MAN 6724 Exam 1
Which of the following respresents consumer surplus in the value creation equation, (B-P) + (P-C)?
B-P
What is the perceived benefit of a product per unit minus the product's monetary price?
Consumer surplus
What term describes a framework used in strategy based on resource heterogeneity in which posits that for a competitive advantage to be sustainable, it must be underpinned by resource capabilities that are scarce and imperfectly mobile?
Resource-based theory of the firm
Consumer surplus is measured as which of the following?
The perceived benefit per unit minus the product's monetary price
What entity as a supplier has the most substantial power over manufacturers in the commercial aircraft market?
Unions
WHich of the following is a resource?
Workers with firm-specific expertise or know-how
WHich of the following best describes a tit-for-tat strategy?
a firm is prepared to match whatever change in strategy their competitor makes
WHat is a grim trigger strategy in a two-firm repeated game?
a strategy in which a firm initially cooperated and then aggresses for the rest of the game as soon as the opponent aggresses
why might a firm not be able to react quickly to competitors' pricing moves?
all of the above
What term describes when a firm sells a combination of goods and services at a price below what the individual items would cost?
bundling
What term best describes clusters of activities that a firm does especially well in comparison with other firms?
capabilities
What term describes the situation when a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market?
competitive advantage
What term refers to situations in which firms can sustain prices in excess of those that would arise in a non-cooperative single-shot price or quantity setting game?
cooperative pricing
WHat term best describes assets that are more valuable when used together than separately?
cospecialized
Benefit proximity refers to which of the following?
cost leading firms offering products with slightly less benefit
What term best describes a targeting strategy in which the firm offers a variety or related products to a particular class of customers?
customer specialization
Which of the following terms best describes the ability of a firm to maintain and adapt the capabilities that are the basis of its competitive advantage?
dynamic capabilities
What type of isolating mechanisms increase the economic power of a competitive advantage over time one a firm has acquired that advantage?
early-mover advantage
In which of the following ways can entry erode incumbents' profits?
entrants decrease market concentration
Which of the following does not tend to affect the threat of entry?
expectations about pre-entry competition
What type of good is one whose quality can be assessed only after the customer has used it for a while?
experience good
Which of the following terms describes a nation's position with regard to the elements of production that are necessary to compete in a particular industry?
factor conditions
Which of the following best describes the term internal rivalry?
firms jockeying for share within a market
What type of cooperation-inducing strategy is defined as one so compelling that a firm would expect all other firms to adopt it?
focal point
What type of cooperation-inducing strategy is defined as one so compelling that that a firm would expect all other firms to adopt it?
focal point
What is another term for a "win-win" business opportunity?
gains from trade
Which of the following is a complement to professional sports?
gambling
Which of the following terms best describes the situation when sources of competitive advantage in an industry are being created and eroded at an increasingly rapid rate?
hypercompetition
Which of the following is a potential risk of a brand umbrella?
if a new product under the umbrella fails, consumers may become disenchanted with the entire brand
What type of isolating mechanisms impedes existing firms and potential entrants from duplicating the resources and capabilities that form the basis of the firm's advantage?
impediments to imitation
What type of curve can be used to describe the set of price-quality combinations that yields the same consumer surplus to an individual?
indifference curve
Which of the following methods is believed to be used by Brazilian cement makers to prevent entry into the market?
limit pricing
Which of the following terms refers to the practice whereby an incumbent firm discourages entry by charging a low price before entry occurs?
limit pricing
What was the cause of Walmart's exit from the German Markert?
loss of a predatory pricing lawsuit
Which of the following situations does not facilitate cooperative pricing?
low-demand periods
What product characteristic refers to the situation where consumers place higher value on a product if other consumers also use it?
network effect
What term describes a decision that has a short-term impact and is easy to reverse?
none of the above
WHich of the following best describes an incumbent firm?
one that is already operating in a particular market
How can incumbents legally erect entry barriers around novel and non-obvious products or production processes?
patents
Which of the following generally accompanies firms that survive as market entrants?
precipitous growth
Which situation occurs when a large incumbent sets a low price to drive smaller rivals from the market?
predatory pricing
Which of the following conditions does not tend to heat up price competition?
products are differentiated/buyers have high switching costs
Which of the following is not a significant entry barrier in the commercial airframe manufacturing market?
