question
A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.
answer
business-level strategy
question
Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
answer
the value and the cost position of the firm relative to its competitors
question
A firm's business strategy can lead to a competitive advantage if it allows the firm to
answer
perform different activities than its rivals.
question
When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in
answer
strategic trade-offs.
question
Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Beach Grub adopted in this scenario?
answer
differentiation
question
Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry.Which of the following generic business strategies is Bargain Styles applying?
answer
cost-leadership
question
Which of the following examples uses a focused differentiation strategy?
answer
a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle
question
Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly-qualified team members, Thomas is unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a competitive advantage?
answer
Narrow the scope of competition and focus on unique features such as the use of organic materials.
question
Tangles Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Tangles using?
answer
cost-leadership
question
Which of the following bestdescribes a strategic trade-off?
answer
the tension between value creation and the pressure to keep costs in check
question
Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a
answer
watch maker that sells high-end, premium watches
question
Airbase is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Airbase should ideally compare its strategic position with
answer
a consumer electronics company popular among price-conscious customers
question
In a focused cost-leadership strategy, a firm
answer
delivers low-cost products and services to a specific, narrow part of the market.
question
Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Swan Song is following a
answer
focused differentiation strategy.
question
Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate?
answer
Sparrow Inc. can charge a premium price on its automobiles.
question
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it
answer
gains market share from other firms.
question
) Product features, customer service, and complements are all examples of important
answer
) value drivers.
question
Which of the following is primarily a value driver?
answer
complements
question
How does availability of complements act as a value driver?
answer
Complements add value to a product when they are consumed in tandem with it.
question
Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on
answer
increasing the perceived value created for customers, which allows it to charge a premium price.
question
Fleet Foot Shoes has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver?
answer
product features
question
) Nendry is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Nendry has decided to pursue a differentiation strategy. In this case, she should
answer
focus on adding unique features to her product that customers will value.
question
When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be
answer
availability of complements.
question
Body Sync Inc. is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health checkups and a gym kit. These add-ons by themselves are not very valuable, but as a package they can enhance the perceived value of the service offerings. In this case, Body Sync's primary value driver is
answer
availability of complements.
question
Value drivers contribute to a firm's competitive advantage only if
answer
the increase in value creation exceeds the increase in costs.
question
While Fun Frames incurs a cost of $12 for a pair of eyeglasses, Highwire, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario?
answer
) Fun Frames and Highwire have achieved differentiation parity.
question
AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply?
answer
AccuroDisk creates a greater economic value than TD Storage.
question
Quick Clean Chemicals outsources its production to contract manufacturers located in underdeveloped nations where unskilled labor is available in plenty for very low wages. This has helped the company become a price leader in the chemicals industry. Which of the following is the key driver behind Quick Clean's strategic position?
answer
low-cost input factors
question
What musta cost-leadership strategy accomplish to be successful?
answer
It must reduce the firm's cost below that of its competitors while offering adequate value.
question
How is differentiation parity different from cost parity?
answer
Differentiation parity deals with value not cost.
question
Heartbeat Industries has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will mostlikely be the result of this innovation?
answer
jumps to a steeper learning curve
question
Which of the following is an accurate statement about learning effects?
answer
Learning effects occur over time as output accumulates.
question
Both BioThink Inc. and GD Pharma Inc. have discovered similar vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per unit, BioThink sells its vaccine at $90 per unit. This price differentiation has mainly been attributed to the companies' capital decisions. While BioThink used its retained earnings to develop the vaccine, GD Pharma borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays a higher interest on its capital, which makes it necessary to price its vaccine higher. Thus, the key driver for BioThink's competitive advantage is
answer
low-cost input factors.
question
In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?
answer
Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image.
question
________ is best described as decreases in cost per unit as output increases.
answer
Economies of scale
question
________ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale.
answer
Minimum efficient scale
question
When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?
answer
3,000-4,000 units
question
When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output level does the firm experience economies of scale?
answer
11,000 units
question
Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers?
answer
A major winter storm shuts down Gilroy's production for several days.
