Exam 7: The Sources and Dimensions of Competitive Advantage

Competitive advantage can be defined as:

The cost reductions that firms derive from moving down their experience curves are mainly the result of learning which increases the productivity of labor.

The fact that a firm's "activity system" comprises closely linked,complementary activities simplifies the task of imitating a competitor's strategy.

The principal distinction between segmentation and differentiation is that segmentation is a strategic choice by a firm while differentiation is a feature of market structure.

Strategic innovation comprises the introduction of novel products or processes that embody new technology

The examples of Ikea and Southwest Airlines demonstrate:

There are two primary sources of competitive advantage: cost advantage and differentiation advantage.

The main strategy implication of the Boston Consulting Group's analysis of experience curves was that firms should not lower profit trade profit margins in order to seek sales growth.

Designing a differentiation strategy requires understanding every possible interaction between a firm and its customers

Differentiation addresses "how" a firm competes in terms of the way in which it can offer uniqueness to its customers

Physical characteristics of a product are of little importance in determining its potential for differentiation

When an industry is subject to externally generated changes,the firms which are most likely to establish a competitive advantage are:

If the prices of securities fully reflect all the information available,then passive investors are best advised to invest in index-based mutual funds (unit trusts)with the lowest administration costs.

Business Process Reengineering that starts with a "clean sheet of paper" runs the risk of destroying some valuable organizational capabilities which have taken many years to build

The potential for spreading fixed costs over a greater volume of output means that unit cost continues to decline even after full capacity utilization has been reached.

One reason that the value chain analysis is a valuable tool for cost analysis is that cost drivers tend to be very different between the different activities of the firm.

Which of the following product categories offers the greatest potential for differentiation?

Compared with simple products like flour or toilet paper,complex products such as cars or hotels:

Isolating mechanisms are:

The difference between "search goods" and "experience goods" depends upon whether customers can ascertain the product's true attributes: on inspection or only after consuming the product