Exam 8: Organizing to Implement Corporate Diversification

If a division of a multidivisional firm has adjusted accounting earnings of $10 million,a weighted average cost of capital of 10% and a total capital employed by the division of $50 million,the division has an EVA of

If SpandoCorp used a ________ budgeting process,it would assume that no project would receive funding for the future simply because it was funded in the past and would require each project to stand on its own merits each year to be included in a list of important projects that the firm can afford to fund.

Discuss the role of division general managers in an M-form organization and compare and contrast this role with that of senior executives in U-form organizations.

The M-form structure is designed to create checks and balances for managers that increase the probability that a diversified firm will be managed in ways consistent with

Which of the following statements regarding outside members of boards of directors is accurate?

Which component of the M-form structure evaluates the firm's decision making to ensure that it is consistent with the interests of equity holders?

The M-form structure is designed to create checks and balances for managers that increase the probability that a diversified firm will be managed in ways consistent with the interests of its equity holders.

The most common organizational structure for implementing a corporate diversification strategy is the ________ structure.

To the extent that a board of directors begins to operate a business on a day-to-day basis,it goes beyond its capabilities.

If a well-managed diversified firm uses both accounting and economic measures,it will be able to unambiguously evaluate divisional performance.

Each division in an M-form organization typically adopts a matrix structure and the division general manager takes on the role of senior project executive.

Discuss the role of accounting measures of divisional performance,identify three different standards of comparison that can be used when evaluating the accounting performance of a division along with the strengths and weaknesses of each standard,and describe the potential weaknesses of accounting measures of divisional performance.

Another name for the M-form is the multidivisional structure.

In a multidivisional structure,each business that the firm engages in is managed through a

The primary responsibility of the ________ is to provide information about the firm's external and internal environments to the firm's senior executive.

A(n)________ occurs when a large,typically diversified firm divests itself of a business in which it has historically been operating and the divested business operates as an independent unit.

Transfer pricing should equal

In the multidivisional structure,each business that the firm engages in is managed through a division.

Intermediate products or services are those products or services that are produced in one division of a diversified firm that are used as inputs by another division.

In 1970,institutions owned 62 percent of the equity traded in the United States; by 1990,institutions owned 48 percent of this equity and by 2002,they owned only 32 percent of this equity.