BUS 450 Exam 2 | Questions and Answers (Complete Solutions)

BUS 450 Exam 2 | Questions and Answers (Complete Solutions) In contrast to strategy formulation, strategy implementation focuses more on A. SWOT analysis B. motivation skills rather than analytical skills C. vision and mission statement assessment D. BCG analysis E. effectiveness rather than efficiency Which term(s) below would not be a good annual objective(s) A. Add 50 new sales representatives in Europe. B. Reduce costs 10%. C. Reduce long-term debt by 30%. D. Increase revenues 10%. E. Add new suppliers as soon as possible. What is the broad term that refers to all other terms listed below. The term can apply to all divisions and departments (such as "We are an equal opportunity employer") or to a single department ("Employees in this department must take one training course a year") A. Guidelines B. Procedures C. Policies D. Rules E. Methods Which factor below commonly prohibits effective resource allocation? A. Reshoring B. Benchmarking C. Placing too great an emphasis on short-run financial criteria D. Retrenchment E. Reengineering Conflict is always Bad True False Changes in structure often require changes in organization's strategies True False Structure dictates how an organization's resources will be allocated True False Changes in strategy often require changes in an organization's structure True False How many basic types of organizational structure are discussed in the chapter A. 5 B. 7 C. 11 D. 9 E. 3 A disadvantage of a functional structure is it A. leads to poor delegation of authority. B. enhances benchmarking. C. enhances career development opportunities. D. forces accountability down in a structure. E. promotes diversity. The divisional structure can be organized by A. process or customer B. geographic area or human resource function C. customer or creditor D. region or factory E. customer or technology What type of structure is the most complex of all the organizational designs or structures? A. Strategic business unit (SBU) B. Matrix C. Functional D. Division by process E. Conglomerate The percentage of large companies in the U.S. with a Chief Operating Officer (COO) has declined almost ever year for a decade, to about 60% today True False Organizational structure is more a strategy implementation than a strategy formulation issue True False Which statement below is NOT a guideline for developing an organizational chart? A. Make sure span of control is reasonable, probably no more than 10 persons reporting to any other person. B. Make sure functional executives such as CFO, CIO, CMO, CSO, R&D, CLO, CTO, and HRM report to the CEO, not to the COO. C. Reserve the title president for the CEO of the firm. D. Use an SBU type structure for large, multidivisional firms. E. Decentralize, using some form of divisional structure, whenever possible. Reengineering does not usually affect an organizational chart True False Restructuring is concerned primarily with shareholder well-being rather than employee well-being True False Restructuring is concerned primarily with employee well-being rather than shareholder well-being True False Reengineering is characterized by man tactical (short-term, business function-specific) decisions True False Reengineering is an analogous term for benchmarking True False What is the greatest single-threat to successful strategy implementation? A. Resistance to change. B. Low customer loyalty C. Data breaches D. Ineffective organizational structure E. Social media rumor versus fact Companies have the legal right to monitor employees' conduct and the legal duty to do so only if there is sufficient reason for concern True False Many companies illegally monitor the social media activities of employees and prospective employees. True False Which of the following sequences of marketing activities is correct? A. Product positioning, market segmentation, target marketing B. Target marketing, product positioning, market segmentation C. Product positioning, target marketing, market segmentation D. Market segmentation, target marketing, product positioning E. Market segmentation, product positioning, target marketing Perceptual mapping is a marketing tool associated with _____. A. market segmentation B. target marketing C. portfolio analysis D. product positioning E. value chain analysis Although the exponential increase in social-media engagement has created huge opportunities for marketers, it also has produced severe threats; any kind of negative publicity travels fast online True False About 50 percent of all traffic on the Internet is reportedly fake; it is the result of bogus computers programmed to visit websites to take advantage of marketers who typically pay for ads whenever they are loaded when a user visits a webpage. Marketers must pay whether the user is a bogus computer or a real person. True False The marketing mix variables include what aspects of a product offerings? A. Perceptual mapping, promotion, and price B. Product, positioning, place, promotion, pricing C. Price, positioning, promoting, and distributing D. Positioning, segmenting, targeting