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How does process innovation benefit a firm?

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Process innovation is a new method or te...

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How does availability of complements act as a value driver?


A) Complements add value to a product by offering an inferior substitute to it.
B) Complements add value to a product by competing with it.
C) Complements add value to a product when they imitate it.
D) Complements add value to a product when they are consumed in tandem with it.

E) A) and D)
F) A) and C)

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


A) Marriott sees increases in cost per hotel unit as number of customers increases.
B) Marriott sees 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 the diversity of its hotel line and thus its differentiated appeal.
D) Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.

E) B) and C)
F) A) and B)

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In a successful ________ strategy, the trade-offs between differentiation and low cost are reconciled.


A) blue ocean
B) focused differentiation
C) liquidation
D) divestment

E) All of the above
F) A) and B)

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Discuss the important differences between economies of scale and learning effects.

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There are some important differences bet...

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Which of the following is primarily a value driver?


A) cost of input factors
B) economies of scope
C) experience-curve effects
D) complements

E) B) and C)
F) A) and B)

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When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?


A) 2,000-3,000 units
B) 3,000-4,000 units
C) below 2,000 units
D) above 4,000 units

E) None of the above
F) A) and B)

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How is differentiation parity different from cost parity?


A) Differentiation parity deals with pricing not innovation.
B) Differentiation parity deals with innovation not value.
C) Differentiation parity deals with pricing not value.
D) Differentiation parity deals with value not cost.

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

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Due to its large sales volume and low cost structure, Quick Serve Mini-Marts enjoys a cost leadership position. Which of the following scenarios might threaten Quick Serve's competitive advantage?


A) Existing competitors in the mini-mart industry lower their prices to match those of Quick Serve.
B) Industry suppliers raise their prices.
C) Competitors engage in an all-out price war.
D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout.

E) A) and D)
F) A) and B)

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________ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale.


A) Minimum efficient scale
B) Break-even output
C) Maximum output capacity
D) Optimum sustainable yield

E) A) and C)
F) B) and C)

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How do experience-curve and learning-curve effects help a business gain competitive advantage?

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Learning by doing can drive down cost. A...

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A firm operating on a 70 percent learning curve will achieve lower per-unit costs after doubling its output than a firm operating on an 80 percent learning curve will.

A) True
B) False

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Petra's Programming competes on cost with WonderWeb in the web design industry. Both firms operate on a 90 percent learning curve, and neither firm is capable of increasing its cumulative output any further. How might Petra's Programming achieve a cost leadership position while maintaining customer satisfaction?


A) by increasing the amount of time the company spends on each website by 25 percent without raising prices
B) by eliminating costly service features like 24/7 customer support
C) by reducing its client base and lowering output
D) by incorporating new programming techniques to take advantage of experience curve effects

E) A) and B)
F) None of the above

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At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n)


A) 80 percent learning curve.
B) 90 percent learning curve.
C) 60 percent learning curve.
D) 54 percent learning curve.

E) B) and C)
F) A) and B)

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A differentiator will always benefit when products have become commoditized.

A) True
B) False

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AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply?


A) AccuroDisk and TD Storage share differentiation parity.
B) TD Storage has a competitive advantage over AccuroDisk in terms of perceived value.
C) AccuroDisk creates a greater economic value than TD Storage.
D) TD Storage is a cost-leader when compared to AccuroDisk.

E) A) and B)
F) None of the above

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Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Swan Song is following a


A) product diversification strategy.
B) liquidation strategy.
C) broad differentiation strategy.
D) focused differentiation strategy.

E) None of the above
F) C) and D)

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Briefly explain the difficulties in pursuing a blue ocean strategyز

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A blue ocean strategy is difficult to im...

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Explain the four questions that managers must answer to initiate a strategic move that allows a firm to open a new and uncontested market space through value innovation.

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The four questions that managers must an...

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What is higher value associated with?

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Higher value tends to require higher cos...

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Showing 21 - 40 of 105

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