Strategic Management Chapter 6

Economies of scale present an opportunity to increase profits because as the number of units within the relevant range increases, fixed costs ______. Multiple choice question. vary only depending on the number of units produced decrease dramatically increase only slightly stay the same

stay the same

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

True

Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product. Multiple choice question. customizations complements citations constructs

complements

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______. Multiple choice question. competitive parity complements economies of scale diseconomies of scale

economies of scale

Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ______. Multiple choice question. asset attainment market definition value innovation economies of scope

value innovation

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers? Multiple choice question. Differentiation provides protection against an increase in input prices. Differentiation results in costs that increase above acceptable thresholds. Differentiation provides protection against substitute products by lowering prices. Differentiation results in the erosion of margins.

Differentiation provides protection against an increase in input prices.

Which capability is required to create superior product features? Multiple choice question. accounting sales R&D marketing

R&D

What is the relationship between fixed costs and economies of scale? Multiple choice question. The amount of fixed costs allocated to each unit of output decreases as output increases. Larger output illustrates the benefits of a differentiation strategy. Larger output results in lower labor costs. Larger outputs result in a maximum efficient scale.

The amount of fixed costs allocated to each unit of output decreases as output increases.

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 Multiple choice question. an experience-curve effect based on process innovation. creative destruction. value driver advantages based on product features. a learning curve effect based on output differential.

an experience-curve effect based on process innovation.

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers. Multiple choice question. proposition differentiation minimally efficient cost-leadership

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? Multiple choice question. complements customer service economies of scale product features

economies of scale

Larger output allows firms to invest in more specialized systems such as ______. (Check all that apply.) Multiple select question. enterprise resource planning software a general accountant manufacturing robots big box retail stores

enterprise resource planning software manufacturing robots

The concept of a(n) ______ attempts to combine both learning effects and process improvements. Multiple choice question. technological innovation experience curve strategic implementation minimum efficient scale

experience curve

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.) Multiple select question. less intense competition from imitators an increased exposure to the threat of price wars reduced per unit costs the ability to charge a premium price

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

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. Multiple choice question. black green red blue

red

A cost leader can achieve a competitive advantage by ______. Multiple choice question. focusing on reducing cost without considering the effect on value allowing people to customize their products ignoring diseconomies of scale reducing costs below those of competitors while maintaining a similar value choosing a differentiation strategy

reducing costs below those of competitors while maintaining a similar value

A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______. Multiple choice question. value innovation a red ocean strategy cost leadership economies of scale

value innovation

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. Multiple choice question. scaling input learning-curve experience-curve

input

Which of the following scenarios would result in strengthening a firm's strategic position? Multiple choice question. A firm invests in a range of new product features that result in an equal increase in costs and value creation. A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm. A firm releases a new complementary product that decreases the perceived value of the original product. A firm invests a significant amount of money into a new customer service call center, resulting in a minimal increase in perceived value.

A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm.

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers? Multiple choice question. Differentiation results in costs that increase above acceptable thresholds. Differentiation results in the erosion of margins. Differentiation provides protection against an increase in input prices. Differentiation provides protection against substitute products by lowering prices.

Differentiation provides protection against an increase in input prices.

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

Which of the following best defines economies of scope? Multiple choice question. They are the savings that come from producing two or more outputs at less cost than producing each output individually. They are the sizes of the markets in which a firm chooses to compete. They are the strategies that seek to create higher value for customers than the value that competitors create. They are the choices between a cost or value position.

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

Which of the following are components of a cost-leadership strategy? (Check all that apply.) Multiple select question. acceptable value unique product features lowest costs in the industry highest prices in the industry

acceptable value lowest costs in the industry

Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods? Multiple choice question. an increase in the cost of raw materials an increase in demand from the market several new competitors entering the market a decline in consumer demand

an increase in demand from the market

For a differentiation strategy to strengthen a company's strategic position and boost its competitive advantage, ______. Multiple choice question. an increase in costs must exceed the increase in value creation any increase in costs is unacceptable any increase in value creation must not be more than the increase in costs an increase in value creation must exceed the increase in costs

an increase in value creation must exceed the increase in costs

Which of the following are input factors? (Check all that apply.) Multiple select question. marketing and sales information technology services capital raw materials distribution labor

information technology services capital raw materials labor

Why do many firms fail to successfully implement a blue ocean strategy? Multiple choice question. because they become involved in situations involving ethical dilemmas because they merge with international competitors for value creation because they end up being "stuck in the middle," unable to increase value and lower costs at the same time because too many other companies already try to implement a blue ocean strategy, making it hard to compete that way

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 ______. Multiple choice question. charge only as much as the competition charges for its product charge premium pricing reduce the cost of raw materials hire employees away from competitor

charge premium pricing

Bundling of products and services that are consumed in tandem to create value is an example of ______. Multiple choice question. premium pricing strategic trade-offs complements economies of scope

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. Multiple choice question. cost leadership integration strategy business level differentiation

cost leadership

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. Multiple choice question. good value product features customer service marketing

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? Multiple choice question. complements customer service product features profits

customer service

What are the three most important value drivers that managers can use to create a competitive advantage? Multiple select question. cost savings availability customer service product features complements

customer service product features complements

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with ______. Multiple choice question. cutting costs and increasing value at the same time maintaining high quality customer service locating products that satisfy customer needs communicating the plan to lower-level employees

cutting costs and increasing value at the same time

A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs. Multiple choice question. differentiation integrated balanced approach competitive implementation cost-leadership

differentiation

A successful blue ocean strategy requires strategists to reconcile the trade-offs between ______. Multiple choice question. private and public investment profit margins and sales volume number of employees and high wages differentiation and cost-leadership

differentiation and cost-leadership

Positive adjustments in product features, customer service, and complements may enable managers to ______. Multiple choice question. weaken the firm's strategic position attract new employees make themselves look good improve the firm's strategic position

improve the firm's strategic position

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.) Multiple select question. increased demand untapped market space increased competition a crowded market space

increased demand untapped market space

Which competitive forces can result in erosion of margins for both differentiation and cost-leadership business strategies? Multiple select question. threat of substitutes power of suppliers threat of entry power of buyers

power of suppliers threat of entry power of buyers

Two important features that managers can adjust in an effort to improve the firm's strategic position are ______. Multiple choice question. investment value and planned emergence customer service and investment value planned emergence and product features product features and customer service

product features and customer service

Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually. Multiple choice question. scale scope integration regulation

scale

Different value drivers contribute to competitive advantage only if ______. Multiple choice question. the company also offers product customization customer service prices exceeds the cost of product features the increase in perceived value exceeds the corresponding cost increase premium pricing is used

the increase in perceived value exceeds the corresponding cost increase

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.) Multiple select question. a crowded market space increased competition untapped market space increased demand

untapped market space increased demand