Question 1

Only accounting measures of performance can be used in accurately measuring the performance of divisions within a diversified firm.

Accepted Answer

A) True 
 B)False

Question 2

The ________ is a subcommittee of the board of directors that maintains the relationship between the firm and external capital markets.

Accepted Answer

A)  nominating committee 
B)  audit committee 
C)  personnel and compensation committee 
D)  finance committee 
A)  nominating committee 
B)  audit committee 
C)  personnel and compensation committee 
D)  finance committee

Question 3

The title chairman of the board often,but not always,identifies the firm's senior executive.

Accepted Answer

A) True 
 B)False

Question 4

In an M-form organization,the management of day-to-day operations is delegated to

Accepted Answer

A)  divisional general managers and corporate staff managers. 
B)  corporate staff managers and functional managers who report to corporate staff managers. 
C)  divisional general managers and functional managers who report to division general managers. 
D)  the board of directors and corporate staff managers who report to the board of directors. 
A)  divisional general managers and corporate staff managers. 
B)  corporate staff managers and functional managers who report to corporate staff managers. 
C)  divisional general managers and functional managers who report to division general managers. 
D)  the board of directors and corporate staff managers who report to the board of directors.

Question 5

In principle,only the CEO and the president report to the board of directors while other senior managers report only to the CEO.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the relationship between accounting methods of measuring divisional performance and economic methods,identify the formula used for calculating economic value added,and discuss methods for adjusting accounting earnings and the importance of making these adjustments.

Accepted Answer

Economic methods build on accounting met

Question 7

Discuss the importance of compensation policies in diversified firms and identify the CEO compensation package that most closely aligns the interests of the CEO with those of stockholders.

Accepted Answer

A firm's compensation policies constitut

Question 8

Kelly Rae's position is SpandoCorp is best described as a(n)

Accepted Answer

A)  institutional investor. 
B)  senior executive. 
C)  division general manager. 
D)  member of the board of directors. 
A)  institutional investor. 
B)  senior executive. 
C)  division general manager. 
D)  member of the board of directors.

Question 9

Under which transfer pricing scheme is the transfer price set equal to the selling division's actual cost of production or set equal to the cost of production if the selling division were operating at maximum efficiency?

Accepted Answer

A)  Exchange autonomy 
B)  Mandated full cost 
C)  Mandated market based 
D)  Dual pricing 
A)  Exchange autonomy 
B)  Mandated full cost 
C)  Mandated market based 
D)  Dual pricing

Question 10

IPO stands for

Accepted Answer

A)  internal product offering. 
B)  internal price orders. 
C)  international product orders. 
D)  initial public offering. 
A)  internal product offering. 
B)  internal price orders. 
C)  international product orders. 
D)  initial public offering.

Question 11

Most accounting measures of divisional performance focus on long-term benefits and minimize the possibility of a short-term bias.

Accepted Answer

A) True 
 B)False

Question 12

If SpandoCorp decides to use the method of allocating capital where each project receives funding on its merit and not because it received funding the previous year,it is using

Accepted Answer

A)  zero-based budgeting. 
B)  corporate budgeting. 
C)  centralized budgeting 
D)  coordinated budgeting. 
A)  zero-based budgeting. 
B)  corporate budgeting. 
C)  centralized budgeting 
D)  coordinated budgeting.

Question 13

Discuss the role of institutional investors in an M-form organization.In addressing this question,be sure to identify who institutional investors are and discuss trends in institutional ownership and whether institutional investors encourage managers to act in ways that are consistent with the interests of equity holders or if institutional investors are overly myopic.

Accepted Answer

Institutional owners are usually pension

Question 14

In zero-based budgeting,each project has to stand on its own merits each year by being included among the important projects that a firm can afford to fund and no project receives funding for the future simply because it received funding in the past.

Accepted Answer

A) True 
 B)False

Question 15

In 2005,what percentage of the equity traded in the United States was owned by institutional investors?

Accepted Answer

A)  20% 
B)  38% 
C)  59% 
D)  69% 
A)  20% 
B)  38% 
C)  59% 
D)  69%

Question 16

If SpandoCorp's board of directors wanted to ensure that changes in the CEO's compensation would be closely linked to changes in the firm's performance,it should

Accepted Answer

A)  use a compensation package that includes only a salary for the CEO. 
B)  use a compensation package that includes a salary and a cash bonus for the CEO. 
C)  use a compensation package the includes a salary,a cash bonus and stock options that represent only a relatively small percentage of the CEO's total compensation package. 
D)  use a compensation package that includes a salary and stock options that represent a relatively substantial percentage of the CEO's total compensation package. 
A)  use a compensation package that includes only a salary for the CEO. 
B)  use a compensation package that includes a salary and a cash bonus for the CEO. 
C)  use a compensation package the includes a salary,a cash bonus and stock options that represent only a relatively small percentage of the CEO's total compensation package. 
D)  use a compensation package that includes a salary and stock options that represent a relatively substantial percentage of the CEO's total compensation package.

Question 17

Two common agency problems include

Accepted Answer

A)  managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk aversion. 
B)  managers not investing enough of a firm's capital in managerial perquisites and managerial risk aversion. 
C)  managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk seeking. 
D)  managers not investing enough of a firm's capital in managerial perquisites and managerial risk seeking. 
A)  managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk aversion. 
B)  managers not investing enough of a firm's capital in managerial perquisites and managerial risk aversion. 
C)  managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk seeking. 
D)  managers not investing enough of a firm's capital in managerial perquisites and managerial risk seeking.

