Capstone 1 Part 2
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Capabilities refer to a company's
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Tangible resources.
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Intangible resources.
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Skills at coordinating its resources and putting them to productive use.
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Strategy as expressed in the firm's business model.
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Policies.
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Capstone 1 Part 2 explores key aspects of business strategy, focusing on competitive advantage, efficiency, and quality in production. It assesses understanding of the Icarus paradox, value chain activities, and factors sustaining competitive advantage.
Quiz Preview
- 2.
The Icarus paradox suggests that
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Companies should stick to a narrowly defined line of products.
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Better-than-average profitability is an elusive goal.
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Companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.
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Companies often pursue too many strategies at once.
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Companies should change strategies before strategies need changing.
Correct Answer
A. Companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.Explanation
The Icarus paradox suggests that companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success. This means that companies often become overconfident and fail to adapt their strategies when needed. They become complacent and assume that their past success guarantees future success, which can lead to their downfall. This paradox highlights the importance of continuously evaluating and adjusting strategies to stay competitive in the ever-changing business environment.Rate this question:
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- 3.
A company's infrastructure includes the company's
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Organization structure, culture, and style of leadership.
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Organization structure and morale level.
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Culture and productivity levels.
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Overall profitability levels.
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Short-run objectives.
Correct Answer
A. Organization structure, culture, and style of leadership.Explanation
The correct answer is organization structure, culture, and style of leadership. A company's infrastructure refers to the underlying framework that supports its operations. This includes the organization structure, which determines how tasks and responsibilities are divided and coordinated within the company. The culture of a company refers to the shared values, beliefs, and behaviors that shape the work environment. The style of leadership refers to the approach and behaviors exhibited by top management in guiding and influencing employees. These three elements are crucial in shaping the overall functioning and effectiveness of a company.Rate this question:
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- 4.
At their simplest level, customer needs can be defined as
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Desires.
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Wants.
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Cravings.
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All of the above.
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None of the above.
Correct Answer
A. All of the above.Explanation
The correct answer is "all of the above" because customer needs can encompass desires, wants, and cravings. Needs refer to the things that customers require or seek to fulfill their desires, wants, or cravings. Therefore, all three options are valid interpretations of customer needs.Rate this question:
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- 5.
A differentiation strategy is based on creating a product that customers perceive as being
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About the same as other available products.
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Distinct.
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The least costly product in the industry.
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The most costly product in the industry.
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Somewhat faddish in nature.
Correct Answer
A. Distinct.Explanation
A differentiation strategy is based on creating a product that is distinct from other available products. This means that the product has unique features, characteristics, or qualities that set it apart from competitors. By offering something different, the company aims to attract customers who value and appreciate these distinct features, allowing them to charge a premium price and gain a competitive advantage in the market.Rate this question:
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- 6.
Factors that help a company to build and sustain competitive advantage include which of the following?
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Superior efficiency
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Product quality
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Innovation
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Customer responsiveness
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All of the above
Correct Answer
A. All of the aboveExplanation
The factors that help a company to build and sustain competitive advantage include superior efficiency, product quality, innovation, and customer responsiveness. Superior efficiency allows a company to operate more effectively and efficiently than its competitors, leading to cost savings and higher productivity. Product quality ensures that the company's offerings meet or exceed customer expectations, leading to customer satisfaction and loyalty. Innovation allows a company to stay ahead of the competition by developing new and improved products or processes. Customer responsiveness involves understanding and meeting the needs and preferences of customers, leading to increased customer satisfaction and loyalty. All of these factors combined contribute to a company's ability to gain a competitive advantage and maintain it over time.Rate this question:
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- 7.
Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?
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Research and development
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Marketing and sales
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Human resources
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Production
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After-sales service and support
Correct Answer
A. Research and developmentExplanation
Research and development is the primary activity that is performed first in the value chain model. This is because research and development involves activities such as market research, product design, and technology development that are necessary for creating new products or improving existing ones. These activities are typically carried out before any other primary activities, such as production, marketing and sales, human resources, or after-sales service and support, can take place. Therefore, research and development is the initial step in transforming inputs into outputs in the value chain model.Rate this question:
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- 8.
