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

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Question 31

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

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Question 32

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When GD Inc.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 GD Inc.'s

A) producer surplus.
B) consumer surplus.
C) opportunity cost.
D) social cost.

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

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Question 33

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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?

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?

Manufacturers of electric fragrance diffusers sell the electric outer device at an extremely low price,sometimes even at a loss.However,they make their money on the product by charging a premium on the perfume refills that have to be replaced regularly.Which of the following business models does this best illustrate?

Which of the following statements about competitive advantage is true?

Kerry the Kangaroo Inc.specializes in producing and selling a stuffed kangaroo named Kerry.Although the stuffed kangaroo has sold well,the clothes that can be bought to dress the kangaroo have not sold as well as expected.As a result,Kerry the Kangaroo has warehouses full of hats,pants,sweaters,and shoes to dress Kerry.This firm used a _____ to determine how much of its capital is tied up in these accessory items.

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

Which of the following statements is true of the balanced-scorecard?

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?

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

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?

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

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?

Nicki 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?

A high percentage of R&D/Revenue ratio indicates a(n)

Using the _____ approach,managers audit their company's fulfillment of its social and ecological obligations to stakeholders such as employees,customers,suppliers,and communities as conscientiously as they track its financial performance.

In the freemium business model,the

Jenny liked a pair of sapphire earrings and thought they would cost around $1,000.She was surprised to find that the price of the earrings was $1,500.However,she decided to buy the earrings anyway.This scenario describes

Which of the following is an advantage of a triple-bottom-line approach?