E. Product, place, promotion, price The term "corporate wellness" has largely been replaced by what new term? A. Corporate fitness B. Corporate vitality C. Sustainability D. Corporate well-being. E. Corporate healthiness When a firm buys more of its own common stock, what is the effect on the firm's earnings per share (EPS) value? A. The effect varies by industry. B. The effect varies by size of firm. C. It goes up. D. There is no effect. E. It goes down. In EPS/EBIT analysis, from where does the tax rate percentage come? A. Estimate the company's future tax rate based on the company's strategies. B. Use the respective country's federal income tax rate. C. Use the company's prior year tax rate as revealed by dividing income before taxes by taxes paid off the firm's income statement. D. Use the company's prior year tax rate as revealed by dividing income before taxes by taxes paid off the firm's cash flow statement. E. Just use 10 percent for all financing options to better examine impact of debt versus stock options for raising capital. Limitations of EPS/EBIT analysis include ______. A. timing and control B. lack of diversity C. dividends and EPS ranges D. continuity and ratio analysis E. lack of control What is another term for profits? A. Revenue B. Future income C. Net revenue D. Past income E. Earnings In performing EPS/EBIT analysis, how is the first row (EBIT) determined? A. Use the most recent year Revenues number plus or minus the impact of recommendations to determine a range. B. Use the most recent year Retained Earnings number plus or minus the impact of recommendations to determine a range. C. Use the most recent year Cash number plus or minus the impact of recommendations to determine a range. D. Use the most recent year EPS number plus or minus the impact of recommendations to determine a range. E. Use the most recent year EBIT number plus or minus the impact of recommendations to determine a range. In developing projected financial statements, with what row item does one start? A. Cost of Goods Stole B. Earnings C. Cash D. Cost of Goods Sold E. Revenues The shares of stock of a firm that are owned by the firm itself are called _____. A. goodwill B. convertible stock C. preferred stock D. retained earnings E. treasury stock In developing projected financial statements, how are retained earnings calculated on the balance sheet? A. Add the net income less dividends to the prior year's retained earnings. B. Add the net income to the prior year's retained earnings. C. Use a percentage of sales methods based on the prior 3 years. D. Use a percentage of sales method based on the prior 3 years coupled with the company's strategies. E. Use retained earnings as the plug figure to make the balance sheet balance. In what way mentioned below would retained earnings on the balance sheet decrease from one year to the next? A. If the firm had zero net income for the year and pays no dividends B. If the firm had positive net income for the year but pays out dividends greater than the net income C. If the firm has a negative capital surplus D. If the firm has negative paid-in-capital E. If the firm has cash or liquidity problems Sometimes firms will increase their Treasury Stock near the end of the quarter, or near the end of the year, to inflate their EPS "artificially" True False Seeing Goodwill regularly increasing on a balance sheet is not a good thing True False The corporate valuation formula for the net worth method is _____. A. total owners' equity (SE) plus (goodwill + intangibles) B. net worth plus retained earnings plus (goodwill + intangibles). C. additional paid in capital plus retained earnings minus (goodwill + intangibles) D. additional paid in capital plus retained earnings minus (goodwill - intangibles) E. total shareholders' equity (SE) minus (goodwill + intangibles). Regarding corporate valuation, a conservative rule of thumb is to establish a business's worth as ______ times the firm's current annual profit. A. 12 B. 6 C. 3 D. 10 E. 5 What formula below is correct for valuing a company using the price-earnings ratio method? A. Divide the market price of the firm's common stock by the annual earnings per share (EPS) and multiply this number by the firm's average net income for the past 5 years. B. Divide the market price of the firm's common stock by the firm's debt-to-equity ratio and multiply this number by the firm's average net income for the past 5 years. C. Divide the market price of the firm's common stock by the annual earnings per share (EPS) and multiply this number by the firm's average sales for the past 5 years. D. Divide the market price of the firm's common stock by the annual earnings per share (EPS) and multiply this number by the firm's average revenue for the past 5 years. E. Divide the market price of the firm's common stock by the firm's current ratio and multiply this number by the firm's average net income for the past 5 years. Develop a clear vision and mission statement is part of the strategy evaluation process True False In many, organizations strategy evaluation is simply an appraisal of how well an organization has performed