MGMT 352 Midterm

intangible assets add great value to a firm primarily because of the firm's

knowledge and culture take time to develop and are generally difficult to imitate

Nicki 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. $900 B. $1,100 C. $550 D. $200

$550

The stronger the five forces in an industry, the greater the industry's profit potential

False

If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo, then: A. Sony and Microsoft will have a VRIO resource. B. Nintendo will have a resource that is valuable but no longer rare. C. Nintendo will still have a VRIO resource. D. Nintendo will have a resource that is rare but no longer valuable.

Nintendo will have a resource that is valuable but no longer rare

Cost drivers that managers include input factors, economies of scale, and learning curve effects.

TRUE

in honey electronics and junglectics, companies that manufacture televisions, develop the same customer knowledge base and create products that provide the same custoer appeal as Alpire, a market leader in consumer electronics, then

alpire will have a resource that is valuable but no longer rare

in the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity

an increase in its customers' disposable income

in a focused cost-leadership strategy, a firm

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

A firm successfully implementing a blue ocean strategy uses value innovation to compete in highly contested market spaces

false

the value of chain describes the

internal activities a firm engages in when transforming inputs into outputs

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

market volatility makes it difficult to asses firm performance through these measures, particularly in the short term

True Vibgyor Inc. sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is True Vibgyor implementing? A. subscription-based B. razor-razor-blade C. pay-as-you-go D. direct sales

razor-razor blade

a firm's return on revenue is .2 and its asset turnover is .8. what do you infer from this information?

the firms return on asset is .16

in the 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.

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

A blue ocean strategy differs from a low-cost strategy in that

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 company that uses a differentiation strategy can achieve a competitive advantage as long as its competitors

true

Which of the following is not a limitation of the economic value creation framework

the framework fails to provide the foundation that will help firms decide between cost-leadership or different strategies

Ambrosia Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Ambrosia Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Ambrosia Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate? A. social complexity B. causal ambiguity C. time compression diseconomies D. better expectations of future resource value

better expectations of future resource value

A firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against

causal ambiguity

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. 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 smartphones 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. incremental innovation C. architectural innovation D. disruptive innovation

disruptive innovation

Smooth Fusion Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage? A. the resources of the company that are mobile B. the capital raised by the company from its shareholders C. the expertise acquired by the employees in the company D. the headquarters owned by the company

the expertise acquired by the employees in the company

The relative bargaining power of suppliers is high when suppliers provide products that create high switching costs

true

in an industry, the barriers of entry is high when capital requirements is high

true

Incumbent firms favor incremental innovation over radical innovation because

radical innovation will disturb the existing power distribution within the firms

In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity with the industry is high and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry

shakeout stage