BUSMHR 4490 EXAM 2 QUESTIONS AND
ANSWERS
Business-level strategy - Correct Answers -The goal-directed actions managers take in
their quest for competitive advantage when competing in a single product market
who?
what?
why?
how?
Strategic tradeoffs - Correct Answers -Choices between a cost or value proposition
Necessary because higher value creation tends to generate higher costs
Differentiation strategy - Correct Answers -Generic business strategy that seeks to
create higher value for customers than the value that competitors create
Cost-leadership strategy - Correct Answers -Generic business strategy that seeks to
create the same or similar value for customers at lower cost
Focused cost-leadership strategy - Correct Answers -Narrow focus on lower cost in
niche market
Focused differentiation strategy - Correct Answers -Narrow focus on higher value in
niche market
Economies of scope - Correct Answers -Savings that come from producing 2 (or more)
outputs at less cost than producing each output individually, despite using the same
resources and technology
About making different but compatible products
Value Drivers - Correct Answers -Product features
Customer service
Complements
Non-equity alliance - Correct Answers -Partnership based on contracts between firms
Joint venture - Correct Answers -A stand alone organization created and jointly owned
by 2 or more parent companies
, Explicit knowledge - Correct Answers -Knowledge that can be codified; concerns
knowing about a process or product
Tacit knowledge - Correct Answers -Knowledge that cannot be codified; concerns
knowing how to do a certain task and can be acquired only through active participation
in the task
Alliance management capability - Correct Answers -A firm's ability to effectively manage
three alliance-related tasks concurrently:
(1) partner selection and alliance formation,
(2) alliance design and governance, and
(3) post-formation alliance management
Product features - Correct Answers -Increases perceived value
Turns commodity products into differentiated products
Strong R&D capabilities are often needed
Customer service - Correct Answers -Process of ensuring customer satisfaction with a
product or service
Complements - Correct Answers -Increased perceived value
Consumed in tandem
Value drivers - Correct Answers -Add value to products and services
Are responsible to customer preferences
Can increase costs
-additional R&D needed
-innovation needed
-but customers are willing to pay a premium
Cost drivers - Correct Answers -Cost of input factors
Economies of scale
Learning curve effects
Experience curve effects
Cost of input factors - Correct Answers -Raw materials
Capital
Labor
IT services
Economies of scale - Correct Answers -Decreases in cost per unit as output increases
Allows firms to...
-spread their fixed costs over large output
-employ specialized systems and equipment
-take advantage of physical properties
ANSWERS
Business-level strategy - Correct Answers -The goal-directed actions managers take in
their quest for competitive advantage when competing in a single product market
who?
what?
why?
how?
Strategic tradeoffs - Correct Answers -Choices between a cost or value proposition
Necessary because higher value creation tends to generate higher costs
Differentiation strategy - Correct Answers -Generic business strategy that seeks to
create higher value for customers than the value that competitors create
Cost-leadership strategy - Correct Answers -Generic business strategy that seeks to
create the same or similar value for customers at lower cost
Focused cost-leadership strategy - Correct Answers -Narrow focus on lower cost in
niche market
Focused differentiation strategy - Correct Answers -Narrow focus on higher value in
niche market
Economies of scope - Correct Answers -Savings that come from producing 2 (or more)
outputs at less cost than producing each output individually, despite using the same
resources and technology
About making different but compatible products
Value Drivers - Correct Answers -Product features
Customer service
Complements
Non-equity alliance - Correct Answers -Partnership based on contracts between firms
Joint venture - Correct Answers -A stand alone organization created and jointly owned
by 2 or more parent companies
, Explicit knowledge - Correct Answers -Knowledge that can be codified; concerns
knowing about a process or product
Tacit knowledge - Correct Answers -Knowledge that cannot be codified; concerns
knowing how to do a certain task and can be acquired only through active participation
in the task
Alliance management capability - Correct Answers -A firm's ability to effectively manage
three alliance-related tasks concurrently:
(1) partner selection and alliance formation,
(2) alliance design and governance, and
(3) post-formation alliance management
Product features - Correct Answers -Increases perceived value
Turns commodity products into differentiated products
Strong R&D capabilities are often needed
Customer service - Correct Answers -Process of ensuring customer satisfaction with a
product or service
Complements - Correct Answers -Increased perceived value
Consumed in tandem
Value drivers - Correct Answers -Add value to products and services
Are responsible to customer preferences
Can increase costs
-additional R&D needed
-innovation needed
-but customers are willing to pay a premium
Cost drivers - Correct Answers -Cost of input factors
Economies of scale
Learning curve effects
Experience curve effects
Cost of input factors - Correct Answers -Raw materials
Capital
Labor
IT services
Economies of scale - Correct Answers -Decreases in cost per unit as output increases
Allows firms to...
-spread their fixed costs over large output
-employ specialized systems and equipment
-take advantage of physical properties
