75 Questions
What is one of the advantages of increased scale according to the text?
Greater task specialization
How does division of labor contribute to economies of specialization?
It promotes learning and assists automation
In which industries are economies of specialization particularly important, according to the text?
Investment banking and software development
What is the basis of the experience curve according to the text?
Learning-by-doing
What is one of the sources of cost advantage related to specialization?
Standardization of Designs & Components
How does specialization contribute to cost efficiency in production?
By achieving economies of scale
Which factor related to specialization can lead to residual efficiency and cost advantage?
Corporate Culture
In the context of specialization, what contributes to cost advantage by reducing unnecessary expenses?
Business Process Reengineering
Which company achieved cost leadership in personal computers during the 1990s through the reconfiguration of the industry’s traditional value chain?
Dell
What did Ford's moving assembly line achieve in terms of reducing the time taken to assemble a Model T?
Reduced from 106 hours to 6 hours
Which company invested $40 billion on new process technology between 1979 and 1986 with the goal of becoming the world’s most efficient manufacturer of automobiles?
General Motors
What were the major efficiency gains from improved processes likely to come from, according to the text?
Process redesign without significant technological innovation
Which of the following is true about firms delivering higher scores on most elements of value?
They demonstrate significantly higher revenue growth rates
What did Bain's B2B value drivers focus on, based on the text?
Increasing cost efficiency in manufacturing processes
How have Amazon's value drivers changed over time, according to the text?
They have shifted focus from 'Quality' to other elements of value
What do consumers tend to be willing to pay for, based on the text?
Firms that deliver more elements of value
What advantage do firms delivering higher scores on most elements of value stand to gain, according to the text?
Higher revenue growth rates
In the context of value creation, what is a value proposition?
A statement that summarizes why a customer should buy a company’s product or use its service
Which factor influences how much of the value created by the firm can be captured by it?
The activities carried out by the company
What connects Indian Oil and Apollo Hospital Enterprises Ltd.in the Nifty 50 index?
They both have a Unique Value Proposition
What is the relationship between Economic Value Added (EVA) and Customer Willingness to Pay (WTP)?
$WTP - EVA = Consumer Surplus
How does division of labor contribute to value creation and capture?
It leads to residual efficiency and cost advantage
What did Carlos Ghosn achieve in his first year as CEO of Nissan Motor?
Reduced the company's operating costs by 20%
What is the primary focus of management systems and company values at Walmart, IKEA, Ryanair, and Amazon?
Elimination of excess costs and promotion of frugality
What does the value chain represent in terms of a firm's activities?
Stages of production from raw materials to final product
In the value chain, what does 'Inbound Logistics' involve?
Receiving and warehousing of raw materials
What is central to capturing the created value in a firm's value chain?
Taking control of key value chain activities
What is the purpose of advertising campaigns in conveying the value proposition?
To convey the set of value drivers underlying the value proposition
In the context of value propositions, what do advertising campaigns aim to inform customers about?
How the product creates value compared to rivals and substitutes
What are the three questions that a value proposition aims to answer?
Which customers? What needs? What relative price?
What is a key purpose of a value proposition?
To drive up firm revenues
How do firms arrive at the appropriate value proposition over time?
Through trial and error, learning, and perfecting
What is the purpose of advertising campaigns in conveying the value proposition for firms?
To highlight the set of value drivers underlying the value proposition
How do firms arrive at the appropriate value proposition over time, according to the text?
By 'learning', 'figuring out', and 'perfecting' them over time
What are the three questions that a value proposition aims to answer, as mentioned in the text?
Which customers? Which needs? What relative price?
What is central to capturing the created value in a firm's value chain, as per the text?
Optimizing operational efficiency and reducing costs
What are the elements that each advertising campaign highlights, as per the text?
Set of value drivers underlying the value proposition
In which industries are economies of specialization particularly important, according to the text?
Technology industries with rapid innovation cycles
What impact did Boeing's efforts to boost output during 2006–2011 have on unit costs?
Increased unit costs due to overtime pay, premiums for night and weekend shifts, and increased defects
What was required for survival in hard-hit sectors like house building, construction equipment, and retailing during the 2008–2009 recession?
Fast response to declining demand
What are residual efficiencies related to, according to the text?
