CBA 469 - Chapter 6 Notes - Business and Corporate Difference
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CBA 469 - JSU - Chapter 6 Notes - Business and Corporate Difference
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drive down costs.
Scale and scope are two main ways to:
It suffered a competitive disadvantage.
As JetBlue grew, which of the following occurred during the years following 2007?
It gained a sustainable competitive advantage.
It began to share its blue ocean strategy with other airlines.
It focused only on highly profitable city routes.
It suffered a competitive disadvantage.
How should we compete?
Business-level strategy addresses which overarching question?
Multiple choice question.
What should we sell?
What should we produce?
How should we treat our employees?
How should we compete?
cost and value
Which two of the following variables can managers primarily manipulate in order to answer the question, "How should we compete?"
Multiple select question.
price
style
size
cost
value
value creation and cost
A firm's strategic position is determined by the relationship of which two variables?
Multiple choice question.
number of different products in the firm's portfolio and countries in which they are sold
number of products sold and price of the product
value creation and cost
supply and demand
cost-leadership
differentiation
Which of the following are considered the two generic business-level strategies?
Multiple select question.
monopolistic competition
cost-leadership
value gap
oligopoly
differentiation
reconciling the trade-offs between cutting costs and providing superior service
The most significant challenge JetBlue faced in implementing its business strategy was Blank______.
Multiple choice question.
keeping up with new technological developments
overwhelming consumer demand
reconciling the trade-offs between cutting costs and providing superior service
justifying its higher-than-average prices to budget-conscious consumers
scope of competition
The Blank______ determines whether to pursue a specific narrow part of the market or to go after the broader market.
Multiple choice question.
range of differentiation
likely combination of generics
scope of competition
fundamental business orientation
business-level strategy
A company's goal-directed plans regarding how to compete for advantage is known as the firm's Blank______.
Multiple choice question.
blue ocean strategy
sustainable competitive advantage
business-level strategy
industry effects
add unique features that will increase the perceived value of a product
By using a differentiation strategy, a firm aims to Blank______.
Multiple choice question.
pursue a broad segment of customers
minimize its opportunity cost
add unique features that will increase the perceived value of a product
provide a product that is similar to successful products already on the market
the economic value created
The perceived value that a company creates for consumers less the company's costs to create the value equals Blank______.
Multiple choice question.
the economic value created
industry attractiveness
a differentiation strategy
a strategic trade-off
(V - C)A > (V - C)B
Which of the following accurately describes the relationship between value and cost that would suggest that firm A has created a competitive advantage over firm B?
Multiple choice question.
(V - C)A = (V - C)B
(V - C)A > (V - C)B
(V - C)A < (V - C)B
(V - C)A > (V - C)C
strategic position
A firm's strategic profile based on value creation and cost is called its Blank______.
Multiple choice question.
strategic control
strategic alliance
strategic trade-offs
strategic position
cost
A firm that pursues a differentiation strategy will often find that the added expense of offering new or unique product features offsets the increase in perceived value, and profit margins begin to erode. This underscores the importance of _________ control for firms pursuing a differentiation strategy.
differentiation
A Blank______ strategy aims to create higher value for customers by offering products with unique features but a similar level of costs to those of competing products.
Multiple choice question.
cost-leadership
differentiation
focused trade-off
competitive industry
scope
A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an economy of _________, reducing overall production costs by finding multiple uses for its components and facilities.
narrower
In a focused differentiation strategy, the competitive scope is Blank______ than in a traditional differentiation strategy.
Multiple choice question.
narrower
broader
less cost-focused
more value perceived
improve the firm's strategic position
Positive adjustments in product features, customer service, and complements may enable managers to Blank______.
Multiple choice question.
improve the firm's strategic position
attract new employees
weaken the firm's strategic position
make themselves look good
differentiation
A Blank______ strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay.
Multiple choice question.
monopolistic
premium market
cost-leadership
differentiation
the increase in perceived value exceeds the corresponding cost increase
Different value drivers contribute to competitive advantage only if Blank______.
Multiple choice question.
customer service prices exceeds the cost of product features
the increase in perceived value exceeds the corresponding cost increase
the company also offers product customization
premium pricing is used
ensuring that its economic value exceeds that of its competitors
When pursuing a differentiation strategy, a firm can achieve a competitive advantage by Blank______.
