Competitive Advantage, Firm Performance, & Business Models
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 dimensions make up the triple bottom line?
economic social ecological
When a firm does favorably compared to similar firms, it is said to ______.
outperform
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
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.
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-looking
Which of the following statements are true about the rival businesses Apple and Microsoft?
Apple introduced a series of popular consumer electronic devices. Microsoft leveraged its computer operating system to sell other software programs.
Which of the following industries use a subscription model?
Cellphone providers Magazines Internet providers
Achieving competitive advantage means maximizing the difference between which of the following?
Cost to produce the good or service Consumers' willingness to pay
A company's total return to shareholders consists of which of the following?
Dividends received Stock price appreciation
If Firm A and Firm B both produce a laptop at the same total cost, but the reservation price for Firm A's laptop is $1,000 and the reservation price for Firm B's laptop is $1,200, who has the competitive advantage?
Firm B The reservation price is the absolute maximum one would be willing to pay for the laptop. In this case, people are willing to pay a higher maximum price for Firm B's laptop while it doesn't cost Firm B more to produce it. Hence, Firm B is able to create more economic value and therefore has the competitive advantage.
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 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 relative performance is evaluated using standardized financial metrics. The information is derived from such data as income statements and balance sheets.
Which of the following are standard performance dimensions for a company?
a firm's accounting profitability how much shareholder value a firm creates how much economic value a firm generates
With a(n) ______, firms describe how they turn strategy into action.
business model
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
When a firm goes bankrupt, shareholders ______.
cannot recover their risk capital
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
The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be ______.
correlated
Managers implement the blueprint of their business model through which of the following?
culture processes structures
Compared to the past, the importance of 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
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 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
To measure firm-level competitive advantage, a company must ______.
estimate the economic value created for all products and services offered by the firm
True or false: The best measure of competitive advantage can be found in the performance of specific departments.
false
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
The pay-as-you-go model is ______.
gaining momentum
Which of the following would be labeled variable costs by a computer manufacturer?
hard drives display screens
The balanced scorecard framework draws from which of the following?
multiple internal and external performance metrics
In order to determine market capitalization, one multiplies which of the following together?
number of outstanding shares share price
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
Which of the following are considered off-balance sheet items?
pension obligations operating leases
To determine a product's producer surplus, which of the following must be compared?
price charged total cost of production
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
The subjectively determined maximum amount a customer would pay for a product is its ______ price.
reservation
Which of the following are among the most commonly used metrics for comparing the performance of different companies?
return on equity return on revenue return on assets
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
The most a consumer is willing to pay for a product is equivalent to the product's ______.
total perceived consumer benefits
Investors in a company are mostly concerned about the company's ______
total return to shareholders
In general, a firm generates ______ when its cost of capital is lower than its ROIC.
value
Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?
NASDAQ computer index
When implementing the razor-razorblade strategy, companies make their profit from ______.
complementary goods
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 ______.
the balanced scorecard
Which of the following statements about the disadvantages of the value creation perspective are correct?
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 value that a consumer places on a good can vary according to how the consumer feels at a particular moment.
Which of the following are true of a firm's book value?
It captures the historical cost of a firm's assets. It is calculated as costs of assets minus accumulated depreciation. Its importance has declined over time.
When competitive advantage is assessed from an analysis of publicly available data, a firm measures its _____.
accounting profitability
Which of the following are elements of the social dimension of the triple bottom line?
achieving work/life balance human sustainability
Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy?
qualitative quantitative
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