Question 1

Which of the following best describes a strategic trade-off?

Accepted Answer

A)   the tension between innovation and keeping manufacturing costs down
B)   the tension between maintaining both high-quality products and service
C)   the tension between value creation and the pressure to keep costs in check
D)   the tension between raising prices and keeping a loyal clienteleE) C) and D)
F) A) and B)

Question 2

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be

Accepted Answer

A)   economies of scale.
B)   learning-curve effects.
C)   experience-curve effects.
D)   availability of complements.E) A) and B)
F) A) and C)

Question 3

What are the key questions managers must answer to formulate an appropriate business-level strategy?

Accepted Answer

Business-level strategy details the goal...

Question 4

A differentiation strategy works best when a

Accepted Answer

A)   firm has tangible resources, its focus of competition shifts to price, and equivalent substitutes are readily available.
B)   firm's focus of competition shifts to price, and when increasing differentiation of product features do not create additional value.
C)   firm's differentiated products are commoditized, and costs of providing uniqueness do not rise above the customer's willingness to pay.
D)   firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.E) C) and D)
F) A) and D)

Question 5

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position?

Accepted Answer

A)   Starfish improves the recipe for its most popular soda without increasing the price.
B)   Starfish introduces a new biodegradable bottle that raises cost and perceived value.
C)   Starfish's customers start to consider soda a commodity.
D)   Starfish's product has not established an acceptable standard of quality.E) B) and C)
F) A) and D)

Question 6

What does it mean for a firm to have an 80 percent learning curve?

Accepted Answer

A)   Every time the cumulative output increases by 80 percent, the cost per unit will decline by 20 percent.
B)   Every time the cumulative output is doubled, the cost per unit will decline by 80 percent.
C)   Every time the cumulative output goes up by 20 percent, the cost per unit will decline by 80 percent.
D)   Every time the cumulative output is doubled, the cost per unit will decline by 20 percent.E) A) and B)
F) All of the above

Question 7

Which of the following examples uses a focused differentiation strategy?

Accepted Answer

A)   a tennis pro shop that sells low-quality racquets priced at 150 dollars per racquet
B)   a coffee shop that offers mediocre lattes at a price of five dollars for a small latte
C)   a hotel chain that offers high-quality furnishings and service with room rates of under 75 dollars per night
D)   a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottleE) None of the above
F) B) and D)

Question 8

When a firm operates at the minimum efficient scale, there is still opportunity for it to further reduce its cost per unit through economies of scale.

Accepted Answer

A) True 
 B)False

Question 9

Differentiation and cost leadership strategies are only effective in manufacturing industries.

Accepted Answer

A) True 
 B)False

Question 10

Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers?

Accepted Answer

A)   Gilroy's leading competitor develops a new low-sodium product.
B)   Gilroy's most reliable production worker takes a job in another industry.
C)   A major winter storm shuts down Gilroy's production for several days.
D)   A wheat shortage raises input costs across the industry.E) A) and C)
F) A) and D)

Question 11

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?

Accepted Answer

A)   reputation for innovation
B)   reputation for quality
C)   superior customer experience
D)   observable product featuresE) A) and D)
F) B) and C)

Question 12

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called

Accepted Answer

A)   cost driving.
B)   cost innovation.
C)   value driving.
D)   value innovation.E) A) and C)
F) C) and D)

Question 13

When a firm combines experience based learning and process innovation, the firm

Accepted Answer

A)   jumps to a steeper learning curve.
B)   experiences an increase in per-unit cost.
C)   loses its competitive advantage.
D)   moves down the existing learning curve.E) None of the above
F) A) and B)

Question 14

What is required for a blue ocean strategy to succeed?

Accepted Answer

For a blue ocean strategy to succeed, ma...

Question 15

Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly-qualified team members, Thomas is unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a competitive advantage?

