per-unit cost is highest -is where the per-unit cost is lowest -demonstrates that smaller is better

is where the per-unit cost is lowest

Which value driver would be the focus of a company that sells products that are similar in cost and features to competing products and that provides a 60-day guarantee with no questions asked? -customer service -product features -complements -profits

customer service

Managers must make strategic trade-offs involving choices between cost and value because __. -lower value tends to require higher costs -higher value tends to require higher costs -lower value leads to higher customer satisfaction -higher value tends to assume low quality

Higher value tends to require higher costs

The cube-square rule makes it __ for smaller stores to compete with larger retailers. -easier -useless -harder -just as difficult

harder

A firm's strategic position is determine by the relationship of which two variables? -number of different products in the firm's portfolio and countries in which they are sold -supply and demand -value creation and cost -number of products sold and price of the product

value creation and cost

Which of the following accurately describes the relationship between value and cost that would suggest that firm A has created a competitive advantage over firm B? -(V-C)A<(V-C)B -(V-C)A>(V-C)B -(V-C)A>(V-C)C (V-C)A=(V-C)B

-(V-C)A>(V-C)B

Which capability is required to create superior product features? -R&D -marketing -accounting -sales

-R&D

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 -a firm invests in a range of new product features that result in an equal increase in costs and value creation -a firm releases a new complementary product that decreased the perceived value of the original product -a firm invests a significant amount of money into a new customer service call center, resulting in a minimal increase in perceived value

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

A differentiation strategy can be threatened when __. -a product becomes commoditized, and the focus of the competition shifts to price -the perceived quality of cost leadership diminishes -the firm leverages opportunities on competitive efforts -the focus of competition shifts to non-price attributes

-a product becomes commoditized, and the focus of the competition shifts to price

Which of the following are components of a cost-leadership strategy? (Check all that apply.) -highest prices in the industry -acceptable value -lowest costs in the industry -unique product features

-acceptable value -lowest costs in the industry

By using a differentiation strategy, a firm aims to __. -provide a product that is similar to successful products already on the market -pursue a broad segment of customers -add unique features that will increase the perceived value of a product -minimize its opportunity cost

-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 -creative destruction -a learning curve effect based on output differential -an experience-curve effect based on process innovation -value driver advantages based on product features

-an experience-curve effect based on process innovation

A firm pursing a blue ocean strategy can increase its profit margins by implementing which of the following pricing options? (Check all that apply.) -charge a higher price than the differentiator -charge a lower price than the cost leader -charge a higher price than the cost leader -charger a lower price than the differentiator

-charge a higher price than the cost leader -charger a lower price than the differentiator

Which of the following threats to a firm pursing a cost-leadership strategy? (Check all that apply.) -competitors adopting similar business strategies -value falling below the acceptable threshold -a unique product becoming commoditized and causing a price war -replacement by innovative substitutes

-competitors adopting similar business strategies -value falling below the acceptable threshold -replacement by innovative substitutes

The most important cost drivers are __ (Check all that apply.) -complement choices -learning curve effects -cost of input factors -experience curve effects -diseconomies of scale -economies of scale

-cost of input factors -economies of scale -learning curve effects -experience curve effects

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with __. -cutting costs and increasing value at the same time -communicating the plan to lower-level employees -locating products that satisfy customer needs -maintaining high quality customer service

-cutting costs and increasing value at the same time

Larger output allows firms to invest in more specialized systems such as __ (Check all that apply). -enterprise resource planning software -manufacturing robots -a general accountant -big box retail stores

-enterprise resource planning software -manufacturing robots

The example of Marriott offering a line of different hotels catering to different types of travelers (e.g., Residence Inn, Marriott Courtyard, Marriott Fairfield Inn) is an example of -how a firm can be overwhelmed by too many assets -how a differentiation strategy does not work -how a firm can compete by offering more perceived value at a similar price -how a differentiation strategy has to always be associated with premium pricing

-how a firm can compete by offering more perceived value at a similar price

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.) -a crowded market space -increased competition -increased demand -untapped market space

-increased demand -untapped market space

When pursuing value innovation, managers must answer questions focused on which of the following? (Check all that apply.) -expanding the supply chain -increasing perceived consumer benefits -lowering perceived consumer value -lowering costs

-increasing perceived consumer benefits -lowering costs

Which of the following statements about a strong value curve are true? (Check all that apply.) -it has divergence -it is directly related to profit -it zigzags across the strategy canvas -it has focus

-it has divergence -it has focus

In order for a firm to successfully implement a business-level strategy, it must limit the impact of __ (Check all that apply). -its own internal weaknesses -technological advancements -consumer demand -external threats

-its own internal weaknesses -external threats

In terms of competitive positioning, erosion of margins is a risk for which of the following competitive forces? (Check all that apply.) -power of buyers -threat of substitutes -power of suppliers -threat of entry

-power of buyers -power of suppliers -threat of entry

Two important features that managers can adjust in an effort to improve the firm's strategic position are __. -product features -planned emergence -salient value -customer service -investment value

-product features -customer service

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? (Check all that apply.) -the ability to charge a premium price -less intense competition from imitators -reduced per unit costs -an increased exposure to the threat of price wars

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

What is the relationship between fixed costs and economies of scale? -larger outputs result in a maximum efficient scale -the amount of fixed costs allocated to each unit of output decreases as output increases -larger output results in lower labor costs -larger output illustrated the benefits of a differentiation strategy

-the amount of fixed costs allocated to each unit of output decreases as output increases

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 -larger output results in lower labor costs -larger output illustrated the benefits of a differentiation strategy -larger outputs result in a maximum efficient scale

-the amount of fixed costs allocated to each unit of output decreases as output increases

Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete?" -price -value -cost -style -size

-value -cost

Value drivers known as __ add value to a product or service when they are consumed in tandem with the focal product. -complements -constructs -customizations -citations

complements

A firm that pursues a differentiation strategy will often find that the added expense of offering new or unique product features offsets the increase in perceived value, and profit margins begin to erode. This underscores the importance of __ control for firms pursing a differentiation strategy.

cost

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

The __ determines whether to pursue a specific narrow part of the market or to go after the broader market. -scope of competition -range of differentiation -likely combination of generics -fundamental business orientation

scope of competition

In the learning curve, the __ the learning curve, the more learning takes place. -flatter -wider -steeper -linear

steeper

Choosing a business-level strategy helps to define a firm's __ in a given product market. -mission statement -strategic position -industry structure -ethical climate

strategic position

Implementing a blue ocean strategy requires making competition irrelevant and creating a new market place, otherwise known as __. -value innovation -economies of scope -market definition -asset attainment

value innovation