The 'principal-agent problem' refers to:
The power held by suppliers over prices
The power held by buyers over prices
The trust of employees
The separation of ownership from control in firms
Those who advocate the stakeholder view of organizations have the view that:
An organization's sole purpose is to create shareholder value
An organization's sole purpose is to make profits for the owners
An organization has more than one purpose - it also needs to consider the society within which it operates
An organization's sole purpose is to increase the quality of life of its employees
Stakeholders can be defined as:
Individuals or groups that are affected by the organization
Individuals or groups that affect the organizations
Individuals or groups that affect and are affected by the organization
Individuals or groups that have invested money in the organization
Organizational performance is a measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals.
True
False
A measure of the appropriateness of goals selected by managers for the organization and the degree to which the organization achieves these goals is known as the effectiveness of the organization.
Which one of the following is NOT a good indicator of how well a company's present strategy is working?
The company's market share ranking and whether its share is trending up, down, or staying more or less the same
Whether the company is regarded as a leader in some significant area (technology, product quality, customer service, product innovation and so on) and the firm's image and reputation with customers
Whether the company's profit margins are increasing or decreasing and how large they are relative to other firms in the industry
Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities
Whether the company is achieving its stated financial and strategic objectives and whether the company is an above-average or below-average industry performer
SWOT analysis:
consists of three steps: identifying a company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation, and translating the conclusions into strategic action to improve the company's strategy.
provides a quick overview of where on the scale from "alarmingly weak" to "exceptionally strong" the attractiveness of the company's overall business situation ranks.
helps provide a basis for matching the company's strategy to its internal resource capabilities and its external opportunities and threats.
helps identify actions for improving the company's strategy.
All of these.
A core competence:
holds the potential for being a cornerstone of a company's strategy because it gives a company competitive capability and qualifies as a genuine company strength and resource.
nearly always resides in the calibre of the company's assets on its balance sheet rather than in its people and in its intellectual capital; furthermore, balance sheet-related core competencies tend to be competitively more valuable than core competencies grounded in intellectual capital.
is better suited to helping a company defend against external threats than in pursuing external market opportunities.
is usually tied closely to the calibre of a company's manufacturing capability and/or its proprietary technology and know-how.
is a more valuable company resource than either a "competence" or a "distinctive competence" but it is not as good a resource strength as a "competitive capability."
A distinctive competence:
is a more important competitive asset than a core competence.
represents competitive superiority in performing an activity and thus is a basis for building a competitive advantage over rivals.
is a competitively important value chain activity that a company performs better than its rivals.
is a strong candidate for being used as a cornerstone of a company's strategy.
All of the above.
Which of the following is NOT a measure of the competitive power of a company's resource strengths and competitive capabilities?
How hard it is for competitors to copy a particular resource strength or competitive capability of a company
Whether the company has more resources/capabilities than any other key rival
Whether the resource or capability is really competitively superior to what rivals have or can do
How easily the resource or capability can be trumped by the different resources/capabilities of rivals
Whether the resource or capability is durable and has staying power (in the sense of not losing its value quickly because of new developments)
The industry or market opportunities that are most relevant to a company and those which its strategy should aim at capturing include
opportunities that are well-suited to the company's competitive capabilities and resource strengths.
opportunities which the company has the financial resources to pursue.
opportunities that offer important avenues for growth.
opportunities where the company has the greatest potential for competitive advantage.
All of the above
A company's value chain consists of:
the activities a company performs in converting its resource weaknesses into resource strengths.
the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service and delivering value to customers-these activities can be grouped into (a) the primary activities that are foremost in creating value for customers and (b) the related support activities that facilitate and enhance the performance of the primary activities.
the activities a company performs to build a competence and turn it into a strong competitive capability.
identifying the primary activities and related support activities that a company performs in developing a distinctive competence.
identifying each and every activity that results in a cost to the company and that, therefore, has to be covered by its price.
A company's cost competitiveness is largely a function of:
whether it does a good enough job of benchmarking its value chain activities against the value chains of competitors so that it knows exactly how low to drive its costs to be cost-competitive.
how efficiently it manages its overall value chain activities relative to how efficiently competitors manage theirs.
whether it does a better job of building its resource strengths more cost effectively than rivals.
whether it possesses more core competences and competitive capabilities than rivals.
how closely its internally-performed activities are linked to the activities performed by suppliers and to the activities performed by forward channel allies.
One of the most dependable ways for a company to build competitive advantage:
is developing the skills, competencies, and capabilities to perform competitively crucial value chain activities better than competitors.
is using its resource strengths to insulate itself from the impact of the five competitive forces.
is improving the calibre of its product or service (because superior products or services are almost impossible to clone or improve upon).
is moving into the strategic group where profit margins are highest.
is neutralizing the external threats to a company's well-being and then focusing company resources on the company's single best market opportunity.
Identifying the strategic issues that company managers need to address:
involves using the results of both industry and competitive analysis and what has been learned from evaluating the company's present strategy, SWOT analysis, and the evaluations of the company's own competitiveness
entails developing a "worry list" of "how to...", "whether to....", and "what to do about....."
is an important component of company situation analysis because a good strategy must include actions to deal with all the strategic issues that need to be addressed.
entails locking in on what challenges the company has to overcome in order to be financially and competitively successful in the years ahead.
"Shareholder wealth" in a firm is represented by:
the number of people employed in the firm.
the book value of the firm's assets less the book value of its liabilities.
the amount of salary paid to its employees
the market price per share of the firm's shares.
The long-run objective of financial management is to:
maximize earnings per share.
maximize the value of the firm's shares.
maximize return on investment.
maximize market share.
