1. When a company decides to pursue a segmentation strategy, customization can cause costs to increase and it is difficult to achieve economies of scale.
a. True b. False

2. When a company pioneers new process innovations that lead to value innovation, it effectively changes the game in an industry and may be able to outperform its rivals for a long period of time.
a. True b. False

3. Which generic business-level strategy is based on the intent to lower costs so that a company can lower prices and still make a profit?
a. Broad low-cost strategy
b. Price differentiation strategy
c. Broad differentiation strategy
d. Focus differentiation strategy
e. Focus low-cost strategy

4. The effect of value innovation on the efficiency frontier is that a product can be offered at a greater value at a lower cost than was thought possible.
a. True b. False

5. In commodity markets, competitive advantage goes to the company that has the lowest costs.
a. True b. False

6. The term value innovation is used to describe
a. the way a company decides to group customers based on important differences in their needs to gain a competitive advantage.
b. a business’s overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings.
c. what happens when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible.
d. what happens when a company decides to ignore different segments and produce a standardized product for the average consumer.
e. what happens when a company decides to serve many segments or even the entire market, producing different offerings for different segments.