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Economies of scale

factors that cause a producer's average cost per unit to fall as output rises

Firm Effects

firm performance attributed to the actions managers take

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?

"Firm effects. I will be able to have the most impact on those."

When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output level does the firm experience economies of scale?

11,000 units

In a firm's external environment, ________ trends primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

Demographic

Macroenvironmental forces

Demographic, economic, technological, political, legal, social, and cultural factors.

Which of the following is NOT considered an important macro-environmental influence on businesses (that is, a potential influence beyond that of the industry alone)?

bargaining power of suppliers

Isolating Mechanisms

barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy

Bath & Chill is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Bath & Chill is following a

focused differentiation strategy

Strategic management

is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Firms that can employ and establish _________________, are more likely to protect their competitive advantage from being copied and/or eroding away.

isolating mechanisms

Core competencies are derived from the combination of

key strategic resources and a firm's capabilities.

broad differentiation strategy

offer unique product attributes that a wide range of buyers find appealing and worth paying for

focused differentiation strategy

same as the differentiation strategy except with a narrow focus on a niche market

Support activities, according to the value chain, are the actions a firm takes to directly provide a product or service to the end user.

False

Leading guitar string producer Wound Up Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Wound Up's competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Wound Up for similar-quality strings. Wound Up's competitive advantage is in danger due to

direct imitation and substitution

Support Activities in the Value Chain

firm infrastructure, human resource management, technology development, procurement

Industry Effects

firm performance attributed to the structure of the industry in which the firm competes