_____ is measured by the percentage increase in net profits over time.
Profit growth
The amount of value a firm creates is measured by the:
difference between its costs of production and the value that consumers perceive in its products.
The _____ all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position.
efficiency frontier shows
The strategy, operations, and organization of a firm must all be consistent with each other if the firm is to _____ and achieve superior profitability.
attain a competitive advantage
_____ include the design, creation, and delivery of a product.
Primary activities
Research and development, production, marketing and sales, and customer service are all examples of _____.
primary activities
Top management should be viewed as part of the firm's _____.
infrastructure
Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on _____.
the domestic market
_____ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible.
Core competencies
Economies that arise from performing a value creation activity in the optimal location are known as _____.
location economies
Cost savings that come from learning by doing are known as _____.
learning effects
Learning effects tend to be:
more significant when a technologically complex task is repeated.
_____ allows a firm to reduce its cost of creating value and increase its profitability
Moving down the experience curve
Which of the following is one of the two types of competitive pressure that affect the ability of multinational enterprises to compete in the global marketplace?
Pressure for local responsiveness
Which of the following is true of firms that compete in the global marketplace?
Because differentiation across countries can involve significant duplication and a lack of product standardization, it may raise costs.
Pressures for cost reduction are intense in industries where:
there is persistent excess capacity.
A multinational firm may need to delegate marketing functions to national subsidiaries to:
be responsive to local differences in distribution channels.
Pressures for _____ imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects, and location economies.
local responsiveness
When a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a(n) _____ strategy.
localization
When the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness, the ideal strategy to follow is the _____ strategy.
transnational
A(n) _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low.
localization
The distinguishing feature of many firms that pursue a(n) _____ strategy is that they are selling a product that serves universal needs, but they do not face significant competitors
international
According to researchers Bartlett and Ghoshal, for transnational enterprises to be successful, they must focus on:
leveraging the skills found at their subsidiaries around the world
_____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital.
Profitability
The percentage increase in net profits over time measures _____.
profit growth
Which of the following statements is true?
The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because:
the customer captures some of that value in the form of a consumer surplus
The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as:
consumer surplus per unit.
A consumer surplus can be best described as:
value for the money
A strategy that focuses on increasing the attractiveness of a product is referred to as a(n) _____.
differentiation strategy
The efficiency frontier has a convex shape because of _____.
diminishing returns
_____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.
Diminishing returns
The basic strategy paradigm suggests that to maximize its profitability, a firm should do which of the following?
Make sure that the right organization structure is in place to execute the strategy
_____ activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service
primary
Which of the following is an example of a primary activity in a firm's value chain?
Research and development
Which of the following is an example of a support activity in a firm's value chain?
Human resources
_____ activities of the value chain provide inputs that allow the primary activities to occur.
Support
A firm benefits by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. Firms that pursue such a strat
location economies
Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as _____.
location economies
When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create:
a global web of value creation activities.
Lenovo's ThinkPad laptop computers are designed in the United States, the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United State
a global web of value creation activities
_____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product.
Experience curve
It has been observed that a product's production costs decline by some quantity about each time cumulative output _____.
doubles
It has been observed in the aircraft industry that, each time cumulative output of airframes was doubled, unit costs typically declined to 80 percent of their previous level. This is an example of the _____ curve.
experiences
When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through _____.
learning effects
Learning effects:
typically disappear after a while, in spite of the complexity of the task.
It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to:
economies of scale
Economies of scale arise from which of the following sources?
Serving domestic and international markets from the same production facilities
Moving down the experience curve
allows a firm to reduce its cost of creating value
Firms usually respond to pressures for cost reduction by trying to:
lower the costs of value creation.
Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country.
being locally responsive
_____ exists when the tastes and preferences of consumers in different nations are similar if not identical.
Universal needs
Which of the following is less likely to add to the pressure for a firm to be locally responsive?
Switching costs for consumers
When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy.
global standardization
Which of the following is associated with firms following the global standardization strategy?
Use cost advantage to support aggressive pricing in world markets
_____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense
Localization
Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets?
Localization strategy
Which of the following is a disadvantage of the localization strategy?
Duplication of functions
A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a(n) _____ strategy.
transnational
A firm that is pursuing a(n) _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects, and trying to differentiate its product offering across geographic markets.
transnational
A firm facing low pressures for cost reductions and low pressures for local responsiveness, is most likely to follow a(n) _____ strategy.
international
For firms that are selling a product that serves universal needs, and that do not face significant competition, a(n) _____ strategy makes sense.
international
Which of the following is true of the international strategy?
The strategy is not viable in the long-run.
The consumer surplus per unit is determined by
the experience curve
Primary activities have to do with:
the design, creation, and delivery of the product.
A(n) _____ customizes the product offering to local demands and increases the value of that product in the local market.
localization strategy
Michael Porter argues that
those firms that create superior value will achieve superior profitability
Skills within the firm that competitors cannot easily match or imitate and that may exist in the firm's value creation activities
Core competencies
Location economies are the economies that arise from performing a _____ activity in the optimal location for that activity.
value creation
The _____ refers to systematic reductions in production costs that have been observed to occur over the life of a product.
experience curve
Universal needs exist when:
the tastes and preferences of consumers in different nations are similar if not identical.