Wk 5 - Practice: Ch. 6, Business Strategy

The concept of a(n) ______ attempts to combine both learning effects and process improvements.

experience curve

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

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.

charge premium pricing

Which type of strategy is being used if a company offers a product at a lower cost than its competitors?

cost-leadership strategy

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 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

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.

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

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.

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.

Blank 1: scope

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.

Blank 1: scope

A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.

Business level strategy

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.

True or false: Formulating a business strategy is a relatively easy task because only a few strategic options are available.

False

Business-level strategy addresses which overarching question?

How should we compete?

As JetBlue grew, which of the following occurred during the years following 2007?

It suffered a competitive disadvantage.

Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?

Power of buyers Power of suppliers Threat of entry

Which capability is required to create superior product features?

R&D

Which of the following best defines economies of scope?

They are the savings that come from producing two or more outputs at less cost than producing each output individually.

In terms of productivity, which of the following is true of learning curves?

They go down.

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.

Which of the following are components of a cost-leadership strategy?

acceptable value lowest costs in the industry

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.

Bundling of products and services that are consumed in tandem to create value is an example of ______.

complements

Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.

complements

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

complements customer service product features

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(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.

differentiation

A successful blue ocean strategy requires strategists to reconcile the trade-offs between ______.

differentiation and cost-leadership

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

Which of the following are input factors?

information technology services raw materials labor capital

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

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 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 maintaining a domestic call center that is open 24 hours per day

Two important features that managers can adjust in an effort to improve the firm's strategic position are ______.

product features and customer service

The most significant challenge JetBlue faced in implementing its business strategy was _____.

reconciling the trade-offs between cutting costs and providing superior service

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

A cost leader can achieve a competitive advantage by ______.

reducing costs below those of competitors while maintaining a similar value

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 perceived value that a company creates for consumers less the company's costs to create the value equals ______.

the economic value created

Which two of the following variables can managers primarily manipulate in order to answer the question,

value cost

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

True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.

True