mgt 4335 exam 2 practice questions
relative cost
The costs incurred by one company compared to the costs paid by a competitor.
Economies of Scale
A reduction in costs per unit due to increases in e ciency of production as the number of goods being produced increases.
Build-a-Bear uses the____ approach to di erentiate their products.
mass customization
Marketers typically segment markets based on __________. A. The production capacity of a rm B. Various attributes or the price of products C. The number of competitors in the market D. Network e ects that make products convenient to use
B
Economies of scale _____. A. Exist when cost per unit increases with decrease in volume B. Are not more relevant in some industries than others C. Arise from the ability to spread xed costs of production D. Produce cost advantages for smaller rms over larger rms
C
List three of the four major categories of differentiation
1. Product Features 2. Quality/Reliability 3. Convenience 4. Brand
At Red Inc., a retail store, Mark, the manager, maps the consumption chain to understand the buying patterns of the consumers. He has identi ed how consumers become aware of their needs for products or services. Which of the following is he likely to do next? A. He identi es how consumers nd the store's o erings. B. He identi es why dissatis ed consumers return products. C. He identi es the kind of help that consumers need in order to use their products. D. He identi es the mode used to pay for the products.
A
Attire Corp., a garment manufacturing company, explains to its employees why its previous year's sales had not met the required standards. The management uses a diagram of the cost acquired for each item manufactured against the volume of items produced in a particular period of time. The pictorial representation is an example of the _____. A. Scale Curve B. Value Curve C. Learning Curve D. Experience Curve
A
For a luxury high-end product, which of three "job" dimensions is not as important? A. Functional B. Emotional C. Social
A
How do companies pursuing customer segmentation as a di erentiation strategy become successful? A. By grouping customers based on similar needs B. By designing a speci c product for each customer C. By creating products that meet the needs of their entire customer base D. By allowing customers to customize their products based on their individual preferences
A
Mercury Corp., a startup company, is sure that it will achieve a steep curve of 75 percent as it is selling a unique product that has not been introduced into the market before. The company is con dent that this product will be sold at a fast rate due to two reasons: the product is a necessity in every home and it is a break-through solution. Mercury sees this product helping the company grow at a fast pace. Which strategy has Mercury Corp. adopted? A. The Growth/Investment Strategy B. The Pricing Strategy C. The Cost-Management Strategy D. The Acquisition Strat
A
Rinkon Inc., an automobile company, purchased its competitor TrackRoads Inc. that had similar production quantities and a su cient amount of raw materials. This takeover was done to decrease the unit cost production of Rinkon and to increase its production using more equipment in Rinkon. This strategy led to record pro ts and more customers investing their nances on cars manufactured by Rinkon. The scenario best illustrates the: A. Acquisition Strategy. B. Pricing Strategy. C. Cost-Management Strategy. D. Investment Strategy.
A
Saturn Inc., a manufacturer of home appliances, familiarizes customers with its products through advertising. Apart from attracting new customers, it o ers quick demos in mass media that assist existing customers. Which of the following stages in the consumption chain is depicted in this scenario? A. The eighth step: what do customers need help with when they use a product? B. The ninth step: what if customers aren't satis ed and need a return or exchange? C. The third step: how do customers make their nal selections? D. The fourth step: how do customers order and purchase a product?
A
To a strategist, what does the logic of the experience curve suggest? A. The company with the highest volume in an industry will also be the lowest-cost producer. B. The company with the steepest learning and experience curves will also be the lowest-cost producer. C. The company with the lowest market share in an industry will also be the highest-cost producer. D. The company spending the most on advertising in an industry will also be the lowest-cost producer.
