Deck 7: Strategy

Question 1

Price elasticity is a measure of how much the supply or demand of a good changes if the price changes.

Answer 1

True

Question 2

Reducing inventory levels reduces risk.

Answer 2

True

Question 3

Liquidity risk is financial risk due to uncertain liquidity. What can cause this to happen?

A)A firm's credit rating falls
B)A firm experiences sudden unexpected cash outflows
C)A firm's market experiences a loss in liquidity
D)All of the above

Answer 3

All of the above

Question 4

Which of the following is a measure of how demand for a good changes with people's income?

A)Price elasticity of demand
B)Income elasticity of demand
C)CPI
D)Michigan Index
E)Marginal Cost

Question 5

What is an advantage of using licensing as a method of global expansion?

A)Profits are shared equally.
B)There are always no establishment costs.
C)There are high levels of direct control.
D)Low levels of investment are required.
E)All of the above.

Question 6

Cannibalization is always a bad thing.

Question 7

What is MECE?

A)Miminal Exceptions Consulting Excellence Framework
B)Mutual Exclusive Collectively Exhaustive
C)A key six sigma principle
D)STAR

Question 8

Which of the following might prevent an acquisition?

A)Strong synergies
B)Anti-trust
C)EBITDA
D)Economies of scale
E)Decreased marginal cost

Question 9

A stock-out is when demand for a good cannot be fulfilled from inventory.

Question 10

What are the four options for dealing with a risk?

A)Accept, mitigate, transfer and avoid
B)Accept, insure, transfer and avoid
C)Accept, mitigate, reduce and avoid
D)Situation, task, action, result
E)It's a trick question - there are only three and they are transfer, mitigate and avoid.

Question 11

Which of the following could be an example of hedging? Select all that apply:

A)Buying futures on oil
B)Hiring a strategy consultant
C)Protecting against fluctuating exchange rates
D)Changing back-office processors

Question 12

A cream-skinning pricing strategy can erode long-term customer loyalty.

Question 13

Which of the following are switching costs? Select all that apply:

A)The time it takes to learn a new software program
B)Fee for cancelling mobile phone service
C)Search costs
D)Emotional attachment
E)Cannibalization

Question 14

What does the Place mean in the 4Ps framework for marketing?

A)Inventory and Storage
B)Distribution Channels
C)Manufacturing Location
D)Location of Advertising
E)Home Office

Question 15

Different technological platforms, systems and products are moving towards performing the same functions. What is this phenomenon referred to as?

A)Confluence
B)Co-radiation
C)Cooperation
D)Convergence
E)Synergy

Question 16

Why might a company want to increase inventory turns? Select all that apply:

A)Reduce inventory risk
B)Reduce holding cost
C)Increase stockouts
D)Improve cash flows
E)Factor accounts receivable

Question 17

Bill's Organic Diapers acquires Organic Diaper Masters. What is this an example of?

A)Vertical integration
B)Horizontal integration
C)Value destruction
D)Anti-trust
E)Monopoly

Question 18

Which of the following would best describe the role of a merchant bank?

A)Securities lending
B)To act as a banker and financial agent to the federal government
C)To provide borrowing and lending services, primarily to the business sector
D)To provide loans to the corporate sector through receipts of insurance premiums

Question 19

Cost-of-Goods-Sold (COGS) is defined as the costs that go into creating the products or services that a company sells.

Question 20

What are three areas of synergies? Select 3 answers:

A)Revenue
B)Inventory
C)Quality
D)Cost
E)Management

Question 21

Leveraged buyouts (LBOs) are not collateralized.

Question 22

The word leveraged in the term leveraged buyout (LBO) refers to what?

A)Pressure from the board of directors
B)Debt
C)Equity
D)Poor strategic position of targeted company
E)Inclined plane

Question 23

You are a consultant brought into help Bo's Television, a global conglomerate. ScreenMaster is a separate company that makes the screens for Bo's TVs. If Bo's acquired Screenmaster, this would be an example of what?

A)Conflict of interest
B)Horizontal integration
C)Transfer pricing
D)Vertical integration
E)Cost-based accounting

Question 24

A problem with risk management at large firms is that it is often:

A)Completely ignored
B)Siloed
C)Too frequent
D)Too aggressive
E)All of the above

Question 25

What are the three Ps of health care? Select all that apply.

A)Prescription
B)Payers
C)Patients
D)Providers
E)Practitioner

Question 26

Which is not part of the 5-C framework for market analysis?

