BSG Comprehensive Final Exam Newest Actual Exam Preparation With Complete
Questions And Correct Answers With Rationales | Already Graded A+||Brand
New Version!!
Question 1
Which of the following is a specific way to reduce costs and strive to achieve a competitive
advantage based on lower overall costs per pair sold than rival companies?
A) Increasing the number of models/styles to 500 in all regions.
B) Setting the S/Q rating to at least 2 stars above the industry average.
C) Striving to keep marketing expenses per branded pair sold to amounts that are below the
industry-high in each region.
D) Increasing the annual dividend to shareholders to boost the stock price.
E) Only producing footwear in North America to avoid exchange rate risks.
Correct Answer: C) Striving to keep marketing expenses per branded pair sold to amounts
that are below the industry-high in each region.
Rationale: In the BSG simulation, cost leadership is achieved by managing every line item
on the income statement. While marketing is essential for sales volume, keeping those
expenses per unit below the maximum spent by rivals prevents "over-spending" that
erodes profit margins. Minimizing marketing "waste" while maintaining a competitive
presence allows a firm to maintain a lower cost structure than high-spending
differentiators.
Question 2
Which action is most likely to be an effective or attractive profit-enhancing way to reduce total
production costs per pair at a particular production facility?
A) Reducing the workforce by 50% regardless of demand.
B) Pursuing actions that will better enable the company to operate its production facilities at or
very close to full production capacity, including maximum use of overtime.
C) Cutting all spending on TQM/Six Sigma programs immediately.
D) Increasing the number of models/styles to create more variety for customers.
E) Shifting all production to regions with the highest exchange rate volatility.
Correct Answer: B) Pursuing actions that will better enable the company to operate its
production facilities at (or very close to) full production capacity, including maximum use
, 2
of overtime.
Rationale: Operating at full capacity allows a company to spread its fixed costs (such as
depreciation and administrative expenses) over the maximum number of units, thereby
reducing the "fixed cost per pair." Using overtime is often more cost-effective than building
new capacity because it avoids the massive capital expenditure and additional depreciation
associated with new space and equipment.
Question 3
Managers should examine the production benchmarks on page 6 of the Footwear Industry Report
(FIR) primarily to:
A) See which company has the most celebrities.
B) Determine the exact price rivals will charge in the upcoming year.
C) Determine whether immediate actions need to be taken to better manage total compensation,
productivity, labor costs, and reject rates.
D) Find out which geographic region has the highest demand for private-label shoes.
E) Decide how many shares of stock to repurchase in the next round.
Correct Answer: C) determine whether immediate actions need to be taken... to do a better
job of managing total compensation, workforce productivity, production labor costs,
spending for TQM/Six Sigma programs, total production costs, and/or reject rates.
Rationale: The FIR benchmarking data provides a "reality check" against the industry. If a
company’s labor costs per pair are in the "high" decile while productivity is in the "low"
decile, it indicates an efficiency crisis. Studying these benchmarks allows managers to
identify specific operational weaknesses and implement corrective measures like TQM
investment or incentive pay adjustments.
Question 4
What is a primary advantage of having production facilities located in all four geographic
regions?
A) It automatically guarantees a 25% market share in every region.
B) It eliminates the need for any marketing or search engine advertising.
C) Increased ability to lower expenditures for shipping/freight costs and reduced exposure to
, 3
high tariffs.
D) It allows the company to ignore the S/Q rating requirements for private-label bids.
E) It ensures the company’s credit rating will never drop below an A.
Correct Answer: C) Increased ability to lower expenditures for shipping/freight costs from
the company's production operations to distribution centers in the various regions.
Rationale: When a company produces shoes in the same region where they are sold (e.g.,
producing in Latin America for Latin American consumers), it avoids the $2.00+ per pair
shipping cost and the significant import tariffs that governments charge on foreign-made
goods. This localized production strategy is a cornerstone for firms seeking a sustainable
cost advantage.
Question 5
An appealing strategy to reduce exposure to adverse exchange rate adjustments when shipping
pairs to distribution warehouses is to:
A) Only sell footwear in the Asia-Pacific region where exchange rates are stable.
B) Invest in sufficient production capacity in each of the four geographic regions to eliminate the
need for cross-region shipping.
C) Increase the price of shoes by 20% every time a currency devalues.
D) Stop all private-label production immediately.
E) Request a loan from the World Bank to offset currency losses.
