Bus 599: strategic management exam

BUS 599: Strategic Management Exam


Question 1

Which of the following IS NOT an argument in favor of corporate social responsibility?

(a) Imposes unequal costs among competitors.

(b) Responds to changing stakeholders’ demands.

(c) Corrects social problems caused by business.

(d) Discourages government regulation.

Question 2

The ethical roots of the classical model of corporate social responsibility are found in which statement?

(a) The idea that the interests of stakeholders are as important as the interests of a corporation’s stockholders.

(b) The free market theory which holds that managers are ethically obliged to make as much money as possible for their.

(c) The ethical imperative to cause no harm.

(d) The ethical imperative to prevent harm. 

Question 4

Which one of the following propositions correctly describes the concept of a right?

(a) Rights protect a person’s wants.

(b) There is really no distinction between a person’s wants and interests. Rights protect both.

(c) Rights protect a person’s interests.

(d) My rights never correspond to your duties and your duties never correspond to my rights.


Question 5

Human rights are:

(a) The standards of treatment to which all people are entitled.

(b)  Can safely be ignored by international companies.

(c) Defined in the united Nations Global Compact.

(d) Of no interest to customers of international companies.

Question 6

Which statement characterizes the moral reasoning typically found in a child?

(a) When in ROME, do as the Romans do.  

(b) I’II scratch your back, if you’II scratch mine.

(c) Seek the greatest good for the greatest number.

(d) Respect the rights of others.


Question 7

The Iron Law of Responsibility says that:


(a) In the long run, those who do not use power responsibly will lose it.

(b) In the short run, sacrifice social goals for economic goals.

(c) Law is most important, more than social or economic responsibility.

(d) In the long run, economic responsibility leads to social responsibility.

Question 8

External rewards and internal rewards relate to which part of the ethical decision-making framework?

(a) Individual factors

(b) Significant others

(c) Cognitive moral development

(d) Intentions

(e) Opportunity

Question 10

Which one of the following statements about multinational corporations is FALSE?

(a) MNCs are corporate organizations that operate on a global scale without significant ties to any one nation or region.

(b) MNCs are inherently unethical.

(c) MNCs are cauterized by a global strategy of focusing on opportunities throughout the world.

(d) Some MNCs are so large and powerful that their revenues are greater than the gross domestic products of some countries.

(e) Because of their size and power, MNCs have been the subject of much ethical criticism and the source of a number of ethical issues.

Question 11

The most intense rivalry results from:

(a) Numerous equally balanced competitors, slow industry growth, and high fixed or storage costs.  

(b) Few competitors, slow industry growth, lack of differentiation, and high fixed or storage costs.

(c) Numerous equally balanced competitors, manufacturing capacity increasing only in large increments, and low exit barriers.

(d) A high level of differentiation.


Question 12


A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate.

(a) Social complexity.

(b) Path dependency.

(c) Physical uniqueness.

(d) Causal ambiguity


Question 13

Emotional intelligence, as proposed by Daniel Goleman, is manifest in self-awareness, self-regulation, social skills, empathy, and: 

(a) Ambition

(b) Motivation

(c) Sympathy.

(d) Open mindedness


Question 14


Which of the following is not characteristic of well-constructed goals?


(a) They are precise and measurable.

(b) They are the result of a group decision process.

(c) They specify a time period.

(d) They are challenging but realistic.

(e) They address critical issues.


Question 15


There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum thinking means that:


(a) All parts of the organizations gain at no loss.

(b) In order for someone to gain, others must experience no gain or benefit.

(c) One can only gain at the expense of someone else.

(d) Everyone in the organization shares gains and losses equally.

Question 16

Kaizen means:

(a) radical innovation.

(b) Incremental innovation.

(c) Open innovation.

(d) Continuous improvement.

Question 17

Costs associated with efforts to prevent errors are:

(a) Appraisal costs.

(b) Direct costs.

(c) Prevention costs.

(d) Expected costs.

Question 18

Emerging sociocultrual changes in the environment include:

(a) Changes in the ethnic composition.

(b) The increasing educational attainment of women in the past decade.

(c) Progressively less disposable income by consumers.

(d) Changes in the geographic distribution of the population.