A)Context
B)Customer
C)Collaborators
D)Competitor
E)Creditor

Question 27

Great Skin Inc. has decided to enter the market for women's razors. What type of pricing framework is most likely to apply?

A)Break-even pricing
B)Competition-based pricing
C)Cost-based pricing
D)Market pricing

Question 28

Which of the following methods of payment represents the least level of risk for exporters?

A)Bill of exchange
B)Letter of credit
C)Open account
D)Pre-payment
E)It's all equal

Question 29

A number of highly trained workers from a large domestic airline have been reclassified owing to major technological changes in the operations of the airline. These employees have been told that the work they performed in the past is no longer required.
Which of the concepts below best describes this situation?

A)De-skilling
B)Globalization
C)Inertia of managers
D)Resistance to change
E)Planned obsolesce

Question 30

The Internet decreased search costs.

Question 31

Ted is negotiating a 10-year contract with the U.S. government to provide educational services. The government wants a fixed price project. However, Ted is extremely concerned about the possibility of inflation given the increase in government spending. Ted should suggest what time of contract?

A)Inflatable
B)Floater
C)Bonded adjustment
D)Fixed price with economic adjustment
E)Treasury

Question 32

Low-on-Cash Inc. decides to use factoring to improve cash flow. This strategy would involve which of the following?

A)Selling accounts receivable to a collection agency or a bank
B)Selling goods on credit but with a specified date for payment
C)Selling the factors of production for cost, plus a small mark-up
D)Selling unused factory equipment to make up for the short-fall in cash flow

Question 33

Which of the following best describes outsourcing?

A)Leasing an asset from another business
B)Management considering stakeholders needs
C)Purchasing support services from another business
D)Establishing a close long-term relationship between businesses
E)A joint venture

Question 34

Bill's Organic Diapers has been selling diapers for 10 years and is now experiencing slowing growth. How can they grow revenue? Select all that apply:

A)Enter new markets
B)Cut costs
C)Create new products
D)Acquire a company
E)All of the above

Question 35

Banana Eagle is experiencing rising sales along with increased market share. However, profits are falling while costs have actually improved, what may be the issue?

A)Margins
B)Product mix
C)Economies of scale
D)COGS
E)a and b

Question 36

Sales at ABC Party Supply have fallen off significantly over the past three years. Which of following is least applicable to this situation?

A)ABC's market is mature.
B)ABC's products are obsolete.
C)Substitutions are on the rise.
D)Costs are rising.
E)All of the above

Question 37

Coffin's Coffee sells premium coffee in their stores. It decides to launch a new iced coffee product. What should be a key consideration?

A)Economies of scale
B)Cannibalization
C)Diversification
D)A niche market
E)Maturity phase

Question 38

Which of the following is not part of basic value chain model?

A)Customer service
B)Product delivery
C)Operations
D)Procurement
E)COGS

Question 39

Which of the following is a McKinsey framework for organization effectiveness?

A)5Ps
B)4Cs
C)7S
D)3G
E)NPV

Question 40

Which of the following situations is most likely to be a razor and blade strategy?

A)Coke and Pepsi
B)Breakfast sandwich and coffee
C)Hamburger with cheese
D)Video game system and cartridges
E)Ordering contact lenses online

Question 41

Managers at Tokyo Manufacturing get together monthly to review ways to improve quality in their respective divisions. What philosophy might this company embrace?

A)Just in Time
B)PMIS
C)Marginal Analysis
D)Total Quality Management
E)Kansei

Question 42

How did famous management thinker Joseph Juran define quality?

A)Achieving six sigma
B)Zero defect manufacturing
C)Value for cost
D)Fitness for use
E)Successful scope verification

Question 43

Of the choices below, this is the best evaluation criteria for selecting which projects to proceed with:

A)Payback Period of the investment
B)Internal Rate of Return
C)Net Present Value (NPV)
D)Example Value
E)Discount Rate

Question 44

Titanic Inc. is reviewing its existing projects; $10 million has already been spent on Project Iceberg but another $20 million is required. The project is expected to provide riskless cash flows with a present value of $28 million once it is completed. Should Titanic proceed?

A)Definitely
B)Maybe
C)No

Question 45

It's been projected that Project X will take 7 years to amortize the project costs and start earning a profit for its company. This demonstrates which concept?

