Strategic Management Chapter 5

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. Multiple choice question. pay-as-you-go motivator-motivation razor—razor-blade wholesale

razor—razor-blade

In general, a firm generates ______ when its cost of capital is lower than its ROIC. Multiple choice question. competition debt overhead value

value

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? Multiple choice question. 1,000,000 50,000,000 1,000 10,000,000 Reason: $100,000,000/$100 per share = 1,000,000 shares

1,000,000

Which of the following is true about shareholders of a public company? Multiple choice question. Those qualified as owners must own at least 100 shares. They are eligible to be elected as owners of the company. They must be individuals who are employed by the company. They can be individuals or organizations.

They can be individuals or organizations.

Public companies are required by law to release detailed accounting data, which enables ______. Multiple choice question. comparative analysis of firms economic value creation shareholder value creation a balanced scorecard system

comparative analysis of firms

If Tom would have paid $1,000 for a new laptop but was able to purchase one for $800, the $200 he saved is considered his ______. Multiple choice question. economic value producer surplus consumer surplus reservation price

consumer surplus

Which of the following statements about the disadvantages of the accounting profitability perspective are correct? Multiple select question. Accounting data focus mostly on intangible assets Accounting data are historical and therefore backward-looking Accounting data focus primarily on tangible assets Accounting data are highly volatile and thus difficult to use

Accounting data are historical and therefore backward-looking Accounting data focus primarily on tangible assets

A company's total return to shareholders consists of which of the following? (Check all that apply.) Multiple select question. Wages Dividends received Stock price appreciation Capital depreciation

Dividends received Stock price appreciation

Which of the following are standard performance dimensions for a company? (Check all that apply.) Multiple select question. the fixed and variable costs a firm's accounting profitability how much shareholder value a firm creates how much economic value a firm generates how a firm's mission statement relates to its strategic intent

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

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price? (Check all that apply.) Multiple select question. a firm's current state expectations of the firm's future performance a firm's political views a firm's past

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

In a subscription-based business model, customers pay for ______. Multiple choice question. premium service actual usage an agent to sell a product access to a product or service

access to a product or service

When a firm goes bankrupt, shareholders ______. Multiple choice question. cannot recover their risk capital are entitled to help pay off debtors owed money by the firm are entitled only to a fraction of their investment can sue for loses

cannot recover their risk capital

Public companies are required by law to release detailed accounting data, which enables ______. Multiple choice question. economic value creation shareholder value creation a balanced scorecard system comparative analysis of firms

comparative analysis of firms

Economic value created is the ______ the cost to produce a product/service and the amount the buyer is willing to pay for it. Multiple choice question. difference between greater of either lesser of either total sum of

difference between

The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as ______. Multiple choice question. economic value created stock price appreciation a profit margin overhead derivative pricing

economic value created

To determine the value of a good in the eyes of consumers, a firm can ______. Multiple choice question. examine consumers' purchasing habits for their revealed preferences employ the use of estimates in firm-level strategic management recall the fixed and variable costs to measure competitive advantage identify some of the most commonly used profitability metrics in strategic management

examine consumers' purchasing habits for their revealed preferences

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price? (Check all that apply.) Multiple select question. expectations of the firm's future performance a firm's current state a firm's political views a firm's past

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

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be ______. Multiple choice question. unrealistically bound unrelated perpendicularly related correlated

correlated

The money a firm spends to set up a sales website can be considered a ______ cost. Multiple choice question. low competitive fixed variable

fixed

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to ______. Multiple choice question. increase return on invested capital cover opportunity costs maximize profit gain market share

gain market share

The most a consumer is willing to pay for a product is equivalent to the product's ______. Multiple choice question. economic value created price relative to all costs, including overhead traceable asset value on the stock exchange total perceived consumer benefits

total perceived consumer benefits

The most a consumer is willing to pay for a product is equivalent to the product's ______. Multiple choice question. total perceived consumer benefits economic value created price relative to all costs, including overhead traceable asset value on the stock exchange

total perceived consumer benefits

In order to determine market capitalization, one multiplies which of the following together? (Check all that apply.) Multiple select question. share price number of outstanding shares total market value value of the dollar

share price number of outstanding shares

The legal owners of publicly traded companies are called ______. Multiple choice question. executives business holders shareholders stock brokers

shareholders

When managers analyze a wide variety of internal and external performance metrics in order to set financial and strategic goals, they often turn to a framework known as ______. Multiple choice question. strategic emergence the accounting metric framework the balanced scorecard shareholder analysis

the balanced scorecard

Which of the following statements about the disadvantages of the accounting profitability perspective are correct? Multiple select question. Accounting data focus primarily on tangible assets Accounting data focus mostly on intangible assets Accounting data are historical and therefore backward-looking Accounting data are highly volatile and thus difficult to use

Accounting data focus primarily on tangible assets Accounting data are historical and therefore backward-looking

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its ______. Multiple choice question. balanced scorecard accounting profitability triple bottom line economic value created

accounting profitability

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability? (Check all that apply.) Multiple select question. The relative performance is evaluated using standardized financial metrics. The information must be purchased from private investment banks. The information is derived from such data as income statements and balance sheets. The information is filed in a 10-K report.

