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ECON 139A – Chapter 2

________ and ________ are typically the most easily identifiable aspects of a company’s business model.
A) Market strategy; market opportunity
B) Value proposition; revenue model
C) Competitive advantage; competitive environment
D) Revenue model; market opportunity
All of the following use a subscription revenue model for music except:
A) Spotify.
B) eHarmony.
C) Rhapsody.
D) Pandora.
Which element of the business model addresses what a firm provides that other firms cannot?
A) competitive environment
B) competitive advantage
C) market strategy
D) value proposition
Which element of the business model refers to the presence of substitute products in the market?
A) value proposition
B) competitive environment
C) competitive advantage
D) market opportunity
) Which of the following represent Amazon’s primary value proposition(s)?
A) personalization and customization
B) selection and convenience
C) reduction of price discovery cost
D) management of product delivery
A firm’s ________ describes how a firm will produce a return on invested capital.
A) value proposition
B) revenue model
C) market strategy
D) competitive advantage
Which of the following is an example of the subscription revenue model?
A) Scribd
B) eBay
C) E*Trade
D) Twitter
Stickiness is an important attribute for which of the following revenue models?
A) advertising revenue model
B) subscription revenue model
C) transaction fee revenue model
D) affiliate revenue model
Which of the following companies use a transaction fee revenue model?
A) Yahoo
B) E*Trade
C) Twitter
D) Birchbox
Which of the following is an example of the affiliate revenue model?
A) Scribd
B) eBay
C) L.L. Bean
D) MyPoints
Which of the following involves a company giving away a certain level of product or services without charge, but then charging a fee for premium levels of the product or service?
A) advertising revenue model
B) subscription revenue model
C) freemium strategy
D) transaction fee revenue model
Which of the following is not a significant influence on a company’s competitive environment?
A) how many competitors are active
B) the market share of each competitor
C) the availability of supportive organizational structures
D) how competitors price their products
All of the following would be considered a direct competitor of Priceline except:
A) Travelocity.
B) Expedia.
C) Orbitz.
The existence of many competitors in any one market segment may indicate:
A) an untapped market niche.
B) the market is saturated.
C) no one firm has differentiated itself within that market.
D) a market that has already been tried without success.
All of the following can be considered a direct or indirect competitor of Amazon except:
A) eBay.
B) Apple’s iTunes Store.
C) Walmart.
D) Priceline.
A perfect market is one in which:
A) there are no competitive advantages or asymmetries because all firms have equal access to all the factors to production.
B) one firm develops an advantage based on a factor of production that other firms cannot purchase.
C) one participant in the market has more resources than the others.
D) competition is at a minimum, as each niche market within an industry is served by the company with the greatest competitive advantage.
Organizations that typically provide an array of services to start-up companies along with a small amount of funding are referred to as:
A) angel investors.
B) crowdfunders.
C) incubators.
D) venture capital investors.
A ________ specifically details how you plan to find customers and sell your product.
A) sales analysis
B) business plan
C) competitive strategy
D) market strategy
Which of the following was not able to successfully implement a freemium business model?
A) Pandora
B) Dropbox
C) LinkedIn
D) Baremetrics
All of the following may lead to a competitive advantage except:
A) less expensive suppliers.
B) better employees.
C) fewer products.
D) superior products.
Which of the following is an unfair competitive advantage?
A) brand name
B) access to global markets
C) lower product prices
D) superior technology
Which of the following gives a business model the most credibility with outside investors?
A) the firm’s management team
B) the firm’s value proposition
C) the firm’s market opportunity
D) the firm’s market strategy
Which of the following statements about Foursquare is not true?
A) Foursquare combines a social network business model with location-based technology.
B) Foursquare has struggled to find profitability.
C) Foursquare’s business model raises significant privacy concerns.
D) In 2016, Foursquare decided to refocus its effort on developing a subscription-based revenue model.
Which type of investor typically becomes interested in a start-up company after it has begun generating revenue?
A) incubators
B) angel investors
C) crowdfunders
D) venture capital investors
Which of the following is another name for a revenue model?
A) business model
B) business strategy
C) financial model
D) financial statements
All of the following use a social network marketing strategy except:
A) Twitter.
B) YouTube.
C) Pinterest.
D) Amazon.
The use of a company’s competitive advantage to penetrate surrounding markets is known as ________.
A) market strategy
B) differentiation
C) leverage
D) focus
A wealthy individual who invests personal funds in a start-up in exchange for an equity share in the business is referred to as a(n) ________.
A) incubator
B) angel investor
C) venture capital investor
D) crowdfunder
Which of the following is not a key element of an elevator pitch?
