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Which of the following competitively important assets is typically excluded from a firm's balance sheet?


A) land and building
B) accounts payable
C) patents
D) customer experience

E) None of the above
F) All of the above

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Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?


A) When the need for "hard numbers" arises, managers and analysts rely on economic value creation perspective to measure competitive advantage.
B) In economic value perspective, analysts not only consider historical costs, but also opportunity costs.
C) Arriving at the economic value created is easy because determining the value of a good in the eyes of consumers is a simple task.
D) It is the most efficient tool for assessing corporate-level competitive advantage of highly diversified companies with large product portfolios.

E) A) and C)
F) None of the above

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The tenet behind the triple-bottom-line is that


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

E) A) and D)
F) A) and C)

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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.

E) B) and C)
F) C) and D)

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What are the advantages of the balanced scorecard?

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The balanced-scorecard approach is popul...

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Which of the following is a disadvantage of the balanced-scorecard approach?


A) It fails to link the strategic vision to responsible parties within the organization.
B) It fails to translate the vision into measureable operational goals.
C) It provides limited guidance for designing and planning business processes.
D) It provides limited guidance about which metrics to choose.

E) B) and C)
F) C) and D)

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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 best chance of quickly creating a sustainable advantage?


A) devoting significant resources to researching and developing new products that will be more durable than competitors'
B) automating the manufacturing process to reduce production costs
C) allowing customers to upload their own image designs and help assemble the finished product at retail locations
D) switching to a just-in-time inventory system to reduce inventory costs

E) A) and B)
F) B) and D)

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What are the drawbacks of using total return to shareholders and firm market capitalization to measure firm performance?

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Although measuring firm performance thro...

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The ratio of SG&A/Revenue is an indicator of a firm's focus on


A) researching to produce innovative products and services.
B) marketing and sales to promote its products and services.
C) producing a good in an efficient manner.
D) creating a good that is cost-effective.

E) B) and C)
F) A) and B)

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Which of the following statements is true of accounting data?


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

E) B) and C)
F) A) and D)

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A defining characteristic of the pay-as-you-go business model is that the


A) users pay for only the services they consume.
B) users pay for access to a product or service whether they use it during the payment term or not.
C) initial product is often sold at a loss in order to drive demand for complementary goods.
D) the basic features of a service are provided free of charge, but the user must pay for premium services.

E) C) and D)
F) A) and C)

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Which of the following is an advantage of the balanced-scorecard?


A) It is a tool for both strategic formulation and strategic implementation.
B) It allows managers to translate a firm's vision into measureable operational goals.
C) The balanced-scorecard is independent of the skills of the managers responsible for its implementation.
D) Its implementation is a one-time effort and does not require continuous tracking of metrics or updating of strategic objectives.

E) A) and C)
F) All of the above

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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?


A) Lynx earned an economic profit of $5.5 million.
B) Lynx earned an economic profit of $500,000.
C) Lynx suffered an economic loss of $500,000.
D) Lynx suffered an economic loss of $2.5 million.

E) A) and C)
F) A) and D)

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________ 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) Break-even point
C) Consumer surplus
D) Cost of capital

E) C) and D)
F) A) and C)

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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?


A) agency
B) wholesale
C) pay-as-you-go
D) freemium

E) B) and D)
F) B) and C)

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What pricing options does a firm have when the difference between V, the consumer's willingness to pay, and C, the cost to produce the good or service, is large?

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A large difference between V, the consum...

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Which of the following statements about competitive advantage is true?


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

E) A) and B)
F) B) and C)

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Competitive advantage goes to the firm that achieves the


A) largest economic value created.
B) lowest producer surplus.
C) highest payable turnover.
D) highest Cost of goods sold/Revenue ratio.

E) None of the above
F) A) and C)

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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.

E) A) and B)
F) A) and C)

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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?


A) Why does the business model create value?
B) What activities need to be performed to create and deliver the offerings to consumers?
C) How are the offerings to the customers created?
D) Who are the main stakeholders who will be performing the activities?

E) C) and D)
F) B) and D)

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