Chapter 6- Internal Analysis
6.1
The goal of analysis is to develop strategies that either exploit a firm’s strengths or correcting /
compensating for weaknesses.
6.2
ROA is return on sales times asset turnover.
6.3
________________ is comparing the performance of a business component such as warehouse
operations with similar operations in other companies.
6.4
Performance measures reflecting long-term profitability include all but one of the following:
a. Outsourcing ability
b. Product/service quality
c. Customer satisfaction
d. New product activity
e. Relative cost
6.5
One of the more important assets of many firms is the size of the customer base.
6.6
All the following are guidelines for measuring customer satisfaction except __________.
a. Identify causes of dissatisfaction that motivate customers to change brands
b. Evaluate the lifetime value of customer to the product
c. Track measures and compare to competitors
d. Differentiate between dissatisfaction and dislike of product
6.7
According to the book, strategies should be driven by three factors—organizational strengths and
weaknesses, market needs, and environmental trends.
6.8
All the following are ways to increase shareholder value except:
a. Invest in products that are low risk
b. Reduce the cost of capital by increasing debt to equity ratio
c. Earn more profit by reducing costs
d. Use less capital
e. Increase revenue without using more capital
6.9
Shareholder value analysis holds that the flow of profits emanating from an investment should exceed the
cost of capital.
6.10
One strength of shareholder value analysis is that it encourages priority to be given to other stakeholders.
6.11
Competences should be evaluated based on strength and revenue potential.
6.12
Kunz found that in their passbook business, small customers were profitable.