66) Which of the following is less likely to be a rare source of cost advantage?
A) Technological software
B) Learning-curve advantages
C) Differential low-cost access to productive inputs
D) Policy choices
67) Perhaps the only time economies of scale are not subject to low-cost duplication is when the
________ size of operations is a significant percentage of ________ in an industry.
A) minimum; marginal demand
B) efficient; total demand
C) maximum; marginal demand
D) efficient; marginal demand
68) Which of the following statements is accurate?
A) In general, economies of scale are relatively easy-to-duplicate bases of cost leadership, but
diseconomies of scale are not.
B) In general, diseconomies of scale are relatively easy-to-duplicate bases of cost leadership, but
economies of scale are not.
C) In general, neither economies of scale nor economies are relatively easy-to-duplicate bases of
cost leadership.
D) In general, both economies of scale and diseconomies of scale are relatively easy-to-duplicate
bases of cost leadership.
69) When managers committed to an incorrect course of action increase their commitment to this
action even as its limitations become manifest, this is known as
A) de-escalation of commitment.
B) diseconomies of scale.
C) escalation of commitment.
D) economies of scale.
70) Cost advantages based on learning-curve economies are
A) rare, but they usually are not costly to duplicate.
B) costly to duplicate, but they usually are not rare.
C) both rare and usually costly to duplicate.
D) not rare and usually are not costly to duplicate.
71) Firms implementing cost-leadership strategies will generally adopt a
A) multidivisional structure.
B) product divisional structure.
C) functional organizational structure.
D) matrix structure.
72) In a functional structure, each of the major business functions is managed by a
A) functional manager.
B) divisional manager.
C) chief executive officer.
D) line manager.
73) The only person in a functional organization to have a multifunctional perspective is the
A) CFO.
B) CEO.
C) COO.
D) marketing manager.
74) Firms pursuing a cost-leadership strategy are typically characterized by
A) loose cost control systems.
B) a de-emphasis on quantitative cost goals and costs.
C) infrequent cost control reports.
D) close supervision of labor, raw materials and inventory.
75) Which of the following compensation policies is most likely to enhance a firm’s ability to
pursue a low-cost strategy?
A) Awarding employees bonuses based on the total amount of goods produced
B) Awarding employees bonuses based on customer comment cards
C) Awarding employees bonuses that are equal to 50% of the total cost savings achieved based
on employee suggestions and initiatives
D) Awarding employees bonuses based solely on how long they have been employed with the
company
76) Cost-leadership firms are typically characterized by very ________ cost-control systems.
A) tight
B) flexible
C) loose
D) decentralized
77) The U in U-form structure stands for
A) “uniform.”
B) “unitary.”
C) “unilateral.”
D) “unambiguous.”
78) In ________ structures, employees report to two or more people.
A) unilateral
B) functional
C) divisional
D) matrix
79) A marketing manager is an example of a(n) ________ manager.
A) ambidextrous
B) divisional
C) functional
D) unitary
80) Firms implementing cost-leadership strategies will have ________ layers in their reporting
structure.
A) many
B) relatively simple
C) relatively few
D) relatively complex
81) Sematech is pursuing which strategy?
A) Cost-leadership business strategy
B) Product-differentiation business strategy
C) Cost-leadership corporate strategy
D) Product-differentiation corporate strategy
82) By increasing production volume in an effort to reduce costs, Sematech is pursuing which
sources of cost advantage?
A) Size differences and diseconomies of scale
B) Differential access to productive inputs
C) Size differences and economies of scale
D) Technological advantages
83) If Sematech’s efforts to increase its production capacity resulted in increased complexity and
an inability of managers to control and operate the firm efficiently, this would be an example of
A) physical limits to efficient size.
B) worker de-motivation.
C) distance to markets and suppliers.
D) managerial diseconomies.
84) If Sematech’s expansion plans did not produce the desired cost savings but the company
decided to continue production expansion in an effort to capture cost reductions, this would be an
example of
A) economies of scale.
B) escalation of commitment.
C) diseconomies of scale.
D) managerial diseconomies.
85) If Sematech were to continue seeking methods to maintain the company’s cost-leadership
position that would be costly to duplicate, which of the following is most likely to be a basis of
cost leadership that may be costly to duplicate?
A) Establishing economies of scale
B) Exploiting learning-curve economies
C) Purchasing new technological hardware
D) Securing differential access to low-cost productive inputs
86) Given Sematech’s business level strategy, which organizational structure is the most
appropriate?
A) Matrix structure
B) U-form structure
C) Multidivisional structure
D) Product-divisional structure
87) If Lucy Sullivan were a Sematech manager who oversaw the finance operations in the
company’s functional structure, Lucy would be considered a
A) chief executive officer.
B) divisional manager.
C) chief operating officer.
D) functional manager.
88) By employing a low-cost competitive strategy, Sematech has made itself
A) less able to withstand industry price wars.
B) more vulnerable to rivals.
C) less vulnerable to the power of suppliers.
D) more vulnerable to the power of buyers.
89) If Sematech decided to focus on building its technological hardware, it would focus on
elements such as
A) robots.
B) organizational culture.
C) the quality of organizational controls.
D) the quality of relations among labor and management.
90) If Sematech were to choose to narrow its product line in an effort to reduce costs, this would
be an example of
A) technological software.
B) a policy choice.
C) a competitive advantage.
D) a learning-curve effect.
91) Differentiate between business strategies and corporate strategies and define the nature of a
cost-leadership strategy.
92) Identify six reasons firms can differ in their costs.
93) Identify four reasons why economies of scale can exist and four reasons why diseconomies
of scale can exist.
94) Discuss the difference between the learning curve and economies of scale.
95) Identify how cost leadership helps neutralize each of the major threats in an industry.
96) Identify which bases of cost leadership are more likely to be rare and costly to imitate.
97) Identify the most appropriate organizational structure for a firm pursuing a cost-leadership
strategy, and identify the two basic responsibilities of the CEO in this type of organization.
98) Identify the types of control systems that are appropriate for firms pursuing a cost-leadership
strategy.
99) Identify the types of compensation policies that are appropriate for firms pursuing a cost–
leadership strategy.
100) What are the responsibilities of the CEO in a functional organization?.