question
Which of the following is an element of good strategy?
A) an approach that underestimates the competition
B) a guiding policy to address employee satisfaction
C) a summary of the firm's history within its industry
D) a set of coherent actions to implement the firm's guiding policy
A) an approach that underestimates the competition
B) a guiding policy to address employee satisfaction
C) a summary of the firm's history within its industry
D) a set of coherent actions to implement the firm's guiding policy
answer
D) a set of coherent actions to implement the firm's guiding policy
question
The best example of a firm's external stakeholder is a(n)
A) shareholder who has invested money in the firm but is not employed by the firm.
B) board member from a wholly-owned foreign subsidiary of the firm.
C) employee of the firm who is responsible for a contract project.
D) government agency that regulates the prices of products manufactured by the firm.
A) shareholder who has invested money in the firm but is not employed by the firm.
B) board member from a wholly-owned foreign subsidiary of the firm.
C) employee of the firm who is responsible for a contract project.
D) government agency that regulates the prices of products manufactured by the firm.
answer
A) shareholder who has invested money in the firm but is not employed by the firm.
question
Which of the following statements with regard to industry structures is true?
A) They are stable over time, not dynamic.
B) A consolidated industry tends to be more profitable than a fragmented one.
C) Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power.
D) Having a large number of competitors generally equates to higher industry profitability
A) They are stable over time, not dynamic.
B) A consolidated industry tends to be more profitable than a fragmented one.
C) Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power.
D) Having a large number of competitors generally equates to higher industry profitability
answer
B) A consolidated industry tends to be more profitable than a fragmented one.
question
Due to resource immobility, a critical assumption in the resource-based model of a firm, the
A) resource bundles of a firm can be easily imitated by competitors.
B) competencies and capabilities of all firms in an industry are similar.
C) competitive advantage of a firm exists for a short period of time.
D) resource differences between firms last for a long time.
A) resource bundles of a firm can be easily imitated by competitors.
B) competencies and capabilities of all firms in an industry are similar.
C) competitive advantage of a firm exists for a short period of time.
D) resource differences between firms last for a long time.
answer
D) resource differences between firms last for a long time.
question
Facing stiff competition in the e-reader market, Sumac Industries wants to protect its competitive advantage by increasing the perceived value of its reader. Sumac's best strategy to accomplish this would be to
A) lower the retail price of its e-reader to attract new customers.
B) increase the cost of production to add innovative new features.
C) try to imitate some of the features found in competing products.
D) highlight the number of celebrities who use Sumac e-readers.
A) lower the retail price of its e-reader to attract new customers.
B) increase the cost of production to add innovative new features.
C) try to imitate some of the features found in competing products.
D) highlight the number of celebrities who use Sumac e-readers.
answer
D) highlight the number of celebrities who use Sumac e-readers.
question
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 rare but no longer valuable.
D) Invoro will have a resource that is valuable but no longer rare.
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 rare but no longer valuable.
D) Invoro will have a resource that is valuable but no longer rare.
answer
D) Invoro will have a resource that is valuable but no longer rare.
question
Which of the following is an external performance metric?
A) fixed assets turnover
B) return on revenue
C) inventory turnover
D) total return to shareholders
A) fixed assets turnover
B) return on revenue
C) inventory turnover
D) total return to shareholders
answer
D) total return to shareholders
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.
A) Economic value created
B) Consumer surplus
C) Break-even point
D) Cost of capital
A) Economic value created
B) Consumer surplus
C) Break-even point
D) Cost of capital
answer
A) Economic value created
question
The difference between the price charged for a product and the cost to manufacture it is referred to as the
A) reservation price.
B) producer surplus.
C) break-even price.
D) consumer surplus.
A) reservation price.
B) producer surplus.
C) break-even price.
D) consumer surplus.
answer
B) producer surplus.
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?
A) $450
B) $800
C) $200
D) $350
A) $450
B) $800
C) $200
D) $350
answer
A) $450
question
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 superior value.
C) It must reduce the firm's cost below that of its competitors while offering adequate value.
D) It must increase the firm's cost above that of its competitors while offering superior value.
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 superior value.
C) It must reduce the firm's cost below that of its competitors while offering adequate value.
D) It must increase the firm's cost above that of its competitors while offering superior value.
answer
C) It must reduce the firm's cost below that of its competitors while offering adequate value.
