Economies of Scale and Specialization Quiz
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Questions and Answers

What is one of the advantages of increased scale according to the text?

  • Decreased economies of scale
  • Less learning and automation
  • Greater task specialization (correct)
  • Higher costs for market leaders

    • How does division of labor contribute to economies of specialization?

  • It reduces task specialization
  • It promotes learning and assists automation (correct)
  • It has no impact on economies of specialization
  • It hinders learning and automation

    • In which industries are economies of specialization particularly important, according to the text?

  • Healthcare and retail
  • Investment banking and software development (correct)
  • Construction and hospitality
  • Agriculture and manufacturing

    • What is the basis of the experience curve according to the text?

    <p>Learning-by-doing</p> Signup and view all the answers

    What is one of the sources of cost advantage related to specialization?

    <p>Standardization of Designs &amp; Components</p> Signup and view all the answers

    How does specialization contribute to cost efficiency in production?

    <p>By achieving economies of scale</p> Signup and view all the answers

    Which factor related to specialization can lead to residual efficiency and cost advantage?

    <p>Corporate Culture</p> Signup and view all the answers

    In the context of specialization, what contributes to cost advantage by reducing unnecessary expenses?

    <p>Business Process Reengineering</p> Signup and view all the answers

    Which company achieved cost leadership in personal computers during the 1990s through the reconfiguration of the industry’s traditional value chain?

    <p>Dell</p> Signup and view all the answers

    What did Ford's moving assembly line achieve in terms of reducing the time taken to assemble a Model T?

    <p>Reduced from 106 hours to 6 hours</p> Signup and view all the answers

    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?

    <p>General Motors</p> Signup and view all the answers

    What were the major efficiency gains from improved processes likely to come from, according to the text?

    <p>Process redesign without significant technological innovation</p> Signup and view all the answers

    Which of the following is true about firms delivering higher scores on most elements of value?

    <p>They demonstrate significantly higher revenue growth rates</p> Signup and view all the answers

    What did Bain's B2B value drivers focus on, based on the text?

    <p>Increasing cost efficiency in manufacturing processes</p> Signup and view all the answers

    How have Amazon's value drivers changed over time, according to the text?

    <p>They have shifted focus from 'Quality' to other elements of value</p> Signup and view all the answers

    What do consumers tend to be willing to pay for, based on the text?

    <p>Firms that deliver more elements of value</p> Signup and view all the answers

    What advantage do firms delivering higher scores on most elements of value stand to gain, according to the text?

    <p>Higher revenue growth rates</p> Signup and view all the answers

    In the context of value creation, what is a value proposition?

    <p>A statement that summarizes why a customer should buy a company’s product or use its service</p> Signup and view all the answers

    Which factor influences how much of the value created by the firm can be captured by it?

    <p>The activities carried out by the company</p> Signup and view all the answers

    What connects Indian Oil and Apollo Hospital Enterprises Ltd.in the Nifty 50 index?

    <p>They both have a Unique Value Proposition</p> Signup and view all the answers

    What is the relationship between Economic Value Added (EVA) and Customer Willingness to Pay (WTP)?

    <p>$WTP - EVA = Consumer Surplus</p> Signup and view all the answers

    How does division of labor contribute to value creation and capture?

    <p>It leads to residual efficiency and cost advantage</p> Signup and view all the answers

    What did Carlos Ghosn achieve in his first year as CEO of Nissan Motor?

    <p>Reduced the company's operating costs by 20%</p> Signup and view all the answers

    What is the primary focus of management systems and company values at Walmart, IKEA, Ryanair, and Amazon?

    <p>Elimination of excess costs and promotion of frugality</p> Signup and view all the answers

    What does the value chain represent in terms of a firm's activities?

    <p>Stages of production from raw materials to final product</p> Signup and view all the answers

    In the value chain, what does 'Inbound Logistics' involve?

