Global | Ch 5 Competitive Advantage
Which of the following statements is true of accounting data?
Accounting data are historical data and thus backward-looking.
Which of the following statements about competitive advantage is true?
Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.
Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?
Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term.
________ precisely indicates how much of a firm's sales is converted into profits.
Return on revenue
The receivables turnover of VK Products Inc. is 13.6 and that of its competitor DL Goods Inc. is 6.0. What does this financial data primarily imply?
VK Products collects accounts receivables faster than AP Goods does.
________ is best described as a measure of how effectively capital is being used by a firm to generate revenue.
Working capital turnover
In an economic context, strategy for producers is primarily about
capturing the economic value created as much as possible.
Taking advantage of the pricing flexibility inherent in the wholesale model, Amazon offered many books (especially e-books) below the cost that other retailers had to pay to publishers. By doing this, Amazon showed how business models can be affected through
disruption
The ratio of SG&A/Revenue is an indicator of a firm's focus on
marketing to promote its products and services.
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?
the value (V) the consumer attaches to the dress
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.
The tenet behind the triple-bottom-line is that
a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
Which of the following statements is not true of competitive advantage?
Competitive advantage is an absolute measure.
Which of the following is an advantage of the balanced-scorecard?
It allows managers to translate a firm's vision into measureable operational goals.
Which of the following is not true of risk capital?
Risk capital invested in a firm can be legally recovered if the firm goes bankrupt.
The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & Development expense/Revenue, and
Selling, general, & administrative expense/Revenue.
________ are the legal owners of public companies.
Shareholders
The ratio Cost of goods sold/Revenue indicates how efficiently a company can
produce a good.
A high percentage of R&D/Revenue ratio indicates a(n)
strong focus on innovation to improve current products and services.
Which of the following business models has been traditionally used by the magazine and newspaper industry?
subscription-based
In the freemium business model, the
users are not charged for the basic features of a product or service, but the user must pay for premium advanced features or add-ons.
In 2014, Apple turned over its inventory more than 53 times. In stark contrast, Microsoft turned over its inventory only about 10 times during the year. Which of the following best explains this difference?
Apple had a more effective management of its global supply chain than Microsoft.
________ most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE).
Fixed asset turnover
________ of receivables turnover imply more efficient management in collecting accounts receivable and shorter durations of interest-free loans to customers.
Higher ratios
When using the balanced-scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?
How do we reduce the economic value created?
Which of the following expressions accurately describes market cap?
It is the product of the number of outstanding shares and the share price.
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
Smart Feet Inc. produces shoes that are better quality and cost more to make than the shoes of its competitors. Smart Feet realizes that there will be a large difference between the cost to produce the shoes and the consumer's willingness to pay for them. Even so, Smart Feet decides to charge the same price as its competitors. Which of the following will most likely be the result of this action?
Smart Feet will gain market share.
Airbnb rents spaces that previously would have been unused to generate revenue, while also dramatically increasing the potential amount of accommodation space in the 191 countries. This business uses a ________ technique.
peer-to-peer
In the ________ business model, the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods.
razor-razor-blade
Which of the following is an external performance metric?
total return to shareholders
During the process of formulating an effective business model, a firm's managers should first
transform their strategy of how to compete into a blueprint of actions and initiatives.
Using the ________ approach, managers audit their company's fulfillment of its social and ecological obligations to stakeholders such as employees, customers, suppliers, and communities as conscientiously as they track its financial performance.
triple-bottom-line