MGMT478 CH. 7-8
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