MGMT478 CH. 7-8

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Which statement below is​ TRUE?

"Going public" means selling off a percentage of a company to others to raise​ capital; consequently, it dilutes the​ owners' control of the firm.

Going public is not recommended for companies with sales of less than ​______.

$10 million

Going public is not recommended for companies with less than​ $ ________ million in sales because the initial costs can be too high for the firm to generate sufficient cash flow to make going public worthwhile.

10

Guidelines for developing organizational charts suggest that spans of control should be​ reasonable, probably no more than how many​ people?

10

Most financial institutions require how many years of projected financial statements when a business seeks​ capital?

3

Most financial institutions require​ ______ of projected financial statements whenever a business seeks capital.

3 years

Regarding corporate​ valuation, a conservative rule of thumb is to establish a​ business's worth as​ ______ times the​ firm's current annual profit.

5

How many basic types of organizational structure are discussed in the​ chapter?

7

Which​ term(s) below would not be a good annual​ objectives?

Add new suppliers as soon as possible.

In developing projected financial​ statements, how are retained earnings calculated on the balance​ sheet?

Add the net income less dividends to the prior​ year's retained earnings.

Which of the following statements are​ TRUE?

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.

Theoretically, how much debt should a company carry on its balance​ sheet?

An enterprise should carry enough debt in its capital structure to boost its return on investment in projects earning more than the cost of the debt.

According to​ Schein, what statement below is not included as a useful element in linking culture to​ strategy?

Benchmarking

What title should be reserved for the top executive of a​ firm?

CEO

Who is a big advocate for economies of​ scale, arguing that growth for the sake of growth is a misguided​ strategy? He suggests firms should be careful not to venture into areas outside their corporate​ strategy; instead, they should deploy resources into areas that will build economies of scale.

CEO of JPMorgan Jamie Dimon

Which statement below is​ FALSE?

Changes in structure often require changes in an​ organization's strategies.

What is the recommended bottom line for companies monitoring​ employees' social media​ use?

Companies have the legal right to monitor​ employees' conduct, but their legal duty is to do so only if there is sufficient reason for concern.

At​ Facebook, Inc., employees are given unusual freedom to choose and change assignments. Even​ low-level employees are encouraged to question and criticize managers. Which of the following HR issues does this exemplify​ best?

Creating a strategy-supportive culture

EPS/EBIT analysis is used to​ ______.

Determine the appropriate mix of debt and equity in a​ firm's capital structure

What formula below is correct for valuing a company using the​ price-earnings ratio​ method?

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.

Which of the following is NOT a corporate valuation​ method?

EPS method

Which of the following is NOT a management​ trade-off decision required in strategy​ implementation?

Finance with Bank A locally or with Bank B​ locally?

Chapter​ 8's exemplary​ strategist, Jamie​ Dimon, CEO of JP​ Morgan, is a big advocate for economies of scale. What does Dimon advice regarding​ this?

Firms should be careful not to venture into areas outside their corporate strategy

Who is featured at the beginning of the chapter as a most​ "exemplary strategist?"

Former CEO of​ PepsiCo, Indra Nooyi

Which of the following represents a​ well-written objective?

Grow by 10% this fiscal year

Moving a company from being private to being public is​ a(n) ​______.

IPO

In what way mentioned below would retained earnings on the balance sheet decrease from one year to the​ next?

If the firm had positive net income for the year but pays out dividends greater than the net income

Which of the following is NOT true of the CEO and Chairperson of the Board​ positions?

In corporate America, the current trend is to split the two positions in privately held companies

When a firm buys more of its own common​ stock, what is the effect on the​ firm's earnings per share​ (EPS) value?

It goes up

Which statement below is not a guideline for developing an organizational​ chart?

Make sure only presidents of divisions report to the CEO.

Which statement below is​ FALSE?

Many companies illegally monitor the social media activities of employees and prospective employees.

Which of the following sequences of marketing activities is​ correct?

Market​ segmentation, target​ marketing, product positioning

The top 20 most valuable college football programs are listed in the chapter in terms of their monetary value. What team is most​ valuable?

Ohio State Buckeyes

A​ full-blown example of a projected financial statement analysis is worked out and presented in Chapter 8 for​ _____.

P&G

Which factor below commonly prohibits effective resource​ allocation?

Placing too great an emphasis on​ short-run financial criteria

Which of the following is TRUE of​ policies?

Policies are needed to make a strategy work

Which of the following statements about policies is​ TRUE?

Policies should be stated in writing whenever possible

Chapter​ 8's exemplary​ strategist, Jamie​ Dimon, CEO of JP​ Morgan, says successful strategic planning has more to do with heart than mind. What does Dimon say this​ means?

Provide people a platform to which they can contribute.

Which is NOT a characteristic of​ policies?

Represent the basis for allocating resources

Which statement below is not a guideline for developing an organizational​ chart?

Reserve the title president for the CEO of the firm.

Which​ statement(s) below is​ FALSE?

Restructuring is concerned primarily with employee​ well-being rather than shareholder​ well-being.

Which​ statement(s) below is​ TRUE?

