MBA 703 STANDARD EXAMS ANSWERS AND
QUESTIONS SET A+
✔✔economies of scale - ✔✔when the cost of an investment can be spread across
increasing units of production or in serving a growing customer base
✔✔Switching Costs and Data - ✔✔Costs consumer incur by switching providers
✔✔Sources of Switching Costs - ✔✔learning costs,
information and data,
financial commitment,
contractual commitments,
search costs,
loyalty programs
✔✔In order to win customers away from a rival - ✔✔ensure that their value added
exceeds the incumbent's value plus any perceived customer switching costs
✔✔Commodities - ✔✔products or services that are nearly identically offered from
multiple vendors.
✔✔network effects - ✔✔Also known as Metcalfe's Law, or network externalities. When
the value of a product or service increases as its number of users expands.
✔✔virtuous adoption cycle - ✔✔occurs when network effects exist that make a product
or service more attractive (increases benefits, reduces costs) as the adopter base
grows.
✔✔distribution channels - ✔✔the path through which products or services get to
customers
✔✔Porter's Five Forces - ✔✔1. competitive rivalry
2. threat of entry
3. threat of substitutes
, 4. supplier power
5. buyer power
✔✔price transparency - ✔✔the ease with which consumers can find out the variety of
prices in a market
✔✔information asymmetry - ✔✔situation in which one party is more informed than
another because of the possession of private information
✔✔The more differentiated and valuable an offering - ✔✔the more the internet shifts
bargaining power to sellers
✔✔In markets where commodity products are sold - ✔✔the internet can increase buyer
power by increasing price transparency
✔✔Productivity Paradox - ✔✔Our inability to unequivocally document any contributions
of IT is caused by:
1. Mismeasurement of outputs and inputs
2. Lags due to learning and adjustment
3. Redistribution and dissipation of profits
4. Mismanagement of information technology
✔✔Two primary methods for obtaining competitive advantage - ✔✔1. cost advantage
2. differentiation advantage
✔✔Primary Value Chain Activities - ✔✔Functions that directly impact the creation of a
product or service. Goal of a primary activity is to add value that is greater than the cost
of that activity
1. inbound logistics
2. operations
3. outbound logistics
4. marketing and sales
5. service
✔✔Goal of a primary value chain activity - ✔✔To add value that is greater than the cost
of that activity
✔✔Inbound logistics - ✔✔processes that bring in raw materials and other needed inputs
✔✔Operations - ✔✔Any part of a business that converts the raw materials into a final
product or service
✔✔Outbound logistics - ✔✔Functions required to get the product out to the customer.
QUESTIONS SET A+
✔✔economies of scale - ✔✔when the cost of an investment can be spread across
increasing units of production or in serving a growing customer base
✔✔Switching Costs and Data - ✔✔Costs consumer incur by switching providers
✔✔Sources of Switching Costs - ✔✔learning costs,
information and data,
financial commitment,
contractual commitments,
search costs,
loyalty programs
✔✔In order to win customers away from a rival - ✔✔ensure that their value added
exceeds the incumbent's value plus any perceived customer switching costs
✔✔Commodities - ✔✔products or services that are nearly identically offered from
multiple vendors.
✔✔network effects - ✔✔Also known as Metcalfe's Law, or network externalities. When
the value of a product or service increases as its number of users expands.
✔✔virtuous adoption cycle - ✔✔occurs when network effects exist that make a product
or service more attractive (increases benefits, reduces costs) as the adopter base
grows.
✔✔distribution channels - ✔✔the path through which products or services get to
customers
✔✔Porter's Five Forces - ✔✔1. competitive rivalry
2. threat of entry
3. threat of substitutes
, 4. supplier power
5. buyer power
✔✔price transparency - ✔✔the ease with which consumers can find out the variety of
prices in a market
✔✔information asymmetry - ✔✔situation in which one party is more informed than
another because of the possession of private information
✔✔The more differentiated and valuable an offering - ✔✔the more the internet shifts
bargaining power to sellers
✔✔In markets where commodity products are sold - ✔✔the internet can increase buyer
power by increasing price transparency
✔✔Productivity Paradox - ✔✔Our inability to unequivocally document any contributions
of IT is caused by:
1. Mismeasurement of outputs and inputs
2. Lags due to learning and adjustment
3. Redistribution and dissipation of profits
4. Mismanagement of information technology
✔✔Two primary methods for obtaining competitive advantage - ✔✔1. cost advantage
2. differentiation advantage
✔✔Primary Value Chain Activities - ✔✔Functions that directly impact the creation of a
product or service. Goal of a primary activity is to add value that is greater than the cost
of that activity
1. inbound logistics
2. operations
3. outbound logistics
4. marketing and sales
5. service
✔✔Goal of a primary value chain activity - ✔✔To add value that is greater than the cost
of that activity
✔✔Inbound logistics - ✔✔processes that bring in raw materials and other needed inputs
✔✔Operations - ✔✔Any part of a business that converts the raw materials into a final
product or service
✔✔Outbound logistics - ✔✔Functions required to get the product out to the customer.
