Chapter 6 Reading Quiz

Which of the following are significant threats to a firm pursuing a cost-leadership strategy

Competitors adopting similar business strategies Value falling below the acceptable threshold Replacement by innovative substitutes

Bundling of products and services that are consumed in tandem to create value is an example of ___

Complements

The most important value drivers that managers can use to create a competitive advantage are ...

Customer service Product features Complements

Economies of scale are ___

Decreases in cost per unit as output increases

A ___ strategy attempts to increase the perceived value of a product while controlling costs

Differentiation

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

Differentiation and cost leadership

A firm experiences ___ when an increase in output results in an increase in costs

Diseconomies of scale

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

Economic value created

When pursuing a differentiation strategy, a firm can achieve a competitive advantage by ___

Ensuring that its economic value exceeds that of its competitors

Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete"?

Value Cost

Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete"

Value Cost

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

industry

A ___ strategy may fail when the focus of the competition shifts to price rather than unique product features

Differentiation

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

Experience curve

The two factors upon which a successful business-level strategy is built are ___

External opportunities in the market The firm's internal strengths

the example of marmot offering a line of different hotels catering to different types of travelers is an example of:

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

Which capability is required to create superior product features?

R&D

Choosing a business-level strategy helps to define a firm's ___ in a given product market

Strategic position

Business-level strategy addresses which overarching question?

"How should we compete"

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

A firm's strategic profile based on value creation and cost is called its ___

Strategic position

The minimum efficient scale indicates the level of output needed to ___ the cost per unit a much as possible

bring down

In the learning curve, the ___ the learning curve, the more learning takes place

Steeper

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

Cost of input factors and economies of scale are ___ that managers can use to keep costs in check

Cost drivers

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

Cost-leadership strategy

In a focused cost-leadership strategy, a firm provides ___

Low-cost products to a niche market

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

Manufacturing robots Enterprise resource planning software

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

In terms of competitive positioning, erosion of margins is a risk for which of the following competitive forces?

Power of suppliers Threat of entry Power of buyers

The beneficial effect of a differentiation strategy on the power of suppliers in an industry is ___

Protection against an increase in input prices

Which of the following questions are questions that managers must answer when pursuing value innovation (4)

Reduce Create Raise Eliminate

A manufacturer of electrical components can use its manufacturing machines to produce many different components. 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

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

Which of the following are pricing options offered by a blue ocean strategy

The firm can charge a higher price than the cost leader The firm can charge a lower price than differentiators

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

Value innovation

By using a differentiation strategy, a firm aims to ___

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

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 pursuing a differentiation strategy

cost

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

A firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on ___

customer service