Question 19


In value chain analysis, the activities of organizations are divided into two major categories of value activities: primary and support. Which of the following is a primary activity?


(a) Purchasing key inputs.

(b) Recruiting and training employees.

(c)   Repairing the product for the consumer.

(d) Monitoring the cost of producing the product through a cost accounting system.

Question 20

The balanced scorecard enables managers to consider their business from all of the following perspectives except:

(a) Customer perspective.

(b) Internal perspective.

(c) Innovation and leering perspective.

(d) Ethical perspective.

Question 21

Imagine your boss wants you to investigate ways your company might be able enhance customer satisfaction, create an attractive loyalty program, and reward your customers. Most likely, your company’s immediate goal is to:

(a) Delight customers.

(b) Make more money.

(c) Enhance product offerings.

(d) Redefine its position.

Question 22

Giant Grocery Retailer tells Small Cereal Manufacturer that it will not stock or sell Small Cereal Manufacture’s product line until and unless a better trade margin is provided. What type of power is Giant Grocery Retailer exhibiting?

(a) Purchasing power.

(b) Information power.

(c)  Coercive power.

(d) Distribution power.


Question 23


Company ABC is interested in better understanding how different groups of customers feel about its product. In order to this, company ABC will need to :


(a) Position its product in the market.

(b) Segment the market.

(c) Mass market.

(d) Target market.

Question -24

The terms manufacturer , service provider ,government agency, and wholesaler are  designations used to segment business and organization markets according to:

(a) The type of customer.

(b) Demographics.

(c) Product use.

(d) Buying situations.



Which of the following is defined to be an exchange between a firm and its customers?

(a) Advertising.

(b) Consumer behavior.

(c) Marketing.

(d) Distribution.


Which is an approach for creating a perceptual map?

(a) Attribute based.

(b) Demography based.

(c) Focus group based.

(d) Survey based.



Marketing information should be gathered _________ so the can be in the know and poised for action.

(a) Quarterly

(b) Annually

(c) Constantly

(d) Every two years


There are two major class of franchising. One is business format franchising. What is the other one?

(a) Market franchising.

(b) Product franchising.

(c) In- house franchising.

(d) Multisite franchising.



Which of the following is not part of Michael porter’s five forces model?

(a) Industry competitors.

(b) Threat of competition imitation strategies.

(c) Threat of new entrants.

(d) Bargaining power of buyer and suppliers.


In order for an exchange to occur (marketing):

(a) A complex societal system must be involved.

(b) Organized marketing activities must also accur.

(c) A profit-oriented organization must be involved.

(d) Each party must have something of value to the other party.


At a price above the equilibrium price, there is ______.

(a) A shortage

(b) A surplus

(c) Excess demand

(d) Super –equilibrium

(e) None of the above


At a price for which quantity demanded exceeds quantity supplied ,a __________ is experienced , which pushes the price______ toward its equilibrium value.

(a) Surplus; downward

(b) Surplus: upward

(c) Shortage: downward

(d) Shortage: upward


The minimum wage is an example of a ___________.

(a) Price door

(b) Price wall

(c) Price floor

(d) Price ceiling


The supply of product X is perfectly inelastic if the price of X rises by _________.

(a) 5 percent and quantity supplied rises by 7 percent

(b) 8 percent and quantity supplied rises by 8 percent

(c) 7 percent and quantity supplied rises by 5 percent

(d) 10 percent and quantity supplied remains the same


If the purchase and sale of a currently illegal drug such as marijuana were decriminalized , we would expect _______.

(a) An increase in demand and supply of this drug

(b) An increase in demand and a decrease in supply of this drug

(c) A decrease in demand and an increase in supply of this drug

(d) A decrease in demand and supply of this drug


John just bought shares of stock in IBM for  $10,000 and paid a $90 commission to his broker . How did this affect GDP (Gross domestic Product)?

(a) It had no impact on GDP.

(b) GDP (Gross Domestic Product) increased by $90

(c) GDP (Gross Domestic Product) increased by $10,000

(d) GDP (Gross Domestic Product) increased by $9,990

(e) GDP (Gross Domestic Product ) increased by $10,0903


Which one of the following will cause a movement down along an economy’s consumption schedule?

(a)An increase in stock prices.

(b) A decrease in stock prices.

(c) An increase in consumer indebtedness.

(d) A decrease in disposable income.



The largest component of national income is __________.

(a) Rental income

(b) Proprietor’s income

(c) Compensation of employees

(d) Corporate profits

(e) Net interest


According to the theory of efficiency wages:

(a) The most profitable firms keep wages low.

(b) Above –equilibrium wages are paid by the firm to increase worker productivity.

(c) Some occupations are predominantly male and some are predominantly female.

(d) Differences in human capital explain why firms pay high wages.



If the CPI (Consumer Price  Index ) is 170 and nominal income is $ 75,000, approximately what does real income equal?

(a) $127,500

(b) $74,825

(c) $75,175

(d) $44,118


Dexter Hemingway is the CEO and Todd Bradley is the CFO of Maxwell Inc. Unknowingly, both signed the financial report for the financial year 2006/07, Which was misleading. Can they be held liable for punishment?

(a) Under the Sarbanes – Oxley Act, both of them must reimburse the company.

(b) Under the Sarbanes – Oxley Act, only the CEO will be liable for punishment.

(c) Under the Racketeer Influenced and Corrupt Organization Act(RICO) ,both of them are required to reimburse the company.

(d) Under the Racketeer Influenced and Corrupt Organization Act(RICO),only the CFO will be liable for punishment.


Question 42


A______ is a public offer to all the shareholders of a corporation to buy their shares at a stated price.


(a) Leveraged buy out

(b) Tender offer

(c) Target bid

(d) Merger


Question 43


If incorporators cannot show substantial compliance with statutes regarding incorporation but can show that they were unaware of any defect and acted in good faith, a court may trat the entity as a(n)___________.


(a) De jure corporation

(b)  Real corporation

(c) De facto corporation

(d)   Equitable corporation


Question 44

IF Tosca’s negligence causes Scarpia, who has an especially weak heart, to die of a heart attack, Scarpia,s surviving spouse_______.


(a) Will not be able to recover against TOSCA because Scarpia assumed the risk of harm when he allowed himself to interact with Tosca, knowing all the while that he had an especially weak heart.

(b) Will not be able to recover against Tosca if her negligence would not have caused a heart attack in normal person

(c) Will only be able to recover against Tosca if her behavior was reckless, not merely negligent

(d)   Will generally be able to recover against Tosca.


Question 45

Today, you might be buying from a regulated natural monopoly when you purchase:

(a) A house, a condominium, or a plot of land.

(b) Natural gas or electricity.

(c) A computer, a phone, or a camera.

(d) A car, a truck, or a bicycle.

Question 46


Under the Equal protection clause,______.

(a) The government must treat like cases alike.

(b) States are prohibited from arbitrarily discriminating against persons.

(c) States are prohibited from discriminating only on the basis of nationality.

(d) The government can uphold restrictions on property.

Question 47

A person who shares in the profits of the business but NOT in its_______ is not a partner.

(a) Management

(b) Losses

(c) control

(d) voting


Question 48

Under rational basis analysis,_________.

(a) A government action will be upheld as long as it has a reasonable relationship to the achievement of a legitimate purpose, even if those provisions are foolish.

(b)    Discrimination on the basis of a suspect category will received highest scrutiny

(c) Courts will deem a government action unconditional when the action impinges on a fundamental right.

(d) Discrimination on the basis of economic interest will receive highest scrutiny.


Question 49

______ is a process used mainly in the area of public international law whereby a third party, often a disinterested government, brings the parties together by establishing communication and providing a site where the parties can meet, often in secret.

(a) Public involvement.

(b) Good offices

(c) Local involvement

(d) Best transitions.

Question 50

________ law legal systems primarily rely on case law and precedents.

(a) Common

(b) Civil

(c) Statutory

(d) Codified

Question 51

A firm changes from Last I n First Out to First In First Out; this change will be found in the:

(a) The balance sheet.

(b) The income statement.

(c) The statement of cash flows.

(d) Notes to the financial statements.


Question 52


Financial leverage impacts the performance of the firm by:


(a) Increasing the volatility of the firm’s earnings before interest & taxes.

(b) Decreasing the volatility of the firm’s earnings before interest & taxes.

