Which of the following is NOT true about generic strategies?
o Firms focusing on cost drivers often bear the challenge of being easily imitable.
o One challenge for differentiation-type companies is that it is often hard to
accurately predict customers' perception of value in the company product.
o Firms who achieve 'value innovation' effectively implement both differentiation
and cost leadership.
o Firms who pursue cost leadership mostly ignore the value delivered to the
customers and strive to attain the lowest cost possible to offer lowest prices.
Which of the following are cost drivers? 1. Learning curve 2. Economies of scope 3. Firm
revenues 4. Complementary products
Which of the following is NOT true for firms that pursue a differentiation strategy?
o Raising the price of the product to the extent that the buyer's surplus is greater
than the competitor products' buyer surplus can be an effective approach.
o Charging the same price while increasing value can always attract new
customers.
o This strategy is more attractive when the value-improving investments produce a higher return than the efforts to reduce costs
o Increasing value entails the challenge of additional costs, possibly reducing theprofits (price-cost).
Which of the following are isolating mechanisms? 1. Casual ambiguity 2. Learning curve
3. Property rights 4. Transition costs
Economies of scope occur when:
o The average cost of making the product goes up as your firm produces more of it
today
o The average cost of making the product goes down as your firms produces more
of it over time
o The variable cost of making the product is less than its average cost
o The total cost of producing two products is less than the sum of costs to
produce them separately
The difference between product value and market price is called:
o the source of customer sensitivity
o the firm’s profit
o the buyer’s surplus
o the firm’s economic contribution
Which of the following statements is FALSE?
o The cost leader in an industry can be identified by finding the company with
the lowest prices.
o The customer, not the seller, determines the value of the product.
o Market position is determined by the Value-minus-Cost profile that a firm
provides.
o A firm can occupy a superior market position without having the lowest cost or
highest value.
In the field of strategy, an industry’s boundaries are determined based on: 1. Employees
switching between companies 2. Technologically similar products 3. High-correlated
stock prices 4. Interdependent consumer markets
How would a supplier firm reduce the power of one of its buyers?
a. Increase the percentage of the firm’s product sold to the buyer.
b. focus on supplying commodity products
c. expand the firm's production capacity
d. vertically integrate into the buyer
Which of the following statements about buyer and supplier power is TRUE?
a. Buyer power increases when there are more buyers and the industry is growing
quickly.
b. Buyer and supplier power do not matter to small firms, since industry forces are
proportional to size.
c. A firm working with weak suppliers and strong buyers will generate high profits.
d. Strong suppliers can achieve high margins even if their buyers operate in
markets with intense rivalry.
Which of the follow represent the best example of complementary products?
a. Starbucks coffee and Diet Coke
b. a Walmart Supercenter and a Walmart Neighborhood Market
c. an iPhone and the Netflix app
d. Gucci handbags and Zara dresses
Which of the following industry forces have the power to drive profits down? 1. Power
of buyers 2. Power of suppliers 3. Strength of substitutes for the industry’s products 4.
Potential for entry into the business 5. The strength of competition or rivalry
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