Ch. 5

A company's stock price increases if the company ____

Grows faster than expected

A balanced scorecard is a tool for strategy ____

Implementation

Economic value created is the ___ the cost to produce a product/service and the amount the buyer is willing to pay for it

Difference between

The balanced scorecard approach helps managers balance ___ goals (2 things)

Financial and strategic

From the view of a shareholder, the measure of competitive advantage that matters most is return on

Risk capital

What dimensions make up the triple bottom line?

1. Ecological 2. Economic 3. Social

What are two off-balance sheet items?

1. Operating leases 2. Pension obligations

What are two performance dimensions that matter in judging the effectiveness of a firm's strategy?

1. Qualitative 2. Quantitative

What 2 frameworks work to provide a more holistic perspective on firm performance?

1. Triple bottom line 2. Balanced scorecard

The acronym BHAG stands for?

Big Hairy Audacious Goals

A firm uses the ____ business model when it sells a set of products that have different levels of demand for a price less than their total combined prices

Bundling

The financial metric RIOC stands for return on invested _____

Capital

Public companies are required by law to release detailed accounting data, which enables ____

Comparative analysis of firms

When implementing the razor-razorblade strategy, companies make their profit from ____

Complementary goods

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be ____

Correlated

Since about the year 2000, assets not captured in firm's accounting data have become ____ to a firm's competitive advantage

Much more important

When a firm does favorably compared to similar firms, it is said to ___

Outperform

Another name for producer surplus is ____

Profit

Economic value creation is calculated as ___

The sum of consumer and producer surplus

What is a true statement about shareholders of a public company?

They can be individuals or organizations

Wholesaling is considered a ____ business model

Traditional

The freemium business model can be considered an evolutionary variation on the razor-razor-blade model. T/F

True

Compared to the past, the importance of firm's intangibles has increased. Therefore the importance of a firm's book value has ____ as part of the firm's total stock market valuation

Decreased

Premium services cost money with complimentary basic services, is a description of which type of business model?

Freemium

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to _____

Gain market share

To determine how well money devoted to sales support is being spent, managers look at the marketing intensity ratio, which is also known as ____

SG&A/Revenue

In order to determine market capitalization, what do you multiply?

Share price and number of outstanding shares

The legal owners of publicly traded companies are called ___

Shareholders

According to ___ theory, a firm exists within an interconnected network of constituencies, both within and outside the organization, and the firm is responsible to these constituencies

Stakeholder

When a person decides to quit their job and start a company, the salary that person gave up when quitting can be considered ____

An opportunity cost