Sustainable Competitive Advantage Quiz
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Questions and Answers

What is the term used to describe the rate at which customers leave a product or service?

  • Engagement rate
  • Churn rate (correct)
  • Retention rate
  • Acquisition rate

    • Which of the following accurately describes the First Sale Doctrine?

  • It permits the distribution of legally acquired physical copies. (correct)
  • It mandates that all content must be distributed for free for a short time.
  • It allows firms to distribute digital copies of content.
  • It restricts the reproduction of digital products.

    • What is a primary advantage of Netflix's use of collaborative filtering through Cinematch?

  • It increases fixed costs.
  • It enhances customer loyalty by personalizing experiences. (correct)
  • It eliminates the need for content acquisition.
  • It limits the types of content available to customers.

    • What does the term 'windowing' refer to in the context of content availability?

    <p>The strategy of releasing content for only a limited period.</p> Signup and view all the answers

    Which of the following best describes a marginal cost?

    <p>The cost incurred by producing one additional unit of a product.</p> Signup and view all the answers

    What competitive advantage did Netflix have over Walmart and Blockbuster?

    <p>Best customer service with DVDs</p> Signup and view all the answers

    What feature of Netflix's business model allowed it to offer a wide range of titles?

    <p>Long-tail selection of unique DVD titles</p> Signup and view all the answers

    Which of the following technologies did Netflix use to enhance its distribution capabilities?

    <p>Automated distribution centers</p> Signup and view all the answers

    What major investment did Netflix make for its delivery infrastructure?

    <p>$300 million</p> Signup and view all the answers

    When companies like Netflix become public, what must they disclose?

    <p>Financial position</p> Signup and view all the answers

    What does Netflix's unmatched data asset provide the company?

    <p>Enhanced understanding of customer preferences</p> Signup and view all the answers

    Which element is crucial for Netflix's ability to manage scale?

    <p>Automated distribution systems</p> Signup and view all the answers

    What element does the concept of 'long-tail' refer to in the context of Netflix?

    <p>Broad selection of niche titles</p> Signup and view all the answers

    What does strategic positioning refer to?

    <p>Performing different activities from rivals.</p> Signup and view all the answers

    What characterizes economies of scale?

    <p>Reduced costs per unit as production increases.</p> Signup and view all the answers

    What is meant by inventory turns?

    <p>How quickly a company collects money from sales.</p> Signup and view all the answers

    What do imitation-resistant value chains rely on?

    <p>Unique and hard-to-replicate operational processes.</p> Signup and view all the answers

    How do switching costs affect consumer behavior?

    <p>They make it costly for consumers to change products.</p> Signup and view all the answers

    What does the term 'fast follower problem' refer to?

    <p>Quickly matching a competitor’s product at a lower cost.</p> Signup and view all the answers

    What is a key characteristic of network effects?

    <p>The product becomes more valuable as more users adopt it.</p> Signup and view all the answers

    What is a critical factor for competitive advantage according to the resource-based view?

    <p>Control of valuable, rare, and imperfectly imitable resources.</p> Signup and view all the answers

    What does operational effectiveness involve?

    <p>Performing the same tasks better than rivals.</p> Signup and view all the answers

    What is meant by straddling in a competitive context?

    <p>Operating in multiple sectors without a clear focus.</p> Signup and view all the answers

    What role does branding play in competitive advantage?

    <p>It creates a perception of premium pricing.</p> Signup and view all the answers

    How does viral marketing contribute to a business?

    <p>By increasing product visibility through word of mouth.</p> Signup and view all the answers

    What factors comprise the primary activities of a value chain?

    <p>Inbound logistics, operations, outbound logistics, marketing, and sales.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of commodities?

    <p>They are typically offered at varying prices.</p> Signup and view all the answers

    What is the purpose of APIs in a business context?

    <p>To enable communication between different software applications</p> Signup and view all the answers

    Which of the following is NOT one of Porter's five forces?

    <p>Intensity of government regulation</p> Signup and view all the answers

    How does Zara minimize the risk of markdowns and write-offs?

    <p>By limiting production runs</p> Signup and view all the answers

    What does an omnichannel strategy integrate?

    <p>Online and offline sales</p> Signup and view all the answers

    What is one of the key benefits of Zara's use of RFID tags?

    <p>Improved inventory management</p> Signup and view all the answers

    What is the primary focus of the bargaining power of buyers in Porter's five forces?

    <p>Customers' ability to influence pricing</p> Signup and view all the answers

    What technology does Zara utilize to gather customer preferences in real-time?

