Question 1

Which of the following statements is true of cost advantage?

Accepted Answer

A) Large firms are guaranteed to secure a wide cost advantage. 
B) Size and scale do not always guarantee a cost advantage. 
C) Firms with high production volumes are sure to gain a cost advantage. 
D) Firms which produce standardized products have a cost advantage. 
A) Large firms are guaranteed to secure a wide cost advantage. 
B) Size and scale do not always guarantee a cost advantage. 
C) Firms with high production volumes are sure to gain a cost advantage. 
D) Firms which produce standardized products have a cost advantage. B

Question 2

String Line Inc.has established a loyal supplier base.The management at String Line had created a system in which it chooses a supplier that is reasonably affordable, and instead of quoting the company's price and demanding that it be met, it complies with the supplier's quotes.Over time, this has established a bond of loyalty with the supplier.When String Line opened a new branch, the supplier built its plant close to the branch so as to save transportation costs.Which of the following has String Line Inc.established with the supplier?

Accepted Answer

A) Rivalry 
B) Cooperation 
C) Competition 
D) Access 
A) Rivalry 
B) Cooperation 
C) Competition 
D) Access B

Question 3

A reduction in costs per unit due to increases in efficiency of production as the number of goods being produced increases best defines the term _____.

Accepted Answer

A) economies of scope 
B) economies of finance 
C) economies of scale 
D) economies of wealth 
A) economies of scope 
B) economies of finance 
C) economies of scale 
D) economies of wealth C

Question 4

Define learning curve, experience curve, and scale curve.Compare them with each other.

Accepted Answer

Scale curve is a graphic representation

Question 5

Taurus Inc.usually produces 5,000 handcrafted products in a day.Recently, the demand for handcrafted products drastically increased as one of its products became a popular item for home décor.Due to this increase, the company had to up its production level to 10,000 products per day.This, however, decreased the price of individual products.This scenario best illustrates _____.

Accepted Answer

A) economies of wealth 
B) economies of finance 
C) economies of scope 
D) economies of scale 
A) economies of wealth 
B) economies of finance 
C) economies of scope 
D) economies of scale

Question 6

Which of the following statements best defines the law of experience?

Accepted Answer

A) Costs per unit decrease with increases in cumulative volume of production. 
B) The average total cost of production decreases as a result of increasing the number of different goods produced. 
C) Cost per unit decreases with increase in the years of experience of employees. 
D) Marginal cost increases when output is increased. 
A) Costs per unit decrease with increases in cumulative volume of production. 
B) The average total cost of production decreases as a result of increasing the number of different goods produced. 
C) Cost per unit decreases with increase in the years of experience of employees. 
D) Marginal cost increases when output is increased.

Question 7

Orange Superstore is largely customer centric and economical in its methods.The store sells the best quality products at prices that are lower than other stores.The store depends on the fact that its salespeople get better at completing their tasks over time.This method used by Orange Superstore is an example of _____.

Accepted Answer

A) cost limitation strategy 
B) cost advantage strategy 
C) proprietary knowledge strategy 
D) sustained competitive advantage strategy 
A) cost limitation strategy 
B) cost advantage strategy 
C) proprietary knowledge strategy 
D) sustained competitive advantage strategy

Question 8

Which of the following is a primary characteristic of employing automated equipment in a company with high levels of production?

Accepted Answer

A) They help employees to acquire specialized knowledge that helps them complete tasks more efficiently. 
B) The general and administrative costs would be high for large companies. 
C) They do not help in spreading out the fixed cost of production. 
D) Large companies can reduce per-unit cost of production. 
A) They help employees to acquire specialized knowledge that helps them complete tasks more efficiently. 
B) The general and administrative costs would be high for large companies. 
C) They do not help in spreading out the fixed cost of production. 
D) Large companies can reduce per-unit cost of production.

Question 9

VisionZed Inc., a computer software company, spends a lot of finances on research.It tries to implement the latest technologies available and provides services that are matchless when compared to any of its competitors.At the same time, Xtron Technologies Corp., another computer software company, pays half the price that VisionZed pays on research as it combines the intelligence of different software companies and creates its product.This enables Xtron to have a cost advantage over VisionZed.Xtron Technologies Corp.is an example of a company that eliminates steps in the _____.

Accepted Answer

A) supply chain 
B) growth chain 
C) value chain 
D) pricing chain 
A) supply chain 
B) growth chain 
C) value chain 
D) pricing chain

Question 10

Explain proprietary knowledge and its important sources.

Accepted Answer

In some cases companies are able to achi

Question 11

In a recent presentation by the management of Seas Inc., the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product.Which of the following charts did the presenters of Seas discuss?

Accepted Answer

A) The learning curve 
B) The experience curve 
C) The scale curve 
D) The value curve 
A) The learning curve 
B) The experience curve 
C) The scale curve 
D) The value curve

Question 12

Connections Communications Inc.has been able to achieve optimal efficiency by identifying a task for each employee and enabling them to become thoroughly proficient in their tasks.The company has realized that employees develop an expertise in their specified job profile over time and they gradually begin to work faster than when they started the job.This is an example of _____.

Accepted Answer

A) task specialization 
B) employee specialization 
C) minimum efficient scale 
D) competitive parity 
A) task specialization 
B) employee specialization 
C) minimum efficient scale 
D) competitive parity

Question 13

Economies of scale _____.