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?
A) network effect
B) black-swan event
C) learning-curve effect
D) time compression diseconomies
A) network effect
B) black-swan event
C) learning-curve effect
D) time compression diseconomies
answer
C) learning-curve effect
question
11) In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness?
A) decline in the firm's market share
B) fall in the purchasing power of the firm's customers
C) irregularity in the raw materials supply throughout the industry
D) increased competition in the industry where the firm operates
A) decline in the firm's market share
B) fall in the purchasing power of the firm's customers
C) irregularity in the raw materials supply throughout the industry
D) increased competition in the industry where the firm operates
answer
A) decline in the firm's market share
question
14) The primary goal of a firm pursuing a blue ocean strategy should be to
A) build a reputation of being the lowest-cost producer in its chosen industry.
B) create the highest perceived value in its respective industry.
C) achieve a less steep learning curve.
D) offer a differentiated product or service at a low cost
A) build a reputation of being the lowest-cost producer in its chosen industry.
B) create the highest perceived value in its respective industry.
C) achieve a less steep learning curve.
D) offer a differentiated product or service at a low cost
answer
B) create the highest perceived value in its respective industry.
question
15) Combining economies of learning with the existing production technology allows a firm to
A) jump to a less steeper learning curve.
B) jump to a flatter experience curve.
C) move down a given learning curve.
D) move up a given experience curve
A) jump to a less steeper learning curve.
B) jump to a flatter experience curve.
C) move down a given learning curve.
D) move up a given experience curve
answer
C) move down a given learning curve.
question
Which of the following is an example of a firm's resources?
A. routine activities like order taking and invoicing customers, performed in a firm
B. assistance available from the government in the form of rules and regulations
C. assets such as land and buildings owned by a firm
D. liabilities such as bills payables and short-term debts
A. routine activities like order taking and invoicing customers, performed in a firm
B. assistance available from the government in the form of rules and regulations
C. assets such as land and buildings owned by a firm
D. liabilities such as bills payables and short-term debts
answer
C. assets such as land and buildings owned by a firm
question
Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lacks. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?
A. resource equality
B. resource heterogeneity
C. resource mobility
D. resource maturity
A. resource equality
B. resource heterogeneity
C. resource mobility
D. resource maturity
answer
B. resource heterogeneity
question
The "Gold Crisps" potato wafers manufactured by True Foods Inc. have been the highest selling wafers in the market. Though the market for wafers is flooded with competitors, True Foods Inc. has been able to maintain its market position for a long time. This is mainly attributed to the unique taste of the wafers that comes from the unique natural flavoring used by the company. This competency of True Foods Inc. will be considered as a(n) _____ resource in the VRIO framework.
A. inexhaustible
B. rare
C. intangible
D. virtual
A. inexhaustible
B. rare
C. intangible
D. virtual
answer
B. rare
question
Onyxo Inc., a consumer electronics company, is the leading manufacturer of LCD televisions. LCD technology has been its core competency and the company holds 80 percent shares in that market. However, Onyxo Inc.'s competitors have now moved on to advanced technologies like LED and 3-D televisions. According to the dynamic capabilities perspective, what should Onyxo Inc. do?
A. Onyxo Inc. should start working on LED and 3-D television technologies to adapt its core competency to suit the external environment.
B. Onyxo Inc. should stick to its existing core competency, that is LCD technology, as it is the best in that segment.
C. Onyxo Inc. should take proactive steps to reduce the causal ambiguity and socially complexity of its core competency.
D. Onyxo Inc. should work on enhancing the mobility of its core competency
A. Onyxo Inc. should start working on LED and 3-D television technologies to adapt its core competency to suit the external environment.
B. Onyxo Inc. should stick to its existing core competency, that is LCD technology, as it is the best in that segment.
C. Onyxo Inc. should take proactive steps to reduce the causal ambiguity and socially complexity of its core competency.
D. Onyxo Inc. should work on enhancing the mobility of its core competency
answer
A. Onyxo Inc. should start working on LED and 3-D television technologies to adapt its core competency to suit the external environment.
question
Which of the following management tools will help determine whether a firm's resources, capabilities, and competencies are strengths or weaknesses?
