management 454 chapter 5

Superior Screen Corp. incurs a cost of $750 to produce one unit of an OLED television. The company's management has priced the product at $1,000 in the market. Considering the technological advancement of the television, customers perceive its value to be around $1,200. What is the economic value created in this scenario?

$450

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework?

Doing so could yield significant business opportunities that could improve the living standard of people living below the poverty line around the world.

Good Grains Inc. and Village Bread Co. both produce similar whole grain loaves of bread. For both companies, the cost of producing a loaf of bread is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other?

Increase total perceived consumer benefits through differentiation.

Which of the following statements correctly describes the actions of a company applying a CSV perspective?

The company is internally focused, and its actions derive from deeply held beliefs.

In an economic context, strategy for producers is primarily about

capturing the economic value created as much as possible.

By selling a tablet at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1,200 - $1000) + $400, is the

economic value created.

The balanced-scorecard framework is a tool for strategy

implementation, not formulation.

A company employing a CSV perspective focuses on

joint company, community, and societal value creation.

Dante is a recent fashion graduate. He started his own apparel store with an investment of $300,000. In the first year he made a profit of $60,000. If he had taken up a job as a fashion editor for a magazine, he would have earned $50,000 as salary per year. Also, he could have invested his capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Dante's

opportunity cost.

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help them climb out of poverty. This best exemplifies Michael Porter's suggestion that

the largest but lowest income socioeconomic group can provide significant business opportunities.