Accepted Answer

A) exist when cost per unit increases with decrease in volume 
B) are not more relevant in some industries than others 
C) arise from the ability to spread fixed costs of production 
D) produce cost advantages for smaller firms over larger firms 
A) exist when cost per unit increases with decrease in volume 
B) are not more relevant in some industries than others 
C) arise from the ability to spread fixed costs of production 
D) produce cost advantages for smaller firms over larger firms

Question 14

Which of the following statements is true of a company's general and administrative costs (G&A)?

Accepted Answer

A) They are part of a company's production costs. 
B) They exclude the expenses of operating a company. 
C) They include Research and Development (R&
D)  expenses. 
D) They help a company with high sales volume that creates cost advantage by managing its G&A across more units. 
A) They are part of a company's production costs. 
B) They exclude the expenses of operating a company. 
C) They include Research and Development (R&
D)  expenses. 
D) They help a company with high sales volume that creates cost advantage by managing its G&A across more units.

Question 15

DFN Inc.expanded its manufacturing plant to employ more equipment because the management of the company thought this would help them attain more sales.Unfortunately, this affected the cost of each unit produced because the company invested more finances for better equipment.This also led to a decrease in sales as customers were not willing to buy the product for an increased price.This scenario best illustrates _____.

Accepted Answer

A) competitive failure 
B) diseconomies of scale 
C) economies of scale 
D) virtuous circle 
A) competitive failure 
B) diseconomies of scale 
C) economies of scale 
D) virtuous circle

Question 16

Identify a true statement about economies of scope.

Accepted Answer

A) They exist when costs are reduced by increasing the volume of a specific activity. 
B) They exist when costs are reduced by expanding the scope of a company's operations to related activities. 
C) They occur when a company decreases its output below the minimum efficient scale. 
D) They occur when a company increases its output beyond the minimum efficient scale. 
A) They exist when costs are reduced by increasing the volume of a specific activity. 
B) They exist when costs are reduced by expanding the scope of a company's operations to related activities. 
C) They occur when a company decreases its output below the minimum efficient scale. 
D) They occur when a company increases its output beyond the minimum efficient scale.

Question 17

Attire Corp., a garment manufacturing company, explains to its employees why its previous year's sales had not met the required standards.The management uses a diagram of the cost acquired for each item manufactured against the volume of items produced in a particular period of time.The pictorial representation is an example of the _____.

Accepted Answer

A) scale curve 
B) value curve 
C) learning curve 
D) experience curve 
A) scale curve 
B) value curve 
C) learning curve 
D) experience curve

Question 18

Identify a primary way in which companies achieve cost advantage through lower-cost inputs.

Accepted Answer

A) By allowing suppliers to exercise strong bargaining power 
B) By cooperating especially well with suppliers 
C) By getting inputs from far-off locations 
D) By blocking access to inputs for other companies 
A) By allowing suppliers to exercise strong bargaining power 
B) By cooperating especially well with suppliers 
C) By getting inputs from far-off locations 
D) By blocking access to inputs for other companies

Question 19

Five Checkers Inc.has been able to purchase more supplies for less money than its competitors.Five Checkers makes use of a set of communication skills that create compromising deals with its suppliers.Sound reasons are stated by Five Checkers to show why the suppliers must reduce their prices.The reasons are accepted by the suppliers and thus have helped increase profits for Five Checkers Inc.In this scenario, Five Checkers Inc.used _____.

Accepted Answer

A) purchasing volume 
B) negotiating volume 
C) learning curves 
D) negotiating tactics 
A) purchasing volume 
B) negotiating volume 
C) learning curves 
D) negotiating tactics

Question 20

In large organizations, diseconomies of scale can happen because large plants _____.

Accepted Answer

A) are associated with decreased waste 
B) become very complex to manage 
C) have an output that is below the minimum efficient scale 
D) are linked to higher employee motivation 
A) are associated with decreased waste 
B) become very complex to manage 
C) have an output that is below the minimum efficient scale 
D) are linked to higher employee motivation

Which of the following statements is true of cost advantage?

A reduction in costs per unit due to increases in efficiency of production as the number of goods being produced increases best defines the term _____.

Define learning curve, experience curve, and scale curve.Compare them with each other.

Which of the following statements best defines the law of experience?

Which of the following is a primary characteristic of employing automated equipment in a company with high levels of production?

Explain proprietary knowledge and its important sources.

In a recent presentation by the management of Seas Inc., the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product.Which of the following charts did the presenters of Seas discuss?

Economies of scale _____.

Which of the following statements is true of a company's general and administrative costs (G&A)?

Identify a true statement about economies of scope.

Identify a primary way in which companies achieve cost advantage through lower-cost inputs.

In large organizations, diseconomies of scale can happen because large plants _____.

What Is Business Strategy

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters

Exam 4: Cost Advantage

Which of the following statements is true of cost advantage?

A reduction in costs per unit due to increases in efficiency of production as the number of goods being produced increases best defines the term _____.

Define learning curve, experience curve, and scale curve.Compare them with each other.

Which of the following statements best defines the law of experience?

Which of the following is a primary characteristic of employing automated equipment in a company with high levels of production?

Explain proprietary knowledge and its important sources.

In a recent presentation by the management of Seas Inc., the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product.Which of the following charts did the presenters of Seas discuss?

Economies of scale _____.

Which of the following statements is true of a company's general and administrative costs (G&A)?

Identify a true statement about economies of scope.

Identify a primary way in which companies achieve cost advantage through lower-cost inputs.

In large organizations, diseconomies of scale can happen because large plants _____.

What Is Business Strategy

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters