SP26 STRivia: Midterm

ACB Systems Inc. and Onyx Systems Inc. are two competing firms. ACB Systems Inc. has $25,000 in tangible assets and $15,000 in intangible assets. Onyx Systems Inc. has $10,000 in tangible assets and $29,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies?

• Onyx Systems Inc. has less valuable resources than ACB Systems Inc.

• ACB Systems Inc. will find it harder than Onyx Systems Inc. to attain competitive advantage.

• Onyx Systems Inc. has less invisible assets than ACB Systems Inc.

• ACB Systems Inc. will find it easier than Onyx Systems Inc. to sustain competitive advantage.

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage?

• The resource is easy to replicate.

• The resource is costly to imitate.

• The resource neutralizes external opportunities.

• The resource decreases the perceived value of its products.

Based on the data provided (click on the image to enlarge), and knowing that the Price Elasticity of Demand (PED) is expressed as the percent change in demand over the percent change in price, what is your firm's PED and its strategic implications?

• |PED| = 0.80; demand is inelastic, and consumers are price insensitive.

• |PED| = 0.35; demand is elastic, and consumers are highly sensitive to price changes.

• |PED| = 1.20; demand is elastic, and consumers are highly sensitive to price changes.

• |PED| = 1.80; demand is inelastic, and consumers are extremely price insensitive.

LinkedIn, a professional social media website, allows its users to create their profiles for free, but charges a premium price for additional services. This is an example of a ________ business model.

• freemium

• subscription

• franchise

• retail

When a firm manufactures 5,000–6,000 units of a product, it incurs an average cost of $12 per unit. When it manufactures 6,000–7,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 7,000 units will raise the average cost per unit to $9. Which of the following is the firm’s minimum efficient scale?

• below 2,000 units

• 5,000–6,000 units

• 6,000–7,000 units

• above 7,000 units

When Netflix transitioned from mailing DVDs to streaming movies online, which type of innovation does this best represent?

• Incremental innovation

• Architectural innovation

• Disruptive innovation

• Radical innovation

You are analyzing competition in the domestic airline industry. Market share data for FY2024 is shown here (click on the image to enlarge). Using the data provided, calculate the Herfindahl–Hirschman Index (HHI) for only the top five firms (excluding Others). Note that the HHI is calculated as the sum of the squares of each firm's market share.

Based on your result and the given data, which of the following best describes the level of concentration and rivalry among these leading firms?

• HHI = 1,600, indicating that the top-five market is fragmented with intense price-based rivalry.

• HHI = 2,600, indicating that the top-five subset is highly concentrated, in which a few firms hold dominant positions, and rivalry occurs mainly through innovation and differentiation rather than price wars.

• HHI = 2,300, indicating that the top-five subset is moderately concentrated with several strong players sharing the market.

• HHI = 4,800, indicating that the top-five subset is highly concentrated with a small number of large competitors exercising strong market power but still competing strategically.

HelioCore Industries is a diversified multinational firm operating across multiple Strategic Business Units (SBUs). The image here (click to enlarge) presents key data on its major SBUs, where total company revenue reflects the combined revenue of all listed SBUs. Assume that the average market growth is 6% and that there are no meaningful operational synergies across these SBUs.

Based on the BCG Growth-Share Matrix, which of HelioCore's SBUs is most likely classified as a “Star”?

• Smart Home Devices

• Electric Bicycles

• Cloud Storage Services

• Commercial Lighting

• None of the above

HelioCore Industries is a diversified multinational firm operating across multiple Strategic Business Units (SBUs). The image here (click to enlarge) presents key data on its major SBUs, where total company revenue reflects the combined revenue of all listed SBUs. Assume that the average market growth is 6% and that there are no meaningful operational synergies across these SBUs.

Based on the revenue data, what type of diversification strategy is HelioCore pursuing?

• Single business

• Dominant business

• Related-constrained diversification

• Related-linked diversification

• Unrelated diversification

SolarWave is a leading manufacturer of residential solar panels. For years, it purchased photovoltaic cells from independent suppliers. Recently, SolarWave acquired SunCore, a company that produces high-efficiency photovoltaic cells used in solar panel manufacturing. This strategic move by SolarWave is best described as:

• Forward horizontal integration

• Forward vertical integration

• Backward horizontal integration

• Backward vertical integration