BUS 498 ch. 1-6 Questions and Answers|
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Cost-leadership Strategy 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.
Differentiation Strategy 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 at the same or similar levels.
Diseconomies of Scale Increases in cost per unit when output increases.
Economies of Scale Decreases in cost per unit as output increases.
Economies of Scope Savings that come from producing two (or more) outputs at less cost
than producing each output individually, despite using the same resources and technology.
Focused Cost-leadership Strategy Same as the cost-leadership strategy except with a
narrow focus on a niche market.
Focused Differentiation Strategy Same as the differentiation strategy except with a
narrow focus on a niche market.
Integration Strategy Business-level strategy that successfully combines differentiation and
cost-leadership activities.
Mass Customization The manufacture of a large variety of customized products or
services at a relatively low unit cost.
, Minimum Efficient Scale (MES) 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.
Productivity Frontier Relationship that captures the result of performing best practices at
any given time; the function is concave (bulging outward) to capture the trade-off between
value creation and production cost.
Scope of Competition The size--narrow or broad--of the market in which a firm chooses
to compete.
Strategic Trade-offs Choices between a cost or value position. Such choices are necessary
because higher value tends to require higher cost.
Value Driver examples Product Features, Customer Service, Complements
Cost Driver examples Input factors, Economies of Scale, Learning Curves, Experience
Curves
AFI Strategy Framework A model that links three interdependent strategic management
tasks - analyze, formulate, and implement - that together, help managers plan and implement a
strategy that can improve performance and result in competitive advantage.
Black Swan Events Incidents that describe highly improbable but high-impact events.
Competitive Advantage Superior performance relative to other competitors in the same
industry or the industry average.
Latest Update
Cost-leadership Strategy 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.
Differentiation Strategy 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 at the same or similar levels.
Diseconomies of Scale Increases in cost per unit when output increases.
Economies of Scale Decreases in cost per unit as output increases.
Economies of Scope Savings that come from producing two (or more) outputs at less cost
than producing each output individually, despite using the same resources and technology.
Focused Cost-leadership Strategy Same as the cost-leadership strategy except with a
narrow focus on a niche market.
Focused Differentiation Strategy Same as the differentiation strategy except with a
narrow focus on a niche market.
Integration Strategy Business-level strategy that successfully combines differentiation and
cost-leadership activities.
Mass Customization The manufacture of a large variety of customized products or
services at a relatively low unit cost.
, Minimum Efficient Scale (MES) 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.
Productivity Frontier Relationship that captures the result of performing best practices at
any given time; the function is concave (bulging outward) to capture the trade-off between
value creation and production cost.
Scope of Competition The size--narrow or broad--of the market in which a firm chooses
to compete.
Strategic Trade-offs Choices between a cost or value position. Such choices are necessary
because higher value tends to require higher cost.
Value Driver examples Product Features, Customer Service, Complements
Cost Driver examples Input factors, Economies of Scale, Learning Curves, Experience
Curves
AFI Strategy Framework A model that links three interdependent strategic management
tasks - analyze, formulate, and implement - that together, help managers plan and implement a
strategy that can improve performance and result in competitive advantage.
Black Swan Events Incidents that describe highly improbable but high-impact events.
Competitive Advantage Superior performance relative to other competitors in the same
industry or the industry average.
