Question 1

In the "make" phase of supply chain management, the SCOR model would classify a company as responsive if:

Accepted Answer

A)  It maintains significant idle capacity. 
B)  It has relatively few SKUs. 
C)  It sells across a single channel. 
D)  It maintains minimal days' supplies of raw materials. 
A)  It maintains significant idle capacity. 
B)  It has relatively few SKUs. 
C)  It sells across a single channel. 
D)  It maintains minimal days' supplies of raw materials. A

Question 2

Penzey's Spices sells its products through two channels: direct sales through its internet website and sales through its own retail outlets. Of the following channel costs, which is likely to be larger for Penzey's internet channel as compared to its retail channel?

Accepted Answer

A)  Channel management and maintenance. 
B)  Advertising and marketing. 
C)  Sales staff. 
D)  Trade show costs. 
A)  Channel management and maintenance. 
B)  Advertising and marketing. 
C)  Sales staff. 
D)  Trade show costs. A

Question 3

The internal value chain is composed of the set of value-added activities within a particular organization.

Accepted Answer

A) True 
 B)False  True

Question 4

Of the following, which is not one of Porter's five forces of competition?

Accepted Answer

A)  Suppliers. 
B)  New entrants. 
C)  Substitutes. 
D)  Regulators. 
A)  Suppliers. 
B)  New entrants. 
C)  Substitutes. 
D)  Regulators.

Question 5

Dover Industries, Inc., is a major supplier of components to Ford Motor Company. In a recently completed year, Dover Industries, Inc., reported the following (all amounts are in millions):
   Required: 
a. Compute Dover Industries' profit margin, asset intensity, and leverage.
b. Use the results from part (a) to compute the company's return on equity.

Accepted Answer

Dover Industries, Inc. is a major suppli

Question 6

Companies in an industry value chain will work to strengthen the weakest link in the chain so that they can squeeze more value chain profit from that weakest link.

Accepted Answer

A) True 
 B)False

Question 7

Beta Company has entered into an arrangement with Big Auto, Inc., under which Beta will supply automotive seating to Big Auto's assembly plant on a just-in-time basis. In order to respond to Big Auto's fluctuating demands, Beta must maintain substantial inventories of raw materials and adequate idle capacity. Beta has:

Accepted Answer

A)  Sacrificed efficiency for responsiveness. 
B)  Sacrificed responsiveness for efficiency. 
C)  Experienced value chain integration. 
D)  Experienced value chain reintegration. 
A)  Sacrificed efficiency for responsiveness. 
B)  Sacrificed responsiveness for efficiency. 
C)  Experienced value chain integration. 
D)  Experienced value chain reintegration.

Question 8

Strategic choices made regarding the size of a company, its degree of vertical integration, and the technology it employs fall into the category of:

Accepted Answer

A)  Structural cost drivers. 
B)  Executional cost drivers. 
C)  Perceptual cost drivers. 
D)  Value propositions. 
A)  Structural cost drivers. 
B)  Executional cost drivers. 
C)  Perceptual cost drivers. 
D)  Value propositions.

Question 9

Little Company is part of an industry value chain in which it has little competitive power. It has been forced to be responsive to both supplier and customer demands for timely delivery and cash payments on open accounts, and as a result experiences very low inventory and accounts receivable turnover. The company's low return on equity is probably most attributable to weak:

Accepted Answer

A)  Leverage. 
B)  Profit margins. 
C)  Asset intensity. 
D)  Executional cost drivers. 
A)  Leverage. 
B)  Profit margins. 
C)  Asset intensity. 
D)  Executional cost drivers.

Question 10

A firm with substantial idle capacity has chosen to be responsive in the "make" step of the supply chain.

Accepted Answer

A) True 
 B)False

Question 11

Capacity utilization is one of the structural cost drivers that can be used to gain a competitive advantage in an industry.

Accepted Answer

A) True 
 B)False

Question 12

MTH and Lionel are competitors in the market for model trains. Although Lionel once did, neither company now participates in the manufacture of the products they sell, nor does either sell through a retail channel. This indicates that the value chain for model trains has reached the point of de-integration.

Accepted Answer

A) True 
 B)False

Question 13

Circuit Techniques, Inc., specialized in the production of components for electrical fuse boxes. The company was forced into bankruptcy and liquidation following continuous demands for price concessions from its major customer, which was in turn under price pressure from the dominant retailer in the value chain for electrical products. Circuit Techniques, Inc., was a victim of:

Accepted Answer

A)  De-integration. 
B)  Integration. 
C)  Value chain squeeze. 
D)  Value migration. 
A)  De-integration. 
B)  Integration. 
C)  Value chain squeeze. 
D)  Value migration.

