Management 480
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
Business-Level Strategy
A _______ primarily details the global-directed actions managers take in their guest for competitive advantage when competing in a single product market
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
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
diseconomies of scale
A firm experiences ________ when there are increases in cost per unit as output increases
$3 billion, that is, 30 million shares x $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
Reduces its level of vertical integration
A firm that engages in strategic outsourcing typically
Strong focus on innovation to improve current products and services
A high percentage of R&D/Revenue ratio indicates a(n)
Charge a higher price than the cost leader in the industry
A successfully implemented blue ocean strategy allows a firm to
Industry value chain
A(n) ________ is best used to depict the transformation of raw materials into finished goods and services along district vertical stages
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
product diversification
Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of
Product diversification
BM Goods Inc. Is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, heath care, hotel airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate?
Cost-Leadership
Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customer. Through its simple apparel designs, acceptable quality levels, and minimum customer service, the company has been able to sell its merchandise a the lowest prices in the industry. Which of the following generic business strategies is Bargain Styles applying?
Vertical integration
Decisions relating to "what stages of the industry value chain to participate in" determine a firm's
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 scales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its DiscountHaven has a competitive advantage due to its
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
create higher customer perceived value than the value that competitors create
Firms pursuing a differentiation strategy primarily seek to
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?
Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities
How do firms benefit from vertical integration?
Apple had a more effective management of its global supply chain than Mircrosoft
In 2014, Apple turned over its inventory more than 53 times. In stark contrast, Mircosoft turned over its inventory only about 10 times during the year. Which of the following best explains this difference?
delivers low-cost products and services to a specific, narrow part of the market.
In a focused cost-leadership strategy, a firm
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
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.
Principal-agent problem
Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?
Backward vertical integration
Neon Electronics Inc. Sourced touch screens required for its tablet computers, cell phones, and televisions from a manufacturer in China. But the demand for such components was high globally, and the supplier could not meet the quality standards of Neon Electronics. Thus, Neon Electronics decided to set up its own unit to develop and manufacture the required touch screens. What does this scenario best illustrate?
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
Product-market diversification
PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in
Franchising
Silver Weave Inc., an apparel company, operates through a business model in which individuals can buy the rights to set up Silver Weave stores and sell the company's merchandise in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to stock the collection approved from the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate?
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?
geographic diversification strategy
Symphon Times Inc., a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations. Which of the following types of diversification strategies is the firm pursuing?
Disruption
Taking advantage of the pricing flexibility inherent in the wholesale model, Amazon offered many books (especially e-books) below the cost that other retailer's had to pay to publishers. By doing this, Amazon showed how business models can be affected through
offer a differentiated product or service at a low cost
The primary goal of a firm pursuing a blue ocean strategy should be to
Produce a good
The ratio cost of the 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
Selling, general, and administrative expense/revenue
The three financial ratios that constitute return on revenue are cost of goods sold/revenue, research and development expense/revenue, and
Engaging in strategic outsourcing
Today, many companies use PeopleSoft and EDS to avoid maintaining a human resource management system. By doing this, these firms are
Total return to shareholders
Which of the following is an external performance metric?
Triple-bottom-line
Using the _______ approach, mangers audit their company's fulfillment of it's social and ecological obligations to stakeholders such as employees, customer, suppliers, and communities as conscientiously as they track its financial performance
The increase in the value creation exceeds the increase in costs
Value drivers contribute to a firm's competitive advantage only if
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
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
Sell its products in several different regional, national, and international markets
When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will
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?
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?
A firm that manufactures and sells car engines to major automobile companies launches its own line of cars
Which of the following best illustrates forward vertical integration?
Subscription-based
Which of the following business models has been traditionally used by the magazine and newspaper industry?
It is the product of the number of outstanding shares and the share price
Which of the following expressions accurately describes market cap?
A firm that buys all the required raw materials from multiple external vendors
Which of the following firms is least integrated?
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 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?
It allows managers to translate a firm's vision into measurable operational goals
Which of the following is an advantage of the balanced-scorecard?
The cost of searching for a contract manufacturer
Which of the following is an example of an external transaction cost?
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?
Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value
Which of the following statements about competitive advantage is true?
Competitive advantage is an absolute measure
Which of the following statements is not true of competitive advantage?
Accounting data are historical data and thus backward-looking
Which of the following statements is true of accounting data?
Transaction costs are necessary to explain and predict the boundaries of a firm
Which of the following statements is true of transaction costs?
Return on Revenue
_____ precisely indicates how much of a firm's sales is converted into profits.
Working capital turnover
_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue
Forward vertical integration
______ is best described as changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain
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 consumers
Strategic Outsourcing
_______ is best described as moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain
Strategic alliances
________ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage
Economies of Scale
________ is best described as decreases in cost per unit as output increases
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
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?
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