question
DiscountHaven Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against DiscountHaven's low prices. Thus, DiscountHaven has a competitive advantage due to its
answer
economies of scale.
question
When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?
answer
diseconomies of scale
question
) A firm experiences diseconomies of scale when it
answer
produces at an output level beyond the minimum efficient scale
question
Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?
answer
learning-curve effect
question
) What does it mean for a firm to have an 80 percent learning curve?
answer
Every time the cumulative output is doubled, the cost per unit will decline by 20 percent.
question
At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n)
answer
90 percent learning curve.
question
Unicorn Toys faces stiff competition from Playtime Inc., a rival firm with which Unicorn Toys has achieved differentiation parity. Both firms have invested in state-of-the art production facilities and have similar learning curves of 85 percent. Assuming neither firm can reduce the cost of its input factors, how can Unicorn Toys achieve a competitive advantage as a cost leader?
answer
Have a cumulative output that is greater than Playtime Inc.'s.
question
Combining economies of learning with the existing production technology allows a firm to
answer
move down a given learning curve.
question
The concept of a(n) ________ attempts to capture both learning effects and process improvements at firms.
answer
experience curve
question
When a firm combines experience based learning and process innovation, the firm
answer
jumps to a steeper learning curve.
question
Petra's Programming competes on cost with WonderWeb in the web design industry. Both firms operate on a 90 percent learning curve, and neither firm is capable of increasing its cumulative output any further. How might Petra's Programming achieve a cost leadership position while maintaining customer satisfaction?
answer
by incorporating new programming techniques to take advantage of experience curve effects
question
) According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
answer
innovation that allows competitors to emerge with more economical replacements
question
Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?
answer
observable product features
question
) A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the
answer
) differentiator is able to create a significant difference between perceived value and current market prices.
question
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?
answer
Starfish's customers start to consider soda a commodity.
question
How is a cost-leader protected from threats from powerful suppliers?
answer
It is more able to absorb price increases through accepting lower profit margins.
question
Due to its large sales volume and low cost structure, Quick Serve Mini-Marts enjoys a cost leadership position. Which of the following scenarios might threaten Quick Serve's competitive advantage?
answer
A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout.
question
A differentiation strategy works best when a
answer
firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.
question
) In a successful ________ strategy, the trade-offs between differentiation and low cost are reconciled.
answer
) blue ocean
question
The primary goal of a firm pursuing a blue ocean strategy should be to
answer
offer a differentiated product or service at a low cost.
question
In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Global Cine Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is True Movies Inc., which offers a customer experience comparable to that of Vibrant Movies at a price almost as low as that of Global Cine. What strategy is True Movies pursuing in this scenario?
answer
blue ocean strategy
question
Backyard BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage?
answer
eliminating brick-and-mortar locations and offering delivery from a central kitchen
question
How did Marriott use economies of scope to achieve greater economic value than its competitors?
answer
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.
question
Which of the following bestexplains why a blue ocean strategy is difficult to implement?
answer
It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost.
question
Which of the following provides an example of a firm in a red ocean?
answer
) Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.
question
) Heirloom Furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is Heirloom applying?
answer
economies of scope
question
Which of the following drivers simultaneously increases value while lowering cost?
answer
innovation
question
When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as
answer
stuck in the middle
question
) A blue ocean strategy differs from a low-cost strategy in that
answer
) 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.
question
A value curve indicates a lack of effectiveness in a firm's strategic profile when it
answer
zigzags.
question
The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves
answer
high price, high comfort, high customer service, high concessions variety, low hours of operation
question
Which of the following describes an airline that is mostlikely stuck in the middle?
A) Red Carpet Airline that offers complimentary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices.
