Integrated ch. 5-7 practice questions

Which of the following statements correctly compares Apple and Microsoft in 2016? A. Apple had a higher return on invested capital than Microsoft B. Apple had a higher return on revenue than Microsoft. C. Microsoft had higher total sales than Apple. D. Microsoft had a lower cost structure than Apple.

A. Apple had a higher return on invested capital than Microsoft

All of the following are generic business-level strategies except... A. Focused Market Strategy B. Focused Cost-Leadership C. Broad differentiation D. Broad Cost-Leadership

A. Focused Market Strategy

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization? A. Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term. B. These tools fail to indicate how the stock market views all available public information about a firm's expected future performance. C. These tools measure competitive advantage in absolute terms rather than relative terms. D. Only the book value of the share prices is taken into account when applying these measures, and not the market value.

A. Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term.

A disruptive innovation leverages ________ technologies, while architectural innovations are based on ________ technologies. A. New: Existing B. existing; novel C. drastic; new D. required; established

A. New: Existing

Tom is attempting to measure how his customers views his firm. To do this, he uses the balanced-scorecard framework because he knows that... A. the customer perspective is directly linked to firm revenues and profits. B. customer surveys will help him determine future industry attractiveness. C. this will guarantee his company a sustainable competitive advantage. D. the framework will help him increase his stock price.

A. the customer perspective is directly linked to firm revenues and profits.

Which of the following is a firm effect that has an impact on the competitive advantage of a firm? A. the value and the cost position of the firm relative to its competitors B. the exit barriers within the industry in which the firm operates C. the number of companies operating in the industry in which the firm operates D. the intensity of rivalry among existing companies in the firm's chosen industry

A. the value and the cost position of the firm relative to its competitors

A firm incurs $400 to manufacture a computer. In the market, customers are willing to pay a maximum of $600 for the computer priced at $500. The difference of $200 ($600 minus $400) is the... A. Consumer Surplus B. Economic Value Created C. total return to shareholders D. customer lifetime value

B. Economic Value Created

Bath & Chill is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Bath & Chill is following a... A. product diversification strategy. B. focused differentiation strategy. C. liquidation strategy D. broad differentiation strategy.

B. focused differentiation strategy.

The balanced-scorecard framework is a tool for strategy ________, not ________. A. implementation; formulation B. analysis; sustainability C. formulation, implementation D. sustainability, economic value creation

A. implementation; formulation

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are... A. Organizational Culture B. Market Brand Value C. Tangible D. Intangible

C. Tangible

As a research scholar, Linda had built a helicam as part of her project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, she started a new venture where she could customize these helicams to fit the specific needs of the buyers and sell them. Linda can be best described as a(n)... A. entrepreneur B. Category captain C. Early adopter D. Franchiser

A. entrepreneur

After the creation of social networking websites were introduced, their value increased exponentially as the number of users increased. This is the positive effect of a(n)... A. network effect. B. confirmation effect. C. impression management effect. D. user effect.

A. network effect.

Jonathan is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly qualified team members, Jonathan is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage? A. Narrow the scope of competition and focus on unique features such as the use of organic materials. B. Offer similar services as competitors but raise prices to increase profits. C. Lower prices but continue employing high-paid expert gardeners D. Maintain prices but replace all the expert employees with less-skilled workers to control costs.

A. Narrow the scope of competition and focus on unique features such as the use of organic materials.

Connell Inc. has been successful at differentiating itself from competitors by claiming a premium price for its digital cameras based on superior image quality and advanced technology. In this scenario, which of the following is the key value driver? A. Product Features B. Economies of scale C. low-cost input factors D. Customer Service

A. Product Features

Managers can justify using the balanced-scorecard framework because research show that both ________ and ________ performance dimensions are important when examining the effectiveness of a firm's strategy. A. Qualitative and Quantitative B. Economic and Stock Price C. Customer Survey and Peer Evaluation D. Financial and Accounting

A. Qualitative and Quantitative

Fresher Corp. produces electric bathroom fragrance diffusers and sells the electric outer device at a market rate price. However, they lock their clients into a two-year agreement to purchase the perfume refills solely from them on a monthly basis. Which of the following business models does this best illustrate A. Subscription B. Peer-to-Peer C. Crowdsourcing D. Freemium

A. Subscription

The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data? A. The firms outstanding shares is 25 million B. The firm pays an annual dividend of 10 percent. C. The firm's total return to shareholder is $5 billion. D. The firm's total return to shareholder is $5 billion.