A
Tracie, the CEO of Boney's Inc., wanted to analyze what customers think of their products. She began her survey by nding out how her customers become aware of their needs, how they nd the products, how they purchase products, and how the products are serviced or repaired. These steps are part of ________. A. Mapping the Consumption Chain B. Studying the Value Chain C. Studying the Production Cycle D. Mapping the Supply Chain
A
What is true about a minimum e cient scale? A. It shows the optimal quantity for a company to produce. B. It can be most e ciently maintained in large industries by increasing the level of production. C. The costs per unit decrease with increases in volume until they reach and maintain the minimal level. D. It can be achieved by large industries during economic downturns because they can easily spread their xed costs when demand declines.
A
When rms rely on brand image to di erentiate products, some of them associate their products with positive qualities in the minds of customers. These are known as __________. A. Prestige Brands B. Convenient Brands C. Utility Brands D. Functional Brands
A
Which of the following is a source of di erentiation advantage? A. More convenient to nd, purchase, or use B. Reduced quality or reliability C. Manufacturing products with similar features D. Manufacturing di erent products for each feature
A
Which of the following is true of product di erentiation? A. It is a matter of customer thought and perception. B. It cannot occur when two companies use similar technologies. C. It does not typically require higher costs. D. It is independent of intangible features such as brand image and value.
A
Which of the following statements best de nes the law of experience? A. Costs per unit decrease with increases in cumulative volume of production. B. The average total cost of production decreases as a result of increasing the number of di erent goods produced. C. Cost per unit decreases with increase in the years of experience of employees. D. Marginal cost increases when output is increased.
A
scale curve
A graphic representation of the relationship between cost per unit and scale (volume) of production in a given time period.
scale curve
A graphic representation of the relationship between cost per unit and scale (volume) of production in a given time period. cost per unit and scale (volume) of production
value curve
A graphical depiction of how a firm and major groups of its competitors are competing across its industry's factors of completion
25. Vladimir, the CEO of Autumn Inc., claims that a learning curve is a better option of identifying the growth of the company. His assistant, Mark, states that growth can be better assessed if a scale curve is used as it re ects reliable and validated results and moreover it shows results of a speci c time period. Which of the following statements strengthens Vladimir's claim? A. A scale curve captures the e ects of economies of scale. B. A learning curve assesses the overall company from its inception. C. Results of the assessment will de nitely contain certain irregularities. D. Both the processes are cumbersome and will require expertise to acquire necessary data.
B
Connections Communications Inc. has been able to achieve optimal e ciency by identifying a task for each employee and enabling them to become thoroughly pro cient in their tasks. The company has realized that employees develop an expertise in their speci ed job pro le over time and they gradually begin to work faster than when they started the job. This is an example of _____. A. Task Specialization B. Employee Specialization C. Minimum E cient Scale D. Competitive Parity
B
Crimson Corp., designs its products based on demographics of its customers. Jaded Inc. designs its products based on product attributes. Which of the following is likely to be true in this case? A. Crimson is likely to consider reliability of products as the primary factor for customer segmentation. B. Crimson is unlikely to consider customizability of products as the primary factor for customer segmentation. C. Jaded is likely to consider income level of customers as the primary factor for customer segmentation. D. Jaded is unlikely to consider quality of products as the primary factor for customer segmentation.
B
Every "job" has three dimensions. Which of the following is NOT one of those three dimensions A. Functional B. Aesthetical C. Social D. Emotional
B
Gear-up Inc., an apparel brand, di erentiates its products by manufacturing jeans that last longer than those of other brands. The fabric is durable and does not wear out even after years of regular use. This attracts customers despite Gear-up's high prices. Which of the following elements of product di erentiation is Gear-up primarily providing? A. Aesthetics B. Quality C. Convenience D. Quantity
B
Identify a true statement about economies of scope. A. They exist when costs are reduced by increasing the volume of a speci c activity. B. They exist when costs are reduced by expanding the scope of a company's operations to related activities. C. They occur when a company decreases its output below the minimum e cient scale. D. They occur when a company increases its output beyond the minimum e cient scale.