Just-in-time inventory systems
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Are used only by manufacturing firms.
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Are implemented primarily by the manufacturing function.
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Have components arrive at a manufacturing plant just in time to enter the production process.
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Are valuable when there is a labor dispute with a key supplier.
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Always keep extra inventory on hand for emergencies.
Correct Answer
A. Have components arrive at a manufacturing plant just in time to enter the production process.Explanation
Just-in-time inventory systems are designed to have components arrive at a manufacturing plant just in time to enter the production process. This approach aims to minimize inventory holding costs and reduce waste by ensuring that materials are delivered exactly when they are needed for production. It is not limited to manufacturing firms only, as other industries can also benefit from this system. The implementation of just-in-time inventory systems is not solely the responsibility of the manufacturing function, as it requires coordination and collaboration among various departments such as procurement, logistics, and production.Rate this question:
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- 9.
Which generic business-level strategy is based on the intent to outperform competitors by doing everything a company can to lower its cost structure?
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Cost leadership
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Differentiation
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Broad differentiation
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Focused differentiation
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None of the above
Correct Answer
A. Cost leadershipExplanation
Cost leadership is a generic business-level strategy that focuses on achieving a competitive advantage by being the lowest-cost producer in the industry. This strategy involves doing everything possible to lower the company's cost structure, including efficient production processes, economies of scale, and cost-effective sourcing of inputs. By offering products or services at lower prices than competitors, the company aims to attract price-sensitive customers and gain market share. This strategy requires a strong emphasis on cost control, operational efficiency, and continuous improvement to maintain the cost advantage over time.Rate this question:
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- 10.
A company's competitive advantage will not endure for long when that competitive advantage can be
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Quickly or easily duplicated by other companies.
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Protected by patents.
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Protected by significant barriers to imitation.
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Shared with other companies in the industry.
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Shielded by copyrights.
Correct Answer
A. Quickly or easily duplicated by other companies.Explanation
When a company's competitive advantage can be quickly or easily duplicated by other companies, it means that competitors can easily replicate or imitate the advantage, thereby reducing its uniqueness and value. This implies that the advantage is not sustainable in the long run and can be easily eroded by competitors. Therefore, the company's competitive advantage will not endure for long in such a scenario.Rate this question:
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- 11.
If a product is to be properly commercialized, there must be integration between
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Research and development (R&D) and marketing.
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R&D and materials management.
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Marketing and materials management.
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Finance and marketing.
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Marketing and after-sales support.
Correct Answer
A. Research and development (R&D) and marketing.Explanation
To properly commercialize a product, it is crucial to have integration between research and development (R&D) and marketing. This is because R&D focuses on creating and improving products, while marketing is responsible for promoting and selling them. By integrating these two functions, companies can ensure that the products being developed align with market needs and preferences. This collaboration allows for effective communication and coordination between R&D and marketing teams, leading to successful product launches and increased sales.Rate this question:
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- 12.
The concept of quality applies to
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All products.
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The products consumers believe to be high-quality products.
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Products with a high per-unit cost.
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Custom-made products only.
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Only those products that have been redesigned
Correct Answer
A. All products.Explanation
The concept of quality applies to all products because quality is a measure of how well a product meets the needs and expectations of the consumer. Whether it is a low-cost or high-cost product, mass-produced or custom-made, all products should strive to meet certain standards of quality to ensure customer satisfaction. Quality is not limited to specific types of products or only those that have been redesigned; it is a universal concept that applies to all goods and services.Rate this question:
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- 13.
Industry dynamism refers to
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The gradual erosion of a company's customer base over time.
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Shifts in product profitability.
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A rapidly changing industry environment.
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Increasing per-unit costs.
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None of the above.
Correct Answer
A. A rapidly changing industry environment.Explanation
The correct answer is a rapidly changing industry environment. Industry dynamism refers to the constant and rapid changes that occur within an industry, such as advancements in technology, shifts in consumer preferences, and new market entrants. These changes can have a significant impact on companies operating within the industry, requiring them to adapt and innovate in order to remain competitive. The other options, such as the erosion of a company's customer base or shifts in product profitability, do not fully capture the concept of industry dynamism.Rate this question:
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- 14.
