Question 1

Blue Horizon Inc.is an Internet service provider.It provides a router free of charge when users sign up for a two-year wireless service plan.In this plan, users pay in advance irrespective of whether they use the Internet package during the two-year period or not.Which of the following business models does this scenario best illustrate?

Accepted Answer

A)   A combination of the razor-razor-blade model and the subscription-based business model
B)   The pay-as-you-go business model
C)   A combination of the freemium business model and the pay-as-you-go business model
D)   The direct sales business modelE) None of the above
F) A) and B)

Question 2

In the freemium business model, the:

Accepted Answer

A)   initial product is sold at a premium price and the complementary goods are given free.
B)   users are free to pay for the services in advance or after using the services.
C)   users are not charged for the basic features of a product or service, but the user must pay for premium advanced features or add-ons.
D)   users pay for access to a product or service whether they use it during the payment term or not.E) A) and B)
F) All of the above

Question 3

Which of the following ratios best expresses inventory turnover?

Accepted Answer

A)   Inventory/Working capital
B)   Annul profits/Inventory
C)   Inventory/Per unit cost of production
D)   Cost of goods sold/InventoryE) A) and B)
F) A) and C)

Question 4

Discuss the limitations associated with using accounting data to measure competitive performance.

Accepted Answer

Although accounting data tend to be read...

Question 5

How does a firm capture its producer surplus for a good or service?

Accepted Answer

A)   As cost per unit sold
B)   As profit per unit sold
C)   As earnings per share
D)   As market price per shareE) A) and B)
F) All of the above

Question 6

How are the balanced scorecard and triple-bottom-line approaches different from the traditional approaches to measure competitive advantage?

Accepted Answer

Although the three traditional framework...

Question 7

A firm has 30 million shares outstanding, and each share is traded at $100.Also, each shareholder gets a dividend of $2000 annually.In this case, the market capitalization is _____.

Accepted Answer

A)   30,000 shares, that is, 30 million shares/$100
B)   $200,000, that is, $2000 × $100
C)   $3 billion, that is, 30 million shares × $100
D)   20:1, that is, $2000/$100E) C) and D)
F) A) and D)

Question 8

Unlike the financial ratios based on accounting data, total return to shareholders is:

Accepted Answer

A)   backward-looking and historic in nature.
B)   an external performance metric.
C)   an absolute measure of competitive advantage.
D)   unaffected by market volatility or macroeconomic factors.E) None of the above
F) C) and D)

Question 9

What do you mean by opportunity costs? What are the opportunity costs for entrepreneurs?

Accepted Answer

Opportunity costs capture the value of t...

Question 10

What do you mean by triple-bottom line?

Accepted Answer

Triple bottom line is a combination of e...

Question 11

The fixed asset turnover of a company is 8.3.What do you infer from this?

Accepted Answer

A)   Every dollar spent on the company's fixed assets generates $8.30 of revenue.
B)   8.3% of the company's revenue is invested in fixed assets.
C)   The return on fixed assets will break even in 8.3 years.
D)   The cost of capital invested on fixed assets is 8.3% of the total profit.E) A) and B)
F) A) and C)

Question 12

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?

Accepted Answer

A)   Freemium
B)   Subscription-based
C)   Pay-as-you-go
D)   Razor-razor-bladeE) C) and D)
F) None of the above

Question 13

Should a firm ideally have a higher or a lower ratio of payables turnover?

Accepted Answer

Payables turnover (Revenue/Accounts paya...

Question 14

What is the relationship between producer surplus and consumer surplus?

Accepted Answer

The difference between the price charged...

Question 15

A watch-making company has priced one of its wrist watches 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 wrist watch?

Accepted Answer

A)   $150
B)   $180
C)   $170
D)   $210E) None of the above
F) A) and B)

Question 16

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Accepted Answer

A)   Total return to shareholders
B)   Earnings per share
C)   Receivables turnover
D)   Dividend yieldE) None of the above
F) B) and C)

Question 17

Which of the following equations best expresses return on revenue?

