STRATEGIC MGMT Exam Questions
and Answers||A+ Solution
guide(Verified)
Overall, the average level of performance in an industry is likely to be lowest when -
Answer- The threat level of all five forces is low
In an industry, the products or services provided by a firm's substitutes meet
approximately the same customer needs in the same way as the products or services
provided by the firm itself, whereas direct competition meet approximately the same
customer needs but do so in different ways. - Answer- True
Firms is a declining industry that engage in a long, systematic phased withdrawal from
the industry, extracting as much value as possible during the withdrawal period are
following a(n) ______ strategy - Answer- Harvest
It is impossible for a single firm to be a complementor of one firm and a competitor of
another. - Answer- False
The threat of existing competition tends to be below in an industry when firms are able
to meaningfully differentiate their products. - Answer- True
Incumbent firms never have cost advantages compared to new competitors. - Answer-
FALSE
Gross Profit margin is defined as: (profits - costs of goods sold)/profits. - Answer- False
Holding other factors constant, a firm can increase its return on assets by - Answer-
Decreasing inventory
Liquidity ratios are ratios with some measure of profit in the numerator and some
measure of firm size or assets in the denominator. - Answer- False
The debt to equity ratio is an example of which type of ratio - Answer- Leverage
A firm can increase its asset turnover by increasing total assets such as inventory,
holding other factors constant. - Answer- False
Increasing total debt will positively impact return on equity, holding other factors
constant. - Answer- TRUE
Activity ratios are ratios that focus on the firm's ability to meet its short-term financial
obligations. - Answer- False
, The correlation between economic and accounting measures of competitive advantage
is high. - Answer- True
A firm's _______ is a measure of its competitive advantage calculated
using information from a firm's published profit and loss balance sheet statement. -
Answer- Accounting performance
Product features as a basis for product differentiation are generally easy to duplicate -
Answer- True
Product differentiation cannot lead to high market share and low costs. - Answer- False
If an individual is considering purchasing a new Honda car or a new BMW car and
decides that it is worth paying the extra money for the prestige that is associated with
the
BMW, the additional money the customer is will to pay for the prestige is known as -
Answer- HEDONIC PRICE
By increasing the perceived value of a firm's products or services a firm will be able to -
Answer- Charge a higher price than it would otherwise be able to do
Mature industries are characterized by elements such as increasing growth in total
industry demand, significant increases in product capacity, and an overall increase in
the
profitability of firms in the industry. - Answer- FALSE
Product differentiation decreases the threat of substitutes by making a firms current
products appear more attractive that substitutes. - Answer- True
Tax advantages is an example of a costly to duplicate economies of scope. - Answer-
FALSE
The percentage of a firm's total capital that is debt times the cost of debt plus the
percentage of a firm's total capital; or equity times the cost is - Answer- Weighted
Average Cost of Capital
All of the different types of economies of scope can be realized by equity holders on
their own. - Answer- FALSE
The business within a diversified firm can never cost-of-capital advantages by being a
part of diversifies firm's portfolio. - Answer- True
The cost of equity is equal to the interest firm must pay its debt holders in order to
induce those debt holders to lend money to the firm. - Answer- FALSE
and Answers||A+ Solution
guide(Verified)
Overall, the average level of performance in an industry is likely to be lowest when -
Answer- The threat level of all five forces is low
In an industry, the products or services provided by a firm's substitutes meet
approximately the same customer needs in the same way as the products or services
provided by the firm itself, whereas direct competition meet approximately the same
customer needs but do so in different ways. - Answer- True
Firms is a declining industry that engage in a long, systematic phased withdrawal from
the industry, extracting as much value as possible during the withdrawal period are
following a(n) ______ strategy - Answer- Harvest
It is impossible for a single firm to be a complementor of one firm and a competitor of
another. - Answer- False
The threat of existing competition tends to be below in an industry when firms are able
to meaningfully differentiate their products. - Answer- True
Incumbent firms never have cost advantages compared to new competitors. - Answer-
FALSE
Gross Profit margin is defined as: (profits - costs of goods sold)/profits. - Answer- False
Holding other factors constant, a firm can increase its return on assets by - Answer-
Decreasing inventory
Liquidity ratios are ratios with some measure of profit in the numerator and some
measure of firm size or assets in the denominator. - Answer- False
The debt to equity ratio is an example of which type of ratio - Answer- Leverage
A firm can increase its asset turnover by increasing total assets such as inventory,
holding other factors constant. - Answer- False
Increasing total debt will positively impact return on equity, holding other factors
constant. - Answer- TRUE
Activity ratios are ratios that focus on the firm's ability to meet its short-term financial
obligations. - Answer- False
, The correlation between economic and accounting measures of competitive advantage
is high. - Answer- True
A firm's _______ is a measure of its competitive advantage calculated
using information from a firm's published profit and loss balance sheet statement. -
Answer- Accounting performance
Product features as a basis for product differentiation are generally easy to duplicate -
Answer- True
Product differentiation cannot lead to high market share and low costs. - Answer- False
If an individual is considering purchasing a new Honda car or a new BMW car and
decides that it is worth paying the extra money for the prestige that is associated with
the
BMW, the additional money the customer is will to pay for the prestige is known as -
Answer- HEDONIC PRICE
By increasing the perceived value of a firm's products or services a firm will be able to -
Answer- Charge a higher price than it would otherwise be able to do
Mature industries are characterized by elements such as increasing growth in total
industry demand, significant increases in product capacity, and an overall increase in
the
profitability of firms in the industry. - Answer- FALSE
Product differentiation decreases the threat of substitutes by making a firms current
products appear more attractive that substitutes. - Answer- True
Tax advantages is an example of a costly to duplicate economies of scope. - Answer-
FALSE
The percentage of a firm's total capital that is debt times the cost of debt plus the
percentage of a firm's total capital; or equity times the cost is - Answer- Weighted
Average Cost of Capital
All of the different types of economies of scope can be realized by equity holders on
their own. - Answer- FALSE
The business within a diversified firm can never cost-of-capital advantages by being a
part of diversifies firm's portfolio. - Answer- True
The cost of equity is equal to the interest firm must pay its debt holders in order to
induce those debt holders to lend money to the firm. - Answer- FALSE
