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BSG Comprehensive Exam (Fall 2019) EXAM 2024-2025 QUESTIONSAND ANSWERS 100 % PASS SOLUTION A+ GRADE
An appealing strategy that a company can use to reduce exposure to adverse exchange rate adjustmentsto the costs of pairs shipped to a distribution warehouse from a plant in a different geographic region is to - answer>>· Build sufficient plant capacity in each of the four geographic regions to greatly reduce(maybe even eliminate) the need to ship pairs to a distribution warehouse from a plant in a different geographic region - such a strategy has the added benefit of cutting tariff payments on importedfootwear
If a company is pursuing a strategy to produce branded footwear at a low-cost relative to any other rivalfirm, then it should regularly review the plant and production cost benchmarking data in each year's footwear industry report to - answer>>· Gauge whether its efforts to reduce total manufacturing costper branded pair produced have been more/less successful than other companies pursuing much the same outcome and to learn what areas of plant operations may warrant further actions to reduce costs Which of the following statements about striving to reduce labor costs per pair produced at each of thecompany's plants is true? - answer>>· To achieve labor costs per pair produced at a particular plant that are "low" compared to their plants in the same geographic region, company manager must - eachdecision round- seek out a combination of base pay increases, piecework incentives per non-defective pair produced, and expenditure for best practices training at the plan that is projected to drive downlabor costs even further
Which one of the following will NOT help a company boosts its credit rating from a A- to A? - answer>>·A decline in the company's current ration from 2.0 to 1.
The benefits of pursuing a strategy of social responsibility and corporate citizenship include - answer>>·The positive impact that such a strategy has on the company's image rating, provided the company spends a meaningful amount on socially responsible activities and such spending is sustained over amulti-year period
If a company's managers want to succeed in creating a differentiation-based competitive advantage(And a potential cost advantage in achieving the differentiation) that is difficult for rivals to quickly or easily copy (because every strategic move a company makes to outcompete rivals and gain acompetitive advantage is not apparent from information contained in the FIR and the competitive
intelligence Report), then the managers have to - answer>>· Do a better job then rivals in identifying andimplementing ways to become very cost-efficient in producing and marketing 350-500 models/styles of branded footwear that also have the highest S/Q rating in the industry Which on of the following is a way to improve the S/Q rating of branded pairs produced at a particularplant - answer>>· Increasing expenditures for TQM/Six Sigma Programs
A dependable and appealing way for managers to try and boost their company's EPS is to - answer>>·Achieve a sizable cost based competitive advantage over rivals that company managers are savvy enough to sustain; as the market demand for branded footwear grows and the company exploits its costadvantage by underpricing most/all rivals in all four geographic regions, the resulting sales volume and revenue gains will typically spur increases in EPS Brinker International operates restaurants in several different segments of the casual dining market.This is - answer>>an example of product diversification.
On the most basic level, corporate-level strategy is concerned with ____ and how to manage thesebusinesses. - answer>>what product markets and businesses the firm should be in
Which acquisition would be considered the LEAST related? - answer>>an upscale "white-tablecloth"restaurant chain acquires a travel agency
The more "constrained" the relatedness of diversification, - answer>>the more links there are amongthe businesses owned by an organization.
Valid reasons to consider building a new plant in Latin America include - answer>>· Low tariff costs onfootwear sales in Latin America (because no import tariffs are paid on footwear produced at the Latin American plant and shipped to the distribution warehouses in Latin America) A company stands a better chance of achieving a sustainable cost-based competitive advantage overrivals if its managers - answer>>· Pursue a number of cost-reducing initiatives that can be concealed
o Reduction = 6.25 * 5.00 = $1. Which of the following combinations of actions will likely provide the biggest competitive benefits inhelping a company achieve a differentiation-based competitive advantage over some/many of its rivals?
