Test Bank Chapter 5 Shared Value And Competitive Advantage

Student name:__________

One aspect of ESG criteria focuses on areas such as diversity, equity, inclusion, health and safety, and human rights.
1. ______

true
false

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Design and Competitive Advantage
Source : Chapter 05 Test Bank > TF Qu. 01 One aspect of ESG criteria focuses...

A detergent manufacturer decides to clean up the waterways it uses even though no federal, state, or local laws require the firm to do this. The firm’s managers believe that the cleanup will improve the company’s image and benefit the environment. This scenario is an example of shareholder capitalism.
1. ______

true
false

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Design and Competitive Advantage
Source : Chapter 05 Test Bank > TF Qu. 02 A detergent manufacturer decides to clean...

The term “tragedy of the commons” refers to a problem that affects a company’s shareholders but not its management or board of directors.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Implications for Strategic Leaders
Source : Chapter 05 Test Bank > TF Qu. 03 The term “tragedy of the commons” refers...

Creating shared value (CSV) differs markedly from corporate social responsibility (CSR).
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-02 Explain the shift in emphasis from corporate social responsibility (CSR) t
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > TF Qu. 04 Creating shared value (CSV)...

A CSV perspective leads to tinkering with isolated components as needed; in contrast, the CSR approach is an integral part of a firm’s competitive strategy from the beginning.
1. ______

true
false

When the value that a customer attaches to a good or service exceeds the price paid for the good or service, this is a consumer surplus.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > TF Qu. 06 When the value that a customer attaches to a...

A strategic leader’s only responsibility is to monitor and assess the performance of their firm.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > TF Qu. 07 A strategic leader’s only responsibility is to ...

The efficient-market hypothesis suggests that the market price of a firm’s stock is an objective indicator of a firm’s past, current, and expected future performance.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > TF Qu. 08 The efficient-market hypothesis suggests tha...

A firm will always see its stock price appreciate when it demonstrates measurable growth.
1. ______

true
false

Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price that consumers pay.
1. ______

true
false

Managers must first develop a strategy that is likely to produce a competitive advantage before implementing a balanced-scorecard approach.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > TF Qu. 11 Managers must first develop a strategy that ...

Competitive advantage is assessed relative to a benchmark, either competitors or the industry average.
1. ______

true
false

A sustainable strategy is one that produces a competitive advantage that can be maintained over time.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > TF Qu. 13 A sustainable strategy is one that produces ...

A strategy that has provided competitive advantages in the past will most likely do so in the future.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Implications for Strategic Leaders
Source : Chapter 05 Test Bank > TF Qu. 14 A strategy that has provided competitive adv...

What does ESG stand for in corporate strategy?
1. ______

ethical, sustainable, global

environmental, social, governance

environmental sustainability goals

economic and societal goals

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 15 What does ESG stand for in corporate...

Which of the following goals relates to the E dimension of ESG criteria for evaluating company performance?
1. ______

We will oppose all forms of racial, gender, and sexual discrimination.

We will reduce our carbon footprint by 50 percent or more in five years.

We will adhere to universally accepted and accurate accounting principles.

We will guarantee fair wages and human rights throughout out supply chain.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 16 Which of the following goals relates to...

Which of the following goals relates to the G dimension of ESG criteria for evaluating company performance?
1. ______

We will oppose all forms of racial, gender, and sexual discrimination.

We will reduce our carbon footprint by 50 percent or more in five years.

We will adhere to universally accepted and accurate accounting principles.

We will guarantee fair wages and human rights throughout out supply chain.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 17 Which of the following goals relates to the...

Lourdes owns Benefice Corporation and wants to maintain a dual focus on creating shareholder value while at the same time increasing value for society as a whole. Lourdes is following the
1. ______

balanced scorecard framework.

shared value creation framework.

shareholder capitalism framework.

philosophy of Milton Friedman.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 18 Lourdes owns Benefice Corporation...

Josie wants to invest in the stock market but is afraid of losing more money than what she invests. Josie need not worry because of
1. ______

limited liability for investors.

transferability of investor ownership.

legal personality.

separation of legal ownership and management control.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 19 Josie wants to invest in the stock market...

Which of the following statements is true of shareholders in a public stock company?
1. ______

They directly supervise and coordinate the manufacture of products and delivery of services.

They are granted a charter of incorporation by the state and legally own company stock.

They are the centerpiece of corporate governance.

They are appointed by a board of directors to oversee the company’s management.

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 20 Which of the following statements is true...

Stark Industries is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?
1. ______

Employees of Stark Industries are legally permitted to invest their capital in the company’s stock.

Employees of Stark Industries are also the owners of the company.

Shareholders of Stark Industries are responsible to the company only to the capital they have invested.

