Question 1

Which of the following scenarios best illustrates bundling?

Accepted Answer

A)  Clean Brush Inc. sells its electric toothbrushes for a low cost, but charges a high price for replacement brushes. 
B)  Cumulus Media Inc. sells its cloud computing network by having customers pay for the service as they use it. 
C)  Sharp Cable Inc. sells its basic TV channels for free but charges high prices for any channels that customers add on later. 
D)  Fresh Seeds Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually. 
A)  Clean Brush Inc. sells its electric toothbrushes for a low cost, but charges a high price for replacement brushes. 
B)  Cumulus Media Inc. sells its cloud computing network by having customers pay for the service as they use it. 
C)  Sharp Cable Inc. sells its basic TV channels for free but charges high prices for any channels that customers add on later. 
D)  Fresh Seeds Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.

Question 2

Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price that consumers pay.

Accepted Answer

A) True 
 B)False

Question 3

Discuss the limitations associated with using accounting data to measure competitive performance.

Accepted Answer

Although accounting data tend to be read

Question 4

Serena paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

Accepted Answer

A)  $900 
B)  $1,100 
C)  $550 
D)  $200 
A)  $900 
B)  $1,100 
C)  $550 
D)  $200

Question 5

The value a consumer attaches to a product or service is captured in the

Accepted Answer

A)  least price a consumer is willing to pay for it. 
B)  consumer's maximum willingness to pay for it. 
C)  expenses incurred by the firm in manufacturing it. 
D)  difference between the price charged for it and the cost to produce it. 
A)  least price a consumer is willing to pay for it. 
B)  consumer's maximum willingness to pay for it. 
C)  expenses incurred by the firm in manufacturing it. 
D)  difference between the price charged for it and the cost to produce it.

Question 6

What is the relationship between producer surplus and consumer surplus?

Accepted Answer

The difference between the price charged

Question 7

Explain how business models put strategy into action.

Accepted Answer

Strategy is a set of goal-directed actio

Question 8

In an economic context, strategy for producers is primarily about

Accepted Answer

A)  distributing the economic value created equally between consumers and themselves. 
B)  reducing the difference between consumer's willingness to pay for a product and the cost to produce it. 
C)  capturing the economic value created as much as possible. 
D)  lowering producer surplus and increasing consumer surplus. 
A)  distributing the economic value created equally between consumers and themselves. 
B)  reducing the difference between consumer's willingness to pay for a product and the cost to produce it. 
C)  capturing the economic value created as much as possible. 
D)  lowering producer surplus and increasing consumer surplus.

Question 9

What are opportunity costs in general? What are the opportunity costs for entrepreneurs?

Accepted Answer

Opportunity costs capture the value of t

Question 10

________ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

Accepted Answer

A)  Return on revenue 
B)  Risk capital 
C)  Working capital turnover 
D)  Revenue per employee 
A)  Return on revenue 
B)  Risk capital 
C)  Working capital turnover 
D)  Revenue per employee

Question 11

What are the three financial ratios that constitute return on revenue, and what do they tell us?

Accepted Answer

Return on revenue is broken down into th

Question 12

The top management at Sunshine Vitamins, through rigorous testing, ensures that the company develops and sells vitamins that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Sunshine Vitamins are applying the ________ approach to measure firm performance.

Accepted Answer

A)  economic value creation 
B)  shareholder value creation 
C)  triple-bottom-line 
D)  accounting profitability 
A)  economic value creation 
B)  shareholder value creation 
C)  triple-bottom-line 
D)  accounting profitability

Question 13

What is risk capital?

Accepted Answer

From the shareholders' perspective, the

Question 14

Managers must first develop a strategy that is likely to produce a competitive advantage before implementing a balanced scorecard approach.

Accepted Answer

A) True 
 B)False

Question 15

How does consumer demand affect fixed costs and variable costs?

Accepted Answer

Fixed costs are independent of consumer

Question 16

Mobius Electronics incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario?

Accepted Answer

A)  $350 
B)  $450 
C)  $800 
D)  $200 
A)  $350 
B)  $450 
C)  $800 
D)  $200

Question 17

Economic value creation is best expressed as

Accepted Answer

A)  producer surplus minus consumer surplus. 
B)  consumer surplus minus cost of production. 
C)  consumer surplus plus firm profit. 
D)  producer surplus plus firm profit. 
A)  producer surplus minus consumer surplus. 
B)  consumer surplus minus cost of production. 
C)  consumer surplus plus firm profit. 
D)  producer surplus plus firm profit.

Question 18

The cost of capital to create a product is a fixed cost because it is

Accepted Answer

A)  directly proportional to the output level. 
B)  uniform throughout all firms and industries. 
C)  not a part of the profit calculations. 
D)  unaffected by consumer demand. 
A)  directly proportional to the output level. 
B)  uniform throughout all firms and industries. 
C)  not a part of the profit calculations. 
D)  unaffected by consumer demand.

Question 19

How does the triple-bottom line approach help managers? Explain with the help of an example.

Accepted Answer

Student examples will vary. A sample res

Question 20

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

Accepted Answer

A)  Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term. 
B)  These tools fail to indicate how the stock market views all available public information about a firm's expected future performance. 
C)  These tools measure competitive advantage in absolute terms rather than relative terms. 
D)  Only the book value of the share prices is taken into account when applying these measures, and not the market value. 
A)  Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term. 
B)  These tools fail to indicate how the stock market views all available public information about a firm's expected future performance. 
C)  These tools measure competitive advantage in absolute terms rather than relative terms. 
D)  Only the book value of the share prices is taken into account when applying these measures, and not the market value.

Which of the following scenarios best illustrates bundling?

Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price that consumers pay.

Discuss the limitations associated with using accounting data to measure competitive performance.

Serena paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

The value a consumer attaches to a product or service is captured in the

What is the relationship between producer surplus and consumer surplus?

Explain how business models put strategy into action.

In an economic context, strategy for producers is primarily about

What are opportunity costs in general? What are the opportunity costs for entrepreneurs?

________ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

What are the three financial ratios that constitute return on revenue, and what do they tell us?

What is risk capital?

Managers must first develop a strategy that is likely to produce a competitive advantage before implementing a balanced scorecard approach.

How does consumer demand affect fixed costs and variable costs?

Economic value creation is best expressed as

The cost of capital to create a product is a fixed cost because it is

How does the triple-bottom line approach help managers? Explain with the help of an example.

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

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

Which of the following scenarios best illustrates bundling?

Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price that consumers pay.

Discuss the limitations associated with using accounting data to measure competitive performance.

Serena paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

The value a consumer attaches to a product or service is captured in the

What is the relationship between producer surplus and consumer surplus?

Explain how business models put strategy into action.

In an economic context, strategy for producers is primarily about

What are opportunity costs in general? What are the opportunity costs for entrepreneurs?

________ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

What are the three financial ratios that constitute return on revenue, and what do they tell us?

What is risk capital?

Managers must first develop a strategy that is likely to produce a competitive advantage before implementing a balanced scorecard approach.

How does consumer demand affect fixed costs and variable costs?

Economic value creation is best expressed as

The cost of capital to create a product is a fixed cost because it is

How does the triple-bottom line approach help managers? Explain with the help of an example.

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

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