ENTR/MGMT Reading 4
Why is it true that a company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy?
if a firm's products are perceived as equally valuable but can be produced at a lower cost, the economic contribution is larger and therefore its cost-leadership strategy is successful
Which capability is required to create superior product features?
R&D
Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet chip maker. Based on this information, which of the following is the greatest advantage Patti's has over Calpurnia's?
economies of scale
Economies of ________ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.
scope
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 _________ outlines the steps a manager will take to achieve competitive advantage in a single product market.
business-level strategy
A company's goal-directed plans regarding how to compete for advantage is known as the firm's _______?
business-level strategy
What are some examples of input factors?
capital, labor, information tech services, raw materials
Unique features and attributes that differentiate a product from a competitors' offerings allow the firm to _____________.
charge 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
What are considered the two generic business-level strategies?
cost-leadership, differentiation
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
Which value driver would be the focus of a company that sells products that are similar to competing products and that provides a 60-day guarantee with no questions asked?
customer service
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 increase the perceived value of a product while controlling costs.
differentiation
Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?
differentiation and cost-leadership
A firm that increases its output of a given product and experiences a simultaneous decrease in per unit cost is taking advantage of ___________.
economies of scale
What best defines economies of scope?
they are savings that come from producing two or more outputs at less cost than producing each output individually
In terms of productivity, what is true of learning curves?
they go down because it takes less and less time to produce the same output as we learn how to be more efficient; they drive down costs
True or false: a company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.
true
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 tech, firm A is benefiting from ______________.
an experience-curve effect based on process innovation
What are some components of a cost-leadership strategy?
lower costs in the industry, acceptable value
What are some examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?
offering a no-questions-asked return policy, maintaining a domestic call center that is open 24 hours a day
Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?
power of buyers, threat of entry, power of suppliers
Two important features that managers can adjust in an effort to improve the firm's strategic position are __________.
product features and customer service
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
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
The perceived value that a company creates for consumers less the company's cost to create the value equals______________.
the economic value created
Bundling of products and services that are consumed in tandem to create value is an example of _______.
complements
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
What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?
it provides protection against an increase in input prices
As JetBlue grew, which of the following occurred during the years following 2007?
it suffered a competitive disadvantage
The concept of an ___________ attempts to combine both learning effects and process improvements.
experience curve
Positive adjustments and product features, customer service, and complements may enable managers to ___________
improve the firm's strategic position
What are two variables that managers can primarily manipulate in order to answer the question, "How should we compete?"
cost, value
