MGT 401 Exam
True or false: The best measure of competitive advantage can be found in the performance of specific departments.
false
The money a firm spends to set up a sales website can be considered a ______ cost.
fixed
Which of the following makes it more likely that producers will breach existing rules of commerce when responding to rapid developments in business models?
when the business models are disruptive
Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?
differentiation and cost leadership
The balanced scorecard approach helps managers balance ______ goals.
financial and strategic
Which of the following are standard performance dimensions for a company? (Check all that apply.)
-a firm's accounting profitability -how much economic value a firm generates -how much shareholder value a firm creates
Which of the following statements about the disadvantages of the accounting profitability perspective are correct?
Accounting data are historical and therefore backward-looking. Accounting data focus primarily on tangible assets.
To determine how efficiently a company can produce a good, managers look to the ______.
COGS/revenue ratio
Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability?
The relative performance is evaluated using standardized financial metrics. The information is filed in a 10-K report. The information is derived from such data as income statements and balance sheets.
Under a wholesale model, RETAILERS (not the wholesalers) sell goods for ______.
any price they want
When a firm goes bankrupt, shareholders _____.
cannot recover their risk capital
Economies of scale are ______.
decreases in cost per unit as output increases
Economic value created is the ______ the cost to produce a product/service and the amount the buyer is willing to pay for it.
difference between
The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as
economic value created
Which are the four steps of the innovation process?
innovation invention idea imitation
To understand how effectively a firm uses its capital, one can use the ratio
net profits/invested capital
When a firm does favorably compared to similar firms, it is said to
outperform
In order to be considered a legal owner of a public company, a person or organization must
own at least one share of the company's stock
When you join the vehicle sharing company Zoooomm, you are allowed to use a motorized scooter whenever you like, though you do not have to own the machine. You have to pay by the hours of usage. Zoooomm operates on a Blank______ model.
pay-as-you-go
The subjectively determined maximum amount a customer would pay for a product is its ______ price.
reservation
Which of the following are among the most commonly used metrics for comparing the performance of different companies?
return on equity return on assets return on revenue
Economic value creation is calculated as
the sum of consumer and producer surplus
Which of the following industries use a subscription model?
Internet providers cellphone providers magazines
The Luminarium Corporation has a market capitalization of $100,000,000, and each share is worth $100. How many outstanding shares of Luminarium Corporation are there?
1,000,000
Which of the following statements is best illustrated by the decades-long business rivalry between the technology giants Apple and Microsoft?
A firm's competitive advantage is transitory.
Which of the following statements are true about the rival businesses Apple and Microsoft? (Check all that apply.)
Apple introduced a series of popular consumer electronic devices. Microsoft leveraged its computer operating system to sell other software programs.
True or false: Stock market valuations are often unreliable due to market fluctuations and are therefore notused to assess competitive advantage.
False
If Firm A and Firm B both produce a laptop at the same total cost, but the reservation price for Firm A's laptop is $1,000 and the reservation price for Firm B's laptop is $1,200, who has the competitive advantage?
Firm B
Which statements about creating and implementing an effective business model are true?
Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure.
Which of the following are the key questions for understanding the balanced scorecard?
How do customers view us? How do shareholders view us? What core competencies do we need? How do we create value?
At 3M, one strategic objective that has been implemented is that 30% of revenues must be obtained from new product introductions. This is an objective that would arise as an answer to which of the following balanced scored questions?
How do we create value?
Which of the following are true of a firm's book value?
It captures the historical cost of a firm's assets. Its importance has declined over time. It is calculated as costs of assets minus accumulated depreciation.
Which of the following statements are true concerning a firm's business model?
It essentially explains how the firm intends to make money. It details the firm's competitive tactics and initiatives. It indicates the way the firm works with buyers and suppliers.
Which of the following is true about a sustainable strategy for a business?
It is a strategy that can be pursued over time without harmful effects on people or the environment.
Which statements about the disadvantages of the value creation perspective are true?
It is difficult to determine the value that consumers place on a given good. For large firms, it is difficult to estimate the economic value created for all products and services offered by the firm. The value that a consumer places on a good can vary according to how the consumer feels at a particular moment.
Which of the following are considered disadvantages of the shareholder value creation approach?
Overall macroeconomic factors have a direct bearing on stock prices. Stock prices are influenced by the psychological mood of investors. Stock prices can be highly volatile.
Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?
Power of buyers Threat of entry Power of suppliers
When one wants to further explore the difference in return on revenue (ROR) for two competitors, one can look at which of the following ratios? (Check the three that apply.)
