Quiz 10

Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Home Smart adopted in this scenario?

Differentiation

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?

Innovation that allows competitors to emerge with more economical replacements

Which of the following statements is true of learning curves?

Learning curves can be observed in manufacturing processes and professional services.

The productivity frontier provides a theoretical reflection of the possible best practices at any given time. Why is this an important tool for managers?

Strategic positions are not fixed, and firms have to refine their positions over time.

Why are differentiation and cost-leadership strategies referred to as generic business strategies?

Why are differentiation and cost-leadership strategies referred to as generic business strategies?

A firm experiences _____ when there are increases in cost per unit as output increases.

diseconomies of scale

A cost-leader is protected from the threat of new entrants primarily due to its:

economies of scale.

Combining economies of learning with the existing production technology allows a firm to:

move down a given learning curve.

The productivity frontier represents a(n):

set of best-in-class strategic positions the firm can take relating to value creation and low cost at a given point in time.

The productivity frontier function is concave, and it captures the:

trade-off between value creation and production cost.