CBA 469 Ch.5 Quiz

Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a ______ business model.

freemium

The subjectively determined maximum amount a customer would pay for a product is its _____ price.

reservation

From the view of a shareholder, the measure of competitive advantage that matters most is return on _______.

risk capital

The legal owners of publicly traded companies are called ______.

shareholders

Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?

the NASDAQ computer index

When managers analyze a wide variety of international and external performance metrics in order to balance financial and strategic goals, they often turn to a framework known as ________.

the balanced scorecard

Which business model evolved from the razor --- razor-blade model and involves a firm providing a base product for free, then finding ways to monetize the usage?

the freemium business model

Economic value creation is calculated as _____.

the sum of consumer and producer surplus

The most a consumer is willing to pay for a product is equivalent to the product's _______.

total perceived consumer benefits

In general, a firm generates ______ when its cost of capital is lower than its ROIC.

value

Which of the following industries use a subscription model?

- magazines - cellphone providers - internet providers

Which of the following performance dimensions matter in judging the effectiveness of firm's strategy?

- qualitative - quantitative

Which of the following are among the most commonly used metrics for comparing the performance of different companies?

- return on assets - return on equity - return on revenue

The Luminarium Corporation has a market capitalization of $100,000,000, and each share is worth $100. How many outstanding shares of Luminarium Corporation are there?

1,000,000

At 3M one strategic objective that has been implemented is that 30% of revenues must be obtained from new product introductions. This is an objective that would arise as an answer to which of the following balanced scored questions?

How do we create value?

In a subscription-based business model, customers pay for ________.

access to a product or service

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its __________.

accounting profitability

When a firm goes bankrupt, shareholders _______.

cannot recover their risk capital

The financial metric ROIC stands for return on invested ________.

capital

When implementing the razor-razorblade strategy, companies make their profit from ________.

complementary goods

Which of the following are the key questions for understanding the balanced scorecard?

- How do customers view us? - How do shareholders view us? - How do we create value? - What core competencies do we need?

True or False: Stock market valuations are often unreliable due to market fluctuations and are therefore not used to assess competitive advantage.

False

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be _______.

correlated

True or False: The freemium business model can be considered an evolutionary variation on the razor---razor-blade model.

True

Which of the following statements is best illustrated by the decades-long business rivalry between the technology giants Apple and Microsoft?

a firm's competitive advantage is transitory

Netflix had a successful business model based on a large library of streaming content but then achieved even more success by also producing and distributing original content. This is an example of the potential value of ______.

business model innovation

To measure firm-level competitive advantage, a company must ______.

estimate the economic value created for all products and services offered by the firm

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability?

- the information is filed in a 10-K report - the information is derived from such data as income statements and balance sheets - the relative performance is evaluated using standardized financial metrics

True or False: The best measure of competitive advantage can be found in the performance of specific departments.

False

A firm's actual ______ minus depreciation is called the book value.

costs of assets

Fixed costs are ______ consumer demand.

independent of

To determine the value of a good in the eyes of consumers, a firm can ________.

examine consumers' purchasing habits for their revealed preferences

The money a firm spends to set up a sales website can be considered a _______ cost.

fixed

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to ______.

gain market share

When a firm does favorably compared to similar firms, it is said to _______.

outperform

In order to be considered a legal owner of a public company, a person or organization must __________.

own at least one share of the company's stock

When you join the vehicle-sharing company Zoooomm, you are allowed to use a motorized scooter whenever you like, though you do not have to own the machine. You have to pay by the hours of usage. Zoooomm operates on a ______ model.

pay-as-you-go

If a firm has a successful ______ strategy, its product will have a higher perceived value and the firm will have a competitive advantage over a competitor that creates a product at equal cost but with a lower reservation price.

product differentiation

Another name for producer surplus is ______.

profit

When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a ________ business model.

razor---razor-blade

Which of the following statements are true about the rival businesses Apple and Microsoft?

- Microsoft leveraged its computer operating system to sell other software programs - Apple introduced a series of popular consumer electronic devices

Which of the following are standard performance dimensions for a company?

- a firm's accounting profitability - how much economic value a firm generates - how much shareholder value a firm creates

To determine a product's producer surplus, which of the following must be compared?

- total cost of production - price charged

Combining the razor-razor-blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their ______ rate, or the proportion of subscribers who leave, down.

churn

Economic value created is the ______ the cost to produce a product/service and the amount the buyer is willing to pay for it.

difference between

The balanced scorecard approach helps managers balance ________ goals.

financial and strategic

Premium services cost money with complimentary basic services, is a description of which type of business model?

freemium

The pay-as-you-go model is __________.

gaining momentum

To understand how effectively a firm uses its capital, one can use the ratio __________.

net profits/invested capital

When a trade occurs, the consumer and producer both capture ______.

some of the economic value

Managers implement the blueprint of their business model through which of the following?

- culture - structures - processes

Achieving competitive advantage means maximizing the difference between which of the following?

- cost to produce the good or service - consumers' willingness to pay

Which of the following are elements of the social dimension of the triple bottom line?

- achieving work/life balance - human sustainability

A company's total return to shareholders consists of which of the following?

- dividends received - stock price appreciation

Which statements about creating and implementing an effective business model are true?

- firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals - firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure

Which of the following are considered off-balance sheet items?

- operating leases - pension obligations

Compared to the past, the importance of a firms' intangibles has increased. Therefore the importance of a firm's book value has _____________ as part of the firm's total stock market valuation.

decreased

Which of the following statements are true concerning a firm's business model?

- it details the firm's competitive tactics and initiatives - it indicates the way the firm works with buyers and suppliers - it essentially explains how the firm intends to make money

Answering the Balanced Scorecard question of "how we create value?" challenges managers to develop strategic objectives that ensure future _______.

- organizational learning - innovation - competitiveness

The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models?

- razor---razor-blade - subscription

In order to determine market capitalization, one multiples which of the following together?

- share price - number of outstanding shares

Which of the following dimensions make up the triple bottom line?

- social - ecological - economic

Which statements about stock market valuations are true?

- stock market valuation is the estimated increase in a stock's value during the next fiscal year - investors generally take a poor view of stock market valuation because it includes all shares in its calculation

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price?

- a firm's past - a firm's current state - expectations of the firm's future performance

Which of the following statements about the disadvantages of the accounting profitability perspective are correct?

- accounting data focus primarily on tangible assets - accounting data are historical and therefore backward-locking

The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as ________.

economic value created