chapter 6 bus pol
marriott offers different hotels that cater to different types of travelers. What is this an example of
how a firm can compete by offering more perceived value at a similar price
in addition to having a lowest cost, a low cost leader is likely to have
a large market share
experience curve
based on process innovation which allows a firm to leapfrog to a steeper learning curve
what outlines the steps a manager will take to achieve competitive advantage in a single product market
business level strategy
which of the following are significant threats to a firm pursuing a cost leadership strategy
competitors adopting similar business strategies, value falling below the acceptable threshold, and replacement by innovative substitutes
a firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on
customer service
managers can increase the perceived value of their firms' product or service offerings by focusing on
customer service
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 struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with
cutting cost and increasing value at the same time
scope of competition (who)
deciding whether to go after a broad or narrow market focus
economies of scale
decreases in cost per unit as output increases. Spreads fixed costs over a larger output, employs specialized systems and equipment, and takes advantage of certain physical properties
economies of scope
describes the savings that come from producing two+ outputs at less cost than producing each output individually. Shares resources or technology
what strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay
differentiation
generic strategies
differentiation (value) and cost leadership (cost -universal, independent of industry, and can be used by any type of organization
a firm experiences what when an increase in output results in an increase in costs
diseconomies of scale
focused cost leadership strategy
focuses on a narrow niche market for cost leadership
strategy canvas
graphical depiction of a company's relative performance vis a vis its competitors across the industry's key success factors
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 ___________________, reducing overall production costs by finding multiple uses for components and facilities
economies of scope
the concept of _________________ attempts to combine both learning effects and process improvements
experience curve
diseconomies of scale
firms are too big, complexities of too much coordination, inflexible and slow
value curve
horizontal connection of the points of each value on the strategy canvas that helps strategic leaders diagnose and determine courses of action
as jetblue grew, which of the following occurred during the years following 2007
it suffered a competitive disadvantage
which of the following are input factors
labor, IT services, capital, and raw materials
differences in timing
learning effects occur over time as output accumulates while economies of scale are captured at one point in time when output increases
when pursuing value innovation, managers must answer questions focused on which of the following
lowering costs and increasing perceived consumer benefits
high end pen manufacturer Mont Blanc pursues a differentiation strategy pursuing only those who need or want an expensive writing instrument. What scope of competition does this represent
narrow (focused)
whereas the firm's strategic position can be considered either differentiated or cost focused, the scope of competition is considered
narrow or broad
learning curve
occurs when it takes less and less time to produce the same output due to learning from experience. Drives down cost and steeper curves indicate more learning. The steeper means more learning has occured
minimum efficient scale (MES)
output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest cost position that is achievable through economies of scale
which competitive forces can result in erosion of margins for both differentiation and cost leadership business strategies
power of buyers, power of suppliers, and threat of entry
which capability is required to create superior product features
research and development
strategic position (how) is based on
value (v) and cost (c)
implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as
value innovation
determining the products the customer wants and needs answers the ____________ question of competition
what
how to compete for advantage
who (customer segments) will we serve? what customer needs, wishes, and desires will we satisfy? why do we want to satisfy them? how will we satisfy our customers' needs?
choosing a business level strategy helps to define a firm's _________ in a given product market
strategic position
a company's strategic profile based on value creation and cost in a specific product market is the company's
strategic positon
value innovation
the simultaneous pursuit of differentiation and low cost in a way that creates a leap in value for both the firm and consumers; considered a cornerstone of blue ocean strategy
a differentiation strategy can be threatened when
a product becomes commoditized, and the focus of the competition shifts to price
value
captured by how much consumers are willing to pay for a product or service
raoul is starting a new cosmetics company. His focus is on what he believes is a game changing lipstick. He wants the lipstick to be accessible to everyone, but the manufacturing costs are higher than he had anticipated. Raoul wants to achieve his desired strategic position of value creation at an affordable cost, he will need to
make strategic trade offs
cost drivers
managers can manipulate cost of input factors, economies of scale, learning curve effects, and experience curve effects to keep their cost low
what is the range of output needed to minimize the cost per unit as much as possible
minimum efficient scale
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 two factors upon which the success of strategy of either cost leadership or differentiation is built are
the firms internal strengths and external opportunities in the market
business level strategy
the goal directed actions managers take in their quest for competitive advantage when competing in a single product market
how to calculate competitive advantage
the greater the economic value created (v-c), the greater the firm's competitive advantage
for 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
strategic trade off
choices between a cost or value position
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 of the firm
a tablet manufacturer that includes a free stylus with every purchase is using ______________ to enhance a users' experiences and increases the perceived value of its tablets
complements
what are the three most important value drivers that managers can use to create a company advantage?
complements, customer service, and product features
a firm that pursues a differentiation strategy will often find that the added expenses of offering new unique product features offsets the increase in perceived value, and profit margins begin to erode. This underscores the importance of ________________ for firms pursuing a differentiation strategy
cost control
which strategy goal 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
the four most important cost drivers that managers can manipulate are
cost of input factors, economies of scale, experience curve effects, and learning curve effects
which of the following determine a firm's competitive advantage
cost position relative to competitors and value position relative to competitors
differentiation strategy
creates higher value for customers, delivers products or services with unique features, and keeps costs at same or similar level
cost leadership strategy
creates the same or similar value, lower cost than competitors, and results in lower prices for customers
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 ______________________, reducing overall production costs by finding multiple uses for its components and facilities
economies of scope
differences in complexity
effects from economies of scale can be quiet significant, while learning effects are minimal and vice versa
value drivers
either increase value or decrease cost and includes product features, customer service, and complements
larger output allows firms to invest in more specialized systems such as
enterprise resource planning software and manufacturing robots
in order for a firm to successfully implement a business level strategy, it must limit the impact of
external threats and its own internal weaknesses
the cube square rule makes it ________ for smaller stores to compete with larger retailers
harder
in terms of business strategy, blue oceans represent which of the following?
increased demand and untapped market space
cost
total cost the firm incurs to create value
blue ocean strategy
uses value innovation to reconcile trade offs. Represents untapped market space, creation of additional demand, and opportunities for highly profitable growth
which two variables can managers primarily manipulate in order to answer the question, "how should we compete"
value and cost
which of the following are questions that managers must answer when pursuing value innovation
which product factors to reduce below the industry standard, which product factors to raise above the industry standard, which product factors to eliminate, and which new product factors to create
a firm pursuing a blue ocean strategy can increase its profit margin by implementing which of the following pricing options
charge a lower price than the differentiator or charge a high price than the cost leader
how does learnings effects differ from economies of scale
differences in timing and differences in complexity
an auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of
input factors
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 and maintaining a domestic call center that is open 24 hours per day
