Business Policy 5,6,7

Patent

A ____ is best described as a form of intelletual property that gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea.

D. strategy canvas

A _____ is a graphical depiction of a company's relative performance vis-à-vis its competitors across the industry's key success factors.

A. business-level strategy

A _____ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

A. the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.

A blue ocean strategy differs from a low-cost strategy in that

B. value innovation

A blue ocean strategy tends to be successful only if a firm is able to rely on a _____ that allows it to reconcile trade-offs.

A. economic value created is greater than that of its competitors.

A company that uses a differentiation strategy can achieve a competitive advantage as long as its

Markets-and-technology Framework

A conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions.

C. economies of scale.

A cost-leader is protected from the threat of new entrants primarily due to its

users pay for only the services they consume.

A defining characteristic of the pay-as-you-go business model is that the

user pays for access to a product or service whether he or she uses it during the payment term or not.

A defining characteristic of the subscription-based business model is that the

D. firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

A differentiation strategy works best when a

A. differentiator is able to create a significant difference between perceived value and current market prices.

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

Incumbent firms are slow to change

A factor favoring the success of disruptive innovation is that?

Maturity stage

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stages of the industry life cycle will they move to next?

A. it creates the same customer value as its competitors.

A firm achieves differentiation parity ideally when

A. diseconomies of scale

A firm experiences _____ when there are increases in cost per unit as output increases.

C. produces at an output level beyond the minimum efficient scale.

A firm experiences diseconomies of scale when it

$3 billion, that is, 30 million shares × $100.

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is

$180

A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?

economic value created.

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

A. focus its research and development on product technologies to add uniqueness.

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will

Absorptive Capacity

A firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones.

C. perform different activities than its rivals.

A firm's business strategy will lead to a competitive advantage if it allows the firm to

Innovation Ecosystem

A firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making.

A. The firm is at an advantage when compared to its competitor.

A firm's learning curve is steeper than that of its competitor. What does this imply?

Organizational Inertia

A firm's resistance to charges in the status quo is referred to as _____.

Patent

A form of intellectual property that gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea.

Open Innovation

A framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. The sharing goes both ways: some external ideas and inventions are insourced while others are spun out.

strong focus on innovation to improve current products and services.

A high percentage of R&D/Revenue ratio indicates a(n)

Architectural Innovation

A new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets.

A. charge a higher price than the cost-leader in the industry.

A successfully implemented blue ocean strategy allows a firm to

B. zigzags.

A value curve indicates a lack of effectiveness in a firm's strategic profile when it

$170

A watchmaking company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?

disruptive innovation

A(n) ____ leverages new technologies to attack existing markets.

Intrapreneur

A.G. Lafley at P&G, had implemented an open-innovation model, which had greatly benefitted the company. In the light of this information, we can conclude that A.G Lafley is a(n):

B. innovation that allows competitors to emerge with more economical replacements

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?

C. AccuroDisk creates a greater economic value than TD Storage.

AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply?

Entrepreneur who commercialized invention into an innovation

After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. This is clearly an example of a(n):

the value (V) the consumer attaches to the dress

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

peer-to-peer

Airbnb rents spaces that previously would have been unused to generate revenue, while also dramatically increasing the potential amount of accommodation space in the 191 countries. This business uses a _____ technique.

A. It appeals to the price-conscious buyers.

Allure is a cosmetic brand that pursues a cost-leader strategy. Which of the following statements is true of the cosmetic brand?

B. It failed to refine its strategic position over time.

Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the best reason for this development?

Standard

An agreed-upon solution about a common set of engineering features and design choices.

Disruptive Innovation

An innovation that leverages new technologies to attack existing markets from the bottom up.

Incremental Innovation

An innovation that squarely builds on an established knowledge base and steadily improves an existing product or service.

Reverse Innovation

An innovation that was developed for emerging economies before being introduced in developed economies. Sometimes also called frugal innovation.

innovates within existing companies

An intrapreneur si described as a person who?

$10,000

Andrew invested $200,000 in the shares of a company. At the end of a year, he had earned $7,000 as dividends on his shares along with a $1,000 appreciation in the overall value of his shares. However, if Andrew had invested the same amount on an asset, like gold, the appreciation in its value would have earned him $10,000 at the end of the year. In this scenario, which of the following is Andrew's opportunity cost?

315

Apple Watch retailed for $349 in 2015, and the firm was predicted to sell millions of units. The firm's total cost in terms of materials and labor for the Apple Watch was no more than $84. Thus, Apple's profit for each watch sold is an estimated $265, with a profit margin of _____ percent.

Entrepreneur

As a research scholar, Richard had built a helicam as part of his project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, he started a new venture where he could customize these helicams to fit the specific needs of the buyers and sell them. Richard can be best described as a(n) ____.

