Chapter 4

Rivals can be preemptive from entering a firms markets

A and B

Singapore Airlines appears to have competitive advantages from:

All of the above

A typical cost leadership strategy involves:

Answers a and b

Cost leaders are frequently:

B and C

The fundamental choice for capability acquisitions is the decision to either:

Buy them or build them

When using value chain analysis to analyse a firm's competitive strategy, the main aim is to:

Compare costs with those of competitors

A firm's ability to turn change in its external environment into profit:

Depends on its ability to respond by changing its capabilities appropriately

A firm has a differentiation advantage when it offers many product features that distinguish its product from everyone else's.

False

One firm possesses a competitive advantage over other firms when it earns or has the potential to earn a persistently higher profit margin.

False

Overall, the Singapore Airlines case shows that:

Firms can create cultures that do motivate staff to continually eliminate waste, reduce costs and improve customer service

If an industry has a stable environment and firms pursue similar strategies:

Firms with similar resources and capabilities should have similar profit rates

In many industries the market leaders

Manage to reconcile low costs with some effective differentiation

"Strategic innovation" involves:

Pioneering in at least one of the three dimensions: new industry, new customer segment, or new source of competitive advantage

The success of Japanese Total Quality Management:

Refutes the perceived trade-off between low cost products and high quality products

a cost leadership strategy

Requires a firm to produce a "no frills" product - even if the industry's product is differentiable (e.g. cars or airlines)

A firm with a competitive advantage that is not manifest in higher profitability may have?

Some or All of the above

"Causal ambiguity" is the failure to clearly understand the source of a rival's competitive advantages - in particular which of the rival's distinctive features are causes and which are effects of another feature.

True

Because some resources are valuable and not perfectly uniform (they are unique, not homogenous) acquiring or developing these can take years before a firm achieves and sustains higher profitability.

True

Firms can achieve competitive advantage by supplying a product at lower cost than competitors or by effectively differentiating their product so that the customer is willing to pay a higher price.

True

competitive advantage can be defined as

a firms ability to earn a persistently higher profit rate than rivals

according to porter and siggelkow, urban outfitters was successful because

all of the above

causal ambiguity and uncertainty imitability are

all of the above

the objective of differentiation is to yield cost savings for the firm

false

Competitive advantage depends on:

the existence of market imperfections

Entrepreneurship can be defined as the ability to identify and rapidly respond to opportunities in the environment

true

Isolating mechanisms are forces tending to equalize profit rates among firms, i.e. phenomena that erode a firm's competitive advantages.

False

For some firms, speed of new product development appears to be the only real source of competitive advantage in today's economy.

True

If scale economies are a key cost driver, increasing sales volume provides an opportunity for cost reduction

True

In the airline industry where genuinely unique resources or capabilities are hard to find and imitation is fast, sustainable competitive advantage is hard to achieve and often depends on corporate culture.

True

In the long run competition eliminates differences in profitability between firms.

True

The extent to which external change creates competitive advantage depends on the magnitude of the change and the extent of firms' strategic differences.

True

Porter says that firms get stuck in the middle because

as a above and firms need very different organizational processes to achieve...

isolating mechanisms are

barriers that slow or stop the equalization of profits between firms such as barrier to imitation

competitive advantage

emerges from external and internal sources

A firm can preempt imitation by

introducing new product to fill each niche investing in capacity ahead of market growth, filing patents

The value chain analysis of Singapore Airlines, illustrated in Case Insight 4.3, is :

is a reasonable start on analysis but now needs to be followed up with hard figures of cost comparisons between SA and its rivals

Porter (1980) in his early work suggests that combining cost leadership and differentiation strategies:

is likely to result in a firm becoming 'stuck in the middle'

it is easy for sears holdings, Kmart, to understand walmarts comp adv

no, its not that easy

differentiation is when a firm

offers customers something valuable and unique for which customers are willing to pay a price premium

requirements for quick organizational response to a turbulent environment are

quick, accurate information, short product launch cycle time

once established competitive advantage is

subject to erosion by competitors or entrants

firms can achieve competitive advantage by supplying product at lower cost than competitors

true