BUS 491 Chap 5

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

To understand how effectively a firm uses its capital, one can use the ratio ______.

net profits/invested capital

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

The financial metric ROIC stands for return on invested ___

Blank 1: capital

Which statements about stock market valuations are true?

Stock market valuation is equal to the number of outstanding shares multiplied by the share price. Viewed over the long term, stock market valuation is a useful metric for assessing competitive advantage.

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

Which of the following are the key questions for understanding the balanced scorecard? (Check all that apply.)

How do we create value? How do customers view us? How do shareholders view us? What core competencies do we need?

Which of the following statements are true concerning a firm's business model? (Check all that apply.)

It essentially explains how the firm intends to make money. It details the firm's competitive tactics and initiatives. It indicates the way the firm works with buyers and suppliers.

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

To determine a product's producer surplus, which of the following must be compared? (Check all that apply.)

Price charged Total cost of production

Which of the following is true about shareholders of a public company?

They can be individuals or organizations.

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its _____.

accounting profitability

When a firm goes bankrupt, shareholders ______.

cannot recover their risk capital

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 ______.

consumer surplus

A firm's actual ______ minus depreciation is called the book value.

costs of assets

To measure firm-level competitive advantage, a company must ______.

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

The pay-as-you-go model is ______.

gaining momentum

Fixed costs are ______ consumer demand.

independent of

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

From the view of a shareholder, the measure of competitive advantage that matters most is return on _____.

risk capital

Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?

the NASDAQ computer index