Disruptive Innovation

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

B. go down.

As it takes less and less time to produce the same output, learning curves usually

A. learning effects

As the cumulative output in a firm increases, managers learn how to optimize the production process and improve workers' performance through repetition. This drives down the per-unit cost. Which of the following phenomena is best described here?

First-mover advantages

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiry of OSP's patents, regular users did not want to switch because they were concerned about possible side-effects. Which of the following benefits does this scenario best illustrate?

A. $4

At a certain output level, the per-unit cost incurred by a firm to manufacture a product is $5. Other factors remaining constant, what will be the new per-unit cost if the cumulative output is doubled, and the firm is able to achieve an 80 percent learning curve?

B. 90 percent learning curve.

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $60. Once the cumulative output doubled, the cost per unit reduced to $54. All other factors remaining constant, the firm has been able to achieve a(n)

Early majority

At the time when Kevin decided to purchase a tablet computer, the product had just become accessible to the mass market. He purchased the tablet only after he was completely convinced that the benefits it would offer him would far exceed its price. Also, he waited for his friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Kevin best represent?

A. cost-leadership

Bargain Styles Inc. is an apparel company that caters to the 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 Bargain Styles applying?

A. learning-curve effect

Bass Watches Inc. initially spent eight man-hours to assemble a wristwatch. But as the production doubled, the number of hours spent on assembling a watch reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

an agency.

Best Cut Inc. sells cutlery by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells cutlery, he or she gets a predetermined percentage commission. This type of business model is called

subscription-based

Best Fit Club, a chain of gyms and spas, requires its customers to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?

C. availability of complements.

Body Sync 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 checkups 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, Body Sync's primary value driver is

A. low-cost input factors.

Both BioThink Inc. and GD Pharma Inc. have discovered similar vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per unit, BioThink sells its vaccine at $90 per unit. This price differentiation has mainly been attributed to the companies' capital decisions. While BioThink used its retained earnings to develop the vaccine, GD Pharma borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays a higher interest on its capital, which makes it necessary to price its vaccine higher. Thus, the key driver for BioThink's competitive advantage is

C. create greater perceived economic value than CLR.

Both Blue Horizons Electronics Inc. and CLR Inc. have achieved cost parity in the television

Vibrant Phones sells its products at a better price than Oryxo.

Both Vibrant Phones Inc. and Oryxo Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Vibrant Phones creates more economic value than Oryxo does. What does this imply?

C. JL Electronics can charge a premium price on its televisions.

Both Viten Electronics Inc. and JL Electronics Inc. incur a cost of $400 to manufacture a LED television. However, the economic value created by JL Electronics is more than that created by Viten Electronics. What does this indicate?

Invade the healthcare needs of the developed countries over developing countries.

By introducing Vscan, a small, wireless ultrasound device, GE Healthcare (General Electric) was primarily trying to:

economic value created.

By selling a laptop at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the

C. reduce the total cost of ownership

Clean Machine Inc. produces a high-quality dishwashing machine that is reliable and durable. How would this product most likely act as a cost driver?

B. move down a given learning curve.

Combining economies of learning with the existing production technology allows a firm to

largest economic value created.

Competitive advantage goes to the firm that achieves the

First-mover Advantages

Competitive benefits that accrue to the successful innovator.

Crossing-the-chasm Framework

Conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group.

B. the loyalty of its customers

Cool Cat Inc. has dominated the high-end refrigerator market by producing a reliable refrigerator with many bonus features that appeal to customers. Recently, a competitor has developed a refrigerator that offers many of the same features as Cool Cat's refrigerator. Which of the following will most likely help Cool Cat to keep its competitive advantage?

C. quality.

DFS Electronics Inc. ensures that all its products are highly durable and reliable by using techniques like zero-defect and lean manufacturing systems. These efforts not only add to the products' differential appeal, but also help the company save costs during production and avoid expenses due to after-sales services. Thus, the common value and cost driver responsible for DFS Electronics' strategic position as an integrator is the

an example of Disruptive Innovation

Digital photography replacing film photography would be?

C. economies of scale.

DiscountHaven Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against DiscountHaven's low prices. Thus, DiscountHaven has a competitive advantage due to its

B. increases in cost as output increases.

Diseconomies of scale refer to

transform their strategy of how to compete into a blueprint of actions and initiatives.

During the process of formulating an effective business model, a firm's managers should first

consumer surplus plus firm profit.

Economic value creation is best expressed as

C. spread their variable costs over a larger output.

Economies of scale do not allow firms to

C. economic value creation exceeds that of its competitors.

Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as its

C. Archer Cycles has created a greater economic value than Evia Cycles.

Evia Cycles Inc. incurs $400 to manufacture a bicycle, and the maximum price customers are willing to pay is $550 per unit. Archer Cycles Inc., its competitor, incurs $450 to manufacture a similar bicycle, and customers are willing to pay a maximum price of $620 for it. What does this indicate?

