chapter 6 bus pol

marriott offers different hotels that cater to different types of travelers. What is this an example of

how a firm can compete by offering more perceived value at a similar price

in addition to having a lowest cost, a low cost leader is likely to have

a large market share

experience curve

based on process innovation which allows a firm to leapfrog to a steeper learning curve

what outlines the steps a manager will take to achieve competitive advantage in a single product market

business level strategy

which of the following are significant threats to a firm pursuing a cost leadership strategy

competitors adopting similar business strategies, value falling below the acceptable threshold, and replacement by innovative substitutes

a firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on

customer service

managers can increase the perceived value of their firms' product or service offerings by focusing on

customer service

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

customer service

a struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with

cutting cost and increasing value at the same time

scope of competition (who)

deciding whether to go after a broad or narrow market focus

economies of scale

decreases in cost per unit as output increases. Spreads fixed costs over a larger output, employs specialized systems and equipment, and takes advantage of certain physical properties

economies of scope

describes the savings that come from producing two+ outputs at less cost than producing each output individually. Shares resources or technology

what strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay

differentiation

generic strategies

differentiation (value) and cost leadership (cost -universal, independent of industry, and can be used by any type of organization

a firm experiences what when an increase in output results in an increase in costs

diseconomies of scale

focused cost leadership strategy

focuses on a narrow niche market for cost leadership

strategy canvas

graphical depiction of a company's relative performance vis a vis its competitors across the industry's key success factors

a manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an ___________________, reducing overall production costs by finding multiple uses for components and facilities

economies of scope

the concept of _________________ attempts to combine both learning effects and process improvements

experience curve

diseconomies of scale

firms are too big, complexities of too much coordination, inflexible and slow

value curve

horizontal connection of the points of each value on the strategy canvas that helps strategic leaders diagnose and determine courses of action

as jetblue grew, which of the following occurred during the years following 2007

it suffered a competitive disadvantage

which of the following are input factors

labor, IT services, capital, and raw materials

differences in timing

learning effects occur over time as output accumulates while economies of scale are captured at one point in time when output increases

when pursuing value innovation, managers must answer questions focused on which of the following

lowering costs and increasing perceived consumer benefits

high end pen manufacturer Mont Blanc pursues a differentiation strategy pursuing only those who need or want an expensive writing instrument. What scope of competition does this represent

narrow (focused)

whereas the firm's strategic position can be considered either differentiated or cost focused, the scope of competition is considered

narrow or broad

learning curve

occurs when it takes less and less time to produce the same output due to learning from experience. Drives down cost and steeper curves indicate more learning. The steeper means more learning has occured

minimum efficient scale (MES)

output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest cost position that is achievable through economies of scale

which competitive forces can result in erosion of margins for both differentiation and cost leadership business strategies

power of buyers, power of suppliers, and threat of entry

which capability is required to create superior product features

research and development

strategic position (how) is based on

value (v) and cost (c)

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

value innovation

determining the products the customer wants and needs answers the ____________ question of competition

what

how to compete for advantage

who (customer segments) will we serve? what customer needs, wishes, and desires will we satisfy? why do we want to satisfy them? how will we satisfy our customers' needs?

choosing a business level strategy helps to define a firm's _________ in a given product market

strategic position

a company's strategic profile based on value creation and cost in a specific product market is the company's

strategic positon

value innovation

the simultaneous pursuit of differentiation and low cost in a way that creates a leap in value for both the firm and consumers; considered a cornerstone of blue ocean strategy

a differentiation strategy can be threatened when

a product becomes commoditized, and the focus of the competition shifts to price

value

captured by how much consumers are willing to pay for a product or service

raoul is starting a new cosmetics company. His focus is on what he believes is a game changing lipstick. He wants the lipstick to be accessible to everyone, but the manufacturing costs are higher than he had anticipated. Raoul wants to achieve his desired strategic position of value creation at an affordable cost, he will need to

make strategic trade offs

cost drivers

managers can manipulate cost of input factors, economies of scale, learning curve effects, and experience curve effects to keep their cost low

what is the range of output needed to minimize the cost per unit as much as possible

minimum efficient scale

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

the two factors upon which the success of strategy of either cost leadership or differentiation is built are

the firms internal strengths and external opportunities in the market

business level strategy

the goal directed actions managers take in their quest for competitive advantage when competing in a single product market

how to calculate competitive advantage

the greater the economic value created (v-c), the greater the firm's competitive advantage

for differentiation strategy to strengthen a company's strategic position and boost its competitive advantage,

an increase in value creation must exceed the increase in costs

strategic trade off

choices between a cost or value position

which of the following scenarios would result in strengthening a firm's strategic position

a firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost of the firm

a tablet manufacturer that includes a free stylus with every purchase is using ______________ to enhance a users' experiences and increases the perceived value of its tablets

complements

what are the three most important value drivers that managers can use to create a company advantage?

complements, customer service, and product features

a firm that pursues a differentiation strategy will often find that the added expenses of offering new unique product features offsets the increase in perceived value, and profit margins begin to erode. This underscores the importance of ________________ for firms pursuing a differentiation strategy

cost control

which strategy goal is to achieve expenses below those of competitors while maintaining similar value. A firm with this strategy could or could not achieve differentiation parity

cost leadership

the four most important cost drivers that managers can manipulate are

cost of input factors, economies of scale, experience curve effects, and learning curve effects

which of the following determine a firm's competitive advantage

cost position relative to competitors and value position relative to competitors

differentiation strategy

creates higher value for customers, delivers products or services with unique features, and keeps costs at same or similar level

cost leadership strategy

creates the same or similar value, lower cost than competitors, and results in lower prices for customers

a manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an ______________________, reducing overall production costs by finding multiple uses for its components and facilities

economies of scope

differences in complexity

effects from economies of scale can be quiet significant, while learning effects are minimal and vice versa

value drivers

either increase value or decrease cost and includes product features, customer service, and complements

larger output allows firms to invest in more specialized systems such as

enterprise resource planning software and manufacturing robots

in order for a firm to successfully implement a business level strategy, it must limit the impact of

external threats and its own internal weaknesses

the cube square rule makes it ________ for smaller stores to compete with larger retailers

harder

in terms of business strategy, blue oceans represent which of the following?

increased demand and untapped market space

cost

total cost the firm incurs to create value

blue ocean strategy

uses value innovation to reconcile trade offs. Represents untapped market space, creation of additional demand, and opportunities for highly profitable growth

which two variables can managers primarily manipulate in order to answer the question, "how should we compete"

value and cost

which of the following are questions that managers must answer when pursuing value innovation

which product factors to reduce below the industry standard, which product factors to raise above the industry standard, which product factors to eliminate, and which new product factors to create

a firm pursuing a blue ocean strategy can increase its profit margin by implementing which of the following pricing options

charge a lower price than the differentiator or charge a high price than the cost leader

how does learnings effects differ from economies of scale

differences in timing and differences in complexity

an auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of

input factors

which of the following are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?

offering a "no questions asked" return policy and maintaining a domestic call center that is open 24 hours per day