A. Porter's five forces analysis
B. PESTEL analysis
C. VRIO framework
D. Ansoff's matrix
A. Porter's five forces analysis
B. PESTEL analysis
C. VRIO framework
D. Ansoff's matrix
answer
C. VRIO framework
question
Which of the following accurately summarizes the difference between the resources and capabilities of a firm?
A. Resources are tangible; capabilities are tangible and intangible.
B. Resources are intangible; capabilities are tangible.
C. Resources are tangible and intangible; capabilities are intangible.
D. Resources are tangible; capabilities are intangible.
A. Resources are tangible; capabilities are tangible and intangible.
B. Resources are intangible; capabilities are tangible.
C. Resources are tangible and intangible; capabilities are intangible.
D. Resources are tangible; capabilities are intangible.
answer
C. Resources are tangible and intangible; capabilities are intangible
question
Clean Rinse Shampoo has been the leader of hair-cleaning products for about 40 years. However, this company relied too long on its competency without refining or upgrading its product. As a result, other shampoo companies that began to offer organic shampoo gained a competitive advantage over Clean Rinse. This case is an example of:
A. resource flow.
B. dynamic capabilities.
C. core rigidity.
D. value chain.
A. resource flow.
B. dynamic capabilities.
C. core rigidity.
D. value chain.
answer
C. core rigidity.
question
Which of the following management tools is usually done first to determine the external opportunities and threats that affect a firm?
A. Porter's five forces analysis
B. PESTEL analysis
C. VRIO framework
D. Ansoff's matrix
A. Porter's five forces analysis
B. PESTEL analysis
C. VRIO framework
D. Ansoff's matrix
answer
B. PESTEL Analysis
question
_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue.
A. Return on revenue
B. Risk capital
C. Working capital turnover
D. Revenue per employee
A. Return on revenue
B. Risk capital
C. Working capital turnover
D. Revenue per employee
answer
C. Working capital turnover
question
The working capital of a small home-based business is $200,000. The revenues generated account to $600,000, and the profits incurred are $300,000. What would be the company's working capital turnover?
A. 3, that is, $600,000/$200,000
B. $300,000, that is, $600,000 - $300,000
C. 2, that is, $600,000/$300,000
D. $100,000, that is, $300,000 - $200,000
A. 3, that is, $600,000/$200,000
B. $300,000, that is, $600,000 - $300,000
C. 2, that is, $600,000/$300,000
D. $100,000, that is, $300,000 - $200,000
answer
A. 3, that is, $600,000/$200,000
question
In 2014, Apple turned over its inventory more than 53 times. In stark contrast, Microsoft turned over its inventory only about 10 times during the year. Which of the following best explains this difference?
A. Apple had a more effective management of its global supply chain than Microsoft.
B. Microsoft had a stronger demand for its tablet computer than Apple did for its tablet computer.
C. Apple operated its own production facilities and therefore had lower production costs than Microsoft.
D. Microsoft had production facilities in countries with lower production costs than Apple
A. Apple had a more effective management of its global supply chain than Microsoft.
B. Microsoft had a stronger demand for its tablet computer than Apple did for its tablet computer.
C. Apple operated its own production facilities and therefore had lower production costs than Microsoft.
D. Microsoft had production facilities in countries with lower production costs than Apple
answer
A. Apple had a more effective management of its global supply chain than Microsoft.
question
12. From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the
A. return on risk capital.
B. economic value created.
C. consumer surplus.
D. inventory turnover.
A. return on risk capital.
B. economic value created.
C. consumer surplus.
D. inventory turnover.
answer
A. return on risk capital.
question
The value a consumer attaches to a product or service is captured in the
A. least price a consumer is willing to pay for it.
B. consumer's maximum willingness to pay for it.
C. expenses incurred by the firm in manufacturing it.
D. difference between the price charged for it and the cost to produce it.
A. least price a consumer is willing to pay for it.
B. consumer's maximum willingness to pay for it.
C. expenses incurred by the firm in manufacturing it.
D. difference between the price charged for it and the cost to produce it.
answer
B. consumer's maximum willingness to pay for it.
question
When using the balanced-scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?