Pay for performance tends to
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Increase per-unit costs.
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Decrease employee output.
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Increase employee output.
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Have little effect on employee output.
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Be used only for individual workers, not for teams.
Correct Answer
A. Increase employee output.Explanation
Pay for performance refers to a compensation system where employees are rewarded based on their performance and productivity. This system creates a direct link between employee output and financial incentives, motivating individuals to work harder and achieve better results. By offering financial rewards for high performance, employees are encouraged to increase their output, leading to improved productivity and efficiency. Therefore, pay for performance tends to increase employee output rather than decrease it.Rate this question:
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- 15.
Learning effects are a result of
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Automation.
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Learning by doing.
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Sound product planning tactics.
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Diseconomies of scale.
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Product standardization.
Correct Answer
A. Learning by doing.Explanation
Learning effects refer to the improvement in performance or efficiency that occurs as a result of gaining experience or practice in a particular task or activity. In this context, learning effects are attributed to "learning by doing." This means that individuals or organizations become more proficient and effective in their work by actively engaging in the task and gaining knowledge through hands-on experience. Therefore, learning by doing is the most appropriate explanation for the occurrence of learning effects.Rate this question:
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- 16.
Companies are now able to pursue cost leadership and differentiation simultaneously because
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Of the emergence of flexible manufacturing technologies and new information technologies.
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Markets have become more homogeneous.
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Industries have become consolidated.
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Barriers to entry have fallen.
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Government regulation has diminished.
Correct Answer
A. Of the emergence of flexible manufacturing technologies and new information technologies.Explanation
Companies are now able to pursue cost leadership and differentiation simultaneously because of the emergence of flexible manufacturing technologies and new information technologies. These advancements in technology have allowed companies to streamline their production processes, reduce costs, and improve efficiency. Additionally, new information technologies have provided companies with access to real-time data and market insights, enabling them to better understand customer needs and preferences. As a result, companies can now offer products or services that are both cost-effective and unique, allowing them to differentiate themselves from competitors while maintaining competitive prices.Rate this question:
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- 17.
When a company produces a wide range of products for different customer groups, it is following a strategy of
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Cost leadership.
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Differentiation.
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Focus.
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Market concentration.
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Share building.
Correct Answer
A. Differentiation.Explanation
When a company produces a wide range of products for different customer groups, it is following a strategy of differentiation. This means that the company aims to differentiate its products from competitors by offering unique features, designs, or quality that appeal to specific customer segments. This strategy allows the company to target different market segments and cater to the diverse needs and preferences of customers, ultimately giving them a competitive advantage in the market.Rate this question:
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- 18.
Which primary activity in the value chain is concerned with the design of products and production processes?
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Research and development
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Marketing and sales
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Materials management
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Production
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Company infrastructure
Correct Answer
A. Research and developmentExplanation
Research and development is the primary activity in the value chain that is concerned with the design of products and production processes. This involves conducting research to identify new product ideas and technologies, and developing and testing prototypes. It also includes designing efficient production processes and finding ways to improve existing products. Research and development plays a crucial role in ensuring that products meet customer needs and are produced in the most effective and efficient manner.Rate this question:
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- 19.
Quality can best be thought of as
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Product usefulness.
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Quality as reliability and quality as excellence.
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Product innovation.
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A matter for a company's managers to decide for themselves without external input.
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A matter for the marketing function of a company to decide.
Correct Answer
A. Quality as reliability and quality as excellence.Explanation
The correct answer is quality as reliability and quality as excellence. This answer suggests that quality can be understood in two ways: as reliability, meaning that the product consistently performs its intended function without errors or failures, and as excellence, meaning that the product surpasses expectations and provides superior performance or features. This explanation implies that quality encompasses both the dependability and the exceptional attributes of a product.Rate this question:
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- 20.
Effective employee training within an organization
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Results in more productive employees.
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Increases employee efficiency.
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Raises employee skill levels.
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Enables employees to perform tasks faster.