A) Red Carpet Airline that offers complimentary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices.
answer
) Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.
question
Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the bestreason for this development?
answer
It failed to refine its strategic position over time.
question
) To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on
answer
lowering cost and increasing perceived customer benefits.
question
The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called
answer
value innovation.
question
Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to
answer
gain a market share and make up the loss in margin through increased sales.
question
It is April 2018 and Mark is a novice investor who wants to decide between purchasing shares in EagleCorp or Myna Bird Inc. In fiscal year 2017, EagleCorp's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Myna Bird Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell Mark?
answer
EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value.
question
________ precisely indicates how much of a firm's sales is converted into profits.
answer
Return on revenue
question
The ratio Cost of goods sold/Revenue indicates how efficiently a company can
answer
produce a good.
question
A high percentage of R&D/Revenue ratio indicates a(n)
answer
strong focus on innovation to improve current products and services.
question
________ is best described as a measure of how effectively capital is being used by a firm to generate revenue.
answer
Working capital turnover
question
The ratio of SG&A/Revenue is an indicator of a firm's focus on
answer
marketing and sales to promote its products and services.
question
The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?
answer
For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.
question
) Which of the following statements correctly compares Apple and Microsoft in 2016?
answer
Apple had a higher return on invested capital than Microsoft
question
Which of the following statements is true of accounting data?
answer
Accounting data are historical data and thus backward-looking.
question
Which of the following competitively important assets is typically excluded from a firm's balance sheet?
answer
customer experience
question
Elena is the CEO of Geode Technologies, a consumer electronics manufacturer. Last year, Geode's return on invested capital (ROIC) was 11.6 percent, while Geode's closest competitor, NorthWest Tech, had an ROIC of 17 percent. Which of the following factors might Elena use t
answer
Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent.
question
________ are the legal owners of public companies.
answer
shareholders
question
Which of the following is an external performance metric?
answer
total return to shareholders
question
From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the
answer
return on risk capital.
question
Return on risk capital primarily includes
answer
stock price appreciation plus dividends received over a specific period.
question
________, which is the return on risk capital, includes stock price appreciation plus
answer
Total return to shareholders
question
A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is
answer
$3 billion, that is, 30 million shares × $100.
question
The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data?
answer
The firm's number of outstanding shares is 25 million.
question
Which of the following expressions accurately describes market cap?
answer
It is the product of the number of outstanding shares and the share price.
question
Unlike the financial ratios based on accounting data, total return to shareholders is
answer
an external performance metric.
question
You are the CEO of a home appliance manufacturing company and have recently undertaken a review of your company's strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed?
answer
Compare the current valuations with past valuations to determine a trend.
question
Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?
answer
Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term.
question
________ is 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.
answer
Economic value created
question
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
answer
economic value created.
question
Both Saturn Technologies and Granite Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Saturn Technologies charges a higher price than Granite Inc. does, but it still sells a higher number of phones. What does this imply?
answer
Saturn Technologies creates more economic value than Granite Inc. does.
question
A watchmaking company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?
answer
$170
question
A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?
answer
$180
question
The difference between the price charged for a product and the cost to manufacture it is referred to as the
answer
producer surplus.
question
________ denotes the dollar amount a consumer would attach to a good or service.
answer
) Value
question
The value a consumer attaches to a product or service is captured in the
answer
consumer's maximum willingness to pay for it.
question
After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?
answer
the value (V) the consumer attaches to the dress
question
How does a firm capture its producer surplus for a good or service?
answer
as profit per unit sold
question
Serena paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?
answer
$200
question
Economic value creation is best expressed as
answer
) consumer surplus plus firm profit.
question
Mobius Electronics incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario?
answer
$450
question
By selling a laptop 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 ($1200 - $1000) + $400, is the
answer
economic value created.
question
In an economic context, strategy for producers is primarily about
answer
capturing the economic value created as much as possible.
question
Competitive advantage goes to the firm that achieves the
answer
largest economic value created.
question
Happy Foods and General Grains both produce similar puffed rice breakfast cereals. For both companies, the cost of producing a box of cereal 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?
answer
Increase total perceived consumer benefits through differentiation.
question
The cost of capital to create a product is a fixed cost because it is
answer
unaffected by consumer demand.
question
________ are best described as the value of the best forgone alternative use of the resources employed.
answer
Opportunity costs
question
) Zelda is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Genevieve's
answer
opportunity cost.
question
When SW International declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as SW International's
answer
opportunity cost.
question
Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?