Network Effects

FindFriend is an instant messaging application for smartphones. New smartphone users find it easier to connect with friends and relatives through this mobile app when compared to other similar instant messaging applications. Hence, it has the largest user base in the industry. Thus, FindFriend app's value has increased primarily due to its _____.

D. create higher customer perceived value than the value that competitors create.

Firms pursuing a differentiation strategy primarily seek to

pay-as-you-go

Free Spirit Communications Inc. is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate?

return on risk capital.

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the

Introducing inexpensive and smaller diagnostic devices in developing countries

General Electric (GE) disrupted itself in the healthcare industry by:

opportunity cost.

Genevieve is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Genevieve's

social entrepreneur

Georgia Ray is the founder of the departmental stores chain, Ether INc. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and manufactured from recycled material. Also, her company purchases handicrafts from non-profit organizations supporting the aged. Georgia's belief is that her company should be able to support the community at large. Which of the following terms best describes Georgia Ray?

a combination of the razor-razor-blade model and the subscription-based business model

GlobalCom Inc. is an Internet service provider. It provides a router free of charge when users sign up for a two-year wireless service plan. In this plan, users pay in advance irrespective of whether they use the Internet package during the two-year period or not. Which of the following business models does this scenario best illustrate?

The firm will buy others' intellectual property whenever it advances its own business model

Globe Source Inc. is a consumer electronics company that follows an open innovation model. Which of the following can be concluded about this firm?

A. jumps to a steeper learning curve

Gotta Get Chocolates, Inc. has recently introduced a new production method that will make the production of their chocolates more cost-effective. Which of the following will most likely be the result of this innovation?

C. a higher value gap

Handy Helper, Inc. produces decent-quality woodworking tools at a mid-range price. Master Tools, Inc. produces high-quality tools also at a mid-range price. Master Tools gained a competitive advantage because it has ______ than Handy Helper.

C. It has exploited external opportunities.

Help Yourself Inc. publishes many types self-help books. Recently, the consumer demand for winter gardening books has increased significantly. Although Help Yourself has limited production facilities, it has increased the production of these books to meet this demand. It hopes to get books to the market faster than its closest competitor, who is also increasing the production of winter gardening books. Which of the following aspects of business-level strategy has Help Yourself accomplished?

A. higher costs.

Higher value tends to require

B. differentiation

Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Home Smart adopted in this scenario?

D. Marriott lowered its cost structure by sharing its production assets over a several types of hotels, which increased its menu and thus its differentiated appeal.

How did Marriott use economies of scope to achieve greater economic value than its competitors?

as profit per unit sold

How does a firm capture its producer surplus for a good or service?

It helps the firm achieve positive results along the social and ecological dimensions.

How does a sustainable strategy typically help a firm?

D. Complements add value to a product when they are consumed in tandem with it.

How does availability of complements act as a value driver?

By regularly introducing incremental improvements in its products

How has Apple been able to sustain its competitive advantage in the smartphone industry?

It has helped overcome the problem of thin markets, at no cost to the buyer

How has the long tail business model affected eBay as an online retailer?

A. It is more able to absorb price increases through accepting lower profit margins.

How is a cost-leader protected from threats from powerful buyers?

D. Differentiation parity deals with value not pricing.

How is differentiation parity different from cost parity?

Although the early majority is confident in their ability to master a new technology, the late majority is not.

How is the early majority section of consumers different from the late majority section?

The triple-bottom-line takes a more integrative and holistic view in assessing a company's performance than traditional approaches do.

How is the triple-bottom-line approach different from the traditional approaches to measuring competitive advantage?

How was Wikipedia able to outperform both Encyclopedia Britannica and Microsoft Encarta?

How was Wikipedia able to outperform both Encyclopedia Britannica and Microsoft Encarta?

wholesale and bundling

Hugo Books Inc. is a retailer that buys books at a fixed price from publishers. Recently, Hugo offered a deal in which customers could buy a package of three mystery books at a discounted rate. Which of the following business models has Hugo Books combined?

Guard the company against disruptive innovation by protecting the low end of the market

INtel's Celeron chip and Atom chip are initiatives to:

20 million

If a firm's market capitalization is $1 billion and the share price is $50, how many shares outstanding does the firm have?

Apple was able to charge a much higher margin for its products and services than Microsoft.

In 2014, Apple had a return on revenue of 29.3 percent, and Microsoft had a return on revenue of 32 percent. Even so, Apple had a higher return on invested capital than Microsoft. Why did this happen?

Apple had a more effective management of its global supply chain than Microsoft.

In 2014, Apple turned over its inventory more than 53 times. In stark contrast, Microsoft turned over its inventory only about 10 times during the year. Which of the following best explains this difference?

C. delivers low-cost products and services to a specific, narrow part of the market.

In a focused cost-leadership strategy, a firm

New markets by using new technologies.

