BKT Test Flashcards

Question

What is the difference between incremental and disruptive innovation?

Answer 1

Incremental innovation involves small, gradual improvements to existing products or processes. Disruptive innovation introduces something entirely new that fundamentally changes or displaces an existing market.

Answer 2

First mover advantage is the competitive benefit gained by being the first to enter a market. Risks include high R&D costs, market uncertainty, and the possibility that competitors learn from your mistakes and enter more efficiently.

Answer 3

The process of identifying opportunities, taking risks, and organizing resources to create a new business or bring a new product/service to market.

Answer 4

A business model describes how a company creates, delivers, and captures value. Innovating the business model can create competitive advantages even without changing the product itself.

Answer 5

Invention is the creation of something new. Innovation is taking that invention and successfully bringing it to market or applying it to create value.

Answer 6

A strategy where companies use both internal and external ideas and paths to market, collaborating with outside partners, startups, or customers to drive innovation rather than relying solely on internal R&D.

Answer 7

Introduction, Growth, Maturity, and Decline.

Answer 8

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It helps companies identify where innovation is needed and where they have the internal capabilities to pursue it.

Answer 9

Design thinking is a human-centered approach to problem solving that involves empathizing with users, defining problems, ideating solutions, prototyping, and testing — commonly used to drive product and service innovation.

Answer 10

The concept introduced by Clayton Christensen describing how successful companies can fail by continuing to focus on existing customers and products, causing them to miss disruptive innovations that eventually overtake them.

Answer 11

An MVP is a version of a product with just enough features to satisfy early customers and gather feedback for future development, minimizing risk and cost during the innovation process.

Answer 12

A culture that encourages risk-taking, experimentation, and learning from failure fosters innovation. A rigid, risk-averse culture tends to suppress it.

Answer 13

Sustaining innovation improves existing products for current customers. Disruptive innovation targets overlooked segments with simpler, cheaper solutions that eventually displace established products.

Answer 14

Intrapreneurship is the practice of encouraging employees within an established company to act like entrepreneurs — developing new ideas, products, or processes from within the organization.

Answer 15

Product, Price, Place, and Promotion — the traditional marketing mix used to bring a product or service to market.

Answer 16

A strategy is the overall plan to achieve a marketing goal (e.g., target a new demographic). A tactic is the specific action taken to execute that strategy (e.g., run a social media ad campaign).

Answer 17

Market segmentation is dividing a broad target market into smaller groups with similar needs or characteristics. It allows companies to tailor their marketing efforts more effectively to specific audiences.

Answer 18

B2B (business-to-business) marketing targets other companies as customers. B2C (business-to-consumer) marketing targets individual consumers. B2B typically involves longer sales cycles and more rational decision-making.

Answer 19

A clear statement that explains how a product solves a customer's problem, what benefits it delivers, and why a customer should choose it over the competition.

Answer 20

Features are the characteristics of a product (what it has). Benefits are what those features do for the customer (why it matters to them). Effective marketing focuses on benefits.

Answer 21

Brand equity is the value a brand adds to a product beyond its functional characteristics. High brand equity means customers are willing to pay more and remain loyal based on brand reputation alone.

Answer 22

Price elasticity measures how sensitive consumer demand is to a change in price. If demand drops significantly when price rises, it is elastic. If demand stays relatively stable, it is inelastic.

Answer 23

Setting a low initial price to quickly gain market share, then gradually raising the price once a customer base is established.

Answer 24

Push marketing involves pushing products toward consumers through promotions and advertising. Pull marketing focuses on creating demand so consumers seek out the product themselves.

Answer 25

Place refers to how and where a product is distributed and made available to customers — including channels, logistics, and retail presence.

Answer 26

Positioning is how a company wants its product to be perceived in the minds of consumers relative to competitors. It is determined by identifying the target market, key benefits, and competitive differentiation.

