CHPT 5 TEST 2
Vibrant Phones sells its products at a better price than Oryox
Vibrant Phones creates more economic value than what Oryx does
$3 billion, that is, 30 million share X $100
30 million shares outstanding, each traded at $100. Each shareholder gets a dividend of $2000 annually.The market capitalization is # of outstanding shares X share price
users pay for only the services they consume
A defining characteristic of the pay-as-you-go business model is that
strong focus on innovation to improve current products and services
A high percentage of R&D/Revenue ratio indicates a
Baby Boomers
At present, ____ make up the oldest cohort of the workforce
combination of razor-razor-blade and subscription
Blue Horizon provides router free of charge with 2 year wireless service plan
driving down its cost
Blackberry has a higher cost of goods sold/revenue ration than Apple. Blackberry was
largest economic value created (increase the difference between the value created and the cost to produce it)
Competitive advantage goes to the firm that achieves the
customer experience
Competitively important assets that it typically excluded from a firm's balance sheet
$200
Consumer surplus -- value the consumer attaches to the product - what they pay for it (V-P)
transform their strategy of HOW to compete into a blueprint of actions and initiatives
During the process of formulating an effective business model, a firm's managers should first
consumer surplus + firm profit ($800-$600) + ($600-$350) = $450
Economic value creation is best expressed as
return on risk capital
From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the
as a profit per unit sold
How does a firm capture its producer surplus for a good or service? - price charged for the product - cost to produce it (P-C)
It helps the firm achieve positive results along the social and ecological dimensions
How does a sustainable strategy typically help a firm?
capturing the economic value created as much as possible
In an economic context, strategy for producers is primarily about
users are not charged for the basic features of a product or service, but the user must pay for premium advanced features or add-ons
In the freemium business model, the
cost of goods sold/inventory
Inventory turnover
expect her company to be socially responsible
Janet is a 23-year old employee at DR Products. As a millennial, she will tend to
It is a tool which can be effectively used by managers for both strategic implementation and strategic formulation
NOT an advantage of the balanced scoreboard
$170
Reservation price is the willingness to pay for a product - same as amount of total perceived consumer benefits ($180)
stock price appreciation plus dividends received over a specific period
Return on risk capital primarily includes
True Machine's profit margin is higher than that of One Electrona
TM COGS/Revenue is 66% and OE is 74%. What do you infer from this financial data?
unaffected by consumer demand
The cost of capital to create a product is a fixed cost because it is
Every dollar spent on the company's fixed assets generates $8.30 of revenue
The fixed asset turnover of a company is 8.3. What do you infer from this?
the firm's number of outstanding shares is 25 million
The market capitalization of a public company is $5 billion. Each share of the company is trades at $200. What do you infer from this financial data?
a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy
The tenet behind the triple bottom line is that
business model
The translation of strategy into action primarily takes place in a firm's
for every dollar Tesva Systems puts to work, the company realizes $6 of sales
The working capital of TSC is 6.0. What does this financial data suggest?
accounting data are historical data and which backward looking
True of accounting date
How do we reduce the economic value created?
When using the balanced scoreboard approach to assess a firm's performance, which of the following is NOT a key question that managers need to answer?
The approach takes an integrative and holistic view in assessing a company's performance
Which of the following IS an advantage of a triple-bottom line approach?
the triple-bottom-line approach - three dimensions, economic, social, and ecological, make up the triple bottom line
Which of the following approaches to assess competitive advantage based on the view that noneconomic factors can have a significant impact on a firm's financial performance?
subscription-based - the users pay for access to a product or service whether he or she uses it during the payment term or not
Which of the following business models have been traditionally used by the magazine and newspaper industry
a software company with over 300 shareholders - 10-K
Which of the following businesses is required by law to make its data available to the public?
the balanced scorecard model
Which of the following frameworks used to measure competitive advantage relies on both an internal and external view of a firm?
The framework fails to provide the foundation that will help decide between cost-leadership or differentiation strategies
Which of the following is NOT a limitation of the economic value creation framework?
the difference between the price charged and the firm's cost
Which of the following is NOT an accurate expression of the economic value created per unit of a product sold?
Competitive advantage is an absolute measure
Which of the following is NOT true of competitive advantage?
Risk capital invested in a firm can be legally recovered if the firm goes bankrupt
Which of the following is NOT true of risk capital?
market volatility makes it difficult to assess firm performance through these measures, particularly in the short term
Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?
In economic value perspective, analysts not only consider historical costs, but also opportunity costs
Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?
total return to shareholders
Which of the following is an external performance metric - return on risk capital also, includes stock prices appreciation plus dividends received over a specific period
competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value
Which of the following statements about competitive advantage is true?
working capital turnover
best described as a measure of how effectively capital is being used by a firm to generate revenue revenue/working capital = $600,000/$200,000 = 3
crowdsourcing - open call to volunteers - encourages general community - Threadless
best described as a process in which a group of people voluntarily performs tasks that were traditionally completed by a firm's employees
economic value created
best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it $600-$400=$200
opportunity costs
best described as the value to the best forgone alternative use of the resources employed
value
denotes the dollar amount a consumer would attach to a good or service - captured in the consumer' maximum willingness to pay for it ($100 is value the consumer attaches to the dress)
receivables turnover
indicates how fast a firm is collecting the credit amount extended by a firm to its customers revenue/accounts receivable - higher the faster you collect (GD Products collects faster)
payable turnover
indicates how much a firm benefits from interest-free loans extended by its suppliers and creditors - Apple vs Blackberry -- Apples is more efficient
shareholders
legal owners of a public company
fixed asset turnover
most precisely measure how well a company leverage its fixed assets, particularly property, plan, and equipment (PPE) revenue/fixed assets
Return on revenue Net Profits/Revenue
precisely indicates how much of a firm's sales is converted into profits
- it attempts to provide a holistic perspective on firm performance - It allows managers to translate a firm's vision into measurable operational goals (ADVANTAGE)
the balanced scoreboard model
producer surplus
the difference between the price charged for a product and the cost to manufacture it is referred to as the
razor-razor-blade
the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods
