Question 1

Firms are often constrained from pursing goals other than profit maximization by the pressure of competition and threat of acquisition.

Accepted Answer

A) True 
 B)False

Question 2

To assess the adequacy of the return on capital employed (ROCE)that a firm earned in its most recent financial year,which of the following would not be an appropriate benchmark:

Accepted Answer

A) The ROCE earned by the same firm in previous years 
B) The ROCE earned by competitors during the same period 
C) The firm's cost of equity capital 
D) The firm's weighted average cost of capital 
A) The ROCE earned by the same firm in previous years 
B) The ROCE earned by competitors during the same period 
C) The firm's cost of equity capital 
D) The firm's weighted average cost of capital

Question 3

Maximizing profit over the life of the firm bears no relationship to the goal of maximizing shareholder value.

Accepted Answer

A) True 
 B)False

Question 4

The divergence between accounting profit and economic profit is likely to:

Accepted Answer

A) Greater for highly leveraged firms than for equity-financed firms 
B) Greater for labor-intensive firms than for capital-intensive firms 
C) Greater for capital-intensive firms than for labor-intensive firms 
D) Greater for technology-based firms than firms in mature industries 
A) Greater for highly leveraged firms than for equity-financed firms 
B) Greater for labor-intensive firms than for capital-intensive firms 
C) Greater for capital-intensive firms than for labor-intensive firms 
D) Greater for technology-based firms than firms in mature industries

Question 5

The main problem of a company establishing shareholder value creation as its primary performance goal is:

Accepted Answer

A) Shareholder value maximization is appropriate only for financial service companies 
B) Pursuing shareholder value inevitably leads to unethical behavior by senior managers 
C) Focusing on shareholder value does not necessarily encourage managers to concentrate on the actions and activities that create the profits that are the source of shareholder value 
D) Pursuing shareholder value is likely to be detrimental to employee morale and customer satisfaction 
A) Shareholder value maximization is appropriate only for financial service companies 
B) Pursuing shareholder value inevitably leads to unethical behavior by senior managers 
C) Focusing on shareholder value does not necessarily encourage managers to concentrate on the actions and activities that create the profits that are the source of shareholder value 
D) Pursuing shareholder value is likely to be detrimental to employee morale and customer satisfaction

Question 6

Influential scholars such as Milton Friedman,Charles Handy,Michael Porter and CK Prahalad:

Accepted Answer

A) Agree that CSR is an essential "moral imperative" 
B) Have fundamental disagreements about the justification for CSR 
C) Believe that the capitalist system would operate better if all firms adopted CSR 
D) Regard most firms' CSR initiatives as primarily exercises in public relations 
A) Agree that CSR is an essential "moral imperative" 
B) Have fundamental disagreements about the justification for CSR 
C) Believe that the capitalist system would operate better if all firms adopted CSR 
D) Regard most firms' CSR initiatives as primarily exercises in public relations

Question 7

The Balanced Scorecard is a technique of performance management that establishes and monitors four dimensions of performance:

Accepted Answer

A) Financial,strategic,operational,and ethical performance 
B) Financial,customer,internal,and learning/innovation performance 
C) Profit,sales,productivity,and asset management performance 
D) Shareholder,customer,employee,supplier,and social performance 
A) Financial,strategic,operational,and ethical performance 
B) Financial,customer,internal,and learning/innovation performance 
C) Profit,sales,productivity,and asset management performance 
D) Shareholder,customer,employee,supplier,and social performance

Question 8

The principal difference between accounting profit and economic profit is:

Accepted Answer

A) Accounting profit is distorted by the arbitrary treatment of depreciation and unusual items. 
B) Accounting profit includes both economic profit and the normal return on capital to the providers of equity capital. 
C) Economic profit is cash flow based and is,hence,less subject to manipulation that accounting profit. 
D) Economic profit is endorsed by economists who tend to be more rigorous than accountants. 
A) Accounting profit is distorted by the arbitrary treatment of depreciation and unusual items. 
B) Accounting profit includes both economic profit and the normal return on capital to the providers of equity capital. 
C) Economic profit is cash flow based and is,hence,less subject to manipulation that accounting profit. 
D) Economic profit is endorsed by economists who tend to be more rigorous than accountants.

