exam 2 strategy quizzes/practice exam

TalkaLot Corp. 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? A) $350 B) $450 C) $800 D) $200

$450

The difference between the price charged for a product and the cost to manufacture it is referred to as the A) producer surplus. B) break-even price. C) reservation price. D) consumer surplus.

producer surplus.

Fleet Foot Shoes has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver? A) economies of scale B) product features C) low-cost input factors D) premium prices

product features

CordKing Electronics has entered a stage in which the demand for their innovative fax machines has declined. Now most customers are buying replacement parts or buying their second fax machine from the firm. What stage in the industry life cycle does this scenario describe? A) shakeout stage B) decline stage C) growth stage D) maturity stage

shakeout stage

Susan is the founder of the restaurant chain Right and Fresh. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and all packaging is manufactured from recycled material. Also, her company sources ingredients from farms within 100 miles from her locations. Susan's belief is that her restaurants should be able to support the community at large. Which of the following terms best describes Susan? A) headhunter B) category captain C) social entrepreneur D) trade creditor

social entrepreneur

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? A) $250 B) $200 C) $180 D) $100

$180

Serena 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? A) $200 B) $1,100 C) $900 D) $550

$200

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 A) $3 billion, that is, 30 million shares × $100. B) $200,000, that is, $2,000 × $100. C) 30,000 shares, that is, 30 million shares/$100. D) 20:1, that is, $2,000/$100.

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

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? A) 2,000-3,000 units B) below 2,000 units C) above 4,000 units D) 3,000-4,000 units

3,000-4,000 units

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n) A) 60 percent learning curve. B) 54 percent learning curve. C) 80 percent learning curve. D) 90 percent learning curve.

90 percent learning curve.

Pete's Bikes enjoys a competitive advantage as a cost-leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Pete's Bikes? A) Pete's leading competitor develops a new low-sodium product. B) Pete's most reliable production worker takes a job in another industry. C) A major winter storm shuts down Pete's production for several days. D) A wheat shortage raises input costs across the industry.

A major winter storm shuts down Pete's production for several days.

Which of the following statements is true of accounting data? A) Accounting data are historical data and thus backward-looking. B) Accounting data consider off-balance sheet items, such as pension obligations of a firm. C) Accounting data focus mainly on intangible assets, rather than tangible assets. D) Accounting data do not have to be adjusted in any manner to compare companies with different capital structures.

Accounting data are historical data and thus backward-looking.

Which of the following businesses is most likely to disrupt an existing industry? A) Altrea added advanced camera technology to its premium line of smartphones so that they would take the highest-quality photos of all phones on the market. B) Particle Inc. developed a teleportation technology that can transport physical materials instantaneously across great distances. C) Closer Connex developed an earphone that receives emails and text messages and converts them to voice messages. The first models had poor reception, but they rapidly improved over time. D) Mega Technologies reconfigured the components used in its touchscreen tablets to create a new type of wearable device for use in restaurants and other service industries.

Closer Connex developed an earphone that receives emails and text messages and converts them to voice messages. The first models had poor reception, but they rapidly improved over time.

You are the CEO of a tech company and have recently undertaken a review of your company's strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed? A) Consider this evidence of a sustainable competitive advantage and maintain your current strategy. B) Compare the current valuations with past valuations to determine a trend. C) Assume your current strategy has failed and begin to formulate a new one. D) Compare your valuation to firms in another industry.

Compare the current valuations with past valuations to determine a trend.

How does availability of complements act as a value driver? A) Complements add value to a product by offering an inferior substitute to it. B) Complements add value to a product by competing with it. C) Complements add value to a product when they imitate it. D) Complements add value to a product when they are consumed in tandem with it.

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

It is April 2018 and Mark is a novice investor who wants to decide between purchasing shares in EagleCorp or Myna Bird Inc. In fiscal year 2017, EagleCorp's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Myna Bird Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell Mark? A) Myna Bird Inc. is more likely to create value while EagleCorp is more likely to destroy value. B) EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value. C) Neither Myna Bird Inc. nor EagleCorp are likely to create value. D) Both Myna Bird Inc. and EagleCorp are likely to create value.

EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value

Which of the following is not an advantage when it comes to "first-mover advantages"? A) First movers may be able to lock-in key suppliers. B) First movers may benefit from network effects. C) First movers must educate potential customers about the product. D) First movers may hold important intellectual property such as critical patents.

First movers must educate potential customers about the product.

Elena is the CEO of Geode Technologies, a consumer electronics manufacturer. Last year, Geode's return on invested capital (ROIC) was 11.6 percent, while Geode's closest competitor, NorthWest Tech, had an ROIC of 17 percent. Which of the following factors might Elena use to convince investors to invest in Geode rather than NorthWest Tech? A) Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent. B) Geode had a Research & development (R&D) expense / Revenue ratio of 16 percent, while NorthWest Tech had an R&D / Revenue ratio of 12 percent. C) Geode's working capital to revenue ratio was 75 percent, while NorthWest Tech's was 68 percent. D) Geode's plant, property, and equipment (PPE) over revenue ratio was 19 percent, while NorthWest Tech's was 10 percent.

Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent.

Sugar Flakes and Cinnamon Texas Toast both produce similar puffed rice breakfast cereals. For both companies, the cost of producing a box of cereal is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other? A) Increase total perceived consumer benefits through differentiation. B) Raise prices above the current reservation price. C) Lower prices to the break-even price. D) Increase the number of stock market shares available to investors.

Increase total perceived consumer benefits through differentiation

Which of the following is an advantage of the balanced-scorecard? A) Its implementation is a one-time effort and does not require continuous tracking of metrics or updating of strategic objectives. B) The balanced-scorecard is independent of the skills of the managers responsible for its implementation. C) It is a tool for both strategic formulation and strategic implementation. D) It allows managers to translate a firm's vision into measureable operational goals.

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

How does a sustainable strategy typically help a firm? A) It helps the firm focus solely on its financial goals. B) It reduces the need for corporate social responsibility within the firm. C) It facilitates the firm in effectively isolating its external stakeholders. D) It helps the firm achieve positive results along the social and ecological dimensions.

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

What must a cost-leadership strategy accomplish to be successful? A) It must reduce the firm's cost below that of its competitors while offering adequate value. B) It must reduce the firm's cost below that of its competitors while offering superior value. C) It must increase the firm's cost above that of its competitors while offering superior value. D) It must increase the firm's cost above that of its competitors while offering adequate value.

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

The Lynx Manufacturing Company produces components used in electronic toys. In fiscal year 2017, Lynx earned an accounting profit of $3 million. However, Lynx's production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true? A) Lynx suffered an economic loss of $2.5 million. B) Lynx suffered an economic loss of $500,000. C) Lynx earned an economic profit of $500,000. D) Lynx earned an economic profit of $5.5 million.

Lynx earned an economic profit of $500,000.

Which of the following scenarios best exemplifies a platform business? A) Gena founded a bike-based transportation company that offers environmentally-friendly rides to customers within a 25-mile radius. B) Devin purchases electronic parts from a variety of vendors and assembles them into inexpensive MP3 players that he sells to consumers. C) Raul operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture. D) Myra operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy.

Myra operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy.

Dominic is the founder of an innovative "impromptu catering" business that provides elegant, healthy party food and decorations on less than 24 hours' notice. The company has grown by over 150 percent in the past year. Dominic credits some of the company's success to studying the strategies of prominent social entrepreneurs, such as Wikipedia's Jimmy Wales. What can Dominic do to exemplify the social entrepreneurship model? A) Seek investments from venture capitalists. B) Buy out his closest competitors to ensure a competitive advantage. C) Provide free weekly catered meals for the homeless. D) Launch a social media platform for food lovers.

Provide free weekly catered meals for the homeless.

