BUSN485- Exam 1
A strategy that has provided competitive advantages in the past will most likely do so in the future.
False
In ______, a firm frames a guiding policy to address the competitive challenge.
Strategy formulation
When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output does the firm experience economies of scale?
11,000 units
How does a firm capture its producer surplus for a good or service?
As profit per sold
Tough Guy's Inc is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health check-ups and a gym kit. These add-ons by themselves are not very valuable, but as a package, they can enhance the perceived value of the service offerings. In this case, Tough Guy's primary value driver is...
Availability of complements
A firm always has a competitive disadvantage when its return on invested capital is..
Below the industry average
In the multiplex industry, Home Again Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Movies-for-less Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is Just Right Films Inc., which offers a customer experience comparable to that of Home Again Movies at a price almost as low as that of Movies-for-less. What strategy is Just Right Films pursuing in this scenario?
Blue Ocean Strategy
Upper management at ComfyShoe Inc., a manufacturer of insoles for shoes, wants to work on improving the product lines it already has without taking on other challenges at this time. Which of the following vision statements reflects that goal?
ComfyShoe Inc. wants to be the best manufacturer of insoles in the industry
Which of the following statements is true of customer-oriented visions?
Customer-oriented vision statements are not the same as listening to your customer.
A successful strategy details a set of goal-directed actions that managers make to gain and sustain a competitive advantage; in order to create this strategy, managers must focus on three pillars. Which of the following below is not one of these pillars?
Execution
A company's total asset base consists of its current assets plus plant, property, and equipment (PPE).
False
A good strategy is a set of actions that enables a firm to achieve its own internal goals without regard to the external environment
False
A manager's only responsibility is to monitor and assess the performance of his or her firm.
False
Product-oriented vision statements are better suited than customer-oriented vision statements for helping companies to adapt to changes in the external environment.
False
The three tasks of the AFI strategy framework are to assemble a prototype, find a buyer, and incorporate feedback.
False
Power Juice is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Power Juice has decided to pursue a differentiation strategy. In this case, she should....
Focus on adding unique features to her product that customers will value
The working capital turnover of Complete Systems Corp. is 6.0. What does this financial data suggest?
For every dollar Complete Systems puts to work, the company realizes $6.00 of sales
Fun Robotics produces components used in electronic toys. In fiscal year 2017, Fun Robotics earned an accounting profit of $3 million. However, Fun Robotics' production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true?
Fun Robotics earned an economic profit of $500,000
You are the manager in charge of setting the strategy for a new fast-casual restaurant. Which of the following questions would be appropriate for you to ask during the analysis phase of the AFI strategy framework?
How have consumer preferences in the fast-casual restaurant industry changed in the last five years?
As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to...
How to implement business strategy
Why is it important for firms in the same industry to choose distinct but different strategic positions?
In strategic positioning, firms stake out a unique position within an industry that allows the firm to provide value to customer, while controlling costs. Competition focuses on creating value for customers (through lower price or better services and selection) rather than destroying rivals. Even though two firms compete in the same industry, both can win if they have a distinct and well-executed competitive strategy
Leslie owns a large portion of Hue Apparel's stock. However, she is not employed by the company. In this scenario, Leslie is the company's ...
Internal stakeholder
What does "total return to shareholders" mean?
Investors are primarily interested in a company's total return to shareholders, which is the return on risk capital, including stock price appreciation plus dividends received over a specific period. Unlike accounting data, total return to shareholders is an external performance metric. It essentially indicates how the stock market views all available public information about a firm's past, current state, and expected future performance (with most of the weight on future growth expectations).
Do vision statements help firms gain and sustain competitive advantage?
It depends, because the effectiveness of vision statements differ by type.
How is a cost-leader protected from threats from powerful suppliers?
It is more able to absorb price increases through accepting lower profit margins.
How do experience-curve and learning-curve effects help a business gain competitive advantage?
Learning by doing can drive down cost. As individuals and teams engage repeatedly in an activity, whether writing computer code, developing new medicines, or building submarines, they learn from their cumulative experience.In the experience curve, in contrast, we now change the underlying technology while holding cumulative output constant. Process innovation is the use of a new method or technology to produce an existing product. The concept of an experience curve attempts to capture both learning effects and process improvements. In this perspective, economies of learning allow movement down a given learning curve based on current production technology. By moving further down a given learning curve than competitors, a firm can gain a competitive advantage.
____ is the best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale
Minimum efficient scale
onathan is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly qualified team members, Jonathan is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage?
Narrow the scope of competition and focus on unique features such as the use of organic materials.
____ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.
Organizational core values
Better Capsules is a highly successful vitamin manufacturer. At the close of its most recent fiscal year, the company's balance sheets showed cash holdings of $110 million. Which of the following actions will provide the most benefit for stakeholders?
Reinvest profits into expanding the company and creating more jobs
BuyNow Inc is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially lower than its competitors because of minimal investments in operation and administration. In this scenario, BuyNow Inc, has most likely been able to provide superior value and cost control through.
Strategic positioning
In strategic management, strategists engage in three pillars. Which of the following is not one of these three pillars?
The unification of major goals and objectives
Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
The value and the cost position of the firm relative to its competitors
Which of the following is a customer-oriented vision?
To enable businesses to improve their employee communications
Differentiate between a firm's intended, realized, and emergent strategies.
Top-level executives design an intended strategy—the outcome of a rational and structured, top-down strategic plan. An emergent strategy describes any unplanned strategic initiative undertaken by mid-level employees of their own volition. If successful, emergent strategies have the potential to influence and shape a firm's strategy. A firm's realized strategy is generally a combination of its top-down strategic intentions and bottom-up emergent strategy.
The major value drivers that managers have at their disposal include product features, customer services, and complements.
True
When the value that a customer attaches to a good or service exceeds the price paid for the good or service, this is a consumer surplus.
True
Both UTech Inc. and Mirco Corp. incur a cost of $200 to manufacture a single unit of a cell phone. However, UTech Inc. charges a higher price than Mirco Corp. does, but it still sells a higher number of phones. What does this imply?
UTech Inc. creates more economic value than Mirco Corp. does.
The CEO of EveryCar was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable, low-maintenance vehicles that could be bought by low-income households. Which of the following does this example demonstrate?
Upper-echelons theory
When do employees fail to adopt the organizational values of a firm?
When the top managers in the firm are merely paying lip service to the firm's stated values
The fact that both Whole Foods (a high-end grocery store) and Aldi (an inexpensive grocery store) have a competitive advantage in the grocery store industry is an indication that....
following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization
The difference between the price charged for a product and the cost to manufacture it, is referred to as the..
producer surplus
The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are..
tangible
Visionary companies are able to outperform their competitors because...
they provide more aspirational visions