Shareholders of Stark Industries are not permitted to trade their company stock at the New York Stock Exchange (NYSE).

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 21 Stark Industries is a public stock company...

Joaquin owns shares in a company called Maxapro Inc. The company’s financial performance has been declining over the past few months, and the value of its stock has been decreasing. Joaquin wants to proactively cut his losses and therefore sells his shares. Miriam, a trading enthusiast, buys shares in Maxapro Inc. because she believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify?
1. ______

separation of legal ownership and management control

legal personality

limited liability for investors

transferability of investor ownership

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 22 Joaquin owns shares in a company called...

Axe Capital is a public stock company. Which of the following best exemplifies the legal personality of the company?
1. ______

Luis, a shareholder, can legally sell shares of Axe Capital in the stock market.

Jennifer is a shareholder of Axe Capital but does not have any managerial duties.

Will, an employee at Axe Capital, is not responsible for any losses that Axe Capital incurs.

Axel, the company’s founder, died a few years ago, yet the company is doing well.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 23 Axe Capital is a public stock company...

Grace founded First Plainfield Bank in 2003. Ten years later, the company went public. Despite Grace’s death in 2021, the company reported a 75 percent increase in revenue in 2022. Which of the following characteristics of a publicly traded company does this scenario best exemplify?
1. ______

transferability of investor ownership

legal personality

limited liability for investors

separation of legal ownership and management control

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 24 Grace founded First Plainfield Bank in...

A problem that arises when individuals, companies, or nations pursue their own self-interest without considering the well-being of society or the global community is known as a
1. ______

competitive disadvantage.

Nash equilibrium.

black swan event.

tragedy of the commons.

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 25 A problem that arises when individuals...

An example of a classic tragedy of the commons problem is
1. ______

Hurricane Katrina.

climate change.

the 9/11 terror attacks.

the Enron accounting scandal.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 26 An example of a classic tragedy of the...

PolyCon Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management’s focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company’s value creation has suffered. This scenario supports strategy scholars’ warning that public companies
1. ______

often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation.

have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

do not focus enough on increasing firm profits, thereby contributing to low value creation.

have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 27 PolyCon Inc. is a public stock company...

According to Michael Porter and Mark Kramer, which of the following is a problem with many publicly traded companies?
1. ______

Shareholders of publicly traded companies do not have a legitimate claim on profits.

They have defined value creation too narrowly in terms of financial performance.

There is no transferability of stock ownership in publicly traded companies.

Publicly traded companies have no legal standing and are not responsible for their debts.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 28 According to Michael Porter and...

Which of the following characteristics of a public stock company deals with principals and agents?
1. ______

limited liability of investors

transferability of investor ownership

separation of legal ownership and management control

legal personality

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 29 Which of the following characteristics...

What do strategy scholars believe is the result of executives’ pursuit of strategies that define value creation too narrowly in public stock companies?
1. ______

It gives the managers greater control of the performance of the organization in the long term.

It reduces the trust of shareholders in the organization as a vehicle for value creation and societal welfare.

It helps companies increase firm profits by creating shared value while benefitting society.

It enables companies to create social value by addressing society’s needs but prevents them from creating economic value for shareholders.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 30 What do strategy scholars believe is...

Which one of the following statements below can best be linked to the Nobel laureate Milton Friedman?
1. ______

Corporate social responsibility is absolutely vital to a firm’s long-term success.

The social responsibility of a business is to increase its profits.

Corporate social responsibility is a universally accepted and practiced principle.

Corporate social responsibility should be incorporate in MNEs.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 31 Which one of the following statements...

Ari is a firm believer in Milton Friedman’s view of a firm’s social obligations. With which of the following statements is Ari most likely to agree?
1. ______

Businesses can use their resources to create profit as long as they do so within the rules of the game.

Firms must go beyond their economic responsibility and act in socially responsible ways.

Firms should define value creation broadly in terms of environmental impact.

Businesses should engage in open and free competition without deception or fraud, only as long as their competitors do so.

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Organizational Structure and Controls
Source : Chapter 05 Test Bank > MC Qu. 32 Ari is a firm believer in Milton Friedman...

According to the perspective of shareholder capitalism, shareholders in public stock companies
1. ______

are restricted from buying shares of two competing companies.

have the most legitimate claim on profits.

have significant decision-making power.

have unlimited financial liability.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 33 According to the perspective of shareholder...

Which of the following perspectives best supports the shared value creation framework?
1. ______

Markets are more often than not defined by societal needs rather than economic needs.

Failing to create value for society almost always reflects on the bottom line.

A firm’s competitive advantage depends on pitting economic and societal needs in a trade-off.

Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 34 Which of the following perspectives best...