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

Which of the following statements about the disadvantages of the value creation perspective are correct? Multiple select question. The value that a consumer places on a good can vary according to how the consumer feels at a particular moment. It is difficult to determine the value that consumers place on a given good. For large firms, it is difficult to estimate the economic value created for all products and services offered by the firm. The meaning of value creation differs between services and products.

The value that a consumer places on a good can vary according to how the consumer feels at a particular moment. It is difficult to determine the value that consumers place on a given good. For large firms, it is difficult to estimate the economic value created for all products and services offered by the firm.

Which of the following is true about shareholders of a public company? Multiple choice question. They must be individuals who are employed by the company. They are eligible to be elected as owners of the company. Those qualified as owners must own at least 100 shares. They can be individuals or organizations.

They can be individuals or organizations.

In general, a firm generates ______ when its cost of capital is lower than its ROIC. Multiple choice question. debt competition value overhead

Value

Which of the following are elements of the social dimension of the triple bottom line? (Check all that apply.) Multiple select question. achieving work/life balance reducing overhead costs human sustainability improving recycling efforts

achieving work/life balance human sustainability

When implementing the razor-razorblade strategy, companies make their profit from ______. Multiple choice question. razors Reason: In the particular example of razors, companies would be making profit form the razorblades instead of the razors (which they sell cheaply). However, the business model goes beyond razors and is applicable to other products such as printers/ink and game consoles/games. initial products complementary goods subscription fees

complementary goods

Achieving competitive advantage means maximizing the difference between which of the following? (Check the two that apply.) Multiple select question. the number of rival firms cost to produce the good or service consumers' willingness to pay advertising costs

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

Which of the following dimensions make up the triple bottom line? (Check all that apply.) Multiple select question. international ecological economic social

ecological economic social

To measure firm-level competitive advantage, a company must ______. Multiple choice question. offer hundreds of products within individual strategic business units differentiate products in more diversified markets estimate the economic value created for all products and services offered by the firm diversify conglomerate offerings and assessment

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

The balanced scorecard framework draws from which of the following? Multiple choice question. from external metrics only from internal metrics only from the same metrics applied to internal resources and the external environment from multiple internal and external performance metrics

from multiple internal and external performance metrics

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to ______. Multiple choice question. maximize profit gain market share increase return on invested capital cover opportunity costs

gain market share

Which of the following would be labeled variable costs by a computer manufacturer? (Check all that apply.) Multiple select question. the administrative assistant hard drives manufacturing facilities display screens

hard drives display screens

Which of the following industries use a subscription model? (Check all that apply.) Multiple select question. magazines internet providers cellphone providers car rental

magazines internet providers cellphone providers

In order to determine market capitalization, one multiplies which of the following together? (Check all that apply.) Multiple select question. total market value value of the dollar number of outstanding shares share price

number of outstanding shares share price

Which of the following are considered off-balance sheet items? (Check all that apply.) Multiple select question. owned assets operating leases cash pension obligations

operating leases pension obligations

In order to be considered a legal owner of a public company, a person or organization must ______. Multiple choice question. be a member of the company's board of executives own a majority of the company's stock own at least one share of the company's stock own at least two products manufactured by the company

own at least one share of the company's stock

The subjectively determined maximum amount a customer would pay for a product is its ______ price. Multiple choice question. exploitative reservation overwhelming unfair

reservation

The subjectively determined maximum amount a customer would pay for a product is its ______ price. Multiple choice question. reservation unfair overwhelming exploitative

reservation

Which of the following are among the most commonly used metrics for comparing the performance of different companies? (Check all that apply.) Multiple select question. return on revenue return on strategic intent return on assets return on equity return on opportunity

return on revenue return on assets return on equity

From the view of a shareholder, the measure of competitive advantage that matters most is return on ______. Multiple choice question. revenue assets invested capital risk capital

risk capital

Investors in a company are mostly concerned about the company's ______. Multiple choice question. return on invested assets planned emergence total return to shareholders opportunity cost

total return to shareholders

Investors in a company are mostly concerned about the company's ______. Multiple choice question. total return to shareholders opportunity cost return on invested assets planned emergence

total return to shareholders