71. _____ is best described as the process of manufacturing a large variety of tailor-made products or services at a relatively low unit cost. A. Just-in-time manufacturing B. Mass customization C. Unit-cost production D. Product diversification 72. Innovate Electronics Inc. allows its customers to personalize their refrigerators in terms of the dimensions, the panels inside, and the color and design of the outer body. Also, customers can include additional features like in-built radios, extra lights, and cold water dispensers based on their individual requirements. The company successfully manufactures these tailor-made goods at a relatively low unit cost and provides it to the customers at a price almost equal to that of the standard refrigerators sold by other companies. What does this scenario best illustrate? A. Mass customization B. Cannibalizati on C. Product standardization D. Direct imitation 73. BodyBlush Inc. is a brand reputed for its wide variants of body wash that introduced its range of shampoos and skin moisturizers a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is BodyBlush applying? A. Mass customization B. Economies of scope C. Learning-curve effect D. Network effect 74. DFS Electronics Inc. ensures that all its products are highly durable and reliable by using techniques like zero-defect and lean manufacturing systems. These efforts not only add to the products' differential appeal, but also help the company save costs during production and avoid expenses due to after-sales services. Thus, the common value and cost driver responsible for DFS Electronics' strategic position as an integrator is the _____. A. network effect B. availability of complements C. qualit y D. diseconomies of scale 75. Which of the following drivers simultaneously increases value while lowering cost? A. Economies of scale B. Superior customer service C. Availability of complements D. Innovati on 76. When a firm is successful at pursuing an integration strategy, _____. A. investments in differentiation are complements B. value and cost exhibit a positive correlation C. low cost acts as a substitute D. investments in process and product technologies are substitutes 77. When a firm applies its current knowledge to enhance its performance in the short term, it is referred to as _____. A. exploitati on B. explorati on C. pattern recognition D. lateral thinking 78. _____ is when a firm is searching for new knowledge that could enhance its future performance. A. Pattern recognition B. Reverse mentoring C. Exploitati on D. Explorati on 79. An integration strategy differs from a low-cost strategy in that: A. the intent of an integration strategy is not to be the absolute lowest-cost provider because an integrator must also increase perceived value. B. the focus of an integrator is on lowering the economic value created, whereas a cost leader focuses on increasing the economic value created. C. economies of scale are more important to an integrator, while economies of scope are more important to a cost leader. D. an integrator's research and development focus is on process technologies, and a cost-leader's focus is on product technologies. 80. The productivity frontier represents a(n): A. convex structure (bulging inward) to capture the trade-off between value creation and production cost. B. set of best-in-class strategic positions the firm can take relating to value creation and low cost at a given point in time. C. output level a firm must operate at to achieve the breakeven point. D. combination of two commodities that can be purchased with a fixed amount of budget. 81. The productivity frontier function is concave, and it captures the: A. negative correlation between economies of scale and economies of scope. B. complementary relationship between differentiation and cost-leadership strategies. C. trade-off between value creation and production cost. D. inverse relationship between experience effects and learning effects. 82. A firm is said to have a competitive advantage over its rivals when it: A. experiences diseconomies of scale. B. reaches the productivity frontier. C. moves up a given learning curve. D. lowers the value gap created. 83. The productivity frontier provides a theoretical reflection of the possible best practices at any given time. Why is this an important tool for managers? A. It suggests ways to lower the value gap created. B. Strategic positions are not fixed, and firms have to refine their positions over time. C. Firms strive to stay below the productivity frontier. D. It allows managers to maintain a less steeper learning curve as compared to their competitors. 84. Which of the following statements is true of a strategic position? A. Choosing a strategic position requires making important trade-offs between value and cost positions. B. Strategic positions are fixed; they do not change like the environment. C. Differentiation and cost leadership require similar strategic positions. D. A firm is said to have a competitive advantage when it ends up with strategic positions below the productivity frontier. Short Answer Questions 85. In Chapter Case 6, it is seen that P&G differentiates itself from competitors by offering branded consumer product goods with distinct features and attributes. Discuss how this strategy has affected P&G. What measures can P&G take to strengthen its strategic position? 86. What are the key questions managers must answer to formulate an appropriate business-level strategy? 87. What is the difference between a strategic position and a strategic trade-off? 88. What are the two different generic business strategies available to firms? 89. Why are differentiation and cost-leadership strategies called generic strategies? 90. What is a focused differentiation strategy? Explain with the help of an example. 91. Discuss product features as value drivers. 92. How does the availability of complements act as value drivers? 93. When a firm pursues differentiation strategy, what does it focus on? 94. What is higher value associated with? 95. What is a value gap? 96. What are the pricing options available to a firm following a differentiation strategy? 97. What condition must value drivers fulfill in order to enhance a firm's competitive advantage? 98. What does a firm that pursues a cost-leadership strategy primarily focus on? 99. Discuss the pricing options available to a firm pursuing a cost-leadership strategy. 100 What is meant by differentiation parity and cost parity? . 101 List how economies of scale contribute to a firm. . 102 How does operating at the minimum efficient scale benefit a firm? . 103 What is the difference between economies of scale and diseconomies of scale? . 104 Why do diseconomies of scale occur? . 105 Discuss the important differences between economies of scale and learning effects. . 106 How do experience-curve and learning-curve effects help a business gain competitive . advantage? 107 How does process innovation benefit a firm? . 108 How are the benefits different for cost leadership and differentiation strategies when . analyzing the power of suppliers in an industry? 109 How are cost leaders and differentiators protected against powerful buyers? . 110 How are the benefits different for cost leadership versus differentiation when . analyzing the threats of substitutes in an industry? 111 Discuss the threats a cost leader faces when there are new entrants into the market. . 112 Why is keeping its costs the lowest in the industry not the only focus of a firm . pursuing cost-leadership strategy? 113 Discuss the threats firms face when they pursue a differentiation strategy. . 114 What does the success of business-level strategies depend on? . 115 What is an integration strategy? . 116 Discuss the pricing options a firm has when it follows an integration strategy. . 117 When pursuing an integration strategy, what does a firm's competitive advantage . depend on? 118 List the value and cost drivers that managers can use to pursue an integration . strategy. 119 How does quality act as a value and cost driver in integration strategy? . 120 Explain economies of scope. . 121 Discuss mass customization. . 122 Briefly describe an ambidextrous organization. . 123 Briefly explain the difficulties in pursuing an integration strategy. . 124 How does productivity frontier help a firm attain competitive advantage? . 125 Why is it important for managers to understand the dynamics of competitive . positioning?