Great Sound Inc. is a publicly traded company that specializes in manufacturing consumer electronics. Which of the following best exemplifies the implementation of a shared value creation framework at Great Sound Inc.?
1. ______

Great Sound’s employees work in shifts to adhere to the eight-hour workday rule.

Great Sound’s products are developed in a high-tech R&D facility based in Florida.

Great Sound uses recycled materials to create its commercially successful products.

Great Sound has a customer reward program for its most loyal customers.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 35 Great Sound Inc. is a publicly traded...

Which of the following statements best supports the view that GE’s Ecomagination strategy is in line with the shared value creation framework?
1. ______

The Ecomagination strategy is the brainchild of the founder of the company.

The Ecomagination strategy helps GE spend more on research and development than other similar companies.

The Ecomagination strategy generated $16 billion in revenues for GE during 2020.

The Ecomagination strategy allows GE to produce “green” products while increasing revenue and competitive advantage.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 36 Which of the following statements best...

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework?
1. ______

Doing so could yield significant business opportunities that could improve the living standard of people living below the poverty line around the world.

Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization.

Doing so could be the only way to meet stockholder expectations in a highly competitive market.

Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 37 Why does Michael Porter recommend...

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help them climb out of poverty. This best exemplifies Michael Porter’s suggestion that
1. ______

managers need to keep economic needs and societal needs disconnected from each other.

a firm should expand its internal value chain to include nontraditional partners.

businesses should focus on creating regional clusters such as Silicon Valley in the United States.

the largest but lowest income socioeconomic group can provide significant business opportunities.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Competing in Various Markets
Source : Chapter 05 Test Bank > MC Qu. 38 Grameen Bank in Bangladesh was founded...

A company employing a CSV perspective focuses on
1. ______

citizenship, philanthropy, and fair-trade purchasing.

joint company, community, and societal value creation.

creating value through its competitive advantage.

the external public relations benefits of “doing good.”

Which of the following statements correctly describes the actions of a company applying a CSV perspective?
1. ______

The company is externally focused to address pressures that arise.

The company maintains focus on its citizenship and philanthropic activities.

The company maintains a competitive advantage that allows it to “do good.”

The company is internally focused, and its actions derive from deeply held beliefs.

Wellness Data Corp. focuses on its competitive advantage as its fundamental and top priority; it uses some of its profits to do good in its community. This demonstrates
1. ______

a balanced scorecard.

creating shared value.

corporate social responsibility.

a sustained competitive advantage.

In the CSV framework, value creation is
1. ______

determined using a balanced scorecard.

an afterthought to citizenship and philanthropy.

focused on both economic benefits and societal benefits.

secondary to maintaining a competitive advantage.

Which of the following descriptions correctly characterizes a CSV perspective?
1. ______

The company identity and budget are entirely aligned around creating shared value.

The company’s budget can easily be modified in response to shifting preferences.

The company commitment to social responsibility is subject to external pressures.

The company’s budget includes philanthropic contributions designed to “do good.”

Which of the following strategies represents a CSR perspective?
1. ______

Northern Lights Industries uses only locally sourced, recycled materials to manufacture its products.

Dream Co. financed a water-purification plant that helped its suppliers increase output for a lower cost while providing clean water to a rural community.

Westminster Law Associates donates professional services to an organization providing legal aid to recent immigrants.

Crane’s considers its technical support of organic soybean farmers in its supply chain to be an investment rather an expense.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-02 Explain the shift in emphasis from corporate social responsibility (CSR) t
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 44 Which of the following strategies...

The strategic decision to design a supply chain to provide higher quality products at a lower cost while also reducing environmental impact represents
1. ______

a CSV approach.

shareholder capitalism.

fair-trade purchasing.

a competitive advantage.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-02 Explain the shift in emphasis from corporate social responsibility (CSR) t
Topic : The Shared Value Creation Framework
Source : Chapter 05 Test Bank > MC Qu. 45 The strategic decision to design a supply...

________ is the benefit that is missed or given up when an investor, individual or business chooses one alternative over another.
1. ______

Value creation

Opportunity cost

Accounting profitability

Reservation price

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 46 ________ is the benefit that is missed o...

Abdul and Laticia both love hot coffee. Abdul likes to keep his coffee hot during the day, while Laetitia doesn’t mind drinking room temperature coffee. Abdul is willing to spend more money on a thermos than Laticia is willing to spend. This example illustrates the following major limitation of employing the economic value creation framework because
1. ______

overall macroeconomic factors such as the unemployment rate, and interest and exchange rates all have a direct bearing on stock prices.

determining the value of a good/service through the perspective of consumers is not a simple task because consumers have different spending habits.

accounting data focus mainly on tangible assets, which are no longer the most important.

accounting data are historical and thus backward-looking.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Limitations of Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 47 Abdul and Laticia both love hot coffee...

