ch 4-5 MAN 4720
Let's Talk Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?
$200
By selling a laptop at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario?
$600
end of ch 4, beg. of ch 5
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Which of the following is an advantage of accounting data?
Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.
A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers.
Activities
_________ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it.
Consumer surplus
Which of the following explains how dynamic capabilities are different from the resource-based view?
Dynamic capabilities deal with applying resources over time.
FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies?
FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage.
Which of the following is not a disadvantage of the balanced scorecard approach?
It fails to allow managers to prepare the company for future growth.
Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?
It provides only limited guidance about which performance metrics to choose.
Let's Roll Inc. and Ride 4 Ever Cycles Inc. are two competing motorcycle companies. While Let's Roll's Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ride 4 Ever Cycles is 54.2 percent. What do you infer from this financial data?
Let's Roll is less efficient than Ride 4 Ever Cycles in producing goods.
In the financial year 2016, for every $100 in revenues, Microsoft earned $21.5 in profit, while Apple earned $20.6 in profit. This demonstrates that
Microsoft's return on revenue was higher than that of Apple.
When asked to explore the strengths and weaknesses of a firm, which of the following would be the best framework to employ?
None of these answers are correct.
Though the microwaves manufactured by Nuked Inc. and Hot Box Inc. sell at the same price of $600 per unit, the economic value created by Nuked Inc. is more than that of Hot Box Inc. In the context of this scenario, which of the following statements is true?
Nuked has a relative cost advantage over Hot Box Inc..
According to the value chain analysis, which of the following is a support activity?
R&D
The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment?
The company's brand equity
Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage?
The resource is costly to imitate.
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?
What intangible assets do we need?
Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?
While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.
The tenet behind the triple bottom line is that
a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is
a temporary competitive advantage
In the context of the VRIO framework, a resource is said to be valuable if it
allows a firm to take advantage of an external opportunity.
In a perfectly competitive industry structure
any competitive advantage that one firm has will be short-lived.
In the dynamic capabilities perspective, for an asset or a capability to be included in a firm's resource stock, it should be
built through investments over time.
William estimated that a pair of Perfect Fit jeans would be worth $60 for its brand and durability. However, at the Perfect Fit store, the pair of jeans he wanted was available for $45. The difference of $15 in this scenario is referred to as the
consumer surplus.
Measuring how a customer views a firm under the balanced scorecard framework is important because
customer perspective is directly linked to a firm's revenue and profit.
In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?
decreasing government interference in the target market
For a firm to sustain its competitive advantage, any fit between its internal strengths and the external environment must be
dynamic
The sum of consumer surplus and producer surplus for a good or service equals the
economic value created.
The value of goods/services in the eyes of consumers is static which makes it difficult to accurately assess what someone is willing to pay for that product and service. This limitation is most directly tied to which of the following multi-dimensional perspective below?
economic value creation
The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the
efficient-market hypothesis.
In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by
eliminating an internal weakness to mitigate an external threat.
Hit Me Up is an instant messaging mobile application. Users have access to a basic version with limited message recipients for free, but they have to pay a fee to have unlimited message recipients or to use advanced features. Which of the following business models does this best illustrate?
freemium
According to the resource-based view, a firm's competitive advantage often stems from its ___________ opposed to its ___________.
intangible resources; tangible resources
Patents, designs, copyrights, trademarks, and trade secrets are five forms of
intellectual property
One major limitation of using shareholder value appreciation as a measure for assessing competitive advantage is that stock prices often times reflect the irrational and psychological mood and behaviors of investors. Alan Greenspan, former head of the Federal Reserve referred to this as
irrational exuberance.
If a company has 25 million shares outstanding, and each share is traded at $400, the ________ is $10 billion.
market capitalization
Economic contribution is created when the
price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.
A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. According to the dynamic capabilities perspective, the $20,000 would most likely be referred to as the firm's
resource flow
Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?
resource heterogeneity
Which of the following is an example of a firm's capabilities?
skills involved in training and managing a workforce
Which of the following SWOT factors are internal to the firm?
strengths and weaknesses
One major limitation of using accounting profitability as a measure for competitive advantage is its focus on ________ versus ________.
tangible assets; intangible assets
While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to
time compression diseconomies.
When a company makes improvements in its social, economic, and ecological performance, it is adopting a ________ approach to assessing competitive advantage.
triple-bottom-line
Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities.
value chain analysis
The _______ describes the internal activities a firm engages in when transforming inputs into outputs.
value chain view
Which of the following is not one of the VRIO characteristics of competitive advantage?
variable