B
In a recent presentation by the management of Seas Inc., the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product. Which of the following charts did the presenters of Seas discuss? A. The Learning Curve B. The Experience Curve C. The Scale Curve D. The Value Curve
B
It is important to remember that product di erentiation is always a matter of _________. A. O ering di erent product features B. Customer perception C. Understanding the job to be done D. Performing di erent activities than competitors
B
Juan, the manager of Pvari, a chain of jewelry stores, claims that mass customization is the best way to create value for their products. Nate, the senior designer, believes that every product must be customized from the pre-production stage. Which of the following statements will strengthen Juan's claim? A. Designers feel their creative skills will be underutilized in mass production. B. The production costs will reduce to half if products are made in large scale. C. Customers love the idea of designing their own jewelry from scratch. D. Their clientele includes a niche group that prefers highly customized products.
B
Kim, a consumer, is in the nal stage of selecting a product. Which of the following is true if her actions follow the typical consumption chain? A. Kim is unlikely to have become aware of her need for a product yet. B. Kim is likely to be persuaded by the product attributes at this stage. C. Service providers are likely to assist Kim in helping her use the product. D. Service providers are likely to detect faults with the performance of the product.
B
Ming Gardens Corp., an interior design company, is solely owned by Veronica. The company has been able to achieve competitive advantage due to the knowledge acquired by Veronica over the years. This knowledge was attained under the protective custody of Veronica and she does not want to publish them to anyone. This scenario re ects the development of _____. A. Procedural Wisdom B. Proprietary Knowledge C. Collective Intellect D. Explicit Knowledge
B
Ochre Inc. manufactures accessories such as belts, bags, and shoes. It produces the basic models of all these items on large scale. However, customers can customize these products by choosing embellishments of their choice, such as zippers, straps, and buckles. Ochre's manufacturing process best exempli es __________. A. Mass Optimization B. Mass Customization C. Mass Consumerism D. Mass Production
B
Orange Superstore is largely customer centric and economical in its methods. The store sells the best quality products at prices that are lower than other stores. The store depends on the fact that its salespeople get better at completing their tasks over time. This method used by Orange Superstore is an example of _____. A. Cost Limitation Strategy B. Cost Advantage Strategy C. Proprietary Knowledge Strategy D. Sustained Competitive Advantage Strategy
B
Rita lives in a dorm with other students of her college. She hesitates to buy furniture owing to lack of space. She wants to buy a new study desk, one that can easily fold away and be dismantled so that it doesn't occupy much space when not in use. What is Rita's main concern? A. How to use the product B. How to store the product C. How to assemble the product D. How to locate the product
B
Sasha, the marketing head of a rm, believes that customers hire products to do jobs for them and that these jobs should be the basis for market segmentation. In this case, which of the following is Sasha likely to approve? A. Segmentation based on age and gender of end consumers. B. Segmentation based on features such as durability and quality. C. Segmentation based on the functions provided by a product. D. Segmentation based on socio-economic factors of customers.
B
Tangerine Inc. di erentiates its products by building a brand image, whereas Cloud Inc. does not rely on brand image to di erentiate its products. Which of the following statements is likely to be true in this case? A. Tangerine is likely to rely on product features to attract customers. B. Tangerine is likely to use advertisements to di erentiate its products. C. Cloud is likely to use promotional tools to increase market share. D. Cloud is unlikely to rely on reliability to boost sales.
B
The Finance Department of Neptune Industries has to audit expenses and pro ts made each year. It creates separate databases for costs accrued in the form of equipment used in the company and for other costs such as costs of accounting, rent, and managerial salaries. Which of the following is the subject of economies of scale in the described scenario? A. Research and Development Expenses B. General and Administrative Costs C. Incentives and Promotional Costs D. Advertising Expenses
B
Tina prefers buying products for the emotional dimension of the job they perform rather than its functional attributes. Jay prefers to buy products for the social dimension of the job they do rather than its functional or emotional attributes. In this case, which of the following is most likely to be true? A. Tina buys a bike because of its low rate of fuel consumption. B. Tina buys an original painting by her favorite artist even though it is not in good condition. C. Jay buys a car he loves even though his friends think it does not look classy. D. Jay buys a piece of furniture that allows more storage space despite it looking odd.
B
When do companies often turn to brand image as a source of di erentiation advantage? A. When their products have achieved top-of-mind awareness in their customers B. When there is di culty di erentiating products based upon features, reliability, or convenience C. When their products or services have the largest network of loyal customers in the industry D. When they produce services that are more reliable than the services of their competitors
B
Which of the following is a characteristic of network e ects? A. They cannot be reproduced by competitors. B. They make a service more convenient to use. C. They o er customers the satisfaction of owning a unique product. D. They add more value to a product when the product has few customers.
B
Which of the following statements is true of cost advantage? A. Large rms are guaranteed to secure a wide cost advantage. B. Size and scale do not always guarantee a cost advantage. C. Firms with high production volumes are sure to gain a cost advantage. D. Firms which produce standardized products have a cost advantage.
B
Which of the following statements is true of research and development (R&D)? A. Small volumes of production enable rms to spread the cost of research and development (R&D), advertising, and general and administrative expenses. B. The higher a firm's R&D costs, the more the scope for the company to expand globally allowing costs to be spread across more customers. C. Adding R&D allows a rm to have a cost advantage over competitors. D. Eliminating R&D helps rms to lead in launching new product designs.
B
Willow Inc., a company that designs and manufactures watches, designs a digital watch allowing users to sync it with their mobile phones. It has a touchscreen, microphone, and Bluetooth device installed in it. The watch is also water-resistant for up to 200 meters. The other general features of the watch remain the same. Which of the following statements is true in this case? A. The touchscreen feature enables the product to do more jobs on existing functions in terms of product di erentiation. B. The Bluetooth device feature enables the product to do a better job of the existing functions in terms of product di erentiation. C. The feature of water-proof material enables the product to do more jobs in terms of product di erentiation. D. The microphone feature enables the product to do a unique job in terms of product di erentiation.
B
________ occur(s) when some products or services are more convenient to use because there is a large network of other users. A. Network Ethics B. Network Effects C. Network Latency D. Network Virtualization
B
_________ is when a company produces in bulk the various modules of a product and then allows the customer to select which modules will be combined together. A. Mapping the Consumption Chain B. Mass Customization C. Product Di erentiation D. Mass Segmentation
B
A strategy whereby companies attempt to gain competitive advantage by o ering value that is not available in other products or services is known as __________. A. Product Depreciation B. Mass Customization C. Product Di erentiation D. Service Dissemination
C
Breaking a large process into smaller elements that require specialized knowledge is known as _____. A. Professional Specialization B. Employee Specialization C. Task Specialization D. Process Specialization
C
Floyd Inc., a manufacturer of washing machines, encourages customers to choose their brand through extensive marketing. Features of Floyd's products are compared with those of other brands, and customers are made to see the bene ts they get from purchasing Floyd's products. Which step of the consumption chain does this scenario depict? A. The eighth step: what do customers need help with when they use your product? B. The ninth step: what if customers aren't satis ed and need a return or exchange? C. The third step: how do consumers make their nal selections? D. The fourth step: how do customers order and purchase your product?
C
Frieda, the manager of a retail store, believes that a customer, Jake, is in the selection making stage. Nina, the sales person, believes that Jake is at the stage where he requires help in using the product. Which of the following statements strengthens Frieda's argument? A. Jake is unaware of his need for a product. B. Jake had placed an order for the product earlier and was in the store to pick it up. C. Jake is comparing the product features o ered by two brands. D. Jake had purchased the product and is looking for a manual.
