Ch.9-13

which of the following is a source for horizontal differentiation?

location

which of the following is another term for "teaching to the test"?

multitasking

what term best characterizes the battle between firms to innovate first?

patent race

what term best describes an agent who is indifferent between a sure thing and a gamble of equal expected value?

risk neutral

which of the following represents total surplus in the value creation equation, (B-P) + (P-C)?

B-C

what type of strategy seeks to serve all customer groups in the market by offering a full line of related products?

broad-coverage strategy

how does a centralized organization solve coordination problems?

concentrates decision making authority in one or a small group of people

what is another term for a "win-win" business opportunity?

gains from trade

which of the following is a grade used to evaluate quality?

report card

which of the following is not an impediment to imitation?

scale diseconomies

why would a report card that measures inputs possibly lead to multitasking?

sellers may invest only in reported inputs but scale back on unreported inputs

when consumers learn about one seller at a time it is known as a:

sequential search

what kind of strategy is one by which a firm exploits its benefit or cost advantage through a higher market share rather than through high price-cost margins?

share strategy

what is a benefit of the de-centralized organization coordination solution?

takes advantage of localized information

which of the following is not a common characteristic of capabilites?

they are easy to reduce to simple algorithms or procedure guides

which of the following is false with respect to the strategy of cost leadership?

a firm following a strategy of cost leadership is following a generic strategy narrow in scope

what term best describes a targeting strategy in which the firm offers a variety or related products to a particular class of customers?

customer specialization

which of the following is not a reason for customer survey bias in quality measures?

customers often lie in consumer surveys

the steepness (slope) of an indifference curve indicates which of the following?

the tradeoff a consumer is willing to make between price and quality

why do consumers often rely on friend's advice when shopping for experience goods?

they know their friend's tastes

what is one way to measure a firm's willingness-to-pay?

value added analysis

which of the following serves as a voluntary signal of quality?

warrantee

what type fo organizational structure is typically used in planning courses for an MBA program?

decentralized

which of the following is measured by a report card that assesses product performance?

outcomes

which of the following terms best describes a phenomenon whereby, despite equal innovative capabilities, an entrant is willing to spend more to develop on innovation?

the replacement effect

which of the following terms is a concept, developed by Michael Porter, which describes the activities within the firms and across firms that add value along the way to the ultimate transacted good or service?

value chain

what term describes the process of using market prices of unfinished and semi finished goods to estimate the incremental value-created by distinctive parts of the value chain?

value-added analysis

when is a signal informative?

when it is more profitable for the high quality firm to offer it

which of the following is a resource?

workers with firm-specific expertise or know-how

which of the following terms best describes a review system in which an employee's supervisor, coworkers and subordinates are all asked to provide information regarding that employee's performance over a period of time?

360-degree peer review system

which of the following products and services depend on standards?

all of the above (cellular communications, internet, video gaming, high-definition television)

what term best describes clusters of activities that a firm does especially well in comparison with other firms?

capabilities

what term best describes the payment which must be offered to a risk-averse individual to willingly accept a gamble?

certainty equivalent

when multiple firms' price-quality positions line up along the same indifference curve offering a consumer the same amount of consumer surplus, what term best describes the situation?

consumer surplus parity

what term best describes a firm informing customers about a product's benefits?

disclosure

which of the following terms best describes the ability of a firm to maintain and adapt the capabilities that are the basis of its competitive advantage?

dynamic capabilities

what type of isolating mechanisms increase the economic power of a competitive advantage over time once a firm has acquired that advantage?

early-mover advantages

which of the following is least likely a characteristic of profit persistence in an industry?

economic profits should quickly converge to zero

what type of good is one whose quality can be assessed only after the customer has used it for a while?

experience good

under what type of strategy does a firm either offer a narrow set of varieties, serve a narrow set of customers, or do both?

focus strategy

which of the following is a concept developed by Michael Porter that describes, in broad terms, how it positions itself to compete in the market it serves?

generic strategy

which of the following is measured by a report card that assesses the components of a product?

inputs

what term describes a framework used in strategy based on resource heterogeneity which posits that for a competitive advantage to be sustainable, it must be underpinned by resource capabilities that are scare and imperfectly mobile?

resource-based theory of the firm

what term best describes firm-specific assets such as patents and trademarks, brand-name reputation, installed base, and organizational culture?

resources

which of the following is not a principal/agent relationship?

shareholder/IRS auditors of a company

what term best refers to fundamental changes tat lead to major shifts of competitive positions in a market?

shock

when consumers learn about many products ar once, it is known as a:

simultaneous search

which of the following would made an outcome report card difficult to produce?

small sample of outcome measures

which of the following terms best describes an idea, developed by Gary Hamel and C.K. Prahalad, which combines commitment to the firm's ambitions with the flexibility to change with circumstances?

strategic stretch

what term coined by Michael Porter describes a firm that pursues elements of cost leadership and benefit leadership at the same time and in the process fails to achieve either a cost advantage or a benefit advantage?

stuck in the middle

which of the following represents producer surplus in the value creation equation, (B-P) + (P-C)

P-C

conflicts of interest in the certifier market often can lead to which of the following?

certification bias

what term describes the situations when a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market?

competitive advantage

what is the perceived benefit of a product per unit consumed minus the product's monetary price?

consumer surplus

why do consumers tend to gravitate toward non-profit firms when evaluating credence goods?

consumers believe non-profit sellers will be less likely to skim on quality for profit

which of the following is the weakest example of a "shock"?

contracting to use another firm's proprietary process

what term best describes assets that are more valuable when used together than when separated?

cospecialized

benefit proximity refers to which of the following?

cost leading firms offering products with slightly less benefit

which of the following is not an example of a way a seller can increase switching costs?

creating a product line compatible with parts that are made by other manufacturers

products for which consumers cannot easily evaluate quality even after purchasing and using the product are called:

credence goods

size, growth, and character of home demand for a firm's product are examples of what?

demand conditions

what term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?

efficiency wage

which of the following is not a characteristic of performance based pay?

employees will always prefer performance based pay thus aligning principal/agent objectives

unraveling is an economic theory that describes which of the following?

even low quality sellers will disclose their product quality

products for which consumers cannot easily compare product characteristics and value information from others are called:

experience goods

which of the following terms describes a nation's position with regard to the elements (e.g. human resources, infrastructure) of production that are necessary to compete in a particular industry?

factor conditions

which of the following best describes the consumer's shopping problem?

finding the seller that offers the highest value of B-P

which of the following is least likely a technique firms can use to mitigate the free-rider problem?

firms can reduce the repeated interactions among team members so that actions depend less on what other members may have done in the past

which of the following is not a way in which consumers can benefit from report cards?

good report cards lead to more advertising

which of the following terms best describes the situation when sources of competition advantage in an industry are being created and eroded at an increasingly rapid rate?

hypercompetition

what term best describes a resource that cannot "sell itself" to the highest bidder?

imperfectly mobile

what type of curve can be used to describe the set of price-quality combinations that yields the same consumer surplus an individual?

indifference curve

what term coined by Michael porter describes a tool that can be used to show how nearly every industry can be broken down into smaller pieces known as segments?

industry segmentation matrix

which of the following is not a Legal Restrictions?

intellectual property

which of the following would not reduce gaming of report cards?

making firms pay for report card results

which of the following terms best describes a review system in which an employee and a supervisor work together to construct a set of goals for that employee?

management-by-objective system

what king of strategy is one by which a firm maintains price parity with its competitors and profits from its benefits or cost advantage primarily through high price-cost margins, rather than through a higher market share?

margin strategy

which of the following terms best describes a place in which a firm can sell its ideas for full value?

market for ideas

what term describes the price at which a consumer is indifferent between buying a product and going without it?

maximum willingness-to-pay

which of the following terms describes when firms with high scores tend to have more than their share of luck in rankings?

mean reversion

which of the following factors is an effective tool for companies to use to mitigate hidden information problems in agency relationships?

monitoring

which of the following is a tool a firm can use to combat agency problems?

monitoring, performance-based incentives, and bureaucracy (a, b, & c)

which of the following terms best describes the principle stating that when allocating effort among a variety of tasks, employees will tend to exert more effort toward those tasks that are rewarded?

multitask principle

which of the following terms describes when efforts to promote improvements on one dimension of performance are confounded by changes in other dimensions of performance?

multitasking

what product characteristic refers to the situation where consumers place higher value on a product if other consumers also use it?

network effect

which of the following statements best describes a characteristic of geographic specialization strategies?

offers a variety of products and/or sells to a variety of customer groups within a narrow geography

what term best describes the characteristic of a process if past circumstances could exclude certain evolutions in the future?

path dependence

which of the following term describes a contract by which the value of the compensation depends on the measured performance of the employee?

pay-for-performance contract

which of the following management actions reflects agency problems due to the fact that information held by the agent is hard to observe?

paying for services that seem excessive to the shareholders

which of the following terms best describes a piece of information on which an incentive contract (explicit or implicit) can be based?

performance measure

which of the following is measured by a report that assesses how a product is produced?

process

what type of performance measurement based process was used to determine Jack Welch's successor, Jeffery Immelt, as CEO of GE?

promotion tournament

what term describes the situation where a firm does exceedingly sell due to good luck or exceedingly poorly due to bad luck, but returns to normal performance following?

regression to the mean

what term best describes how a firm performs based on a comparison to another firm in its peer set within an industry?

relative performance

which of the following terms best describes a contract that guarantees an agent some payment, but provides enough incentive so that the agent does not shirk?

risk-sharing contract

select the letter corresponding to the best answer. for a given consumer, any price-quality combination along the indifference curve yields the________.

same consumer surplus

motivation bias and survivor bias are the most common in which of the following?

scorecards on horizontally differentiated products

what type of good is one whose quality is relatively easy to evaluate before purcahse?

search good

which of the following is a capability?

sourcing skills

which of the following is not an isolating mechanism that falls under the heading of early-mover advantage?

superior access to inputs or customers