BSG Final(practice)
Production improvement option B (with capital costs of $1.6 million per million pairs of production capacity and annual depreciation costs of 10%) that reduces production run setup costs by 50% each year makes the most economic sense in which one of the following circumstances?
A company's strategy is to pursue actions that will reduce production costs per pair produced at each of its production facilities to as low a level as possible--lowering production run setup costs helps achieve this strategic objective; therefore, installing option B should be done at each of the company's production facilities, irrespective of facility capacity and number of models to be produced.
Which one of the following actions is least likely to boost labor productivity by a sufficient amount to lower labor costs per pair produced at a particular plant?
Actions to boost total compensation per production worker to an amount that not only is the highest in each region where the company has production operations but also is at least $10,000 above the industry-average in those regions
Which of the following actions is not one of the optional initiatives that a company can include in its social responsibility strategy to boost its image rating over the long term?
Building and operating a large employee housing facility within walking distance of each company production facility with 1, 2, and 3 bedroom units that employees can rent at an economical price
Which one of the following is an advantage of having production facilities to manufacture athletic footwear in all four geographic regions?
Increased ability to reduce payments for import tariffs because when a company has production operations in all four geographic regions it typically needs to ship fewer pairs of footwear from production facilities in one region to distribution centers in a different region
Which one of the following acts/outcomes provides the biggest direct boost to a company's image rating?
Increasing the company's global market share of branded footwear sales
Which one of the following is not a way to improve the S/Q rating of branded pairs produced at a particular production facility?
Increasing the number of models/styles produced
Which of the following actions is unlikely to help make a company's branded footwear more competitive vis-a-vis the brands of rival firms?
Investing in production improvement option A to reduce the reject rates by 50% at all of the company's production facilities
Which of the following are effective ways for managers to try to boost a company's stock price?
Raising the company's dividend each year by $.25 per share or more, repurchasing shares of common stock, and striving to achieve a high percentage of the five investor-expected performance targets (particularly the EPS target) over the years a management team is in charge of company operations
Which of the following sets of actions are unlikely to help a company achieve a differentiation-based competitive advantage over some/many of its rivals?
Raising worker base pay by 10% or more each year at all of the company's production facilities, charging prices for branded footwear that are $5 or more above any other company in the industry in all four geographic regions, and having the largest global production capacity of any company in the industry
Which one of the following is a way to reduce costs and strive to achieve a competitive advantage based on lower overall costs per pair sold than rival companies?
Striving to keep marketing expenses per branded pair sold to amounts that are below the industry-high in each region
Based on the industry-low, industry-average, and industry-high values for the benchmarking data on pp. 6-7 of each issue of the FIR, which one of the following is the most valid signal that one or more elements of a company's costs are too high relative to those of rival companies?
The company's operating profit per branded pair sold is $0.50 above the industry-average benchmark in the Asia-Pacific region
Which one of the following is the most trustworthy sign that companies opting to install additional production capacity in the upcoming decision round will likely struggle to avoid the extra costs of having unneeded production capacity and/or excessively large year-end inventories of branded footwear?
The number of pairs that can be produced worldwide at full production capacity (including overtime) already exceeds by 20% the combined demand for branded footwear and private-label footwear three years from now (as reported in the most recent year's FIR).
Under what circumstances should a company's management team seriously consider submitting a price offer to supply private-label footwear to chain retailers in a particular geographic region?
When the company has excess production capacity at a production facility in that geographic region that will otherwise be idle
Which one of the following constitutes a valid reason/condition for a company to consider shifting away from pursuit of a global differentiation strategy keyed to producing and marketing 450+ models/styles of top quality branded footwear at above-average prices in all four regions?
When there are so many rival companies trying to sell 400+ models/styles of top-quality, premium-priced athletic footwear--a comparatively small target buyer segment--that fierce competition among these companies makes it challenging for them to achieve the sales volumes needed to consistently meet or beat investor expectations on the five performance measures
One profit-enhancing strategic approach a company can use to adjust to favorable and unfavorable exchange rate adjustments to its total production costs stemming from shipping footwear from production facilities in one geographic region to distribution warehouses in another region is to
adjust the company's shipping decisions and pricing and marketing efforts each decision round to sell more pairs in regions where the exchange rate adjustments are favorable and sell fewer pairs in regions where the cost adjustments are unfavorable; such shifts tend to boost profits in regions with favorable adjustments and lessen the adverse impact on profits in regions with unfavorable adjustments.
The industry-low, industry-average, and industry-high branded operating benchmarks on p. 7 of each issue of the Footwear Industry Report
always merit close attention because when these benchmarks signal that a company's cost of branded pairs sold, distribution and warehouse costs, or operating profit margins in one or more geographic regions compare unfavorably, managers are well-advised to take immediate corrective actions in the upcoming decision round.
The most competitively effective and very likely most profitable long-term approach to reduce or eliminate the impact of paying tariffs on pairs imported to a company's distribution warehouse in Latin America is to
build production capacity in Latin America and then expand the facility's capacity as may be needed to supply all (or at least most) of the pairs the company intends to try to sell in Latin America.
One of the lessons about competing in a globally competitive marketplace that comes from "playing" The Business Strategy Game is that
competition is dynamic and always evolving, forcing each company to consider on an ongoing basis what strategy adjustments it needs to make to improve its competitiveness vis-a-vis rivals and improve its overall performance.
A dependable and attractive strategy for managers to use in trying to boost their company's EPS is to
concentrate the company's production of footwear at a large-scale production facility in the Asia-Pacific--the resulting super-low production costs and the ability to produce 500 models/styles cheaper than any other production facility in the world will typically yield consistent annual increases in total profits and EPS in step with the rising global demand for branded footwear.
If a company is being outcompeted by various rival companies in the Europe-Africa market for branded footwear and consequently has an unappealingly low branded market share in Europe-Africa, then company managers should
correct most or all of the company's high percentage competitive disadvantages shown on the Comparative Competitive Efforts page for Europe-Africa in the latest CIR; then, managers should selectively strengthen the company's competitive efforts on 2-3 of the 8 competitive factors in the Internet segment and 10 competitive factors in the Wholesale by amounts sufficient to yield high-percentage competitive advantages vis-a-vis its Europe-Africa rivals in the upcoming decision round.
The Time Series Competitive Efforts section of the CIR which provides every company's management team with a means of reviewing how the regional competitive efforts of any company of interest have changed over the years is particularly useful for
drawing conclusions about what levels of competitive effort the industry's one or two best performing companies may employ in the year or two ahead and then determining what levels of competitive effort your company may need to employ to narrow the performance gap.
If a company invests in production improvement option D that will boost labor productivity by 50%, while its annual depreciation costs will rise by an amount equal to 10% of the investment costs associated with installing option D, it is accurate to say that its labor costs per pair produced will decline
from $8.00 per pair to $5.33 for a production facility in North America that currently has labor productivity of 5,000 pairs per worker and total regular compensation (which does not include overtime pay) of $40,000 annually.
The managerial value of regularly consulting the data in the Year-to-Year Performance Highlights report has to do with the data provided being the quickest and best way to:
identify which of the company's competitive efforts in the branded Internet and Wholesale segments need to be increased, left as is, or decreased in the upcoming decison round.
Which of the following statements about striving to reduce labor costs per pair produced at each of the company's production facilities is true?
it is very difficult for a company producing branded footwear with a high S/Q rating to achieve labor costs per pair produced that are below the industry average in each geographic region where the company has production facilities.
Flawed ways to pursue competitive efforts that will successfully differentiate a company's branded footwear from the branded offerings of rival companies include
not charging prices for branded footwear price that are slightly below the industry-average wholesale price and the industry-average Internet retail price in all four geographic regions.