Multiple choice question.
equipping customers with generic and lower priced products
increasing perceived value regardless of cost increases
making sure the firm's costs are the lowest
ensuring that its economic value exceeds that of its competitors
The firm neglected to control costs.
Baby Buggy Baby sells high-end baby strollers. In an attempt to maintain its competitive advantage, the firm began adding additional features to its strollers. Customers liked these features and sales increased, but the company's profit margins shrank. Which of the following is the likely reason for this?
Multiple choice question.
The firm focused on supply rather than demand.
The firm neglected its competition.
The firm neglected to control costs.
The firm didn't differentiate its products enough from competing products.
R&D
Which capability is required to create superior product features?
Multiple choice question.
marketing
R&D
sales
accounting
scope
Economies of Blank______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.
Multiple choice question.
integration
regulation
scale
scope
offering a "no questions asked" return policy
maintaining a domestic call center that is open 24 hours per day
Which of the following are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?
Multiple select question.
offering a "no questions asked" return policy
offering an improved version of a product at the same price
maintaining a domestic call center that is open 24 hours per day
by utilizing set scripts for customer service representatives to use with all customers
product features and customer service
Two important features that managers can adjust in an effort to improve the firm's strategic position are Blank______.
Multiple choice question.
investment value and planned emergence
customer service and investment value
product features and customer service
planned emergence and product features
A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm.
Which of the following scenarios would result in strengthening a firm's strategic position?
Multiple choice question.
A firm invests in a range of new product features that result in an equal increase in costs and value creation.
A firm invests a significant amount of money into a new customer service call center, resulting in a minimal increase in perceived value.
A firm releases a new complementary product that decreases the perceived value of the original product.
A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm.
complements
A tablet manufacturer that includes a free stylus with every purchase is using Blank______ to enhance users' experiences and increase the perceived value of its tablets.
Multiple choice question.
customer service
product features
complements
differentiation
reducing costs below those of competitors while maintaining a similar value
A cost leader can achieve a competitive advantage by Blank______.
Multiple choice question.
choosing a differentiation strategy
focusing on reducing cost without considering the effect on value
allowing people to customize their products
ignoring diseconomies of scale
reducing costs below those of competitors while maintaining a similar value
charge premium pricing
Unique features and attributes that differentiate a product from competitors' offerings allow the firm to Blank______.
Multiple choice question.
charge only as much as the competition charges for its product
charge premium pricing
reduce the cost of raw materials
hire employees away from competitor
input
An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of Blank______ factors.
Multiple choice question.
experience-curve
learning-curve
scaling
input
customer service
Which value driver would be the focus of a company that sells products that are similar to competing products and that provides a 60-day guarantee with no questions asked?
Multiple choice question.
customer service
profits
product features
complements
economies of scale
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?
Multiple choice question.
complements
customer service
product features
economies of scale
customer service
product features
complements
What are the three most important value drivers that managers can use to create a competitive advantage?
Multiple select question.
availability
customer service
product features
cost savings
complements
stay the same
Economies of scale present an opportunity to increase profits because as the number of units within the relevant range increases, fixed costs Blank______.
Multiple choice question.
increase only slightly
decrease dramatically
vary only depending on the number of units produced
stay the same
an increase in demand from the market
Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods?
Multiple choice question.
an increase in demand from the market
several new competitors entering the market
an increase in the cost of raw materials
a decline in consumer demand
True
True or False:
A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.
harder
The cube-square rule makes it Blank______ for smaller stores to compete with larger retailers.
Multiple choice question.
harder
useless
just as difficult
easier
capital
information technology services
raw materials
labor
Which of the following are input factors?
Multiple select question.
capital
information technology services
distribution
raw materials
labor
marketing and sales
minimum efficient scale
The Blank______ is the range of output needed to minimize the cost per unit as much as possible.
Multiple choice question.
minimum efficient scale
economies of scale
diseconomies of scale
cube square rule
economies of scale
A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of Blank______.
Multiple choice question.
economies of scale
diseconomies of scale
competitive parity
complements
The amount of fixed costs allocated to each unit of output decreases as output increases.
What is the relationship between fixed costs and economies of scale?
Multiple choice question.
Larger output results in lower labor costs.
The amount of fixed costs allocated to each unit of output decreases as output increases.
Larger outputs result in a maximum efficient scale.
Larger output illustrates the benefits of a differentiation strategy.
They go down
In terms of productivity, which of the following is true of learning curves?
Multiple choice question.
They remain level.
They are volatile.
