MFT Exam

How was Netflix able to outperform both Hulu and Amazon?

by focusing its resources on producing high-quality content for content streaming

In an economic context, strategy for producers is primarily about

capturing the economic value created as much as possible.

In the statement of cash flows, the section for cash flows from operating activities will include which of the following?

cash payments for salaries.

Net Income = $100,000 Depreciation Expense = $10,000 Net increase in accounts receivable = $5,000 Net increase in accounts payable = $3,000 On the basis of the information provided in the table above for a corporation, the corporation's net cash flow from operating activities for the current year is

108000

A watchmaking company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?

170

On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank statement shows a balance of $4,905. Other information is available as follows: A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge does. A customer's $40 insufficient funds check has been returned with the bank statement. Outstanding checks of $10, $15, and $100 are identified on May. What is the correct cash balance on May 31?

5080

Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow requires two pounds of raw material and one hour of direct labor to manufacture. Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year lease for $4,000 per month. All costs areconsidered costs of production. How many pillows must Dreamland produce and sell each month to earn a monthly gross profit of $1,000?

700

Which of the following statements about the tort of negligence is true?

A possible defense to the plaintiff's claim of negligence is that the plaintiff volunteered to take the risk.

Dell is expanding its market share in European countries because its direct-sales model is more effective than the business model used by its European rivals. Which of the following benefits of global expansion is Dell experiencing, relative to its competitors?

Further exploitation of distinctive competencies

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

Architectural innovations.

Priceless Treasures is an antique jewelry retailer. Priceless Treasures' owner, Sally Thornton, wishes to replace the printed catalog with an online catalog. Ms. Thornton decides to conduct a market research project to explore how Priceless Treasures' target customers would respond to the online catalog approach. From data collected by the retail jewelers' trade association, Ms. Thornton learns that sales of antique jewelry are rising and that the most common purchasers are older, upper-income couples. Though initially reluctant to purchase online, these customers are beginning to overcome their concerns. From United States Census Bureau data, she learns that this population segment is growing in number and will continue to do so throughout the next two decades. At this point what should Ms. Thornton do?

Collect primary data to determine whether these trends and preferences are reflected in Priceless Treasures' customer base.

Which of the following ratios best expresses inventory turnover?

Cost of goods sold/Inventory

The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?

It has a competitive advantage in the industry.

Which of the following statements is true of firms pursuing a closed innovation?

Firms in the closed innovation model are extremely protective of their intellectual property.

most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE).

Fixed asset turnover

How does a sustainable strategy typically help a firm?

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

Which of the following statements is true of a disruptive innovation?

It invades the market from the bottom up, by first capturing the low end.

EasyOpen Inc. gained a patent for an electronic corkscrew. Soon the company made a huge profit on this device. Recently, however, other firms have produced electronic corkscrews. As a result, EasyOpen lost its competitive advantage. Which of the following would mot likely be the reason for this development?

EasyOpen's patent expired after 20 years.

Which of the following would most likely occur as a result of the United States government's imposing tariffs on foreign steel imports?

Employment in the United States steel industry would increase.

How do low interest rates affect a business?

Firms can easily borrow money to finance future growth.

In which of the following stages of the industry life cycle is a standard first established?

Growth stage

After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to

Identify stakeholders' interests and claims.

Which of the following statements is strongly influenced by the not-invented-here syndrome?

If a product was not created and developed at our company, it could not be good enough.

------ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones.

Innovation

Saint Martin Hospital boasts one of the world's leading medical imaging programs. Its radiology department specializes in the early detection of particularly serious forms of stomach, intestinal, and colon cancer. The hospital plans to invest in a new system of digital medical imaging and image transmission technologies that will enable its radiologists to view and evaluate intestinal scan results from anywhere in the world. With this investment, the hospital is attempting to overcome which of the constraints of services marketing?

Inseparability

Which of the following statements about a systems flowchart is true?

It documents the sequence of processing steps that take place in an information system.

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information?

It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.

Which of the following statements accurately describes a firm's resource flow?

It is the firm's level of investments to maintain or build a resource.

Which of the following is an implication of high employee turnover in a company?

It results in a reduction in the company's intangible-resource stocks.

A project consists of 150 jobs. The expected completion time for each job is given in days. The project has three critical paths with two jobs in common, J and K. In order to finish the project one day early, the completion time should be reduced one day for

Job J and K

In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory value and the lowest net income figure?

LIFO

When a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty, the process is termed

Licensing

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

Motivating managers

Which of the following accurately describes how Netflix used innovation to gain a competitive advantage?

Netflix applied big data analytics to its user preferences to provide highly personalized viewing recommendations.

------ is when a firm moves activities and jobs outside its home country.

Off-shore outsourcing

The Organization of the Petroleum Exporting Countries (OPEC) reduces production by 10 percent, and the growth rate of the world economy begins to escalate. How will the simultaneous occurrence of these events affect the equilibrium price and quantity in the world petroleum market?

Price will increase, but quantity is indeterminate

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

Related diversification

Which of the following statements accurately describes a firm's resource stock?

Resource stocks are a firm's current level of intangible resources.

Which of the following is not true of risk capital?

Risk capital invested in a firm can be legally recovered if the firm goes bankrupt.

____ are the legal owners of public companies.

Shareholders

Why should satisfying stockholder demands receive so much attention in many corporate mission statements?

Stockholders are the legal owners of the company and are the providers of equity capital.

Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry?

Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry.

Which of the following is not a necessity for leveraging the skills and capabilities of global subsidiaries?

The firm must be pursuing a strategy of differentiation.