Both Saturn Technologies and Granite Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Saturn Technologies charges a higher price than Granite Inc. does, but it still sells a higher number of phones. What does this imply? A) Granite Inc. has a competitive advantage over Saturn Technologies. B) Saturn Technologies creates more economic value than Granite Inc. does. C) Granite Inc. is not charging enough for its product. D) Saturn Technologies and Granite have achieved a competitive parity.

Saturn Technologies creates more economic value than Granite Inc. does.

Erin is the manager of gardening supplies wholesaler SpringTime Inc. The company's vision is to become the leading supplier of gardening materials west of the Mississippi River. In assessing the firm's current state, Erin has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Erin has determined that SpringTime must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced scorecard approach, what is wrong with Erin's thinking? A) She has failed to account for external factors such as customer perceptions and shareholder perceptions. B) She has not considered the opportunity costs associated with launching an online ordering system. C) She has not addressed the question of which core competencies the firm needs. D) She has not addressed the question of how SpringTime will create value.

She has failed to account for external factors such as customer perceptions and shareholder perceptions.

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position? A) Starfish's customers start to consider soda a commodity. B) Starfish introduces a new biodegradable bottle that raises cost and perceived value. C) Starfish's product has not established an acceptable standard of quality. D) Starfish improves the recipe for its most popular soda without increasing the price.

Starfish's customers start to consider soda a commodity.

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so? A) Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image. B) Raise prices without increasing spending on customer service or resort features. C) Lower prices but eliminate several of the features that have come to define Coastal Haven properties for consumers, such as complimentary meals and in-room massages. D) Maintain prices but significantly increase spending on customer service and other amenities.

Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image.

Which of the following is a competitive benefit experienced by the first-mover firm in an industry? A) The first mover will be able to achieve a less steep learning curve. B) The first mover will be able to reduce the switching costs. C) The first mover will not have to patent its products or technology. D) The first mover will be able to reduce costs through economies of scale.

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

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply? A) The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. B) The electric car industry will move to the growth stage, whereas the industry for MP3 players will enter the growth stage next. C) The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based. D) The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

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

Which of the conditions prevail when an industry is at the end of its life cycle? A) The level of process innovation reaches its maximum as firms attempt to lower cost. B) The industry structure is perfectly competitive with a large number of buyers and sellers. C) The strategic objectives of businesses will involve gaining market acceptance. D) The market reaches its maximum size at this stage.

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

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? A) Unlike incumbent firms, new entrants do not have formal organizational structures and processes. B) Incumbent firms do not have the advantages of network effects that new entrants have. C) Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. D) New entrants are embedded in an innovation ecosystem, while incumbent firms are not.

Unlike incumbent firms, new entrants do not have formal organizational structures and processes.

Hottechi Laminate has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Hottechi Laminate will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Hottechi Laminate to ask in order to put its strategy into action? A) Why does the business model create value? B) What activities need to be performed to create and deliver the offerings to consumers? C) How are the offerings to the customers created? D) Who are the main stakeholders who will be performing the activities?

What activities need to be performed to create and deliver the offerings to consumers?

While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data? A) The number of competitors will be greater in the domestic airline industry than the internet-enabled appliance industry. B) The internet-enabled appliance industry is ahead of the domestic airline industry in the industry life cycle. C) The mode of competition will be price-based in the internet-enabled appliance industry and will be non-price-based in the domestic airline industry. D) While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants.

While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants.

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? A) The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. B) While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation. C) The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price. D) While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits.

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

Airbase is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Airbase should ideally compare its strategic position with A) a consumer electronics company that sells high-end devices. B) a company that sells small kitchen appliances at affordable prices. C) a consumer electronics company popular among price-conscious customers. D) an online company that sells customized electronics accessories.

a consumer electronics company popular among price-conscious customers.