Question 18

The senior executive (the president or CEO)in an M-form organization has two responsibilities:

Accepted Answer

A)  budgeting and accounting. 
B)  budgeting and mission setting. 
C)  strategy formulation and strategy implementation. 
D)  strategy formulation and budgeting. 
A)  budgeting and accounting. 
B)  budgeting and mission setting. 
C)  strategy formulation and strategy implementation. 
D)  strategy formulation and budgeting.

Question 19

The senior executive in an M-form organization has two responsibilities: strategy formulation and strategy implementation.

Accepted Answer

A) True 
 B)False

Question 20

An important study on executive compensation found that differences in CEO cash compensation is not very responsive to differences in firm performance even if a substantial percentage of the CEO's compensation came in the form of stock and stock options in the firm.

Accepted Answer

A) True 
 B)False

Only accounting measures of performance can be used in accurately measuring the performance of divisions within a diversified firm.

The ________ is a subcommittee of the board of directors that maintains the relationship between the firm and external capital markets.

The title chairman of the board often,but not always,identifies the firm's senior executive.

In an M-form organization,the management of day-to-day operations is delegated to

In principle,only the CEO and the president report to the board of directors while other senior managers report only to the CEO.

Discuss the relationship between accounting methods of measuring divisional performance and economic methods,identify the formula used for calculating economic value added,and discuss methods for adjusting accounting earnings and the importance of making these adjustments.

Discuss the importance of compensation policies in diversified firms and identify the CEO compensation package that most closely aligns the interests of the CEO with those of stockholders.

Kelly Rae's position is SpandoCorp is best described as a(n)

Under which transfer pricing scheme is the transfer price set equal to the selling division's actual cost of production or set equal to the cost of production if the selling division were operating at maximum efficiency?

IPO stands for

Most accounting measures of divisional performance focus on long-term benefits and minimize the possibility of a short-term bias.

If SpandoCorp decides to use the method of allocating capital where each project receives funding on its merit and not because it received funding the previous year,it is using

In zero-based budgeting,each project has to stand on its own merits each year by being included among the important projects that a firm can afford to fund and no project receives funding for the future simply because it received funding in the past.

In 2005,what percentage of the equity traded in the United States was owned by institutional investors?

If SpandoCorp's board of directors wanted to ensure that changes in the CEO's compensation would be closely linked to changes in the firm's performance,it should

Two common agency problems include

The senior executive (the president or CEO)in an M-form organization has two responsibilities:

The senior executive in an M-form organization has two responsibilities: strategy formulation and strategy implementation.

An important study on executive compensation found that differences in CEO cash compensation is not very responsive to differences in firm performance even if a substantial percentage of the CEO's compensation came in the form of stock and stock options in the firm.

What Is Strategy and the Strategic Management Process?

Evaluating a Firm's External Environment

Evaluating a Firm's Internal Capabilities

Cost Leadership

Product Differentiation

Vertical Integration

Corporate Diversification

Strategic Alliances

Mergers and Acquisitions

International Strategies

Filters

Exam 8: Organizing to Implement Corporate Diversification

Only accounting measures of performance can be used in accurately measuring the performance of divisions within a diversified firm.

The ________ is a subcommittee of the board of directors that maintains the relationship between the firm and external capital markets.

The title chairman of the board often,but not always,identifies the firm's senior executive.

In an M-form organization,the management of day-to-day operations is delegated to

In principle,only the CEO and the president report to the board of directors while other senior managers report only to the CEO.

Discuss the relationship between accounting methods of measuring divisional performance and economic methods,identify the formula used for calculating economic value added,and discuss methods for adjusting accounting earnings and the importance of making these adjustments.

Discuss the importance of compensation policies in diversified firms and identify the CEO compensation package that most closely aligns the interests of the CEO with those of stockholders.

Kelly Rae's position is SpandoCorp is best described as a(n)

Under which transfer pricing scheme is the transfer price set equal to the selling division's actual cost of production or set equal to the cost of production if the selling division were operating at maximum efficiency?

IPO stands for

Most accounting measures of divisional performance focus on long-term benefits and minimize the possibility of a short-term bias.

If SpandoCorp decides to use the method of allocating capital where each project receives funding on its merit and not because it received funding the previous year,it is using

In zero-based budgeting,each project has to stand on its own merits each year by being included among the important projects that a firm can afford to fund and no project receives funding for the future simply because it received funding in the past.

In 2005,what percentage of the equity traded in the United States was owned by institutional investors?

If SpandoCorp's board of directors wanted to ensure that changes in the CEO's compensation would be closely linked to changes in the firm's performance,it should

Two common agency problems include

The senior executive (the president or CEO)in an M-form organization has two responsibilities:

The senior executive in an M-form organization has two responsibilities: strategy formulation and strategy implementation.

An important study on executive compensation found that differences in CEO cash compensation is not very responsive to differences in firm performance even if a substantial percentage of the CEO's compensation came in the form of stock and stock options in the firm.

What Is Strategy and the Strategic Management Process?

Evaluating a Firm's External Environment

Evaluating a Firm's Internal Capabilities

Cost Leadership

Product Differentiation

Vertical Integration

Corporate Diversification

Strategic Alliances

Mergers and Acquisitions

International Strategies

Filters