Accepted Answer

A)   Net profits/Revenue
B)   Revenue - Cost
C)   Sales/Revenue
D)   Revenue - Gross profitsE) A) and B)
F) All of the above

Question 18

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

Accepted Answer

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) C) and D)

Question 19

_____ are best described as the value of the best forgone alternative use of the resources employed.

Accepted Answer

A)   Variable costs
B)   Opportunity costs
C)   Social costs
D)   Switching costsE) None of the above
F) A) and B)

Question 20

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

Accepted Answer

A)   Land and building
B)   Accounts payable
C)   Patents
D)   Customer experienceE) All of the above
F) None of the above

Exam 5: Competitive Advantage, Firm Performance, and Business Models

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

Correct Answer
verified

Which of the following ratios best expresses inventory turnover?

Correct Answer
verified

The fixed asset turnover of a company is 8.3.What do you infer from this?

Correct Answer
verified

Unlike the financial ratios based on accounting data, total return to shareholders is:

Correct Answer
verified

What do you mean by opportunity costs? What are the opportunity costs for entrepreneurs?

Correct Answer
verified
Opportunity costs capture the value of t...
View Answer

In the freemium business model, the:

Correct Answer
verified

Should a firm ideally have a higher or a lower ratio of payables turnover?

Correct Answer
verified
Payables turnover (Revenue/Accounts paya...
View Answer

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?

Correct Answer
verified

What do you mean by triple-bottom line?

Correct Answer
verified
Triple bottom line is a combination of e...
View Answer

Correct Answer
verified

Correct Answer
verified

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Correct Answer
verified

Discuss the limitations associated with using accounting data to measure competitive performance.

Correct Answer
verified
Although accounting data tend to be read...
View Answer

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

Correct Answer
verified

Which of the following equations best expresses return on revenue?

Correct Answer
verified

How are the balanced scorecard and triple-bottom-line approaches different from the traditional approaches to measure competitive advantage?

Correct Answer
verified
Although the three traditional framework...
View Answer

What is the relationship between producer surplus and consumer surplus?

Correct Answer
verified
The difference between the price charged...
View Answer

_____ are best described as the value of the best forgone alternative use of the resources employed.

Correct Answer
verified

A firm has 30 million shares outstanding, and each share is traded at $100.Also, each shareholder gets a dividend of $2000 annually.In this case, the market capitalization is _____.

Correct Answer
verified

How does a firm capture its producer surplus for a good or service?

Correct Answer
verified

Exam 5: Competitive Advantage, Firm Performance, and Business Models

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

Correct AnswerverifiedShow Answer

Which of the following ratios best expresses inventory turnover?

Correct AnswerverifiedShow Answer

The fixed asset turnover of a company is 8.3.What do you infer from this?

Correct AnswerverifiedShow Answer

Unlike the financial ratios based on accounting data, total return to shareholders is:

Correct AnswerverifiedShow Answer

What do you mean by opportunity costs? What are the opportunity costs for entrepreneurs?

Correct AnswerverifiedOpportunity costs capture the value of t...View AnswerShow Answer

In the freemium business model, the:

Correct AnswerverifiedShow Answer

Should a firm ideally have a higher or a lower ratio of payables turnover?

Correct AnswerverifiedPayables turnover (Revenue/Accounts paya...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

What do you mean by triple-bottom line?

Correct AnswerverifiedTriple bottom line is a combination of e...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Correct AnswerverifiedShow Answer

Discuss the limitations associated with using accounting data to measure competitive performance.

Correct AnswerverifiedAlthough accounting data tend to be read...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following equations best expresses return on revenue?

Correct AnswerverifiedShow Answer

How are the balanced scorecard and triple-bottom-line approaches different from the traditional approaches to measure competitive advantage?

Correct AnswerverifiedAlthough the three traditional framework...View AnswerShow Answer

What is the relationship between producer surplus and consumer surplus?

Correct AnswerverifiedThe difference between the price charged...View AnswerShow Answer

_____ are best described as the value of the best forgone alternative use of the resources employed.

Correct AnswerverifiedShow Answer

A firm has 30 million shares outstanding, and each share is traded at $100.Also, each shareholder gets a dividend of $2000 annually.In this case, the market capitalization is _____.

Correct AnswerverifiedShow Answer

How does a firm capture its producer surplus for a good or service?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Opportunity costs capture the value of t...
View Answer

Correct Answer
verified

Correct Answer
verified
Payables turnover (Revenue/Accounts paya...
View Answer

Correct Answer
verified

Correct Answer
verified
Triple bottom line is a combination of e...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Although accounting data tend to be read...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Although the three traditional framework...
View Answer

Correct Answer
verified
The difference between the price charged...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified