Chapter 5 Competitive Advantage, Firm Performance and Business Models.

Which of the following statements is true about a firm's stock price? Multiple choice question. The price determines in part the stock's market valuation. The price is calculated exactly from the firm's accounting profitability. The price tends not to reflect accounting profitability. The price is not correlated with the firm's economic value creation.

The price determines in part the stock's market valuation.

To determine a product's producer surplus, which of the following must be compared? (Check all that apply.) Multiple select question. Sunk costs The overhead costs Price charged Total cost of production

Price charged Total cost of production

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price? (Check all that apply.) Multiple select question. a firm's current state a firm's past a firm's political views expectations of the firm's future performance

a firm's current state a firm's past expectations of the firm's future performance

The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as ______. Multiple choice question. stock price appreciation a profit margin overhead derivative pricing economic value created

economic value created

The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as ______. Multiple choice questions. stock price appreciation economic value created a profit margin overhead derivative pricing

economic value created

Which statements about creating and implementing an effective business model are true? Multiple select question. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. Firms must use a blueprint to come up with strategies for how the firms will compete in the market. Firms that wish to be truly innovative and original must avoid using a blueprint, which might be limiting.

Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals.

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its _____. Multiple choice question. triple bottom line accounting profitability economic value created balanced scorecard

accounting profitability

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 ______ rate, or the proportion of subscribers who leave, down. Multiple choice question. freemium agency scorecard churn

churn

Public companies are required by law to release detailed accounting data, which enables ______. Multiple choice question. comparative analysis of firms shareholder value creation economic value creation a balanced scorecard system

comparative analysis of firms

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to ___. Multiple choice question. gain market share increase return on invested capital maximize profit cover opportunity costs

gain market share

Fixed costs are ______ consumer demand. Multiple choice question. directly proportional to independent of reduced by inversely proportional to

independent of

From the view of a shareholder, the measure of competitive advantage that matters most is return on _____. Multiple choice question. invested capital risk capital revenue assets

risk capital

The legal owners of publicly traded companies are called ______. Multiple choice question. stock brokers executives shareholders business holders

shareholders

Achieving competitive advantage means maximizing the difference between which of the following? (Check the two that apply.) Multiple select question. Consumers' willingness to pay Advertising costs Cost to produce the good or service The number of rival firms

Consumers' willingness to pay Cost to produce the good or service

A company's total return to shareholders consists of which of the following? (Check all that apply.) Multiple select question. Wages Dividends received Capital depreciation Stock price appreciation

Dividends received Stock price appreciation

Another name for producer surplus is .

profit

Which of the following statements is best illustrated by the decades-long business rivalry between the technology giants Apple and Microsoft? Multiple choice question. A firm's competitive advantage is transitory. A company that shrinks to less than 10% market share cannot grow again significantly. Once a company becomes highly dominant in its industry, it cannot be displaced. Technological change has little influence on a firm's competitive advantage.

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.) Multiple select question. Apple introduced a series of popular consumer electronic devices. Apple's primary business for several decades was to sell computers to corporations. Microsoft almost went bankrupt in late 1990s. Microsoft leveraged its computer operating system to sell other software programs.

Apple introduced a series of popular consumer electronic devices. Microsoft leveraged its computer operating system to sell other software programs.

Which of the following statements are true concerning a firm's business model? (Check all that apply.) Multiple select question. It essentially explains how the firm intends to make money. It details the firm's competitive tactics and initiatives. It reports the firm's latest accounting profitability. It indicates the way the firm works with buyers and suppliers

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 are elements of the social dimension of the triple bottom line? Multiple select question. reducing overhead costs achieving work/life balance human sustainability improving recycling efforts

achieving work/life balance human sustainability

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 ______. Multiple choice question. shareholder analysis strategic emergence the accounting metric framework the balanced scorecard

balanced scorecard

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 ______. Multiple choice question. consumer cost sharing business model innovation revenue depreciation overhead maximization modeling

business model innovation

When a firm goes bankrupt, shareholders ___. Multiple choice question. cannot recover their risk capital can sue for loses are entitled to help pay off debtors owed money by the firm are entitled only to a fraction of their investment

cannot recover their risk capital

When implementing the razor-razor-blade strategy, companies make their profit from: Multiple choice question. initial products. subscription fees. complementary goods. razors.

complementary goods.

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be ______. Multiple choice question. unrelated unrealistically bound perpendicularly related correlated

correlated

Which of the following would be labeled variable costs by a computer manufacturer? (Check all that apply.) Multiple select question. hard drives manufacturing facilities display screens the administrative assistant

hard drives display screens

In order to be considered a legal owner of a public company, a person or organization must ______. Multiple choice question. own at least two products manufactured by the company be a member of the company's board of executives own at least one share of the company's stock own a majority of the company's stock

own at least one share of the company's stock

Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy? (Check all that apply.) Multiple select question. natural qualitative quantitative international

qualitative quantitative

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? (Check all that apply.) Multiple select question. freemium subscription razor--razor-blade pay-as-you-go

subscription razor--razor-blade

True or false: The best measure of competitive advantage can be found in the performance of specific departments. True false question.TrueFalse

false

The balanced scorecard approach helps managers balance ______ goals. Multiple choice questions. opportunity and transitional advantaged and disadvantaged fixed and variable financial and strategic

financial and strategic

The money a firm spends to set up a sales website can be considered a Blank______ cost. Multiple choice question. marginal variable fixed sunk

fixed

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability? (Check all that apply.) Multiple select question. The information must be purchased from private investment banks. The information is filed in a 10-K report. The relative performance is evaluated using standardized financial metrics. The information is derived from such data as income statements and balance sheets.

The information is filed in a 10-K report. The relative performance is evaluated using standardized financial metrics. The information is derived from such data as income statements and balance sheets.

Economic value created is the ______ the cost to produce a product/service and the amount the buyer is willing to pay for it. Multiple choice question. greater of either total sum of lesser of either difference between

difference between

When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a ______ business model. Multiple choice question. razor—razor-blade pay-as-you-go wholesale motivator-motivation

razoe-razor-blade

Investors in a company are mostly concerned about the company's ______. Multiple choice question. opportunity cost return on invested assets total return to shareholders planned emergence

total return to shareholders

Which of the following dimensions make up the triple bottom line? (Check all that apply.) Multiple select question. social economic international ecological

social economic ecological

Managers implement the blueprint of their business model through which of the following? (Check all that apply.) Multiple select question. structures processes voice memos culture

structures processes culture