Ch 5 q
Which of the following best explains why a blue ocean strategy is difficult to implement?
It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost.
When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?
3,000-4,000 units
How is differentiation parity different from cost parity?
Differentiation parity deals with value not cost.
Evaluate the following statement: Strategic leaders should always try to pursue a blue ocean strategy because it is the most complex, coveted, and most desirable strategy that exists.
I disagree; firms should only pursue this strategy if they are able to reconcile the tradeoff's of each generic strategy.
As noted in the case, a firm can adjust its value drivers to improve its strategic position. Which of the following examples highlights a differentiation strategy driven by product features?
OXO ergonomic kitchen utensils designed with soft black rubber grips
In order to achieve a competitive advantage, the Heavenly Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?
Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Heavenly Hotels brand image.
Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
The value and the cost position of the firm relative to its competitors
Southwest and Delta both compete in the airline industry, but they follow different business strategies. Delta's transportation infrastructure is based upon a high-value hub-and-spoke system and offers upscale services to high mileage flyers. Southwest Airlines uses a point-to-point basic system to offer affordable travel for nationwide air transport. What generic business strategy is Southwest using?
broad cost leadership
Differentiation business strategies are often associated with premium prices. There are, however, reasons why a firm would NOT want to charge higher prices than the competition. Which of the following is the best example of why a firm would want to keep prices in line with competitors?
drive up market share
All of the following are generic business-level strategies except
focused cost-leadership.
The four generic business strategies are generated by comparing the strategic position with the scope of competition. Tesla, an electric car manufacturer, is presented in the text as fitting into which of these categories?
focused differentiation
According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
innovation that allows competitors to emerge with more economical replacements
A strategy canvas comparing JetBlue to the differentiated and low-cost airlines provides a visual depiction of some of the issues found in the JetBlue discussion throughout the chapter. Which three factors in the canvas most prominently show the key problems at JetBlue?
price, connections, and customer service
One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that
they are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently.
A strategic position is the firm's profile based on value creation and cost. Effective managers will create a large gap between the ________ and the cost required to produce it.
value the firm creates with its product or service
One of the risks of pursuing a blue ocean strategy is that a firm can find itself
stuck in the middle
Bigger & Better Inc. is a big box retailer who is in direct competition with Walmart and Target. Bigger & Better Inc. initially tried to respond to Walmart by cutting its prices and reducing costs. Walmart has greater buying power and a more efficient supply chain, therefore, Bigger & Better Inc. was not able to compete on costs. The company then tried to differentiate itself by signing a celebrity to create an in-house line of clothing. However, Target has a celebrity clothing line that has a more differentiated appeal. The economic value created by Bigger & Better Inc. is currently less than Target and Walmart. It can be said that
Buy Us is "stuck in the middle" and has a competitive disadvantage
Marriott is able to create greater economic value than its competitors due to their ability to take advantage of ________, which describe the savings that come from producing two (or more) outputs at less cost than producing one output individually, while utilizing the same amount of resources and technology.
ECONOMIES OF SCALE
When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in
Strategic trade-offs
Ticker Inc. is a wristwatch company known for its luxury watches, and it follows a differentiation strategy. In this scenario, Ticker Inc. should ideally compare its strategic position with a
Watch maker that sells high -end premium watches
The case illustrates that Toyota overall maintains a differentiated position in the market and continues to be successful across the globe. Which of the following business levers is highlighted in this effort to sustain a competitive advantage?
customer service
Timex and Rolex both compete in the wristwatch market, but they follow different business strategies. Rolex creates a high-quality timepiece with unique features that last a lifetime. Timex efficiently produces a watch of acceptable quality. What generic business strategy is Rolex using?
differentiation
Golden Soles has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver?
product features
Toyota has undergone difficult times in recent years, as explained in the case. What attribute does Toyota seize as a way to move forward?
refocusing on their core value creation tools
A value innovation strategy requires trade-offs between differentiation and low costs. These are two distinct business-level positions that often require very different internal value chain activities. An example of a low-cost activity that may not be appropriate for a differentiator is
standardizing the production processes for higher output levels with fewer model changes.