ch 5 bus 402

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period.

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

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

Which of the following scenarios best illustrates bundling?

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

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

Which of the following scenarios exemplifies a sustainable strategy under the triple bottom line approach?

Impervious Plastics reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment.

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

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

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

Selling, general, & administrative expense/Revenue.

You are the founder of Shadow Skateboards, and you are considering methods of gaining and sustaining a competitive advantage. Which of the following changes has the best chance of quickly creating a sustainable advantage?

allowing customers to upload their own image designs and help assemble the finished product at retail locations

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

an agency.

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

as profit per unit sold

In an economic context, strategy for producers is primarily about

capturing the economic value created as much as possible.

Economic value creation is best expressed as

consumer surplus plus firm profit.

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

consumer's maximum willingness to pay for it.

Threadless allows customers to submit their own designs and to vote on which designs they would like to see printed on a T-shirt. This business uses a _____ technique.

crowdsourcing

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

economic value created.

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

produce a good.

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

return on risk capital.

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?

the value (V) the consumer attaches to the dress

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.

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

value