GBA 490 Exam 2 (Meyer)
best cost provider strategy - CORRECT ANSWER-striving to incorporate upscale
product attributes at a lower cost than rivals.
allows a company to give customers more value for their money
hybrid strategy
Low-cost leadership - CORRECT ANSWER-achieves this when it becomes the
industry's lowest-cost provider rather than just being one of perhaps several competitors
with comparatively low costs
low-cost provider's foremost strategic objective - CORRECT ANSWER-meaningfully
lower costs than rivals, but not necessarily the absolutely lowest possible cost
two options for translating a low-cost advantage over rivals into profits - CORRECT
ANSWER-1)use the lower-cost edge to underprice competitors and attract price-
sensitive buyers in great enough numbers to increase total profits
2)maintain the present price, be content with the present market share, and the lower-
cost edge to earn a higher profit margin on each unit sold, thereby raising the firm's total
profits and overall return on investment.
Two major avenues for achieving a cost advantage - CORRECT ANSWER-1)perform
value chain activities more cost effectively than rivals
2)revamp the firm's overall value chain to eliminate or bypass some cost-producing
activities
Cost drivers - CORRECT ANSWER-a factor that has a strong influence on a company's
cost
Cost-cutting approaches that demonstrate an effective use of the cost drivers: -
CORRECT ANSWER-1)Capturing all available economies of scale
2)taking full advantage of experience and learning-curve effects
3)operating facilities at full capacity
4)improving supply chain efficiency
5)substituting lower-cost inputs wherever there is little or no sacrifice in product quality
or performance
6)using the company's bargaining power vis-a-vis suppliers or others in the value chain
system to gain concessions
7)using online systems and sophisticated software to achieve operating efficiencies
8)improving process design and employing advances production technology
9)being alert to the cost advantages of outsourcing or vertical integration
10)motivating employees through incentives and company culture
, Revamping of the value chain system to lower costs - CORRECT ANSWER-1)selling
direct to consumers and bypassing the activities and cost of distributors and dealers
2)streamlining operations by eliminating low-value-added or unnecessary work steps
and activities
3)reducing materials handling and shipping costs by having suppliers locate their plants
or warehouses close to the company's own facilities
- CORRECT ANSWER-success in achieving a low-cost edge over rivals comes from
out-managing rivals in finding ways to perform value chain activities faster more
accurately, and more cost-effectively
when a low-cost provider strategy works best: - CORRECT ANSWER-1)price
competition among rival sellers is vigorous
2)the products of rival sellers are essentially identical and readily available from many
eager sellers
3)it is difficult to achieve product differentiation in ways that have value to buyers
4)most buyers use the product in the same ways
5)buyers incur low costs in switching their purchases from one sellers to another
A low cost provider is in the best position to: - CORRECT ANSWER-win the business of
price-sensitive buyers, set the floor on market price, and still earn a profit
reducing price does not lead to higher total profits unless - CORRECT ANSWER-the
added gains in unit sales are large enough to offset the loss in revenues use to lower
margins per unit sold
The two biggest factors that distinguish one competitive strategy from another: -
CORRECT ANSWER-1)whether a company's market target is broad or narrow
2)whether the company is pursuing a competitive advantage linked to lower costs or
differentiation
Low-cost Provider strategy - CORRECT ANSWER-striving to achieve lower overall
costs than rivals on comparable products that attract a broad spectrum of buyers,
usually by underpricing rivals
Broad Differentiation Strategy - CORRECT ANSWER-seeking to differentiate the
company's product offering from rivals' with attributes that will appeal to a broad
spectrum of buyers
Focused low cost Strategy - CORRECT ANSWER-concentrating on the needs and
requirements of a narrow buyer segment (or market niche) and striving to meet these
needs at lower costs than rivals (thereby being able to serve niche members at a lower
price)
focused differentiation strategy - CORRECT ANSWER-concentrating on a narrow buyer
segment (or market niche) and outcompeting rivals by offering niche members
best cost provider strategy - CORRECT ANSWER-striving to incorporate upscale
product attributes at a lower cost than rivals.