In a radical innovation, a firm targets:

A. blue ocean

In a successful _____ strategy, the trade-offs between differentiation and low cost are reconciled.

capturing the economic value created as much as possible.

In an economic context, strategy for producers is primarily about

C. focus its research and development on process technologies to improve efficiency.

In contrast to a differentiator, a cost-leader will

The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.

In developed countries, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply?

Shakeout stage

In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry currently in?

increase the difference between the value created and the cost to produce it.

In order to achieve a competitive advantage, a firm should be able to

20 years

In the US, the time period for the right to exclude others from the use of a patented technology is ____ from the filing date of a patent application.

razor-razor-blade

In the _____ business model, the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods.

As the size of market expands, a standard signals the market's agreement on a common set of engineering features and design choices.

In the context of industrial growth, which of the following statements is true of standards?

It represents products that appeal to the largest segment of the market with homogenous tastes.

In the context of the long tail phenomenon, what does the short head represent?

users are not charged for the basic features of a product or service, but the user must pay for premium advanced features or add-ons.

In the freemium business model, the

D. blue ocean strategy

In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Global Cine Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is True Movies Inc., which offers a customer experience comparable to that of Vibrant Movies at a price almost as low as that of Global Cine. What strategy is True Movies pursuing in this scenario?

Growth Stage

In which of the folloiwng stages of the industry life cycle is the standard first established?

Radical innovation will disturb the existing power distribution within the firms.

Incumbent frims favor incremental innovation over radical innovation because:

Enter into the market in large numbers, creating a herding effect.

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they:

expect her company to be socially responsible.

Janet is the CEO of Far Sight Inc., which uses a triple-bottom-line approach. As a result, Janet will tend to

consumer surplus.

Jenny liked a pair of sapphire earrings and thought they would cost around $1,000. She was surprised to find that the price of the earrings was $1,500. However, she decided to buy the earrings anyway. This scenario describes

D. low-cost input factors

Juanita Apparels Inc. outsources its production to contract manufacturers located in underdeveloped nations where unskilled labor is available in plenty for very low wages. This has helped the apparel brand become a price leader in the industry. Which of the following is the key driver behind Juanita Apparel's strategic position?

inventory turnover

Kerry the Kangaroo Inc. specializes in producing and selling a stuffed kangaroo named Kerry. Although the stuffed kangaroo has sold well, the clothes that can be bought to dress the kangaroo have not sold as well as expected. As a result, Kerry the Kangaroo has warehouses full of hats, pants, sweaters, and shoes to dress Kerry. This firm used a _____ to determine how much of its capital is tied up in these accessory items.

B. economies of scale.

KitchenThings Inc. is a company that manufactures plastic kitchenware. It operates at an output level that allows it to keep its unit cost per output to the lowest in the industry. This in turn allows KitchenThings to be the price leader. Other competing companies cannot operate at the same level due to a lack of consumer demand for their products. This puts them at a competitive disadvantage. In this scenario, the cost driver behind KitchenThings's strategic position is

Increasing supply and mobility of skilled workers

Large companies, such as AT&T, IBM, GE, have been shifting their knowledge landscape from closed innovation to open innovation because of the:

A. superior customer service

Lush Roses is a chain of premium hotels around the globe that charges higher prices for its rooms and suites when compared to the average industry standards. Yet, the hotel enjoys the largest market share in the industry. This is mainly due its highly responsive staff that has a strong commitment toward achieving a 100 percent guest satisfaction. In this scenario, which of the following is the key value driver?

razor-razor-blade

Manufacturers of electric fragrance diffusers sell the electric outer device at an extremely low price, sometimes even at a loss. However, they make their money on the product by charging a premium on the perfume refills that have to be replaced regularly. Which of the following business models does this best illustrate?

Winner-take-all markets

Markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created.

subscription-based

Mia has purchased an Internet package for three months, in which she can use 30 mbps Internet speed. However, for the service, she needs to pay a fee of $50 in advance irrespective of whether she uses the Internet during the service period or not. This arrangement best illustrates the _____ strategy.

Architectural Innovation

ModelLife Electronics Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate?

Product Innovation

New or recombined knowledge embodied in new products.

Process Innovation

New ways to produce existing products or deliver existing services.

$200

Nicki paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

Open innovation model

Norce Autos Inc. allows its customers, suppliers, researchers, and the community in general to contribute their ideas toward new product developments. Customers and other interested stakeholders can let the company know what new features they want to see in their next car. If the company faces any technical complexities that its internal R&D team cannot solve, it posts the problem on its website and allows people from the external community to provide solutions. In this scenario, Norce Autos Inc. is primarily leveraging its:

Each stage of the industry life cycle is dominated by a different customer group.

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?

