Question 1

Which of the following is primarily a value driver?

Accepted Answer

A)   cost of input factors
B)   economies of scope
C)   experience-curve effects
D)   complementsE) None of the above
F) A) and D)

Question 2

Which of the following describes an airline that is most likely stuck in the middle?

Accepted Answer

A)   Red Carpet Airline that offers complimentary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices.
B)   Plush Airline that offers international routes and global coverage, high customer service, high reliability, and high prices.
C)   Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.
D)   Bottom Line Airline that offers no assigned seating, no in-flight amenities, no drinks or meals, no airport lounges, and low prices.E) A) and D)
F) B) and D)

Question 3

Which of the following contributed the most to JCPenny's failed blue ocean strategy?

Accepted Answer

A)   failure to win legal battles against its closest competitors
B)   failure to conduct an accurate pretest in the market
C)   failure to apply the strategy to enough stores at the same time
D)   failure to combine a cost-leadership position with a differentiation positionE) A) and B)
F) A) and C)

Question 4

Body Sync Inc.is a chain of gyms.It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months.Included in the package are two health checkups and a gym kit.These add-ons by themselves are not very valuable,but as a package they can enhance the perceived value of the service offerings.In this case,Body Sync's primary value driver is

Accepted Answer

A)   economies of scale.
B)   learning-curve effects.
C)   availability of complements.
D)   experience-curve effects.E) B) and C)
F) None of the above

Question 5

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) B) and D)
F) C) and D)

Question 6

The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.

Accepted Answer

A)   managerial grid
B)   growth matrix
C)   experience curve
D)   diminishing utility curveE) None of the above
F) B) and C)

Question 7

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 B)

Question 8

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

Accepted Answer

A)   superior customer service.
B)   luxury goods.
C)   economies of scale.
D)   premium pricing.E) A) and B)
F) All of the above

Question 9

Cool Cat Inc.has dominated the high-end refrigerator market by producing a reliable refrigerator with many bonus features that appeal to customers.Recently,a competitor has developed a refrigerator that offers many of the same features as Cool Cat's refrigerator.Which of the following will most likely help Cool Cat to keep its competitive advantage?

Accepted Answer

A)   a reduction of price
B)   the loyalty of its customers
C)   an increase of price
D)   the loyalty of its retail storesE) None of the above
F) B) and D)

Question 10

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 cost in check
D)   the tension between raising prices and keeping a loyal clienteleE) A) and B)
F) B) and C)

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) B) and D)
F) C) and D)

Question 12

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

Accepted Answer

A)   competition switching from non-price attributes to pricing
B)   innovation that allows competitors to emerge with more economical replacements
C)   new entrants with small production scale
D)   suppliers requesting a 2% price increase across the industryE) B) and C)
F) B) and D)

Question 13

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value,it

Accepted Answer

A)   loses its competitive advantage.
B)   gains market share from other firms.
C)   lowers the economic value created.
D)   results in diseconomies of scale.E) None of the above
F) A) and C)

Question 14

How did Marriott use economies of scope to achieve greater economic value than its competitors?

Accepted Answer

A)   Marriott increases in cost per hotel unit as number of customers increases.
B)   Marriott decreases in cost per hotel unit as number of customers increases.
C)   Marriott lowered its cost structure by focusing its production assets on one type of hotel, which increased its menu and thus its differentiated appeal.
D)   Marriott lowered its cost structure by sharing its production assets over a several types of hotels, which increased its menu and thus its differentiated appeal.E) A) and C)
F) C) and D)

Question 15

Wear Crush Inc.is an apparel company known for its affordable clothes that follows a cost-leadership strategy.In this scenario,Wear Crush should ideally compare its strategic position with

Accepted Answer

A)   a company that sells wristwatches at affordable prices.
B)   a luxury apparel company that sells designer clothes.
C)   an apparel company popular among price-conscious customers.
D)   an online company that sells customized pet clothing.E) A) and B)
F) B) and D)

Question 16

As the cumulative output in a firm increases,managers learn how to optimize the production process and improve workers' performance through repetition.This drives down the per-unit cost.Which of the following phenomena is best described here?

Accepted Answer

A)   learning effects
B)   network effects
C)   diseconomies of scale
D)   productivity frontierE) B) and C)
F) None of the above

Question 17

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 B)

Question 18

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

Accepted Answer

A)   differentiator is able to create a significant difference between perceived value and current market prices.
B)   differentiator is able to significantly reduce the value gap.
C)   source of a competitor's differential appeal is tangible rather than intangible.
D)   new product features added raise costs but not the perceived value in the minds of consumers.E) None of the above
F) B) and C)

Question 19

Tangles Costume Jewelry offers slightly lowerquality merchandise than competitors at a much lower price.What strategy is Tangles using?

Accepted Answer

A)   cost-leadership
B)   differentiation
C)   niche marketing
D)   product diversificationE) None of the above
F) B) and C)

Question 20

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

Accepted Answer

A)   diseconomies of scale
B)   economies of scope
C)   time compression diseconomies
D)   economies of flowE) B) and D)
F) B) and C)

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

Tangles Costume Jewelry offers slightly lowerquality merchandise than competitors at a much lower price.What strategy is Tangles using?

Correct Answer
verified

As the cumulative output in a firm increases,managers learn how to optimize the production process and improve workers' performance through repetition.This drives down the per-unit cost.Which of the following phenomena is best described here?

Correct Answer
verified

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

Correct Answer
verified

The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following describes an airline that is most likely stuck in the middle?

Correct Answer
verified

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Correct Answer
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How did Marriott use economies of scope to achieve greater economic value than its competitors?

Correct Answer
verified

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value,it

Correct Answer
verified

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

Correct Answer
verified

Which of the following contributed the most to JCPenny's failed blue ocean strategy?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is primarily a value driver?

Correct Answer
verified

In a focused cost-leadership strategy,a firm

Correct Answer
verified

Wear Crush Inc.is an apparel company known for its affordable clothes that follows a cost-leadership strategy.In this scenario,Wear Crush should ideally compare its strategic position with

Correct Answer
verified

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

Tangles Costume Jewelry offers slightly lowerquality merchandise than competitors at a much lower price.What strategy is Tangles using?

Correct AnswerverifiedShow Answer

As the cumulative output in a firm increases,managers learn how to optimize the production process and improve workers' performance through repetition.This drives down the per-unit cost.Which of the following phenomena is best described here?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following describes an airline that is most likely stuck in the middle?

Correct AnswerverifiedShow Answer

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

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

Correct AnswerverifiedShow Answer

How did Marriott use economies of scope to achieve greater economic value than its competitors?

Correct AnswerverifiedShow Answer

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value,it

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following contributed the most to JCPenny's failed blue ocean strategy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is primarily a value driver?

Correct AnswerverifiedShow Answer

In a focused cost-leadership strategy,a firm

Correct AnswerverifiedShow Answer

Wear Crush Inc.is an apparel company known for its affordable clothes that follows a cost-leadership strategy.In this scenario,Wear Crush should ideally compare its strategic position with

Correct AnswerverifiedShow Answer

Correct Answer
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