Under the________ framework, producer surplus is important in the quest for competitive advantage because this is the profit that a firm captures when producing and selling a good or service.
1. ______

economic value creation

accounting profitability

shareholder value creation

PESTEL

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 48 Under the ________ framework, producer s...

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are
1. ______

market brand value.

organizational culture.

intangible.

tangible.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 49 The types of assets that are the primary foc...

Under the________ framework, the question “How do we create value?” is relevant when trying to improve innovation and organizational learning.
1. ______

triple-bottom-line

economic value creation

balanced scorecard

operational effectiveness

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : The Balanced Scorecard
Source : Chapter 05 Test Bank > MC Qu. 50 Under the ________ framework, the questi...

Yoon-gi is attempting to measure how his customers view his firm. To do this, he uses the balanced-scorecard framework because he knows that
1. ______

customer surveys will help him determine future industry attractiveness.

this will guarantee his company a sustainable competitive advantage.

the framework will help him increase his stock price.

the customer perspective is directly linked to firm revenues and profits.

Which of the following is considered a limitation of employing the balance-scorecard framework?
1. ______

providing guidance about the right metrics to use

accommodating both short- and long-term metrics

designing and planning business processes

translating the company vision into measurable goals

FMC Corp., a chemical manufacturer, has over 5,000 employees spread across several SBUs that collectively generate more than $3 billion in annual revenues. FMC’s strategic leaders initially focused solely on financial metrics as their key performance measure, but the company is failing to achieve competitive advantage in its industry. Which of the following questions should FMC’s senior leadership consider while implementing the balanced-scorecard framework?
1. ______

How do we become the customer’s most valued supplier, and how can we create this value for the customer?

What corporate strategy will enhance our firm’s chances of gaining and sustaining a competitive advantage?

Where should we compete in terms of industry, markets, and geography?

When should we decide to divest assets and prepare for an exit strategy?

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : The Balanced Scorecard
Source : Chapter 05 Test Bank > MC Qu. 53 FMC Corp., a chemical manufacturer, has...

Which of the following answers is one of the three dimensions that make up the triple-bottom-line framework?
1. ______

principles

producer

profits

price

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : The Triple Bottom Line
Source : Chapter 05 Test Bank > MC Qu. 52 Which of the following answers is one...

Denise is the CEO of a profitable business called 4-Ever-Sun Inc. which harnesses solar power, a renewable energy source that is sustainable over time. Instead of pursuing a sustainable competitive advantage, Denise decides to focus on minimizing detrimental effects on society and the planet. This strategy is known as
1. ______

sustainable strategy.

the balanced scorecard.

corporate diversification strategy.

cost leadership strategy.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : The Triple Bottom Line
Source : Chapter 05 Test Bank > MC Qu. 55 Denise is the CEO of a profitable business c...

Managers can justify using the balanced-scorecard framework because research shows that both________ performance dimensions are important when examining the effectiveness of a firm’s strategy.
1. ______

economic and stock market

quantitative and qualitative

customer survey and peer evaluation

financial and accounting

The balanced-scorecard framework is a tool for strategy
1. ______

implementation, not formulation.

analysis, not sustainability.

formulation, not implementation.

sustainability, not economic value creation.

Nalani is trying to determine if her company has a competitive advantage. She must be able to accomplish two critical tasks before she can substantiate this claim. First, she must assess the performance of her company accurately; second, she must
1. ______

assess her capital and liquid position to ensure funding for future projects.

focus on creating value by utilizing operational effectiveness such as Six Sigma and lean manufacturing.

compare and benchmark her firm’s performance to other competitors in the same industry.

ensure the right strategic leaders are in place that can execute her strategy.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Accounting Profitability
Source : Chapter 05 Test Bank > MC Qu. 58 Nalani is trying to determine if her company ...

Which of the following statements is true of accounting data?
1. ______

Accounting data focus mainly on intangible assets, rather than tangible assets.

Accounting data are historical data and thus backward-looking.

Accounting data do not have to be adjusted to compare companies with different capital structures.

Accounting data consider off-balance-sheet items, such as pension obligations of a firm.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 59 Which of the following statements is true of...

Which of the following competitively important assets is typically excluded from a firm’s balance sheet?
1. ______

land and building

accounts payable

patents

customer experience

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 60 Which of the following competitively importa...

Which of the following reports is a publicly traded firm required to file each year with the U.S. Securities and Exchange Commission?
1. ______

Form 10-K

Form 40-F

Form 990-N

Form 1120-S

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 61 Which of the following reports is a...

What is captured in a firm’s book value?
1. ______

intangible assets

future expectations

tangible assets

competitive advantage

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 62 What is captured in a firm’s book...