Which of the following examples uses a focused differentiation strategy? A) a tennis pro shop that sells low-quality racquets priced at 150 dollars per racquet B) a coffee shop that offers mediocre lattes at a price of five dollars for a small latte C) a hotel chain that offers high-quality furnishings and service with room rates of under 75 dollars per night D) a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle

a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle

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? A) automating the manufacturing process to reduce production costs B) switching to a just-in-time inventory system to reduce inventory costs C) allowing customers to upload their own image designs and help assemble the finished product at retail locations D) devoting significant resources to researching and developing new products that will be more durable than competitors'

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

SonronMedia 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 A) an agency. B) bundling. C) wholesale. D) a freemium.

an agency.

Unlike the financial ratios based on accounting data, total return to shareholders is A) backward-looking and historic in nature. B) an absolute measure of competitive advantage. C) an external performance metric. D) unaffected by market volatility or macroeconomic factors.

an external performance metric.

DigitalHealth 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? A) radical innovation B) incremental innovation C) disruptive innovation D) architectural innovation

architectural innovation

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) economies of scale. B) learning-curve effects. C) experience-curve effects. D) availability of complements.

availability of complements.

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be A) economies of scale. B) learning-curve effects. C) experience-curve effects. D) availability of complements.

availability of complements.

When a firm is able to successfully employ a blue ocean strategy, it will create a competitive advantage by A) combining high quality and product features to provide service that customers truly value. B) using a first-mover advantage to be the lowest price in the market. C) winning market share with a highly differentiated product. D) beating rivals on product attributes while offering a better price.

beating rivals on product attributes while offering a better price.

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? A) product diversification strategy B) blue ocean strategy C) liquidation strategy D) market penetration strategy

blue ocean strategy

When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, Magnet Inc., a manufacturer of GPS devices, 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 Magnet adopted in this scenario? A) harvest strategy B) differentiation strategy C) consolidation strategy D) maintain strategy

consolidation strategy

Tangles Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Tangles using? A) niche marketing B) product diversification C) cost-leadership D) differentiation

cost-leadership

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. A) offshoring B) crowdsourcing C) peer-to-peer D) binge watching

crowdsourcing

In a focused cost-leadership strategy, a firm A) caters to the segment of the market that is least cost sensitive. B) provides high-priced products for many different segments of the mass market. C) delivers low-cost products and services to a specific, narrow part of the market. D) focuses on reducing the economic value created to drive down costs.

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

Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Beach Grub adopted in this scenario? A) market penetration B) product diversification C) differentiation D) cost-leadership

differentiation

When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as? A) learning-curve effect B) minimum efficient scale C) diseconomies of scale D) experience curve effect

diseconomies of scale

Digital photography replacing film photography is an example of which type of innovation? A) incremental B) architectural C) radical D) disruptive

disruptive

As a start-up company, DigiWrist entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. 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 smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate? A) radical innovation B) disruptive innovation C) architectural innovation D) incremental innovation

disruptive innovation

At the time when Ellen decided to purchase a tablet computer, the product had just become accessible to the mass market. She did not purchase the tablet until after she was convinced that the benefits it would offer her would far exceed its price. Also, she waited for her friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Ellen best represent? A) technology enthusiasts B) early adopters C) early majority D) laggards

early majority

The group of customers referred to as the ________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage. A) early majority B) laggards C) late majority D) early adopters

early majority

Afya Limited is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Afya Limited emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage? A) advanced capabilities B) the company's outsider status C) sleek and trendy design D) ease of use

ease of use

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 A) superior customer service. B) learning-curve effects. C) time compression economies. D) economies of scale.

economies of scale.

Finger Lickin' BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage? A) lowering the quality of ingredients below what customers expect to control costs B) eliminating brick-and-mortar locations and offering delivery from a central kitchen C) raising prices without improving on the quality of food D) marketing itself as a high-end restaurant and competing with more refined restaurants in the area

eliminating brick-and-mortar locations and offering delivery from a central kitchen

As a research scholar, Denise had built a helicam as part of her project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, she started a new venture where she could customize these helicams to fit the specific needs of the buyers and sell them. Denise can be best described as a(n) A) early adopter B) entrepreneur. C) category captain. D) franchisor.

entrepreneur

LinkedIn, a professional social media website, allows its users to create their profiles for free, but charges a premium price for additional services. This is an example of a ________ business model. A) subscription-based B) peer-to-peer C) crowdsourcing D) freemium

freemium

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 A) gain a market share and make up the loss in margin through increased sales. B) create higher value creation and thus generate greater profit margins. C) create higher value creation and thus generate greater sales. D) gain a market share and make up the loss in margin through increased pricing.

