mgt 491

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2000 annually. In this case, the market capitalization is _____.

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

_____ describes a situation in which the cause and effect of a phenomenon are not readily apparent.

Causal ambiguity

Which of the following forces was NOT originally a part of Michael Porter's fives forces model?

Strategic role of complements

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

The overall industry profitability will increase.

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

an external performance metric.

Vior Systems Inc. took many decades to build its core competencies, and these competencies were based primarily on the decisions made by the company's top management in the past. This process is called:

path dependence.

Competitive rivalry based solely on _____ is destructive to firms as it transfers most of the value created in the industry to the customers.

price-cutting

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.

Path dependence rests on the notion that:

time cannot be compressed at will.

Economic value creation is best expressed as _____.

consumer surplus plus firm profit

How did McDonald's leverage internal strengths in brand name and consistency to minimize the external threat of easy-to-prepare grocery items?

By launching a McDonald's line of frozen foods in grocery stores

Master's Health Club, a chain of gyms and spas, requires its customers to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?

Subscription-based

When evaluating the sustainability of a firm's competitive advantage, which of the following statements is NOT true?

If managed effectively, existing core competencies can help sustain the competitive advantage indefinitely.

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 a primary feature of the five forces model?

It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

Balmia Ammunition Inc., a firm controlled and managed by the government of Balmia, 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

Which type of industry structure is often analyzed using game theory?

Oligopolistic

Which of the following statements is true about strategic groups?

Profitability varies between different strategic groups.

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Total return to shareholders

In an industry, the threat of entry is high when:

capital requirements are low.

Blue Ego Inc. is a market leader in the cell phone industry. To gain competitive advantage, the company has a post on its official site requesting its suppliers and customers to contribute ideas about the kinds of features and technology they think should be included in the next smartphone. This has helped the company reduce the burden of innovation on its employees, effectively meet customers' needs, and also include the larger community in product development. This process best exemplifies:

crowdsourcing.

The value chain describes the:

internal activities a firm engages in when transforming inputs into outputs.

_____ is best described as a process in which a group of people voluntarily performs tasks that were traditionally completed by a firm's employees.

Crowdsourcing

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

Customer experience

When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger?

The threat of substitutes

Which of the following is a characteristic of a fragmented industry?

There are many small firms.

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as _____.

capabilities

Microsoft's eventual industry dominance is largely credited to the:

initial breaks that Bill Gates got when starting Microsoft, which were leveraged for several decades through an effective strategy.

Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will only be successful today if its:

internal strengths change with its external environment in a dynamic fashion.

A defining characteristic of the subscription-based business model is that the:

user pays for access to a product or service whether he or she uses it during the payment term or not.