QUESTION Maintaining the company infrastructure is a support activity. Indicate whether the statement is true or false. ANSWER TRUE The company infrastructure, a support activity, is the context within which all the other value creation activities occur. The infrastructure includes the organizational structure, control systems, and culture of the firm.
QUESTION The amount of value a firm creates is measured by: A. the difference between the previous year’s profitability and the current year’s profitability. B. dividing the market price of its products by the price that customers are actually willing to pay. C. the difference between its costs of production and the value that consumers […]
QUESTION Location economies are the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be. Indicate whether the statement is true or false. ANSWER TRUE Location economies are the economies that arise from performing a value creation activity in the optimal […]
QUESTION In general, the more value customers place on a firm’s products: A. the lesser the profitability of the firm. B. the higher the competitive pressure from other firms. C. the lesser the quality of the product. D. the lesser the consumer surplus for those products. E. the higher the price the firm can charge […]
QUESTION Learning effects will be more significant in an assembly process which involves 100 simple steps than in an assembly process which involves 1,000 complex steps. Indicate whether the statement is true or false. ANSWER FALSE Learning effects tend to be more significant when a technologically complex task is repeated, because there is more […]
QUESTION The experience curve refers to systematic increases in production costs that have been observed to occur over the life of a product. Indicate whether the statement is true or false. ANSWER FALSE The experience curve refers to systematic reductions in production costs that have been observed to occur over the life of a […]
QUESTION The ability to spread fixed costs over a large volume is one of the sources of economies of scale. Indicate whether the statement is true or false. ANSWER TRUE Economies of scale have a number of sources. One is the ability to spread fixed costs over a large volume. Fixed costs are the […]
QUESTION The firm that moves up the experience curve most rapidly will have a cost advantage vis-à-vis its competitors. Indicate whether the statement is true or false. ANSWER FALSE Moving down the experience curve allows a firm to reduce its cost of creating value and increase its profitability. The firm that moves down the […]
QUESTION Strategies that increase profitability can also expand a firm’s business and thus enable it to attain a higher rate of profit growth. Indicate whether the statement is true or false. ANSWER TRUE Strategies that increase profitability can also expand a firm’s business and thus enable it to attain a higher rate of profit […]
QUESTION Universal needs exist when the tastes and preferences of consumers in different nations are different. Indicate whether the statement is true or false. ANSWER FALSE Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical.