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All of the above.
Correct Answer
A. All of the above.Explanation
Effective employee training within an organization can result in more productive employees because it equips them with the necessary skills and knowledge to perform their tasks efficiently. This increased efficiency can lead to higher levels of productivity. Additionally, training can also raise employee skill levels by enhancing their capabilities and enabling them to perform tasks faster. Therefore, all of the given options are correct as they highlight the positive outcomes of effective employee training.Rate this question:
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- 21.
Mercedes-Benz automobiles are a good example of
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Moderately priced products.
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Imitative products.
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Differentiated products.
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Products that are struggling to differentiate.
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Highly competitive products.
Correct Answer
A. Differentiated products.Explanation
Mercedes-Benz automobiles are a good example of differentiated products. This means that they have unique features, qualities, and branding that set them apart from other similar products in the market. Mercedes-Benz vehicles are known for their luxury, performance, and innovative technology, which differentiates them from other car brands. They cater to a specific target market that values these unique characteristics, making them stand out in the highly competitive automotive industry.Rate this question:
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- 22.
A firm makes complex telecommunications products, such as cellular telephones. Because this company has a distinctive competency in research and development, it should try to differentiate its product through
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Reliability.
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Innovation.
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Advertising
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Service.
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Low price.
Correct Answer
A. Innovation.Explanation
Given that the firm has a distinctive competency in research and development, it suggests that the company is capable of creating new and unique products or features. Therefore, it should try to differentiate its product through innovation, as this would allow the company to stay ahead of its competitors by continuously introducing new and improved products or features to the market. This would help the firm maintain its competitive advantage and appeal to customers who value cutting-edge technology and advancements in the telecommunications industry.Rate this question:
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- 23.
Product differentiation is often
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Inexpensive.
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Expensive.
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Cheaper than producing a single undifferentiated product.
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Not likely to be successful.
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Unnecessary because customer needs and wants are essentially alike.
Correct Answer
A. Expensive.Explanation
Product differentiation is often expensive because it requires additional resources and investments to create unique features, designs, or branding that set a product apart from competitors. This can include research and development costs, marketing expenses, and higher production costs for specialized components or materials. Additionally, maintaining and updating differentiated products can also be costly. Therefore, product differentiation is not a cheap strategy and often requires significant financial investment.Rate this question:
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- 24.
Which of the following is not a generic competitive strategy?
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Cost leadership
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Differentiation
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Focused cost leadership
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Focused differentiation
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Innovation
Correct Answer
A. InnovationExplanation
Innovation is not considered a generic competitive strategy because it is not focused on achieving a sustainable competitive advantage through cost leadership, differentiation, or focus. While innovation can certainly contribute to a company's competitive position, it is not a standalone strategy in the same way that cost leadership, differentiation, focused cost leadership, and focused differentiation are. These four strategies involve specific approaches to pricing, product/service features, and target markets, whereas innovation is more of a broad concept that can be applied across various strategies.Rate this question:
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- 25.
When a company services the broad market and has a low degree of product differentiation, it is most likely
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Pursuing a cost-leadership strategy.
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Pursuing a differentiation strategy
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Pursuing a focus strategy.
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Stuck in the middle.
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Pursuing both cost leadership and differentiation.
Correct Answer
A. Pursuing a cost-leadership strategy.Explanation
When a company services the broad market and has a low degree of product differentiation, it is most likely pursuing a cost-leadership strategy. This means that the company aims to offer products or services at a lower cost compared to its competitors. By focusing on cost reduction and efficiency, the company can attract a large customer base and gain a competitive advantage. This strategy is suitable when customers prioritize price over other factors and when there is intense price competition in the market.Rate this question:
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- 26.
When a firm produces products that customers perceive as having higher utility than those of its rivals, this firm's source of competitive advantage is
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Design.
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Low innovation.
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Superior quality.
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Efficiency.
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Customer responsiveness.
Correct Answer
A. Superior quality.Explanation
When a firm produces products that customers perceive as having higher utility than those of its rivals, it means that the firm's products are of superior quality. This means that the firm's products are better in terms of features, performance, durability, and overall satisfaction compared to its competitors. This competitive advantage is derived from the firm's ability to consistently deliver high-quality products that meet or exceed customer expectations, leading to customer loyalty, positive word-of-mouth, and ultimately, a larger market share.Rate this question:
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- 27.
__________ is a way to avoid failure.
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Benchmarking
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Gaining access to resources
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Ignoring prior strategic commitments
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Avoiding organizational commitments
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The Icarus paradox
Correct Answer
A. BenchmarkingExplanation
Benchmarking is a way to avoid failure because it involves comparing an organization's performance, processes, and practices with those of industry leaders or competitors. By identifying best practices and areas for improvement, benchmarking allows organizations to learn from others' successes and failures, ultimately enhancing their own performance and reducing the risk of failure.Rate this question:
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- 28.
The experience curve concept
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Is a result of a combination of learning effects and economies of scale.
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Is a result of a combination of learning effects and economies of scale and suggests that unit manufacturing costs decline by a certain amount each time output is doubled.
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Suggests that achieving low costs allows a firm to charge a premium price.
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Is most important for specialized or customized production.
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Suggests that unit manufacturing costs decline by a certain amount each time output is doubled.
Correct Answer
A. Is a result of a combination of learning effects and economies of scale and suggests that unit manufacturing costs decline by a certain amount each time output is doubled.Explanation
The experience curve concept is a result of a combination of learning effects and economies of scale. This means that as a company produces more units, it gains experience and becomes more efficient, leading to lower unit manufacturing costs. Additionally, the concept suggests that each time the output is doubled, the unit manufacturing costs decline by a certain amount. This implies that the more a company produces, the lower its costs will be, allowing for increased profitability.Rate this question:
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- 29.
A large company produces a variety of clothing for different customer groups. This firm is pursuing which of the following strategies?
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Cost leadership
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Differentiation
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Both cost and differentiation
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Focus
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Share building
Correct Answer
A. DifferentiationExplanation
The large company is pursuing a differentiation strategy. This means that they are focusing on creating unique and distinct clothing products that stand out from their competitors. By offering unique features, designs, or quality, they aim to attract customers who are willing to pay a premium price for their products. This strategy allows the company to position itself as a leader in the market and differentiate itself from competitors who may focus on cost leadership or other strategies.Rate this question:
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- 30.
Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?
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Research and development
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Marketing and sales
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After-sales service and support
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Production
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Human resources
Correct Answer
A. After-sales service and supportExplanation
After-sales service and support is performed last in the value chain model as it involves providing assistance and addressing customer needs after the product has been sold. This activity comes after the production process, marketing and sales efforts, and even after human resources have been involved in hiring and training employees. After-sales service and support focuses on ensuring customer satisfaction and maintaining relationships with customers, making it the final step in the transformation of inputs into outputs.Rate this question:
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- 31.
The resources and capabilities that lead to the formation of distinctive competencies are mostly created at which level of the organization?
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Business
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Functional
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Corporate
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Global
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Industry
Correct Answer
A. FunctionalExplanation
The resources and capabilities that lead to the formation of distinctive competencies are mostly created at the functional level of the organization. This is because functional areas, such as marketing, operations, finance, and human resources, are responsible for developing and leveraging specific skills, knowledge, and expertise that contribute to the organization's competitive advantage. By focusing on their respective functions, employees can specialize and excel in their areas, leading to the creation of distinctive competencies that set the organization apart from its competitors.Rate this question:
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- 32.
Market segmentation is best described as what type of process?
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Static
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Regressive
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Evolving
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Normative
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Revolving
Correct Answer
A. EvolvingExplanation
Market segmentation is best described as an evolving process because it is not a one-time activity but rather a continuous process that adapts and evolves over time. Market segmentation involves dividing a broad market into smaller, more manageable segments based on similar characteristics, behaviors, or needs of the target customers. As consumer preferences, behaviors, and market dynamics change, companies need to constantly review and adjust their segmentation strategies to ensure they are effectively targeting and reaching their desired customer segments. Therefore, market segmentation is an ongoing process that requires continuous monitoring and adaptation to stay relevant and effective.Rate this question:
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- 33.