raw materials and labor
What type of option exists when a decision maker has the opportunity to tailor a decision to information that will be received in the future?
real option
What term describes the situation where a firm does exceedingly well due to good luck or exceedingly poorly due to bad luck, but returns to normal performance following?
regression to the mean
Which of the following is not a factor that could intensify internal rivalry in the Chicago hospital market?
relatively small number of doctors
What term refers to the ability of firms to negotiate purchase prices that extract higher profits from buyers?
seller power
Which of the following is a capability?
sourcing skills
What are the two types of barriers to entry?
strategic and structural
what term describes a decision that has long-term impact and is difficult to reverse?
strategic commitment
What tactical term best describes the capacity relationship between Toyota and Honda such that Toyota's response is to reduce production output of the Rav 4 if Honda were to first announce a large increase in the production of the CR-V that drove down prices?
strategic substitute
What term coined by Michael Porter describes a firm that pursues elements of cost leadership and benefit leadership at the same time and in the process fails to achieve either a cost advantage or a benefit advantage?
stuck in the middle
How did European governments help Airbus aggressively pursue a 50% market share in its early years of operation
subsidies
Substitutes erode profits because of which of the following factor?
substitutes divide demand and drive up internal rivalry
Which of the following is not an isolating mechanism that falls under the heading of early-mover advantage?
superior access to inputs or customers
Which of the following is a trend that Chicago area hospitals should least likely be worried about with respect to pricing?
there has been considerable consolidation (hospital mergers) in regional submarkets, including the city of Chicago and the important North Shore Suburbs
Why do price sensitive buyers tend to harm cooperative pricing in a market?
there is an increase in temptation to cut price, even if competitors are expected to match
What term describes a policy in which a firm is prepared to match whatever change in strategy a competitor makes?
tit for tat strategy
WHich of the following is a method a monopolist firm would not use to prevent entry into a market?
utilizing excess capacity for generic branded products
What term describes the process of using market prices of unfinished and semi-finished goods to estimate the incremental value-created by distinctive parts of the value chain?
value-added analysis
Which of the following describes a focus strategy?
when a firm either offers a narrow set of varieties, serves a narrow set of customers, or does both
Which of the following is not a way teams "collude" within the professional sports market?
agreeing on ticket prices
Which of the following is not a barrier to entry in professional sports markets?
because the number of potential billionaires owners has risen dramatically, the purchase prices have dropped
What term best describes when quiet periods in markets are punctuated by fundamental "shocks" or "discontinuities" that destroy old sources of advantage and replace them with new ones?
creative destruction
What type of entry exists if (1) the incumbent can keep the entrant out by employing an entry-deterring strategy and (2) employing the entry-deterring strategy boosts the incumbent's profits?
deterred entry
What type of entry exists if structural entry barriers are low, and either (1) entry-deterring strategies will be ineffective or (2) the cost to the incumbent of trying to deter entry exceeds the benefits it could gain from keeping the entrant out?
accommodated entry
What term best describes firm specific assets such as patents and trademarks, brand-name reputation, installed base, and organizational culture?
resources
What term refers to the costs incurred by buyers when they change to a different supplier?
switching costs
Which of the following is the most likely substitute for commercial aircraft travel between Chicago and Tokyo?
teleconferencing
WHich of the following is not a conditions under which an incumbent firm can successfully deter entry by holding excess capacity?
the excess capacity investment must be recoverable prior to entry
How much revenue a firm brings in by improving the quality of a product such that more consumers want to buy it depends on which 2 factors
the increase in demand caused by the increase in quality and the incremental profit earned on each additional unit sold
Which of the following terms best describes a phenomenon whereby a profit-maximizing firm sticks with its current technology or product concept even though the profit-maximizing decision for a firm starting from scratch would be to choose a different technology or product concept?
the sunk cost effect
The steepness (slope) of an indifference curve indicated which of the following?
the tradeoff a consumer is willing to make between price and quality
Which of the following commitment strategies involves soft commitment postures, strategic complements for the stage 2 tactical variables, a refrain commitment action and an acceptance of the status quo out of fear thus wanting to follow the leader?
weak kitten
When are sunk costs a most effective entry barrier?
when the incumbent has incurred them and the entrant has not