BEC IV BLAKE CPA

Question 1

Porter’s 5 Forces

Answer 1

Barrier to market entry

Bargaining power of customers

Existence of substitute products

Market competitiveness

Bargaining power of suppliers

Question 2

Two types of Competitive advantage

Answer 2

1) Differentiation
or
2) Cost leadership

Question 3

Differentiation advantage

Answer 3

May be best obtained by a firm that builds Market Share or increases (not decreases) its Price

Question 4

Cost Leadership advantage

Answer 4

Firm enjoys a competitive advantage when it is able to match the prices of its rivals

OR has a cost structure that is LOWER than its rivals

Question 5

SWOT Analysis - Take an honest and unbiased look at the company and assess what the company has evaluating internal and external factors.

Answer 5

Strengths, weaknesses (Internal), Opportunities & Threats (External)

Strengths - Core competencies: the areas where the firm thrives (Internal)

Weaknesses - Areas that need improvement, placing the company at a disadvantage - FOCUS on Internal Factors

Opportunities - Favorable factors with potential to improve current positioning

Threats - Factors that arise in a firm’s external environment that have the potential to hurt its business - relates to EXTERNAL FACTORS

Question 6

When the supply of and demand for a good both increase what is the effect on equilibrium price? If impact on price is indeterminate?

Answer 6

Equilibrium price may increase, decrease or remain unchanged

Question 7

When demand for a product is inelastic, A decrease in price would have what effect on the number of units sold & total revenue?

Answer 7

The % change in price will be GREATER than the % change in Quantity, Total REVENUE WILL FALL

Question 8

Veracity of Data

Answer 8

Trustworthiness of your data

Question 9

Variety of Data

Answer 9

Type or source of data that is being analyzed

Question 10

Velocity of Data

Answer 10

Speed or flow of data

Question 11

Volume of Data

Answer 11

Size of the Data set

Question 12

Lean manufacturing characteristics

Answer 12

Waste Reduction & Continuous Improvement (KAIZEN)

Question 13

Total Quality Management Characteristics

Answer 13

Customer Focus

Question 14

Characteristics of a Just In Time Inventory System

Answer 14

Lot sizes equal to one

Insignificant set-up times & costs

Balanced & level workloads

non-value-adding operations of storing materials is eliminated (minimize storage time and storage costs)

Controlled by a “Pull” approach - item is produced when it is needed down the line and not a “push through system”

Question 15

Recessionary Phase = Contractionary Phase

Answer 15

GDP is down
Unemployment is going up
Prices are going down
Profits are going down

Question 16

Expansionary Phase

Answer 16

Government Purchases - stimulating the economy

Question 17

Recession

Answer 17

Falling national output for two consecutive quarters

Results in a decrease in aggregate demand & aggregate supply

potential national income (long run aggregate supply) exceeds actual national income - Short Run aggregate supply curve shifts to the left

GDP down

Unemployment Up

Confidence Down (Economic expectations)

Profits Down

Question 18

Multiplier Effect Calculation: An increase in Federal spending of $20 billions at a Marginal Propensity to consume at 0.6 would calculate an increase real GDP as follows:

Answer 18

Step 1) 1/ (1-.0.6) x $20 billion

Step 2) (2.5 x $20 billion) = $ 50 Billion increase in Real GDP

Goods & Services produced in United States

Question 19

Peak

Answer 19

Face Highest Cost levels - COGS faster than Sales Price

Economy is producing at maximum output

Demand exceeds supply

Economy begins to Overheat

Question 20

Gross Domestic Product (GDP)

Answer 20

Total market value of all final goods and services produced within the borders of a nation during a particular period

excludes used goods

Question 21

Supply Shock

Answer 21

Supply Shock Increase
Aggregate Supply Increase

Supply Shock Decrease
Aggregate Supply Decrease

Question 22

Typical Business Cycle

Answer 22

Peak, Recession, trough, recovery phase

Question 23

Increase in Exchange Rates on Aggregate Demand

Answer 23

Exchange rates go up Aggregate demand goes down

Exchange Rates go down Aggregate demand goes up

Question 24

Collusive Pricing

Answer 24

Two gas stations in a small-town jack the price up on gas above the competitive market price since other gas stations are extremely far away and people in that town would have no choice but to buy this high price of gas.

Question 25

Predatory Pricing

Answer 25

Company puts a low price so it can flush out its competitors, forces an exit for them in the market

Question 26

Benefits of understanding SWOT analysis

Answer 26

A company can fully understand where they fit into the competitive landscape, and then develop a strategy to achieve any goals that are set

Question 27

Theory of Constraints

Answer 27

When a company identifies the bottlenecks that impact efficiency. Idea with any company is to maximize the use of the company’s resources (employees, machines, spending ect.)

Question 28

Economies of Scale

Answer 28

Means that the cost to produce one unit of output DECREASES as OUTPUT INCREASES

Question 29

When an item is unit elastic what is the impact of price change on revenue?

Answer 29

No Change

Question 30

If % Change in Price > % Change in demand

Answer 30

Inelastic