Strategic Management Chapters 6-10
Test Bank with Solutions 2026
Updated.
Business-level strategy - Answer Details the actions managers take in their quest for
competitive advantage when competing in a single product market. "How should we
compete?".
Who, what, why, how.
Strategic position - Answer Determined by business-level strategy, and is a firm's strategic
profile based on value creation and cost. Goal is to maximize gap between value and cost (V-C).
Strategic trade-offs - Answer Situations that require choosing between a cost or value
positions, necessary because higher value tends to require higher cost.
Differentiation strategy - Answer Generic business strategy that seeks to create higher value
for customers than the value that competitors create, by delivering products or services with
unique features while keeping the firm's cost structure the same or similar.
Can be focused if targeting more narrow market.
Cost-leadership strategy - Answer Generic business strategy that seeks to create the same or
similar value for customers by delivering products or services at a lower cost than competitors,
enabling the firm to offer lower prices to its customers.
Can be focused if targeting more narrow market.
Scope of competition - Answer The size -- narrow or broad -- of the market in which a firm
chooses to compete.
Mass customization - Answer Manufacture of a large variety of customized products or
services at a relatively low unit cost.
Economies of scale - Answer As output increases, cost per unit decreases.
, Minimum efficient scale (MES) - Answer Output range needed to bring down the cost per
unit as much as possible, allowing a firm to stake out the lowest-cost position possible via
economies of scale.
Integration strategy - Answer Business-level strategy that successfully combines
differentiation and cost leadership activities.
Drivers are quality, economies of scope, innovation, and structure culture and routines.
Economies of scope - Answer Savings that come from producing two or more outputs at less
cost than producing each output individually, despite using the same resources and technology.
Ambidextrous organization - Answer An organization able to balance and harness different
activities in trade-off situations
Conglomerate - Answer An organization that combines two or more business units, often
active in different industries, under one overarching corporation.
Productivity frontier - Answer Relationship that captures the result of performing best
practices at any given time; the function is convex to capture the trade-off between value
creation and production cost.
Innovation - Answer The commercialization of any new product, process, or idea, or the
modification and recombination of existing ones. To drive growth, innovation also needs to be
useful and successfully implemented.
Industry life cycle - Answer The four different stages -- introduction, growth, maturity,
decline -- that occur in the evolution of an industry over time.
Network effects - Answer Increases in the value of a product to each user, including existing
users, as the total number of users rises.
Standard - Answer An agreed-upon solution about a common set of engineering features
and design choices; also known as dominant design
Product innovations - Answer New products, such as the jet airplane, electric vehicle, MP3
player, and netbook.
Process innovations - Answer New ways to produce existing products or deliver existing ones
Test Bank with Solutions 2026
Updated.
Business-level strategy - Answer Details the actions managers take in their quest for
competitive advantage when competing in a single product market. "How should we
compete?".
Who, what, why, how.
Strategic position - Answer Determined by business-level strategy, and is a firm's strategic
profile based on value creation and cost. Goal is to maximize gap between value and cost (V-C).
Strategic trade-offs - Answer Situations that require choosing between a cost or value
positions, necessary because higher value tends to require higher cost.
Differentiation strategy - Answer Generic business strategy that seeks to create higher value
for customers than the value that competitors create, by delivering products or services with
unique features while keeping the firm's cost structure the same or similar.
Can be focused if targeting more narrow market.
Cost-leadership strategy - Answer Generic business strategy that seeks to create the same or
similar value for customers by delivering products or services at a lower cost than competitors,
enabling the firm to offer lower prices to its customers.
Can be focused if targeting more narrow market.
Scope of competition - Answer The size -- narrow or broad -- of the market in which a firm
chooses to compete.
Mass customization - Answer Manufacture of a large variety of customized products or
services at a relatively low unit cost.
Economies of scale - Answer As output increases, cost per unit decreases.
, Minimum efficient scale (MES) - Answer Output range needed to bring down the cost per
unit as much as possible, allowing a firm to stake out the lowest-cost position possible via
economies of scale.
Integration strategy - Answer Business-level strategy that successfully combines
differentiation and cost leadership activities.
Drivers are quality, economies of scope, innovation, and structure culture and routines.
Economies of scope - Answer Savings that come from producing two or more outputs at less
cost than producing each output individually, despite using the same resources and technology.
Ambidextrous organization - Answer An organization able to balance and harness different
activities in trade-off situations
Conglomerate - Answer An organization that combines two or more business units, often
active in different industries, under one overarching corporation.
Productivity frontier - Answer Relationship that captures the result of performing best
practices at any given time; the function is convex to capture the trade-off between value
creation and production cost.
Innovation - Answer The commercialization of any new product, process, or idea, or the
modification and recombination of existing ones. To drive growth, innovation also needs to be
useful and successfully implemented.
Industry life cycle - Answer The four different stages -- introduction, growth, maturity,
decline -- that occur in the evolution of an industry over time.
Network effects - Answer Increases in the value of a product to each user, including existing
users, as the total number of users rises.
Standard - Answer An agreed-upon solution about a common set of engineering features
and design choices; also known as dominant design
Product innovations - Answer New products, such as the jet airplane, electric vehicle, MP3
player, and netbook.
Process innovations - Answer New ways to produce existing products or deliver existing ones
