Return on equity
A) is the ratio of net profit after taxes to shareholders’ equity.
B) is a profitability ratio.
C) is referred to by the acronym ROE.
D) measures the rate of return on the book value of shareholders’ total investment in the
company.
E) all of the above
Answer:
Controls which measure variables that influence future profitability are called
A) steering controls.
B) activity controls.
C) behavior controls.
D) output controls.
E) influencing controls.
Answer:
Most entrepreneurial ventures follow
A) differentiation strategies.
B) focus strategies.
C) no strategies.
D) cost leadership strategies.
E) all of the above
Answer:
There are three distinct phases in the development of a matrix structure. Which phase
occurs when both the functional and product structures become permanent in a true
dual-authority structure?
A) temporary cross-functional task forces
B) true dual-authority structure
C) product/brand management
D) immature matrix
E) mature matrix
Answer:
A description of what the company is capable of becoming is referred to as
A) strategic vision.
B) strategic concept.
C) strategic mission.
D) strategic flexibility.
E) strategic familiarity.
Answer:
Top-down planning that emphasizes formal strategy formulation and leaves the
implementation issues to lower management levels is known as
A) forecast-based planning.
B) externally oriented planning.
C) strategic management.
D) basic financial planning.
E) none of the above
Answer:
To succeed in a hypercompetitive industry, companies must be willing to
A) cut prices below marginal costs.
B) pursue market share instead of profits.
C) operate in the ethical gray zone.
D) cannibalize their own successful product lines.
E) reduce spending on research and development.
Answer:
Converting categories on financial statements from dollar terms to percentages results
in
A) inflation-adjusted statements.
B) diverse rates of returns.
C) common-size statements.
D) constant dollar denominations.
E) equivalency comparison.
Answer:
All of the following ratios represent activity ratios EXCEPT
A) accounts payable period.
B) days of inventory.
C) net working capital turnover.
D) earnings per share.
E) days of cash.
Answer:
Which financial indicator shows the current market’s evaluation of a stock, based on its
earnings?
A) debt to asset ratio
B) price/earnings ratio
C) coverage of fixed charges
D) debt to equity ratio
E) times interest earned
Answer:
The technique used to help strategic managers choose among alternative choices by
defining the task environment, developing a set of various forecasts, and using pro
forma financial statements is called
A) decision trees.
B) SWOT analysis.
C) industry scenarios.
D) corporate scenarios.
E) Capital Asset Pricing Model.
Answer:
A company which has previously found great success pioneering an extremely
successful product that is presently trying to turn another “long-shot” into a success
would be an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand
Answer:
When calculating a “deserved pay” for CEOs based upon earnings growth and
shareholder return, financial research firm Obermatt found that
A) there is a negative correlation between CEO pay and company performance.
B) there is a positive correlation between CEO pay and company performance.
C) there is no correlation between CEO pay and company performance.
D) CEO pay packages were rejected by 90% of shareholders.
E) most compensation systems were aligned with the interests of shareholders.
Answer:
Which method of managing disparate cultures involves a relatively balanced
give-and-take of cultural and managerial practices between the merger partners, and no
strong imposition of cultural change on either company?
A) separation
B) deculturation
C) integration
D) assimilation
E) segmentation
Answer:
In licensing arrangements
A) the licensee can gain technical expertise.
B) companies can be aided in entering new countries directly.
C) the licensee might become a competitor to the licensing firm.
D) companies should never license their distinctive competencies.
E) all of the above
Answer:
Carroll’s four responsibilities listed in order of priority are
A) legal, economic, ethical, and discretionary.
B) legal, ethical, discretionary, and economic.
C) economic, legal, ethical, and discretionary.
D) economic, ethical, discretionary, and legal.
E) ethical, economic, legal, and discretionary.
Answer:
Amenities to attract highly skilled labor, scientists, or creative people is a common
organizational requirement for which of Porter’s generic competitive strategies?
A) cost leadership
B) differentiation
C) cost leadership focus
D) differentiation focus
E) collusion
Answer:
In many cases, ________ integration is more profitable than ________ integration.
A) forward; backward
B) vertical; backward
C) backward; vertical
D) backward; forward
E) mass; forward
Answer:
An industry dominated by a few large firms, all of which struggle with product
differentiation, is known as
A) multidomestic.
B) consolidated.
C) global.
D) indigenous.
E) worldwide.
Answer:
When the return on investment for each division of a corporation is greater than what
the return would be if each division were an independent business, that corporation is
said to have achieved
A) synergy.
B) a leveraged buyout.
C) its hurdle rate.
D) the status of a true conglomerate.
E) Stage III.
Answer:
According to the BCG Growth Share Matrix, the key to success with this model is
A) effective management.
B) competitive positioning.
C) innovative initiative.
D) industry leadership.
E) market share.
Answer:
The requirements of a board of directors vary significantly by country and by state;
however, there is a developing consensus as to what the major responsibilities should
be. Which of the following is NOT one of the responsibilities?
A) effective board leadership including the processes, makeup and output of the board
B) strategy of the organization
C) risk vs. initiative and the overall risk profile of the organization
D) becoming directly involved in managerial decisions
E) sustainability
Answer:
Issues in affirmative action such as reverse discrimination are examples of conflicts
between
A) compensatory and punitive justice.
B) retributive and distributive justice.
C) distributive and compensatory justice.
D) retributive and compensatory justice.
E) punitive and retributive justice.
Answer:
The ability of an organization to reshape its environment is described by
A) population ecology theory.
B) institution theory.
C) the strategic choice perspective.
D) organizational learning theory.
E) organizational citizenship theory.
Answer:
Which strategy involves giving up management of the firm to the courts in return for
some settlement of the corporation’s obligations?
A) liquidation
B) bankruptcy
C) diversification
D) divestment
E) consolidation
Answer:
Unlike ROI, managers cannot manipulate the numbers of EVA.
Answer:
As compared to a firm with low financial leverage, a firm with a high amount of
financial leverage in an expanding market should have
A) lower profits.
B) higher profits.
C) higher earnings per share.
D) lower earnings per share.
E) higher sales revenue.
Answer:
Which of the following is an example of an objective?
A) Diversify product line to appeal to more people.
B) Increase sales by 10% over last year.
C) Pay highest salaries to keep high quality employees.
D) Develop and sell quality appliances worldwide.
E) Divide a sales region into a group of sales districts.
Answer:
One benefit of a U.S. company entering a joint venture with an international firm is that
it
A) reduces the risks of expropriation by host country officials.
B) enhances the policy of the host country’s takeover of the firm.
C) promotes skepticism among other countries not involved in the merger.
D) encourages competitors to work with the company.
E) increases revenues by 20%.
Answer:
The purchasing strategy used by an automobile manufacturer when it orders seats for a
specific car model from several vendors is
A) sole sourcing.
B) multiple sourcing.
C) just-in-time sourcing.
D) backup sourcing.
E) parallel sourcing.
Answer:
Which strategy is most appropriate as a temporary strategy to enable a corporation to
consolidate its resources after prolonged rapid growth in an industry now facing an
uncertain future?
A) horizontal integration strategy
B) no change strategy
C) retrenchment strategy
D) pause/proceed with caution strategy
E) profit strategy
Answer: