Strat 5370 Quizzes Exam 1

Which of the following are cost drivers? 1. the learning curve 2. economies of scope 3. firm revenues 4. complementary products 1 and 2 3 and 4 1 and 4 1, 3 and 4

1 and 2

Which of the following are isolating mechanisms? 1. causal ambiguity 2. the learning curve 3. property rights 4. transition costs 1 and 2 3 and 4 1, 3, and 4 all

1, 3, and 4

Which of the following is NOT true for firms that pursue a differentiation strategy? Raising the price of the product to the extent that the buyer's surplus is greater than the competitor products' buyer surplus can be an effective approach. Charging the same price while increasing value can always attract new customers. This strategy is more attractive when the value-improving investments produce a higher return than the efforts to reduce costs Increasing value entails the challenge of additional costs, possibly reducing the profits (price-cost).

Charging the same price while increasing value can always attract new customers.

Which of the following is NOT true about generic strategies? Firms focusing on cost drivers often bear the challenge of being easily imitable. One challenge for differentiation-type companies is that it is often hard to accurately predict customers' perception of value in the company product. Firms who achieve 'value innovation' effectively implement both differentiation and cost leadership. Firms who pursue cost leadership mostly ignore the value delivered to the customers and strive to attain the lowest cost possible to offer lowest prices.

Firms who pursue cost leadership mostly ignore the value delivered to the customers and strive to attain the lowest cost possible to offer lowest prices.

Which of the following industry forces have the power to drive profits down? I. The power of buyers II. The power of suppliers III. The strength of substitutes for the industry's products IV. The potential for entry into the business V. The strength of competition or rivalry I & II III & IV I, II, III & IV I, II, III, IV & V

I, II, III, IV & V

In the field of strategy, an industry's boundaries are determined based on: I. employees switching between companies II. technologically similar products III. highly-correlated stock prices IV. interdependent consumer markets I and III II and IV I, II, and III all of the above

II and IV

Which of the following statements about buyer and supplier power is TRUE? Buyer power increases when there are more buyers and the industry is growing quickly. Buyer and supplier power do not matter to small firms, since industry forces are proportional to size. A firm working with weak suppliers and strong buyers will generate high profits. Strong suppliers can achieve high margins even if their buyers operate in markets with intense rivalry.

Strong suppliers can achieve high margins even if their buyers operate in markets with intense rivalry.

Which of the following statements is FALSE? The cost leader in an industry can be identified by finding the company with the lowest prices. The customer, not the seller, determines the value of the product. Market position is determined by the Value-minus-Cost profile that a firm provides. A firm can occupy a superior market position without having the lowest cost or highest value.

The cost leader in an industry can be identified by finding the company with the lowest prices.

Economies of scope occur when: The average cost of making the product goes up as your firm produces more of it today The average cost of making the product goes down as your firms produces more of it over time The variable cost of making the product is less than its average cost The total cost of producing two products is less than the sum of costs to produce them separately

The total cost of producing two products is less than the sum of costs to produce them separately

Which of the following represents the best example of complementary products? Starbucks coffee and Diet Coke a Walmart Supercenter and a Walmart Neighborhood Market an iPhone and the Netflix app Gucci handbags and Zara dresses

an iPhone and the Netflix app

The difference between product value and market price is called: the source of customer sensitivity the firm's profit the buyer's surplus the firm's economic contribution

the buyer's surplus

How would a supplier firm reduce the power of one of its buyers? Increase the percentage of the firm's product sold to the buyer. focus on supplying commodity products expand the firm's production capacity vertically integrate into the buyer's industry

vertically integrate into the buyer's industry