Question 1

Which of the following is an accurate statement about learning effects?

Accepted Answer

A)   Learning effects are captured at one point in time.
B)   Learning effects occur over time as output accumulates.
C)   Learning effects are significant in all production processes.
D)   Learning effects can produce diseconomies.

Question 2

Unicorn Toys faces stiff competition from Playtime Inc., a rival firm with which Unicorn Toys has achieved differentiation parity. Both firms have invested in state-of-the art production facilities and have similar learning curves of 85 percent. Assuming neither firm can reduce the cost of its input factors, how can Unicorn Toys achieve a competitive advantage as a cost leader?

Accepted Answer

A)   Reduce the manufacturing staff by half to save on labor costs.
B)   Increase spending on product features.
C)   Have a cumulative output that is greater than Playtime Inc.'s.
D)   Eliminate several features that customers value to cut costs.

Question 3

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

Accepted Answer

A)   Maintain prices but significantly increase spending on customer service and other amenities.
B)   Lower prices but eliminate several of the features that have come to define Coastal Haven properties for consumers, such as complimentary meals and in-room massages.
C)   Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image.
D)   Raise prices without increasing spending on customer service or resort features.

Question 4

Value drivers contribute to a firm's competitive advantage only if

Accepted Answer

A)   the increase in value creation exceeds the increase in costs.
B)   they can shrink the firm's value gap.
C)   they can restrict the firm from claiming a premium price for its products.
D)   the decrease in perceived value leads to an increase in costs.

Question 5

________ is best described as decreases in cost per unit as output increases.

Accepted Answer

A)   Economies of scale
B)   Economies of scope
C)   Time compression economies
D)   Economies of replication

Question 6

Why is keeping its costs the lowest in the industry not the only focus of a firm pursuing cost-leadership strategy?

Accepted Answer

The low-cost leader needs to stay vigila...

Question 7

What does a firm that pursues a cost-leadership strategy primarily focus on?

Accepted Answer

The goal of a cost-leadership strategy i...

Question 8

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate?

Accepted Answer

A)   Bison Autos has a competitive advantage over Sparrow Inc.
B)   Both Bison Autos and Sparrow Inc. have achieved competitive parity.
C)   Sparrow Inc. can charge a premium price on its automobiles.
D)   Bison Autos has created a higher value gap than Sparrow Inc.

Question 9

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator?

Accepted Answer

A)   high price, high comfort, high customer service, high concessions variety, low hours of operation
B)   low price, high comfort, high customer service, high concessions variety, low hours of operation
C)   high price, low comfort, low customer service, high concessions variety, low hours of operation
D)   low price, low comfort, low customer service, low concessions variety, low hours of operation

Question 10

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.

Accepted Answer

A) True 
 B)False

Question 11

In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Global Cine Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is True Movies Inc., which offers a customer experience comparable to that of Vibrant Movies at a price almost as low as that of Global Cine. What strategy is True Movies pursuing in this scenario?

Accepted Answer

A)   liquidation strategy
B)   product diversification strategy
C)   market penetration strategy
D)   blue ocean strategy

Question 12

Which of the following provides an example of a firm in a red ocean?

Accepted Answer

A)   Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.
B)   Cheap Apparel offered clothing at a price matching that of its competitors and, as a result, it had lower profit margins.
C)   Goode Apparel offered clothing at a mid-range price but failed to differentiate its product as being of decent quality.
D)   Top Drawer Apparel offered clothing at a higher price than competitors and, as a result, failed to make a profit.

Question 13

Discuss the threats firms face when they pursue a differentiation strategy.

Accepted Answer

The viability of a differentiation strat...

Question 14

A value curve that zig-zags across the strategy canvas indicates a focused strategy that is likely to achieve a sustainable competitive advantage.

Accepted Answer

A) True 
 B)False

Question 15

What is a value gap?

Accepted Answer

Economic value creation, V - C, is also ...

Question 16

Which of the following describes an airline that is most likely stuck in the middle?

Accepted Answer

A)   Red Carpet Airline that offers complimentary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices.
B)   Plush Airline that offers international routes and global coverage, high customer service, high reliability, and high prices.
C)   Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.
D)   Bottom Line Airline that offers no assigned seating, no in-flight amenities, no drinks or meals, no airport lounges, and low prices.

Question 17

What are the pricing options available to a firm following a differentiation strategy?

