Question 1

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

Accepted Answer

Although measuring firm performance thro...

Question 2

Which of the following business models has been traditionally used by the magazine and newspaper industry?

Accepted Answer

A)   Subscription-based
B)   Razor-razor-blade
C)   Pay-as-you-go
D)   FreemiumE) A) and D)
F) All of the above

Question 3

True Vibgyor Inc.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 True Vibgyor implementing?

Accepted Answer

A)   Subscription-based
B)   Razor-razor-blade
C)   Pay-as-you-go
D)   Direct salesE) B) and D)
F) A) and B)

Question 4

Which of the following statements about competitive advantage is true?

Accepted Answer

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) None of the above
F) B) and C)

Question 5

Both Vibrant Phones Inc.and Oryxo Inc.incur a cost of $200 to manufacture a single unit of a cell phone.However, Vibrant Phones creates more economic value than what Oryxo does.What does this imply?

Accepted Answer

A)   Vibrant Phones and Oryxo have achieved a competitive parity.
B)   Oryxo has a competitive advantage over Vibrant Phones.
C)   Vibrant Phones sells its products at a better price than Oryxo.
D)   Oryxo's offering has greater total perceived consumer benefits than Vibrant Phones's offering.E) All of the above
F) A) and B)

Question 6

Discuss the limitations of the economic value creation framework.

Accepted Answer

As with any tool to assess competitive a...

Question 7

Explain the freemium business model with the help of an example.

Accepted Answer

Students' answers may vary.The freemium ...

Question 8

Return on risk capital primarily includes:

Accepted Answer

A)   stock price appreciation plus dividends received over a specific period.
B)   consumer surplus plus firm profit.
C)   account receivables plus account payables.
D)   economic value created by a firm plus reservation price.E) B) and D)
F) None of the above

Question 9

Define value.How is it captured?

Accepted Answer

Value denotes the dollar amount (V)a con...

Question 10

Economic value creation is best expressed as _____.

Accepted Answer

A)   producer surplus minus consumer surplus
B)   consumer surplus minus cost of production
C)   consumer surplus plus firm profit
D)   producer surplus plus firm profitE) B) and C)
F) A) and D)

Question 11

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 _____.

Accepted Answer

A)   consumer surplus
B)   total return to shareholders
C)   customer lifetime value
D)   economic value createdE) B) and C)
F) None of the above

Question 12

Describe the razor-razor-blade business model.

Accepted Answer

In this business model, the initial prod...

Question 13

What are the advantages of the balanced scorecard?

Accepted Answer

The balanced-scorecard approach is popul...

Question 14

The translation of strategy into action primarily takes place in a firm's _____.

Accepted Answer

A)   mission statement
B)   executive summary
C)   business model
D)   code of conductE) None of the above
F) A) and B)

Question 15

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the _____.

Accepted Answer

A)   return on risk capital
B)   economic value created
C)   consumer surplus
D)   inventory turnoverE) None of the above
F) A) and C)

Question 16

What are the three financial ratios that constitute return on revenue?

Accepted Answer

Return on revenue is broken do...

Question 17

Which of the following is an external performance metric?

Accepted Answer

A)   Return on revenue
B)   Fixed assets turnover
C)   Inventory turnover
D)   Total return to shareholdersE) C) and D)
F) A) and D)

Question 18

_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

Accepted Answer

A)   Return on revenue
B)   Risk capital
C)   Working capital turnover
D)   Revenue per employeeE) A) and D)
F) All of the above

Question 19

In an economic context, what should a firm's strategy focus on?

Accepted Answer

The relationship between consumer and pr...

Question 20

Describe the subscription-based business model.

Accepted Answer

The subscription-based model has been tr...

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

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 _____.

Correct AnswerverifiedShow Answer

Both Vibrant Phones Inc.and Oryxo Inc.incur a cost of $200 to manufacture a single unit of a cell phone.However, Vibrant Phones creates more economic value than what Oryxo does.What does this imply?

Correct AnswerverifiedShow Answer

True Vibgyor Inc.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 True Vibgyor implementing?

Correct AnswerverifiedShow Answer

What are the advantages of the balanced scorecard?

Correct AnswerverifiedThe balanced-scorecard approach is popul...View AnswerShow Answer

Economic value creation is best expressed as _____.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAlthough measuring firm performance thro...View AnswerShow Answer

Discuss the limitations of the economic value creation framework.

Correct AnswerverifiedAs with any tool to assess competitive a...View AnswerShow Answer

In an economic context, what should a firm's strategy focus on?

Correct AnswerverifiedThe relationship between consumer and pr...View AnswerShow Answer

_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

Correct AnswerverifiedShow Answer

The translation of strategy into action primarily takes place in a firm's _____.

Correct AnswerverifiedShow Answer

Which of the following statements about competitive advantage is true?

Correct AnswerverifiedShow Answer

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the _____.

Correct AnswerverifiedShow Answer

What are the three financial ratios that constitute return on revenue?

Correct AnswerverifiedReturn on revenue is broken do...View AnswerShow Answer

Describe the subscription-based business model.

Correct AnswerverifiedThe subscription-based model has been tr...View AnswerShow Answer

Which of the following business models has been traditionally used by the magazine and newspaper industry?

Correct AnswerverifiedShow Answer

Explain the freemium business model with the help of an example.

Correct AnswerverifiedStudents' answers may vary.The freemium ...View AnswerShow Answer

Return on risk capital primarily includes:

Correct AnswerverifiedShow Answer

Which of the following is an external performance metric?

Correct AnswerverifiedShow Answer

Define value.How is it captured?

Correct AnswerverifiedValue denotes the dollar amount (V)a con...View AnswerShow Answer

Describe the razor-razor-blade business model.

Correct AnswerverifiedIn this business model, the initial prod...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The balanced-scorecard approach is popul...
View Answer

Correct Answer
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Correct Answer
verified
Although measuring firm performance thro...
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Correct Answer
verified
As with any tool to assess competitive a...
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Correct Answer
verified
The relationship between consumer and pr...
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Return on revenue is broken do...
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Correct Answer
verified
The subscription-based model has been tr...
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Correct Answer
verified

Correct Answer
verified
Students' answers may vary.The freemium ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Value denotes the dollar amount (V)a con...
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Correct Answer
verified
In this business model, the initial prod...
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