EXAM 1: GMU MIS 303 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

EXAM 1: GMU MIS 303 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS

Question:
1. Why do firms exist?
Answer:
Coase proposed that transaction was not costless, therefore firms emerged as an alternative to the market in
order to reduce costs

Question:
2. markets
Answer:
locations where we can transact to make gains from trade

Question:
3. hierarchies
Answer:
locations where we vertically integrate transactions to reduce costs

Question:
4. firm
Answer:
a bundle of capabilities and resources which attempt to trade, in the marketplace, in order to capture value

Question:
5. Firms have the capabilities they have because
Answer:
shareholders have traded money for a percent ownership stake in the firm base on the expectation of future
revenues

Question:
6. Purpose of a firm
Answer:
Maximize value of shares in the long term

Question:
7. How do you maximize profit?
Answer:
develop a business strategy which creates maintainable, sustainable, competitive advantage

Question:
8. Business Strategy
Answer:
firms plan to achieve a specific set of goals

, Question:
9. What are the sources of competitive advantage?
Answer:
in the short term, inefficiency (pricing/speed) or imitable acts. In the long term, resources the firm has that
are rare or difficult for competitors to acquire

Question:
10. Why is lowering prices a temporary competitive advantage?
Answer:
competitors can easily do the same thing

Question:
11. set of factors that can lead to a sustainable competitive advantage:
Answer:
-if it affects the firms value in a positive way
-If competitors can't copy it
-if the firm can't keep it up (continuous investment)

Question:
12. sustainable competitive advantage comes from the identification of unique abilities. This is also known
as?
Answer:
taking a resource based view of the firm

Question:
13. assets
Answer:
what you have
-physical assets, intellectual property, etc

Question:
14. Capabilities
Answer:
what you can do with assets
-skills, techniques, know-how, etc.

Question:
15. For resources to be a basis of long term competitive strategy, they have to be..
Answer:
VRIN V-valuable R-rare I-imperfectly imitable N-Non-substitutable

Question:
16. if a competitive strategy does not have VRIN resources it is NOT
Answer:
sustainable