The most expensive competitive strategy to pursue is
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Differentiation.
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Cost leadership
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Focus.
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Growth.
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Hypercompetition.
Correct Answer
A. Differentiation.Explanation
Differentiation is the most expensive competitive strategy to pursue because it involves creating unique and superior products or services that set a company apart from its competitors. This requires significant investment in research and development, marketing, and customer service to develop and maintain a differentiated position in the market. Additionally, differentiation often requires customization or personalization of products, which can increase production and operational costs. Overall, pursuing differentiation as a strategy can be costly but can also lead to higher profit margins and customer loyalty if successfully implemented.Rate this question:
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- 34.
A company's competitive advantage is more durable when
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Barriers to imitation are low and there are few capable competitors.
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Barriers to imitation are high and there are many capable competitors.
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Barriers to imitation are high.
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The industry is stable and there are many capable competitors.
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The industry is stable and barriers to imitation are low.
Correct Answer
A. Barriers to imitation are high.Explanation
When barriers to imitation are high, it means that it is difficult for other companies to replicate or copy the company's competitive advantage. This could be due to factors such as unique technology, patents, brand reputation, or exclusive access to resources. With high barriers to imitation, the company is able to maintain its competitive advantage for a longer period of time, as other competitors are unable to easily replicate or surpass the company's offerings.Rate this question:
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- 35.
The intellectual property of an organization is a(n)
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Tangible resource.
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Tangible competence.
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Tangible capability.
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Intangible capability.
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Intangible resource.
Correct Answer
A. Intangible resource.Explanation
The intellectual property of an organization refers to the intangible assets that are legally protected, such as patents, trademarks, copyrights, and trade secrets. These assets cannot be physically touched or seen but hold significant value for the organization. They provide a competitive advantage, as they are unique to the organization and cannot be easily replicated by competitors. Therefore, the correct answer is "intangible resource."Rate this question:
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- 36.
The role played by infrastructure leadership in implementing reliability methodologies includes which of the following?
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Providing leadership and commitment quality
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Finding ways to manage quality
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Setting goals and creating incentives
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Soliciting input from employees
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All of the above
Correct Answer
A. All of the aboveExplanation
The role played by infrastructure leadership in implementing reliability methodologies includes providing leadership and commitment to quality, finding ways to manage quality, setting goals and creating incentives, and soliciting input from employees. All of these actions are important in ensuring that reliability methodologies are effectively implemented within an organization. By providing leadership and commitment to quality, infrastructure leadership sets the tone for the entire organization and emphasizes the importance of reliability. Finding ways to manage quality ensures that processes are in place to monitor and improve reliability. Setting goals and creating incentives motivates employees to prioritize reliability. Soliciting input from employees allows for their perspectives and ideas to be considered, enhancing the effectiveness of reliability methodologies.Rate this question:
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- 37.
Quality improvement efforts should focus on the
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Product.
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External environment.
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Customer.
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Material costs.
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Internal operations.
Correct Answer
A. Customer.Explanation
Quality improvement efforts should focus on the customer because ultimately, it is the customer who determines the success of a product or service. By understanding and meeting the needs and expectations of the customer, organizations can improve the quality of their offerings and enhance customer satisfaction. This can lead to increased customer loyalty, repeat business, and positive word-of-mouth, ultimately driving growth and profitability. Focusing on the customer also helps organizations to identify areas for improvement, address customer complaints, and continuously innovate to stay ahead of competitors.Rate this question:
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- 38.
Which firm has the greatest probability of achieving a competitive advantage by successfully managing its strategy?
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A steel manufacturer that continues to use large plants instead of new technology to achieve economies of scale
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A retailer that sells a wide range of clothes to the mass market
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A pharmaceutical firm with brand loyalty that decreases administrative costs but continues to invest in research and development
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A large defense contractor that offers an undifferentiated product only to a few market segments
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A jeans manufacturer that keeps its production within the United States rather than moving to less expensive, overseas factories
Correct Answer
A. A pharmaceutical firm with brand loyalty that decreases administrative costs but continues to invest in research and developmentExplanation
The pharmaceutical firm with brand loyalty has the greatest probability of achieving a competitive advantage by successfully managing its strategy. Brand loyalty decreases administrative costs as customers are more likely to stick with a trusted brand, reducing the need for marketing and customer acquisition expenses. Additionally, investing in research and development allows the firm to continuously innovate and develop new products, giving them a competitive edge in the market.Rate this question:
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- 39.