Intangible assets that have become much more important to a firm’s competitive advantage include
1. ______

real estate holdings.

return on equity.

return on revenue.

intellectual property.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 63 Intangible assets that have become...

________ are the legal owners of public companies.
1. ______

Employees

Shareholders

Category captains

Creditors

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 64 ________ are the legal owners of public compani...

Which of the following is an external performance metric?
1. ______

return on revenue

fixed assets turnover

inventory turnover

total return to shareholders

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 65 Which of the following is an external perfor...

From a shareholder’s perspective, the measure of competitive advantage that matters most is the
1. ______

return on risk capital.

economic value created.

consumer surplus.

inventory turnover.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 66 From a shareholder...

Return on risk capital primarily includes
1. ______

stock price appreciation plus dividends received over a specific period.

consumer surplus plus firm profit.

account receivables plus account payables.

economic value created by a firm plus reservation price.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 67 Return on risk capital primarily includes

________, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.
1. ______

Total return to shareholders

Earnings per share

Receivables turnover

Dividend yield

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 68 ________, which is the return on risk capital, ...

A firm has 10 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is
1. ______

10,000 shares; that is,10 million shares/$100.

$200,000; that is, $2,000 × $100.

$1 billion; that is, 10 million shares × $100.

20:1; that is, $2,000/$100.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 69 A firm has 10 million shares outstanding, an...

The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data?
1. ______

The firm’s number of outstanding shares is 25 million.

The firm pays an annual dividend of 10 percent.

The firm’s total return to shareholder is $5 billion.

The firm’s economic value created is $5 billion.

Which of the following expressions accurately describes market cap?
1. ______

It is the product of the number of outstanding shares and the share price.

It is the difference between the book value and the market value of a firm’s assets.

It is the ratio of a firm’s equity finance and its debt finance.

It is the difference between a firm’s account receivables and account payables.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 71 Which of the following expressions accuratel...

Unlike the financial ratios based on accounting data, total return to shareholders is
1. ______

backward-looking and historic in nature.

an external and forward-looking performance metric.

an absolute measure of competitive advantage.

unaffected by market volatility or macroeconomic factors.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 72 Unlike the financial ratios based on account...

You are the CEO of a tech company and have recently undertaken a review of your company’s strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed?
1. ______

Consider this evidence of a sustainable competitive advantage and maintain your current strategy.

Compare the current valuations with past valuations to determine a trend.

Assume your current strategy has failed and begin to formulate a new one.

Compare your valuation to firms in another industry.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 73 You are the CEO of a tech company and have r...

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?
1. ______

Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term.

These tools fail to indicate how the stock market views all available public information about a firm’s expected future performance.

These tools measure competitive advantage in absolute terms rather than relative terms.

Only the book value of the share prices is taken into account when applying these measures, and not the market value.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 74 Which of the following is a disadvantage of ...

In determining the competitive advantage of a firm, the NASDAQ Computer Index and the S&P 500 are examples of
1. ______

valuations.

benchmarks.

reporting standards.

accounting metrics.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > MC Qu. 75 In determining the competitive advantage...

________ is best described as the difference between a buyer’s willingness to pay for a product or service and a firm’s total cost to produce it.
1. ______

Economic value created

Break-even point

Consumer surplus

Cost of capital

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 76 ________ is best described as the difference be...

A firm incurs $600 to manufacture a computer. In the market, customers are willing to pay a maximum of $800 for the computer priced at $700. The difference of $200 ($800 – $600) is the
1. ______

consumer surplus.

total return to shareholders.

customer lifetime value.

economic value created.

Both Watchdog Inc. and Device Corp. incur a cost of $200 to manufacture a single unit of a smart home pet monitor. However, Watchdog Inc. charges a higher price than Device Corp. does, but it still sells a higher number of monitors. What does this imply?
1. ______

Watchdog and Device Corp. have achieved a competitive parity.

Device Corp. has a competitive advantage over Watchdog Inc.

Watchdog creates more economic value than Device Corp. does.

Device Corp. is not charging enough for its product.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 78 Both Watchdog Inc. and Device Corp...

A wearable technology company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling at any price less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?
1. ______

$150

$180

$170

$210

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 79 A wearable technology company has priced one...

A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250 and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?
1. ______

$250

$200

$180

$100

The difference between the price charged for a product and the cost to manufacture it is referred to as the
1. ______

consumer surplus.

break-even price.

producer surplus.

reservation price.

________ denotes the dollar amount a consumer would attach to a good or service.
1. ______

Utility

Value

Consumer surplus

Economic contribution

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 82 ________ denotes the dollar amount a consumer w...

The value a consumer attaches to a product or service is captured in the
1. ______

least price a consumer is willing to pay for it.

consumer’s maximum willingness to pay for it.

expenses incurred by the firm in manufacturing it.

difference between the price charged for it and the cost to produce it.

After trying on a jacket, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount to buy it. However, the jacket is priced at $80. What is the amount, $100, referred to as?
1. ______

the producer surplus

the firm’s cost ( C) in manufacturing the jacket

the consumer surplus

the value ( V) the consumer attaches to the jacket

How does a firm capture its producer surplus for a good or service?
1. ______

as cost per unit sold

as profit per unit sold

as earnings per share

as market price per share

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 85 How does a firm capture its producer surplus...

Sarah paid $900 for a camera that she thought was worth $1,100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?
1. ______

$200

$550

$900

$1,100

Economic value creation is best expressed as
1. ______

producer surplus minus consumer surplus.

consumer surplus minus cost of production.

consumer surplus plus firm profit.

producer surplus plus firm profit.

Superior Screen Corp. incurs a cost of $750 to produce one unit of an OLED television. The company’s management has priced the product at $1,000 in the market. Considering the technological advancement of the television, customers perceive its value to be around $1,200. What is the economic value created in this scenario?
1. ______

$250

$350

$450

$550

By selling a tablet at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1,200 – $1000) + $400, is the
1. ______

opportunity cost.

economic value created.

reservation price.

consumer surplus.

In an economic context, strategy for producers is primarily about
1. ______

distributing the economic value created equally between consumers and themselves.

reducing the difference between consumer’s willingness to pay for a product and the cost to produce it.

capturing the economic value created as much as possible.

lowering producer surplus and increasing consumer surplus.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 90 In an economic context, strategy for produce...

Competitive advantage goes to the firm that achieves the
1. ______

largest economic value created.

lowest producer surplus.

highest payable turnover.

highest Cost of goods sold/Revenue ratio.

Good Grains Inc. and Village Bread Co. both produce similar whole grain loaves of bread. For both companies, the cost of producing a loaf of bread is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other?
1. ______

Increase total perceived consumer benefits through differentiation.

Raise prices above the current reservation price.

Lower prices to the break-even price.

Increase the number of stock market shares available to investors.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 92 Good Grains Inc. and Village Bread...

The cost of capital to create a product is a fixed cost because it is
1. ______

directly proportional to the output level.

uniform throughout all firms and industries.

not a part of the profit calculations.

unaffected by consumer demand.

________ are best described as the value of the best forgone alternative use of the resources employed.
1. ______

Variable costs

Opportunity costs

Social costs

Switching costs

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 94 ________ are best described as the value of the...

Dante is a recent fashion graduate. He started his own apparel store with an investment of $300,000. In the first year he made a profit of $60,000. If he had taken up a job as a fashion editor for a magazine, he would have earned $50,000 as salary per year. Also, he could have invested his capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Dante’s
1. ______

social cost.

break-even price.

reservation price.

opportunity cost.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 95 Dante is a recent fashion graduate. He...

When ASI Inc. declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as ASI Inc.’s
1. ______

producer surplus.

consumer surplus.

opportunity cost.

social cost.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 96 When ASI Inc. declared a dividend of $20,000...

Which of the following is an advantage of applying the economic value creation perspective to assess a firm’s performance?
1. ______

When the need for “hard numbers” arises, managers and analysts rely on economic value creation perspective to measure competitive advantage.

In the economic value creation perspective, analysts not only consider historical costs, but also opportunity costs.

Arriving at the economic value created is easy because determining the value of a good in the eyes of consumers is a simple task.

It is the most efficient tool for assessing corporate-level competitive advantage of highly diversified companies with large product portfolios.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > MC Qu. 97 Which of the following is an advantage of ap...

Skyward Robotics produces electronic components used in drones. In fiscal year 2022, Skyward Robotics earned an accounting profit of $3 million. However, Skyward’s production facilities might have also been used to produce components for smartphones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true?
1. ______

Skyward Robotics earned an economic profit of $5.5 million.

Skyward Robotics earned an economic profit of $500,000.

Skyward Robotics suffered an economic loss of $500,000.

Skyward Robotics suffered an economic loss of $2.5 million.

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?
1. ______

the economic value creation model

the accounting profitability model

the shareholder value creation model

the balanced-scorecard model

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > MC Qu. 99 Which of the following frameworks used to me...

Which of the following statements is true of the balanced scorecard?
1. ______

It is a more or less a one-dimensional metric of measuring competitive advantages of a firm.

It is one of the traditional approaches of measuring firm performance.

Its primary focus is to base a firm’s strategic goals entirely on external performance dimensions.

It attempts to provide a holistic perspective on firm performance.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > MC Qu. 100 Which of the following statements is true of...