D. focused differentiation strategy.

Organic Eats is a restaurant that caters to the needs of a small percentage of highly health-conscious consumers. It has an all-organic, vegan menu. Since there are very few restaurants that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Organic Eats is following a

$450

Osion Electronics Inc. incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario?

C. product features

Oviyo 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?

freemium

Photohome is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate?

freemium

Pilot Games Inc. allows users to play the trial versions of its games without any charge. However, users have to purchase the games to access the upgraded version of the games with advanced features. Which of the following business models is Pilot Games using in this scenario?

A standard, in terms of engineering features and design choices, has been set across the industry

Process innovation is more important than product innovation during the growth stage because?

D. value drivers.

Product features, customer service, and complements are all examples of important

B. economies of scope

PureRinse Inc. is a brand reputed for its wide variants of body wash that introduced its range of shampoos and skin moisturizers a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is PureRinse applying?

stock price appreciation plus dividends received over a specific period.

Return on risk capital primarily includes

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

Sara can be categorized under the late majority customer segment. Which of the following behaviors is she most likely to exhibit?

Smart Feet will gain market share.

Smart Feet Inc. produces shoes that are better quality and cost more to make than the shoes of its competitors. Smart Feet realizes that there will be a large difference between the cost to produce the shoes and the consumer's willingness to pay for them. Even so, Smart Feet decides to charge the same price as its competitors. Which of the following will most likely be the result of this action?

incremental innovation

SyncTouch Inc. is a manufacturer of cell phones. It has released an improvised version of its smartphone in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate?

disruption

Taking advantage of the pricing flexibility inherent in the wholesale model, Amazon offered many books (especially e-books) below the cost that other retailers had to pay to publishers. By doing this, Amazon showed how business models can be affected through

A. cost-leadership

Tangles Costume Jewelry offers slightly lowerquality merchandise than competitors at a much lower price. What strategy is Tangles using?

Entrepreneurs

The agents that introduce change into the competitive system.

both short- and long-term performance metrics

The balanced-scorecard can accommodate

Innovation

The commercialization of any new product or process, or the modification and recombination of existing ones.

The industry structure is an oligopoly with only a few large firms

The compact disk (CD) industry is in the maturity phase of its industry cycle. What conditions prevail for an industry in this stage?

C. experience curve

The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.

unaffected by consumer demand.

The cost of capital to create a product is a fixed cost because it is

decline stage

The demand for video recorders has drastically reduced, and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of video recorders are mainly categorized under laggards. Which of the following stages of the industry life cycle is the video recorder industry in currently?

producer surplus.

The difference between the price charged for a product and the cost to manufacture it is referred to as the

Industry Life Cycle

The five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time.

Every dollar spent on the company's fixed assets generates $8.30 of revenue.

The fixed asset turnover of a company is 8.3. What do you infer from this?

Imitation

The four-step innovation process ends with?

stake out a strong strategic position not easily imitated by rivals

The key objective for firms during the growth phase is to:

triple-bottom-line approach.

The management team for SafeCare Chemicals Inc. came up with the following vision statement: "SafeCare Chemicals will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is most likely based on the

The firm's number of outstanding shares is 25 million.

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?

There are only a few competitors in the 3D television market.

The market for 3D televisions is in the introduction stage of the industry life cycle. What does this imply?

C. offer a differentiated product or service at a low cost.

The primary goal of a firm pursuing a blue ocean strategy should be to

Entrepreneurship

The process by which people undertake economic risk to innovate—to create new products, processes, and sometimes new organizations.

D. value innovation.

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called

Strategic Entrepreneurship

The pursuit of innovation using tools and concepts from strategic management.

Social Entrepreneurship

The pursuit of social goals while creating a profitable business.

produce a good.

The ratio Cost of goods sold/Revenue indicates how efficiently a company can

marketing to promote its products and services.

The ratio of SG&A/Revenue is an indicator of a firm's focus on

VK Products collects accounts receivables faster than AP Goods does.

The receivables turnover of VK Products Inc. is 13.6 and that of its competitor DL Goods Inc. is 6.0. What does this financial data primarily imply?

Pursue a harvest strategy

The strategic objective of a first mover during the introduction stage of the industry life cycle is to:

survive by drawing on "deep pockets"

The strategic objective of businesses during the shakeout phase of the industry life cycle will primarily be to:

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

The tenet behind the triple-bottom-line is that

Selling, general, & administrative expense/Revenue.

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & Development expense/Revenue, and

triple-bottom-line

The top management at Parallela Pharma Inc., through rigorous testing, ensures that the company develops and sells drugs that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Parallela Pharma are applying the _____ approach to measure firm performance.

Invention

The transformation of an idea into a new product or process, or the modification and recombination of existing ones.

business model.

The translation of strategy into action primarily takes place in a firm's

business model

The translation of strategy into action takes place in the firm's _____, which details the firm's competitive tactics and initiatives.

The presentation of an idea as findings derived from basic research

The typical four-step innovation process begins with?

consumer's maximum willingness to pay for it

The value a consumer attaches to a product or service is captured in the

Network Effects

The value of a product or service for an individual user increases with the number of total users.

3, that is, $600,000/$200,000

The working capital of a small home-based business is $200,000. The revenues generated account to $600,000, and the profits incurred are $300,000. What would be the company's working capital turnover?

For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.

The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?

Harvest Strategy

Though Wave Electronics Inc. still sells its VCR players, a product in its decline stage, the investments made by the company on improving or marketing the product are very low. The company has allocated the least amount of human and financial capital to this department. Which of the following strategies has Wave Electronics adopted in this scenario?

B. operate at the minimum efficient scale.

To be cost-competitive, a firm should

Gain economies of scale

To be successful and to survive the shakeout stage of the industry life cycle, a firm should:

C. lowering cost and increasing perceived customer benefits.

To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on

A. gain a market share and make up the loss in margin through increased sales.

Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to

pay-as-you-go.

TravelCheap Inc. is a car rental business that charges customers based on how many miles they put on a car on a daily basis. As result, a person who uses a car to travel from Chicago to Denver during a week is charged much more than a person who uses a car only to travel one mile to the grocery store six times a week. TravelCheap uses a business model called

ecological

Triple-bottom-line is a combination of economic, social, and _____ concerns that can lead to a sustainable strategy.

B. automobile company that sells high-end, premium cars.

True Empire Autos Inc. is an automobile company known for its luxury cars and follows a differentiation strategy. In this scenario, True Empire Autos should ideally compare its strategic position with a(n)

razor-razor-blade

True Vibgyor Inc. sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is True Vibgyor implementing?

an external performance metric.

Unlike the financial ratios based on accounting data, total return to shareholders is

triple-bottom-line

Using the _____ approach, managers audit their company's fulfillment of its social and ecological obligations to stakeholders such as employees, customers, suppliers, and communities as conscientiously as they track its financial performance.

Trade Secret

Valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy.

A. the increase in value creation exceeds the increase in costs.

Value drivers contribute to a firm's competitive advantage only if

buyer

Value is determined by the perceived benefits a good or service provides to a(n)

C. an apparel company popular among price-conscious customers.

Wear Crush Inc. is an apparel company known for its affordable clothes that follows a cost-leadership strategy. In this scenario, Wear Crush should ideally compare its strategic position with

A. the conflicting requirements of two generic strategies

What does blue ocean strategy attempt to reconcile?

D. Every time the cumulative output is doubled, the cost per unit will decline by 20 percent.

What does it mean for a firm to have an 80 percent learning curve?

B. economic value creation

What is a value gap?

B. It must reduce the firm's cost below that of its competitors while offering adequate value.

What must a cost-leadership strategy accomplish to be successful?

opportunity cost.

When GD Inc. declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as GD Inc.'s

D. availability of complements.

When Internet service providers offer free routers for subscriptions to their wireless Internet packs, the perceived value of the service offering increases. In this case, the value driver would be

Disruptive Innovation.

When Japanese carmakers attacked the existing U.S. automobile market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in _____.

B. diseconomies of scale

When Jean Cult Inc. was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $20. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $22. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?

Patent

When TrueHeal Pharma Inc. released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of TrueHeal Pharma's intellectual property rights. Thus, the drug is protected by a ____.

A. stuck in the middle.

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as

B. gains market share from other firms.

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it

A. jumps to a steeper learning curve.

When a firm combines experience based learning and process innovation, the firm

A. investments in differentiation are complements.

When a firm is successful at pursuing a blue ocean strategy,

B. strategic trade-offs.

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

B. 3,000-4,000 units

When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?

B. 11,000 units

When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output level does the firm experience economies of scale?

A. returns to scale are constant.

When a firm operates at the minimum efficient scale, the

Reduces investments in product support

When a firm pursues a harvest strategy, it:

continues to support marketing efforts even if the demand for the product is declining.

When a firm pursues a maintain strategy, it:

When it fails to successfully launch a mass-market version of its product

When does a firm fall into the large competitive chasm between early adopters and early majority?

Architectural innovations

When firms innovate by leveraging existing technologies into new markets, they are said to be involved in _____.

Consolidated Strategy

When the market for photo film negatives declined with the arrival of digital cameras, Momento Films Inc., a manufacturer of film negatives, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has Momento Films adopted in this scenario?

How do we reduce the economic value created?

When using the balanced-scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

The level of process innovation reaches its maximum as firms attempt to lower cost

Which of the conditions prevail when an industry is at the end of its life cycle?

the triple-bottom-line approach

Which of the following approaches to assess competitive advantage is based on the view that noneconomic factors can have a significant impact on a firm's financial performance?

