Ch02
Student: ___________________________________________________________________________
1. What determines the value of a product?
A. its technology
B. its market price
C. the price the customer would be willing to pay for it in the absence of competing products and given
budget constraints
D. the market prices of competing products
2. Which of the following are isolating mechanisms?
A. causal ambiguity
B. property rights
C. learning and development costs
D. all of the choices are correct
3. Which of the following are value drivers: 1. the product's technology, 2. the firm's geographical scope, 3.
economies of scale, 4. network externalities?
A. 1 and 2
B. 1, 2 and 3
C. 1, 2 and 4
D. all
4. Which of the following are cost drivers: 1. the learning curve, 2. economies of scope, 3. firm revenues, 4.
complementary products?
A. 1 and 2
B. 3 and 4
C. 1 and 4
D. 1, 3 and 4
5. A firm creates a network externality when:
A. all its products are connected
B. the products are produced using network technologies
C. the benefit customers receive from using the firm's product increases as new customers are added
D. customers using the product speak to each other
6. A product whose value cannot be measured without trying it out is called
A. a search good
B. an experience good
C. a service product
D. a transition good
7. Which of the following value drivers is less likely to contribute to customer retention?
A. customization
B. geographical scope
C. network externalities
D. product line breadth
8. If a firm is neither a cost leader nor a differentiator, it is called
A. competitively disadvantaged
B. poorly positioned
C. stuck in the middle
D. lost in competitive space
,9. What determines a superior market position compared to rivals?
A. the difference between value and cost
B. superior technology
C. economies of scope
D. cost leadership
10. The difference between product value and market price is called
A. the source of customer sensitivity
B. the firm's profit
C. the buyer's surplus
D. the firm's economic contribution
11. A generic strategy always represents a superior market position.
True False
12. A superior market position compared to rivals is sufficient to achieve a sustainable competitive
advantage.
True False
13. Reducing costs provides a greater return than increasing value when the marginal customer is price, not
value, sensitive.
True False
14. The price customers pay always represents the full value of the product.
True False
15. Development costs in imitating a capability increase when it is tied to complementary practices.
True False
16. A key assumption regarding the disadvantage of being stuck in the middle is that demand is insufficient
to allow the firm to improve its position.
True False
17. Investing in cost drivers can improve the firm's performance by allowing it to lower prices.
True False
18. Cost reduction, compared to increasing value, is more attractive when the firms in an industry have
access to the same process innovations.
True False
19. The benefit of customer one-stop shopping pertains to the value driver of customization.
True False
20. Cisco's major value drivers are service and breadth of line.
True False
, Ch02 Key
1. What determines the value of a product?
(p. 25) A. its technology
B. its market price
C. the price the customer would be willing to pay for it in the absence of competing products and
given budget constraints
D. the market prices of competing products
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #1
2. Which of the following are isolating mechanisms?
(p. 44) A. causal ambiguity
B. property rights
C. learning and development costs
D. all of the choices are correct
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #2
3. Which of the following are value drivers: 1. the product's technology, 2. the firm's geographical scope,
(p. 36) 3. economies of scale, 4. network externalities?
A. 1 and 2
B. 1, 2 and 3
C. 1, 2 and 4
D. all
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #3
4. Which of the following are cost drivers: 1. the learning curve, 2. economies of scope, 3. firm revenues,
(p. 36) 4. complementary products?
A. 1 and 2
B. 3 and 4
C. 1 and 4
D. 1, 3 and 4
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #4
5. A firm creates a network externality when:
(p. 39) A. all its products are connected
B. the products are produced using network technologies
C. the benefit customers receive from using the firm's product increases as new customers are added
D. customers using the product speak to each other
Difficulty: moderate
Type: vocabulary
Walker - Chapter 02 #5
6. A product whose value cannot be measured without trying it out is called
(p. 48) A. a search good
B. an experience good
C. a service product
D. a transition good
Difficulty: moderate
Type: vocabulary
Walker - Chapter 02 #6
, 7. Which of the following value drivers is less likely to contribute to customer retention?
(p. 48-49) A. customization
B. geographical scope
C. network externalities
D. product line breadth
Difficulty: moderate
Type: application
Walker - Chapter 02 #7
8. If a firm is neither a cost leader nor a differentiator, it is called
(p. 28) A. competitively disadvantaged
B. poorly positioned
C. stuck in the middle
D. lost in competitive space
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #8
9. What determines a superior market position compared to rivals?
(p. 24) A. the difference between value and cost
B. superior technology
C. economies of scope
D. cost leadership
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #9
10. The difference between product value and market price is called
(p. 27) A. the source of customer sensitivity
B. the firm's profit
C. the buyer's surplus
D. the firm's economic contribution
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #10
11. A generic strategy always represents a superior market position.
(p. 31) FALSE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #11
12. A superior market position compared to rivals is sufficient to achieve a sustainable competitive
(p. 24) advantage.
FALSE
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #12
13. Reducing costs provides a greater return than increasing value when the marginal customer is price,
(p. 35) not value, sensitive.
