Mock midterm

Question 1

Which of the following differentiation basis has the LOWEST score on complexity?

Answer 1

Timing

Question 2

Which statement about the VRIO analysis is INCORRECT?

Answer 2

The “organization” question typically determines the difference between a temporary and a sustained competitive advantage.

Question 3

Which industry leads to MORE collusion?

Answer 3

Absence of a market leader

Question 4

Two food trucks sell fries on a festival. Goldenfries sells 1500 portions and has a total revenue of 5000 euro and total costs of 3000 euro. Moonfries sells 1000 portions for 3 euro each and has 1 euro costs per portion. Visitors of the festival have 1 euro consumer surplus per consumed portion independently of the seller.
Which statement is CORRECT?

Answer 4

Goldenfries creates, during the festival, a larger economic value added than Moonfries.

Question 5

Determine the height of the net present value quotient of a real option for which it is known that the decision has to be taken in 9 years, discounted cashflows are 100, discounted investment is 90, risk free rate is 5% and standard deviation is 0.2.

Answer 5

Larger than 0.79

Question 6

Which of the following statements about entry barriers is CORRECT?

Answer 6

Cost saving proprietary technolgies increase entry barriers.

Question 7

Which of the following strategies presumes that the other player will portray the same strategy?

Answer 7

Puppy-dog-ploy

Question 8

What should NOT be expected from a firm succesfully pursuing a cost leadership strategy?

Answer 8

Bad quality products

Question 9

Factors determining the threat of substitute products do NOT include

Answer 9

Numbers of competitors in the industry

Question 10

Which can be a source of cost advantage

Answer 10

High-volume production

Question 11

Managers are comparing two different options. Both options have the same capital expenditures related to the investment, and the projected cash flows are also the same. However, the options differ in terms of uncertainty and the time available to defer the decision to invest. In option 1, the investment can be deferred for 3 years and the uncertainty in the cash flow is very high. In option 2, the investment can only be deferred for 1 year, but the uncertainty is much lower.

Which of the options is MORE valuable?

Answer 11

Option 1

Question 12

Bargaining power of buyers is high in the case of:

Answer 12

Small number of buyers

Question 13

Which type of structure fits best with a single business firm focusing on cost leadership?

Answer 13

A functional structure