Seeing Goodwill regularly increasing on a balance sheet is not a good thing.

Which is NOT a required step in perceptual​ mapping?

Serve two segments with the same strategy.

According to Table​ 8-5 in Chapter​ 8, what are the three most corrupt countries in the​ world?

Somalia, South​ Sudan, North Korea

Which​ statement(s) is​ TRUE?

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".

Which of the following describes a movement currently underway in corporate​ America?

Splitting the Chairperson of the Board and the CEO positions in publicly held companies

Megan is doing a projected financial statement for her biking company. She is currently calculating the projected net income. This falls into which step in the process of making a projected financial​ statement?

Step 3

​______ is the idea that there is a barrier that bars women and minorities from​ top-level management positions.

The glass ceiling

Which valuation method is most feasible for small business​ evaluation?

The net income method

Which​ statement(s) below is​ FALSE?

The percentage of large companies in the United States with a chief operating officer​ (COO) has declined almost every year for a​ decade, to about 60 percent today.

Which of the following statements is TRUE regarding the issuance of corporate bonds in the United​ States?

The year 2017 was the seventh straight year that a record dollar value of bonds was sold in the United​ States, totalling more than​ $1.5 trillion.

Which statement below is​ FALSE?

There are more female CEOs in the United States than male CEOs.

Which of the following is NOT one of the primary reasons that annual objectives are essential for strategy​ implementation?

They enable effective monitoring of progress toward short-term objectives

What is a key reason that policies are essential instruments for strategy​ implementation?

They promote delegation of decision making to appropriate managerial levels where various problems usually arise.

Which of the following is not true of annual​ objectives?

They represent a primary tool for formulating strategy

Which of the following is a guideline for developing an organization​ chart?

Use Chairperson of the Board instead of Chairman of the board

In performing​ EPS/EBIT analysis, how is the first row​ (EBIT) determined?

Use the most recent year EBIT number plus or minus the impact of recommendations to determine a range.

n​ EPS/EBIT analysis, from where does the tax rate percentage​ come?

Use the​ company's prior year tax rate as revealed by dividing income before taxes by taxes paid off the​ firm's income statement.

Which of the following is NOT cited as a benefit of a diverse​ workforce?

Women represent an additional pool of applicants that saves the firm money due to the pay gap.

Clayton, Dubilier​ & Rice, LLC acquired Emergency Medical Services​ (EMS) Corporation for​ $2.9 billion​ (9.4 percent below​ EMS's stock price of​ $64.00). This is an example​ of:

a discount

According to the​ text, ______ is arguably the most important strategic decision facing large companies annually

allocating resources across business segments

Many practitioners and students of strategic planning use which of the following to develop existing and projected financial​ statements?

an Excel template provided by www.strategyclub.com

An organization needs to achieve desired milestones in order to ensure successful strategy​ implementation; these milestones are known as​ ______.

annual objectives

The amount by which retained earnings changes is obtained by subtracting

any dividends to be paid for that year from net income.

Which of the following is not one of the ways in which a divisional structure may be​ organized?

business function

List the four basic ways a divisionally structured firm could be organized.

by geographic area, by product, by customer, or by process.

Corporate valuation​ ______.

can use different valuation methods, which will yield different results

What is the focus of​ reengineering?

changing the way work is actually carried out

What statement below is​ FALSEf?

conflict is always bad

Which of the following is NOT true about​ conflict?

conflict is always bad

The term​ "corporate wellness" has largely been replaced by what new​ term?

corporate well-being

Two primary sources of capital are

debt and equity

Two primary sources of the capital required to implement strategy successfully​ are:

debt and equity

Which of the following is not a​ production/operations issue important for successful strategy​ implementation?

developing a diverse workforce

Except for the smallest​ organizations, the transition from strategy formulation to strategy implementation requires a shift in responsibility from strategists to​ ______.

divisional and functional managers

What is another term for​ profits?

earnings

Which of the following is NOT a type of resource that can be used to achieve desired organizational​ objectives?

environmental

A conservative rule of thumb is to establish a​ business' worth as​ ________ the​ firm's current annual profit.

five times

A divisional structure can be organized in all of the following ways except​ by:

function

What is the most widely used​ structure?

functional

When a university groups tasks and activities such as academic​ affairs, student​ services, athletics,​ maintenance, and​ accounting, it is using which type of​ structure?

functional

What is the fourth and final step of an​ EPS/EBIT analysis?

graph the analysis

Firms must be cautious when​ ______ due to the increasing number of lawsuits based on noncompete agreements.

hiring employees from rival firms

Financial ratios are examined based on three major​ areas; these include which of the​ following?

how they compare to key competitors

Which of the following is considered a potential limitation of​ EPS/EBIT analysis?

if interest rates are expected to​ rise, then debt could be better than​ stock, regardless of the determined EPS values in the analysis.

Which of the following reflects managing conflict by​ avoidance?

ignoring a problem inn hopes that it will resolve itself

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

interest expense

Moving a company from being private to being public​ ______.

is an IPO

Which of the following statements about organizational structure is​ TRUE?

it can influence strategy

Which is NOT true of​ EPS?

it is sometimes referred to as operating income

A disadvantage of a functional structure is​ it____.

leads to poor delegation of authority.