    <p>Mobile apps with chat features</p> Signup and view all the answers

    How quickly can Zara design and launch a product in stores?

    <p>In 15 days</p> Signup and view all the answers

    Which of the following strategies does NOT directly relate to Zara's inventory management?

    <p>Discounting slow-moving products</p> Signup and view all the answers

    What significant change in sales did Zara experience during April 2020?

    <p>E-commerce sales increased by 95%</p> Signup and view all the answers

    What is the main consequence of having too much unwanted product in retailer inventory?

    <p>Higher markdowns and write-offs</p> Signup and view all the answers

    What aspect of customer demand does Zara’s design process heavily rely on?

    <p>Consumer feedback and sales data</p> Signup and view all the answers

    What is a potential effect of information asymmetry in pricing?

    <p>Possibility of unfair pricing practices</p> Signup and view all the answers

    Which of the following is true about Zara's supply chain management?

    <p>It maintains control over multiple layers of the value chain</p> Signup and view all the answers

    Study Notes

    Sustainable Competitive Advantage

    • Sustainable competitive advantage is achieving financial performance that consistently outperforms industry peers.
    • Operational effectiveness refers to performing the same tasks better than rivals.
    • Fast follower problem arises when a competitor enters a market quickly with a comparable or superior product at a lower cost.
    • Strategic positioning involves performing different activities than rivals.

    Resource Based View

    • To achieve sustainable competitive advantage, firms must control a set of exploitable resources that are valuable, rare, imperfectly imitable, and non-substitutable.

    Imitation Resistant Value Chains

    • Value Chain: set of activities through which a firm creates and delivers a product to customers.
      • Primary activities include logistics, inbound and outbound operations, marketing and sales, and service.
      • Secondary activities include firm infrastructure, human resource management, technology/research & development, and procurement.
    • Brands can be a source of competitive advantage by representing a symbolic embodiment of all aspects connected with a product or service.
    • Viral Marketing can be a powerful tool for spreading brand awareness.
    • Scale Advantages are benefits that firms gain from their size, such as:
      • Economies of Scale: Spreading investment costs across increasing units of production.
      • Switching Costs: Cost consumers incur when switching from one product to another.
    • Differentiation refers to offering products or services that are nearly identical but offer unique value propositions.
    • Network Effects: When a product or service becomes more valuable as more people use it.
    • Distribution Channels: The paths through which products and services reach customers.
    • APIs (Application Programming Interfaces) are tools that allow firms to connect their systems and services with those of other companies.

    Porter's Five Forces

    • Intensity of rivalry among existing competitors
    • Threat of new entrants
    • Threat of substitute products or services
    • Bargaining power of buyers
    • Bargaining power of suppliers

    Price Transparency

    • Price transparency refers to the ease with which consumers can compare prices across different sellers.
    • Information Asymmetry exists when one party in a transaction has more information than the other.

    Zara

    • Zara's success is based on its ability to respond quickly to changing customer demand.
    • Zara leverages data to understand customer preferences and tailor its designs accordingly.
    • Zara uses a vertical integration strategy, owning several layers of its value chain.
    • Inventory optimization models help Zara manage its stock levels effectively.
    • Zara's manufacturing facilities are close to its stores, allowing for fast turnaround times.
    • Limited production runs and full-price pricing minimize the risk of leftover inventory.
    • Zara has adapted to the shift towards e-commerce through its omnichannel strategy.
    • Zara's RFID system helps track inventory and facilitate efficient logistics.

    Netflix

    • Netflix has successfully transitioned from a DVD rental business to a streaming service.
    • Netflix's strength comes from its customer service, brand, scale, and data assets.
      • Netflix has a long-tail strategy, offering a wide selection of unique titles.
    • The company's automated distribution centers enable fast overnight delivery to customers.
    • Netflix uses algorithms like Cinematch to personalize customer experience based on viewing history and preferences.
    • Netflix leverages data to optimize its content library and reduce churn rate.
    • Netflix operates on a fixed cost structure, with marginal costs associated with streaming content.
    • Netflix uses a "coopetition" strategy with companies like Amazon.
    • Content acquisition is a significant challenge for streaming services like Netflix.
    • The First Sale Doctrine allows firms to distribute physical copies of legally acquired copyright-protected products.
    • Netflix has adopted a windowing strategy, limiting content availability for specific time periods.

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    Description

    Test your knowledge on sustainable competitive advantage and the resource-based view in strategic management. This quiz covers key concepts such as operational effectiveness, strategic positioning, and value chains. Understand how firms can outperform their peers through effective resource management.

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