WPC 470 Moore ASU Final Exam
Questions and Answers
Business-level strategy - Answer-The goal-directed actions managers take in their quest
for competitive advantage when competing in a single product market
Blue ocean strategy - Answer-Business level strategy that successfully combines
differentiation and cost-leadership activities using value innovation to reconcile the
inherent tradeoffs
Cost-leadership strategy - Answer-Generic business strategy that seeks to create the
same or similar value for customers at a lower cost
Differentiation strategy - Answer-Generic business strategy that seeks to create higher
value for customers than the value that competitors create, while containing costs
Diseconomies of scale - Answer-Increases in cost per unit when output increases
Economies of scale - Answer-Decreases in cost per unit as output increases
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
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 that is
achievable through economies of scale
Strategic trade-offs - Answer-Choices between a cost or value position. Such choices
are necessary because higher value creation tends to generate higher cost
Architectural innovation - Answer-A new product which known components, based on
existing technologies, are reconfigured In a novel way to attack new markets
Disruptive innovation - Answer-An innovation that leverages new technologies to attack
existing markets from the bottom up
Incremental innovation - Answer-An innovation that squarely builds on an established
knowledge base and steadily improves an existing product or service
Process innovation - Answer-New ways to produce existing products or deliver existing
services
, Value innovation - Answer-The simultaneous pursuit of differentiation and low cost in a
way that creates a leap in value for both the firm and the consumers; considered a
cornerstone of blue ocean strategy
Crossing-the-chasm framework - Answer-Conceptual model that shows how each stage
of the industry life cycle is dominated by a different customer group
Entrepreneurship - Answer-The process by which people undertake economic risk to
innovate- to create new products, processes, and sometimes new organizations
First-mover advantages - Answer-Competitive benefits that accrue to the successful
innovator
Industry life cycle - Answer-The five different stages; introduction, growth, shakeout,
maturity, and decline, that occur in the evolution of an industry over time
Network effects - Answer-The positive effect (externality) that one user of a product or
service has on the value of that product for other users
Patent - Answer-A form of intellectual property that gives the inventor exclusive rights to
benefit from commercializing a technology for a specified time period in exchange for
public disclosure of the underlying idea
Platform business - Answer-An enterprise that creates value by matching external
producers and consumers in a way that creates value for all participants, and that
depends on the infrastructure or platform that the enterprise manages
Platform ecosystem - Answer-The market environment in which all players participate
relative to the platform
Reverse innovation - Answer-An innovation that was developed for emerging
economies before introduced in developed economies. Sometimes also called frugal
innovation
Social entrepreneurship - Answer-The pursuit of social goals while creating a profitable
business
Winner-take-all markets - Answer-Markets where the market leader captures almost all
of the market share and is able to extract a significant amount of the value created
Backward vertical integration - Answer-Changes in an industry value chain that involve
moving ownership of activities upstream to originating (inputs) point of value chain
Forward vertical integration - Answer-Changes in an industry value chain that involve
moving ownership of activities closer to the end (customer) point of value chain
Questions and Answers
Business-level strategy - Answer-The goal-directed actions managers take in their quest
for competitive advantage when competing in a single product market
Blue ocean strategy - Answer-Business level strategy that successfully combines
differentiation and cost-leadership activities using value innovation to reconcile the
inherent tradeoffs
Cost-leadership strategy - Answer-Generic business strategy that seeks to create the
same or similar value for customers at a lower cost
Differentiation strategy - Answer-Generic business strategy that seeks to create higher
value for customers than the value that competitors create, while containing costs
Diseconomies of scale - Answer-Increases in cost per unit when output increases
Economies of scale - Answer-Decreases in cost per unit as output increases
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
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 that is
achievable through economies of scale
Strategic trade-offs - Answer-Choices between a cost or value position. Such choices
are necessary because higher value creation tends to generate higher cost
Architectural innovation - Answer-A new product which known components, based on
existing technologies, are reconfigured In a novel way to attack new markets
Disruptive innovation - Answer-An innovation that leverages new technologies to attack
existing markets from the bottom up
Incremental innovation - Answer-An innovation that squarely builds on an established
knowledge base and steadily improves an existing product or service
Process innovation - Answer-New ways to produce existing products or deliver existing
services
, Value innovation - Answer-The simultaneous pursuit of differentiation and low cost in a
way that creates a leap in value for both the firm and the consumers; considered a
cornerstone of blue ocean strategy
Crossing-the-chasm framework - Answer-Conceptual model that shows how each stage
of the industry life cycle is dominated by a different customer group
Entrepreneurship - Answer-The process by which people undertake economic risk to
innovate- to create new products, processes, and sometimes new organizations
First-mover advantages - Answer-Competitive benefits that accrue to the successful
innovator
Industry life cycle - Answer-The five different stages; introduction, growth, shakeout,
maturity, and decline, that occur in the evolution of an industry over time
Network effects - Answer-The positive effect (externality) that one user of a product or
service has on the value of that product for other users
Patent - Answer-A form of intellectual property that gives the inventor exclusive rights to
benefit from commercializing a technology for a specified time period in exchange for
public disclosure of the underlying idea
Platform business - Answer-An enterprise that creates value by matching external
producers and consumers in a way that creates value for all participants, and that
depends on the infrastructure or platform that the enterprise manages
Platform ecosystem - Answer-The market environment in which all players participate
relative to the platform
Reverse innovation - Answer-An innovation that was developed for emerging
economies before introduced in developed economies. Sometimes also called frugal
innovation
Social entrepreneurship - Answer-The pursuit of social goals while creating a profitable
business
Winner-take-all markets - Answer-Markets where the market leader captures almost all
of the market share and is able to extract a significant amount of the value created
Backward vertical integration - Answer-Changes in an industry value chain that involve
moving ownership of activities upstream to originating (inputs) point of value chain
Forward vertical integration - Answer-Changes in an industry value chain that involve
moving ownership of activities closer to the end (customer) point of value chain
