Chapter 6 Reading Quiz
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 Replacement by innovative substitutes
Bundling of products and services that are consumed in tandem to create value is an example of ___
Complements
The most important value drivers that managers can use to create a competitive advantage are ...
Customer service Product features Complements
Economies of scale are ___
Decreases in cost per unit as output increases
A ___ 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
A firm experiences ___ when an increase in output results in an increase in costs
Diseconomies of scale
How to compete on a business level is defined by the variables value and cost. Together they define the ___
Economic value created
When pursuing a differentiation strategy, a firm can achieve a competitive advantage by ___
Ensuring that its economic value exceeds that of its competitors
Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete"?
Value Cost
Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete"
Value Cost
A firm's competitive advantage is determined jointly by ___ effects and firm effects
industry
A ___ strategy may fail when the focus of the competition shifts to price rather than unique product features
Differentiation
The concept of a(n) ___ attempts to combine both learning effects and process improvements
Experience curve
The two factors upon which a successful business-level strategy is built are ___
External opportunities in the market The firm's internal strengths
the example of marmot offering a line of different hotels catering to different types of travelers is an example of:
How a firm can compete by offering more perceived value at a similar price
Which capability is required to create superior product features?
R&D
Choosing a business-level strategy helps to define a firm's ___ in a given product market
Strategic position
Business-level strategy addresses which overarching question?
"How should we compete"
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
A firm's strategic profile based on value creation and cost is called its ___
Strategic position
The minimum efficient scale indicates the level of output needed to ___ the cost per unit a much as possible
bring down
In the learning curve, the ___ the learning curve, the more learning takes place
Steeper
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
Cost of input factors and economies of scale are ___ that managers can use to keep costs in check
Cost drivers
Which type of strategy is being used if a company offers a product at a lower cost than its competitors
Cost-leadership strategy
In a focused cost-leadership strategy, a firm provides ___
Low-cost products to a niche market
Larger output allows firms to invest in more specialized systems such as ___
Manufacturing robots Enterprise resource planning software
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 competitive positioning, erosion of margins is a risk for which of the following competitive forces?
Power of suppliers Threat of entry Power of buyers
The beneficial effect of a differentiation strategy on the power of suppliers in an industry is ___
Protection against an increase in input prices
Which of the following questions are questions that managers must answer when pursuing value innovation (4)
Reduce Create Raise Eliminate
A manufacturer of electrical components can use its manufacturing machines to produce many different components. In this case, the firm benefits from an economy of ___, reducing overall production costs by finding multiple uses for its components and facilities
Scope
The ___ determines whether to pursue a specific narrow part of the market or to go after the broader market
Scope of competition
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 are pricing options offered by a blue ocean strategy
The firm can charge a higher price than the cost leader The firm can charge a lower price than differentiators
Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ___
Value innovation
By using a differentiation strategy, a firm aims to ___
add unique features that will increase the perceived value of a product
A firm that pursues a differentiation strategy will often find that the added expense of offering new or unique product features offsets the increase in perceived value, and profit margins begin to erode. This underscores the importance of ___ control for firms pursuing a differentiation strategy
cost
According to the ___ rule, increasing the surface area (size) of a storage unit or retail facility results in a disproportionate increase in volume (space)
cube-square
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