allows a company to give customers more value for their money
hybrid strategy
Low-cost leadership - CORRECT ANSWER-achieves this when it becomes the
industry's lowest-cost provider rather than just being one of perhaps several competitors
with comparatively low costs
low-cost provider's foremost strategic objective - CORRECT ANSWER-meaningfully
lower costs than rivals, but not necessarily the absolutely lowest possible cost
two options for translating a low-cost advantage over rivals into profits - CORRECT
ANSWER-1)use the lower-cost edge to underprice competitors and attract price-
sensitive buyers in great enough numbers to increase total profits
2)maintain the present price, be content with the present market share, and the lower-
cost edge to earn a higher profit margin on each unit sold, thereby raising the firm's total
profits and overall return on investment.
Two major avenues for achieving a cost advantage - CORRECT ANSWER-1)perform
value chain activities more cost effectively than rivals
2)revamp the firm's overall value chain to eliminate or bypass some cost-producing
activities
Cost drivers - CORRECT ANSWER-a factor that has a strong influence on a company's
cost
Cost-cutting approaches that demonstrate an effective use of the cost drivers: -
CORRECT ANSWER-1)Capturing all available economies of scale
2)taking full advantage of experience and learning-curve effects
3)operating facilities at full capacity
4)improving supply chain efficiency
5)substituting lower-cost inputs wherever there is little or no sacrifice in product quality
or performance
6)using the company's bargaining power vis-a-vis suppliers or others in the value chain
system to gain concessions
7)using online systems and sophisticated software to achieve operating efficiencies
8)improving process design and employing advances production technology
9)being alert to the cost advantages of outsourcing or vertical integration
10)motivating employees through incentives and company culture
, Revamping of the value chain system to lower costs - CORRECT ANSWER-1)selling
direct to consumers and bypassing the activities and cost of distributors and dealers
2)streamlining operations by eliminating low-value-added or unnecessary work steps
and activities
3)reducing materials handling and shipping costs by having suppliers locate their plants
or warehouses close to the company's own facilities
- CORRECT ANSWER-success in achieving a low-cost edge over rivals comes from
out-managing rivals in finding ways to perform value chain activities faster more
accurately, and more cost-effectively
when a low-cost provider strategy works best: - CORRECT ANSWER-1)price
competition among rival sellers is vigorous
2)the products of rival sellers are essentially identical and readily available from many
eager sellers
3)it is difficult to achieve product differentiation in ways that have value to buyers
4)most buyers use the product in the same ways
5)buyers incur low costs in switching their purchases from one sellers to another
A low cost provider is in the best position to: - CORRECT ANSWER-win the business of
price-sensitive buyers, set the floor on market price, and still earn a profit
reducing price does not lead to higher total profits unless - CORRECT ANSWER-the
added gains in unit sales are large enough to offset the loss in revenues use to lower
margins per unit sold
The two biggest factors that distinguish one competitive strategy from another: -
CORRECT ANSWER-1)whether a company's market target is broad or narrow
2)whether the company is pursuing a competitive advantage linked to lower costs or
differentiation
Low-cost Provider strategy - CORRECT ANSWER-striving to achieve lower overall
costs than rivals on comparable products that attract a broad spectrum of buyers,
usually by underpricing rivals
Broad Differentiation Strategy - CORRECT ANSWER-seeking to differentiate the
company's product offering from rivals' with attributes that will appeal to a broad
spectrum of buyers
Focused low cost Strategy - CORRECT ANSWER-concentrating on the needs and
requirements of a narrow buyer segment (or market niche) and striving to meet these
needs at lower costs than rivals (thereby being able to serve niche members at a lower
price)
focused differentiation strategy - CORRECT ANSWER-concentrating on a narrow buyer
segment (or market niche) and outcompeting rivals by offering niche members
