Question 1

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?

Accepted Answer

A)   The triple-bottom-line approach
B)   The economic value creation framework
C)   The accounting profitability approach
D)   The balanced scorecardE) A) and B)
F) A) and C)

Question 2

Which of the following is NOT a limitation of the economic value creation framework?

Accepted Answer

A)   The framework falls short when managers are called upon to operationalize competitive advantage.
B)   The framework is not as effective as accounting profitability or shareholder value creation when the need for "hard numbers" arises.
C)   The framework fails to provide the foundation that will help firms decide between cost-leadership or differentiation strategies.
D)   The framework cannot be effectively applied for assessing corporate-level performance of diversified conglomerates.E) B) and D)
F) B) and C) C

Question 3

The working capital turnover of Tesva Systems Corp.is 6.0.What does this financial data suggest?

Accepted Answer

A)   For every $6.00 Tesva Systems puts to work, the company incurs a cost of $1.00.
B)   For every $6.00 Tesva Systems puts to work, the company realizes a sales of $1.00.
C)   For every dollar Tesva Systems puts to work, the company realizes $6.00 in loss.
D)   For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.E) None of the above
F) C) and D)

Question 4

Osion Electronics Inc.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?

Accepted Answer

A)   $350
B)   $450
C)   $800
D)   $200E) None of the above
F) A) and C)

Question 5

Mia has purchased an Internet package for three months, in which she can use 30 mbps Internet speed.However, for the service, she needs to pay a fee of $50 in advance irrespective of whether she uses the Internet during the service period or not.This arrangement best illustrates the _____ strategy.

Accepted Answer

A)   razor-razor-blade
B)   subscription-based
C)   pay-as-you-go
D)   freemiumE) A) and B)
F) A) and C)

Question 6

In the fiscal year 2012, BlackBerry's Cost of goods sold (COGS) /Revenue ratio was higher than that of its competitor, Apple.This implies that BlackBerry needs to work toward:

Accepted Answer

A)   driving down its costs.
B)   lowering its inventory turnover.
C)   increasing its fixed costs and decreasing its variable costs.
D)   reducing its return on revenue.E) A) and D)
F) A) and C)

Question 7

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

Accepted Answer

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

Question 8

Competitive advantage goes to the firm that achieves the:

Accepted Answer

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

Question 9

_____ most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE) .

Accepted Answer

A)   Working capital turnover
B)   Fixed asset turnover
C)   Fixed assets to equity ratio
D)   Capital leverage ratioE) A) and D)
F) A) and C) B

Question 10

The payable turnover for Apple and BlackBerry (as of fiscal year 2012) was 7.4 and 24.8 respectively.From this data we can conclude that:

Accepted Answer

A)   BlackBerry has taken a longer time to pay its creditors as compared to Apple.
B)   Apple has been more efficient than Blackberry in paying creditors and generating interest-free loans from suppliers.
C)   BlackBerry has a clear advantage over Apple as its credits are paid much faster than that of Apple.
D)   BlackBerry can extend its payment periods, while Apple is required to pay its creditors more quickly.E) B) and C)
F) C) and D)

Question 11

Which of the following statements is NOT true of competitive advantage?

Accepted Answer

A)   Competitive advantage is reflected in superior firm performance.
B)   Competitive advantage is a multifaceted concept.
C)   Competitive advantage is an absolute measure.
D)   Competitive advantage has been linked to a firm's triple bottom line.E) None of the above
F) B) and D)

Question 12

In an economic context, strategy for producers is primarily about:

Accepted Answer

A)   distributing the economic value created equally between consumers and themselves.
B)   reducing the difference between consumer's willingness to pay for a product and the cost to produce it.
C)   capturing the economic value created as much as possible.
D)   lowering producer surplus and increasing consumer surplus.E) All of the above
F) B) and C) C

Question 13

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

Accepted Answer

A)   The economic value creation model
B)   The accounting profitability model
C)   The shareholder value creation model
D)   The balanced scorecard modelE) A) and B)
F) C) and D)

Question 14

Andrew invested $200,000 in the shares of a company.At the end of a year, he had earned $7,000 as dividends on his shares along with a $1,000 appreciation in the overall value of his shares.However, if Andrew had invested the same amount on an asset, like gold, the appreciation in its value would have earned him $10,000 at the end of the year.In this scenario, which of the following is Andrew's opportunity cost?

Accepted Answer

A)   $7,000
B)   $10,000
C)   $2,000
D)   $200,000E) A) and B)
F) B) and D)

Question 15

_____ 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.

Accepted Answer

A)   Economic value created
B)   Break-even point
C)   Consumer surplus
D)   Cost of capitalE) A) and D)
F) A) and C)

Question 16

What does the ratio Selling, general, & administrative (SG&A)/Revenue indicate?

Accepted Answer

The ratio SG&A/Revenue indicates how muc...

