481- EXAM 2
Which of the following acquisitions would be considered the LEAST related?
A toy manufacturer acquiring a coffee company
When measuring competitive advantage under the economic value creation approach, it can be easy to determine what the consumer's maximum willingness to pay will be.
FALSE
_____ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.
business-level strategy
After the Internet was introduced, its value increased exponentially as the number of users increased. This is the positive effect of a(n):
network effect
If a firm wants to have more ownership of activities closer to the end product or customer, it should:
Forward vertically integrate.
. A(n) ______________ is the value lost due to choosing to use resources for one alternative over another.
opportunity cost
BM Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate?
product diversification
The most efficient way to overcome the principal-agent problem in a firm is to
provide stock options to managers.
From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the
return on risk capital.
best describes as the commercialization of any new product, process, or the modification and recombination of existing ones.
Innovation
Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola?
It is building new core competencies to protect and extend its current market position.
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.
Which of the following is NOT one of the three critical factors used to evaluate economic value creation and competitive advantage?
STOCK PRICE
Intangibles such as a firm's reputation for innovation and quality increase a firm's stock market valuation.
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 differentiation strategies.
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?
The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.
Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?
The weaker firms are forced out of the industry in this stage.
Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms?
Unlike incumbent firms, new entrants do not have formal organizational structures and processes.
A firm's strategic position reflects:
Whether it is competing on differentiation or cost.
Which of the following firms is least integrated?
a firm that buys all the required raw materials from multiple external vendors
A primary advantage of organizing economic activity within firms is the
ability to coordinate highly complex tasks to allow for specialized division of labor.
Wear Crush Inc. is an apparel company known for its affordable clothes that follows a cost-leadership strategy. In this scenario, Wear Crush should ideally compare its strategic position with
an apparel company popular among price-conscious customers.
Which of the following best illustrates a process innovation as opposed to product innovation?
an automobile company using computer-aided design in its production
When Internet service providers offer free routers for subscriptions to their wireless Internet packs, the perceived value of the service offering increases. In this case, the value driver would be
availability of complements.
Hyundai's reputation for quality is an asset that:
ALL OF THESE
EviaCyclesInc.incurs$400tomanufactureabicycle,andthemaximum price customers are willing to pay is $550 per unit. Archer Cycles Inc., its competitor, incurs $450 to manufacture a similar bicycle, and customers are willing to pay a maximum price of $620 for it. What does this indicate?
Archer Cycles has created a greater economic value than Evia Cycles.
Economic value can be viewed as the amount of the total value created that is captured and distributed between ________ and ________.
Consumer; producer
Innovation used as a sustained competitive weapon must be:
Continuous and commercialized.
When the focus of competition is on differentiation, a firm tends to use all of these levers EXCEPT:
Cost input factors.
On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?
Each stage of the industry life cycle is dominated by a different customer group.
_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.
Economic value created
Economic value creation is best expressed as
consumer surplus plus firm profit.
The type of customers vital to a firm introducing a new innovation are the _________, who are willing to pay higher prices and like to tinker with new products.
early adopters
By selling a laptop at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the
economic value created
Astheinventorofhypertensionmedication,OneSurePharmaceuticals(OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiration of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate?
first-mover advantages
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it
gains market share from other firms.
Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.
industry
According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
innovation that allows competitors to emerge with more economical replacements
The key objective for firms during the growth phase is to
stake out a strong strategic position not easily imitated by rivals.
Return on risk capital primarily includes
stock price appreciation plus dividends received over a specific period.
Which of the following is more of a value driver than a cost driver?
superior customer service
Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of
taper integration.
The typical four-step innovation process begins with
the presentation of an idea as findings derived from basic research.
Using the_____approach,managers audit their company's fulfillment of its social and ecological obligations to stakeholders such as employees, customers, suppliers, and communities as conscientiously as they track its financial performance.
triple-bottom-line
Competitive advantage and firm strategy are best assessed using a variety of approaches.
true
A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses.
unrelated diversification strategy
When it would cost the firm less to pursue an activity in-house than obtaining that activity from a supplier in the external market, then the firm should:
vertically integrate
Which of the following situations will have greater effects from economies of scale than from learning effects?
when mass manufacturing pens