They go up.
They go down.
manufacturing robots
enterprise resource planning software
Larger output allows firms to invest in more specialized systems such as which of the following?
Multiple select question.
manufacturing robots
big box retail stores
a general accountant
enterprise resource planning software
True
True or False:
Tesla's high stock market valuation is partly justified by the company's learning curve.
cube square
According to the Blank______ rule, increasing the surface area (size) of a storage unit or retail facility results in a disproportionate increase in volume (space).
Multiple choice question.
maximum effective
cube square
minimum efficient
superstore
an experience-curve effect based on process innovation
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 Blank______.
Multiple choice question.
creative destruction
value driver advantages based on product features
an experience-curve effect based on process innovation
a learning curve effect based on output differential
bring down
The minimum efficient scale indicates the level of output needed to Blank______ the cost per unit as much as possible.
Multiple choice question.
keep steady
inflate
bring down
increase
Differentiation provides protection against an increase in input prices.
What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?
Multiple choice question.
Differentiation results in the erosion of margins.
Differentiation provides protection against an increase in input prices.
Differentiation results in costs that increase above acceptable thresholds.
Differentiation provides protection against substitute products by lowering prices.
decreases in cost per unit as output increases
Economies of scale are Blank______.
Multiple choice question.
decreases in economic value due to competitive parity
increases in cost-leadership business level strategy
increases in minimum efficiencies of scale
decreases in cost per unit as output increases
differentiation
A(n) Blank______ strategy attempts to increase the perceived value of a product while controlling costs.
Multiple choice question.
differentiation
cost-leadership
competitive implementation
integrated balanced approach
As workers repeatedly engage in an activity, they become more efficient, driving down costs.
Why does the learning curve go down when productivity is considered?
Multiple choice question.
As workers repeatedly engage in an activity, they become more efficient, driving down costs.
The challenge of learning is an uphill battle, leading to decreases in worker morale.
Learning cuts into the amount of time workers have, resulting in decreased productivity.
A large number of people can learn at the same time, leading to economies of scale.
a large market share
In addition to having the lowest cost, a low-cost leader is likely to have Blank______.
Multiple choice question.
a small but loyal customer base
unique product offerings
high overhead
a large market share
per-unit cost drops 20% whenever output doubles
If Tesla has an 80% learning curve, Blank______.
Multiple choice question.
company efficiency has risen by 80%
per-unit cost drops 20% whenever output doubles
20% of workers will never fully learn their jobs
workers need to spend 80% of their time learning
replacement by innovative substitutes
competitors adopting similar business strategies
value falling below the acceptable threshold
Which of the following are significant threats to a firm pursuing a cost-leadership strategy?
Multiple select question.
replacement by innovative substitutes
suppliers increasing input prices
competitors adopting similar business strategies
value falling below the acceptable threshold
experience curve
The concept of a(n) Blank______ attempts to combine both learning effects and process improvements.
Multiple choice question.
minimum efficient scale
technological innovation
strategic implementation
experience curve
red
Products in the affordable "business-casual" clothing market have largely become commoditized, and most retailers have begun to compete mainly on price rather than product features. In this environment, it is impossible for one retailer to gain market share without another losing it. This is an example of a Blank______ ocean.
Multiple choice question.
green
black
red
blue
Power of buyers
Power of suppliers
Threat of entry
Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?
Multiple select question.
Power of buyers
Power of suppliers
Threat of entry
Threat of substitutes
value innovation
Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as Blank______.
Multiple choice question.
value innovation
economies of scope
asset attainment
market definition
the ability to charge a premium price
less intense competition from imitators
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?
Multiple select question.
an increased exposure to the threat of price wars
the ability to charge a premium price
less intense competition from imitators
reduced per unit costs
cutting costs and increasing value at the same time
A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with Blank______.
Multiple choice question.
cutting costs and increasing value at the same time
locating products that satisfy customer needs
communicating the plan to lower-level employees
maintaining high quality customer service
cost-leadership
A Blank______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.
Multiple choice question.
proposition
differentiation
cost-leadership
minimally efficient
To achieve strategic positioning, firms must make important trade-offs.
What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?
Multiple choice question.
To achieve strategic positioning, firms must make important trade-offs.
They must work within existing areas of competition rather than trying to open new ones.
A business strategy will only work if it already has superior performance.
Although understanding their firm is crucial, understanding the industry is optional.
the focus of competition shifts from price to non-price attributes
A company with a cost-leadership strategy faces significant difficulties when Blank______.
