1. A building block of a competitive advantage can impact profitability by accomplishing one of three goals – increasing value as perceived by customers, allowing the company to increase the price it charges or reducing the costs of producing products. Which of these actions by a car manufacturer would be part of a short-term strategy for increasing profitability through value creation, price increase or cost reduction?
a. The company sales and marketing team chooses to undercut its nearest competitor by reducing prices to just below the rival's list price.
b. The company fires its CEO and chooses to hire its competitor's former vice president for research and development.
c. The company's operations team identifies 10 improvements to their production process that will reduce the per car manufacturing cost for each vehicle off the line.
d. The company will expand an existing manufacturing plant to make room for additional capacity.
2. Customer responsiveness includes:
a. serving customers quickly with quality products, meeting their after-sale service and follow-up needs, and developing new products to fill unmet customer needs.
b. the development of new processes for manufacturing products.
c. the output of a company's production workforce.
d. the price at which a customer is willing to pay for a product based on their perceived value
3. A competitive advantage is based on the possession of distinctive competencies. By definition, these are:
a. resources that are available to all firms operating in a given industry that are easily shared and copied by rivals.
b. differences between companies in how they structure their companies and compensate their employees.
c. characteristics, skills or knowledge that cannot be written down and must be understood through experience or intuition.
d. firm-specific strengths that allow a company to differentiate its products from rivals or achieve lower costs than rivals.