Capstone Final

economies of scale

decrease in cost per unit as output increase (making more with less capital)

economies of scope

describes the savings that come from producing two or more outputs at less cost than producing each output

What is the opportunity cost of investing in specialized assets that is characterized by self-interest seeking with guile?

opportunism

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

One way that a company can try to avoid problems resulting from diseconomies of scale is to ______.

structure the company into smaller units

One way to overcome the principal-agent problem is to ______.

make managers owners through stock options

value curve

- component of the strategy canvas - graphically depicts a company's relative performance across its industry factors of competition

Which capability is required to create superior product features?

R&D

______ is a theoretical framework that helps explain and predict the boundaries of the firm.

Transaction cost economics

By using a differentiation strategy, a firm aims to ______.

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

Diseconomies of scale often appear when a firm ______.

becomes too large and complex to manage efficiently

cube square rule

big stores like walmart operates more efficiently making it hard to compete with

what are the lower cost input factors

cheap raw material, capital, labor, and IT services

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

cost and value

Cost of input factors and economies of scale are ______ that managers can manipulate to keep costs in check.

cost drivers

strategic position

determined by the firms business level strategy

The persons responsible for forming corporate-level strategy are the ___.

executive

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

experience curve

Business-level strategy addresses which overarching question?

how should we compete

______ is a situation in which one party has more knowledge than another due to the possession of private knowledge.

information asymmetry

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

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

low-cost products to a niche market

Whereas the firm's strategic position can be considered either differentiated or cost-focused, the scope of competition is considered ______.

narrow or broad

In terms of productivity, which of the following is true of learning curves?

they go down because as we learn our productivity goes up which mean we will learn less

______ costs are all of the costs associated with an economic exchange.

transaction

What is an advantage of a firm in organizing economic activity?

transactional-specific investments

Furniture retailer IKEA has used the value innovation framework of ______ to successfully implement a blue ocean strategy.

understand-acknowledge-attempt-achieve

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

value innovation

When a firm is more efficient in organizing economic activity than markets are, the firm should ______.

vertically integrate

Determining the products the customer wants and needs answers the ______ question of competition.

what

business level strategy

who are the cusomer segments we will serv