answer
In economic value perspective, analysts not only consider historical costs, but also opportunity costs.
question
The Lynx Manufacturing Company produces components used in electronic toys. In fiscal year 2017, Lynx earned an accounting profit of $3 million. However, Lynx's production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true?
answer
Lynx earned an economic profit of $500,000.
question
Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?
answer
the shareholder value creation model
question
Which of the following statements is true of the balanced-scorecard?
answer
It attempts to provide a holistic perspective on firm performance.
question
Which of the following is an advantage of the balanced-scorecard?
answer
It allows managers to translate a firm's vision into measureable operational goals.
question
The balanced-scorecard can accommodate
answer
both short- and long-term performance metrics.
question
Erin is the manager of gardening supplies wholesaler SpringTime Inc. The company's vision is to become the leading supplier of gardening materials west of the Mississippi River. In assessing the firm's current state, Erin has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Erin has determined that SpringTime must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced scorecard approach, what is wrong with Erin's thinking?
answer
She has failed to account for external factors such as customer perceptions and shareholder perceptions.
question
Which of the following is a disadvantage of the balanced-scorecard approach?
answer
It provides limited guidance about which metrics to choose.
question
Which of the following approaches to assess competitive advantage is based on the view that noneconomic factors can have a significant impact on a firm's financial performance?
answer
the triple-bottom-line approach
question
The tenet behind the triple-bottom-line is that
answer
a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
question
The management team for Volcanic Batteries came up with the following vision statement: "Volcanic Batteries will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is mostlikely based on the
answer
) triple-bottom-line approach.
question
How does a sustainable strategy typically help a firm?
answer
It helps the firm achieve positive results along the social and ecological dimensions.
question
Which of the following scenarios exemplifies a sustainable strategy under the triple bottom line approach?
answer
Impervious Plastics reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment.
question
Which of the following is an advantage of a triple-bottom-line approach?
answer
The approach takes an integrative and holistic view in assessing a company's performance.
question
The top management at Sunshine Vitamins, through rigorous testing, ensures that the company develops and sells vitamins that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Sunshine Vitamins are applying the ________ approach to measure firm performance.
answer
triple-bottom-line
question
The translation of strategy into action primarily takes place in a firm's
answer
business model.
question
During the process of formulating an effective business model, a firm's managers should first
answer
transform their strategy of how to compete into a blueprint of actions and initiatives.
question
You are the founder of Shadow Skateboards, and you are considering methods of gaining and sustaining a competitive advantage. Which of the following changes has the bestchance of quickly creating a sustainable advantage?
answer
allowing customers to upload their own image designs and help assemble the finished product at retail locations
question
________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price.
answer
Wholesale
question
Mega Media sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called
answer
an agency.
question
Which of the following scenarios bestillustrates bundling?
answer
Fresh Seeds Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.
question
Threadless allows customers to submit their own designs and to vote on which designs they would like to see printed on a T-shirt. This business uses a ________ technique.
answer
crowdsourcing
question
Polygon sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Polygon implementing?
answer
razor-razor-blade
question
Aguilar Industries has produced a new piece of technology that will monitor the soil moisture in a user's garden and send a notification to an app on the user's phone when it is time to water their plants. The goal of this inexpensive technology is to entice users to purchase Aguilar's more expensive automated watering system, so that they can trigger the watering process from the app on their phones. Which business model is most likely to help Aguilar Industries accomplish its goals?
answer
freemium
question
A defining characteristic of the subscription-based business model is that the
answer
user pays for access to a product or service whether he or she uses it during the payment term or not.
question
Shark Fin Golf Club requires its members to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?
answer
subscription-based
question
A defining characteristic of the pay-as-you-go business model is that the
answer
users pay for only the services they consume.
question
Unplug Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this bestillustrate?
answer
pay-as-you-go
question
Cloudlink is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this bestillustrate?
answer
freemium
question
Rock Bottom Tiles has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Rock Bottom will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Rock Bottom to ask in order to put its strategy into action?
answer
What activities need to be performed to create and deliver the offerings to consumers?
question
Which of the following statements about competitive advantage is true?
answer
Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.
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