Question 17

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

Accepted Answer

A)   Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term.
B)   These tools fail to indicate how the stock market views all available public information about a firm's expected future performance.
C)   These tools measure competitive advantage in absolute terms rather than relative terms.
D)   Only the book value of the share prices is taken into account when applying these measures, and not the market value.E) A) and D)
F) B) and D)

Question 18

A defining characteristic of the subscription-based business model is that the:

Accepted Answer

A)   user pays for only the services he or she consumes.
B)   user pays for access to a product or service whether he or she uses it during the payment term or not.
C)   basic features of a product or service are provided free of charge, but the user must pay for premium services such as advanced features or add-ons.
D)   initial product is often sold at a loss or given away for free in order to drive demand for complementary goods.E) A) and D)
F) B) and C)

Question 19

Gina 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?

Accepted Answer

A)   $900
B)   $1100
C)   $550
D)   $200E) A) and B)
F) A) and C)

Question 20

The receivables turnover of GD Products Inc.is 13.6 and that of its competitor, AP Goods Inc., is 6.0.What does this financial data primarily imply?

Accepted Answer

A)   GD Products is less efficient than AP Goods in collecting accounts receivables.
B)   AP Goods pays its creditors more quickly as compared to GD Products.
C)   GD Products collects accounts receivables faster than what AP Goods does.
D)   AP Goods has a larger value gap as compared to GD Products.E) B) and C)
F) A) and D)

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

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?

Correct Answer
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Which of the following is NOT a limitation of the economic value creation framework?

Correct Answer
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C

The working capital turnover of Tesva Systems Corp.is 6.0.What does this financial data suggest?

Correct Answer
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Correct Answer
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Mia has purchased an Internet package for three months, in which she can use 30 mbps Internet speed.However, for the service, she needs to pay a fee of $50 in advance irrespective of whether she uses the Internet during the service period or not.This arrangement best illustrates the _____ strategy.

Correct Answer
verified

In the fiscal year 2012, BlackBerry's Cost of goods sold (COGS) /Revenue ratio was higher than that of its competitor, Apple.This implies that BlackBerry needs to work toward:

Correct Answer
verified

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

Correct Answer
verified

Competitive advantage goes to the firm that achieves the:

Correct Answer
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_____ most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE) .

Correct Answer
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B

The payable turnover for Apple and BlackBerry (as of fiscal year 2012) was 7.4 and 24.8 respectively.From this data we can conclude that:

Correct Answer
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Which of the following statements is NOT true of competitive advantage?

Correct Answer
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In an economic context, strategy for producers is primarily about:

Correct Answer
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C

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

Correct Answer
verified

Correct Answer
verified

_____ 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.

Correct Answer
verified

What does the ratio Selling, general, & administrative (SG&A)/Revenue indicate?

Correct Answer
verified
The ratio SG&A/Revenue indicates how muc...
View Answer

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

Correct Answer
verified

A defining characteristic of the subscription-based business model is that the:

Correct Answer
verified

Gina 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?

Correct Answer
verified

The receivables turnover of GD Products Inc.is 13.6 and that of its competitor, AP Goods Inc., is 6.0.What does this financial data primarily imply?

Correct Answer
verified

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

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?

Correct AnswerverifiedShow Answer

Which of the following is NOT a limitation of the economic value creation framework?

Correct AnswerverifiedC

The working capital turnover of Tesva Systems Corp.is 6.0.What does this financial data suggest?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Mia has purchased an Internet package for three months, in which she can use 30 mbps Internet speed.However, for the service, she needs to pay a fee of $50 in advance irrespective of whether she uses the Internet during the service period or not.This arrangement best illustrates the _____ strategy.

Correct AnswerverifiedShow Answer

In the fiscal year 2012, BlackBerry's Cost of goods sold (COGS) /Revenue ratio was higher than that of its competitor, Apple.This implies that BlackBerry needs to work toward:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Competitive advantage goes to the firm that achieves the:

Correct AnswerverifiedShow Answer

_____ most precisely measures how well a company leverages its fixed assets, particularly property, plant, and equipment (PPE) .

Correct AnswerverifiedB

The payable turnover for Apple and BlackBerry (as of fiscal year 2012) was 7.4 and 24.8 respectively.From this data we can conclude that:

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true of competitive advantage?

Correct AnswerverifiedShow Answer

In an economic context, strategy for producers is primarily about:

Correct AnswerverifiedC

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

_____ 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.

Correct AnswerverifiedShow Answer

What does the ratio Selling, general, & administrative (SG&A)/Revenue indicate?

Correct AnswerverifiedThe ratio SG&A/Revenue indicates how muc...View AnswerShow Answer

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

Correct AnswerverifiedShow Answer

A defining characteristic of the subscription-based business model is that the:

Correct AnswerverifiedShow Answer

Gina 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?

Correct AnswerverifiedShow Answer

The receivables turnover of GD Products Inc.is 13.6 and that of its competitor, AP Goods Inc., is 6.0.What does this financial data primarily imply?

Correct AnswerverifiedShow Answer

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C

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B

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C

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The ratio SG&A/Revenue indicates how muc...
View Answer

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