(c)  Decreasing the volatility of the firm’s net income.

(d) Increasing the volatility of the firm’s net income.


Question 53

In the financial planning model, external funds needed (EFN) is equal to changes in;

(a) Assets-(liabilities-equity).

(b) Assets-(liabilities + equity).

(c) (Assets+ liabilities-equity).

(d)  (Assets + equity-liabilities).


Question 54


Use the following information and horizontal analysis to compute the percentage increase in sales: Year X sales  were $200,000 and year (X+1) sales were $250,000.


(a) Sales increased by 80%.

(b) Sales increased by 25%

(c) Sales increased by 20%

(d) Sales increased by 125%

Question 55

The counting house Inc., purchased a 5-year property class equipment for $60,000. The firm uses the MACRS method of depreciation. What is tax depreciation for the second year of the asset’s life”?

(a) 12000

(b) 19200

(c) 20000

(d) 24000

Question 56

Which one of the following would not be counted as part of incremental cash flow?

(a) Opportunity cost.

(b) Sunk cost.

(c) External cost such as brand cannibalism.

(d) External benefit such as acquisition of new technology which can be applied to other projects.


Question 57


The financial ratio days’ sales in receivables is measured as:


(a) Receivables turnover plus 365 days.

(b) Accounts receivable times 365 days.

(c) Accounts receivable plus sales, divided by 365 days.

(d) 365 days divided by the receivables turnover. 

Question 58


The firm’s _______ are primarily interested in ratios that measure the short-term liquidity of the company and its ability to make principal and interest payments.

(a) Board of directors

(b) Creditors

(c) Owners

(d) Financial managers

(e) Customers

Question 59

Which one of the following would not be counted after the end of a project?

(a) Scarp value.

(b) Continuation value.

(c) Release of working capital.

(d) Change in working capital.


Question 60

An increase in which one of the following accounts increases a firm’s current ratio without affecting its quick ratio?

(a) Accounts payable

(b)  Cash

(c) Inventory

(d) Accounts receivable


Question 61


Which structure is usually optimal for project based organizations with fluctuating workloads?


(a) Functional.

(b) Divisional

(c)  Matrix.

(d) Network.

Question 62

The right to self-determination and freedom from the control of others is called:

(a) Beneficence.

(b) Justice.

(c) Fidelity.

(d) Autonomy.


Question 63


An important activity in _______ is taking corrective action.


(a) Strategy formulation

(b) Strategy evaluation

(c) Strategy manipulation

(d) Strategy implementation

Question 64


For a culture to exist, it must be all of the following EXCEPT________.

(a) Shared by the vast majority of members.

(b) Be passed from generation to generation.

(c) Shape perceptions, judgments, and feelings.

(d) Be distinct from decisions and behaviors.


Question 65


Advantages of the place design include all of the following except:


(a) Direct contact with customers in each locale.

(b) Managers in each market become generalists.

(c) Proximity to suppliers.

(d) Proximity to customers.

Question 66


A main force pushing toward a network structure is that an organizations has_________ core competencies.

(a) Undefined

(b) A few

(c) Interdependent

(d) Independent

Question 67

A flat organizational structure creates a(n)______ span of control.

(a) Tall

(b) Narrow

(c) Wide

(d) Centralized

Question 68

The term______refers to formal statements specifying acceptable and unacceptable behaviors and decisions by employees.


(a) Strategies

(b) Impersonality

(c) Tactics

(d) Rules




Question 69


________ refers to the lack of information regarding what needs to be done in a role, as well as unpredictability regarding the consequences of performance in that role.


(a) Time pressure

(b) Daily hassles

(c) Role overload

(d) Role ambiguity

(e) Role conflict

Question 70


The strategy that is based on an organization’s ability to provide a product or service at a lower cost than its rivals is referred to as________.


(a) Discount

(b) Differentiation

(c)  Focused

(d) Low-cost

Question 71


Paid-in Capital represents:

(a) Earnings retained for use in the business.

(b) The amount invested in the entity by the owners.

(c) Market value of the entity’s common stock.

(d) Net assets of the entity at the date of the statement.