Accepted Answer

A company that uses a differentiation st...

Question 18

When a firm pursues differentiation strategy, what does it focus on?

Accepted Answer

The goal of a generic differentiation st...

Question 19

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as

Accepted Answer

A)   stuck in the middle.
B)   buried at the bottom.
C)   burned at the top.
D)   caught in the transition.

Question 20

Backyard BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage?

Accepted Answer

A)   lowering the quality of ingredients below what customers expect to control costs
B)   eliminating brick-and-mortar locations and offering delivery from a central kitchen
C)   raising prices without improving on the quality of food
D)   marketing itself as a high-end restaurant and competing with more refined restaurants in the area

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

Correct Answer
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What does a firm that pursues a cost-leadership strategy primarily focus on?

Correct Answer
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The goal of a cost-leadership strategy i...
View Answer

________ is best described as decreases in cost per unit as output increases.

Correct Answer
verified

Why is keeping its costs the lowest in the industry not the only focus of a firm pursuing cost-leadership strategy?

Correct Answer
verified
The low-cost leader needs to stay vigila...
View Answer

Which of the following describes an airline that is most likely stuck in the middle?

Correct Answer
verified

When a firm pursues differentiation strategy, what does it focus on?

Correct Answer
verified
The goal of a generic differentiation st...
View Answer

Discuss the threats firms face when they pursue a differentiation strategy.

Correct Answer
verified
The viability of a differentiation strat...
View Answer

Correct Answer
verified

A value curve that zig-zags across the strategy canvas indicates a focused strategy that is likely to achieve a sustainable competitive advantage.

Correct Answer
verified

What are the pricing options available to a firm following a differentiation strategy?

Correct Answer
verified
A company that uses a differentiation st...
View Answer

Correct Answer
verified

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator?

Correct Answer
verified

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate?

Correct Answer
verified

What is a value gap?

Correct Answer
verified
Economic value creation, V - C, is also ...
View Answer

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

Correct Answer
verified

Which of the following provides an example of a firm in a red ocean?

Correct Answer
verified

Which of the following is an accurate statement about learning effects?

Correct Answer
verified

Value drivers contribute to a firm's competitive advantage only if

Correct Answer
verified

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as

Correct Answer
verified

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

What does a firm that pursues a cost-leadership strategy primarily focus on?

Correct AnswerverifiedThe goal of a cost-leadership strategy i...View AnswerShow Answer

________ is best described as decreases in cost per unit as output increases.

Correct AnswerverifiedShow Answer

Why is keeping its costs the lowest in the industry not the only focus of a firm pursuing cost-leadership strategy?

Correct AnswerverifiedThe low-cost leader needs to stay vigila...View AnswerShow Answer

Which of the following describes an airline that is most likely stuck in the middle?

Correct AnswerverifiedShow Answer

When a firm pursues differentiation strategy, what does it focus on?

Correct AnswerverifiedThe goal of a generic differentiation st...View AnswerShow Answer

Discuss the threats firms face when they pursue a differentiation strategy.

Correct AnswerverifiedThe viability of a differentiation strat...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A value curve that zig-zags across the strategy canvas indicates a focused strategy that is likely to achieve a sustainable competitive advantage.

Correct AnswerverifiedShow Answer

What are the pricing options available to a firm following a differentiation strategy?

Correct AnswerverifiedA company that uses a differentiation st...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator?

Correct AnswerverifiedShow Answer

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate?

Correct AnswerverifiedShow Answer

What is a value gap?

Correct AnswerverifiedEconomic value creation, V - C, is also ...View AnswerShow Answer

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

Correct AnswerverifiedShow Answer

Which of the following provides an example of a firm in a red ocean?

Correct AnswerverifiedShow Answer

Which of the following is an accurate statement about learning effects?

Correct AnswerverifiedShow Answer

Value drivers contribute to a firm's competitive advantage only if

Correct AnswerverifiedShow Answer

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as

Correct AnswerverifiedShow Answer

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The goal of a cost-leadership strategy i...
View Answer

Correct Answer
verified

Correct Answer
verified
The low-cost leader needs to stay vigila...
View Answer

Correct Answer
verified

Correct Answer
verified
The goal of a generic differentiation st...
View Answer

Correct Answer
verified
The viability of a differentiation strat...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A company that uses a differentiation st...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Economic value creation, V - C, is also ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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