MAN 4720, Chapter 6, Exam 1

1. The minimum efficient scale indicates the level of output needed to _____ the cost per unit as much as possible a. Keep steady b. Bring down c. Increase d. Inflate

b. Bring down

21. Firms focusing on operating a cost leadership strategy are most likely to develop their product or service to emphasize the a. Functional aspects b. Presentational aspects c. Promotional aspects d. Emotional aspects e. Social aspects

Functional Aspects

7. 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 benefitting from a. An experience-curve effect based on process innovation b. Creative destruction c. Value driver advantages based on product features d. A learning curve effect based on output differential

a. An experience-curve effect based on process innovation

14. A firm that hopes to achieve a competitive advantage by maintain an efficient supply chain and taking advantage of economies of scale and a well-trained staff is focusing on a. Cost drivers b. Customer service c. Product features d. Value drivers

a. Cost drivers

10. Furniture retailer IKEA has used the value innovation framework of _____ to successfully implement a blue ocean strategy a. Eliminate-reduce-raise-create b. Reduce-reuse-recycle-repurpose c. Understand-acknowledge-attempt-achieve d. Analyze-decide-accomplish-restart

a. Eliminate-reduce-raise-create

17. As you saw in the video, one of the measures used to demonstrate Usain Bolt's competitive advantage in running is the number of gold medals he won during the Olympics. Which of the following measures, as described in the video, similarly demonstrates McDonald's competitive advantage in the fast-food industry? a. Market share b. A strong leadership team c. Brand Recognition d. Number of Menu options e. All-day Breakfast

a. Market share

20. Frank the baker has imported some specialty baking flour from Italy that is especially prized by Sarah. Frank's use of this flour, in his transaction with Sara, should impact the a. Reservation price b. Consumer surplus c. Production costs d. Producer surplus e. Purchase price

a. Reservation price

16. Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as a. Value innovation b. Market definition c. Economies of scope d. Asset attainment

a. Value innovation

9. A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in a. Value innovation b. Cost leadership c. A red ocean strategy d. Economies of scale

a. Value innovation

11. Why do many firms fail to successfully implement an integration strategy? a. Because too many other companies already try to implement an integration strategy, making it hard to compete that way b. Because they end p being "stuck in the middle," unable to increase value and lower cost at the same time c. Because they become involved in situations involving ethical dilemmas d. Because they merge with international competitors for value creation

b. Because they end p being "stuck in the middle," unable to increase value and lower cost at the same time

4. 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 a. Good value b. Customer service c. Product features d. Marketing

b. Customer service

6. A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of a. Complements b. Economies of scale c. Competitive parity d. Diseconomies of scale

b. Economies of scale

13. Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually a. Scale b. Scope c. Regulation d. Integration

b. Scope

2. How to compete on a business level is defined by the variables value and cost. Together they define the a. Strategic fit b. Potential economic value c. Economic value created d. Perceived economic value

c. Economic value created

12. The ______ is the range of output needed to minimize the cost per unit as much as possible a. Economies of scale b. Cube squared rule c. Minimum efficient scale d. Diseconomies of scale

c. Minimum efficient scale

8. A _______ strategy requires achieving the lowest costs in the industry while maintain a level of value that is acceptable to customers a. Differentiation b. Cost-leadership c. Proposition d. Minimally efficient

b. Cost-leadership

19. Intangible resources or capabilities may be a good basis for creating a competitive advantage because a. Intangible resources or capabilities are generally rare b. Intangible resources or capabilities are generally sticky to the firm c. Intangible resources or capabilities are generally easily acquired d. Intangible resource or capabilities are generally easily observed e. Intangible resources or capabilities are generally easily transferred

b. Intangible resources or capabilities are generally sticky to the firm

3. Different value drivers contribute to competitive advantage if a. Premium pricing is used b. Product customization is offered c. The increase in perceived value exceeds the corresponding cost increase d. Customer service prices exceeds the cost of product features

c. The increase in perceived value exceeds the corresponding cost increase

15. A company with a cost-leadership strategy faces significant difficulties ______ a. When no valuable substitutes exist b. When the focus of competition shifts from non-price to price attributes c. When the focus of competition shifts form price to non-price attributes d. When suppliers agree to charge less for their supplies

c. When the focus of competition shifts form price to non-price attributes

5. When pursuing a differentiation strategy, a firm can achieve a competitive advantage by a. Making sure the firm's costs are the lowest b. Ensuring that its economic value exceeds that of its competitors c. Equipping customers with generic and lower priced products d. Increasing perceived value regardless of cost increases

b. Ensuring that its economic value exceeds that of its competitors

18. Effective use of the PESTEL framework can help us identify a. New competitors b. Emerging substitute products c. How a trend is changing buyer behavior in an industry d. Emerging opportunities and threats within an industry e. Only a few effective trends

d. Emerging opportunities and threats within an industry