Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
What will be the result if a company which achieves a negative performance spread shrinks?
1)
A)
Value opportunity forgone
B)
Value destruction
C)
Value maintenance
D)
Value creation
2)
What key benefit results from using value–creation profile charts to review current SBU activities?
2)
A)
They identify ways of minimising returns.
B)
They extend the planning horizon.
C)
They may reveal particular product or customer categories that destroy wealth.
D)
They may reveal areas in which borrowing can be increased.
3)
An SBU’s plans are for an investment of £0.5m, which is expected to achieve a 20 percent per
annum return over 10 years, followed by returns equal to the risk–adjusted required return (15 per
cent). What will be the result?
3)
A)
Value creation
B)
Value opportunity forgone
C)
Value destruction
D)
Value maintenance
4)
Which three of the following are key roles of the corporate centre in value–based strategic
organisations?
4)
A)
Instructing managers in each strategic business unit on the details of operations
B)
Managing strategic value drivers shared by two or more strategic business units
C)
Providing the pervading philosophy and governing objective for all business units
D)
Allocating resources to those strategic business units and product and/or customer areas
offering the greatest value creation while withdrawing capital from those destroying value
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5)
What will be the result if a company grows and achieves a negative performance spread?
5)
A)
Value destruction
B)
Value maintenance
C)
Value creation
D)
Value opportunity forgone
6)
In an investigation of the value creation of three products, a company found that A and B were
value creating, but C was value destroying. They also found that a profile of customers identified
that value creation for sales in England were value destroying, but sales in Wales and Scotland
were value creating. Which two actions would you probably recommend to the company?
6)
A)
Stop sales in England
B)
Increase production of C
C)
Focus sales efforts in England
D)
Stop production of C
7)
Which three of the following are important aspects of the role of the corporate centre (or head
office)?
7)
A)
Structuring the organisation so that rules and responsibilities are clearly defined
B)
Ensuring that work groups act efficiently to reach targets
C)
Managing strategic value drivers shared by SBUs
D)
Portfolio planning
8)
Which of the following options best defines the term ‘strategic business unit’?
8)
A)
A business unit which is distinguishable from other business units because it serves a defined
external market in which management can conduct strategic planning in relation to products
and markets
B)
A functional area of a business, for example production, distribution or administration
C)
A part of a business concerned with just one product or one market
D)
A division of a large firm that operates in a manner very similar to other units within the firm,
thus creating internal competition
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TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false.
9)
The strategic financial plans are planned long–term financial actions and the anticipated financial
impact of those actions.
9)
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Answer Key
Testname: C16
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