C
Historically, which company has di erentiated through quality or reliability? A. Walmart B. BMW C. Toyota
C
Lavender Inc., a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain pro ts in order to cover more of the competitive market. The company follows this method as it has high unit volumes. The scenario best illustrates the _____. A. Acquisition Strategy B. Cost-Management Strategy C. Pricing Strategy D. Investment Strategy
C
Purple Inc., an interior design company, o ers its clients unique design solutions. Clients can choose from Purple's in-house products, customize them to meet their needs, and see how their home would appear using a 3D visualization software in a mini-theatre at Purple's o ce. This gives Purple a competitive advantage over its rivals since none of them o er this unique combination of services. Purple's advantage is due to its __________. A. Service Standardization Strategy B. Mass Customization Strategy C. Product Di erentiation Strategy D. Supply-Driven Strategy
C
The research and development department of Chi Inc. studies the buying patterns of its customers. If it starts with the customers in the rst step of the consumption chain, which of the following does it most likely study? A. How do its customers nd its products? B. How do its customers order its products? C. How do its customers become aware of their needs? D. How do its customers pay for the products?
C
Time-Threads Inc. sells storage devices, such as memory cards, thumb drives, and external hard disks. Which of the following is most likely true if it achieves product di erentiation by designing its products to perform more jobs than its competitors? A. Its thumb drives come with a tracker to help users locate them. B. Its memory cards o er more space than most others in the market. C. Its hard disks are designed for quicker copying of les from various mediums. D. Its instructions manuals are printed in more languages than its competitors.
C
When Facebook was launched, it was exclusive to only ________. A. People 18 and Above B. People 13 and Above C. Students at Harvard D. Students
C
When products are di erentiated through marketing, via advertisements, promotions, and other marketing activities, it is known as __________. A. Brand Availability B. Brand Con ict C. Brand Image D. Brand Loyalty
C
Which of the following is a feature of task specialization? A. It causes workers to be confused about the task at hand. B. It enables employees to choose tasks that they are most capable of performing. C. It enables workers to be more e cient and thus enables them to avoid loss of time. D. It results in job dissatisfaction because employees have to repeat the same functions over time.
C
Which of the following is necessary for a product to be considered reliable? A. It needs to do a better job as far as performance on existing features is concerned. B. It needs to do more jobs than products o ered by other rms in the market. C. It needs to last longer than products o ered by other rms in the market. D. It needs to o er unique functions and features that no other rm o ers.
C
Which of the following questions denotes the last step in a consumption chain? A. How do consumers nd your o ering? B. How is your product stored/moved around? C. How is your product repaired, serviced, or disposed of? D. How is your product/service delivered?
C
he marketing department of a cosmetics brand conducts a research. 40% of its customers said that they prefer the brand because they do not need to reapply the product often, while 30% said that they chose the brand because the products are organic. If the brand segments the customers by the features of the cosmetics they prefer, the segmentation is primarily based on __________. A. Brand Image B. Demographics C. Product Attributes D. Psychographics of Wholesalers
C
Which of the following is NOT a way to di erentiate with product features? A. To have products that do a "better job" B. To have products that do more jobs C. To have products that do a "unique job" D. To have products that do less-expensive job
D
Which of the following is a strategy in which the unique value o ered to customers is lower-priced products or services? A. Cost Advantage Strategy B. Relative Cost Strategy C. Learning Curve D. Fixed Cost of Production
Cost advantage strategy
Blaze Corp., a car company, shared its costs of producing cars. It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars. Blaze Corp. started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories. This led to a de nite decrease in the overall cost of production. This scenario best illustrates _____. A. Economies of Scale B. Economies of Finance C. Economies of Wealth D. Economies of Scope
D
Companies focus most on establishing brand image when _________. A. They can di erentiate their products based on their features B. The quality of their products is higher than that of others in the market C. The familiarity principle doesn't work for their products D. They have trouble di erentiating their product based on convenience
D
During the process of mapping the consumption chain of a product, Nina looks at the methods followed by companies which send their engineers to check laptops when they detect that a possible bug could be a ecting a system. Which of the following questions does this example address? A. What if customers aren't satis ed and need a return or exchange? B. What help do customers need to become familiar with the product? C. How is your product stored? D. How is your product repaired, serviced, or disposed of?
