Chapter 13

The amount of value a firm creates is measured by the 

• economies of scale they are able to achieve. 

• difference between its costs of production and the value that consumers perceive in its products. 

• profitability the firm achieves. 

• difference between its costs of production and the price that it charges for its products. 

Which of the following is an example of a support activity in a firm's value chain? 

• research and development 

• customer service 

• human resources 

• marketing and sales 

_____ include the design, creation, and delivery of a product. 

• Primary activities 

• Core competencies 

• Support activities 

• Universal needs 

Michael Porter argues that 

• those firms that create superior value will achieve superior profitability. 

• Standardization of products is a basic strategy for attaining a competitive advantage in an industry. 

• It is necessary for a firm to have the lowest cost structure or create the most valuable product. 

• It is important that the gap between value and the cost of production be smaller than that of competitors. 

Location economies are the economies that arise from performing a _____ activity in the optimal location for that activity. 

• universal need 

• core competence 

• value creation 

• localization strategy 

Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on 

• Value creation

• Economies of scale

• location economies

• the domestic market

_____ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. 

• Core competencies 

• Global standardization strategies 

• Operations 

• Location economies 

Cost savings that come from learning by doing are known as 

• learning curves. 

• economies of scale. 

• learning effects. 

• experience curves. 

Learning effects tend to be 

• the same regardless of whether a task is simple or complex. 

• more significant when a technologically simple task is repeated. 

• less significant when a technologically complex task is repeated. 

• more significant when a technologically complex task is repeated. 

Lenovo's ThinkPad laptop computers are designed in the United States; the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United States. In each case, these components are manufactured and sourced from the optimal location given current factor costs. In this example, Lenovo has 

• vertical integration advantages. 

• a global web of value creation activities. 

• learning effects

• high local responsiveness.