Deck 4: Building Competitive Advantage Through Functional-Level Strategy

Question 1

Flexible manufacturing technologies enable companies to produce small batches of high-quality customized products at a cost that,at one time,could be achieved only through mass production.

Answer 1

True

Question 2

No matter how complex the task is,learning effects typically die out after a limited period of time.

Answer 2

True

Question 3

Distinctive competencies shape the functional-level strategies that a company can pursue.

Answer 3

True

Question 4

Mass customization describes the ability of companies to use flexible manufacturing technology to reconcile the two goals of low cost and differentiation through product customization.

Question 5

Poor positioning strategy arises when a company introduces a potentially attractive new product but sales fail to materialize because it is poorly positioned in the marketplace.

Question 6

Six Sigma encompasses the activities necessary to get inputs and components to a production facility,through the production process,and out through a distribution system to the end user.

Question 7

A vital source of information about the causes of poor quality are the firm's own employees.

Question 8

While Information Systems (IS)have greatly improved externally focused decision making,they have had little impact on lowering costs.

Question 9

Learning effects tend to be more significant when a technologically complex task is performed only occasionally.

Question 10

The challenge for a company's human resource function is to find ways to lower wage and benefits costs.

Question 11

Six Sigma is a quality and efficiency program derived from the concept of Total Quality Management,and was widely used in Japan before acceptance in the U.S.

Question 12

The Six Sigma name refers to the Greek letter meaning standard deviation from the mean.

Question 13

Functional strategies,because they occur at a low level in the firm,play only a small role in organizational success.

Question 14

The law of economies of scale suggests that unit costs continue to fall indefinitely as output volume increases.

Question 15

A benefit of long-time customer loyalty is the free advertising that customers provide for a company through referrals.

Question 16

Poor commercialization occurs when there is definite customer demand for a new product,but the product is not well adapted to customer needs because of factors such as poor design and poor quality.

Question 17

All else being equal,if a company moves down the experience curve faster than its rivals,it should realize a lower cost structure.

Question 18

Diseconomies of scale are the unit cost increases associated with a large scale of output.

Question 19

Unfortunately,Harvard Business School found no differences in learning effects among hospitals performing a new cardiac procedure.

Question 20

There is a negative relationship between the length of time that a customer stays with a company and profit per customer.

Question 21

Self-managing work teams

A) increase per-unit costs of manufactured items.
B) perform all workplace tasks except the making of hiring decisions.
C) increase the cycle time of manufacturing items.
D) require greater task specialization by members of the team.
E) tend to increase productivity.

Question 22

Close integration between research and development (R&D),production and marketing can help a company avoid innovation failures.

Question 23

Economies of scale may be found

A) in several of a company's departments.
B) only in manufacturing operations.
C) principally in research and development activities.
D) primarily in administrative areas of a company.
E) none of these.

Question 24

The marketing strategy that a company adopts

A) has little impact on a company's efficiency and cost structure.
B) has an effect on efficiency and cost structure, but the extent of this effect cannot be determined.
C) should not take into account the impact the strategy has on efficiency or cost structure.
D) can have a major impact on efficiency and cost structure.
E) none of these choices

Question 25

Managers should not become complacent about efficiency-based cost advantages because

A) neither learning effects nor economics of scale go on forever.
B) the experience curve is likely to bottom out at some point.
C) cost advantages gained from experience effects can be made obsolete by the development of new technologies.
D) all of these.
E) none of these.

Question 26

The resources and capabilities that lead to the formation of distinctive competencies are mostly created at which level of the organization?

A) Business
B) Functional
C) Corporate
D) Global
E) Industry

Question 27

Strong brand loyalty leads to more sales and the ability to charge higher prices.

Question 28

The use of self-managing teams

A) is limited to only very large organizations.
B) requires members to coordinate their own activities and make decisions.
C) typically increases the need for supervisors.
D) all of these.
E) none of these.

Question 29

Dell Computer was one of the last computer companies to implement online selling of computers.

Question 30

The experience curve refers to the

A) learning by doing technique.
B) company's overall experience in a particular industry.
C) systematic lowering of the cost structure and unit cost reductions.
D) diseconomies of scale caused by inexperienced workers.
E) increases in unit costs experienced over time.

Question 31

Learning effects are a result of

A) automation.
B) learning by doing.
C) sound product planning tactics.
D) diseconomies of scale.
E) product standardization.

Question 32

Through efficient logistics at Gina's Grocers,the stock in the stores is automatically replenished once every week.Management at Gina's Grocers uses a just-in-time inventory system.

Question 33

Pay for performance tends to

A) increase per-unit costs.
B) decrease employee output.
C) increase employee output.
D) have little effect on employee output.
E) be used only for individual workers, not for teams.

Question 34

Toyota is perhaps the most well-known adopter of the Six Sigma program.