D
Fuchsia Corp., a retail chain, opens four outlets in di erent locations of a city. It markets itself for attracting customers to these locations. The company invests in promotional campaigns for one of the outlets and then divides the expenses among the four outlets. Which of the following is the subject of economies of scale in the described scenario? A. Production costs B. General costs C. Research and development expenses D. Advertising expenses
D
Home Shore Inc., an electronics store, provides value to its customers by setting up televisions at customers' homes for free. The company also provides instructional manuals on how to set them up without professional help. Which step of the consumption chain does this scenario depict? A. The sixth step: how do consumers nd your o ering? B. The seventh step: how is your product stored/moved around? C. The tenth step: what if customers aren't satis ed and need to return or exchange? D. The fth step: how is your product/service delivered?
D
In terms of product di erentiation, convenience refers to ________. A. How long a product functions optimally B. How unique a product is when compared to others C. How e cient a product is in meeting consumers' primary needs D. How easy it is for customers to purchase a product
D
Kiara states that, as a customer, the pen she had recently purchased was a very convenient product. In terms of product di erentiation, which of the following is Kiara most likely to denote? A. The pen lasted longer than pens by other brands. B. The pen came in di erent colors and shapes. C. The pen was made with high-quality plastic. D. The pen was easier to purchase than other products.
D
Leo Foods is an eatery that sells organic food. It opens a number of outlets across the state, creates a website that makes ordering and take-away easy, and also does not charge a delivery fee for its regular customers. Which step of the consumption chain does this scenario depict? A. The sixth step: how is your product stored/moved around? B. The fourth step: how do consumers become aware of their need? C. The tenth step: how is your product/service paid for? D. The second step: how do consumers nd your o ering?
D
Li, the president of Lavender Inc., believes that when employees are trained, they should work on one particular task till they know how to perform it perfectly. Thus, the employees are usually encouraged to repeatedly perform their designated tasks. Li claims that the more an employee engages in a particular task, the more skilled he or she will become at it. Which of the following statements strengthens Li's belief? A. Employees will feel a sense of job dissatisfaction and will lose their overall enthusiasm for their jobs. B. The work of employees will speed up while compromising their attention to detail. C. This method of training requires a lot of time, e ort, patience, and nances. D. Employees will nd better ways at completing the same task.
D
O ering di erent product features can be done in all of these except: A. A Better Job B. More Jobs C. A Unique Job D. Stable Jobs
D
Proprietary knowledge refers to _____ A. Resources such as people, information, or nancing that are put into a system B. The plan and set of activities implemented by a company C. The sequence of all activities that are performed by a rm D. Information that is not public and that is viewed as the property of the holder
D
The expenses and taxes that are directly related to the wide-ranging operation of a company best de ne the term _____. A. Sunk Costs B. Research and Development Costs C. Incentives and Promotional Costs D. General and Administrative Costs
D
The increased e ciency that results when employees perform a narrow range of tasks over and over again leading them to acquire specialized knowledge that helps them complete the task more e ciently accurately de nes the term _____. A. Competitive Parity B. Minimum E cient Scale C. Task Specialization D. Employee Specialization
D
Trends Inc. has been awarded the best branded clothing company award for three years consecutively. The CEO of the company stated that this was possible due to the company strategically lowering the cost of each unit produced, and successfully maintaining that method in order to e ectively contain nances. While comparing Trends with other similar production companies, it was found out that the company did certainly collect more pro t than the others. The scenario best illustrates the: A. Acquisition Strategy. B. Investment Strategy. C. Pricing Strategy. D. Cost-Management Strategy.