Correct Answer: B) invest in sufficient production capacity in each of the four geographic
regions to greatly reduce (maybe even eliminate) the need to ship pairs to a distribution
warehouse from a production facility in a different geographic region.
Rationale: Exchange rate shifts can swing profits by as much as 10-20% per pair when
shoes are made in one currency (e.g., Asia-Pacific) but sold in another (e.g., Europe-Africa).
By building plants in every region, the company "naturalizes" its costs and revenues,
essentially hedging against currency fluctuations while also saving on tariffs and freight.
Question 6
Which action is LEAST likely to increase labor productivity by an amount large enough to result
in lower labor costs per pair produced?
, 4
A) Investing in TQM/Six Sigma training for workers.
B) Installing production improvement options that automate the assembly process.
C) Increasing total compensation per production worker to an amount that is slightly above the
industry average.
D) Reducing the number of models/styles produced at the plant to simplify the workflow.
E) Increasing the reject rate to 15% to speed up the assembly line.
Correct Answer: C) Increasing total compensation per production worker to an amount that
is slightly above the industry-average.
Rationale: While higher pay can boost productivity, a "slight" increase above the average
often doesn't generate a large enough jump in pairs-per-worker to offset the higher wage
expense. To lower labor costs per pair, the percentage increase in productivity must exceed
the percentage increase in total compensation. Minimal pay raises usually result in a wash
or a slight increase in per-unit labor costs.
Question 7
The installation of production improvement option D (robots) which boosts worker productivity
by 50% is:
A) Equally attractive in all four geographic regions regardless of labor costs.
B) Only useful if the company is pursuing a high-price differentiation strategy.
C) A more economically attractive means for reducing labor costs in North America than in Asia-
Pacific.
D) A waste of money if the firm is already using overtime.
E) Prohibited if the company’s image rating is below 50.
Correct Answer: C) is a more economically attractive means for reducing labor costs per
pair produced at a production facility in North America than for a production facility in
the Asia-Pacific.
Rationale: Robots (Option D) reduce the need for human labor. Because wages in North
America and Europe-Africa are significantly higher than in Asia-Pacific or Latin America,
the "savings" from eliminating human labor hours are much greater in high-wage regions.
Questions And Correct Answers With Rationales | Already Graded A+||Brand
New Version!!
Question 1
Which of the following is a specific way to reduce costs and strive to achieve a competitive
advantage based on lower overall costs per pair sold than rival companies?
A) Increasing the number of models/styles to 500 in all regions.
B) Setting the S/Q rating to at least 2 stars above the industry average.
C) Striving to keep marketing expenses per branded pair sold to amounts that are below the
industry-high in each region.
D) Increasing the annual dividend to shareholders to boost the stock price.
E) Only producing footwear in North America to avoid exchange rate risks.
Correct Answer: C) Striving to keep marketing expenses per branded pair sold to amounts
that are below the industry-high in each region.
Rationale: In the BSG simulation, cost leadership is achieved by managing every line item
on the income statement. While marketing is essential for sales volume, keeping those
expenses per unit below the maximum spent by rivals prevents "over-spending" that
erodes profit margins. Minimizing marketing "waste" while maintaining a competitive
presence allows a firm to maintain a lower cost structure than high-spending
differentiators.
Question 2
Which action is most likely to be an effective or attractive profit-enhancing way to reduce total
production costs per pair at a particular production facility?
A) Reducing the workforce by 50% regardless of demand.
B) Pursuing actions that will better enable the company to operate its production facilities at or
very close to full production capacity, including maximum use of overtime.
C) Cutting all spending on TQM/Six Sigma programs immediately.
D) Increasing the number of models/styles to create more variety for customers.
E) Shifting all production to regions with the highest exchange rate volatility.
Correct Answer: B) Pursuing actions that will better enable the company to operate its
production facilities at (or very close to) full production capacity, including maximum use
, 2
of overtime.
Rationale: Operating at full capacity allows a company to spread its fixed costs (such as
depreciation and administrative expenses) over the maximum number of units, thereby
reducing the "fixed cost per pair." Using overtime is often more cost-effective than building
new capacity because it avoids the massive capital expenditure and additional depreciation
associated with new space and equipment.
Question 3
Managers should examine the production benchmarks on page 6 of the Footwear Industry Report
(FIR) primarily to:
A) See which company has the most celebrities.