Accepted Answer

A)   Offer similar services as competitors but raise prices to increase profits.
B)   Lower prices but continue employing high-paid expert gardeners.
C)   Narrow the scope of competition and focus on unique features such as the use of organic materials.
D)   Maintain prices but replace all the expert employees with less-skilled workers to control costs.E) A) and C)
F) None of the above

Question 16

The goal of the differentiator is to have a smaller value gap than competitors.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)   move up a given experience curve.
B)   move down a given learning curve.
C)   jump to a less steeper learning curve.
D)   jump to a flatter experience curve.E) C) and D)
F) All of the above

Question 18

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

Accepted Answer

A)   the exit barriers within the industry in which the firm operates
B)   the number of companies operating in the industry in which the firm operates
C)   the intensity of rivalry among existing companies in the firm's chosen industry
D)   the value and the cost position of the firm relative to its competitorsE) None of the above
F) A) and B)

Question 19

When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?

Accepted Answer

A)   minimum efficient scale
B)   diseconomies of scale
C)   experience curve effect
D)   learning-curve effectE) A) and B)
F) A) and C)

Question 20

A cost leader is the firm most likely to survive a price war.

Accepted Answer

A) True 
 B)False

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

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called

Correct Answer
verified

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be

Correct Answer
verified

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

Correct Answer
verified

What are the key questions managers must answer to formulate an appropriate business-level strategy?

Correct Answer
verified
Business-level strategy details the goal...
View Answer

Differentiation and cost leadership strategies are only effective in manufacturing industries.

Correct Answer
verified

The goal of the differentiator is to have a smaller value gap than competitors.

Correct Answer
verified

Correct Answer
verified

When a firm combines experience based learning and process innovation, the firm

Correct Answer
verified

A differentiation strategy works best when a

Correct Answer
verified

Which of the following examples uses a focused differentiation strategy?

Correct Answer
verified

Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers?

Correct Answer
verified

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

Correct Answer
verified

A cost leader is the firm most likely to survive a price war.

Correct Answer
verified

When a firm operates at the minimum efficient scale, there is still opportunity for it to further reduce its cost per unit through economies of scale.

Correct Answer
verified

Which of the following best describes a strategic trade-off?

Correct Answer
verified

What does it mean for a firm to have an 80 percent learning curve?

Correct Answer
verified

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?

Correct Answer
verified

Correct Answer
verified

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position?

Correct Answer
verified

What is required for a blue ocean strategy to succeed?

Correct Answer
verified
For a blue ocean strategy to succeed, ma...
View Answer

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

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called

Correct AnswerverifiedShow Answer

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What are the key questions managers must answer to formulate an appropriate business-level strategy?

Correct AnswerverifiedBusiness-level strategy details the goal...View AnswerShow Answer

Differentiation and cost leadership strategies are only effective in manufacturing industries.

Correct AnswerverifiedShow Answer

The goal of the differentiator is to have a smaller value gap than competitors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a firm combines experience based learning and process innovation, the firm

Correct AnswerverifiedShow Answer

A differentiation strategy works best when a

Correct AnswerverifiedShow Answer

Which of the following examples uses a focused differentiation strategy?

Correct AnswerverifiedShow Answer

Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers?

Correct AnswerverifiedShow Answer

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

Correct AnswerverifiedShow Answer

A cost leader is the firm most likely to survive a price war.

Correct AnswerverifiedShow Answer

When a firm operates at the minimum efficient scale, there is still opportunity for it to further reduce its cost per unit through economies of scale.

Correct AnswerverifiedShow Answer

Which of the following best describes a strategic trade-off?

Correct AnswerverifiedShow Answer

What does it mean for a firm to have an 80 percent learning curve?

Correct AnswerverifiedShow Answer

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position?

Correct AnswerverifiedShow Answer

What is required for a blue ocean strategy to succeed?

Correct AnswerverifiedFor a blue ocean strategy to succeed, ma...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Business-level strategy details the goal...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
For a blue ocean strategy to succeed, ma...
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