A. The firms outstanding shares is 25 million

While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data? A. While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants. B. The number of competitors will be greater in the domestic airline industry than the internet-enabled appliance industry. C. The internet-enabled appliance industry is ahead of the domestic airline industry in the industry life cycle. D. The mode of competition will be price-based in the internet-enabled appliance industry and will be nonprice-based in the domestic airline industry.

A. While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants.

Tablette Corp. is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Tablette Corp. should ideally compare its strategic position with... A. a consumer electronics company popular among price-conscious customers. B. a company that sells small kitchen appliances at affordable prices. C. a consumer electronics company that sells high-end devices. D. an online company that sells customized electronics accessories.

A. a consumer electronics company popular among price-conscious customers.

Assume that the market for print book publishing has entered the maturity stage. Which of the following would most likely exist during this stage? A. a few large publishers B. a few start-up publishers C. many small to midsized publishers D. one large publisher

A. a few large publishers

Tough Guy's Inc. is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health check-ups and a gym kit. These add-ons by themselves are not very valuable, but as a package they can enhance the perceived value of the service offerings. In this case, Tough Guy's primary value driver is... A. availability of complements. B. economies of scale. C. learning-curve effects D. experience-curve effects.

A. availability of complements.

One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that... A. they are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently. B. they have both broad and narrow economies of scope. C. they are able to take advantage of market size and spread investment losses over many locations. D. they have been able to protect themselves from the threat of buyer power by increasing input prices.

A. they are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently.

Feran is the founder of an innovative "impromptu catering" business that provides elegant, healthy party food and decorations on less than 24 hours' notice. The company has grown by over 150 percent in the past year. Feran credits some of the company's success to studying the strategies of prominent social entrepreneurs, such as Wikipedia's Jimmy Wales. What can Feran do to exemplify the social entrepreneurship model? A. Launch a social media site for food lovers B. Provide free weekly catered meals for the homeless. C. Seek investments from venture capitalists. D. Buy out his closest competitors to ensure a competitive advantage.

B. Provide free weekly catered meals for the homeless.

Benny's Closet Inc. is an apparel company that caters to highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Benny's Closet applying? A. Niche Marketing B. differentiation C. Cost-leadership D. product diversification

C. Cost-leadership

Karat Packaging has entered a stage in which the demand for their innovative fax machines has declined. Now most customers are buying replacement parts or buying their second fax machine from the firm. What stage in the industry life cycle does this scenario describe? A. Shakeout Stage B. Growth Stage C. Mature Stage D. Decline Stage

C. Mature Stage

Susan wants to create a networking site that would connect local artists to homeowners who are looking for unique and original art. She knows that network effects will play a big role in her success and doesn't want to build her business using a linear value chain. Susan would best be served by employing a(n)... A. innovative social networking website. B. A pipeline business model C. platform business model. D. razor-razor blade business model.

C. platform business model.

Jimmy can be categorized under the late majority customer segment. Which of the following behaviors is he most likely to exhibit? A. He will be confident in her ability to master any new technology. B. He will not rely on endorsements by the early majority or early adopters. C. He will buy beta versions of new products and technology. D. He will prefer to buy from well-established brands rather than unknown new ventures.

D. He will prefer to buy from well-established brands rather than unknown new ventures.

Facebook has become one of the largest media companies in the world, valued at nearly 50 billion in 2019, but hasn't produced a single piece of content. Facebook is an example of a... A. A typical value chain driven business B. Pipeline C. Strategic business unit D. Platform

D. Platform

Customer service and ________ are two of the value drivers that managers can utilize when trying to improve a firm's differentiation strategic position. A. economies of scale B. Experience Curve C. Cost of input factors D. product uniqueness

D. product uniqueness

A high percentage of R&D/Revenue ratio indicates a(n)... A. negligent investment toward research and development B. inefficiency in the management to focus on new products. C. strong focus on marketing and sales to promote products and services. D. strong focus on innovation to improve current products and services.

D. strong focus on innovation to improve current products and services.