Multiple choice question.
suppliers agree to charge less for their supplies
no valuable substitutes exist
the focus of competition shifts from non-price to price attributes
the focus of competition shifts from price to non-price attributes
differentiation and low cost
A successful blue ocean strategy requires strategists to reconcile the trade-offs between Blank______.
Multiple choice question.
private and public investment
differentiation and low cost
profit margins and sales volume
number of employees and high wages
value innovation
A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in Blank______.
Multiple choice question.
value innovation
economies of scale
a red ocean strategy
cost leadership
because they end up being "stuck in the middle," unable to increase value and lower costs at the same time
Why do many firms fail to successfully implement a blue ocean strategy?
Multiple choice question.
because they merge with international competitors for value creation
because they become involved in situations involving ethical dilemmas
because too many other companies already try to implement a blue ocean strategy, making it hard to compete that way
because they end up being "stuck in the middle," unable to increase value and lower costs at the same time
False
Formulating a business strategy is a relatively easy task because only a few strategic options are available.
True false question.
True
False
competitors adopting similar business strategies
value falling below the acceptable threshold
replacement by innovative substitutes
Which of the following are significant threats to a firm pursuing a cost-leadership strategy?
Multiple select question.
competitors adopting similar business strategies
value falling below the acceptable threshold
suppliers increasing input prices
replacement by innovative substitutes
customer service
The case illustrates that Toyota overall maintains a differentiated position in the market and continues to be successful across the globe. Which of the following business levers is highlighted in this effort to sustain a competitive advantage?
Multiple Choice
complements
economies of scale
learning curve
product features
customer service
renewed dedication to improve their learning curve
Toyota has undergone difficult times in recent years, as explained in the case. What attribute does Toyota seize as a way to move forward?
Multiple Choice
move toward a more focused scope of competition
renewed dedication to improve their learning curve
willingness to decrease value if needed to improve costs
refocusing on their core value creation tools
change from differentiation to a cost-focused strategy
OXO ergonomic kitchen utensils designed with soft black rubber grips
As noted in the case, a firm can adjust its value drivers to improve its strategic position. Which of the following examples highlights a differentiation strategy driven by product features?
Multiple Choice
Toyota’s focus on listening to its customers
Zappos’ free shipping to its customers for returns
OXO ergonomic kitchen utensils designed with soft black rubber grips
Toyota’s renewed sense of transparency
Google’s Pixel phone combined with discounted high-speed wireless services
to drive up market share
Differentiation business strategies are often associated with premium prices. There are, however, reasons why a firm would NOT want to charge higher prices than the competition. Which of the following is the best example of why a firm would want to keep prices in line with competitors?
Multiple Choice
to leverage complements
to increase profit margins per item
if the industry is in a high-growth stage
to invest in product R&D
to drive up market share
Chevy - Cost Leadership
Caddi: Differentitation
BIC: Focused Cost Leadership
Mont Blanc: Focused Differentiation
Match each brand to its correct business-level strategy.
Focused Cost Leadership
Differentiation
Focused Differentiation
Cost Leadership
Match each of the options above to the items below.
Chevy
No answer 1 2 3 4
Cadillac
No answer 1 2 3 4
BIC
No answer 1 2 3 4
Mont Blanc
broad cost leadership
Southwest and Delta both compete in the airline industry, but they follow different business strategies. Delta’s transportation infrastructure is based upon a high-value hub-and-spoke system and offers upscale services to high mileage flyers. Southwest Airlines uses a point-to-point basic system to offer affordable travel for nationwide air transport. What generic business strategy is Southwest using?
Multiple Choice
broad cost leadership
differentiation
strategic positioning
focused cost leadership
economies of scope
value the firm creates with its product or service
A strategic position is the firm's profile based on value creation and cost. Effective managers will create a large gap between the ________Blank and the cost required to produce it.
Multiple Choice
broad and focused market segments
integration strategy
value the firm creates with its product or service
overall market share size
scope and scale of the business
focused differentiation
The four generic business strategies are generated by comparing the strategic position with the scope of competition. Tesla, an electric car manufacturer, is presented in the text as fitting into which of these categories?
Multiple Choice
focused differentiation
differentiation
focused cost leadership
integration
cost leadership within electric vehicles
focused differentiation
Timex and Rolex both compete in the wristwatch market, but they follow different business strategies. Rolex creates a high-quality timepiece with unique features that last a lifetime. Timex efficiently produces a watch of acceptable quality. What generic business strategy is Rolex using?
