BUS445 Midterm Study Guide

According to the Toyota case study, what is the Fuel Efficiency rate for Gas Hybrid Vehicle powertrain? A. 2.30 miles/liter B. 1.50 miles/liter C. 3.00 miles/liter D. 3.75 miles/liter

A. 2.30 miles/liter

Which of the following statements is true of accounting data? A. Accounting data are historical data and thus backward-looking. B. Accounting data do not have to be adjusted in any manner to compare companies with different capital structures. C. Accounting data focus mainly on intangible assets, rather than tangible assets. D. Accounting data consider off-balance sheet items, such as pension obligations of a firm.

A. Accounting data are historical data and thus backward-looking.

________ is best described as decreases in cost per unit as output increases. A. Economies of scale B. Economies of scope C. Time compression economies D. Economies of replication

A. Economies of scale

The tenet behind the triple-bottom-line is that A. a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy. B. a firm's primary objective should be increasing the total returns to its shareholders. C. a firm should solely focus on increasing the economic value created to/for its customers. D. a firm's return on revenue can be broken down into three ratios: COGS/Revenue, R&D/Revenue, and SG&A/Revenue.

A. a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a A. core competency. B. capital gain. C. markup. D. resource flow.

A. core competency.

O'Ryan Plastics maintains a manufacturing plant overseas. The local government has just been overthrown by a military group that opposes foreign influence in the country. According to the SWOT analysis, the political situation in this location is considered to be an A. external threat. B. external opportunity. C. internal weakness. D. internal strength.

A. external threat.

True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage? A. high costs involved in imitation B. inexhaustible nature C. intangibility of the company's resource D. resource mobility

A. high costs involved in imitation

A high percentage of R&D/Revenue ratio indicates a(n) A. strong focus on innovation to improve current products and services. B. inefficiency in the management to focus on new products. C. strong focus on marketing and sales to promote products and services. D. negligent investment toward research and development.

A. strong focus on innovation to improve current products and services.

Which of the following is an example of an internal transaction cost? A. the cost of maintaining a production unit B. the cost of searching for a contract manufacturer C. the cost of buying raw materials D. the cost of signing a contract with a supplier

A. the cost of maintaining a production unit

Anita has been named CEO of a popular sports apparel company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Anita most likely to make? A. what range of products the firm should offer B. how to achieve the highest levels of customer satisfaction C. whether to pursue a differentiation or cost leadership strategy D. which customer segments to target

A. what range of products the firm should offer

Each stage of the vertical value chain typically represents a distinct ________ in which a number of different firms are competing. A. economy B. industry C. customer segment D. functional department

B. industry

Which of the following best illustrates forward vertical integration? A. A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery. B. A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. C. A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. D. A chain of ice cream parlors launches a brand of toys and accessories for children.

B. A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

According to the Toyota case study, which of the following were among the top three US automaker? A. Chevrolet B. Ford C. Jeep D. Dodge

B. Ford The U.S. "Big Three" consisted of General Motors, Ford, and Chrysler.

Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola? A. It is targeting the chasm between the early adopter and early majority market segment. B. It is building new core competencies to protect and extend its current market position. C. It is leveraging existing core competencies to improve current market position. D. It is redeploying and recombining existing core competencies to compete in markets of the future.

B. It is building new core competencies to protect and extend its current market position.

What must a cost-leadership strategy accomplish to be successful? A. It must increase the firm's cost above that of its competitors while offering adequate value. B. It must reduce the firm's cost below that of its competitors while offering adequate value. C. It must increase the firm's cost above that of its competitors while offering superior value. D. It must reduce the firm's cost below that of its competitors while offering superior value.

