Question 1

In a successful _____, the trade-offs between differentiation and low cost are reconciled.

Accepted Answer

A)   integration strategy
B)   focused differentiation strategy
C)   liquidation strategy
D)   divestment strategyE) C) and D)
F) B) and D)

Question 2

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

Accepted Answer

A)   While there are no diseconomies to learning, there are diseconomies to scale.
B)   Economies of scale occur over time, whereas learning effects are captured at one point in time.
C)   Firms experience economies of scale when output increases, and learning effects when output decreases.
D)   Economies of scale reduce cost per unit, learning effects increase cost per unit.E) A) and B)
F) B) and D)

Question 3

When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit.When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7.However, manufacturing beyond 4,000 units will raise the average cost per unit to $9.Which of the following is the firm's minimum efficient scale?

Accepted Answer

A)   2,000-3,000 units
B)   3,000-4,000 units
C)   Below 2,000 units
D)   Above 4,000 unitsE) B) and C)
F) A) and D)

Question 4

When a firm is successful at pursuing an integration strategy, _____.

Accepted Answer

A)   investments in differentiation are complements
B)   value and cost exhibit a positive correlation
C)   low cost acts as a substitute
D)   investments in process and product technologies are substitutesE) A) and D)
F) All of the above

Question 5

DFS Electronics Inc.ensures that all its products are highly durable and reliable by using techniques like zero-defect and lean manufacturing systems.These efforts not only add to the products' differential appeal, but also help the company save costs during production and avoid expenses due to after-sales services.Thus, the common value and cost driver responsible for DFS Electronics' strategic position as an integrator is the _____.

Accepted Answer

A)   network effect
B)   availability of complements
C)   quality
D)   diseconomies of scaleE) C) and D)
F) B) and D)

Question 6

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $60.Once the cumulative output doubled, the cost per unit reduced to $54.All other factors remaining constant, the firm has been able to achieve a(n) :

Accepted Answer

A)   80 percent learning curve.
B)   90 percent learning curve.
C)   60 percent learning curve.
D)   54 percent learning curve.E) B) and C)
F) C) and D)

Question 7

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?

Accepted Answer

A)   Cost-leadership
B)   Differentiation
C)   Market penetration
D)   Product diversificationE) A) and B)
F) All of the above

Question 8

Both Myoco Electronics Inc.and Electra Series Inc.have achieved cost parity in the television market.To gain and sustain a competitive advantage against Electra Series, Myoco Electronics should:

Accepted Answer

A)   achieve differentiation parity with Electra Series.
B)   keep its value gap lower than that of Electra Series.
C)   create greater perceived economic value than Electra Series.
D)   increase its cost of production to more than that of Electra Series.E) A) and B)
F) All of the above

Question 9

Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as its:

Accepted Answer

A)   learning curve is not steeper than that of its competitors.
B)   per-unit costs are higher than that of its competitors.
C)   economic value creation exceeds that of its competitors.
D)   value gap is lower than that of its competitors.E) A) and C)
F) C) and D)

Question 10

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

Accepted Answer

A)   It suggests ways to lower the value gap created.
B)   Strategic positions are not fixed, and firms have to refine their positions over time.
C)   Firms strive to stay below the productivity frontier.
D)   It allows managers to maintain a less steeper learning curve as compared to their competitors.E) B) and C)
F) A) and B)

Question 11

_____ is best described as the process of manufacturing a large variety of tailor-made products or services at a relatively low unit cost.

Accepted Answer

A)   Just-in-time manufacturing
B)   Mass customization
C)   Unit-cost production
D)   Product diversificationE) B) and D)
F) B) and C)

Question 12

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will:

Accepted Answer

A)   focus its research and development on product technologies to add uniqueness.
B)   concentrate on leveraging its economies of scale through process technologies.
C)   build an organization structure that relies on strict budget controls.
D)   create a lower economic value as compared to its competitors.E) A) and B)
F) C) and D)

Question 13

In a focused cost-leadership strategy, a firm:

Accepted Answer

A)   caters to the segment of the market that is least cost-sensitive.
B)   provides high-priced products for many different segments of the mass market.
C)   delivers low-cost products and services to a specific, narrow part of the market.
D)   focuses on reducing the economic value created to drive down costs.E) C) and D)
F) A) and C)

Question 14

Rosa Apparels Inc.outsources its production to contract manufacturers located in underdeveloped nations where unskilled labor is available in plenty for very low wages.This has helped the apparel brand become a price leader in the industry.Which of the following is the key driver behind Rosa Apparel's strategic position?

Accepted Answer

A)   Network effects
B)   Superior customer service
C)   Availability of complements
D)   Low-cost input factorsE) None of the above
F) All of the above

Question 15

Why are differentiation and cost-leadership strategies called generic strategies?

Accepted Answer

Differentiation and cost-leadership stra...

Question 16

How are the benefits different for cost leadership versus differentiation when analyzing the threats of substitutes in an industry?

Accepted Answer

Should substitutes emerge, a low-cost le...

Question 17

Explain economies of scope.

Accepted Answer

The concept economies of scope describes...

Question 18

A firm's business strategy will lead to a competitive advantage if it allows the firm to:

Accepted Answer

A)   execute the same activities performed by the rivals in a similar manner.
B)   reduce the value gap.
C)   perform different activities than its rivals.
D)   position itself below the productivity frontier.E) None of the above
F) A) and D)

Question 19

A company that uses a differentiation strategy can achieve a competitive advantage as long as its:

Accepted Answer

A)   economic value created is greater than that of its competitors.
B)   value gap is lower than that of its competitors.
C)   strategic position is below the productivity frontier.
D)   products and services create a lower consumer surplus than that of its competitors.E) All of the above
F) A) and B)

Question 20

_____ is best described as the 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.

Accepted Answer

A)   Minimum efficient scale
B)   Break-even output
C)   Maximum output capacity
D)   Optimum sustainable yieldE) All of the above
F) A) and B)

Exam 6: Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

A company that uses a differentiation strategy can achieve a competitive advantage as long as its:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Why are differentiation and cost-leadership strategies called generic strategies?

Correct Answer
verified
Differentiation and cost-leadership stra...
View Answer

Both Myoco Electronics Inc.and Electra Series Inc.have achieved cost parity in the television market.To gain and sustain a competitive advantage against Electra Series, Myoco Electronics should:

Correct Answer
verified

When a firm is successful at pursuing an integration strategy, _____.

Correct Answer
verified

Correct Answer
verified

Explain economies of scope.

Correct Answer
verified
The concept economies of scope describes...
View Answer

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

Correct Answer
verified

A firm's business strategy will lead to a competitive advantage if it allows the firm to:

Correct Answer
verified

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $60.Once the cumulative output doubled, the cost per unit reduced to $54.All other factors remaining constant, the firm has been able to achieve a(n) :

Correct Answer
verified

Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as its:

Correct Answer
verified

In a focused cost-leadership strategy, a firm:

Correct Answer
verified

_____ is best described as the 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.

Correct Answer
verified

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will:

Correct Answer
verified

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

Correct Answer
verified

In a successful _____, the trade-offs between differentiation and low cost are reconciled.

Correct Answer
verified

Correct Answer
verified

How are the benefits different for cost leadership versus differentiation when analyzing the threats of substitutes in an industry?

Correct Answer
verified
Should substitutes emerge, a low-cost le...
View Answer

_____ is best described as the process of manufacturing a large variety of tailor-made products or services at a relatively low unit cost.

Correct Answer
verified

Exam 6: Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

A company that uses a differentiation strategy can achieve a competitive advantage as long as its:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why are differentiation and cost-leadership strategies called generic strategies?

Correct AnswerverifiedDifferentiation and cost-leadership stra...View AnswerShow Answer

Both Myoco Electronics Inc.and Electra Series Inc.have achieved cost parity in the television market.To gain and sustain a competitive advantage against Electra Series, Myoco Electronics should:

Correct AnswerverifiedShow Answer

When a firm is successful at pursuing an integration strategy, _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain economies of scope.

Correct AnswerverifiedThe concept economies of scope describes...View AnswerShow Answer

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

Correct AnswerverifiedShow Answer

A firm's business strategy will lead to a competitive advantage if it allows the firm to:

Correct AnswerverifiedShow Answer

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $60.Once the cumulative output doubled, the cost per unit reduced to $54.All other factors remaining constant, the firm has been able to achieve a(n) :

Correct AnswerverifiedShow Answer

Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as its:

Correct AnswerverifiedShow Answer

In a focused cost-leadership strategy, a firm:

Correct AnswerverifiedShow Answer

_____ is best described as the 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.

Correct AnswerverifiedShow Answer

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a successful _____, the trade-offs between differentiation and low cost are reconciled.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How are the benefits different for cost leadership versus differentiation when analyzing the threats of substitutes in an industry?

Correct AnswerverifiedShould substitutes emerge, a low-cost le...View AnswerShow Answer

_____ is best described as the process of manufacturing a large variety of tailor-made products or services at a relatively low unit cost.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Differentiation and cost-leadership stra...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The concept economies of scope describes...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Should substitutes emerge, a low-cost le...
View Answer

Correct Answer
verified