D
Turbine Industries breaks down its manufacturing process into smaller segments that are performed by employees who are trained very well. This also helps the rm to save time because this way the employees do not need to juggle between various tasks. This scenario best illustrates _____. A. Minimum E cient Scale B. Competitive Parity C. Employee Specialization D. Task Specialization
D
What is meant by diseconomies of scale? A. A reduction in costs per unit due to increases in e ciency of production B. The smallest level of output (unit volume) that a plant or rm can produce to minimize its long-run average costs C. The average total cost of production decreases as a result of increasing the number of di erent goods produced D. An increase in marginal cost when output is increased
D
When a company mass-produces the various modules of a product and then allows customers to select which modules will be combined together, it is known as __________. A. Mass Standardization B. Product Standardization C. Product Di erentiation D. Mass Customization
D
Whenever customers of Black Inc., a mobile manufacturer, have a complaint to make about a product not being up to the mark, the company makes it a point to contact the customer or even go to their homes to understand the issue. The company believes that this will help retain customers and create better products. Which step of the consumption chain is this scenario depicting? A. The third step: how do consumers make their nal selections? B. The fth step: how is your product/service delivered? C. The sixth step: how is your product/service paid for? D. The ninth step: what if customers aren't satis ed and need a return or exchange?
D
Which of the following is a primary characteristic of employing automated equipment in a company with high levels of production? A. They help employees to acquire specialized knowledge that helps them complete tasks more e ciently. B. The general and administrative costs would be high for large companies. C. They do not help in spreading out the xed cost of production. D. Large companies can reduce per-unit cost of production.
D
Which of the following statements is true of a company's general and administrative costs (G&A)? A. They are part of a company's production costs. B. They exclude the expenses of operating a company. C. They include Research and Development (R&D) expenses. D. They help a company with high sales volume that creates cost advantage by managing its G&A across more units.
D
DFN Inc. expanded its manufacturing plant to employ more equipment because the management of the company thought this would help them attain more sales. Unfortunately, this a ected the cost of each unit produced because the company invested more nances for better equipment. This also led to a decrease in sales as customers were not willing to buy the product for an increased price. This scenario best illustrates ____ A. Competitive Failure B. Diseconomies of Scale C. Economies of Scale D. Virtuous Circle
Diseconomies of scale
Which of the following terms describes a reduction in costs per unit due to increases in e ciency of production as the number of goods being produced increases? A. Minimum E cient Scale B. Diseconomies of Scale C. Economies of Scale D. Economies of Slope
Economies of scale
proprietary knowledge
Information that is not public and that is viewed as the property of the holder.
Which of the following terms describes when costs per unit decrease with increases in cumulative volume of production? A. Law of Experience B. Law of production Volume C. Minimum E cient Scale D. Economies of Slope
Law of experience
Which company is an example of a company that has tried to achieve economies of scope? A. AT&T B. Intel C. Limited Inc. D. Samsung
Limited Inc.
A reduction in costs per unit due to increases in e ciency of production as the number of goods being produced increases best de nes the term _____. A. Economies of Scope B. Economies of Finance C. Economies of Scale D. Economies of Wealth
economies of scale
minimum efficient scale
The lowest rate of output at which a firm takes full advantage of economies of scale
Companies only gain a cost advantage through preferred access to inputs when those inputs are raw materials that are rare and di cult to imitate. A. True B. False
True
VisionZed Inc., a computer software company, spends a lot of nances on research. It tries to implement the latest technologies available and provides services that are matchless when compared to any of its competitors. At the same time, Xtron Technologies Corp., another computer software company, pays half the price that VisionZed pays on research as it combines the intelligence of di erent software companies and creates its product. Xtron Technologies Corp. is an example of a company that eliminates steps in the _____. A. Supply Chain B. Growth Chain C. Value Chain D. Pricing Chain
Value chain
learning curve
a line that displays the relationship between processing time and the cumulative quantity of a product or service produced
Which of the following is not one of the four primary ways that companies can achieve cost advantage through lower- cost inputs? A. Exercising strong bargaining power over suppliers B. Arranging better access to outputs than other companies have C. Getting inputs from low-cost loca ons D. Cooperating especially well with suppliers
arranging better access to outputs than other companies have
employee specialization
increased efficiency that results when employees perform a narrow range of tasks over and over again, leading them to acquire specialized knowledge that helps them complete the task more efficiently
diseconomies of scale
increases in cost per unit when output increases
_________ is de ned as products that are di erentiated through marketing, via advertisements, promotions, and other marketing activities. A. Brand Image B. Prestige Brands C. Product Prestige D. Product Di erentiation
brand image
task specialization
breaking a large process into smaller tasks that require specialized knowledge
_______________ is a plan or set of activities implemented by a company to o er unique value and generate revenue and make a pro t from operations. A. Minimum E cient Scale B. Business Model C. Cost Advantage Strategy D. Value Chain
business model
Inputs include A. Dividends. B. Capital. C. Services. D. Products.