A)Net Present Value
B)Internal Rate of Return
C)Payback Period
D)Benefit Cost Ratio
E)PMIS

Question 46

Boris hires an outside vendor to maintain his company's servers. However, he is extremely concerned about uptime. In order to remain profitable, Boris' company needs to have 99 percent uptime. Which of the following would be a clause Boris would want to include in the contract to directly address this requirement?

A)Privity
B)VC
C)SLA
D)CPPF
E)Retainage

Question 47

Which of the following can you use a Monte Carlo simulation to model? Select all that apply:

A)Cost
B)Probability of success
C)Project duration
D)Quality of inputs
E)Stock returns

Question 48

What is Pareto's Law?

A)80 percent of the effects come from 20 percent of the causes.
B)Work expands to fill the time available for its completion.
C)Anything that can go wrong will go wrong.
D)Never attribute to malice that which can be adequately explained by stupidity.

Question 49

Jerry was in the midst of assessing his risk for a project at a well-known real estate firm when the stock market collapsed, sending shockwaves throughout his company and his project. The market crashing can be classified as what type of risk:

A)Foreseeable
B)Internal
C)Technical
D)External
E)Redoubtable

Question 50

Customers, company and competitors are are part of the 5Cs framework. What are the other 2Cs?

A)Context
B)Costs
C)Collaborators
D)Capacity
E)Computer

Question 51

AT&T hires you for a project asking you to help them increase their ARPU. What do they mean by ARPU?

A)Average revenue per user
B)Annual returns per unit
C)Allowable returns per unit
D)Annual returns per user
E)Annual revenue per user

Question 52

Ted has 10 content projects he wants to push forward. Each one has a positive net present value with an initial up-front investment followed by a multiple-year revenue stream. Which of the following would be the biggest reason why he would not pursue them all right away?

A)Lock-in
B)Switching costs
C)Cash flow cycle
D)Synergies
E)Risk

Question 53

Boris wants to figure out how much more his company should invest into the quality of a certain product. What tool would be most effective for this exercise?

A)Five Forces analysis
B)Generic strategies
C)MECE
D)Razor and Blades
E)Marginal analysis

Question 54

Roger is trying to figuring out pricing for his new product, a rock that looks like a friendly turtle. He decides to price it 30 percent more than the cost of making it, which is $1. Roger is using what type of pricing strategy?

A)Value-based pricing
B)Analyzing willingness to pay
C)Cost-plus pricing
D)Dynamic pricing
E)All of the above

Question 55

WePro has created a monopoly in the Nigindia sugar market by acquiring its competitors. Which of the following might keep it from fully leveraging its market power?

A)Cannibalization
B)Increased demand for coffee
C)Splenda
D)Barriers to entry
E)Switching costs

Question 56

Everyone loves Piggy Brand Bacon products, sold in supermarkets worldwide. Piggy acquires a mail-order steak company and renames it Piggy's Steaks. This could be an example of:

A)Marginal analysis
B)Trying to use the Halo Effect
C)NPV analysis
D)Same store sales
E)Ponzi Scheme

Question 57

A relatively unknown maker of luxury soaps, shampoos and lotions might provide its products to a high-end hotel chain for zero for which of the following reasons? Select all that apply.

A)Its products are experience goods.
B)Branding
C)Marginal analysis
D)TQM
E)Threat of substitutes

Question 58

You would most likely receive confirmation of "freedom to operate" from:

A)A nurse
B)A patent attorney
C)A strategy consultant
D)The head of IT
E)Compliance director

Question 59

A digital good distributed via the web has a marginal cost of zero.

Question 60

Which of the following are barriers to entry?

A)Initial investment capital
B)Intellectual property
C)Government policy
D)Sales channel access
E)All of the above

Question 61

Which of the following are complimentary goods?

A)SUVs and gasoline
B)Cheeseburgers and ketchup
C)Bread and butter
D)Computers and keyboards
E)All of the above

Question 62

Other than current industry competitors and potential entrants, what are Porter's Five Forces? Select three of the following:

A)Barriers to entry
B)Bargaining power of buyers
C)Bargaining power of suppliers
D)Threat of substitutes
E)Distribution channels

Question 63

Boris has identified some key risks in a new project he is leading. What are the acceptable ways to deal with this risk?

A)Say this risk is fine and do nothing.
B)Invest resources to monitor the specific risk.
C)Pay another contractor to execute a piece of the project that seems risky with a penalty if they fail.
D)Pay an insurer to compensate the company with a cash payment if the risk does not work out.
E)Throw a temper tantrum