- answer>>· Offering 400 or more models/styles to buyers in all four geographic regions, maintaining acelebrity appeal rating of 200 or higher in all four geographic regions, selling branded footwear with a 7- star or higher S/Q rating in all four geographic regions, and offering a rebate of $9 in all four geographicregions
It is both reasonable and wise for a company to consider shifting away from pursuit of a strategy tostrongly differentiate its branded footwear from the offerings of rival companies and sell its footwear at a premium price when - answer>>· A big percentage of industry rivals are trying to outcompete eachother with copycat differentiation strategies that include high S/W ratings, many models/styles, high celebrity appeal ratings, and above-average advertising expenditures Which of the following is NOT of much significance to company manager in deciding whether profitableopportunity exist to build (or purchase) additional plant capacity in the upcoming decision round? - answer>>· Information in the most recent FIR indicates that more than half of the companies in theindustry have expanded their plant capacity since year 10
What IS significant to company managers in deciding whether profitable opportunity exist to build (orpurchase) additional plant capacity in the upcoming decision round? - answer>>· The growth in branded demand and private-label demand over the next 3 years (as reported in each year FIR) · How branded pairs available for sale in each geographic region in the past year compared withprojected branded demand and private label demand in each geographic region over the next three years as shown in each year FIR · The size of beginning inventories of branded footwear in each geographic region reported in the mostrecent FIR
· Whether the most recent years FIR shows that the industry already has more than enough productioncapacity worldwide to supply the combined demand for branded footwear and private-label footwear worldwide for each of the next three years If a company's actual results for revenues, net profits, EPS, and ROE turn out to be worse than projectedthen it is usually because - answer>>· The competitive efforts exerted by rival companies to capture sales and market share for themselves in one or more geographic regions proved stronger thancompany manager anticipated, given the estimates they entered for the various industry averages affecting internet sales and branded wholesale sales on the sales forecast screen Which of the following are affective ways for manager to try to boost a company's stock price? -answer>>· Increase the company's dividend payment to shareholders, each year by at least $ per share, repurchase shares of common stock, and make every effort to achieve annual increases in earnings pershare.
Which of the following is an advantage of having plants to manufacture athletic footwear in all fourgeographic regions? - answer>>· Reduced exposure to adverse exchange rate cost adjustments (because having plants in all four geographic regions typically enables a company to reduce cross regionshipments of pairs that are subject to unfavorable shifts in exchange rates)
One of the lessons about competing in a globally competitive marketplace that comes from "playing"the Business strategy game is that - answer>>· The dynamic, ever evolving nature of competition makes it advisable for managers to make strategic adjustments of one kind or another on an ongoing basis toimprove the companies competiveness vis-à-vis rivals and boost its overall performance
One of the benefits of contracting with celebrities to endorse the company's brand of athletic footwearis - answer>>· The assist that celebrity endorsement provides in increasing a company's sales and market share of branded footwear Which one of the following is NOT a way to reduce costs and strive to achieve a competitive advantagebased on lower overall costs per pair sold than rival companies? - answer>>Avoiding the use of overtime at the company's plants
Which of the following results from the latest decision round are least important in providing guidanceto company managers in making their strategic moves and decision to improve their company's competiveness and ranking among the top-performing companies in the upcoming decision round? -answer>>· The dividend data, the credit rating data, the income statement data, and the balance sheet data for each company that are part of the Financial Performance Summary on p. 5 of the FIR Managers are well-advised to consider whether the company can operate more profitably by sellingsome/all plant capacity in one or more geographic regions where - answer>>· Global demand for branded and private-label footwear is so fare below global plant capacity that it will be impossible formost all companies to profitably operate their plants at full capacity for many years to come.
A company cannot effectively differentiate its branded footwear from the brands of rivals by -answer>>· Spending more money on corporate social responsibility and citizenship activities than most all other rivals If a company has an unappealing low branded market share in north America because it is beingoutcompeted by various rival companies, then company manager should - answer>>· Immediately review the company's competitive weaknesses in north America as shown at the bottom of thecompetitive intelligence report and explore the merits of action to correct most or all of them: in addition, they should take actions that they believe will result in the company having at least twoimportant competitive strengths vis-à-vis its north American rivals in the upcoming decision round
Flawed ways to pursue a differentiation strategy include - answer>>· Striving only to achieve weakdifferentiation (as opposed to strong differentiation) from the branded footwear offerings of other companies also pursuing a differentiation strategy A company's strategy to be a low-cost provider of branded footwear can fail to produce good companyperformance when - answer>>· Managers do not operate the company's plants cost efficiently and achieve manufacturing costs per branded pair sold that is no equal to the industry low in eachgeographic region are at least close to the industry low in each geographic region
In which one of the following instances do the industry low, industry average, and industry high valuesfor the cost benchmarking data in each issue of the FIR signal that one or more elements of a company's costs are likely to be too high relative to those of rival companies? - answer>>· When the company's
operating profit per pair sold in the internet and wholesale segments are the lowest in the industry of allfour geographic regions
Which of the following action sis unlikely to help boost a company's market share in all four geographicregions? - answer>>· Pursuing efforts to boost labor productivity at each of the company's plants.
