COB 487 - EXAM 2 (100% Accurate)

The Strategic Management Process correct answers 1) mission 2) objectives 3) external analysis/internal analysis 4) strategic choice 4a) Business level strategy = how to position a business in the market 4b) corporate level strategy = which businesses to enter 5) strategy implementation 6) competitive advantage Business Level Strategies correct answers Two Generic Business Level Strategies Cost Leadership = • generate economic value by having lower costs than competitors Product differentiation = generate economic value by offering a product that customers prefer over competitors' product Understanding Cost Advantage correct answers Managers need to understand who has the cost advantage in their market. - it could be a local firm = develop a strategy to exploit the advantage - it could be a competitor = develop a strategy to either capture the advantage or compete on some other basis Sources of Cost Advantage correct answers Economies of Scale Diseconomies of Scale Learning Curve Economies Differential Low-Cost Access to Productive Inputs Technology Independent of Scale Policy Choices Economies of Scale correct answers exist when the increase in firm size (measured in terms of volume of production) is associated with lower costs (measured in terms of average costs per unit of production) As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production (point X) is reached, after which the average costs per unit of production begins to rise because of diseconomies of scale