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

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Question 21

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

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.

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

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Question 22

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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) C) and D)

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Question 23

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

A firm's learning curve is steeper than that of its competitor.What does this imply?

A company that uses a differentiation strategy can achieve a competitive advantage as long as its

Oviyo Inc.has been successful at differentiating itself from competitors by claiming a premium price for its digital cameras based on superior image quality and advanced technology.In this scenario,which of the following is the key value driver?

When a firm operates at the minimum efficient scale,the

At a certain output level,the per-unit cost incurred by a firm to manufacture a product is $5.Other factors remaining constant,what will be the new per-unit cost if the cumulative output is doubled,and the firm is able to achieve an 80 percent learning curve?

What does it mean for a firm to have an 80 percent learning curve?

How does availability of complements act as a value driver?

Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage,it failed to maintain this advantage.Which of the following provides the best reason for this development?

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

Higher value tends to require

A _____ is a graphical depiction of a company's relative performance vis-à-vis its competitors across the industry's key success factors.

DFS Electronics Inc.ensures that all its products are highly durable and reliable by using techniques like zero-defect and lean manufacturing systems.These efforts not only add to the products' differential appeal,but also help the company save costs during production and avoid expenses due to after-sales services.Thus,the common value and cost driver responsible for DFS Electronics' strategic position as an integrator is the

DiscountHaven Inc.is a large chain of hypermarkets.It has cost benefits due to its extensive operation.The company's marketing and sales,logistics,administrative,and other such related costs get divided between a large number of product units stocked in its stores.This makes it difficult for smaller retail stores and supermarkets to compete against DiscountHaven's low prices.Thus,DiscountHaven has a competitive advantage due to its

How is differentiation parity different from cost parity?

Which of the following situations will have greater effects from economies of scale than from learning effects?

Gotta Get Chocolates,Inc.has recently introduced a new production method that will make the production of their chocolates more cost-effective.Which of the following will most likely be the result of this innovation?

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