capital
Purchases that are made by a rm in the course of conduc ng business ac vi es are known as A. Outputs. B. Fixed Costs of Produc on. C. Inputs. D. Rela ve Costs.
inputs
The two major ways companies attempt to find sources of product differentiation:
customer segmentation and consumer chain
Suppliers can be expected to _____ prices when buyers ________ their volume of purchases.
drop; increase
Taurus Inc. usually produces 5,000 handcrafted products in a day. Recently, the demand for handcrafted products drastically increased as one of its products became a popular item for home décor. Due to this increase, the company had to up its production level to 10,000 products per day. This, however, decreased the price of individual products. This scenario best illustrates _____. A. Economies of Wealth B. Economies of Finance C. Economies of Scope D. Economies of Scale
economies of scale
When the Average Total Cost of production decreases as a result of increasing the number of di erent goods produced, it is known as A. Diseconomies of Scale. B. Minimum E cient Scale. C. Economies of Scope. D. Economies of Scale.
economies of scope
Fixed costs of production
expenses that remain constant regardless of the amount of products produced i.e. plant and equipment
A representation of the relationship between cumulative volume and product cost is known as the A. PIMS studies. B. Law of Experience. C. Experience Curve. D. Learning Curve.
experience curve
Companies adopting a cost advantage strategy should focus on cost to the exclusion of everything else. A. True B. False
false
The experience curve does a better job of capturing the e ects of economies of scale than a learning curve does, because it includes only labor costs. A. True B. False
false
The relatively xed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____. A. Fixed Cost of Production B. Fixed Cost of Supply C. Fixed Cost of Demand D. Fixed Cost of Scale
fixed cost of production
Which term describes when some products or services are more convenient to use because there is a large group of other users? A. Mapping the Consumption Chains B. Prestige Brands C. Network E ects D. Mass Customization
network effects
the learning curve is the idea that:
practice makes perfect
Fixed Costs of Production include A. Accounting. B. Plant and Equipment. C. Advertising. D. Research and Development
plant and equipment
experience curve
relationship between cumulative volume and product cost
MediDose Inc., a pharmaceutical company, has been studying and experimenting with a few drugs. After 10 years of conducting and standardizing tests, the company comes up with positive results that would help many patients. These drugs become popular and e ective among millions of patients and enable the company to expand its operations across the globe while spreading out the cost of the studies. Which of the following is the subject of economies of scale in the described scenario? A. Research and Development Expenses B. Advertising Expenses C. General and Administrative Costs D. Production Costs
research and development expenses
A(n) _______________ is a graphic representation of the relationship between cost per unit and scale of production in a given time period. A. Value Chain B. Experience Curve C. Minimum E cient Scale D. Scale Curve
scale curve
Economies of scope
the average total cost of production decreases as a result of increasing the number of different goods produced
Large firms may be at a disadvantage during economic downturns because they have more difficulty spreading fixed costs when demand declines. A. True B. False
true
Scale and experience curves are tools used when making practical strategic decisions about growth and investment strategies. A. True B. False
true
There are two basic ways to create a new business model: 1) eliminating activities or steps in the value chain, or 2) performing different activities all together. A. True B. False
true
The sequence of all activities that are performed by a rm to turn raw materials into the nished product that is sold to the buyer is known as a A. Cost Management Strategy. B. Cost Advantage Strategy. C. Business Model. D. Value Chain
value chain
