BPS Exam 2

Which of the following most accurately describes a difference between incremental innovation and radical innovation?

Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

A factor favoring the success of disruptive innovation is that

Incumbent firms are slow to change

___ is best described as a situation in which one party is more informed than another, because of the possession of private information

Information asymmetry

Which of the following lists the stages of the industry life cycle in the correct order?

Introduction, Growth, Shakeout, Maturity, and Decline

Which of the following is an advantage of the balanced-scorecard?

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

Which of the following statements is true of the balanced scorecard?

It attempts to provide a holistic perspective on firm performance

How does sustainable strategy typically help a firm?

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

Which of the following is a drawback of vertical integration?

It increases the potential of legal repercussions.

How is cost-leader protected from the threats from powerful suppliers?

It is more able to absorb price increases through accepting lower profit margins.

What must a cost-leadership strategy accomplish to be successful?

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

A new product often has high price when it is launched because of a

Large investment in designing a product while producing small quantities.

Competitive advantage foes to the firm that achieves the

Largest economic value created

Which of the following is an accurate statement about learning effect?

Learning effects involve the accumulation of output over time.

Decisions relating to the range of products and services a firm will offer determine the firm's

Level of Diversification

There are many reasons firms need to grow. Which of the following reasons is strongly influenced by economies of scale?

Lower costs

Which of the following motivations for business growth involves principle-agent problems?

Motivation Managers

Combining economies of learning with the existing production technology.... Firm to

Move down a given learning curve

Which of the following scenarios best exemplifies a platform business?

Myra operates...

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Total return to shareholders

_____ denotes the dollar amount a consumer would attach to a good or service.

Value

Which of the following in an example of social entrepreneurship? The committee approved the formula for an all-purpose cleaner because it

Cleaned as well as other cleaners and used organic ingredients.

Which of the following businesses is most likely to disrupt an existing industry?

Closer Connex...

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 ...

Entrepreneur

The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.

Experience Curve

A differentiation strategy works best when a

Firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

At 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 was been able to achieve a(n)

90 Percent Learning Curve

The tenet behind the triple-bottom-line is that

A firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

Which of the following best illustrates forward vertical integration?

A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

Mondo Tacos, a fast food restaurant, operates through a business model in which... individuals can buy the rights to set up Mondo Taco stores and sell the.... Food in return for a lump sum fee at the beginning of the contract and a percentage...

Franchising

A primary advantage of organizing economic activity within firms is the

Ability to coordinate highly complex tasks to allow for specialized division of labor.

Which of the following statements is true of accounting data?

Accounting data are historical data and thus backward-looking

How is an equity alliance different from a joint venture?

An equity alliance involves taking ownership in a partner; a joint venture involved two or more entities owning a firm.

When firms innovate by leveraging existing technologies into new markets, they are said to be involved in

Architectural Innovations

To be successful and to survive the shakeout stage of the industry life cycle... should

Gain economies of scale

In a successful ____ strategy, the trade-offs between differentiation and ..... reconciled

Blue Ocean

The balanced-scorecard can accommodate

Both long and short term metrics.

A ___ primarily details the goal-directed actions managers take in their .... Competitive advantage when competing in a single product market.

Business-level strategy

Revolution Watches, a Swiss-based premium watch brand has recently started selling its watches through company-owned retail outlets in major cities of developing nations. Which of the following types of diversification is the firm pursuing?

Geographic Diversification Strategy

In the decline stage, which of the following strategies involves a reduction of investments in product support?

Harvest Strategy

How has Apple been able to sustain its competitive advantage in the smartphone industry?

By regularly introducing incremental improvements in its products

The four-step innovation process ends with

Imitation

In an economic context, strategy for producers is primarily about

Capturing the economic value created as much as possible.

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

Chief Executive Officer

Which of the following provides an example of a firm in a red ocean?

Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.

You are the CEO of a home appliance manufacturing 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?

Compare the current valuations with past calculations to determine a trend

Economic Value creation is best expressed as

Consumer surplus plus form profit

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

Customer Experience

How is differentiation parity different from cost parity?

Differentiation parity deals with value not cost

A differentiator is least likely to be threatened by increases in input prices... powerful suppliers when the

Differentiator is able to create a significant difference between perceived value and current market prices.

___ is best described as decreases in cost per unit as output increases.

Economies of Scale

Phoenix Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results?

NOT invest in vertical integration despite the cost of producing pickups (Pursue taper integration?)

In a radical innovation, a form targets

New markets by using new technologies

The primary goal of a firm pursuing a blue ocean strategy should be to

Offer a differentiated product or service at a low cost Achieve a larger economic value created than that of rivals in the industry.

____ are best described as the value of the best forgone alternative use of the resources employed.

Opportunity Costs

A firm's resistance to changes in the status quo is referred to as

Organizational Inertia

A firms business strategy can lead to a competitive advantage if it allows the firm...

Perform different activities than its rivals Position itself below the productivity frontier

True Tomato Inc. makes organic ketchup. To promote its products, this firm decided to make bottles in the shape of tomatoes. To accomplish this, True Tomato worked with its bottle manufacture to create a set of unique molds for its bottles.

Physical-asset Specificity

Manager's in a firm hired to improve the firm's profitability and ultimately the shareholder's value will add to the overall costs if they pursue their own self interests. What does this best illustrate?

Principal-agent Problem

The difference between the price charged for a product and the cost to manufacture it is referred to as the

Producer surplus

A firm experiences diseconomies of scale when it

Produces at an output level beyond the minimum efficient scale

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific websites that offer textbooks and paraphernalia, such as logo sweatshirts and baseball hats. This development shows Amazon's relentless pursuit of

Product Diversificaiton

Which of the following scenarios would be characteristic of an entrepreneur?

Rachel implemented a new and more efficient way to produce pottery.

The key objective for firms during the growth phase is to

Stake out a strong strategic position not easily imitated by rivals

A high percentage of R&D/Revenue ratio indicates a(n)

Strong focus on innovation to improve current products and services

Which of the following is an advantage to the triple-bottom-line?

The approach does not rely on an external view of a firm to assess its performance

Which of the following is an example of an internal transaction cost?

The cost of maintaining a production unit

Which of the following is an example of an external transaction cost?

The cost of searching for a contract manufacturer

Which of the following is competitive benefit experienced by the first... in an industry?

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

The typical four-step innovation process begins with

The presentation of an idea as findings derived from basic research

A drawback of short-term contracting as an alternative to making a component in-house is that

The supplying firm has no incentive to make any transaction specific investments to increase performance or quality.

What is invention?

The transformation of an idea into a new product or process.

Which of the following approaches to assess competitive advantage is based on ... view that noneconomic factors can have a significant impact on a firm's financial performance?

The triple-bottom-line approach

Which of the following is a firm that has an impact on the competitive advantage of a firm?

The value and the cost position of the firm relative to its competitors.

While cellphones 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?

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