MA introduction + lecture 1 Flashcards
tenta (22 cards)
What is strategy in a business context?
The plan that determines the purpose and long term direction of the company.
What are the two main competitive strategies firms can adopt?
- Product differentiation
- Cost leadership
What does product differentiation lead to?
Brand loyalty and the willingness of customers to pay high prices.
What is cost leadership?
A strategy that leads to lower selling prices.
Which company exemplifies a cost leadership strategy?
Walmart
Which company exemplifies a product differentiation strategy?
Samsung
What is a cost object?
The things we want to know the cost of, e.g., an e-bike.
Define direct costs.
Costs that can be easily traced to cost objects, e.g., bike material.
What are overhead costs?
Indirect costs that can’t be traced, but need to be allocated through a cost driver.
What are the six levels in the organizational chart of Daimler?
- Level 1: CEO
- Level 2: Corporate support functions
- Level 3: Product lines
- Level 4: CARS support functions
- Level 5: PRODUCTION locations
- Level 6: SINDELFINGEN models
What does cost behavior refer to?
The relationship between production volume and costs.
What are variable costs?
Costs that increase with the number of units produced.
What are fixed costs?
Costs that do not change with the number of units produced.
In the longterm it behaves like a stepfunction.
What are learning curves?
Representations of how employees become more efficient in production over time.
What is the normal activity level?
The steady, most efficient level of production for an employee.
What are diseconomies of scale?
Inefficiencies that occur when production reaches its peak, causing hindrances.
What does total cost represent on a graph?
The cost associated with producing a certain number of units.
What are product costs?
All costs necessary to complete the production process of a product. /Costs incurred in the manufacturing of a product
What are period costs?
All other costs, including selling expenses and administrative expenses.
What is work in process inventory?
Collection of raw material, labor costs, and overhead costs for products in production.
Where is the cost of goods sold reported?
In the income statement.
Fill in the blank: Fixed costs behave like _______ over the long term.
step-functions