Question 35

Economies of scale are

A) unit cost reductions associated with learning effects.
B) unit cost reductions associated with superior customer responsiveness.
C) realized when output is as large as possible.
D) realized when the point of maximum efficient scale is reached.
E) unit cost reductions associated with a large-scale output.

Question 36

Flexible production technology is sometimes referred to as

A) just-in-time manufacturing.
B) quick technology.
C) lean production.
D) stable production.
E) unscheduled manufacturing.

Question 37

Although important,unfortunately,innovation plays a minor role in achieving competitive advantage.

Question 38

A company's infrastructure includes the company's

A) organization structure, culture, and style of leadership.
B) organization structure and morale level.
C) culture and productivity levels.
D) overall profitability levels.
E) short-run objectives.

Question 39

When Amber first started working at a Ford Motor plant assembling car doors,she was slower at the task than her co-workers.As time passed,her speed at assembling the doors increased and she even taught others how to perform the task more quickly.As a result of increased employee productivity,this particular Ford plant experienced cost savings.These cost savings can be attributed to learning effects.

Question 40

Sherree works at ABC Manufacturing where she is part of a seven member team.Her team coordinates its own activities as well as makes their own hiring,training,work,and reward decisions.Sherree is a member of a group referred to as an empowerment team.

Question 41

Flexible manufacturing technologies allow companies to

A) mass-produce a standardized output at a low delivered cost.
B) avoid plant-level diseconomies of scale.
C) produce small batches of high-quality customized products at a high cost.
D) ride down the experience curve more rapidly than competitors.
E) produce small batches of customized products at a relatively low cost.

Question 42

Which of the following is not one of the principles commonly found in companies that have successfully embraced the TQM philosophy?

A) Building an organizational commitment to quality
B) Finding ways to measure quality
C) Giving more time for supervisors to work with employees
D) Training new employees
E) Creating a separate quality department within the firm

Question 43

If a product is to be properly commercialized,there must be integration between

A) research and development (R&D) and marketing.
B) R&D and materials management.
C) marketing and materials management.
D) finance and marketing.
E) marketing and after-sales support.

Question 44

A company's hiring strategy

A) directly affects employee productivity.
B) has little effect on employee productivity.
C) does not relate to profitability.
D) is not part of the company's overall human resource strategy.
E) None of these.

Question 45

____ refers to unit cost increases associated with a large scale of output.

A) Economies of scale
B) Learning effects
C) Diseconomies of scale
D) Flexible manufacturing
E) Mass customization

Question 46

Quality can best be thought of as

A) product usefulness.
B) quality as reliability and quality as excellence.
C) product innovation.
D) a matter for a company's managers to decide for themselves without external input.
E) a matter for the marketing function of a company to decide.

Question 47

Which of the following statements concerning customer defection rates is incorrect?

A) Defection rates are determined by customer loyalty.
B) The longer a company holds on to a customer, the greater is the volume of customer-generated unit sales and the lower is the average cost of each sale.
C) Lowering customer defection rates allows a company to achieve a lower cost structure.
D) Research and development should address the issue of customer loyalty in product development.
E) There is a positive relationship between the length of time that a customer stays with the company and profit per customer.

Question 48

Traditional manufacturing

A) is no longer used.
B) requires a tradeoff between unit costs and product variety.
C) has higher unit costs than does flexible manufacturing.
D) produces a variety of products in high volume.
E) has higher unit costs than does flexible manufacturing and requires a tradeoff between unit costs and product variety.

Question 49

Learning effects

A) result in unit manufacturing costs declining by a certain amount each time output is doubled.
B) result in unit manufacturing costs declining by a certain amount each time accumulated output is reduced.
C) are more significant when simple steps in an assembly process are repeated.
D) are more significant when a technologically complex task is repeated.
E) lead to economies of scale.

Question 50

When a company successfully implements Six Sigma quality,how many units will be defective?

A) 17% (one-sixth of the units)
B) 6%
C) 0.6%
D) Three per million
E) Three per 10 million

Question 51

Employee productivity is

A) a function of employee socialization.
B) one of the key determinants of a company's efficiency, cost structure, and profitability.
C) not subject to measurement.
D) typically not sustainable in the long run.
E) none of these.

Question 52

The philosophy underlying TQM includes which of the following?

A) Improved quality results in cost decreases.
B) Better quality leads to higher market share.
C) Better quality increases a company's profitability.
D) Management should create an environment in which employees do not fear expressing themselves.
E) All of these

Question 53

The experience curve concept

A) is a result of a combination of learning effects and economies of scale.
B) is a result of a combination of learning effects and economies of scale and suggests that unit manufacturing costs decline by a certain amount each time output is doubled.
C) suggests that achieving low costs allows a firm to charge a premium price.
D) is most important for specialized or customized production.
E) suggests that unit manufacturing costs decline by a certain amount each time output is doubled.