    <p>Receiving and warehousing of raw materials</p> Signup and view all the answers

    What is central to capturing the created value in a firm's value chain?

    <p>Taking control of key value chain activities</p> Signup and view all the answers

    What is the purpose of advertising campaigns in conveying the value proposition?

    <p>To convey the set of value drivers underlying the value proposition</p> Signup and view all the answers

    In the context of value propositions, what do advertising campaigns aim to inform customers about?

    <p>How the product creates value compared to rivals and substitutes</p> Signup and view all the answers

    What are the three questions that a value proposition aims to answer?

    <p>Which customers? What needs? What relative price?</p> Signup and view all the answers

    What is a key purpose of a value proposition?

    <p>To drive up firm revenues</p> Signup and view all the answers

    How do firms arrive at the appropriate value proposition over time?

    <p>Through trial and error, learning, and perfecting</p> Signup and view all the answers

    What is the purpose of advertising campaigns in conveying the value proposition for firms?

    <p>To highlight the set of value drivers underlying the value proposition</p> Signup and view all the answers

    How do firms arrive at the appropriate value proposition over time, according to the text?

    <p>By 'learning', 'figuring out', and 'perfecting' them over time</p> Signup and view all the answers

    What are the three questions that a value proposition aims to answer, as mentioned in the text?

    <p>Which customers? Which needs? What relative price?</p> Signup and view all the answers

    What is central to capturing the created value in a firm's value chain, as per the text?

    <p>Optimizing operational efficiency and reducing costs</p> Signup and view all the answers

    What are the elements that each advertising campaign highlights, as per the text?

    <p>Set of value drivers underlying the value proposition</p> Signup and view all the answers

    In which industries are economies of specialization particularly important, according to the text?

    <p>Technology industries with rapid innovation cycles</p> Signup and view all the answers

    What impact did Boeing's efforts to boost output during 2006–2011 have on unit costs?

    <p>Increased unit costs due to overtime pay, premiums for night and weekend shifts, and increased defects</p> Signup and view all the answers

    What was required for survival in hard-hit sectors like house building, construction equipment, and retailing during the 2008–2009 recession?

    <p>Fast response to declining demand</p> Signup and view all the answers

    What are residual efficiencies related to, according to the text?

    <p>The extent to which the firm approaches its efficiency frontier of optimal operation</p> Signup and view all the answers

    What do excess costs have a propensity to accumulate within, according to the text?

    <p>Corporate headquarters</p> Signup and view all the answers

    What is the basis of residual efficiency and cost advantage?

    <p>Approaching the efficiency frontier of optimal operation and eliminating organizational slack</p> Signup and view all the answers

    What was announced by Caterpillar on the same day it reported a downturn in its quarterly sales during the 2008–2009 recession?

    <p>Cutting 20,000 jobs</p> Signup and view all the answers

    What is the primary focus of the company's strategy to drive down firm costs?

    <p>Emphasizing deep-discounting and reducing expenses</p> Signup and view all the answers

    How has the company aimed to 'Reduce Anxiety' for customers?

    <p>By overhauling its interface and offering favorable return policies</p> Signup and view all the answers

    What can be inferred about the impact of the company's reduced focus on 'Rewards Me' in 2018?

    <p>It cut down on free coupons and cashbacks</p> Signup and view all the answers

    How has the company aimed to make the right product 'easily' available to customers?

    <p>By overhauling its interface</p> Signup and view all the answers

    What has been the impact of Amazon's specific expenses related to 'Reduce Anxiety' in 2018?

    <p>They have come down in 2018</p> Signup and view all the answers

    What can be inferred about the impact of cutting back on free coupons and cashbacks?

    <p>It resulted in higher expenses for customers</p> Signup and view all the answers

    What is the relationship between higher scores on most elements of value and revenue growth rates, according to the text?

