Question 1

A sustainable strategy is one that produces a competitive advantage that can be maintained over time.

Accepted Answer

A) True 
 B)False  False

Question 2

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price.

Accepted Answer

A)  Agency 
B)  Freemium 
C)  Bundling 
D)  Wholesale 
A)  Agency 
B)  Freemium 
C)  Bundling 
D)  Wholesale D

Question 3

Elena is the CEO of Geode Technologies, a consumer electronics manufacturer. Last year, Geode's return on invested capital (ROIC) was 11.6 percent, while Geode's closest competitor, NorthWest Tech, had an ROIC of 17 percent. Which of the following factors might Elena use to convince investors to invest in Geode rather than NorthWest Tech?

Accepted Answer

A)  Geode had a Research & development (R&
D)  expense / Revenue ratio of 16 percent, while NorthWest Tech had an R&D / Revenue ratio of 12 percent. 
B)  Geode's working capital to revenue ratio was 75 percent, while NorthWest Tech's was 68 percent. 
C)  Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent. 
D)  Geode's plant, property, and equipment (PP
E)  over revenue ratio was 19 percent, while NorthWest Tech's was 10 percent. 
A)  Geode had a Research & development (R&
D)  expense / Revenue ratio of 16 percent, while NorthWest Tech had an R&D / Revenue ratio of 12 percent. 
B)  Geode's working capital to revenue ratio was 75 percent, while NorthWest Tech's was 68 percent. 
C)  Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent. 
D)  Geode's plant, property, and equipment (PP
E)  over revenue ratio was 19 percent, while NorthWest Tech's was 10 percent. C

Question 4

________ are the legal owners of public companies.

Accepted Answer

A)  Employees 
B)  Shareholders 
C)  Category captains 
D)  Creditors 
A)  Employees 
B)  Shareholders 
C)  Category captains 
D)  Creditors

Question 5

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the

Accepted Answer

A)  return on risk capital. 
B)  economic value created. 
C)  consumer surplus. 
D)  inventory turnover. 
A)  return on risk capital. 
B)  economic value created. 
C)  consumer surplus. 
D)  inventory turnover.

Question 6

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

Accepted Answer

A)  consumer surplus. 
B)  total return to shareholders. 
C)  customer lifetime value. 
D)  economic value created. 
A)  consumer surplus. 
B)  total return to shareholders. 
C)  customer lifetime value. 
D)  economic value created.

Question 7

Discuss the four key questions managers need to answer when using the balanced scorecard to develop strategic objectives.

Accepted Answer

The four key questions are:
1. How do cu

Question 8

Which of the following statements is true of the balanced-scorecard?

Accepted Answer

A)  It is a more or less a one-dimensional metric of measuring competitive advantages of a firm. 
B)  It is one of the traditional approaches of measuring firm performance. 
C)  Its primary focus is to base a firm's strategic goals entirely on external performance dimensions. 
D)  It attempts to provide a holistic perspective on firm performance. 
A)  It is a more or less a one-dimensional metric of measuring competitive advantages of a firm. 
B)  It is one of the traditional approaches of measuring firm performance. 
C)  Its primary focus is to base a firm's strategic goals entirely on external performance dimensions. 
D)  It attempts to provide a holistic perspective on firm performance.

Question 9

During the process of formulating an effective business model, a firm's managers should first

Accepted Answer

A)  transform their strategy of how to compete into a blueprint of actions and initiatives. 
B)  implement their strategy at corporate, strategic business unit, and functional levels. 
C)  implement their blueprint of actions and initiatives through structures, processes, culture, and procedures. 
D)  evaluate the firm's strategy already in effect and take corrective actions if necessary. 
A)  transform their strategy of how to compete into a blueprint of actions and initiatives. 
B)  implement their strategy at corporate, strategic business unit, and functional levels. 
C)  implement their blueprint of actions and initiatives through structures, processes, culture, and procedures. 
D)  evaluate the firm's strategy already in effect and take corrective actions if necessary.

Question 10

Which of the following is an advantage of a triple-bottom-line approach?

Accepted Answer

A)  The approach takes an integrative and holistic view in assessing a company's performance. 
B)  The approach does not rely on an external view of a firm to assess its performance. 
C)  The approach is more of a quantitative performance metric rather than a mere conceptual framework. 
D)  The framework can help managers assess a firm's competitive advantage without taking into account the firm's performance along noneconomic dimensions. 
A)  The approach takes an integrative and holistic view in assessing a company's performance. 
B)  The approach does not rely on an external view of a firm to assess its performance. 
C)  The approach is more of a quantitative performance metric rather than a mere conceptual framework. 
D)  The framework can help managers assess a firm's competitive advantage without taking into account the firm's performance along noneconomic dimensions.

Question 11

A manager's only responsibility is to monitor and assess the performance of his or her firm.

Accepted Answer

A) True 
 B)False

Question 12

A watchmaking company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?