Question 54

Just-in-time inventory systems

A) are used only by manufacturing firms.
B) are implemented primarily by the manufacturing function.
C) have components arrive at a manufacturing plant just in time to enter the production process.
D) are valuable when there is a labor dispute with a key supplier.
E) always keep extra inventory on hand for emergencies.

Question 55

Which of the following is not a benefit of tight cross-functional integration among research and development (R&D),production,and marketing?

A) New products are designed for ease of manufacture.
B) Development costs are kept in check.
C) Product development projects are driven by company innovations.
D) Time to market is minimized.
E) Customer needs are considered in the product development process.

Question 56

The role played by infrastructure leadership in implementing reliability methodologies includes all BUT which of the following?

A) Providing leadership and commitment quality
B) Finding ways to manage quality
C) Setting goals and creating incentives
D) Soliciting input from employees
E) Creating a command-and-control structure

Question 57

Poor commercialization of new products

A) is the result of inefficient manufacturing technology.
B) occurs when a company markets a product for which there is not enough demand.
C) occurs when a product is not well adapted to a customer's needs.
D) is due to poor quality.
E) is the result of uncertainty.

Question 58

Research and development (R&D)can help a company improve quality by

A) designing products that are easy to manufacture.
B) pursuing economies of scale.
C) developing new products.
D) integrating R&D with marketing.
E) integrating R&D with materials management.

Question 59

Which of the following is a tactical step for getting down the experience curve ahead of competitors?

A) Premium pricing to create an image of uniqueness in consumers' minds
B) Pursuing a distinctive competence in focused marketing
C) Constructing a manufacturing plant of less than minimum efficient scale
D) Using aggressive pricing and promotions to expand sales volume as rapidly as possible
E) Making the assembly of the product as complex as possible because this results in greater learning effects

Question 60

Quality improvement efforts should focus on the

A) product.
B) external environment.
C) customer.
D) material costs.
E) internal operations.

Question 61

A computer manufacturer allows scientists and engineers a certain amount of company time to work on independent research projects.This company is trying to

A) achieve superior innovation.
B) achieve superior quality.
C) achieve superior efficiency.
D) achieve superior customer responsiveness.
E) minimize the time to market.

Question 62

Discuss why superior efficiency is important and the many ways that different parts of the organization can help achieve it.

Question 63

Which of the following statements about customer focus is false?

A) It must start at the top of the organization.
B) It is a central part of TQM.
C) It can be facilitated by soliciting feedback from the customer.
D) It requires that all employees see the customer as the focus of their activity.
E) It can be achieved by mass customization.

Question 64

The Mountain Ski Lodge spent $100,000 marketing and advertising its new ski trails and on-site spa.The money used for marketing and advertising can be referred to as

A) variable costs.
B) fixed costs.
C) ratio costs.
D) diseconomies of scale.
E) economies of scale.

Question 65

You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in customer responsiveness.What suggestions would you offer? Be specific and detailed in your answer.

Question 66

Identify the two dimensions of quality and describe how companies can achieve them.

Question 67

You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in innovation.What suggestions would you offer? Be specific and detailed in your answer.

Question 68

Explain the process by which increased production volume leads to lower costs.Give an example from a real or hypothetical firm.Can this process apply to a service organization as well as a manufacturing one? If so,give an example.If not,explain why not.

Question 69

Cool Looks,Inc.is a local fashion design company that actively solicits comments from its customers about the quality of its clothing and the kind of merchandise they want it to supply.Which of the following mechanisms for focusing on the customer is Cool Looks utilizing?

A) Managing materials
B) Improving response time
C) Demonstrating leadership
D) Shaping employee attitudes
E) Knowing customer needs

Question 70

Which of the following trends has led to the fragmentation of many consumer markets?

A) Self-managing teams
B) Project management
C) TQM
D) Customization
E) Increased response time

Question 71

The failure rate of innovative products is

A) high.
B) low.
C) consistent with failure rates in other areas of a company's operations.
D) moderate.
E) too difficult to assess.

Question 72

Customer defection rates are

A) a reflection of customer loyalty.
B) an indication of a company's ability to satisfy its customers.
C) important to consider because of their potential impact on advertising and marketing costs.
D) an important consideration because of their effect on sales volumes.
E) all of the above.

Question 73

Which of the following is not a product attribute?

A) Form
B) Features
C) Style
D) Price
E) Reliability

Question 74

When credit card companies such as Visa and Mastercard allow an individual to put one of their own photos on their account credit card,they are utilizing

A) mass customization.
B) a flexible manufacturing system.
C) quality as reliability mantra.
D) supply-chain management.
E) a just-in-time inventory system.

Question 75

You can put your own message on and select the colors of your own M&Ms candies,making the candies relevant to any occasion in your life.This is an example of

A) a positioning strategy.
B) just-in-time inventory.
C) a marketing strategy.
D) mass customization.
E) a flexible production technology.