SG&A expense/revenue COGS/revenue R&D expense/revenue
Which of the following best defines economies of scope?
They are the savings that come from producing two or more outputs at less cost than producing each output individually.
Which of the following is true about shareholders of a public company?
They can be individuals or organizations.
Which of the following are advantages of platform businesses compared to pipeline businesses?
They can grow faster than pipeline businesses.
Which of the following are advantages of platform businesses compared to pipeline businesses?
They scale efficiently by eliminating gatekeepers. They unlock new sources of value creation and supply. They benefit from community feedback.
Which of the following are characteristics of the early majority?
They weigh benefits and costs carefully. They have a strong sense of practicality.
Which statements about stock market valuations are true?
Viewed over the long term, stock market valuation is a useful metric for assessing competitive advantage. Stock market valuation is equal to the number of outstanding shares multiplied by the share price.
According to the efficient-market hypothesis, information about which of the following is embedded in a stock price?
a firm's past expectations of the firm's future performance a firm's current state
Which of the following is most likely to produce a radical innovation?
a new sportswear company with a handful of employees that perform a number of loosely defined roles
In a subscription-based business model, customers pay for
access to a product or service
Which of the following are elements of the social dimension of the triple bottom line?
achieving work/life balance human sustainability
Netflix had a successful business model based on a large library of streaming content but then achieved even more success by also producing and distributing original content. This is an example of the potential value of
business model innovation
The financial metric ROIC stands for return on invested
capital
Combining the razor-razor blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their Blank______ rate, or the proportion of subscribers who leave, down.
churn
Public companies are required by law to release detailed accounting data, which enables
comparative analysis of firms
When implementing the razor-razor blade strategy, companies make their profit from
complementary goods
If Tom would have paid $1,000 for a new laptop but was able to purchase one for $800, the $200 he saved is considered his
consumer surplus
The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be
correlated
A firm's actual ----- minus depreciation is called the book value.
costs of assets
Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?
differentiation and cost-leadership
To measure firm-level competitive advantage, a company must
estimate the economic value created for all products and services offered by the firm
True or false: When companies commit to sustainable strategies, they do so purely out of a spirit of charity.
false
Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a Blank______ business model.
freemium
Premium services that cost money, with complementary basic services, is a description of which type of business model?
freemium
For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to
gain market share
The pay-as-you-go model is
gaining momentum
Which of the following would be labeled variable costs by a computer manufacturer?
hard drives display screens
Which of the following are standard performance dimensions for a company? (Check all that apply.)
how much economic value a firm generates a firm's accounting profitability how much shareholder value a firm creates
In order to determine market capitalization, one multiplies which of the following together?
number of outstanding shares share price
Which of the following are considered off-balance sheet items?
operating leases pension obligations
As a consequence of the rapid development of business models, ______ may breach existing rules of commerce.
producers
If a firm has a successful ______ strategy, its product will have a higher perceived value and the firm will have a competitive advantage over a competitor that creates a product at equal cost but with a lower reservation price.
product differentiation
What are the three most important value drivers that managers can use to create a competitive advantage?
product features customer service complements
Another name for producer surplus is
profit
Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy?
qualitative quantitative
When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a Blank______ business model.
razor-razor blade
From the view of a shareholder, the measure of competitive advantage that matters most is return on
risk capital
Which of the following dimensions make up the triple bottom line?
social economic ecological
When a trade occurs, the consumer and producer both capture
some of the economic value
A company's total return to shareholders consists of which of the following?
stock price appreciation dividends received
anagers implement the blueprint of their business model through which of the following?
structures culture processes
The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models?
subscription razor-razor blade
Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?
the NASDAQ computer index
A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?
the ability to charge a premium price less intense competition from imitators
When managers analyze a wide variety of internal and external performance metrics in order to set financial and strategic goals, they often turn to a framework known as
the balanced scorecard
Achieving competitive advantage means maximizing the difference between which two of the following?
the cost to produce the good or service consumers' willingness to pay
Which business model evolved from the razor-razor blade model and involves a firm providing a base product for free, then finding ways to monetize the usage?
the freemium business model
The most a consumer is willing to pay for a product is equivalent to the product's
total perceived consumer benefits
Because external factors create volatility in stock prices, a better measure of a firm's performance over the long term is the
total return to shareholders
Investors in a company are mostly concerned about the company's ______
total return to shareholders
Wholesaling is considered a(n) ______ business model.
traditional
True or false: The freemium business model can be considered an evolutionary variation on the razor-razor blade model.
true
In general, a firm generates ______ when its cost of capital is lower than its ROIC.
value