Business Policy Exam 1
Based on the example in the Student Guide, what additional awareness does a promotion budget of $1,500,000 buy?
36%
Assuming no additional product promotion, what percent of customers, reached through last year's marketing campaign will carry over into the current year
67%
Why are differentiation and cost-leadership strategies referred to as generic business strategies?
They can be used by any organization independent of industry context.
Which of the following statements is true of the triple-bottom-line?
Three dimensions, economic, social, and ecological, make up the triple-bottom-line.
The Low segment's ideal spot is
near the center of its circle
At the beginning of the simulation, how many assembly lines are there?
one line per company
A change in MTBF affects:
material cost
When the practice rounds are over (both individual and team) the simulation will be reset so that real competition can begin among the teams Each management team will take the reins of
$40 million company with 1 product
What is the minimum amount of time that it takes to invent a new sensor?
1 year at lest
When a segment's product supply exceeds demand, how much appeal, to the customer, will a product priced $1 above or below the segment price range lose?
10%
If your short-term interest rate (the rate on your current debt) is 12.1%, then your bond rate (the rate on your long-term debt) is:
13.5% (1.4% higher than the current debt rate)
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?
AccuroDisk creates a greater economic value than TD Storage.
Which of the following does not explain why activist investors have more power over a firm than individual investors?
Activist investors have more legitimacy than individual investors
How can assembly lines double their capacity?
Add a second shift
The U.S. government legitimized claims by thousands of businesses and individuals in the aftermath of the BP oil spill in the Gulf of Mexico, causing the claims to become of great urgency to BP. This best represents the process of Question options: A) identifying stakeholders. B) addressing stakeholder concerns. C) establishing competitive parity. D)implementing a cost-leadership strategy.
Addressing stakeholder concerns.
Which of the following are not considered in the Fine Cut?
Automation
________ are incidents that describe highly improbable but highly impactful events.
Black swan events
The fixed asset turnover of a company is 8.3. What do you infer from this?
Every dollar spent on the company's fixed assets generates $8.30 of revenue.
What's the measure for product reliability?
How long a product is expected to function
If the previous year you reached 100% customer awareness in your company, this year what will you need to do to maintain this level?
I would scale back promotional expenditures to about $1,400,000 to maintain awareness
The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?
It has a competitive advantage in the industry.
Which market segment places the most importance on price?
Low Tech
If you or your team decides to introduce a new sensor product, when should capacity and automation be purchased?
One round prior to product release
It allows managers to translate a firm's vision into measureable operational goals
Payables turnover
Which financial obligation is best satisfied with Bond Issues?
Paying for increased production capacity
If you are marketing to High Tech customers, which criteria are most important to them in order of importance?
Positioning, Age, Price, MTBF
How much do segment prices fall each year?
Prices remain constant in each segment
Which of the following scenarios illustrates a firm that has a sustainable competitive advantage?
Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.
Shortly after the small island of Balamia experienced multiple unexpected high-intensity earthquakes that caused massive destruction, many banks and insurance companies filed for bankruptcy. This left the economy of the country in a poor state. The natural calamity in Balamia best exemplifies
a black swan event
The relationship between promotion and sales budgets and sensor sales is generally...
a direct one
If your company has a sales budget of $3 million and drops it to zero, in that year...
accessibility will drop by one third
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
an apparel company popular among price-conscious customers.
The promotion budget affects:
awareness
In an economic context, strategy for producers is primarily about
capturing the economic value created as much as possible.
If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?
comparing the return to the return on invested capital obtained by other firms in the industry
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
consumer surplus.
Both Blue Horizons Electronics Inc. and CLR Inc. have achieved cost parity in the television market. To gain and sustain a competitive advantage against CLR, Blue Horizons Electronics should
create greater perceived economic value than CLR.
In a focused cost-leadership strategy, a firm
delivers low-cost products and services to a specific, narrow part of the market.
An increase in promotional budgets has:
diminishing returns become apparent at $2 million
Triple-bottom-line is a combination of economic, social, and ________ concerns that can lead to a sustainable strategy.
ecological
Which of the following is not one of the three interdependent tasks of strategic management?
estimate
Janet is the CEO of Far Sight Inc., which uses a triple-bottom-line approach. As a result, Janet will tend to
expect her company to be socially responsible.
Sun Inc., a vendor, regularly supplies pallets to Octangle Corp. for its shipping business. Therefore, Sun Inc. is Octangle Corp.'s
external stakeholder.
In a seller's market even pathetic products are snapped up by desperate buyers because...
first shift capacity plus second shift capacity are less than total segment demand
A firm pursuing a differentiation strategy as opposed to a low-cost strategy will
focus its research and development on product technologies to add uniqueness.
In stakeholder impact analysis, identifying the opportunities and threats presented by stakeholders is immediately followed by Question options:
formulating the stakeholder to address and effectively balance the different needs of various stakeholders
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
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
opportunity cost.
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
pay-as-you-go.
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.
peer-to-peer
Which of the following responsibilities results from a society's mere expectations of a business and not because the society and the shareholders mandatorily require the business to demonstrate it?
philanthropic responsibilities
Which of the following is not an example of a software company's external stakeholder?
project managers
A firm is said to gain a competitive advantage when it can
provide products similar to its competitors, but at lower prices.
Which of the following is an advantage of the balanced-scorecard?
It allows managers to translate a firm's vision into measureable operational goals
Allure is a cosmetic brand that pursues a cost-leader strategy. Which of the following statements is true of the cosmetic brand?
It appeals to the price-conscious buyers.
Which one of the following is Not one of the four product characteristics that R&D can set?
Quality
________ precisely indicates how much of a firm's sales is converted into profits.
Return on revenue
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?
Shoes Cult has a competitive advantage over Aros.
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?
Smart Feet will gain market share.
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
Strategic management
Stakeholder impact analysis primarily helps a firm
gain a competitive advantage while acting as a good corporate citizen.
The best example of a firm's external stakeholder is a(n)
government agency that regulates the prices of products manufactured by the firm.
In order to achieve 100% accessibility, a team must:
have two products in the same segment
Which of the following strategies does Twitter need to implement to increase its competitive advantage?
increase its user base
A firm achieves differentiation parity ideally when
it creates the same customer value as its competitors
If you purchase production capacity and automation:
it is available in the next year
Competitive advantage goes to the firm that achieves the
largest economic value created.
Age, price and ___________ criteria remain constant from year to year.
reliability
Inside each fine cut circle,
segments have an ideal spot where demand is at its highest
If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally
stake out a unique position within the industry.
Return on risk capital primarily includes
stock price appreciation plus dividends received over a specific period.
According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified?
strategy analysis
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.
subscription-based
Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?
the balanced-scorecard model
Which of the following was a key driver in the Occupy movement of 2011?
the issue of income disparity
Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
the value and the cost position of the firm relative to its competitors
Last year your company built 1,500,000 units of product Able and sold 1,405,000 After 14 months in R&D, a revision of product Able is due out tomorrow, on January 2 (the first business day of this year) What will happen to the unsold inventory of 95,000 units of "old" product Able?
they'll be reworked to match the new specifications for product Able
A defining characteristic of the subscription-based 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.