Question 72


At the beginning of the fiscal year, the balance sheet showed assets of $1,364 and owners equity of $836. During the year, assets increased $ 74 and liabilities decreased $38. Owner’s equity at the end of the year totaled:


(a) $836

(b) $872

(c) $948

(d) $1438

Question 73

The number of times interest charges are earned is computed as:

(a) Net income plus interest charges, divided by interest charges.

(b) Income before income tax plus interest charges, divided by interest charges.

(c) Net income divided by interest charges.

(d) Income before income tax divided by interest charges.

Question 74


The tendency of the rate earned on stockholders equity to vary disproportionately from the rate earned on total assets is sometimes referred to as:

(a) Leverage.

(b) Solvency.

(c) Yield.

(d)  Quick assets. 

Question 75

Which method of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows expected from capital investment proposals?

(a) Internal rate of return

(b) Cash Payback

(c) Net present value

(d) Average rate of return

Question 76


Statements in which all items are expressed only in relative terms (percentages of a common bas )are:

(a) Horizontal statements.

(b) Percentage statements

(c) Vertical statements.

(d) Common-size statements.


Question 77


The reason for recoding a prepaid expense as a current asset is:

(a) That the prepaid item will be returned for a cash refund. 

(b) That the prepaid item has not yet become an expense.

(c) That the expense has been incurred but not yet paid.

(d) To avoid recognizing an expense so net income will be higher for the current accounting period.

Question 78


Current generally accepted Accounting Principles and auditing standards require that financial statements of an entity for the reporting period to include:


(a) Earnings and gross receipts of cash for the period.

(b) Projected earnings for the subsequent period.

(c) Financial position at the end of the period.

(d) Current market values of all assets at the end of the period.

Question 79


Which of the flowing ratios provides a solvency measure that shows the margin of safety of note holders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

(a) Ratio of fixed assets to long-term liabilities.

(b) Ratio of net sales to assets

(c) Number of days’ sales in receivables

(d) Rate earned on stockholders’ equity


Question 80

Sage, Inc has 20 employees who each earn $ 100 per day and are paid every Friday. The end of the accounting period is on a Wednesday.


(a) $2,000

(b) $1,000

(c) $0

(d) $6,000


Question 81

Testing the probability of a relationship between variables occurring by chance alone if there really was no difference in the population from which that sample was drawn is knows as:

(a) Multiple regression analysis.

(b) Chi-squared test.

(c) Correlation coefficient.

(d) Significance testing.

Question 82

A Type II error is defined as ________.

(a) Rejecting a true null hypothesis

(b) Rejecting a false null hypothesis

(c) Not rejecting a true null hypothesis

(d)  Not rejecting a false null hypothesis

 Question 83

The numbers of rooms for 15 homes recently sold were (mean=7.4):8,8,8,5,9,8,7,6,6,7,7,7,7,9, and 9. What is the variance?

(a) 1.183

(b) 1.4

(c)  4

(d) 16

(e) 1.96

Question 84

Which of the following is an Excel add-in for simulation?

(a) Precision tree

(b) TopRank

(c) BestFit

(d) @Risk

(e) Riskview


Question 85


(a) A government body which collects social statistics.

(b) A two-way analysis variance.

(c) The Name of a statistical software package.

(d) A one-way analysis of variance.

Question 86

Which of the following statements are false?

(a) The modeling process discussed in Data analysis & Decision making book is a five-step process.

(b) Dealing with uncertainty requires a basis understanding of probability.

(c) Uncertainty is a key aspect of most business problems.

(d) Data description and data inference are included under data analysis.

Question 87


In a criminal trial, a type II error is made when__________.

(a) A guilty defendant is acquitted

(b) An innocent person is convicted

(c) A guilty defendant is convicted

(d) An innocent person is acquitted


Question 88


What is the name of the test that is used to assess the relationship two ordinal variables?

(a) Spearman’s rho.

(b) Phi.

(c) Cramer’s V.

(d) Chi square.

Question 89


Which one of the following would be considered a state of nature for a business firm?


(a) Inventory levels.

(b) Salaries for employees.

(c)  Site for a new plant.

(d) Worker safety laws.

Question 90

The number of miles a truck is divine before it is overhauled is an examples of a(n)_______variable.

(a) Nominative

(b) Ordinal

(c) Interval

(d) Ratio



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