Question 1

Economies of scale focus on the relationship between the cumulative volume of production and average unit costs,while the learning curve focuses on the relationship between the volume of production at a given time and average unit costs.

Accepted Answer

A) True 
 B)False

Question 2

What are the responsibilities of the CEO in a functional organization?

Accepted Answer

The U-form structure (the other name for...

Question 3

Which of the following is likely to be a rare source of cost advantage?

Accepted Answer

A)  technological software
B)  if the efficient size of a firm or plant is significantly smaller than the total size of an industry
C)  cost disadvantages based on diseconomies of scale
D)  technological hardwareE) All of the above
F) B) and C)

Question 4

Identify the types of compensation policies that are appropriate for firms pursuing a cost-leadership strategy.

Accepted Answer

Compensation at cost-leadership firms is...

Question 5

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs.
-If Sematech were to continue seeking methods to maintain the company's cost-leadership position that would be costly to duplicate,which of the following is most likely to be a basis of cost leadership that may be costly to duplicate?

Accepted Answer

A)  establishing economies of scale
B)  exploiting learning-curve economies
C)  purchasing new technological hardware
D)  securing differential access to low-cost productive inputsE) A) and D)
F) B) and D)

Question 6

Cost leadership,flexibility,collusion,and product differentiation are so widely recognized that they are often called generic business strategies.

Accepted Answer

A) True 
 B)False

Question 7

Productive inputs are any supplies used by a firm in conducting its business activities.

Accepted Answer

A) True 
 B)False

Question 8

Corporate level strategies are actions firms take to gain competitive advantages in a single market or industry.

Accepted Answer

A) True 
 B)False

Question 9

Perhaps the only time economies of scale are not subject to low-cost duplication is when the ________ size of operations is a significant percentage of ________ in an industry.

Accepted Answer

A)  minimum; marginal demand
B)  efficient; total demand
C)  maximum; marginal demand
D)  efficient; marginal demandE) B) and C)
F) A) and B)

Question 10

The link between cumulative volumes of production and cost has been formalized in the concept of the learning curve.

Accepted Answer

A) True 
 B)False

Question 11

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs per unit of production begin to rise because of diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 12

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs of production begin to rise because of

Accepted Answer

A)  diseconomies of scale.
B)  economies of scope.
C)  diseconomies of scope.
D)  economies of scale.E) A) and B)
F) A) and C)

Question 13

Large transportation costs can offset cost reductions attributable to the exploitation of economies of scale in manufacturing.

Accepted Answer

A) True 
 B)False

Question 14

In general,economies of scale and diseconomies of scale are relatively easy-to-duplicate bases of cost leadership.

Accepted Answer

A) True 
 B)False

Question 15

Even the best formulated strategy is competitively irrelevant if it is not implemented.

Accepted Answer

A) True 
 B)False

Question 16

Cost-leadership firms are typically characterized by very tight cost control systems; frequent and detailed cost control reports; an emphasis on quantitative cost goals and targets; and close supervision of labor,raw materials,inventory,and other costs.

Accepted Answer

A) True 
 B)False

Question 17

Firms pursuing a cost-leadership strategy are typically characterized by

Accepted Answer

A)  loose cost control systems.
B)  a de-emphasis on quantitative cost goals and costs.
C)  infrequent cost control reports.
D)  close supervision of labor,raw materials,inventory,and other costs.E) A) and C)
F) B) and C) D

Question 18

Identify four reasons why economies of scale can exist and four reasons why diseconomies of scale can exist.

Accepted Answer

The four reasons why economies of scale can exist include: a.Volume of Production and Specialized Machines.When a firm has high levels of production,it is often able to purchase and use specialized manufacturing tools that cannot be kept in operation in small firms. b.Volume of Production and the Cost of Plant and Equipment.In some industries,the cost of building manufacturing operations per unit of production is lower than the cost of building smaller manufacturing operations per unit of production.Thus large-volume firms,other factors being equal,will be able to build lower per unit cost manufacturing operations and will have lower average costs of production. c.Volume of Production and Employee Specialization.High volumes of production are also associated with high levels of employee specialization.As workers specialize in accomplishing a narrow task,they can become more and more efficient at this task,thereby reducing their firm's costs. d.Volume of Production and Overhead Costs.A firm with high volumes of production has the luxury of spreading its overhead costs over more units and thereby reducing the overhead costs per unit. The four reasons why diseconomies of scale can exist include: a.Physical Limits to Efficient Size.There are some important physical limitations to the size of some manufacturing processes and when these limitations are reached,additional volume increases can lead to higher per unit costs. b.Managerial Diseconomies.As a firm increases in size,it often increases in complexity,and the ability of managers to control and operate it efficiently becomes limited. c.Worker De-Motivation.As firms become larger,employee specialization increases.With specialization,workers become more and more efficient at the particular task facing them.However,very specialized jobs can be very de-motivating for employees and productivity and quality both suffer,resulting in cost increases. d.Distance to Markets and Suppliers.Any reductions in cost attributable to the exploitation of economies of scale in manufacturing may be more than offset by large transportation costs associated with moving supplies and products to and from the manufacturing facility.Firms that build highly efficient plants without recognizing these significant transportation costs may put themselves in a competitive disadvantage compared to firms with slightly less efficient plants but plants that are located nearer suppliers and key markets.

Question 19

Firms for whom the prices of the products or services they sell are determined by market conditions and not by the individual decisions of the firms themselves are known as price makers.

Accepted Answer

A) True 
 B)False  False

Question 20

If Temper Company,a manufacturer of mattresses,was considering moving its production facilities to China but decided against it because the additional costs of shipping the mattresses back to the U.S.would offset the cost savings associated with moving the production facilities,the increased costs associated with shipping would be an example of

Accepted Answer

A)  learning-curve economies.
B)  diseconomies of scale.
C)  economies of scale.
D)  competitive advantages.E) B) and D)
F) A) and C)

Exam 4: Cost Leadership

Economies of scale focus on the relationship between the cumulative volume of production and average unit costs,while the learning curve focuses on the relationship between the volume of production at a given time and average unit costs.

Correct Answer
verified

What are the responsibilities of the CEO in a functional organization?

Correct Answer
verified
The U-form structure (the other name for...
View Answer

Which of the following is likely to be a rare source of cost advantage?

Correct Answer
verified

Identify the types of compensation policies that are appropriate for firms pursuing a cost-leadership strategy.

Correct Answer
verified
Compensation at cost-leadership firms is...
View Answer

Correct Answer
verified

Cost leadership,flexibility,collusion,and product differentiation are so widely recognized that they are often called generic business strategies.

Correct Answer
verified

Productive inputs are any supplies used by a firm in conducting its business activities.

Correct Answer
verified

Corporate level strategies are actions firms take to gain competitive advantages in a single market or industry.

Correct Answer
verified

Perhaps the only time economies of scale are not subject to low-cost duplication is when the size of operations is a significant percentage of in an industry.

Correct Answer
verified

The link between cumulative volumes of production and cost has been formalized in the concept of the learning curve.

Correct Answer
verified

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs per unit of production begin to rise because of diseconomies of scale.

Correct Answer
verified

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs of production begin to rise because of

Correct Answer
verified

Large transportation costs can offset cost reductions attributable to the exploitation of economies of scale in manufacturing.

Correct Answer
verified

In general,economies of scale and diseconomies of scale are relatively easy-to-duplicate bases of cost leadership.

Correct Answer
verified

Even the best formulated strategy is competitively irrelevant if it is not implemented.

Correct Answer
verified

Cost-leadership firms are typically characterized by very tight cost control systems; frequent and detailed cost control reports; an emphasis on quantitative cost goals and targets; and close supervision of labor,raw materials,inventory,and other costs.

Correct Answer
verified

Firms pursuing a cost-leadership strategy are typically characterized by

Correct Answer
verified
D

Identify four reasons why economies of scale can exist and four reasons why diseconomies of scale can exist.

Firms for whom the prices of the products or services they sell are determined by market conditions and not by the individual decisions of the firms themselves are known as price makers.

Correct Answer
verified
False

Correct Answer
verified

Exam 4: Cost Leadership

Economies of scale focus on the relationship between the cumulative volume of production and average unit costs,while the learning curve focuses on the relationship between the volume of production at a given time and average unit costs.

Correct AnswerverifiedShow Answer

What are the responsibilities of the CEO in a functional organization?

Correct AnswerverifiedThe U-form structure (the other name for...View AnswerShow Answer

Which of the following is likely to be a rare source of cost advantage?

Correct AnswerverifiedShow Answer

Identify the types of compensation policies that are appropriate for firms pursuing a cost-leadership strategy.

Correct AnswerverifiedCompensation at cost-leadership firms is...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Cost leadership,flexibility,collusion,and product differentiation are so widely recognized that they are often called generic business strategies.

Correct AnswerverifiedShow Answer

Productive inputs are any supplies used by a firm in conducting its business activities.

Correct AnswerverifiedShow Answer

Corporate level strategies are actions firms take to gain competitive advantages in a single market or industry.

Correct AnswerverifiedShow Answer

Perhaps the only time economies of scale are not subject to low-cost duplication is when the ________ size of operations is a significant percentage of ________ in an industry.

Correct AnswerverifiedShow Answer

The link between cumulative volumes of production and cost has been formalized in the concept of the learning curve.

Correct AnswerverifiedShow Answer

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs per unit of production begin to rise because of diseconomies of scale.

Correct AnswerverifiedShow Answer

As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs of production begin to rise because of

Correct AnswerverifiedShow Answer

Large transportation costs can offset cost reductions attributable to the exploitation of economies of scale in manufacturing.

Correct AnswerverifiedShow Answer

In general,economies of scale and diseconomies of scale are relatively easy-to-duplicate bases of cost leadership.

Correct AnswerverifiedShow Answer

Even the best formulated strategy is competitively irrelevant if it is not implemented.

Correct AnswerverifiedShow Answer

Cost-leadership firms are typically characterized by very tight cost control systems; frequent and detailed cost control reports; an emphasis on quantitative cost goals and targets; and close supervision of labor,raw materials,inventory,and other costs.

Correct AnswerverifiedShow Answer

Firms pursuing a cost-leadership strategy are typically characterized by

Correct AnswerverifiedD

Identify four reasons why economies of scale can exist and four reasons why diseconomies of scale can exist.

Firms for whom the prices of the products or services they sell are determined by market conditions and not by the individual decisions of the firms themselves are known as price makers.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The U-form structure (the other name for...
View Answer

Correct Answer
verified

Correct Answer
verified
Compensation at cost-leadership firms is...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Perhaps the only time economies of scale are not subject to low-cost duplication is when the size of operations is a significant percentage of in an industry.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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D

Correct Answer
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False

Correct Answer
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