A) exit strategy
B) growth metrics
C) legal structure
D) market opportunity
Which of the following is not a community provider?
A) LinkedIn
B) Facebook
C) Blue Nile
D) Pinterest
Which of the following is not a variation of the e-tailer business model?
A) bricks-and-clicks
B) virtual merchant
C) market creator
D) manufacturer-direct
An example of a company using the content provider model is:
A) Priceline.
B) Rhapsody.
C) Dell.
D) eBay.
Which of the following is not an example of the bricks-and-clicks e-tailing business model?
A) Walmart
B) Sears
C) Bluefly
D) Staples
In general, the key to becoming a successful content provider is to:
A) own the content being provided.
B) own the technology by which content is created, presented, and distributed.
C) provide online content for free.
D) provide other services as well as online content.
The business model of e-tailers is similar to that of:
A) e-distributors.
B) transaction brokers.
C) exchanges.
D) service providers.
All of the following use an advertising revenue model except:
A) Twitter.
B) Yahoo.
C) Google.
D) Amazon.
Which of the following is not considered a portal?
A) Yahoo
C) Amazon
Portals primarily generate revenue in all of the following ways except:
A) charging advertisers for ad placement.
B) collecting transaction fees.
C) sales of goods.
D) charging subscription fees.
The basic value proposition of community providers is:
A) they offer a fast, convenient one-stop site where users can focus on their most important concerns and interests.
B) they offer consumers valuable, convenient, time-saving, and low cost alternatives to traditional service providers.
C) they create a digital electronic environment for buyers and sellers to meet, agree on a price, and transact.
D) they increase customers’ productivity by helping them get things done faster and with less expense.
eBay uses all of the following business models except:
A) B2C market creator.
B) C2C market creator.
C) content provider.
D) e-commerce infrastructure provider.
All of the following are business models employed in the online music industry except:
A) subscription.
B) peer-to-peer streaming.
C) download-and-own.
D) cloud streaming.
The financial services, travel services, and job placement services industries typically use the ________ business model.
A) community provider
B) transaction broker
C) market creator
D) e-tailer
In the ________ business model, a web-based business builds a digital environment in which buyers and sellers can meet, display products, search for products, and establish prices.
A) market creator
B) community provider
C) e-tailer
D) portal
All of the following are examples of business-to-business (B2B) business models except:
A) e-distributors.
B) e-procurement.
C) exchanges.
D) portals.
What is the primary revenue model for an e-distributor?
A) sales
B) transaction fee
C) advertising
D) subscription
Amazon is an example of which of the following business models?
A) B2B service provider
B) exchange
C) e-distributor
D) industry consortia
________ create and sell access to digital markets.
A) E-distributors
B) Portals
C) E-procurement firms
D) Market creators
Which of the following may offer its customers value chain management software?
A) e-distributors
B) e-procurement companies
C) exchanges
D) community providers
Over the past decade, the number of exchanges has:
A) greatly increased.
B) diminished sharply.
C) stayed about the same.
D) increased slowly but steadily.
TheSeam is an example of a(n):
A) private industrial network.
B) exchange.
C) industry consortium.
D) e-distributor.
A ________ marketplace supplies products and services of interest to particular industries.
A) perfect
B) differentiated
C) horizontal
D) vertical
Which business strategy involves implementing a new, more efficient set of business processes that other firms cannot yet obtain?
A) strategy of cost competition
B) scope strategy
C) customer intimacy strategy
D) focus/market niche strategy
Which of the following features of e-commerce technology changes industry structure by lowering barriers to entry but greatly expands the market at the same time?
A) global reach
B) richness
C) interactivity
D) personalization
Which of the following is not a primary activity in a firm value chain?
A) outbound logistics
B) finance/accounting
C) operations
D) after-sales service
A ________ is a networked business ecosystem that coordinates a firm’s suppliers, distributors, and delivery firms with its own production needs using an Internet-based supply chain management system.
A) value chain
B) value system
C) value web
D) business strategy
If you wished to leverage the ubiquitous nature of the Web to differentiate your product, you would:
A) enable individual customization of the product by consumers.
B) implement a strategy of commoditization.
C) adopt a strategy of cost competition.
D) develop a scope strategy to compete within a narrower market segment.
A strategy designed to compete within a narrow market or product segment is called a ________ strategy.
A) scope
B) differentiation
C) commoditization
D) focus
________ technologies are technologies that enable the incremental improvement of products and services.
A) Sustaining
B) Differentiating
C) Disruptive
D) Commodity
Innovative entrepreneurs and their business firms that destroy existing business models are referred to as ________.
A) crowdfunders
B) venture capitalists
C) disruptors
D) angel investors

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