Smartbook Chapter 6

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

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

A differentiation strategy can be threatened when _____

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

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

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

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

value innovation

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

strategic position

A firm's strategic position is determined by the relationship of which two variables?

value creation and cost

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

A firm pursuing a blue ocean strategy can increase its profit margins by implementing which of the following pricing options

Charge a lower price than the differentiator. Charge a higher price than the cost leader.

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.

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 services

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? (Check all that apply.)

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

A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.

Business level strategy

A firm that hopes to achieve a competitive advantage by maintaining an efficient supply chain and taking advantage of economies of scale and a well-trained staff is focusing on

cost drivers

In a focused cost-leadership strategy, a firm provides ______.

low-cost products to a niche market

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

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 complete?

For a differentiation strategy to strengthen a company's strategic position and boost its competitive advantage, __

an increase in value creation must exceed the increase in costs

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

charge premium pricing

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 are considered the two generic business-level strategies? (Check all that apply.)

cost leadership differentiation

A ______ strategy aims to create higher value for customers by offering products with unique features but a similar level of costs to those of competing products.

differentiation

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

differentiation

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 external threats

High-end pen manufacturer Mont Blanc pursues a differentiation strategy pursuing only those who need or want an expensive writing instrument. What scope of competition does this represent?

narrow

In a focused differentiation strategy, the competitive scope is _______ than in a traditional differentiation strategy.

narrower

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

power of buyers power of suppliers threat of entry

The two factors upon which the success of strategy of either cost leadership or differentiation is built are ______.

the firm's internal strengths external opportunities in the market

A company with a cost-leadership strategy faces significant difficulties when __

the focus of competition shifts from price to non-price attributes

The horizontal connection of the points of each value on the strategy canvas is known as

the value curve

What do learning curves do when viewed in terms of productivity?

they go down

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

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.)

untapped market space increased demand

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

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

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

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

experience curve

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

improve the firm's strategic position

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

strategic position

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

ensuring that its economic value exceeds that of its competitors

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.)

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

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

a large market share

Which of the following are components of a cost-leadership strategy? (Check all that apply.)

acceptable value lowest costs in the industry

By using a differentiation strategy, a firm aims to _

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

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

complements

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

complements

An important requirement for increasing economic value creation under a differentiation strategy is to ___

control costs

Cost of input factors and economies of scale are ______ that managers can manipulate 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

Managers can increase the perceived value of their firms' product or service offerings by focusing on

customer service

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

differentiation

A(n) ______ strategy may fail when the focus of the competition shifts to price rather than unique product features.

differentiation

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

Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet potato-chip maker. Based on just this information, which of the following is the greatest advantage Patti's has over Calpurnia's?

economies of scale

Marriott offers different hotels that cater to different types of travelers (e.g., Residence Inn, Marriott Courtyard, Marriott Fairfield Inn). What is this an example of?

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

Rodney is making decisions about his newly formed business. He wants to focus on producing the highest-quality product in the market so he can maximize the product's value to customers. This will cause his product to have higher costs than others already in the market, but Rodney believes customers will pay more for the higher-quality product. Rodney's choice to use a differentiation business-level strategy is determining his company's strategic ______.

position

Which capability is required to create superior product features?

r&d

Which of the following are input factors? (Check all that apply.)

raw materials capital labor IT services

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

The ______ determines whether to pursue a specific narrow part of the market or to go after the broader market.

scope of competition

A graphical depiction of a firm's relative performance across its industry's factors of competition is known as a(n) ______.

value curve

Which of the following best exemplifies a company that successfully uses a differentiation strategy?

Company X strengthens its brand by marketing a product with an innovative feature.

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.

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 or costs

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 services

What are the three most important value drivers that managers can use to create a competitive advantage?

customer services complements product features

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

A differentiation strategy is typically associated with ______ pricing

premium

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

True