Accepted Answer

A)  $150 
B)  $180 
C)  $170 
D)  $210 
A)  $150 
B)  $180 
C)  $170 
D)  $210

Question 13

Happy Foods and General Grains both produce similar puffed rice breakfast cereals. For both companies, the cost of producing a box of cereal is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other?

Accepted Answer

A)  Increase total perceived consumer benefits through differentiation. 
B)  Raise prices above the current reservation price. 
C)  Lower prices to the break-even price. 
D)  Increase the number of stock market shares available to investors. 
A)  Increase total perceived consumer benefits through differentiation. 
B)  Raise prices above the current reservation price. 
C)  Lower prices to the break-even price. 
D)  Increase the number of stock market shares available to investors.

Question 14

Unplug Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate?

Accepted Answer

A)  razor-razor-blade 
B)  subscription-based 
C)  pay-as-you-go 
D)  freemium 
A)  razor-razor-blade 
B)  subscription-based 
C)  pay-as-you-go 
D)  freemium

Question 15

You are the CEO of a home appliance manufacturing company and have recently undertaken a review of your company's strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed?

Accepted Answer

A)  Consider this evidence of a sustainable competitive advantage and maintain your current strategy. 
B)  Compare the current valuations with past valuations to determine a trend. 
C)  Assume your current strategy has failed and begin to formulate a new one. 
D)  Compare your valuation to firms in another industry. 
A)  Consider this evidence of a sustainable competitive advantage and maintain your current strategy. 
B)  Compare the current valuations with past valuations to determine a trend. 
C)  Assume your current strategy has failed and begin to formulate a new one. 
D)  Compare your valuation to firms in another industry.

Question 16

Mega Media sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called

Accepted Answer

A)  an agency. 
B)  bundling. 
C)  wholesale. 
D)  a freemium. 
A)  an agency. 
B)  bundling. 
C)  wholesale. 
D)  a freemium.

Question 17

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

Accepted Answer

A)  the producer surplus 
B)  the firm's cost (
C)  in manufacturing the dress 
C)  the consumer surplus 
D)  the value (V) the consumer attaches to the dress 
A)  the producer surplus 
B)  the firm's cost (
C)  in manufacturing the dress 
C)  the consumer surplus 
D)  the value (V) the consumer attaches to the dress

Question 18

What does "total return to shareholders" mean?

Accepted Answer

Investors are primarily interested in a

Question 19

It is April 2018 and Mark is a novice investor who wants to decide between purchasing shares in EagleCorp or Myna Bird Inc. In fiscal year 2017, EagleCorp's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Myna Bird Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell Mark?

Accepted Answer

A)  Myna Bird Inc. is more likely to create value while EagleCorp is more likely to destroy value. 
B)  EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value. 
C)  Both Myna Bird Inc. and EagleCorp are likely to create value. 
D)  Neither Myna Bird Inc. nor EagleCorp are likely to create value. 
A)  Myna Bird Inc. is more likely to create value while EagleCorp is more likely to destroy value. 
B)  EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value. 
C)  Both Myna Bird Inc. and EagleCorp are likely to create value. 
D)  Neither Myna Bird Inc. nor EagleCorp are likely to create value.

Question 20

The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?

Accepted Answer

A)  For every $6.00 Tesva Systems puts to work, the company incurs a cost of $1.00. 
B)  For every $6.00 Tesva Systems puts to work, the company realizes sales of $1.00. 
C)  For every dollar Tesva Systems puts to work, the company realizes $6.00 in loss. 
D)  For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales. 
A)  For every $6.00 Tesva Systems puts to work, the company incurs a cost of $1.00. 
B)  For every $6.00 Tesva Systems puts to work, the company realizes sales of $1.00. 
C)  For every dollar Tesva Systems puts to work, the company realizes $6.00 in loss. 
D)  For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.

A sustainable strategy is one that produces a competitive advantage that can be maintained over time.

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price.

________ are the legal owners of public companies.

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

Discuss the four key questions managers need to answer when using the balanced scorecard to develop strategic objectives.

Which of the following statements is true of the balanced-scorecard?

During the process of formulating an effective business model, a firm's managers should first

Which of the following is an advantage of a triple-bottom-line approach?

A manager's only responsibility is to monitor and assess the performance of his or her firm.

Unplug Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate?

Mega Media sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

What does "total return to shareholders" mean?

The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 5: Competitive Advantage, Firm Performance, and Business Models

A sustainable strategy is one that produces a competitive advantage that can be maintained over time.

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price.

________ are the legal owners of public companies.

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

Discuss the four key questions managers need to answer when using the balanced scorecard to develop strategic objectives.

Which of the following statements is true of the balanced-scorecard?

During the process of formulating an effective business model, a firm's managers should first

Which of the following is an advantage of a triple-bottom-line approach?

A manager's only responsibility is to monitor and assess the performance of his or her firm.

Unplug Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate?

Mega Media sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

What does "total return to shareholders" mean?

The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters