Strategic Management: Differentiation, Cost Leadership, and Diversification Concepts

Product differentiation strategy depends on what?

Rarity

Challenge of pursuing cost leadership and differentiation simultaneously?

Difficulty creating an organization that incentivizes both

A firm's socially complex relationship with customers is called what?

Reputation

Why may learning curves not be costly to imitate?

Competitors can hire experienced employees from rivals

Economies of scale are always costly to imitate.

False

Cost-leadership firms typically have what type of cost-control systems?

Tight cost-control systems

To support differentiation, a firm should do what?

Include broad decision-making authority

When costs rise as production increases, this is called what?

Diseconomies of scale

One advantage of differentiation is what?

Competitors are less likely to compete on price

Are AirAsiaX's cost-saving policy choices difficult to imitate?

False

Operating in multiple industries is called what strategy?

Corporate diversification strategy

Cost leadership focuses on increasing perceived value.

False

Which cannot serve as a base of differentiation?

None (all can serve as a base)

Differentiation reduces the threat of what?

Rivalry

When average cost increases with production volume, this is called what?

Diseconomies of scale

Which is least likely to be a rare source of cost advantage?

Policy choices

Corporate strategy is about gaining advantage across multiple businesses.

True

Transaction cost logic considers which costs?

Both production and transaction costs

Transaction costs increase when exchanges involve what?

Specific assets

Under high uncertainty, should firms vertically integrate?

No, contracting is preferred

Capabilities perspective says integrate when transaction costs are high.

False

When value increases across multiple businesses, what exists?

Economies of scope

Which economy of scope is most costly to imitate?

Core competencies

The M-form structure is rarely used.

False

Why do firms diversify?

To gain power, grow, access weak capital markets, and use resources in new markets