TRUE
Difficulty: easy
Type: application
Walker - Chapter 02 #13
14. The price customers pay always represents the full value of the product.
(p. 25) FALSE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #14
15. Development costs in imitating a capability increase when it is tied to complementary practices.
(p. 47) TRUE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #15
Student: ___________________________________________________________________________
1. What determines the value of a product?
A. its technology
B. its market price
C. the price the customer would be willing to pay for it in the absence of competing products and given
budget constraints
D. the market prices of competing products
2. Which of the following are isolating mechanisms?
A. causal ambiguity
B. property rights
C. learning and development costs
D. all of the choices are correct
3. Which of the following are value drivers: 1. the product's technology, 2. the firm's geographical scope, 3.
economies of scale, 4. network externalities?
A. 1 and 2
B. 1, 2 and 3
C. 1, 2 and 4
D. all
4. Which of the following are cost drivers: 1. the learning curve, 2. economies of scope, 3. firm revenues, 4.
complementary products?
A. 1 and 2
B. 3 and 4
C. 1 and 4
D. 1, 3 and 4
5. A firm creates a network externality when:
A. all its products are connected
B. the products are produced using network technologies
C. the benefit customers receive from using the firm's product increases as new customers are added
D. customers using the product speak to each other
6. A product whose value cannot be measured without trying it out is called
A. a search good
B. an experience good
C. a service product
D. a transition good
7. Which of the following value drivers is less likely to contribute to customer retention?
A. customization
B. geographical scope
C. network externalities
D. product line breadth
8. If a firm is neither a cost leader nor a differentiator, it is called
A. competitively disadvantaged
B. poorly positioned
C. stuck in the middle
D. lost in competitive space
,9. What determines a superior market position compared to rivals?
A. the difference between value and cost
B. superior technology
C. economies of scope
D. cost leadership
10. The difference between product value and market price is called
A. the source of customer sensitivity
B. the firm's profit
C. the buyer's surplus
D. the firm's economic contribution
11. A generic strategy always represents a superior market position.
True False
12. A superior market position compared to rivals is sufficient to achieve a sustainable competitive
advantage.
True False
13. Reducing costs provides a greater return than increasing value when the marginal customer is price, not
value, sensitive.
True False
14. The price customers pay always represents the full value of the product.
True False
15. Development costs in imitating a capability increase when it is tied to complementary practices.
True False
16. A key assumption regarding the disadvantage of being stuck in the middle is that demand is insufficient
to allow the firm to improve its position.
True False
17. Investing in cost drivers can improve the firm's performance by allowing it to lower prices.
True False
18. Cost reduction, compared to increasing value, is more attractive when the firms in an industry have
access to the same process innovations.
True False
19. The benefit of customer one-stop shopping pertains to the value driver of customization.
True False
20. Cisco's major value drivers are service and breadth of line.
True False
, Ch02 Key
1. What determines the value of a product?
(p. 25) A. its technology
B. its market price
C. the price the customer would be willing to pay for it in the absence of competing products and
given budget constraints
D. the market prices of competing products
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #1
2. Which of the following are isolating mechanisms?
(p. 44) A. causal ambiguity
B. property rights
C. learning and development costs
D. all of the choices are correct
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #2
3. Which of the following are value drivers: 1. the product's technology, 2. the firm's geographical scope,
(p. 36) 3. economies of scale, 4. network externalities?
A. 1 and 2
B. 1, 2 and 3
C. 1, 2 and 4
D. all
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #3
4. Which of the following are cost drivers: 1. the learning curve, 2. economies of scope, 3. firm revenues,
(p. 36) 4. complementary products?
A. 1 and 2
B. 3 and 4
C. 1 and 4
D. 1, 3 and 4
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #4
5. A firm creates a network externality when:
(p. 39) A. all its products are connected
B. the products are produced using network technologies
C. the benefit customers receive from using the firm's product increases as new customers are added
D. customers using the product speak to each other
Difficulty: moderate
Type: vocabulary
Walker - Chapter 02 #5
6. A product whose value cannot be measured without trying it out is called
(p. 48) A. a search good
B. an experience good
C. a service product
D. a transition good
Difficulty: moderate
Type: vocabulary
Walker - Chapter 02 #6
, 7. Which of the following value drivers is less likely to contribute to customer retention?
(p. 48-49) A. customization
B. geographical scope
C. network externalities
D. product line breadth
Difficulty: moderate
Type: application
Walker - Chapter 02 #7
8. If a firm is neither a cost leader nor a differentiator, it is called
(p. 28) A. competitively disadvantaged
B. poorly positioned
C. stuck in the middle
D. lost in competitive space
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #8
9. What determines a superior market position compared to rivals?
(p. 24) A. the difference between value and cost
B. superior technology
C. economies of scope
D. cost leadership
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #9
10. The difference between product value and market price is called
(p. 27) A. the source of customer sensitivity
B. the firm's profit
C. the buyer's surplus
D. the firm's economic contribution
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #10
11. A generic strategy always represents a superior market position.
(p. 31) FALSE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #11
12. A superior market position compared to rivals is sufficient to achieve a sustainable competitive
(p. 24) advantage.
FALSE
Difficulty: easy
Type: knowledge
Walker - Chapter 02 #12
13. Reducing costs provides a greater return than increasing value when the marginal customer is price,
(p. 35) not value, sensitive.
TRUE
Difficulty: easy
Type: application
Walker - Chapter 02 #13
14. The price customers pay always represents the full value of the product.
(p. 25) FALSE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #14
15. Development costs in imitating a capability increase when it is tied to complementary practices.
(p. 47) TRUE
Difficulty: moderate
Type: knowledge
Walker - Chapter 02 #15
