BUS 495 FINAL REVIEW

What is NOT one of the basic ways a divisional structure can be organized?

by cost

Which divisional structure stands out for effectiveness when a few major customers are of paramount importance and many different services are provided to these customers?

by customer

Two primary sources of capital are

debt and equity

Operating income is sometimes also called

EBIT

A functional structure can be effective at eliminating short-term and narrow thinking.

False

A projected financial analysis can be used to forecast the impact of various implementation decisions.

False

Most large companies have abandoned the functional structure in favor of decentralization.

True

With a divisional structure, it is possible that competition between divisions may become so intense that it leads to improved sharing of ideas and resources for the common good of the firm.

False

One of the steps of the SWOT Matrix is to list the firm's key external opportunities.

True

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

True

Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats?

WT

In the Boston Consulting Group (BCG) Matrix, which element represents the industry growth rate in sales, measured in percentage terms?

Y-Axis

The Omega Company sells two very different types of products, each of which needed special emphasis. The type of structure that would best suit the Omega Company is the __ structure.

divisional-by-product

What type of organizational structure promotes specialization of labor and allows rapid decision making?

functional structure

Which element in the projected income statement CANNOT be forecasted using the percentage-of-sales method?

interest expense

Subdividing a market into distinct subsets of customers according to their needs and buying habits is known as

market segmentation

What is the most complex form of organizational structure?

matrix

Which of the following is NOT a management issue central to strategy implementation?

performing an internal audit

What tends to become a more attractive financing technique when interest rates are high?

stock issuance

In the BCG Matrix, a division with a high relative market share position in a low-growth industry can be described as a

Cash Cow

In preparing projected statements, to project cost of goods sold in the income statement, which of these methods is recommended?

Common Size Method using percentage-of-sales

Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called ___ matrices.

Portfolio

Name and explain the two dimensions of the BCG Portfolio Matrix

Relative Market Share: used as a substitute for competitive strength. The larger the firm's market share, relative to its largest competitor, the stronger the firm is in the marketplace Market Growth Rate: used as a measure of the attractiveness of the market, with high-growth markets being seen as more attractive and offering more potential and opportunity

Which section of the SWOT Matrix involves matching internal strengths with external opportunities?

SO Cell

Name and briefly explain Porter's Three Tests for assessing value creation through diversification

The attractiveness test answers how attractive the market is. The industries chosen for diversification must be structurally attractive or capable of being made attractive. The attractiveness test addresses if the new market is appealing for the company to enter in the first place. The cost-of-entry test answers how expensive it is to enter the market. The cost of entry must not capitalize all the future profits. The cost-of-entry test evaluates if the potential profitability of the market is greater or lower than the cost of entering. The better-off test answers if the company will be in a better position. The better-off test looks to establish if the company or new unit will be better off from the diversification and thus gain some form of competitive advantage. In order to pass the test, there has to be some tangible benefit for the company.

Which of the following is NOT given as an example of a decision that may require finance/accounting policies?

To be a price leader or a price follower

Another term for earnings is profits.

True

Dividends and taxes cannot be forecasted using the percentage-of-sales method.

True

Alfred Chandler's conclusions on the relationship between strategy and structure can be summed up as

structure follows strategy