B) Determine the exact price rivals will charge in the upcoming year.
C) Determine whether immediate actions need to be taken to better manage total compensation,
productivity, labor costs, and reject rates.
D) Find out which geographic region has the highest demand for private-label shoes.
E) Decide how many shares of stock to repurchase in the next round.
Correct Answer: C) determine whether immediate actions need to be taken... to do a better
job of managing total compensation, workforce productivity, production labor costs,
spending for TQM/Six Sigma programs, total production costs, and/or reject rates.
Rationale: The FIR benchmarking data provides a "reality check" against the industry. If a
company’s labor costs per pair are in the "high" decile while productivity is in the "low"
decile, it indicates an efficiency crisis. Studying these benchmarks allows managers to
identify specific operational weaknesses and implement corrective measures like TQM
investment or incentive pay adjustments.
Question 4
What is a primary advantage of having production facilities located in all four geographic
regions?
A) It automatically guarantees a 25% market share in every region.
B) It eliminates the need for any marketing or search engine advertising.
C) Increased ability to lower expenditures for shipping/freight costs and reduced exposure to
, 3
high tariffs.
D) It allows the company to ignore the S/Q rating requirements for private-label bids.
E) It ensures the company’s credit rating will never drop below an A.
Correct Answer: C) Increased ability to lower expenditures for shipping/freight costs from
the company's production operations to distribution centers in the various regions.
Rationale: When a company produces shoes in the same region where they are sold (e.g.,
producing in Latin America for Latin American consumers), it avoids the $2.00+ per pair
shipping cost and the significant import tariffs that governments charge on foreign-made
goods. This localized production strategy is a cornerstone for firms seeking a sustainable
cost advantage.
Question 5
An appealing strategy to reduce exposure to adverse exchange rate adjustments when shipping
pairs to distribution warehouses is to:
A) Only sell footwear in the Asia-Pacific region where exchange rates are stable.
B) Invest in sufficient production capacity in each of the four geographic regions to eliminate the
need for cross-region shipping.
C) Increase the price of shoes by 20% every time a currency devalues.
D) Stop all private-label production immediately.
E) Request a loan from the World Bank to offset currency losses.
Correct Answer: B) invest in sufficient production capacity in each of the four geographic
regions to greatly reduce (maybe even eliminate) the need to ship pairs to a distribution
warehouse from a production facility in a different geographic region.
Rationale: Exchange rate shifts can swing profits by as much as 10-20% per pair when
shoes are made in one currency (e.g., Asia-Pacific) but sold in another (e.g., Europe-Africa).
By building plants in every region, the company "naturalizes" its costs and revenues,
essentially hedging against currency fluctuations while also saving on tariffs and freight.
Question 6
Which action is LEAST likely to increase labor productivity by an amount large enough to result
in lower labor costs per pair produced?
, 4
A) Investing in TQM/Six Sigma training for workers.
B) Installing production improvement options that automate the assembly process.
C) Increasing total compensation per production worker to an amount that is slightly above the
industry average.
D) Reducing the number of models/styles produced at the plant to simplify the workflow.
E) Increasing the reject rate to 15% to speed up the assembly line.
Correct Answer: C) Increasing total compensation per production worker to an amount that
is slightly above the industry-average.
Rationale: While higher pay can boost productivity, a "slight" increase above the average
often doesn't generate a large enough jump in pairs-per-worker to offset the higher wage
expense. To lower labor costs per pair, the percentage increase in productivity must exceed
the percentage increase in total compensation. Minimal pay raises usually result in a wash
or a slight increase in per-unit labor costs.
Question 7
The installation of production improvement option D (robots) which boosts worker productivity
by 50% is:
A) Equally attractive in all four geographic regions regardless of labor costs.
B) Only useful if the company is pursuing a high-price differentiation strategy.
C) A more economically attractive means for reducing labor costs in North America than in Asia-
Pacific.
D) A waste of money if the firm is already using overtime.
E) Prohibited if the company’s image rating is below 50.
Correct Answer: C) is a more economically attractive means for reducing labor costs per
pair produced at a production facility in North America than for a production facility in
the Asia-Pacific.
Rationale: Robots (Option D) reduce the need for human labor. Because wages in North
America and Europe-Africa are significantly higher than in Asia-Pacific or Latin America,
the "savings" from eliminating human labor hours are much greater in high-wage regions.