Which of the following actions is LEAST likely to increase labor productivity by an amount that is largeenough to result in lower labor costs per pair produced at a particular plant? - answer>>· Increasing worker base pay by the allowed maximum of 15% each and every year until the company's base paycompensation per employee exceeds the total compensation per employee ($/year) of all other companies in the industry The plant upgrade option that reduces production run setup costs by 50% each year and costs $8 millionper million pairs of plant capacity (which causes depreciation costs at the plant to rise by 5% of the capital cost of the upgrade) merits immediate consideration by company managers when - answer>>·The company has a new 1 million-pair plant in Europe-Arica ready to go into production in Year 14 and the company's strategy calls for this plant to produced 500 models/styles (which entails annualproduction run setup costs of $14 million) every year through year 20.
The industry low, industry average, and industry high benchmarks for the costs per branded pair sold ineach geographic region (including manufacturing costs, shipping, import tariffs, and exchange rate adjustments), warehouse expenses pe branded pair sold, marketing expenses per branded pair sold, andadministration expenses per branded pair sold that appear in each issue of the footwear industry report
- answer>>· Are worth careful scrutiny by the managers of all companies because when thebenchmarking data signals that a company's costs for one or more of the benchmarks are out of line, managers are well advised to take corrective action in the next decision round. While contracting with celebrities to endorse a company's brand adds to the competitive power of itsproduct offering vis-à-vis the offerings of rivals - answer>>· One of the big risks of bidding to win contracts for celebrity endorsements is that it is easy to end up overspending to win a contract becauseit is so hard to judge just how big the actual benefit (of value) of winning the contract for a particular celebrity will prove to be.
· A change in the company's default risk rating from medium to low
Which of the following is NOT a limit to vertical integration? - answer>>imitation of core technology bypotential competitors
What is a limit to vertical integration? - answer>>bureaucratic costs the loss of flexibility through investment in specific technologies capacity balance and coordination problems from changes in demand Horizontal acquisitions in the video rental industry are typically intended to - answer>>reduce some ofthe overcapacity in the industry.
Foreign firms seeking to acquire U.S. firms are interested in all of the following EXCEPT -answer>>acquiring relationships with dealers through horizontal acquisitions.
When a foreign firm seeks to acquire U.S. firms they are interested in - answer>>gaining access to theU.S. company brand names.
gaining access to critical resources held by U.S. companies. diversifying into unrelated industries in order to broaden their market scope.
Researchers have found that shareholders of acquired firms often - answer>>earn above-averagereturns.
The fastest and easiest way for a firm to diversify its portfolio of businesses is through acquisitionbecause - answer>>it is difficult for companies to develop products that differ from their current product line Related acquisitions to build market power - answer>>are likely to undergo regulatory review. International strategy refers to a(an) - answer>>strategy through which the firm sells products inmarkets outside the firm's domestic market.
U.S. companies moving into the international market need to be sensitive to the need for local countryor regional responsiveness due to - answer>>customization required by cultural differences.
Which of the following is NOT a motive for firms to become multinational? - answer>>to avoid highdomestic taxation on corporate income.
What is a motive for firms to become multinational - answer>>to take advantage of potentialopportunities to expand the market for the firm's products.
to secure needed resources. increasing universal product demand Which of the following is NOT a factor pressuring companies for local responsiveness? -answer>>availability of low labor costs
In a(an) ____ the firms involved own equal shares of a newly-created venture. - answer>>joint venture A state-wide alliance of independent hospitals has formed in order to do group purchasing of medicalsupplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of ____ resulting from analliance. - answer>>economies of scale.