Which of the following is an advantage of the balanced scorecard?
1. ______

It is a tool for both strategic formulation and strategic implementation.

It allows managers to translate a firm’s vision into measurable operational goals.

The balanced scorecard is independent of the skills of the managers responsible for its implementation.

Its implementation is a one-time effort and does not require continuous tracking of metrics or updating of strategic objectives.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > MC Qu. 101 Which of the following is an advantage of th...

The balanced scorecard can accommodate
1. ______

only short-term performance metrics.

only long-term performance metrics.

both short- and long-term performance metrics.

neither short- or long-term performance metrics.

Amber is the manager of gardening supplies wholesaler DigIt Inc. The company’s vision is to become the leading supplier of gardening materials in the New England. In assessing the firm’s current state, Amber has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Amber has determined that DigIt must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced-scorecard approach, what is wrong with Amber’s thinking?
1. ______

She has not considered the opportunity costs associated with launching an online ordering system.

She has not addressed the question of which core competencies the firm needs.

She has failed to account for external factors such as customer perceptions and shareholder perceptions.

She has not addressed the question of how DigIt will create value.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > MC Qu. 103 Amber is the manager of gardening supplies w...

Which of the following is a disadvantage of the balanced-scorecard approach?
1. ______

It fails to link the strategic vision to responsible parties within the organization.

It fails to translate the vision into measurable operational goals.

It provides limited guidance for designing and planning business processes.

It provides limited guidance about which metrics to choose.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > MC Qu. 104 Which of the following is a disadvantage of ...

Which of the following statements about competitive advantage is true?
1. ______

Superior firm performance is unrelated to competitive advantage.

Competitive advantage cannot be assessed relative to a benchmark.

Competitive advantage has been linked to a firm’s triple bottom line.

Shareholder value is the best measure of competitive advantage.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 105 Which of the following statements about...

Which of the following approaches to assess competitive advantage is based on the view that noneconomic factors can have a significant impact on a firm’s financial performance?
1. ______

the triple-bottom-line approach

the economic value creation framework

the accounting profitability approach

the balanced-scorecard approach

The tenet behind the triple-bottom-line is that
1. ______

a firm should solely focus on increasing the economic value created to/for its customers.

a firm’s primary objective should be increasing the total returns to its shareholders.

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

a firm’s return on revenue can be broken down into three ratios: COGS/Revenue, R&D/Revenue, and SG&A/Revenue.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 107 The tenet behind the triple-bottom-line is t...

The management team for Forever Power came up with the following vision statement: “Forever Power will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment.” This vision statement is most likely based on the
1. ______

accounting profitability approach.

economic value creation approach.

triple-bottom-line approach.

balanced-scorecard approach.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 108 The management team for Forever Power came u...

How does a sustainable strategy typically help a firm?
1. ______

It helps the firm focus solely on its financial goals.

It reduces the need for corporate social responsibility within the firm.

It facilitates the firm in effectively isolating its external stakeholders.

It helps the firm achieve positive results along the social and ecological dimensions.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 109 How does a sustainable strategy typically he...

Which of the following scenarios exemplifies a sustainable strategy under the triple-bottom-line approach?
1. ______

Rather than complying with restrictive recycling laws in the United States, Chemicor outsourced its manufacturing to a country with fewer environmental restrictions.

Chemicor developed an additive that doubled the life of its plastics. The chemical was legal, but environmental groups argued that it harmed the environment.

Chemicor reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment.

Chemicor’s nearest competitor increased the salaries of its production workers by 30 percent, but Chemicor kept its wages the same to gain a cost advantage over its competitor.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 110 Which of the following scenarios exemplifies...

Which of the following is an advantage of a triple-bottom-line approach?
1. ______

The approach takes an integrative and holistic view in assessing a company’s performance.

The approach does not rely on an external view of a firm to assess its performance.

The approach is more of a quantitative performance metric rather than a mere conceptual framework.

The framework can help managers assess a firm’s competitive advantage without taking into account the firm’s performance along noneconomic dimensions.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 111 Which of the following is an advantage of a ...

The top management at Konex Vitamins, through rigorous testing, ensures that the company develops and sells vitamins that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Konex Vitamins are applying the________ approach to measure firm performance.
1. ______

economic value creation

shareholder value creation

triple-bottom-line

accounting profitability

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > MC Qu. 112 The top management at Konex Vitamins, throug...

Describe a challenge facing capitalism and how it has affected our shifting understanding of the firm from a primary focus on profit maximization to a focus on creating shared value.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Evaluate
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > SA Qu. 113 Describe a challenge facing capitalism and...

How does Nobel laureate Milton Friedman’s view of the firm’s social obligations tie in with shareholder capitalism?

