Question 1

Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a

Accepted Answer

A)   watch retailer that sells pre-owned watches.
B)   watch maker that sells high-end, premium watches.
C)   watch maker that manufactures low-priced watches.
D)   watch maker that follows a differentiation strategy.

Question 2

A value curve indicates a lack of effectiveness in a firm's strategic profile when it

Accepted Answer

A)   stays level.
B)   zigzags.
C)   trends downward.
D)   trends upward.

Question 3

List how economies of scale contribute to a firm.

Accepted Answer

Economies of scale allow firms to:
-Spre...

Question 4

Why are differentiation and cost-leadership strategies called generic strategies?

Accepted Answer

Differentiation and cost-leadership stra...

Question 5

Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to

Accepted Answer

A)   gain a market share and make up the loss in margin through increased sales.
B)   create higher value creation and thus generate greater profit margins.
C)   gain a market share and make up the loss in margin through increased pricing.
D)   create higher value creation and thus generate greater sales.

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 curve

Question 7

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.

Question 8

What must a cost-leadership strategy accomplish to be successful?

Accepted Answer

A)   It must increase the firm's cost above that of its competitors while offering adequate value.
B)   It must reduce the firm's cost below that of its competitors while offering adequate value.
C)   It must increase the firm's cost above that of its competitors while offering superior value.
D)   It must reduce the firm's cost below that of its competitors while offering superior value.

Question 9

A firm's business strategy can 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.

Question 10

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

Accepted Answer

A)   collective bargaining.
B)   strategic trade-offs.
C)   arbitration.
D)   mediation.

Question 11

Heirloom Furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is Heirloom applying?

Accepted Answer

A)   mass customization
B)   economies of scope
C)   learning-curve effect
D)   network effect

Question 12

A blue ocean strategy differs from a low-cost strategy in that

Accepted Answer

A)   the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.
B)   the focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created.
C)   economies of scale are more important to a blue ocean strategy, while economies of scope are more important to a cost-leader.
D)   a blue ocean's research and development focus is on process technologies, and a cost-leader's focus is on product technologies.

Question 13

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on

Accepted Answer

A)   decreasing the existing value gap by providing luxury goods to customers.
B)   maintaining a less steeper learning curve as compared to its competitors.
C)   increasing the perceived value created for customers, which allows it to charge a premium price.
D)   lowering its costs compared to its competitors,' while offering adequate value for its products and services.

Question 14

The primary goal of a firm pursuing a blue ocean strategy should be to

Accepted Answer

A)   create the highest perceived value in its respective industry.
B)   build a reputation of being the lowest-cost producer in its chosen industry.
C)   offer a differentiated product or service at a low cost.
D)   achieve a less steep learning curve.

Question 15

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.

Question 16

A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

Accepted Answer

A)   business-level strategy
B)   code of ethics
C)   mission statement
D)   functional-level strategy

Question 17

While Fun Frames incurs a cost of $12 for a pair of eyeglasses, Highwire, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario?

Accepted Answer

A)   Fun Frames and Highwire have achieved differentiation parity.
B)   Fun Frames is a cost-leader when compared to Highwire.
C)   Fun Frames has created a greater economic value than Highwire.
D)   Highwire has a higher opportunity cost than Fun Frames.

Question 18

What are the two different generic business strategies available to firms?

Accepted Answer

There are two fundamentally different ge...

Question 19

Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

Accepted Answer

A)   learning-curve effect
B)   network effect
C)   black-swan event
D)   time compression diseconomies

Question 20

A firm experiences diseconomies of scale when it

Accepted Answer

A)   has a constant return to scale.
B)   moves down the experience curve.
C)   produces at an output level beyond the minimum efficient scale.
D)   has a steep learning curve when compared to its competitors.

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

What must a cost-leadership strategy accomplish to be successful?

Correct Answer
verified

Correct Answer
verified

A blue ocean strategy differs from a low-cost strategy in that

Correct Answer
verified

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

Correct Answer
verified

What are the two different generic business strategies available to firms?

Correct Answer
verified
There are two fundamentally different ge...
View Answer

A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

Correct Answer
verified

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

Correct Answer
verified

List how economies of scale contribute to a firm.

Correct Answer
verified
Economies of scale allow firms to:
-Spre...
View Answer

While Fun Frames incurs a cost of $12 for a pair of eyeglasses, Highwire, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario?

Correct Answer
verified

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

Correct Answer
verified

A firm experiences diseconomies of scale when it

Correct Answer
verified

Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to

Correct Answer
verified

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on

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

Why are differentiation and cost-leadership strategies called generic strategies?

Correct Answer
verified
Differentiation and cost-leadership stra...
View Answer

The primary goal of a firm pursuing a blue ocean strategy should be to

Correct Answer
verified

Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a

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 value curve indicates a lack of effectiveness in a firm's strategic profile when it

Correct Answer
verified

Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

Correct Answer
verified

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

What must a cost-leadership strategy accomplish to be successful?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A blue ocean strategy differs from a low-cost strategy in that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What are the two different generic business strategies available to firms?

Correct AnswerverifiedThere are two fundamentally different ge...View AnswerShow Answer

A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

Correct AnswerverifiedShow Answer

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

Correct AnswerverifiedShow Answer

List how economies of scale contribute to a firm.

Correct AnswerverifiedEconomies of scale allow firms to:-Spre...View AnswerShow Answer

While Fun Frames incurs a cost of $12 for a pair of eyeglasses, Highwire, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A firm experiences diseconomies of scale when it

Correct AnswerverifiedShow Answer

Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to

Correct AnswerverifiedShow Answer

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on

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

Why are differentiation and cost-leadership strategies called generic strategies?

Correct AnswerverifiedDifferentiation and cost-leadership stra...View AnswerShow Answer

The primary goal of a firm pursuing a blue ocean strategy should be to

Correct AnswerverifiedShow Answer

Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a

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 value curve indicates a lack of effectiveness in a firm's strategic profile when it

Correct AnswerverifiedShow Answer

Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There are two fundamentally different ge...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Economies of scale allow firms to:
-Spre...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Differentiation and cost-leadership stra...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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