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

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it A) lowers the economic value created. B) gains market share from other firms. C) loses its competitive advantage. D) results in diseconomies of scale.

gains market share from other firms.

The leading producer of cell phone backup batteries, Progyny, has achieved great success because they produce high-quality battery backups that are not too expensive. Even so, another company that produces lower-quality batteries at the same price has also achieved some success, but not as much as Progyny. Also, in general, the price of backup batteries has declined because of economies of scale and learning. In addition, Progyny has added complementary assets, such as a carrying case. Considering all of these factors, the backup battery industry is most likely in the ________ stage. A) introduction B) growth C) shakeout D) maturity

growth

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator? A) low price, low comfort, low customer service, low concessions variety, low hours of operation B) high price, high comfort, high customer service, high concessions variety, low hours of operation C) low price, high comfort, high customer service, high concessions variety, low hours of operation D) high price, low comfort, low customer service, high concessions variety, low hours of operation

high price, high comfort, high customer service, high concessions variety, low hours of operation

The question that business-level strategy answers is ________ the firm will compete. A) when B) where C) who D) how

how

Blackzim Wireless 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? A) razor-razor-blade B) subscription-based C) pay-as-you-go D) freemium

pay-as-you-go

Lillypad Toys is a manufacturer of educational toys for children. Six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. Three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. What should Lillypad's managers prepare for next? A) a sharp decline in demand for the product B) increased competition from imitators C) a prolonged period of uncontested success D) a difficult struggle to move from invention to innovation

increased competition from imitators

Foot Friendly is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate? A) radical innovation B) disruptive innovation C) incremental innovation D) architectural innovation

incremental innovation

Jerry is the owner of All Hinges Inc. and has recently modified his firm's strategic objective based on a shift in his industry. Jerry is responding to a(n) ________ life cycle. A) entrepreneurial B) economic C) growth D) industry

industry

General Electric (GE) disrupted itself in the healthcare industry by A) introducing inexpensive and smaller diagnostic devices in developing countries. B) saturating the global market with multiple diagnostic devices. C) targeting the comparatively less price-sensitive sections of the market. D) replacing the top levels of the executive hierarchy.

introducing inexpensive and smaller diagnostic devices in developing countries.

NuLiver Corp. has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will most likely be the result of this innovation? A) jumps to a steeper learning curve B) destabilizes a steeper learning curve C) stabilizes the existing learning curve D) moves down the existing learning curve

jumps to a steeper learning curve

Zelda 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 A) reservation price. B) social cost. C) break-even price. D) opportunity cost.

opportunity cost.

Incumbent firms prefer to focus on incremental innovations which reinforce their established organizational structure and power distribution and avoid radical innovation that could disrupt their existing power distribution. This is known as A) organizational inertia. B) organization culture. C) organizational design. D) organization complexity.

organizational inertia.

Bioplex requires its members 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? A) razor-razor-blade B) pay-as-you-go C) subscription-based D) freemium

subscription-based

The top management at Sunshine Vitamins, through rigorous testing, ensures that the company develops and sells vitamins 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 Sunshine Vitamins are applying the ________ approach to measure firm performance. A) accounting profitability B) shareholder value creation C) economic value creation D) triple-bottom-line

triple-bottom-line

Ticker Inc. is a wristwatch company known for its luxury watches, and it follows a differentiation strategy. In this scenario, Ticker Inc. should ideally compare its strategic position with a A) watch retailer that sells pre-owned watches. B) watch maker that sells high-end, premium watches. C) watch maker that manufactures low-priced watches. D) watch maker that follows a differentiation strategy.

watch maker that sells high-end, premium watches.