Question 1

Activity-based costing is used to evaluate a company's cost-competitiveness and:

Accepted Answer

Activity-based costing is used to determine the costs of each primary and support activity comprising a company's value chain, which helps reveal the nature and makeup of a company's internal cost structure. This information can then be used to evaluate the company's cost-competitiveness and identify areas for cost reduction or process improvement.

Question 2

Benchmarking involves:

Accepted Answer

Benchmarking involves comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.

Question 3

The most difficult part of benchmarking is:

Accepted Answer

Gaining access to information regarding rivals' practices and costs is challenging due to confidentiality and competitive sensitivity, making it the most difficult part of benchmarking.

Question 4

Which of the following is NOT one of the objectives of benchmarking?

Accepted Answer

Identifying primary and support activities of a company value chain is not one of the objectives of benchmarking. It is a key step in value chain analysis, which benchmarking can inform, but it is not the primary objective.

Question 5

The options for remedying a supplier-related cost disadvantage include:

Accepted Answer

The best option for remedying a supplier-related cost disadvantage would be to collaborate closely with the supplier for identifying mutual cost-saving opportunities. Pressuring suppliers for more favorable prices and switching to lower-priced substitute inputs may not always be feasible options as it could lead to a deteriorated supplier relationship or result in compromise with quality. Similarly, shifting into the production of substitute products could be a costly and time-consuming process. Cutting selling prices and trying to win a bigger market share may also not always be feasible as it could result in decreased profit margins. Therefore, the best option would be to collaborate closely with the supplier for identifying mutual cost-saving opportunities.

Question 6

Which of the following is NOT an option for remedying a supplier-related cost disadvantage?

Accepted Answer

The answer of Which of the following is NOT an...

Question 7

Benchmarking provides a company with which of the following?

Accepted Answer

Benchmarking involves comparing a company's performance to that of competitors or industry leaders in order to identify areas for improvement. By doing this, a company can gain hard evidence of whether or not their costs are competitive with others in the market.

Question 8

Costs and price differences among competing companies can have origins in activities performed by:

Accepted Answer

Costs and price differences among competing companies can have origins in activities performed by the company's internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies. Thus, the best choice is D. Choices A, B, C, and E are either only partially correct or not relevant to the question.

Question 9

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is:

Accepted Answer

Benchmarking is the process of comparing a company's performance and processes to industry best practices. Through benchmarking, a company can identify areas where it can improve in both cost and effectiveness. This tool is widely used by managers to identify opportunities for improvement and to establish performance targets. Competitive strength analysis, activity-based costing, and resource cost mapping are all related tools, but they focus on specific aspects of a company's operations and are not as comprehensive as benchmarking. SWOT analysis is focused on assessing a company's internal and external strengths, weaknesses, opportunities, and threats, and is not specifically designed to identify best practices.

Question 10

A company's strategic options for remedying cost disadvantages in internally performed value chain activities do NOT include:

Accepted Answer

Activity-based costing is a method of allocating costs to products or services based on the resources they consume, and is not a strategic option for remedying cost disadvantages in internally performed value chain activities. The other options listed are all viable strategies for reducing costs in value chain activities.

Question 11

Obtaining cost information is a primary difficulty associated with benchmarking.The following are typical sources for collecting information,EXCEPT:

Accepted Answer

Obtaining cost information from classified government documents is not a typical source for benchmarking. The other options listed are typical sources for collecting information for benchmarking.

Question 12

The means to enhance differentiation through activities at the forward end of the value chain system do NOT include:

Accepted Answer

Enhancing cost-reducing activities with defensive functionality designed to create incentives is not a means to enhance differentiation through activities at the forward end of the value chain system. It may be a means to enhance cost efficiency, but it does not necessarily relate to differentiation. The other options are valid means of enhancing differentiation through activities at the forward end of the value chain system.

Question 13

Which of the following areas within a company's total value chain system can managers use to improve efficiency and effectiveness?

Accepted Answer

Managers can improve efficiency and effectiveness within a company's total value chain system by focusing on the internal activity segments, suppliers' part, and the forward (distribution) channel portion. This approach takes into account the entire value chain system and allows for optimization and streamlining of processes across different segments. Option B only focuses on a company's own reinforced activities, while options C, D, and E do not consider the entire value chain system.

Question 14

To build a competitive advantage by out-managing rivals in performing value chain activities,a company must:

Accepted Answer

Developing core competencies and distinctive competencies that rivals don't have or can't quite match and that are instrumental in helping a company deliver attractive value to customers is essential for building a competitive advantage through out-managing rivals in performing value chain activities. This approach allows a company to differentiate itself in the market and provide unique value to customers, making it difficult for competitors to replicate. Positioning itself in the industry's more favorably situated strategic group, developing resource strengths, eliminating resource weaknesses, and outsourcing value chain activities can all be helpful strategies, but they are not sufficient on their own to create a sustainable competitive advantage.

Question 15

Activity-based costing:

Accepted Answer

Activity-based costing is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost. This helps to more accurately allocate costs and identify areas where cost reductions can be made. Options B, C, D, and E are not accurate descriptions of activity-based costing.

Question 16

Which of the following is NOT an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)?

Accepted Answer

Insisting on across-the-board cost cuts in all value chain activities is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies. This option would affect all activities in the value chain, including those performed in-house and by suppliers, and may not necessarily address the specific cost disadvantage related to forward channel activities. The other options listed focus specifically on addressing the cost disadvantage associated with forward channel allies, such as changing distribution strategies, enhancing differentiation, collaborating to identify cost-saving opportunities, and pressuring forward channel allies to reduce costs/markups.

Question 17

A company's value-creating activities can offer a competitive advantage in one of two ways:

Accepted Answer

Value-creating activities can provide a competitive advantage either through achieving greater efficiency and lower costs or by providing differentiation. This means that a company can either provide the same product as its competitors but at a lower cost, or provide a unique product or service that sets it apart from its competitors. Option A correctly identifies both of these potential sources of competitive advantage. The other options do not accurately describe how value-creating activities contribute to a competitive advantage.

Question 18

For a company to translate its performance of value chain activities into competitive advantage,it must:

Accepted Answer

To translate performance of value chain activities into competitive advantage, a company must undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages. Thus, option A is the best choice. Option B, C, D, and E do not necessarily guarantee a company's competitive advantage.

Question 19

An option for NOT remedying an internal cost disadvantage includes:

Accepted Answer

Not remedying an internal cost disadvantage means accepting the higher costs and continuing with the same activities as before, which is option E. The other options all involve some form of change or improvement to reduce costs.

Question 20

Which of the following is NOT a good option for trying to remedy high internal costs vis-à-vis rivals' firms?

Accepted Answer

Implementing aggressive strategic resource mapping to permit across-the-board cost reduction is not a good option for remedying high internal costs vis-à-vis rivals' firms because it is not a specific method for reducing costs. Instead, it is a general strategy that involves analyzing the company's resources and capabilities and finding ways to allocate them in the most efficient and effective manner. While this can lead to cost reductions, it is not a direct approach and may not address specific high-cost activities or items. The other options listed (A, B, D, and E) are all effective methods for reducing costs by addressing specific areas of inefficiency.

Quiz 4: Evaluating a Companys Resources, Capabilities, and Competitiveness