C. the tension between value creation and the pressure to keep cost in check

Which of the following best describes a strategic trade-off?

B. It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost.

Which of the following best explains why a blue ocean strategy is difficult to implement?

Revenue/Fixed assets

Which of the following best expresses fixed asset turnover?

An automobile company using computer-aided design in its production

Which of the following best illustrates a process innovation as opposed to product innovation?

subscription-based

Which of the following business models has been traditionally used by the magazine and newspaper industry?

customer experience

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

D. failure to combine a cost-leadership position with a differentiation position

Which of the following contributed the most to JCPenny's failed blue ocean strategy?

The early and late majority together

Which of the following customer segments as described in the chasm framework make up the mass market?

A company matches an individual with a cleaning service.

Which of the following describes a peer-to-peer technique?

C. Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.

Which of the following describes an airline that is most likely stuck in the middle?

D. innovation

Which of the following drivers simultaneously increases value while lowering cost?

D. a cosmetics brand that offers superior-quality skin lotion priced at 100 dollars per bottle

Which of the following examples uses a focused differentiation strategy?

It is the product of the number of outstanding shares and the share price.

Which of the following expressions accurately describes market cap?

the balanced-scorecard model

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

The availability of apps that led to network effects

Which of the following has been a primary reason for increases in the Apple IPhone's installed base?

The first mover will be able to reduce costs through economies of scale

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

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

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

It provides limited guidance about which metrics to choose.

Which of the following is a disadvantage of the balanced-scorecard approach?

The user-generated content may be unreliable and unauthoritative

Which of the following is a drawback of Wikipedia's business model?

The framework does not explain everything about changes in industries.

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

The consumer demand increases

Which of the following is a feature of the growth stage of the industry life cycle?

The market reaches its maximum size

Which of the following is a feature of the maturity stage of the industry life cycle?

Competitive intensity within the industry increases

Which of the following is a feature of the shakeout phase of the industry life cycle?

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

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

B. How will we satisfy our customer needs?

Which of the following is a key question managers must answer to formulate an appropriate business-level strategy?

B. Learning effects involve the accumulation of output over time.

Which of the following is an accurate statement about learning effects?

The approach takes an integrative and holistic view in assessing a company's performance.

Which of the following is an advantage of a triple-bottom-line approach?

In economic value perspective, analysts not only consider historical costs, but also opportunity costs.

Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?

It allows managers to translate a firm's vision into measureable operational goals.

Which of the following is an advantage of the balanced-scorecard?

total return to shareholders

Which of the following is an external performance metric?

A. superior customer service

Which of the following is more of a value driver than a cost driver?

the unpredictability of return on revenue

Which of the following is not a factor that makes total return to shareholders and market capitalization unreliable measures of company performance?

The framework fails to provide the foundation that will help firms decide between cost-leadership or differentiation strategies.

Which of the following is not a limitation of the economic value creation framework?

the difference between the price charged and the firm's cost

Which of the following is not an accurate expression of the economic value created per unit of a product sold?

It is a tool which can be effectively used by managers for both strategic implementation and strategic formulation.

Which of the following is not an advantage of the balanced-scorecard approach to assess firm performance?

Risk capital invested in a firm can be legally recovered if the firm goes bankrupt.

Which of the following is not true of risk capital?

The second movers imitated CNN's incremental innovation to continuously improve their offering.

Which of the following is one of the reasons that led to CNN, an innovator, losing its leadership position in the 24-hour cable news industry?

D. economies of scale

Which of the following is primarily a cost driver?

D. complements

Which of the following is primarily a value driver?

Almost 80 percent of sales in a given product category come from only 20 percent of the offerings in that category

Which of the following is stated by the long tail phenomenon?

an approach to understanding a firm as embedded in a network of internal and external constituencies that each make contributions and expect consideration in return

Which of the following is the most accurate characterization of stakeholder theory?

It targets existing markets

Which of the following is true of a disruptive innovation?

A. Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.

Which of the following provides an example of a firm in a red ocean?

How do we create value?

Which of the following questions challenges managers to come up with strategic objectives that ensure future competitiveness?

Cost of goods sold/Inventory

Which of the following ratios best expresses inventory turnover?

The company was no longer able to generate adequate growth through closed innovation.

Which of the following reasons led to the launch of Procter & Gamble's "Connect + Develop," a web-based interface that connects the company's internal-innovation capability with the distributed knowledge in the global community?

Fresh Seeds Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.

Which of the following scenarios best illustrates bundling?

C. The firm's focus shifts to price rather than value-creating features.

Which of the following scenarios would threaten a firm that uses a differentiation strategy?

C. when mass manufacturing pens

Which of the following situations will have greater effects from economies of scale than from learning effects?

D. observable product features

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?

Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.

Which of the following statements about competitive advantage is true?