A market segment consists of a group of
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Similar products.
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Customers who have similar needs.
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Companies who produce similar products.
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Diverse products produced by one manufacturer.
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Customers who have diverse needs.
Correct Answer
A. Customers who have similar needs.Explanation
A market segment consists of a group of customers who have similar needs. This means that these customers share common characteristics or preferences, making them more likely to respond similarly to marketing strategies and product offerings. By identifying and targeting specific market segments, companies can tailor their products and marketing messages to better meet the needs and preferences of these customers, increasing their chances of success in the market.Rate this question:
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- 40.
Efficiency is
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Defined as the time it takes to produce a product.
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Defined as the cost of inputs required to produce a given output.
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Pursued only by cost leaders.
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Measured by looking at a product's price.
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Lower when the output is high-quality.
Correct Answer
A. Defined as the cost of inputs required to produce a given output.Explanation
Efficiency is defined as the cost of inputs required to produce a given output. This means that efficiency is measured by how efficiently resources are used in the production process. It focuses on minimizing the cost of inputs while maximizing the output. By reducing wastage and optimizing production methods, businesses can improve their efficiency and lower their costs. This definition of efficiency is widely accepted in economics and business management.Rate this question:
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- 41.
Customer defection rates are
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A reflection of customer loyalty.
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An indication of a company's ability to satisfy its customers.
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Important to consider because of their potential impact on advertising and marketing costs.
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An important consideration because of their effect on sales volumes.
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All of the above.
Correct Answer
A. All of the above.Explanation
The correct answer is "all of the above." Customer defection rates can reflect customer loyalty because if customers are defecting at a high rate, it indicates that they are not loyal to the company. It is also an indication of a company's ability to satisfy its customers because if customers are leaving, it suggests that the company is not meeting their needs or expectations. Additionally, customer defection rates are important to consider because they can impact advertising and marketing costs. If customers are leaving, the company may need to invest more in advertising and marketing to attract new customers. Lastly, customer defection rates can also have an effect on sales volumes as losing customers means losing potential sales.Rate this question:
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- 42.
______________ refers to unit cost increases associated with a large scale of output.
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Economies of scale
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Learning effects
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Diseconomies of scale
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Flexible manufacturing
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Mass customization
Correct Answer
A. Diseconomies of scaleExplanation
Diseconomies of scale refers to unit cost increases associated with a large scale of output. As production increases, the cost per unit may start to rise due to various factors such as inefficiencies, coordination issues, and increased complexity. This can lead to higher costs and reduced profitability for the firm.Rate this question:
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- 43.
The philosophy underlying TQM includes which of the following?
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Improved quality results in cost decreases.
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Better quality leads to higher market share.
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Better quality increases a company's profitability.
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Management should create an environment in which employees do not fear expressing themselves.
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All of the above.
Correct Answer
A. All of the above.Explanation
The philosophy underlying TQM (Total Quality Management) includes all of the given options. Improved quality results in cost decreases because it reduces the need for rework and customer complaints. Better quality leads to higher market share as customers are more likely to choose products or services that meet their expectations. Better quality also increases a company's profitability by reducing costs and attracting more customers. Finally, management should create an environment in which employees do not fear expressing themselves to encourage open communication and continuous improvement. Therefore, all of the options are part of the philosophy underlying TQM.Rate this question:
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- 44.
The use of self-managing teams
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Is limited to only very large organizations.
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Requires members to coordinate their own activities and make decisions.
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Typically increases the need for supervisors.
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All of the above.
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None of the above.
