Question 1

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

Securing differential access to low-cost productive inputs would be the most likely basis of cost leadership that may be costly to duplicate. This is because obtaining access to exclusive low-cost inputs, such as raw materials or labor, could be difficult for competitors to replicate, giving Sematech a unique cost advantage. Establishing economies of scale and exploiting learning-curve economies are common cost leadership strategies that are easier for competitors to imitate. Purchasing new technological hardware may also be costly to duplicate, but it may not necessarily result in cost leadership if competitors can also obtain the same hardware.

Question 2

Identify the most appropriate organizational structure for a firm pursuing a cost-leadership strategy,and identify the two basic responsibilities of the CEO in this type of organization.

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Question 3

Identify which bases of cost leadership are more likely to be rare and costly to imitate.

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Question 4

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

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Question 5

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

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Question 6

Sematech is pursuing which strategy?

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Question 7

Discuss the difference between the learning curve and economies of scale.

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Question 8

If Lucy Sullivan were a Sematech manager who oversaw the finance operations in the company's functional structure,Lucy would be considered a

Accepted Answer

A functional manager oversees a specific function within the organization, such as finance, human resources, or marketing. In this scenario, Lucy Sullivan specifically oversees finance operations within Sematech. Therefore, she would be considered a functional manager.

Question 9

By employing a low-cost competitive strategy,Sematech has made itself

Accepted Answer

A low-cost competitive strategy typically involves cost-cutting measures and lean operations, which can make a company less vulnerable to the power of suppliers by allowing it to negotiate better prices for goods and services. It can also make the company more price competitive, which can be advantageous in industry price wars. However, it may make the company more vulnerable to rivals who may be able to undercut their prices or offer superior products and services. It is not necessarily more vulnerable to the power of buyers.

Question 10

Identify six reasons firms can differ in their costs.

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Question 11

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

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Question 12

If Sematech's efforts to increase its production capacity resulted in increased complexity and an inability of managers to control and operate the firm efficiently,this would be an example of

Accepted Answer

Managerial diseconomies occur when an increase in the size and complexity of an organization results in an inability to efficiently manage and control the firm. This can lead to decreased productivity and increased costs. In the case of Sematech, if the increase in production capacity resulted in such complexity that managers were unable to efficiently operate and control the firm, it would be an example of managerial diseconomies.

Question 13

Identify how cost leadership helps neutralize each of the major threats in an industry.

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Question 14

If Sematech were to choose to narrow its product line in an effort to reduce costs,this would be an example of

Accepted Answer

Narrowing the product line is a strategic decision that falls under policy choices. It may involve evaluating the profitability of various products and focusing resources on those that are most valuable to the company, while phasing out or discontinuing less profitable products. This can help to reduce costs and improve overall efficiency.

Question 15

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

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Question 16

If Sematech's expansion plans did not produce the desired cost savings but the company decided to continue production expansion in an effort to capture cost reductions,this would be an example of

Accepted Answer

Escalation of commitment refers to the tendency of individuals or organizations to persist with a failing course of action even after it becomes clear that the action is unlikely to yield the desired results. In this case, Sematech's decision to continue production expansion despite not achieving cost savings is an example of escalation of commitment. It is not economies of scale, as cost savings were not achieved, nor is it diseconomies of scale or managerial diseconomies, which refer to the increasing costs or inefficiencies that result from increasing production beyond a certain point.

Question 17

By increasing production volume in an effort to reduce costs,Sematech is pursuing which sources of cost advantage?

Accepted Answer

Sematech is pursuing economies of scale by increasing production volume to reduce costs. By doing so, they can spread fixed costs over a larger output and benefit from lower average costs of production.

Question 18

If Sematech decided to focus on building its technological hardware,it would focus on elements such as

Accepted Answer

If Sematech decided to focus on building its technological hardware, then elements such as robots would be most relevant. Organizational culture, quality of organizational controls and quality of relations among labor and management may also be important but are not directly related to technological hardware production.

Question 19

Differentiate between business strategies and corporate strategies and define the nature of a cost-leadership strategy.

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Question 20

Given Sematech's business level strategy,which organizational structure is the most appropriate?

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Quiz 4: Cost Leadership