MGMT 498

How to compete on a business level is defined by the variables value and cost. Together they define the ______.

economic value created

Positive adjustments in product features, customer service, and complements may enable managers to ______.

improve the firm's strategic position

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

the economic value created

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

business-level strategy

Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.

scope

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

Which of the following are considered the two generic business-level strategies? (Check all that apply.)

differentiation cost-leadership

Which of the following are input factors? (Check all that apply.)

capital raw materials labor information technology services

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

charge premium pricing

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

complements

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

complements

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

Economies of scale are ______.

decreases in cost per unit as output increases

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

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

Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?

differentiation and cost-leadership

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

product features customer service complements

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

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? (Check all that apply.)

the ability to charge a premium price less intense competition from imitators

In addition to having the lowest cost, a low-cost leader is likely to have ______.

a large market share

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.

Business-level strategy addresses which overarching question?

How should we compete?

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.

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.

What do learning curves do when viewed in terms of productivity?

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.

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

True

Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete?"

Value and Cost

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.

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

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.

cost-leadership

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

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

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

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

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

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? (Check all that apply.)

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

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

power of suppliers threat of entry power of buyers

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

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

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.)

untapped market space increased demand

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

value innovation