B. It must reduce the firm's cost below that of its competitors while offering adequate value.

Which one of the following is not a product line of Clearwater Seafoods? A. Clams B. Oyster C. Lobster D. Crab

B. Oyster

_______ are the legal owners of public companies. A. Employees B. Shareholders C. Category captains D. Creditors

B. Shareholders

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position? A. Starfish improves the recipe for its most popular soda without increasing the price. B. Starfish's customers start to consider soda a commodity. C. Starfish's product has not established an acceptable standard of quality. D. Starfish introduces a new biodegradable bottle that raises cost and perceived value.

B. Starfish's customers start to consider soda a commodity.

Which of the following statements accurately brings out the difference between tangible and intangible resources? A. Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage. B. Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased. C. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. D. Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.

B. Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.

Royal Motor Corp. generates a major portion of its revenues by manufacturing luxury sports cars. However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes Royal Motor Corp.? A. a single-business firm B. a dominant-business firm C. a conglomerate D. a subsidiary

B. a dominant-business firm

How does a firm capture its producer surplus for a good or service? A. as cost per unit sold B. as profit per unit sold C. as earnings per share D. as market price per share

B. as profit per unit sold

Threadbare Industries is a new high-end textile company that has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Threadbare Industries to acquire using its capital? A. a new CEO B. brand name C. software D. a lease for a new building

B. brand name

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the A. total return to shareholders. B. economic value created. C. customer lifetime value. D. consumer surplus.

B. economic value created.

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because A. entering the aircraft manufacturing industry means violating government policies. B. entering the aircraft manufacturing industry requires huge capital investments. C. there is expected to be a huge return on investment within this industry. D. there is no credible threat of retaliation from the incumbents.

B. entering the aircraft manufacturing industry requires huge capital investments.

A differentiation strategy works best when a A. firm's differentiated products are commoditized, and costs of providing uniqueness do not rise above the customer's willingness to pay. B. firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty. C. firm's focus of competition shifts to price, and when increasing differentiation of product features do not create additional value. D. firm has tangible resources, its focus of competition shifts to price, and equivalent substitutes are readily available.

B. firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? A. increasing profits B. lowering costs C. motivating managers D. reducing risk

B. lowering costs

Gladiator Apparel is the market leader in the sportswear industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gladiator Apparel is most likely to be considered a rare resource that is contributing to its competitive advantage? A. the company's raw material supplies B. the company's design patents C. the company's plant and machinery D. the company's land and buildings

B. the company's design patents

According to the Toyota case study, what does CAFE stand for? A. The law required for safety standards B. Corporate Average Freight Efficiency C. Corporate Average Fuel Economy D. The meeting place for the auto industry

C. Corporate Average Fuel Economy The law was established in 1975 to increase fuel efficiency.

What year does Unilever target for achieving its goals? A. 2015 B. 2025 C. 2020 D. 2018

C. 2020

Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then A. Invoro will have a sustainable competitive advantage in the industry. B. Finolo and Ethver will have a VRIO resource. C. Invoro will have a resource that is valuable but no longer rare. D. Invoro will have a resource that is rare but no longer valuable.

C. Invoro will have a resource that is valuable but no longer rare.

Which of the following statements is true of the balanced-scorecard? A. It is one of the traditional approaches of measuring firm performance. B. It is a more or less a one-dimensional metric of measuring competitive advantages of a firm. C. It attempts to provide a holistic perspective on firm performance. D. Its primary focus is to base a firm's strategic goals entirely on external performance dimensions.

C. It attempts to provide a holistic perspective on firm performance.

A strategic group will typically include A. employees within a firm earning the same amount in salary. B. firms employing similar number of employees, irrespective of their industries. C. firms within the same industry. D. customers belonging to a particular socioeconomic class.

C. firms within the same industry.

In which of the following situations is the power of suppliers high in an industry? A. Suppliers offer products that are undifferentiated. B. Suppliers depend heavily on the industry for their revenues. C. Suppliers' industry is more concentrated than the industry it sells to. D. Suppliers can credibly threaten to backward integrate into the industry.

