Question 1

A value chain is a set of logically sequenced, value adding activities that convert input resources into products or services in a manner consistent with the chosen business strategy.

Accepted Answer

A value chain is indeed a set of logically sequenced, value adding activities that convert input resources into products or services in a manner consistent with the chosen business strategy.

Question 2

Critical success factors are performance measures that must "go right" for an organization to implement its strategy successfully and achieve its mission.

Accepted Answer

This statement accurately defines critical success factors as performance measures that are essential for an organization to achieve its strategic goals and mission.

Question 3

It is typically best for a firm to outsource or form strategic alliances with outside suppliers to perform those value activities in which it does not have a unique advantage.

Accepted Answer

Outsourcing or forming strategic alliances with outside suppliers can help a firm to focus on its core competencies and allocate resources efficiently, while allowing other parties to perform certain activities more effectively or at lower costs. This can ultimately result in greater overall value for the firm and its customers.

Question 4

In the development stage of a product's life cycle we expect sales revenue only sufficient to cover costs.

Accepted Answer

In the development stage of a product's life cycle, there are no sales revenue as the product is still being developed and tested. Therefore, there are no costs to cover either. Sales revenue is expected in the later stages of the product's life cycle.

Question 5

Firms following the cost leadership strategy intensively scrutinize costs, starting once the product is finished to after the customer purchases the product.

Accepted Answer

Firms following the cost leadership strategy scrutinize costs at all stages of the production process, not just after the product is finished or after the customer purchases the product.

Question 6

Product life cycle analysis emphasizes that the objective is to maximize profitability of a product in its early stages to sustain it over the later stages of the cycle.

Accepted Answer

Product life cycle analysis emphasizes managing a product strategically over its entire life cycle to maximize overall profitability, not just focusing on early-stage profitability.

Question 7

Firms following Kaizen Strategy couple their strategy with market power to raise significant barriers to potential entrants thereby preserving their market share and long-term profitability.

Accepted Answer

Kaizen strategy focuses on continuous improvement within the organization, and does not necessarily involve raising barriers to entry. While firms may use market power to protect their market share, it is not a core tenet of the Kaizen approach.

Question 8

The value chain should never extend beyond the boundaries of the firm.

Accepted Answer

The value chain can extend beyond the boundaries of the firm, for example through partnerships or outsourcing.

Question 9

Once a firm chooses critical success factors, little importance is placed on setting targets and monitoring progress.

Accepted Answer

Once critical success factors are identified, it is important to set targets and monitor progress to ensure that the firm is on track to achieving its goals. This helps to identify any deviations or areas that need improvement, and allows for adjustments to be made in a timely manner.

Question 10

Target costing is particularly effective for products with well-defined and discrete features because it helps in making proper tradeoffs among price, quality and functionality with respect to each product feature.

Accepted Answer

Target costing involves identifying the target cost for a product based on customer needs and market conditions, and then designing the product to meet that cost. Well-defined and discrete product features allow for more accurate cost estimation and effective tradeoffs among price, quality, and functionality.

Question 11

Strategic critical success factors are short-term, industry-specific measures that can be used to measure customer satisfaction.

Accepted Answer

Strategic critical success factors are actually long-term, organization-specific measures used to measure the success of achieving company goals and objectives. They are not related to customer satisfaction specifically.

Question 12

Product costs do not play as critical a role in pricing as the market's perception of the value differentiation.

Accepted Answer

The market's perception of the value differentiation is a more important factor in pricing than product costs. Customers are willing to pay more for a product that they perceive to provide higher value or benefits, even if the product costs are higher.

Question 13

The primary reason ROI is by itself not enough to communicate strategy is that it only reflects the effect of components of the income statement.

Accepted Answer

ROI (Return on Investment) considers both the income statement and the balance sheet since it measures the return on invested capital, not just the income or profit generated.

Question 14

In the introduction and growth stage of a product's life cycle profitability typically begins slow and picks up as the scale of marketing and production goes up.

Accepted Answer

This is true as during the introduction and growth stage, companies often invest a lot of money into research and development, marketing, and producing the product. As sales gradually increase, the economy of scale kicks in and profitability begins to increase as well.

Question 15

With differentiation strategy, innovation is more important than cost control.

Accepted Answer

Differentiation strategy focuses on creating a unique and innovative product or service that sets a company apart from its competitors. In order to achieve this, innovation is more important than simply cutting costs.

Question 16

Product life cycle is an important element of a business strategy because it determines the rate at which companies have to develop and introduce new products to compete effectively.

Accepted Answer

The product life cycle helps businesses understand the stages that a product goes through, from introduction to decline, and informs decisions about marketing, pricing, and product development. Understanding the product life cycle helps companies stay competitive by knowing when it's time to introduce new products or retire older ones.

Question 17

Firms following a value differentiation strategy focus on continuous improvement and customer satisfaction.

Accepted Answer

The answer of Firms following a value differentiation strategy focus...

Question 18

To build and preserve a significant market share in any competitive market, a firm must offer a unique value proposition, the key source of customer value, to its target market.

Accepted Answer

This statement is true. A unique value proposition is critical for a firm to differentiate itself from competitors and provide compelling customer value to maintain and grow its market share.

Question 19

One characteristic of a critical success factor is that it is readily quantifiable.

Accepted Answer

Critical Success Factors (CSFs) are often quantifiable measures that help to determine the success of a project or an organization in achieving its goals, making it easier to track progress and performance.

Question 20

The activity-based approach to configuring the value chain is useful for both value differentiation and cost leadership strategies.

Accepted Answer

The activity-based approach helps in identifying ways to differentiate the value chain activities that lead to competitive advantage while at the same time eliminating non-value adding activities to reduce costs, thus making it applicable for both value differentiation and cost leadership strategies.

Quiz 13: Strategic Planning and Control