Question 9

"Value" refers to the estimated monetary worth of a product or asset.

Accepted Answer

A) True 
 B)False

Question 10

Adam Smith's notion of the "invisible hand" refers to the ability of the price mechanism to align the interests of individuals with those of society-by pursuing their own interests self-interested individuals also further the overall good of society.

Accepted Answer

A) True 
 B)False

Question 11

Empirical research shows that firms that are committed to values and ethical principles are significantly less profitable over the long run than those committed to the pursuit of profit.

Accepted Answer

A) True 
 B)False

Question 12

According to Milton Friedman,the social purpose of a business is to make profit.

Accepted Answer

A) True 
 B)False

Firms are often constrained from pursing goals other than profit maximization by the pressure of competition and threat of acquisition.

To assess the adequacy of the return on capital employed (ROCE)that a firm earned in its most recent financial year,which of the following would not be an appropriate benchmark:

Maximizing profit over the life of the firm bears no relationship to the goal of maximizing shareholder value.

The divergence between accounting profit and economic profit is likely to:

The main problem of a company establishing shareholder value creation as its primary performance goal is:

Influential scholars such as Milton Friedman,Charles Handy,Michael Porter and CK Prahalad:

The Balanced Scorecard is a technique of performance management that establishes and monitors four dimensions of performance:

The principal difference between accounting profit and economic profit is:

"Value" refers to the estimated monetary worth of a product or asset.

Adam Smith's notion of the "invisible hand" refers to the ability of the price mechanism to align the interests of individuals with those of society-by pursuing their own interests self-interested individuals also further the overall good of society.

Empirical research shows that firms that are committed to values and ethical principles are significantly less profitable over the long run than those committed to the pursuit of profit.

According to Milton Friedman,the social purpose of a business is to make profit.

The Concept of Strategy

Industry Analysis: the Fundamentals

Further Topics in Industry and Competitive Analysis

Analyzing Resources and Capabilities

Organization Structure and Management Systems: the Fundamentals of Strategy Implementation

The Sources and Dimensions of Competitive Advantage

Industry Evolution and Strategic Change

Technology-Based Industries and the Management of Innovation

Competitive Advantage in Mature Industries

Vertical Integration and the Scope of the Firm

Global Strategy and the Multinational Corporation

Diversification Strategy

Implementing Corporate Strategy: Managing the Multibusiness Firm

External Growth Strategies: Mergers,acquisitions,and Alliances

Current Trends in Strategic Management

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Exam 2: Goals,values and Performance

Firms are often constrained from pursing goals other than profit maximization by the pressure of competition and threat of acquisition.

To assess the adequacy of the return on capital employed (ROCE)that a firm earned in its most recent financial year,which of the following would not be an appropriate benchmark:

Maximizing profit over the life of the firm bears no relationship to the goal of maximizing shareholder value.

The divergence between accounting profit and economic profit is likely to:

The main problem of a company establishing shareholder value creation as its primary performance goal is:

Influential scholars such as Milton Friedman,Charles Handy,Michael Porter and CK Prahalad:

The Balanced Scorecard is a technique of performance management that establishes and monitors four dimensions of performance:

The principal difference between accounting profit and economic profit is:

"Value" refers to the estimated monetary worth of a product or asset.

Adam Smith's notion of the "invisible hand" refers to the ability of the price mechanism to align the interests of individuals with those of society-by pursuing their own interests self-interested individuals also further the overall good of society.

Empirical research shows that firms that are committed to values and ethical principles are significantly less profitable over the long run than those committed to the pursuit of profit.

According to Milton Friedman,the social purpose of a business is to make profit.

The Concept of Strategy

Industry Analysis: the Fundamentals

Further Topics in Industry and Competitive Analysis

Analyzing Resources and Capabilities

Organization Structure and Management Systems: the Fundamentals of Strategy Implementation

The Sources and Dimensions of Competitive Advantage

Industry Evolution and Strategic Change

Technology-Based Industries and the Management of Innovation

Competitive Advantage in Mature Industries

Vertical Integration and the Scope of the Firm

Global Strategy and the Multinational Corporation

Diversification Strategy

Implementing Corporate Strategy: Managing the Multibusiness Firm

External Growth Strategies: Mergers,acquisitions,and Alliances

Current Trends in Strategic Management

Filters