C. Suppliers' industry is more concentrated than the industry it sells to.

What does TAC stand for in the case of Clearwater Seafoods? A. Transportation Advisory Committee B. Technical Advisory Catch Liability C. Total Allowable Catch Limits D. Total Acceptable Cod Limits

C. Total Allowable Catch Limits

The balanced-scorecard can accommodate A. only short-term performance metrics. B. only long-term performance metrics. C. both short- and long-term performance metrics. D. neither short- or long-term performance metrics.

C. both short- and long-term performance metrics.

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as A. reserves. B. tangible resources. C. capabilities. D. capital gains.

C. capabilities.

To reduce the amount of time it takes to apply packaging to its finished products, North Star Foods is implementing new equipment at its production plants. By doing this, North Star is addressing a ________ in the value chain analysis. A. support activity B. secondary activity C. primary activity D. premier activity

C. primary activity

A blue ocean strategy differs from a low-cost strategy in that A. a blue ocean's research and development focus is on process technologies, and a cost-leader's focus is on product technologies. B. economies of scale are more important to a blue ocean strategy, while economies of scope are more important to a cost-leader. C. the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value. D. the focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created.

C. the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.

Which of the following statements about competitive advantage is true? A. Competitive advantage is permanent and not transitory; once gained by a firm it stays with the firm. B. Competitive advantage is a one-dimensional concept. C. Competitive advantage is an absolute measure; it is not relative. D. Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.

D. Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.

How does a sustainable strategy typically help a firm? A. It helps the firm focus solely on its financial goals. B. It reduces the need for corporate social responsibility within the firm. C. It facilitates the firm in effectively isolating its external stakeholders. D. It helps the firm achieve positive results along the social and ecological dimensions.

D. It helps the firm achieve positive results along the social and ecological dimensions.

How is a cost-leader protected from threats from powerful suppliers? A. It is more able to absorb price increases through generating higher profit margins. B. It is able to create a significant difference between perceived value and current market prices. C. It is able to create a significant difference between actual value and future market prices. D. It is more able to absorb price increases through accepting lower profit margins.

D. It is more able to absorb price increases through accepting lower profit margins.

Which of the following is a primary feature of the five forces model? A. It takes into account a firm's internal resources, capabilities, and core competencies. B. It helps managers determine the changing speed of an industry or the rate of innovation. C. It is concerned exclusively about the intensity of rivalry among direct competitors. D. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

D. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

How did Marriott use economies of scope to achieve greater economic value than its competitors? A. Marriott lowered its cost structure by focusing its production assets on one type of hotel, which increased the diversity of its hotel line and thus its differentiated appeal. B. Marriott sees increases in cost per hotel unit as number of customers increases. C. Marriott sees decreases in cost per hotel unit as number of customers increases. D. Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.

D. Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A. VRIO framework B. SWOT analysis C. BCG matrix D. PESTEL framework

D. PESTEL framework

The collapse of cod fisheries is a common example of ___________? A. Tragedy B. Tragedy of the fisheries C. Public common problem D. Tragedy of the commons

D. Tragedy of the commons

What does USLP stand for? A. Universal Sustainable Life Plan B. Unilever Sustaining Life Program C. Universal Sustainable Living Plan D. Unilever Sustainable Living Plan

D. Unilever Sustainable Living Plan

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? A. growth in the size of the market in which a firm operates B. loss of a competitor's reputation C. rise in the income of the demographic segment to which a firm caters D. increase in a firm's customer loyalty

D. increase in a firm's customer loyalty

Economies of scale are cost advantages that accrue for firms with A. high capital risks. B. low employee turnover. C. high fixed costs. D. larger output.

D. larger output.

Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? A. monopoly B. perfect competition C. monopolistic competition D. oligopoly

D. oligopoly

The smartphone division of the large consumer electronics company, True Electra Inc., has a significant market share in the fast-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra will be categorized under A. dogs. B. cash cows. C. question marks. D. stars.

D. stars.