6.3 & 6.4

Which of the following are input factors?

• capital

• information technology services

• labor

• raw materials

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of Blank______.

economies of scale

Why does the learning curve go down when productivity is considered?

As workers repeatedly engage in an activity, they become more efficient, driving down costs.

If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from

an experience-curve effect based on process innovation

True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.

True

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?

Differentiation provides protection against an increase in input prices.

An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.

input

Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet potato-chip maker. Based on just this information, which of the following is the greatest advantage Patti's has over Calpurnia's?

economies of scale

A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?

the ability to charge a premium price

less intense competition from imitators

In terms of productivity, which of the following is true of learning curves?

they go down

In addition to having the lowest cost, a low-cost leader is likely to have

a large market share

The concept of a(n) ______ attempts to combine both learning effects and process improvements.

experience curve

Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?

• Threat of entry

• Power of suppliers

• Power of buyers

A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.

differentiation

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.

cost leadership

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with

cutting costs and increasing value at the same time

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?

less intense competition from imitators

• the ability to charge a premium price