BUS 495 Final Exam
In the Boston Consulting Group (BCG) Matrix, which element represents the industry growth rate in sales, measured in percentage terms? First quadrant X-axis Second quadrant Y-axis Third quadrant
Y-axis
Subdividing a market into distinct subsets of customers according to their needs and buying habits is known as Market segmentation Market segregation Product diversification Positioning Market penetration
Market segmentation
What is the most complex form of organizational structure? Functional SBU Divisional Matrix Geographic
Matrix
Operating income is sometimes also called SWOT ROA EPS EBIT ROE
EBIT
A functional structure can be effective at eliminating short-term and narrow thinking False True
False
All items on the income statement can be forecasted using the percentage-of-sales method True False
False
Most large companies have abandoned the functional structure in favor of decentralization False True
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 firms. False True
False
One of the steps of the SWOT Matrix is to list the firm's key external opportunities. False True
True
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit. False True
True
Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats? WT WO SO SW ST
WT
You are making a $120,000 investment and feel that a 10 percent rate of return is reasonable given the nature of the risks involved. You expect you will receive cash flows of $48,000 in the first year, $54,000 in the second year, and $56,000 in the third year. You expect to invest an additional $12,000 in the fourth year. What is the net present value of this investment given your expectations? $14,206.10 $18,534.25 $5,607.16 $2,141.93 $16,233.33
$2,141.93 (-120000+48000/(1+0.1)^1 + 54000/(1+0.1)^2 + 56000/(1+0.1)^3 - 12000/(1+0.1)^4 = 2141.93)
A proposed project requires an initial cash outlay of $749,000 for equipment and an additional cash outlay of $48,500 in year one to cover operating costs. During years 2 through 4, the project will generate cash inflows of $354,000 a year. What is the net present value of this project at a discount rate of 16 percent? $128,612 -$105,427 -$41,209 $239,601 $67,333
-$105,427 (-749000 - 48500/(1+0.16)^1 + 354000/((1+0.16)^2 + 354000/(1+0.16)^3 + 354000/(1+0.16)^4=105426.81)
Name and briefly explain Porter's Three Tests for assessing value creation through diversification
?
Name and explain the two dimensions of the BCG Portfolio Matrix
?
Under Armour is considering entering the wearables segment by acquiring Fitbit Inc, which is one of the pioneers of this innovative technology. Currently, Fitbit has a market valuation of $1.3 billion. The boom in wearable technology has been mainly fueled by fitness, such as wearable gadgets' that monitor a person's heart rate or accurately track exercise levels. These gadgets have been successful because they are helpful to the user and easy to integrate into everyday life.Explain how Porter's Cost of Entry Test can be used by Under Armour to evaluate value-creation derived from the potential acquisition of Fitbit. Name two other Porter's Tests that can be used to examine value creation from diversification
?
What is NOT one of the basic ways a divisional structure can be organized? By process By product By customer By cost By geographic area
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 geographic area By product By cost By customer By process
By customer
In the BCG Matrix, a division with a relative market share position in a low-growth industry can be described as a: Cash Cow Star Question Mark Dog Failure
Cash Cow
In preparing projected statements, to project cost of goods sold in the income statement, which of these methods is recommended? Net income method Outstanding shares method Net worth method Common size method using percentage-of-sales Price-earnings ratio method
Common size method using percentage-of-sales
Two primary sources of capital are Debt and borrowings Debt and sale of assets Debt and equity Equity and sale of assets Debt and accounts receivable
Debt and equity
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-geography Divisional-by-region Divisional-by-size Divisional-by-process Divisional-by-product
Divisional-by-product
What type of organizational structure promotes specialization of labor and allows rapid decision making? Divisional structure by customer Matrix structure Functional structure Divisional structure by product Strategic business unit
Functional structure
Which element in the projected income statement CANNOT be forecasted using the percentage-of-sales method? Administrative expense Operating expenses Interest expense Cost of goods sold Selling expense
Interest expense
Which of the following is NOT a management issue central to strategy implementation? Performing an internal audit Minimizing resistance to change Revising reward and incentive plans Devising policies Developing an effective human resources function
Performing an internal audit
Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called _____________ matrices. Vector Strategy Velocity Portfolio Security
Portfolio
What tends to become a more attractive financing technique when interest rates are high? Staying privately owned Stock issuance Borrowing Debt Cost cutting
Stock issuance?
Alfred Chandler's conclusions on the relationship between strategy and structure can be summed up as Structure shapes strategy Structure follows strategy Structure and strategy are unrelated Strategy and structure are independent factors Strategy follows structure
Structure follows strategy
Which section of the SWOT Matrix involves matching internal strengths with external opportunities? The ST cell The WT cell The SW cell The SO cell The WO cell
The SO cell
Which of the following is NOT given as an example of a decision that may require finance/accounting policies? To extend the time of accounts receivable To establish a certain percentage on accounts within a specified period of time To be a price leader or a price follower To lease or buy fixed assets To use LIFEO, FIFO, or a marker-value accounting approach
To be a price leader or a price follower
A projected financial analysis can be used to forecast the impact of various implementation decisions False True
True
Another term for earnings is profits True False
True
Dividend and taxes cannot be forecasted using the percentage-of-sales method True False
True