The extent to which the firm approaches its efficiency frontier of optimal operation
What do excess costs have a propensity to accumulate within, according to the text?
Corporate headquarters
What is the basis of residual efficiency and cost advantage?
Approaching the efficiency frontier of optimal operation and eliminating organizational slack
What was announced by Caterpillar on the same day it reported a downturn in its quarterly sales during the 2008–2009 recession?
Cutting 20,000 jobs
What is the primary focus of the company's strategy to drive down firm costs?
Emphasizing deep-discounting and reducing expenses
How has the company aimed to 'Reduce Anxiety' for customers?
By overhauling its interface and offering favorable return policies
What can be inferred about the impact of the company's reduced focus on 'Rewards Me' in 2018?
It cut down on free coupons and cashbacks
How has the company aimed to make the right product 'easily' available to customers?
By overhauling its interface
What has been the impact of Amazon's specific expenses related to 'Reduce Anxiety' in 2018?
They have come down in 2018
What can be inferred about the impact of cutting back on free coupons and cashbacks?
It resulted in higher expenses for customers
What is the relationship between higher scores on most elements of value and revenue growth rates, according to the text?
Firms with higher scores on most elements of value demonstrate significantly higher revenue growth rates
What impact do firms delivering the higher scores on most elements of value have on their market shares, according to the text?
A significant improvement in market shares over a period of time
What changed about Amazon's Value Drivers over time, based on the text?
Amazon's Value Drivers shifted from under-delivering on 'Quality' to over-delivering on 'Quality'
How does delivering more elements of value impact customer willingness to pay, according to the text?
It leads to an increase in customer willingness to pay
What do firms that deliver more elements of value stand to gain, based on the text?
A significant gain in market share compared to other firms
What is the impact of delivering higher scores on most elements of value on customer willingness to pay, as per the text?
A significant increase in customer willingness to pay
How did Ford’s moving assembly line contribute to cost advantage?
It reduced the time taken to assemble a Model T from 106 hours to six hours, resulting in significant efficiency gains
What major efficiency gains did Dell achieve during the 1990s?
Cost leadership in personal computers through reconfiguration of the industry’s traditional value chain
Which company's system of lean production combined several work practices leading to cost advantage?
Toyota
What did General Motors achieve through spending $40 billion on new process technology between 1979 and 1986?
Goal of becoming the world’s most efficient manufacturer of automobiles
What contributes to huge cost economies according to the text?
Major efficiency gains from improved processes through process redesign without significant technological innovation
What was a key factor in Dell's cost leadership in personal computers during the 1990s?
's system of lean production combining several work practices
What is the primary focus of the company's strategy to drive down firm costs?
Focusing on deep-discounting and value driver 'Reduces Cost'
What can be inferred about the impact of the company's reduced focus on 'Rewards Me' in 2018?
It contributed to cutting down on free coupons and cashbacks
In which area has the company aimed to make significant improvements to reduce customer effort and time, as mentioned in the text?
Overhauling its interface
What is the primary purpose of advertising campaigns in conveying the value proposition for firms, as per the text?
To communicate the value drivers underlying the value proposition
What do value propositions aim to answer, as mentioned in the text?
Which needs and relative price are relevant to customers?
What is the impact of delivering higher scores on most elements of value on customer willingness to pay, as per the text?
Customer willingness to pay increases significantly
What are residual efficiencies related to, according to the text?
Reducing unnecessary expenses through specialization
What are the two tests of a good strategy mentioned in the text?
Unique Value Proposition and Tailored Value Chain
What does 'Economic Value Added (EVA)' represent according to the text?
The value a company adds by generating a return on capital that exceeds the cost of that capital
What is the formula for 'Value Created to Customer' as per the text?
$$f (Value Proposition + Value Chain Activities)$$
What do the activities carried out by the company help it create and deliver according to the text?
Value Proposition to Customers
What aspect of the firm's decisions also influences how much of the value created by the firm can be captured by it?
Tailored Value Chain
What is the basis for capturing the created value in a firm's value chain according to the text?
Tailored Value Chain
Test your knowledge of economies of scale and specialization with this quiz. Explore how firms benefit from spreading costs over larger volumes of output and how increased scale permits greater task specialization.
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