Answer 27

Technological advancements, shifting consumer preferences, demographic changes, globalization, and new competitive entrants can all disrupt existing markets.

Answer 28

Market penetration focuses on selling more of an existing product in an existing market. Market development involves entering new markets with existing products.

Answer 29

Generally Accepted Accounting Principles. It provides a standardized framework for financial reporting, ensuring consistency and comparability across companies.

Answer 30

The Income Statement (revenues and expenses over a period), the Balance Sheet (assets, liabilities, and equity at a point in time), and the Cash Flow Statement (cash inflows and outflows over a period).

Answer 31

Assets = Liabilities + Owner's Equity. This equation must always remain balanced.

Answer 32

Cash basis records revenue and expenses when cash is actually received or paid. Accrual basis records them when they are earned or incurred, regardless of when cash changes hands. GAAP requires accrual accounting.

Answer 33

An asset is something a company owns that has economic value. A liability is an obligation or debt the company owes to others.

Answer 34

Depreciation is the process of allocating the cost of a tangible asset over its useful life. It reflects the gradual consumption of the asset's value and reduces taxable income.

Answer 35

Gross profit is revenue minus the cost of goods sold (COGS). Net profit is what remains after all expenses, including operating costs, interest, and taxes, are subtracted from revenue.

Answer 36

Money owed to the company by customers for goods or services already delivered but not yet paid for. It is listed as a current asset.

Answer 37

Debits increase asset and expense accounts, while decreasing liability and equity accounts. Credits do the opposite. Every transaction must have equal debits and credits.

Answer 38

An audit is an independent examination of a company's financial statements to verify their accuracy and compliance with GAAP. It provides credibility to financial reporting for investors and stakeholders.

Answer 39

Expenses should be recorded in the same period as the revenues they helped generate, ensuring accurate measurement of profitability.

Answer 40

Accounts payable is money the company owes to suppliers (a liability). Accounts receivable is money owed to the company by customers (an asset).

Answer 41

Financial accounting is focused on reporting financial information to external stakeholders (investors, regulators). Managerial accounting is focused on providing internal information to managers for decision-making, planning, and control.

Answer 42

A budget is a financial plan that estimates revenues and expenses over a future period. It helps managers allocate resources, set goals, and measure performance against expectations.

Answer 43

Fixed costs remain constant regardless of production volume (e.g., rent). Variable costs change in direct proportion to production volume (e.g., raw materials).

Answer 44

The break-even point is where total revenues equal total costs — no profit or loss. It is calculated by dividing fixed costs by the contribution margin per unit (Price - Variable Cost per unit).

Answer 45

Contribution margin is revenue minus variable costs. It represents how much each unit sold contributes to covering fixed costs and generating profit. It helps managers make pricing and production decisions.

Answer 46

A tool used to understand the relationship between costs, sales volume, and profit. It helps managers determine how changes in price, costs, or volume affect profitability.

Answer 47

Direct costs can be traced directly to a specific product or service (e.g., raw materials). Indirect costs cannot be easily traced to a single product and are shared across multiple products (e.g., factory overhead).

Answer 48

ABC assigns overhead costs to products based on the specific activities that drive those costs, rather than using a single overhead rate. It provides more accurate cost information for complex operations.

Answer 49

A variance is the difference between a budgeted or standard amount and the actual amount. Favorable variances mean actual costs were lower than expected; unfavorable variances mean they were higher.

Answer 50

Capital budgeting involves evaluating long-term investment decisions such as purchasing equipment or expanding facilities. Common tools include Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.

Answer 51

Absorption costing includes both fixed and variable manufacturing costs in the product cost. Variable costing only includes variable manufacturing costs, treating fixed overhead as a period expense.

Answer 52

A responsibility center is a unit within a company where a manager is held accountable for specific financial outcomes. The main types are cost centers (control costs), revenue centers (generate revenue), profit centers (control both), and investment centers (responsible for return on investment).

BKT Test Flashcards

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