True False As described in Chapter 9, what is the first strategy-evaluation activity? A. Formulate strategies. B. Establish a clear vision and mission statement. C. Review the underlying bases of strategy. D. Measure performance of the firm across all products and regions. E. Establish clear objectives. What is the second of the three strategy-evaluation activities? A. Measure organizational performance. B. Review the underlying bases of strategy. C. Survey managers and employees for input information. D. Calculate all relevant financial ratios and compare with industry norms. Your answer is not correct. E. Establish clear objectives. _____ is the third strategy-evaluation activity. A. Take corrective actions. B. Revise the firm's vision, mission, and objectives. C. Re-formulate strategies. D. Reward both employees and managers appropriately. E. Develop projected financial statements. The basic premise of ______ is that firms should establish objectives and evaluate strategies on criteria other than using only financial measures. A. value chain analysis B. reengineering C. cost-benefit analysis D. balanced scorecard E. benchmarking ______ is the characteristic of ensuring that long-term strategic objectives and plans are established and that the proper management structure is in place to achieve those objectives, while at the same time making sure that the structure functions to maintain the corporation's integrity, reputation, and responsibility to its various constituencies. A. Sustainability B. Value chain analysis C. Benchmarking D. Governance E. Reengineering Contingency plans should be established if _____. A. sales objectives are reached B. a new technological advancement makes a new product obsolete sooner than expected C. demand for a new product cannot be determined D. a major competitor liquidates E. demand for a product does as expected When evaluating strategies, GAAP stands for what term? A. Generally accepted actuary procedures B. Generally accepted accounting principles C. Generally accepted auditing principles D. Generally accepted accounting procedures E. Generally accepted auditing standards When evaluating strategies, GAAS stands for what term? A. Generally accepted administrative scales B. Generally accepted actuary standards C. Generally accepted auditing standards D. Generally accepted administrative standards E. Generally accepted actuary scales When evaluating strategies, IFRS stands for what term? A. Interactive financial reporting standards B. International financial ratio standards C. Interim financial ratio standards D. International financial reporting standards E. Interim financial reporting standards Strategic planning is an art rather than a science. True False Mintzberg's notion of "crafting" strategies embodies the artistic model, which suggests that strategic decision making be based primarily on holistic thinking, intuition, creativity, and imagination True False There are no good reasons to keep the strategy process and strategies themselves visible and open rather than hidden and secret True False The Chinese warrior Sun Tzu and military leaders today strive to keep strategies secret, because war is based on deception; but for business organizations, secrecy may not be best True False The textbook recommends what approach to strategic planning? A. It depends on the workforce. B. Top-down C. It depends on the size of the firm. D. Bottom-up E. It depends on the industry. Advantages of keeping the strategic-planning process secret include which statement below? A. Secrecy increases criticism, second-guessing, and hindsight. B. Openness is always better than secrecy. C. Participants in a visible strategy process become more attractive to rival firms, that may lure them away. D. Participants in a visible strategy process become less attractive to rival firms that may lure them away. E. Secrecy enables rival firms to imitate the firm's strategies and undermine the firm. "Participation and openness lead to conciseness and accuracy" is a reason to that the textbook gives to be open with the strategy process True False Mintzberg refers to strategic planning as an "inevitable" process, whereas strategy scientists use the term "absolute" process. True False Mintzberg's notion of "crafting" strategies embodies the artistic model, which suggests that strategic decision making be based primarily on holistic thinking, intuition, and creativity True False The Mintzberg philosophy insists on informality, whereas strategy scientists (and the authors of this text) insist on more formality True False Strategic plans should be worded in plain jargon True False You should welcome bad news and encourage devil's advocate thinking True False Executives should keep assignments, team memberships, and meeting formats constant for a year. True False Strategic decisions require tradeoffs such as long-range versus short-range considerations and maximizing profits versus increasing shareholders' wealth True False Successful companies maintain loose financial controls. True False Successful companies treat facts as friends and controls as liberating.