While contracting with celebrities to endorse a company's brand adds to the competitive power of its product offering vis-a-vis the offerings of rivals, one of the big risks in deciding how much a company can afford to bid for an upcoming celebrity is
overestimating the size of the gains in branded sales volume and revenue that the company is likely to realize should it be the winning bidder and, therefore, bidding more than the celebrity's endorsement turns out to be worth.
A strategy to be a low-cost provider of branded footwear is unlikely to result in the company being one of the best-performers in the industry unless the company's management team
proves adept in operating the company as cost effectively (or, ideally, more cost effectively) than any other rival pursuing a strategy of being a low-cost provider of branded footwear.
If a company's actual results for revenues, net profits, EPS, and ROE turn out to be worse than projected, then it is usually because
some or many of the competitive efforts of rival firms in one or more geographic regions turned out to be stronger than anticipated by company managers (based on the entries for the Competitive Assumptions on the Internet Marketing and Wholesale marketing decision screens in the four geographic regions).
A company cannot differentiate its branded footwear from the brands of rivals and effectively attract more buyers to purchase its brand by
spending more money on efforts to reduce the reject rates at its production facilities than do most all other rivals.
The most important results from the latest decision round that company managers need to review/study in order to guide their strategic moves and decisions to improve their company's competitiveness and overall performance on the five investor-expected performance targets in the upcoming decision round are
the Comparative Competitive Efforts data for each region in the Competitive Intelligence Report.
Valid reasons why a company should definitely open a new production facility in Latin America include
the fact that labor costs per pair produced in Latin America are the lowest in the world due to the very high productivity of production workers in Latin America.
The installation of production improvement option D which boosts worker productivity by 50% by using robots to assist in producing footwear
would be a more economically attractive means for reducing labor costs per pair at a recently opened production facility in Europe-Africa than for a recently opened production facility of the same size in Latin America.
Which of the following cost-saving actions can potentially result in a company gaining a sustainable cost advantage over rivals because the company's actions to cut costs cannot be detected by rivals from the information in either the FIR or the Comparative Competitive Efforts section of the CIR?
Investing in production improvement options B and C that give the company lower-cost capability to produce large numbers of models/styles of branded footwear with attractively high S/Q ratings as compared to rivals choosing NOT to invest in these same options.
Which one of the following is not a factor that helps determine a company's credit rating?
Its current ratio
Which one of the following is likely to be the most effective and/or competitively attractive way to try to reduce total production costs per pair at a particular production facility?
Pursuing actions that will better enable the company to operate its production facilities at (or very close to) full production capacity, sometimes including maximum use of overtime
Which one of the following options is usually an appealing way to try to increase a company's ROE?
Pursuing actions to boost the company's net profits by healthy amounts every year and, further, to maintain a high dividend p
If a company is striving to gain a competitive advantage by producing its branded footwear at a lower per pair production cost than some/many/all rival firms, then it should regularly review the production benchmarks on p. 6 in each year's Footwear Industry Report to
gauge whether its efforts to achieve a low-cost advantage per branded pair produced have been more/less successful than other companies pursuing much the same outcome and to learn what aspects of its production operations may warrant further actions to reduce costs per pair.
A company's managers should probably give serious consideration to changing from a low-cost/low price strategy for branded footwear to a different strategy when
the company's branded footwear costs are near or above the industry averages for many/most of the benchmarked cost categories contained in the FIR and, furthermore, both the Internet and Wholesale segments in all four regions are crowded with competitors selling branded footwear at below-average prices.
One of the benefits of contracting with celebrities to endorse the company's brand of athletic footwear is
the positive impact that celebrity endorsements have on increasing a company's sales and market share of branded footwear in each geographic region.
The benefits of pursuing a strategy of social responsibility and corporate citizenship include
the positive impact that such a strategy has on the company's image rating/brand reputation, provided the company spends a meaningful amount on socially responsible activities and such spending is sustained over a multi-year period.