Which of the following is NOT a major factor that should be studied before locating production​ facilities?

local public transportation

Which of the following is not an HR issue impacting strategy​ implementation?

managing resistance to change

A clothing company divides its market into distinct subsets of​ consumers, offering different products and strategies for each. This is an example of​ ______.

market segmentation

Three marketing strategies represent​ marketing's most important contributions to strategic management. What are these three marketing strategies in the order they are​ executed?

market segmentation, target marketing, and positioning

What type of structure is the most complex of all the organizational designs or​ structures?

matrix

When developing an organizational​ chart, one should avoid having a particular person report to more than one person in the chain of command. The only exception to this is in​ a(n) ______ structure.

matrix

Which organizational structure violates the​ unity-of-command principle?

matrix

Functional resources are shared in a​ ______ structure, rather than duplicated in a​ ______ structure.

matrix; divisional

In contrast to strategy​ formulation, strategy implementation focuses more on​ _____.

motivation skills rather than analytical skills

To use the outstanding shares method of corporate​ valuation, ​______.

multiply the number of shares outstanding​ (or issued) by the market price by share

Which of the following relates to strategy implementation but not strategy​ formulation?

people-orientation

Marketers use a tool called​ ______ to develop schematic representations that reflect how a​ firm's goods or services compare to​ competitors' in the mind of consumers.

perceptual mapping

Which process involves developing schematic representations to compare how customers think about a​ company's products and​ competitors' products?

perceptual mapping

The marketing mix variables are​ product, ______,​ promotion, and price

place

Annual objectives should be supported by clearly stated ​______.

policies

Specific​ guidelines, methods,​ procedures, rules,​ forms, and administrative practices established to support and encourage work toward stated goals are known​ as:

policies

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 at least one training and development course each​ year").

policies

Prohibiting​ employees' use of personal social media sites during work hours is an example of​ a(n) ______.

policy

What involves designing a marketing mix that provides unique value to target customers

positioning

The divisional structure can be organized by​ ____.

process or customer

Perceptual mapping is a marketing tool associated with​ _____.

product positioning

The marketing mix variables include what aspects of a product​ offerings?

product, place, promotion, price

Dr. Howard Schilit discusses five major ways top executives manipulate financial statements. Which of the following is NOT one of​ them?

recording revenue well after the fact

Policies help an organization in all of the following ways EXCEPT

reduce work load of employees.

Zara is modifying jobs in her organization in ways that reduce cost and improve quality. This is an example​ of:

reengineering

Which statement below is​ FALSE?

reengineering is an analogous term for benchmarking

According to the​ chapter, "______ may be the​ single-greatest threat to successful strategy​ implementation."

resistance to change

According to the​ text, ______ may be the single greatest threat to successful strategy implementation.

resistance to change

Distributing an​ organization's assets across​ products, regions, and segments according to priorities established by annual objectives is referred to as​ ______.

resource allocation

A manufacturing company is looking to reduce the size of its overall workforce and reduce the level of hierarchy. This is an example​ of:

restructuring

In developing projected financial​ statements, with what row item does one​ start?

revenues

Which of the following can be used to mean the same as sales​?

revenues

What does it mean to​ "go public"?

selling off a percentage of a company to others to raise capital

Annual objectives are essential to which phase of the strategic management​ process?

strategy implementation

According to Alfred​ Chandler, ​______.

structure follows strategy

Alfred Chandler suggests that​ ______.

structure follows strategy

When a firm changes its​ strategy, ​______.

the organizational structure may become ineffective

If earnings and the number of shares are taken at the same point in​ time, which corporate valuation methods will be the​ same?

the price/earnings ratio and outstanding shares methods

Which of the following is TRUE of organizational​ structure?

there is no one optimal organizational design or structure for a given strategy or type of organization

Limitations of​ EPS/EBIT analysis include​ ______.

timing and control

Which of the following is NOT a symptom of an ineffective organizational​ structure?

too few levels of management

The corporate valuation formula for the net worth method is​ _____.

total​ shareholders' equity​ (SE) minus​ (goodwill +​ intangibles).

Shares of stock that a firm has repurchased are called​ ______.

treasury stock

The shares of stock of a firm that are owned by the firm itself are called​ _____.

treasury stock

Is it true or false that the free Excel strategic planning template at www.strategyclub.com will automatically balance your projected balance​ sheets, but​ 1) you likely will need to make adjustments to the cash​ account, and​ 2) the template does not automatically balance your existing balance​ sheets, i.e. once you enter your​ firm's financial statements into the template​ format, you will need to make adjustments as needed.

true

Under which of the following conditions can issuing bonds be an effective way to raise​ capital?

when a company's balance sheet is strong

Goodwill on the balance sheets of​ S&P 500 firms changed from​ $1.7 trillion in 2007 to how much in​ 2017?

​$3 trillion

What are the three categories of approaches for managing and resolving​ conflict?

​Avoidance, defusion, and confrontation


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