Capstone EXAM 2

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?

"Firm effects. I will be able to have the most impact on those."

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is

$3 billion, that is, 30 million shares × $100

Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then

Invoro will have a resource that is valuable but no longer rare.

________ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Isolating mechanisms

Which of the following is a disadvantage of the balanced-scorecard approach?

It provides limited guidance about which metrics to choose.

________ are best described as the value of the best forgone alternative use of the resources employed.

Opportunity costs

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL framework

________ describes a process in which the options one faces in a current situation are limited by decisions made in the past.

Path dependence

In which of the following situations is the power of suppliers high in an industry?

Suppliers' industry is more concentrated than the industry it sells to.

Unlike the financial ratios based on accounting data, total return to shareholders is

an external performance metric

Luz manages a chain of bars and restaurants in a tri-county area that has recently experienced an economic boom because of fracking and high oil prices. What is most likely to happen when there is too much money in the tri-county economy?

an increase in prices

The translation of strategy into action primarily takes place in a firm's

business model

Assume a firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by

causal ambiguity

Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of

co-opetition

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

customer experience

In a firm's external environment, ________ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

demographic trends

Companies in the same strategic group are ________ to each other.

direct competitors

Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones are visually similar to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.?

direct imitation

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were

easy to imitate

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

economic value created

A firm will fail to create a sustained competitive advantage when the

fit between its internal strengths and the external environment is static

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?

increase in a firm's customer loyalty

Which of the following is a macroeconomic factor that can affect a firm's strategy?

levels of employment

According to the value chain analysis, which of the following is a primary activity?

marketing and sales

Fadia Ammunition Inc., a firm controlled and managed by the government of Fadia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate?

monopoly

The ratio Cost of goods sold/Revenue indicates how efficiently a company can

produce a good

The difference between the price charged for a product and the cost to manufacture it is referred to as the

producer surplus

Due to resource immobility, a critical assumption in the resource-based model of a firm, the

resource differences between firms last for a long time.

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period

The primary objective of Porter's five forces model is to

understand the profit potential of industries.