WPC 480 Exam 2 UPDATED ACTUAL
Questions and CORRECT Answers
Blue Ocean Strategy - CORRECT ANSWER - - Successfully combining differentiation
and cost-leadership activities
- Uses value innovation to reconcile trade-offs (Between Differentiation & Cost Leadership)
"Untapped Market Space"
"Create additional demand"
"Opportunity for Highly Profitable Growth"
How to Increase Consumer Perceived Benefits? - CORRECT ANSWER - - Raise, raise the
standard and industry norm to your business
- Create, Create something the industry has never offered
What are 2 Value Innovation Strategies ? - CORRECT ANSWER - 1. Lowering Costs
(Eliminate & Reduce)
2. Increase perceived Consumer Benefits (Raise & Create)
Threat of Entry (Competitive Forces, Differentiation) - CORRECT ANSWER --
Protection due to intangible resources, innovation, and customer service
- Risk include Erosion of Margins and Replacement
Threat of Entry (Cost Leadership) - CORRECT ANSWER - - Protects against entry due to
Economies of Scale
,- Risk include Erosion of Margins and Replacement
Power of Suppliers (Differentiation) - CORRECT ANSWER - - protection against input
prices which can be passed to customers
Risks include Erosion of Margins
Power of Suppliers (Cost Leadership) - CORRECT ANSWER - - Protection against
increase in input prices which can be absorbed
- Risks include Erosion of Margins
Power of Buyers (Differentiation) - CORRECT ANSWER - - Protection against decreased
sales prices
- Are well differentiated products
- Risks, Erosion of Margins
Power of Buyers (Cost Leadership) - CORRECT ANSWER - - Protected against decrease
in sales prices
- Can be absorbed
- Risks, Erosion of Margins
Threat of Substitutes (Differentiation) - CORRECT ANSWER - - Protection against
substitute, differential appeal
- Risks, Replacement when face with Innovation*
, Threat of Substitutes (Cost Leadership) - CORRECT ANSWER - - Protection against
substitutes through further lower prices
- Risks, Replacement when faced with innovation
Rivalry Among Competitors (Differentiation) - CORRECT ANSWER - - Protection ONLY
if product has enough differential appeal
- Competition focus = Price Shifts
- Risks, Increasing product features and no recovery profit
Rivalry Among Competitors (Cost Leadership) - CORRECT ANSWER - - Protection
against price wars because lowest cost firm WINS
- Risks, lowering costs to drive value below acceptable threshold
- Focus of competition to switch to non-price attributes (enhancing a product without cost inputs)
Economies of Scope - CORRECT ANSWER - - Savings that come from producing 2 or
more outputs (cheaper than it would be to produce them individually)
How do Managers Increase Perceived Value or Decrease Costs? - CORRECT ANSWER -
1. Product Features
2. Customer Service
3. Complements
Different value drivers contribute to Competitive Advantage if V > C
Questions and CORRECT Answers
Blue Ocean Strategy - CORRECT ANSWER - - Successfully combining differentiation
and cost-leadership activities
- Uses value innovation to reconcile trade-offs (Between Differentiation & Cost Leadership)
"Untapped Market Space"
"Create additional demand"
"Opportunity for Highly Profitable Growth"
How to Increase Consumer Perceived Benefits? - CORRECT ANSWER - - Raise, raise the
standard and industry norm to your business
- Create, Create something the industry has never offered
What are 2 Value Innovation Strategies ? - CORRECT ANSWER - 1. Lowering Costs
(Eliminate & Reduce)
2. Increase perceived Consumer Benefits (Raise & Create)
Threat of Entry (Competitive Forces, Differentiation) - CORRECT ANSWER --
Protection due to intangible resources, innovation, and customer service
- Risk include Erosion of Margins and Replacement
Threat of Entry (Cost Leadership) - CORRECT ANSWER - - Protects against entry due to
Economies of Scale
,- Risk include Erosion of Margins and Replacement
Power of Suppliers (Differentiation) - CORRECT ANSWER - - protection against input
prices which can be passed to customers
Risks include Erosion of Margins
Power of Suppliers (Cost Leadership) - CORRECT ANSWER - - Protection against
increase in input prices which can be absorbed
- Risks include Erosion of Margins
Power of Buyers (Differentiation) - CORRECT ANSWER - - Protection against decreased
sales prices
- Are well differentiated products
- Risks, Erosion of Margins
Power of Buyers (Cost Leadership) - CORRECT ANSWER - - Protected against decrease
in sales prices
- Can be absorbed
- Risks, Erosion of Margins
Threat of Substitutes (Differentiation) - CORRECT ANSWER - - Protection against
substitute, differential appeal
- Risks, Replacement when face with Innovation*
, Threat of Substitutes (Cost Leadership) - CORRECT ANSWER - - Protection against
substitutes through further lower prices
- Risks, Replacement when faced with innovation
Rivalry Among Competitors (Differentiation) - CORRECT ANSWER - - Protection ONLY
if product has enough differential appeal
- Competition focus = Price Shifts
- Risks, Increasing product features and no recovery profit
Rivalry Among Competitors (Cost Leadership) - CORRECT ANSWER - - Protection
against price wars because lowest cost firm WINS
- Risks, lowering costs to drive value below acceptable threshold
- Focus of competition to switch to non-price attributes (enhancing a product without cost inputs)
Economies of Scope - CORRECT ANSWER - - Savings that come from producing 2 or
more outputs (cheaper than it would be to produce them individually)
How do Managers Increase Perceived Value or Decrease Costs? - CORRECT ANSWER -
1. Product Features
2. Customer Service
3. Complements
Different value drivers contribute to Competitive Advantage if V > C