Multiple Choice
integration
strategic positioning
economies of scope
focused cost leadership
focused differentiation
functional aspects.
Firms focusing on operating a cost-leadership strategy are most likely to develop their product or service to emphasize the
Multiple Choice
emotional aspects.
presentational aspects.
social aspects.
promotional aspects.
functional aspects.
an engraving service for pen owners who may wish to will their pens to loved ones
Mont Blanc uses a differentiation strategy that focuses on the social and emotional aspects of their product to appeal to a specific consumer segment. Which of the following initiatives would most be in keeping with their strategy?
Multiple Choice
an agreement with OfficeMax to more prominently show Mont Blanc pens in the writing instrument section of their stores
an agreement with online providers to offer discounted pens
an increase in the service warranty from 1 year to 2 years
the release of a new pen that uses a smoother roller ball effect
an engraving service for pen owners who may wish to will their pens to loved ones
Bic is a large publicly traded company with significant financial resources.
Each of the following would be a reason for Bic NOT to compete in Mont Blanc's market EXCEPT_________.
Multiple Choice
Bic’s distribution capabilities are not well designed to reach Mont Blanc’s target market.
Bic is a large publicly traded company with significant financial resources.
Bic’s manufacturing facilities would need to be retooled to compete in Mon Blanc’s target market.
Bic’s reputation would be detrimental when competing in Mont Blanc’s target market.
Bic’s marketing department isn’t geared to addressing Mont Blanc’s target market.
Neither a low-cost leader nor a differentiator - Stuck in the middle
Aligning innovation with total perceived consumer benefits, price, and cost- Value Innovation
Obtaining the lowest-cost position in the industry while offering acceptable value; fairly well-isolated from threats; can absorb price reductions more easily when demanded by powerful buyers- Cost Leader
Creates a higher value for customers than the value that competitors create; delivers products or services with unique features while keeping costs at the same or similar levels (and allowing the firm to charge higher prices to its customers)- Differentiation
Neither a low-cost leader nor a differentiator
Aligning innovation with total perceived consumer benefits, price, and cost- Value Innovation
Obtaining the lowest-cost position in the industry while offering acceptable value; fairly well-isolated from threats; can absorb price reductions more easily when demanded by powerful buyers- Cost Leader
Creates a higher value for customers than the value that competitors create; delivers products or services with unique features while keeping costs at the same or similar levels (and allowing the firm to charge higher prices to its customers)
Stuck in the middle
Differentuation
Value Innovator
Cost Leader
standardizing the production processes for higher output levels with fewer model changes.
A value innovation strategy requires trade-offs between differentiation and low costs. These are two distinct business-level positions that often require very different internal value chain activities. An example of a low-cost activity that may not be appropriate for a differentiator is
Multiple Choice
standardizing the production processes for higher output levels with fewer model changes.
building an ambidextrous organization.
improving the efficiency of customer service to lower costs and improve customer response times.
adding new features to the product in response to customer feedback.
investing in complementary assets to increase market share of the product.
price, connections, international routes, customer service
A strategy canvas comparing JetBlue to the differentiated and low-cost airlines provides a visual depiction of some of the issues found in the JetBlue discussion throughout the chapter. Which three factors in the canvas most prominently show the key problems at JetBlue?
Graph for low-cost leadership strategy pursued by low cost airlines, JetBlue stuck in middle, differentiation strategy pursued by legacy carriers.The data is as follows:Leadership strategy pursued by low cost airlines:The curve begins at low in price and increases linearly through international routes, customer service, reliability, and convenience. The curve is low along seating class, in-flight amenities, meals, connections (via hub), and lounges.JetBlue stuck in middle:The curve begins at middle in price and decreases and increases like zigzag through seating class, in-flight amenities, meals, connections (via hub), lounges, international routes, customer service, reliability, and convenience.Low-cost leadership strategy pursued by low cost airlines: The curve begins at high in price and decreases through seating class, in-flight amenities, meals, connections (via hub), lounges, international routes, customer service, reliability, and convenience.Note: All data is approximate.
Multiple Choice
price, in-flight amenities, and lounges
seating class, lounges, and meals
international routes, seating class, and in-flight amenities
connections, lounges, and in-flight amenities
price, connections, international routes, customer service