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > SA Qu. 114 How does Nobel laureate Milton Friedman...

How does GE exemplify the creation of a shared value creation framework?

Question Details
AACSB : Ethics
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-01 Compare and contrast shareholder capitalism and stakeholder capitalism whi
Topic : Shared Value Creation Framework
Source : Chapter 05 Test Bank > SA Qu. 115 How does GE exemplify the creation of...

Define the CSV and CSR perspectives, and give an example of how each may affect a company’s actions.

Discuss the limitations associated with using accounting data to measure competitive performance.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > SA Qu. 117 Discuss the limitations associated with usin...

Accounting data focus mainly on tangible assets, which are no longer a company’s most important assets. Elaborate on this statement.

What is risk capital?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : The Roles of Firm Effects and Industry Effects on Firm Performance and Competitive Advantage
Source : Chapter 05 Test Bank > SA Qu. 119 What is risk capital?

What does “total return to shareholders” mean?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > SA Qu. 120 What does “total return to shareholder...

What are the drawbacks of using total return to shareholders and firm market capitalization to measure firm performance?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Shareholder Value Creation and Competitive Advantage
Source : Chapter 05 Test Bank > SA Qu. 121 What are the drawbacks of using total return...

What is the relationship between producer surplus and consumer surplus?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : Economic Value Creation
Source : Chapter 05 Test Bank > SA Qu. 122 What is the relationship between producer su...

List the dimensions on which a firm can create greater economic value.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-04 Link economic value creation to different sources of competitive advantage
Topic : The Roles of Firm Effects and Industry Effects on Firm Performance and Competitive Advantage
Source : Chapter 05 Test Bank > SA Qu. 123 List the dimensions on which a firm can crea...

What pricing options does a firm have when the difference between V, the consumer’s willingness to pay, and C, the cost to produce the good or service, is large?

How does consumer demand affect fixed costs and variable costs?

What are opportunity costs in general? What are the opportunity costs for entrepreneurs?

What are the advantages of the balanced scorecard?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : Balanced-Scorecard Approach
Source : Chapter 05 Test Bank > SA Qu. 127 What are the advantages of the balanced scor...

Discuss the four key questions managers need to answer when using the balanced scorecard to develop strategic objectives.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 05-05 Apply a balanced scorecard to assess and evaluate competitive advantage.
Topic : The Roles of Firm Effects and Industry Effects on Firm Performance and Competitive Advantage
Source : Chapter 05 Test Bank > SA Qu. 128 Discuss the four key questions managers need...

How does the triple-bottom line approach help managers? Explain with the help of an example.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 2 Medium
Learning Objective : 05-06 Apply a triple bottom line to assess and evaluate competitive advantage.
Topic : Financial Analysis Tools for Appraising Firm Performance
Source : Chapter 05 Test Bank > SA Qu. 129 How does the triple-bottom line approach hel...

The term “competitive advantage” is difficult to measure. However, you recall that strategists use a multidimensional perspective when measuring competitive advantage. Label and describe the three standard dimensions used when measuring a firm’s competitive advantage.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 05-03 Appraise accounting metrics and shareholder value creation as measures of
Topic : Competitive Advantage and Firm Performance
Source : Chapter 05 Test Bank > SA Qu. 130 The term “competitive advantage”...

Document Information

Document Type:

DOCX

Chapter Number:

Created Date:

Aug 21, 2025

Chapter Name:

Chapter 5 Shared Value And Competitive Advantage

Author:

Frank Rothaermel

Connected Book

Frank Rothaermel - Strategic Management 6e - Test Pack

By Frank Rothaermel

Test Bank General

View Product →

Explore recommendations drawn directly from what you're reading

Chapter 3 External Analysis Strategy

DOCX Ch. 3

Chapter 4 Internal Resources & Capabilities

DOCX Ch. 4

Chapter 5 Shared Value And Competitive Advantage

DOCX Ch. 5 Current

Chapter 6 Strategy – Cost, Differentiation

DOCX Ch. 6

Chapter 7 Business Strategy and Platforms

DOCX Ch. 7

$24.99

100% satisfaction guarantee

Buy Full Test Bank

Quick Navigation

Preview Document Info Connected Book Recommendations

Benefits

Immediately available after payment

Answers are available after payment

ZIP file includes all related files

Files are in Word format (DOCX)

Check the description to see the contents of each ZIP file

We do not share your information with any third party

Test Bank Chapter 5 Shared Value And Competitive Advantage

Document Information

Connected Book

Frank Rothaermel - Strategic Management 6e - Test Pack

Explore recommendations drawn directly from what you're reading

$24.99

Quick Navigation

Benefits

Report Unauthorized Use

Added to Cart