Question 1

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. 
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 2

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

Accepted Answer

Differentiation and cost-leadership stra

Question 3

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. 
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 4

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

Question 5

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

Question 6

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

Question 7

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. 
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 8

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. 
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 9

List how economies of scale contribute to a firm.

Accepted Answer

Economies of scale allow firms to:
-Spre

Question 10

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. 
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.

Question 11

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. 
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 12

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. 
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 13

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

Accepted Answer

There are two fundamentally different ge

Question 14

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

Question 15

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 
A)  managerial grid 
B)  growth matrix 
C)  experience curve 
D)  diminishing utility curve

Question 16

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. 
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 17

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. 
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 18

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

Question 19

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. 
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 20

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. 
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.

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

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

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

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

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

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

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it

List how economies of scale contribute to a firm.

A firm experiences diseconomies of scale when it

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

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

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

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?

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

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

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

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

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?

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

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

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

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

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

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

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

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

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

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it

List how economies of scale contribute to a firm.

A firm experiences diseconomies of scale when it

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

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

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

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?

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

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

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

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

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?

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

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters