MGT 247 Sample exam ?"s

Advil's competitive advantage can be characterized as a cost advantage.

false

Firms tend to grow slower in an expansionary economy than in a contractionary economy.

false

.The cost to produce a certain product is $1 per unit irrespective of the volume of production. This cost curve exhibits no economies of scale.

true

compute economic value created per unit

willingness to pay per unit - cost per unit

The Xerox research division developed the first personal computer. Yet, that innovation did not yield Xerox a sustained competitive advantage. What part of the VRIO test failed in this case?

O

Which one of the following do buyers try to maximize?

WTP minus Price

The three levels of strategy are

corporate business functional

The razor-razorblade business model involves a set of two complementary products.

true

In the discussion of firm vs. industry effects (chapter 3), "industry effects" refer to how much of the variation in firm performance is attributable to industry-specific factors like entry barriers.

true

One of the key limitations of using accounting data to assess performance for purposes of strategic management is that they are historical.

true

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

true

a firm with a better product is likely to have a differentiation advantage

true

brand equity and copyrights are examples of valuable intangible resources

true

Which one of the following is equal to consumer surplus?

WTP minus price

Which of the following is not an example of an external environmental factor for the US airline industry?

Air fares

If the inflation-adjusted product prices in an industry are observed to decrease steadily for a long period of time, then which of the following may be true?

Buyers have the ability to backward integrate into this industry

As the CEO of a large computer manufacturer, you notice that your revenues from computer sales have been declining over the last 3 quarters. Which of the following is likely to be the cause? When analyzing each cause, assume that is the only change, and that everything else about the company remains unchanged

Consumers shifting to smaller, cheaper computers

Resources that are easier to imitate are more likely to yield a sustained competitive advantage than resources that are harder to imitate

false

If the inflation-adjusted product prices in an industry are observed to increase steadily for a long period of time, then which one of the following may be true? Explain briefly.

Firms in this industry have significant bargaining power over their buyers -All others would imply a likely decrease in prices over time.

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 increases the bargaining power of suppliers:

Suppliers can integrate forward into the buyers' industry

Which of the following is not a likely potential effect of increasing the economies of scale in an industry? Assume no other changes occur. Explain briefly.

The average industry profitability decreases -Increasing economies reduces the number of firms in the industry since each firm is larger; same argument implies fewer entrants and higher profitability.

In a recession, many companies' revenues fell (or stayed constant) but their profits rose. Which of the following explanations is not consistent with the above fact?

The companies' bargaining power over their buyers increased

Suppose the government makes it harder for foreign firms to enter a certain industry. This will increase within-industry competitive rivalry in this industry.

false

The WTP for a certain car produced by Toyota is $20,000 and the cost is $18,000. The WTP for a Starbuck's coffee is $5 and the cost is $2. Hence, Toyota has a competitive advantage over Starbucks. What is the flaw in this reasoning?

cars and coffee are not comparable -Competitive advantage makes sense only when two products that are "competing" for each other are compared.

A firm is at a competitive disadvantage if it has a significantly higher performance than its competitors.

false

Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.

false

Company A has a lower per unit cost than company B. Hence, it follows that company A has a competitive advantage over company B

false

Company A makes a better quality product than Company B, but at a higher cost. Hence, it necessarily follows that company A has a competitive advantage over company B.

false

Firm X wants to become the largest and most profitable firm in its industry in a three-state area. To do this, it should try to create the smallest possible difference between the customer WTP of its products and the cost it incurs to produce and deliver its product.

false

Industry A mostly requires general purpose assets that can be used in many industries. In contrast, industry B relies mostly on very specialized assets. Other things being equal, when demand falls, we will observe more firms exit in industry B than in industry A.

false

Keeping the willingness to pay (V) and cost (C) constant, increasing price (P) increases the value (consumer surplus) to the buyer.

false

Keeping the willingness to pay (WTP) and price (P) constant, a firm must lower its costs to increase its customers' surplus.

false

One of Rolex's tangible resources is its well-known brand name for quality timepieces.

false

Patents are generally easier to imitate than cash and commodities.

false

Until recently, switching from one cell phone service provider to another meant that consumers had to change their phone number as well. Introduction of portability (which allows consumers to retain the same phone number even if they switch service providers) is likely to have decreased competitive rivalry among cell phone providers.

false

an industry with low barriers to entry will be highly profitable.

false

consider some industry x mergers among the suppliers to industry x will increase the average profitability of firms in industry X

false

patents are generally easier to imitate than cash and commodities

false

The competitive advantage that one firm has will be short-lived in an industry in which:

perfect competition exists

A resource that is valuable, rare, and difficult to imitate, and is part of a firm that is organized to exploit that resource is likely to generate sustained competitive advantage for a firm.

true