BADM 4970 CH. 4-6 Exam
Questions and Answers 100%
PASS
What determines a company's profitability - CORRECT ANSWER-1. The
amount of value customers place on the company's goods/services
2. The company's cost of production
Consumer Surplus - CORRECT ANSWER-The price a company charges for a
good/service is typically less than the value placed on that good/service by the
average customer. This is so because the average customer captures some of that
value in the form of a consumer surplus.
V-P
Customer's Reservation Price - CORRECT ANSWER-The price that reflects that
individual's assessment of the value of a product.
P-C - CORRECT ANSWER-Company's profit margin
V-C - CORRECT ANSWER-Value created by the company
, How do you measure profitability as measured by return on invested capital? -
CORRECT ANSWER-P-C/capital
Example of Value Creation (compare two companies) - CORRECT ANSWER-
Toyota and GM
According to Michael Porter, what are the two basic strategies for creating value
and attaining a competitive advantage in an industry? - CORRECT ANSWER-
Low Cost and Differentiation
According to Michael Porter, low cost and differentiation are the two basic
strategies for what? - CORRECT ANSWER-For creating value and attaining a
competitive advantage in an industry
Four factors that build competitive advantage - CORRECT ANSWER-Efficiency
Quality
Innovation
Customer responsiveness
All interrelated
Efficiency formula - CORRECT ANSWER-outputs/inputs
Employee Productivity - CORRECT ANSWER-output per employee
Capital productivity - CORRECT ANSWER-output per unit of invested capital
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law
Questions and Answers 100%
PASS
What determines a company's profitability - CORRECT ANSWER-1. The
amount of value customers place on the company's goods/services
2. The company's cost of production
Consumer Surplus - CORRECT ANSWER-The price a company charges for a
good/service is typically less than the value placed on that good/service by the
average customer. This is so because the average customer captures some of that
value in the form of a consumer surplus.
V-P
Customer's Reservation Price - CORRECT ANSWER-The price that reflects that
individual's assessment of the value of a product.
P-C - CORRECT ANSWER-Company's profit margin
V-C - CORRECT ANSWER-Value created by the company
, How do you measure profitability as measured by return on invested capital? -
CORRECT ANSWER-P-C/capital
Example of Value Creation (compare two companies) - CORRECT ANSWER-
Toyota and GM
According to Michael Porter, what are the two basic strategies for creating value
and attaining a competitive advantage in an industry? - CORRECT ANSWER-
Low Cost and Differentiation
According to Michael Porter, low cost and differentiation are the two basic
strategies for what? - CORRECT ANSWER-For creating value and attaining a
competitive advantage in an industry
Four factors that build competitive advantage - CORRECT ANSWER-Efficiency
Quality
Innovation
Customer responsiveness
All interrelated
Efficiency formula - CORRECT ANSWER-outputs/inputs
Employee Productivity - CORRECT ANSWER-output per employee
Capital productivity - CORRECT ANSWER-output per unit of invested capital
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law
