MGT 4300 Chapter 6
Which value driver would be the focus of a company that sells products that are similar to competing products and that provides a 60-day guarantee with no questions asked?
customer service
A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with ______.
cutting costs and increasing value at the same time
A ______ strategy aims to create higher value for customers by offering products with unique features but a similar level of costs to those of competing products.
differentiation
Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods?
an increase in demand from the market
For a 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
Bundling of products and services that are consumed in tandem to create value is an example of ______.
complements
By using a differentiation strategy, a firm aims to ______.
add unique features that will increase the perceived value of a product
Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.
charge premium pricing
Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.
complements
Larger output allows firms to invest in more specialized systems such as ______.
-enterprise resource planning software -manufacturing robots
Which capability is required to create superior product features?
R&D
What is the relationship between fixed costs and economies of scale?
The amount of fixed costs allocated to each unit of output decreases as output increases.
What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?
To achieve strategic positioning, firms must make important trade-offs.
Why do many firms fail to successfully implement a blue ocean strategy?
because they end up being "stuck in the middle," unable to increase value and lower costs at the same time
The goal of a _____________ strategy 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
Positive adjustments in product features, customer service, and complements may enable managers to ______.
improve the firm's strategic position
An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.
input
The most significant challenge JetBlue faced in implementing its business strategy was _____.
reconciling the trade-offs between cutting costs and providing superior service
The perceived value that a company creates for consumers less the company's costs to create the value equals ______.
the economic value created
Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet potato-chip maker. Based on just this information, which of the following is the greatest advantage Patti's has over Calpurnia's?
economies of scale
Products in the affordable "business-casual" clothing market have largely become commoditized, and most retailers have begun to compete mainly on price rather than product features. In this environment, it is impossible for one retailer to gain market share without another losing it. This is an example of a ______ ocean.
red
As JetBlue grew, which of the following occurred during the years following 2007?
It suffered a competitive disadvantage.
Why does the learning curve go down when productivity is considered?
As workers repeatedly engage in an activity, they become more efficient, driving down costs.
Which of the following best exemplifies a company that successfully uses a differentiation strategy?
Company X strengthens its brand by marketing a product with an innovative feature.
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 economy of __________________________ , reducing overall production costs by finding multiple uses for its components and facilities.
scope
Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.
scope
What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?
Differentiation provides protection against an increase in input prices.
A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.
differentiation
True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.
true
If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from
an experience-curve effect based on process innovation.
In terms of business strategy, blue oceans represent which of the following?
-increased demand -untapped market space
Which of the following are input factors?
-information technology services -capital -raw materials -labor
A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?
-less intense competition from imitators -the ability to charge a premium price
Which of the following are components of a cost-leadership strategy?
-lowest costs in the industry -acceptable value
Which competitive forces can result in erosion of margins for both differentiation and cost-leadership business strategies?
-power of buyers -power of suppliers -threat of entry
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?
1. Maintaining a domestic call center that is open 24 hours per day. 2. Offering a "no questions asked" return policy
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 to the firm.
Business-level strategy addresses which overarching question?
How should we compete?
In terms of productivity, which of the following is true of learning curves?
They go down.
A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.
business-level strategy
A company's goal-directed plans regarding how to compete for advantage is known as the firm's ______.
business-level strategy
The concept of a(n) ______ attempts to combine both learning effects and process improvements.
experience curve
True or false: Formulating a business strategy is a relatively easy task because only a few strategic options are available.
false
Two important features that managers can adjust in an effort to improve the firm's strategic position are ______.
product features and customer service
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
A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______.
value innovation
Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ______.
value innovation
A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.
economies of scale
A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.
cost-leadership
Which of the following are considered the two generic business-level strategies?
cost-leadership differentiation
How to compete on a business level is defined by the variables value and cost. Together they define the ______.
economic value created