A. How do customers view us?
B. How do we reduce the economic value created?
C. What core competencies do we need?
D. How do shareholders view us?
A. How do customers view us?
B. How do we reduce the economic value created?
C. What core competencies do we need?
D. How do shareholders view us?
answer
B. How do we reduce the economic value created?
question
Janet is the CEO of Far Sight Inc., which uses a triple-bottom-line approach. As a result, Janet will tend to
A. view superior financial performance as the sole objective of her firm.
B. expect her company to be socially responsible.
C. use fossil fuels to run her company's production plants.
D. ignore the ecological dimension for her company.
A. view superior financial performance as the sole objective of her firm.
B. expect her company to be socially responsible.
C. use fossil fuels to run her company's production plants.
D. ignore the ecological dimension for her company.
answer
B. expect her company to be socially responsible.
question
Which of the following business models has been traditionally used by the magazine and newspaper industry?
A. subscription-based
B. razor-razor-blade
C. pay-as-you-go
D. freemium
A. subscription-based
B. razor-razor-blade
C. pay-as-you-go
D. freemium
answer
A. subscription-based
question
Pilot Games Inc. allows users to play the trial versions of its games without any charge. However, users have to purchase the games to access the upgraded version of the games with advanced features. Which of the following business models is Pilot Games using in this scenario?
A. freemium
B. subscription-based
C. pay-as-you-go
D. razor-razor-blade
A. freemium
B. subscription-based
C. pay-as-you-go
D. razor-razor-blade
answer
A. freemium
question
Wear Crush Inc. is an apparel company known for its affordable clothes that follows a cost-leadership strategy. In this scenario, Wear Crush should ideally compare its strategic position with
A. a company that sells wristwatches at affordable prices.
B. a luxury apparel company that sells designer clothes.
C. an apparel company popular among price-conscious customers.
D. an online company that sells customized pet clothing.
A. a company that sells wristwatches at affordable prices.
B. a luxury apparel company that sells designer clothes.
C. an apparel company popular among price-conscious customers.
D. an online company that sells customized pet clothing.
answer
C. an apparel company popular among price-conscious customers.
question
Evia Cycles Inc. incurs $400 to manufacture a bicycle, and the maximum price customers are willing to pay is $550 per unit. Archer Cycles Inc., its competitor, incurs $450 to manufacture a similar bicycle, and customers are willing to pay a maximum price of $620 for it. What does this indicate?
A. Both Evia Cycles and Archer Cycles have achieved differentiation parity.
B. Evia Cycles has a competitive advantage over Archer Cycles.
C. Archer Cycles has created a greater economic value than Evia Cycles.
D. Both Evia Cycles and Archer Cycles have achieved cost parity.
A. Both Evia Cycles and Archer Cycles have achieved differentiation parity.
B. Evia Cycles has a competitive advantage over Archer Cycles.
C. Archer Cycles has created a greater economic value than Evia Cycles.
D. Both Evia Cycles and Archer Cycles have achieved cost parity.
answer
C. Archer Cycles has created a greater economic value than Evia Cycles.
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?
A. 9,000 units
B. 11,000 units
C. 13,000 units
D. 15,000 units
A. 9,000 units
B. 11,000 units
C. 13,000 units
D. 15,000 units
answer
B. 11,000 units
question
Allure is a cosmetic brand that pursues a cost-leader strategy. Which of the following statements is true of the cosmetic brand?
A. It appeals to the price-conscious buyers.
B. Its primary value driver is product uniqueness.
C. It charges a premium price for its products.
D. It directly competes against luxury cosmetic brands that charge premium prices.
A. It appeals to the price-conscious buyers.
B. Its primary value driver is product uniqueness.
C. It charges a premium price for its products.
D. It directly competes against luxury cosmetic brands that charge premium prices.
answer
A. It appeals to the price-conscious buyers.
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?
A. liquidation strategy
B. product diversification strategy
C. market penetration strategy
D. blue ocean strategy
A. liquidation strategy
B. product diversification strategy
C. market penetration strategy
D. blue ocean strategy
answer
D. blue ocean strategy
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
A. stuck in the middle.
B. buried at the bottom.
C. burned at the top.
D. caught in the transition.
A. stuck in the middle.
B. buried at the bottom.
C. burned at the top.
D. caught in the transition.
answer
A. stuck in the middle.
question
Which of the following is primarily a cost driver?
A. product features
B. customer service
C. complements
D. economies of scale
A. product features
B. customer service
C. complements
D. economies of scale
answer
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