Deck 7: Growth

Question 1

Companies that grow more slowly than 0 percent in one year generally within five years see their growth increase to:

A)About 4 percent and then up to 4.5 percent within 10 years.
B)About 1 percent and then up to 2 percent within 10 years.
C)About 6 percent and then up to 8 percent within 10 years.
D)About 8 percent and then up to 10 percent within 10 years.

Answer 1

A

Question 2

Companies in which of the following industries or sectors have had the lowest growth rates?

A)Software.
B)IT services.
C)Automobiles.
D)Health-care equipment.

Answer 2

C

Question 3

Which of the following is most accurate concerning the median revenue growth rates of firms over the years 1965 to 2013?

A)The range was 1.5 percent to 12 percent,with a median of 7.2 percent.
B)The range was 0 percent to 9 percent,with a median of 5.3 percent.
C)The range was 2.2 percent to 8.8 percent,with a median of 4.2 percent.
D)The range was -0.2 percent to 6.6 percent,with a median of 3.3 percent.

Answer 3

B

Question 4

For which situation does additional growth likely create more value?

A)High-ROIC company in a mature market.
B)Low-ROIC company in a fast-growing market.
C)Low-ROIC company in a mature market.
D)Medium-ROIC company in a mature market.

Question 5

For firms that grew at rates greater than 15 percent in the 2000-2003 period,what percentage grew at rates less than 10 percent in the 2010-2013 period?

A)58 percent.
B)37 percent.
C)21 percent.
D)42 percent.

Question 6

While the pace of growth can vary greatly across products,the pattern of growth is usually the same for almost all products and services.

Question 7

Which of the following is true concerning an increase in market share that comes at the expense of established competitors?

A)It rarely creates much value for long,except when it results in pushing a competitor out of the market completely.
B)It generally creates value for a fairly long period,but it will decay after about 10 years.
C)It never creates any value over the long run because the effects are random across firms and net to zero for any given firm over time.
D)None of these.

Question 8

Incremental innovation will rarely create lasting value.

Question 9

The strategy of making bolt-on acquisitions to accelerate product sales:

A)Has not been proven to create value.
B)Can create positive and about average value compared to other strategies.
C)Can create positive and above-average value compared to other strategies.
D)Can create positive but below-average value compared to other strategies.

Question 10

If a company increases its market share because of a product having momentum,it can be said that growth was generated via portfolio momentum.

Question 11

For firms that grew at rates less than 5 percent in the 2000-2003 period,what percentage grew at rates greater than 10 percent in the 2010-2013 period?

A)44 percent.
B)15 percent.
C)13 percent.
D)28 percent.

Question 12

Which of the following is most accurate concerning corporate growth rates?

A)High growth rates decay quickly,and large companies struggle to grow.
B)High growth rates are sustainable for 10 years or more,but large companies struggle to grow.
C)High growth rates decay quickly,but large companies grow more easily than small companies.
D)High growth rates are sustainable for 10 years or more,and large companies grow more easily than small companies.

Question 13

Companies that grow faster than 30 percent in one year generally within five years see their growth decline to:

A)About 4 percent and then down to 2 percent within 10 years.
B)About 12 percent and then down to 10 percent within 10 years.
C)About 10 percent and then down to 8 percent within 10 years.
D)About 8 percent and then down to 6 percent within 10 years.

Question 14

Which of the following usually result in above-average value creation?
I.Make large acquisitions.
II.Attract new customers into the market.
III.Convince existing customers to buy more of a product.
IV.Make bolt-on acquisitions to accelerate product growth.

A)I and II only.
B)I,III,and IV only.
C)II and III only.
D)II,III,and IV only.

Question 15

Which of the following are types of organic revenue growth?
I.Mergers.
II.Acquisitions.
III.Portfolio momentum.
IV.Market share performance.

A)I and II only.
B)I,II,and III only.
C)II and IV only.
D)III and IV only.

Question 16

The only way to achieve consistently high growth is to consistently find new product markets and enter them successfully in time to enjoy their more profitable high-growth phase.

Question 17

Which of the following explain the reasons that growth-rate rankings change among industries so much over time?
I.The business cycle.
II.Changing regulations.
III.Fluctuating exchange rates.
IV.Product life cycles.

A)I and II only.
B)I and IV only.
C)II and III only.
D)III and IV only.

Question 18

Average industry revenue growth varies considerably across industries,but the growth rates among companies in the same industry are fairly uniform.

Question 19

Explain the "portfolio treadmill" effect and what it means for a firm that wishes to sustain growth.

Question 20

Which of the following is LEAST likely to result in above-average,long-run value creation?

A)Create new markets through new products.
B)Attract new customers into the market.
C)Convince existing customers to buy more of a product.
D)Gain market share from rivals through product promotion.