BUS 4853 Chapter 6 Smartbook
Positive adjustments in product features, customer service, and complements may enable managers to ______.
improve the firm's strategic position
The most significant challenge JetBlue faced in implementing its business strategy was _____.
reconciling the trade-offs between cutting costs and providing superior service
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 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.
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
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 ______ 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
Which of the following are input factors? (Check all that apply.)
capital information technology services labor raw materials
Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.
charge premium pricing
Bundling of products and services that are consumed in tandem to create value is an example of ______.
complements
Which type of strategy is being used if a company offers a product at a lower cost than its competitors?
cost-leadership strategy
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
Economies of scale are ______.
decreases in cost per unit as output increases
A ______ strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay.
differentiation
A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.
differentiation
Which of the following are considered the two generic business-level strategies? (Check all that apply.)
differentiation cost-leadership
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
How to compete on a business level is defined by the variables value and cost. Together they define 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
True or false: Formulating a business strategy is a relatively easy task because only a few strategic options are available.
false
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
Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete?"
-cost -value
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.
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 capability is required to create superior product features?
R&D
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.
True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.
True
In addition to having the lowest cost, a low-cost leader is likely to have ______.
a large market share
By using a differentiation strategy, a firm aims to ______.
add unique features that will increase the perceived value of a product
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.
Which of the following are components of a cost-leadership strategy? (Check all that apply.)
lowest costs in the industry acceptable value
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.)
maintaining a domestic call center that is open 24 hours per day offering a "no questions asked" return policy
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
Two important features that managers can adjust in an effort to improve the firm's strategic position are ______.
product features and customer service
A cost leader can achieve a competitive advantage by ______.
reducing costs below those of competitors while maintaining a similar value
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
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 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
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 ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.
cost-leadership
Larger output allows firms to invest in more specialized systems such as ______. (Check all that apply.)
enterprise resource planning software manufacturing robots
The concept of a(n) ______ attempts to combine both learning effects and process improvements.
experience curve
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
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