Firms entering into synergistic strategic alliances expect to attain - answer>>economies of scope. The top management team at Sierra Infusion is concerned about the declining performance of firms intheir industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directorswith a proposal for - answer>>increased diversification of Sierra Infusion.
The separation between firm ownership and management creates a(n) ____ relationship. -answer>>agency
A primary objective of corporate governance is to - answer>>ensure that the interests of top-levelmanagers are aligned with the interests of shareholders.
Which of the following is NOT an internal governance mechanism? - answer>>the market for corporatecontrol
What is an internal governance mechanism - answer>>the board of directors ownership concentration executive compensation
A major conflict of interest between top executives and owners, is that top executives wish to diversifythe firm in order to ____, while owners wish to diversify the firm to ____. - answer>>reduce their employment risk, increase the company's value In the US, monitoring by shareholders is usually accomplished through - answer>>the board of directors. Generally, a board member who is a source of information about a firm's day-to-day activities isclassified as a(an) ____ director. - answer>>inside
A primary objective of corporate governance is to - answer>>ensure that the interests of top-levelmanagers are aligned with the interests of shareholders.
Executive compensation is a governance mechanism that seeks to align managers' and owners' intereststhrough all of the following EXCEPT - answer>>penalties for inadequate firm performance
Executive compensation is a governance mechanism that seeks to align managers and owners intereststhrough - answer>>bonuses
long-term incentives such as stock options. salary. Which of the following is NOT an internal governance mechanism? - answer>>the market for corporatecontrol
What is internal governance mechanism - answer>>the board of directors
a means to establish and maintain harmony between owners and top managers whose interests mayconflict.
ensuring that top managers' interests are aligned with the interests of stockholders. T or F? Collusion is a form of cooperative strategy. - answer>>T T or F? Firms who are competitors can form cooperative strategies - answer>>T T or F? If a large Asian cosmetics firm was to engage in a 50-50 partnership with a large Americanchemical company to form a new company focused on creating advanced skin care products, this would be considered a joint venture. - answer>>T T or F? Strategic alliances are cooperative strategies between firms that combine their resources andcapabilities to create a competitive advantage - answer>>T
T or F? Being (and having) a trustworthy partner increases the probability of alliance success -answer>>T
T or F? Equity strategic alliances exist when one firm acquire another firm - answer>>F T or F? Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable)share of the joint venture than do the remaining partner(s). - answer>>F
T or F? Cooperation in slow-cycle markets is destructive, especially in emerging markets. - answer>>F T or F? Mergers are the most popular cooperative strategy used in standard-cycle markets - answer>>F
T or F? Standard-cycle markets are often large and gain economies of scale through cooperativealliances. - answer>>T
T or F? In a horizontal complementary strategic alliance, one firm enters a nonequity strategic alliancewith another to help in the design, manufacture, or distribution of its product - answer>>F
Which of the following is NOT a motive for firms to become multinational? - answer>>to reducedomestic country political pressures to expand
What is a motive for firms to become multinational - answer>>to take advantage of potentialopportunities to expand the market for the firm's products
to secure access to low-cost factors of production to secure key input resources The increased pressures for global integration of operations have been driven mostly by: -answer>>universal product demand.
. Moving into international markets is a particularly attractive strategy to firms whose domestic markets:- answer>>are limited in opportunities for growth.
Factors of production in Porter's model of international competitive advantage include all of thefollowing EXCEPT: - answer>>quality of demand.
Factors of production in Porters model of international competitive advantage include - answer>>labor.
licensing. aquisition Which of the following is NOT a disadvantage associated with exporting? - answer>>high costsassociated with acquiring foreign production facilities
What is a disadvantage associated with exporting - answer>>high transportation costs loss of control over distribution activities tariffs imposed by local governments A licensing agreement: - answer>>allows a foreign firm to purchase the rights to manufacture and sell afirm's products within a host country.
The means of entry into international markets that offers the greatest control is: - answer>>greenfieldventures.
Political risks in international diversification include: - answer>>those related to instability in nationalgovernments.
