MAN 4720 quiz 6

While SMART Tech Inc. incurs $350 to manufacture a laptop, its competitor, Better Electronics Inc., incurs $300. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that - SMART Tech has a competitive advantage over Better Electronics. - SMART Tech is a cost leader when compared to Better Electronics. - Better Electronics and SMART Tech share a differentiation parity. - Better Electronics can charge a higher price for its laptops.

Better Electronics and SMART Tech share a differentiation parity.

Delish Corp is a chain of supermarkets that sells its fruits and vegetables at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Delish Corp adopted in this scenario? - Delish Corp is probably pursuing a differentiation strategy. - Delish Corp is probably pursuing a cost-leadership strategy. - Delish Corp is probably pursuing a market penetration strategy. - Delish Corp is probably pursuing a growth strategy.

Delish Corp is probably pursuing a differentiation strategy.

Which of the following statements accurately brings out the difference between economies of scale and learning effects? - While there are no diseconomies to scale, there are diseconomies to learning. - Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased. - Firms experience economies of scale when output increases, and they experience learning effects when output decreases. - Economies of scale reduce cost per unit, whereas learning effects increase cost per unit.

Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

Fones Inc. and Speed Dial Corp. are two competitors in the mobile phone market. The cost incurred by each company to manufacture smartphones is $200 per unit. Although both the companies sell their smartphones at the same price, Speed Dial Corp. has a larger market share in the laptop industry. What does this imply? - Speed Dial Corp. has a cost advantage over Fones Inc. - Fones Inc. has a competitive advantage over Speed Dial Corp. - Speed Dial Corp. has been able to offer more perceived value than Fones Inc. - Fones Inc. has created a higher value gap than Speed Dial Corp.

Speed Dial Corp. has been able to offer more perceived value than Fones Inc.

Supreme Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Cheap Beans, in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Vale's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Cheap Beans. In this scenario, Vale's Coffee is following a - liquidation strategy - product diversification strategy - market penetration strategy - blue ocean strategy

blue ocean strategy.

If costs are equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm - can charge a premium price for its products and services. - has achieved a competitive parity in its chosen industry. - has lost its competitive advantage to its competitor. - can adopt a cost-leadership strategy.

can charge a premium price for its products and services.

There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is - adding unique features that turn standard commodities into differentiated products. - combining experience-based learning and process innovation to move onto a steeper learning curve. - creating personalized customer service in order to minimize price sensitivity among customers. - shifting to small-scale production processes in order to create highly customized products.

combining experience-based learning and process innovation to move onto a steeper learning curve.

Oberlo Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Oberlo Autos applying in this scenario? - differentiation strategy - product diversification strategy - cost-leadership strategy - liquidation strategy

cost-leadership strategy

Firms pursuing a cost-leadership strategy seek to - create higher value for customers and offer premium pricing. - keep their cost structures at the same or similar levels as that of the competitors. - deliver products or services at a lower cost than competitors. - gain competitive advantage by reducing the value gap.

deliver products or services at a lower cost than competitors.

In a focused differentiation strategy, a firm seeks to - offer low-priced products and services with a narrow focus on a niche market. - create higher customer value than the competitors in different segments of a mass market. - deliver products or services with unique features to a specific, narrow part of the market. - focus on reducing the value gap to differentiate itself from the competitors.

deliver products or services with unique features to a specific, narrow part of the market.

The viability of a differentiation strategy is severely undermined when the - difference between perceived value and costs is significant. - focus of competition shifts to value-creating features rather than price. - differential appeal is based more on intangible resources than tangible resources. - differentiated products become commoditized throughout the industry.

differentiated products become commoditized throughout the industry.

ACME Inc. has retained you to review their low-cost strategy for their company. Based on several consultations with the client, you realize that their per unit costs are actually increasing as their business grows and expands. You conclude that this firm is experiencing - diseconomies of scale - economies of scope - diseconomies of scope - economies of scale

diseconomies of scale

In the ________, firms change the underlying technology while holding cumulative output constant. - learning curve - experience curve - minimum efficient scale - maximum efficient scale

experience curve

The cost-leadership strategy helps a firm achieve competitive advantage when it does which one of the following? - helps a firm create as large a gap as possible between the differential value created and the cost required - permits a firm to perform similar activities than its rivals with greater costs or lower value creation - permits a firm to perform different activities than its rivals with greater value creation - permits a firm to perform similar activities differently than its rivals with resulting lower costs

helps a firm create as large a gap as possible between the differential value created and the cost required

An experience curve attempts to capture both - network effects and diseconomies of scale. - time compression diseconomies and mass customizations. - learning effects and process improvements. - economies of scope and network effects.

learning effects and process improvements.

A blue ocean strategy typically allows a firm to - provide unique product or service features at a premium price. - add product features that raise costs without raising the perceived value. - reduce the value gap created by their products. - offer a differentiated product or service at low cost.

offer a differentiated product or service at low cost.

All of the following are tools primarily used to achieve cost-leadership except - controlling the cost of inputs - leveraging economies of scale - offering products at a premium price - learning by doing

offering products at a premium price.

There exist important trade-offs between value creation and low cost because value creation and cost tend to be - negatively correlated - positively correlated - independent of each other - inversely related

positively correlated

Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but rather by doing a thousand small things. This approach focuses on driving down the cost of health care through - value of input factors - cost of input factors - process innovation - product innovation

process innovation.

As differentiation and cost-leadership are distinct strategic positions that require important trade-offs, it is - easy to build an ambidextrous organization. - best for firms to avoid pursuing a generic business-level strategy. - quite difficult to translate a blue ocean strategy into reality. - easy to increase value and lower cost at the same time.

quite difficult to translate a blue ocean strategy into reality.

A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its - diseconomies of scale - reputation for quality - low pricing - low cost per unit

reputation for quality.

When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not - value drivers but cost drivers - cost drivers but value drivers - complements but substitutes - substitutes but complements

substitutes but complements.

GiftBasket.com has successfully created a higher perceived value in the e-commerce industry, though it offers the same products at slightly higher prices than the competitors. This has been mainly attributed to the company's easy-to-navigate website, simple return procedures, fast delivery, and cash on delivery option. Thus, the value driver for GiftBasket.com is its - lower value gap - superior customer service - economies of scale - availability of complements

superior customer service.

The two primary competitive levers that managers can use in order to answer the question of how to compete are - accounting profitability and shareholder returns - profit and loss - core competencies and competitive advantage - value and cost

value and cost.