    <p>Firms with higher scores on most elements of value demonstrate significantly higher revenue growth rates</p> Signup and view all the answers

    What impact do firms delivering the higher scores on most elements of value have on their market shares, according to the text?

    <p>A significant improvement in market shares over a period of time</p> Signup and view all the answers

    What changed about Amazon's Value Drivers over time, based on the text?

    <p>Amazon's Value Drivers shifted from under-delivering on 'Quality' to over-delivering on 'Quality'</p> Signup and view all the answers

    How does delivering more elements of value impact customer willingness to pay, according to the text?

    <p>It leads to an increase in customer willingness to pay</p> Signup and view all the answers

    What do firms that deliver more elements of value stand to gain, based on the text?

    <p>A significant gain in market share compared to other firms</p> Signup and view all the answers

    What is the impact of delivering higher scores on most elements of value on customer willingness to pay, as per the text?

    <p>A significant increase in customer willingness to pay</p> Signup and view all the answers

    How did Ford’s moving assembly line contribute to cost advantage?

    <p>It reduced the time taken to assemble a Model T from 106 hours to six hours, resulting in significant efficiency gains</p> Signup and view all the answers

    What major efficiency gains did Dell achieve during the 1990s?

    <p>Cost leadership in personal computers through reconfiguration of the industry’s traditional value chain</p> Signup and view all the answers

    Which company's system of lean production combined several work practices leading to cost advantage?

    <p>Toyota</p> Signup and view all the answers

    What did General Motors achieve through spending $40 billion on new process technology between 1979 and 1986?

    <p>Goal of becoming the world’s most efficient manufacturer of automobiles</p> Signup and view all the answers

    What contributes to huge cost economies according to the text?

    <p>Major efficiency gains from improved processes through process redesign without significant technological innovation</p> Signup and view all the answers

    What was a key factor in Dell's cost leadership in personal computers during the 1990s?

    <p>'s system of lean production combining several work practices</p> Signup and view all the answers

    What is the primary focus of the company's strategy to drive down firm costs?

    <p>Focusing on deep-discounting and value driver 'Reduces Cost'</p> Signup and view all the answers

    What can be inferred about the impact of the company's reduced focus on 'Rewards Me' in 2018?

    <p>It contributed to cutting down on free coupons and cashbacks</p> Signup and view all the answers

    In which area has the company aimed to make significant improvements to reduce customer effort and time, as mentioned in the text?

    <p>Overhauling its interface</p> Signup and view all the answers

    What is the primary purpose of advertising campaigns in conveying the value proposition for firms, as per the text?

    <p>To communicate the value drivers underlying the value proposition</p> Signup and view all the answers

    What do value propositions aim to answer, as mentioned in the text?

    <p>Which needs and relative price are relevant to customers?</p> Signup and view all the answers

    What is the impact of delivering higher scores on most elements of value on customer willingness to pay, as per the text?

    <p>Customer willingness to pay increases significantly</p> Signup and view all the answers

    What are residual efficiencies related to, according to the text?

    <p>Reducing unnecessary expenses through specialization</p> Signup and view all the answers

    What are the two tests of a good strategy mentioned in the text?

    <p>Unique Value Proposition and Tailored Value Chain</p> Signup and view all the answers

    What does 'Economic Value Added (EVA)' represent according to the text?

    <p>The value a company adds by generating a return on capital that exceeds the cost of that capital</p> Signup and view all the answers

    What is the formula for 'Value Created to Customer' as per the text?

    <p>$$f (Value Proposition + Value Chain Activities)$$</p> Signup and view all the answers

    What do the activities carried out by the company help it create and deliver according to the text?

    <p>Value Proposition to Customers</p> Signup and view all the answers

    What aspect of the firm's decisions also influences how much of the value created by the firm can be captured by it?

    <p>Tailored Value Chain</p> Signup and view all the answers

    What is the basis for capturing the created value in a firm's value chain according to the text?

    <p>Tailored Value Chain</p> Signup and view all the answers

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