All of the following are true regarding a seller's rights to reduce legal liability in the sale of non-consumer goods EXCEPT:

The seller can disclaim all implied warranties by simply stating that there are no implied warranties.

The mechanism by which companies rigorously assess the business environment(s) in which they compete is called?

There are three strategies for establishing a competitive advantage: Cost Leadership, Differentiation, and Focus

is best described as a rational process in which executives at a company's headquarters take primary responsibility to program future success of the company they lead.

Top-down strategic planning

The receivables turnover of VK Products Inc. is 13.6 and that of its competitor DL Goods Inc. is 6.0. What does this financial data primarily imply?

VK Products collects accounts receivables faster than AP Goods does.

Green desires to form a new company to manufacture lawn mowers. Green is concerned about having his personal assets exposed to liability for the new company's contracts and torts. Furthermore, he wants to retain control over the company's operations and growth for the next few years. He will need an infusion of equity capital to begin operations. He hopes to take the company public in about five years if it is advantageous to do so at the time. Which of the following types of business associations would be best for Green's new company?

a corporation

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.

Process innovation is more important than product innovation during the growth stage because

a standard, in terms of engineering features and design choices, has been set across the industry.

An information system that enables all business departments in the same firm to share relevant information and data is called

an enterprise resource planning (ERP) system

How does a firm capture its producer surplus for a good or service?

as profit per unit sold

The balanced-scorecard can accommodate

both short- and long-term performance metrics.

If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?

comparing the return to the return on invested capital obtained by other firms in the industry

Economic value creation is best expressed as

consumer surplus plus firm profit.

The value a consumer attaches to a product or service is captured in the

consumer's maximum willingness to pay for it.

When a firm pursues a maintain strategy, it

continues to support marketing efforts even if the demand for the product is declining.

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

customer experience

The first step in the strategic management process is to

define a firm's vision, mission, and values.

In a firm's external environment, primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

demographic trends

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

economic value created.

Based on his scientific management theory, Frederick Taylor developed what pay principle?

employees should be paid on the basis of seniority.

Organizational values are the that govern the behavior of individuals within a firm or organization.

ethical standards and norms

Flat organizational structures are characterized by

few levels of management and a relatively wide span of control.

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to

how to implement business strategy.

The four-step innovation process ends with

imitation

In an economy the unemployment rate is 10percent and the inflation rate is 1 percent. An appropriate fiscal policy in this phase of the business cycle would be to

increase government purchase

An intrapreneur is described as a person who

innovates within existing companies

If the spread between the spot and forward exchange rates of two currencies equals the interest rate difference between the two countries, this phenomenon is referred to as

interest rate parity

The value chain describes the

internal activities a firm engages in when transforming inputs into outputs.

G. Lafley at Procter & Gamble (P&G), had implemented an open-innovation model, which had greatly benefitted the company. In the light of this information, we can conclude that A. G. Lafley is a(n)

intrapreneur

A drawback of the functional organizational structure is...

it creates silos of knowledge which makes it difficult to communicate across functions.

A department manager telephoned two managers in other departments to discuss a cost savings idea that would benefit their departments as well as her own. Which of the following most accurately defines the communication channel that the manager was using?

lateral

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. This has ensured that all firms in the country pay their employees at least $8,000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors in a firm's general environment does this mandate best indicate?

legal factors

A firm that would like to know whether it has enough cash to meet its bills would be most likely to use which category of financial ratio?

liquidity

A hospital supply company invests in training for a team of sales associates to learn the details of each hospital's operations. In return, the hospital invests in a computer system that supports supply ordering. The supply company and the hospital are working to ensure the success of their long-term relationship by -

making a credible commitment.

The primary goal of the firm is to

maximize profit

The ratio Cost of goods sold/Revenue indicates how efficiently a company can

produce a good

Which of the following is an appropriate Federal Reserve action to stimulate the United States economy?

reducing the reserve requirement.

The resource-based view of a firm assumes that the

resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another.

within the context of the capital asset pricing model (CAPM), the risk measure known as beta is often computed by regressing the return of the company's stock against the

return on the market portfolio

Web 2.0 is best represented by which of the following phenomena?

social net working sites

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 forces tends to be more important in determining a firm's performance?

the actions of managers within the firm

The term "net working capital" refers to

the difference between a company's current assets—such as cash, accounts receivable/customers' unpaid bills, and inventories of raw materials and finished goods—and its current liabilities, such as accounts payable and debts

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?

the expertise acquired by the employees in the company

If a resource is rare or unique to a particular firm, then

the firm will be able to maintain a competitive advantage for a long period.

The central processing unit (CPU) in a personal computer contains the

the main memory, control unit, and arithmetic-logic unit.

The typical four-step innovation process begins with

the presentation of an idea as findings derived from basic research.

Which of the following represents an economic factor in a firm's external general environment?

the stage of the business cycle that the country is in

Which of the following approaches to assess competitive advantage is based on the 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 an external performance metric?

total return to shareholders

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

trying to be everything to everybody by combining different competitive strategies

When parts of a firm's intended strategy fall by the wayside due to unpredictable events, it turns into a(n)strategy.

unrealized

In marketing research, a firm might consider using secondary data over primary data because

usually cheaper

Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability by lowering its production costs. Thus, Crystal's competency in designing and manufacturing microprocessors will be considered a(n)resource in the VRIO framework.

valuable

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

value

Family branding refers to a group of

when a manufacturer uses the same brand name on two or more individual products.

A small number of people with complementary skills who are committed to a common purpose, a set of performance goals, and an approach for which they hold themselves mutually accountable is referred to as a

work team