Question 14

Dover Industries, Inc., is a major supplier of components to Ford Motor Company. In a recently completed year, Dover Industries, Inc., reported the following (all amounts are in millions):
   Required: 
a. Compute the company's days of inventory on hand.
b. Based on your answer to part (a), does Dover Industries appear to emphasize responsiveness or efficiency in managing its supply chain?

Accepted Answer

Dover Industries, Inc. is a major suppli

Question 15

A firm that is attempting to be the lowest cost producer in its industry will find it relatively easy to meet large random fluctuations in demand from its customers.

Accepted Answer

A) True 
 B)False

Question 16

Because increased leverage imposes risk on a firm, it will reduce return on equity.

Accepted Answer

A) True 
 B)False

Question 17

Inchworm Construction Equipment Company maintains a very large investment in plant and equipment assets. Given the size of this investment, the firm experiences very low fixed asset turnover and the lowest asset intensity among its competitors. In order to compensate for this and earn an adequate return on equity, the company must:

Accepted Answer

A)  Be the low cost producer in its industry. 
B)  Sell its construction equipment through multiple channels. 
C)  Earn a large profit margin and/or employ a high degree of leverage. 
D)  Reconfigure its value chain to become more divergent. 
A)  Be the low cost producer in its industry. 
B)  Sell its construction equipment through multiple channels. 
C)  Earn a large profit margin and/or employ a high degree of leverage. 
D)  Reconfigure its value chain to become more divergent.

Question 18

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What is Simple Company's return on equity?

Accepted Answer

A)  24% 
B)  6% 
C)  1.5% 
D)  15% 
A)  24% 
B)  6% 
C)  1.5% 
D)  15%

Question 19

When a single supplier of a product or service exists, that firm will possess greater power if it is part of:

Accepted Answer

A)  A divergent value chain. 
B)  An oligopolistic value chain. 
C)  A convergent value chain. 
D)  An internal value chain. 
A)  A divergent value chain. 
B)  An oligopolistic value chain. 
C)  A convergent value chain. 
D)  An internal value chain.

Question 20

Two companies that earn the same profit margin and maintain the same level of asset intensity will experience the same return on equity.

Accepted Answer

A) True 
 B)False

In the "make" phase of supply chain management, the SCOR model would classify a company as responsive if:

Penzey's Spices sells its products through two channels: direct sales through its internet website and sales through its own retail outlets. Of the following channel costs, which is likely to be larger for Penzey's internet channel as compared to its retail channel?

The internal value chain is composed of the set of value-added activities within a particular organization.

Of the following, which is not one of Porter's five forces of competition?

Companies in an industry value chain will work to strengthen the weakest link in the chain so that they can squeeze more value chain profit from that weakest link.

Strategic choices made regarding the size of a company, its degree of vertical integration, and the technology it employs fall into the category of:

A firm with substantial idle capacity has chosen to be responsive in the "make" step of the supply chain.

Capacity utilization is one of the structural cost drivers that can be used to gain a competitive advantage in an industry.

A firm that is attempting to be the lowest cost producer in its industry will find it relatively easy to meet large random fluctuations in demand from its customers.

Because increased leverage imposes risk on a firm, it will reduce return on equity.

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What is Simple Company's return on equity?

When a single supplier of a product or service exists, that firm will possess greater power if it is part of:

Two companies that earn the same profit margin and maintain the same level of asset intensity will experience the same return on equity.

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

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Exam 14: Strategic Cost Management and the Value Chain Domain

In the "make" phase of supply chain management, the SCOR model would classify a company as responsive if:

Penzey's Spices sells its products through two channels: direct sales through its internet website and sales through its own retail outlets. Of the following channel costs, which is likely to be larger for Penzey's internet channel as compared to its retail channel?

The internal value chain is composed of the set of value-added activities within a particular organization.

Of the following, which is not one of Porter's five forces of competition?

Companies in an industry value chain will work to strengthen the weakest link in the chain so that they can squeeze more value chain profit from that weakest link.

Strategic choices made regarding the size of a company, its degree of vertical integration, and the technology it employs fall into the category of:

A firm with substantial idle capacity has chosen to be responsive in the "make" step of the supply chain.

Capacity utilization is one of the structural cost drivers that can be used to gain a competitive advantage in an industry.

A firm that is attempting to be the lowest cost producer in its industry will find it relatively easy to meet large random fluctuations in demand from its customers.

Because increased leverage imposes risk on a firm, it will reduce return on equity.

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What is Simple Company's return on equity?

When a single supplier of a product or service exists, that firm will possess greater power if it is part of:

Two companies that earn the same profit margin and maintain the same level of asset intensity will experience the same return on equity.

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Filters