Chapter 6 - Test 2

Question 1

Goal-directed actions

Answer 1

To achieve a competitive advantage in a single
product market

Question 2

What Is Business Level Strategy?

Answer 2

Goal-directed actions and “How should we
compete?”

Question 3

“How should we compete?”

Answer 3

Who: which customer segments?
What: customer needs will we satisfy?
Why: do we want to satisfy them?
How: will we satisfy our customers’ needs?

Question 4

Strategic Position

Answer 4

Based on value creation and cost in a specific product-market

Question 5

valuable and unique position

Answer 5

• Meets customer needs
• Maximizes product value
• Lowest possible product cost

Question 6

Strategic Trade-Offs

Answer 6

Choices between a cost OR value position

Question 7

Generic Business Strategies

Answer 7

Differentiation & Cost Leadership

Question 8

Differentiation

Answer 8

Seeks to create higher value vs. competitors by offering unique features

Question 9

Cost Leadership

Answer 9

Seeks to create similar value vs. competitors by charging lower prices

Question 10

Focused Business Strategies

Answer 10

Narrower competitive scope with Focused Differentiation & Focused Cost Leadership

Question 11

Differentiation competitive advantage is achieved when

Answer 11

Value – Cost > Competitors

Question 12

Economies of Scale

Answer 12

Decreases in cost per unit and achieved as output
increases

Question 13

Economies of Scope

Answer 13

Savings that come from producing two outputs at a
lesser cost by sharing the same resources or technology

Question 14

Three Drivers That Increase Perceived Value

Answer 14

• Product features
• Customer service
• Complements

Question 15

Drivers That Keep Costs Low

Answer 15

• Cost of input factors
• Economies of scale
• Learning-curve effects
• Experience-curve effects

Question 16

Cost of input factors

Answer 16

Cost of raw materials, capital, labor, and IT services

Question 17

Experience-curve effects

Answer 17

Improvements to technology and production processes

Question 18

Learning-curve effects

Answer 18

Less time to produce output with experience

Question 19

Diseconomies of Scale

Answer 19

• Firm’s too big
• Complexities of too much coordination
• Inflexible and slow

Question 20

Successful Business Strategy

Answer 20

• Leverages the firm internal strengths
• Mitigates internal firm weaknesses
• Exploits external opportunities
• Avoids external threats

Question 21

Blue Ocean Strategy

Answer 21

A strategy that combines both differentiation and
cost-leadership activities

Question 22

Blue oceans represent

Answer 22

• Untapped market space
• Creation of additional demand
• Opportunities for highly profitable growth

Question 23

To Achieve Successful Value Innovation

Answer 23

Lower costs and Increase perceived consumer benefits

Question 24

Four Actions to Create a Blue Ocean

Answer 24

• Raise
• Create
• Eliminate
• Reduce

Question 25

The Strategy Canvas

Answer 25

Graphical depiction of a company’s performance that reveals key strategic insights