While open innovation focuses on building an effective business model to commercialize R&D, closed innovation focuses on being first to market.

Which of the following statements accurately brings out the difference between closed innovation and open innovation?

C. Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output.

Which of the following statements accurately brings out the difference between economies of scale and economies of scope?

A. While there are no diseconomies to learning, there are diseconomies to scale.

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns.

Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?

There is more strategic variety in the growth stage when compared to the introduction stage.

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

Social entrepreneurs are those who consider financial, ecological, and social metrics to evaluate their firm's performance

Which of the following statements accurately describes social entrepreneurs?

Innovation has to be high-tech in order to be a potent competitive weapon.

Which of the following statements is NOT true about innovation?

Competitive advantage is an absolute measure

Which of the following statements is not true of competitive advantage?

It invades the market from the bottom up, by first capturing the low end.

Which of the following statements is true of a disruptive innovation?

A. Choosing a strategic position requires making important trade-offs between value and cost positions.

Which of the following statements is true of a strategic position?

Accounting data are historical data and thus backward-looking.

Which of the following statements is true of accounting data?

Firms in the closed innovation model are extremely protective of their intellectual property.

Which of the following statements is true of firms pursuing a closed innovation?

They tend to enter the market frequently during the decline stage.

Which of the following statements is true of laggards?

B. Learning curves can be observed in manufacturing processes and professional services.

Which of the following statements is true of learning curves?

They enjoy using beta versions of products and providing feedback to companies

Which of the following statements is true of technology enthusiasts?

It attempts to provide a holistic perspective on firm performance.

Which of the following statements is true of the balanced-scorecard?

They weigh the benefits and costs carefully when adopting a new product.

Which of the following statements is true of the early majority section of consumers

Three dimensions, economic, social, and ecological, make up the triple-bottom-line.

Which of the following statements is true of the triple-bottom-line?

C. lower value gap

Which of the following will hamper a differentiator's ability to achieve a competitive advantage?

Combining the best of internal and external R&D will more likely lead to a competitive advantage.

Whihc of the following key assumptions are innovations like Procter & Gamble's "Connect + Develop" based on?

D. Shoes Cult has a competitive advantage over Aros.

While Aros Inc. incurs a cost of $20 for a pair of shoes, Shoes Cult Inc., its competitor, manufactures a pair of shoes at $22. Both the companies are able to sell their shoes for a maximum of $30 per pair. Which of the following statements is true in this scenario?

While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation.

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?

While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants.

While the domestic airline industry is in the maturity stage of the industry life cycle, the pet clothing industry is in its growth stage. Which of the following can be inferred from the given data?

While product innovation will be at its maximum for the 3D television industry, process innovation will be more crucial for the CRT television industry

While the industry for 3D televisions is in the introduction stage of the industry life cycle, the CRT (Cathode Ray Tube) television industry is in its decline stage. Which of the following statements will be true in this scenario?

The number of competitors in the e-book reader industry will be larger when compared to the landline telephone industry

While the industry for e-book readers is in its growth stage, the industry for landline telephones is in the decline stage of the industry life cycle. Which of the following can be inferred from this?

Laggards

While the personal computer industry is flooded and growing with laptops and tablets, John recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does John best represent?

C. increasing the perceived value created for customers, which allows it to charge a premium price.

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on

B. They can be used by any organization independent of industry context.

Why are differentiation and cost-leadership strategies referred to as generic business strategies?

Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially.

Why is it easier for new entrants to involve in radical innovations when compared ot incumbent firms?

The weaker firms are forced out of the industry in this stage.

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?

Opportunity costs

_____ are best described as the value of the best forgone alternative use of the resources employed.

Shareholders

_____ are the legal owners of public companies.

Value

_____ denotes the dollar amount a consumer would attach to a good or service.

Receivables turnover

_____ indicates how fast a firm is collecting the credit amount extended by a firm to its customers.

Payables turnover

_____ indicates how much a firm benefits from interest-free loans extended by its suppliers and creditors.

Wholesale

_____ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is to free set its own price.

Thin Markets

_____ is a situation in which transactions are likely not to take place because there are only a few buyers and sellers who have difficulty finding each other.

Working capital turnover

_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

A. Economies of scale

_____ is best described as decreases in cost per unit as output increases.

Economic value created

_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.

A. Minimum efficient scale

_____ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale.

Risk capital

_____ is the money shareholders provide in return for an equity share, which they cannot recover if the firm goes bankrupt.

Fixed asset turnover

_____ most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE).

Higher ratios

_____ of receivables turnover imply more efficient management in collecting accounts receivable and shorter durations of interest-free loans to customers.

Return on revenue

_____ precisely indicates how much of a firm's sales is converted into profits.

Total return to shareholders

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Innovation

______ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones.

long tail

the _____ business model is best described as one in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices.

Early adopters

the customers entering the market in the growth stage are primarily _____.