Correct Answer
A. Requires members to coordinate their own activities and make decisions.Explanation
The correct answer is "requires members to coordinate their own activities and make decisions." This answer is supported by the use of the term "self-managing teams," which implies that the teams are responsible for managing themselves and taking ownership of their activities and decisions. This suggests that members within these teams must coordinate with each other and make their own decisions without relying on external supervision. The other options, such as being limited to large organizations or increasing the need for supervisors, are not mentioned in the question and are therefore not applicable.Rate this question:
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- 45.
Economies of scale are
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Unit cost reductions associated with learning effects.
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Unit cost reductions associated with superior customer responsiveness.
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Realized when output is as large as possible.
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Realized when the point of maximum efficient scale is reached.
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Unit cost reductions associated with a large-scale output.
Correct Answer
A. Unit cost reductions associated with a large-scale output.Explanation
Economies of scale refer to the cost advantages that a company can achieve when it produces goods or services on a larger scale. As the output increases, the average cost per unit decreases due to factors such as bulk purchasing, specialization, and efficient utilization of resources. This allows the company to spread its fixed costs over a larger number of units, resulting in lower per-unit costs. Therefore, the correct answer is "unit cost reductions associated with a large-scale output."Rate this question:
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- 46.
Which of the following statements is true?
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Differentiation and cost structure decisions affect one another.
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Differentiation and cost structure decisions do not affect one another.
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Differentiation and cost structure decisions have little effect on a company's profitability.
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Differentiation decisions do not affect a company's profitability.
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Cost structure decisions do not affect a company's profitability.
Correct Answer
A. Differentiation and cost structure decisions affect one another.Explanation
Differentiation and cost structure decisions affect one another because the level of differentiation a company chooses to implement will impact its cost structure. If a company decides to differentiate its products or services by adding unique features or offering superior quality, it may incur higher costs in terms of research and development, production, or marketing. On the other hand, if a company decides to focus on cost leadership and implement a low-cost strategy, it may need to sacrifice some level of differentiation. Therefore, the two decisions are interrelated and have a mutual influence on each other.Rate this question:
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- 47.
A competitor's ability to ____________ a cost leader's methods is a threat to a cost-leadership strategy
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Negate
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Subvert
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Control
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Repudiate
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Imitate
Correct Answer
A. ImitateExplanation
A competitor's ability to imitate a cost leader's methods is a threat to a cost-leadership strategy because it allows the competitor to offer similar products or services at a lower cost. This undermines the cost leader's competitive advantage and can lead to a loss of market share and profitability. By imitating the cost leader's methods, the competitor can potentially attract customers who are price-sensitive and willing to switch to a cheaper alternative. Thus, the ability to imitate poses a significant challenge to the effectiveness of a cost-leadership strategy.Rate this question:
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- 48.
Compared to a differentiator, the cost leader has the advantage over its rivals of
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Making higher profit margins.
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Being better able to withstand the negative influence of powerful suppliers and buyers.
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Having inimitable production methods.
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Enjoying higher brand loyalty.
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Being preferred by investors.
Correct Answer
A. Being better able to withstand the negative influence of powerful suppliers and buyers.Explanation
The cost leader has the advantage of being better able to withstand the negative influence of powerful suppliers and buyers. This means that the cost leader is able to negotiate better deals with suppliers and buyers, reducing their power to dictate terms and prices. This allows the cost leader to maintain lower costs and higher profit margins compared to their rivals. By being able to withstand the negative influence of powerful suppliers and buyers, the cost leader can maintain a competitive advantage in the market.Rate this question:
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- 49.
The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is
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Standardized market price.
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Industry life cycle stage.
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Degree of market segmentation.
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Age of the market.
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Market trajectory.
Correct Answer
A. Degree of market segmentation.Explanation
The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is the degree of market segmentation. A cost leadership strategy focuses on offering products or services at the lowest cost in the industry, targeting a broad market. On the other hand, a focused cost leadership strategy narrows down the target market to a specific segment or niche, offering low-cost products or services tailored to that particular segment. Therefore, the degree of market segmentation is the key distinguishing factor between these two strategies.Rate this question:
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Mar 20, 2023Quiz Edited by
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Mar 20, 2011Quiz Created by
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