A(n) _______________ would be an example of a principal, while a(n) ________________ would be an example of an agent.
shareholder; manager
manager; owner
accountant; bondholder
shareholder; bondholder
The decision function of financial management can be broken down into the ____________ decisions.
financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and credit management
A company's ____________________ is (are) potentially the most effective instrument of good corporate governance.
shareholders
board of directors
top executive officers
Growth means:
change
stability
effectiveness
efficiency
Entrenched companies may have cost advantages not available to potential rivals. This is an example of:
capital requirements
cost disadvantage independent of size
economies of scale
government policy
profitability gap
Which of the following financial objectives best relates to a firm's ability to meet its short-term financial obligations?
Liquidity
Profitability
Efficiency
Stability
Which of the following financial objectives best relates to how productively a firm uses its assets relative to its revenues and its profits?
_____ is a written report that quantitatively describes a firm's financial health.
A forecast
A budget
A business plan
A financial statement
Friedman (1962) is a famous exponent of the view that:
Business is business
Business is society
Business is politics
Business is power
Benchmarking is a popular tool to measure performance. Benchmarking involves the continual process of comparing organizational performance against:
Industry standards
High achieving organizations
Rivals
Organizations within the same industry
Which of the following statements regarding flaws suffered by financial measures is not correct?
They are hard to quantify.
They do little to motivate employees to improve accounting profits.
They are not effective in getting managers' attention.
They are useful in identifying operational problems.
None of the above.
The description of an organization's values, definition of its responsibilities to stakeholders, and identification of its major strategies is known as a:
business-level strategy.
business model.
mission statement.
balanced scorecard.
The description of how different levels and employees in the organization must perform for the organization to achieve its goals is a:
What term is used to describe the continuous process of measuring a company's own products, services, and activities against competitors' performance?
Balanced scorecard
Business-level strategy
Benchmarking
Internal calibration
Which of the following statements regarding multiple measures or a single measure of performance is not correct?
The advantage of using branch profits to evaluate branch managers is that profit is relatively simple to compute and reflects the organization's ultimate goal.
The use of multiple measures can influence branch managers' decisions by changing the components of the performance measurement system to reflect changes in the firm's strategy.
If the branch managers are more knowledgeable than the corporate staff about local conditions and what local clients value, a single measure could be preferable.
If the corporate office has better knowledge of what it requires to operate a profitable branch, using multiple measures provides a way to communicate this knowledge and achieve common branch operations
All of the above are correct statements.
Which of the following is not a reason that worker involvement is important in an effective performance measurement system?
Many managers believe that when workers take on real decision-making authority, their commitment to the organization and its objectives increases.
When decision-making responsibility lies with workers closer to the customer, workers are more responsive to customer concerns and can make informed decisions.
Giving decision-making responsibility to workers uses their skills and knowledge and motivates them to further develop those skills and knowledge in an effort to improve the organization's performance.
Workers are more likely to understand financial measures than nonfinancial measures.
Taking a bribe is:
A violation of human rights
A violation of an individual's right to privacy
A violation of distributive justice
A violation of common decency
Ethical behavior is not in the long-term interest of businesses.
Extortion is an attempt to buy:
Goods and services quickly
Influence
At a discount
Goodwil
Distributive justice refers to:
Rewards allocated to those who shout loudest
Rewards allocated by level of contribution
Rewards allocated to those who cannot help themselves
Rewards allocated regardless of contribution
Ethical business practice requires, above all else, an active awareness and consideration of the likely long-term consequence of any action.
By professing ethical behavior, organisations in the ____________ hope to avoid threats of litigation, boycotts, strikes and shareholder alienation.
Reactive
Compliant
Immoral
Amoral management conforms to high standards of ethical behavior.
Amoral managers practice a style of management devoid of ethical principles and active opposition to what is ethical.
It is important for businesses to practice ethical behaviour to________________.
Avoid conflict and promote distributive justice.
Promote conservation of resources and preserve corporate reputation.
Promote long term profitability and avoid societal conflict.
Which one of the following managers does not factor ethical considerations into own actions since business activity lies outside sphere of moral judgment?
Immoral managers
Intentionally amoral managers
Both a) and b).
The income statement reflects a firm's results over a period of time.
The three major criteria managers should look for when selecting employees are physical, mental and ________________capability?
Intellectual
Emotional
Psychological
Physiological
A system for providing employees with regular feedback on their performance is known as ___________________?
Empowerment
Enrichment
Appraisal
Enhancement
Which of the following is not usually associated with a highly motivated workforce?
High quality work output
High staff turnover
High work satisfaction
High staff involvement
The purpose of the Basic Conditions of Employment Act is to give effect to and regulate the right to fair labour practices conferred by section 23(1) of the Constitution by:
establishing and enforcing basic conditions of employment
regulating the variation of basic conditions of employment
to give effect to obligations incurred as a member state of the International Labour Organisation
all of the above
The purpose of the Employment Equity Act, 55 of 1998 is to achieve equity in the workplace by :
a) promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination
implementing affirmative action measures to redress the disadvantages in employment experienced b) by designated groups, to ensure their equitable representation in all occupational categories and levels in the workforce
c) to advance the interests of historically disadvantaged individuals
a) and b)
a) and c)
The principal purpose of the Labour Relations Act is to advance economic development, social justice, labour peace and the democratisation of the workplace by fulfilling the primary objects of this Act, which are:
To give effect and regulate the fundamental rights conferred by section 27 of the Constitution
To give effect to obligations incurred by the Republic as a member state of the International Labour
Organisation To provide a framework within which employees and their trade unions, employers and employers’ organisations can collectively bargain to determine matters of mutual interest and formulate industrial policy
To promote orderly collective bargaining, employee participation in decision-making in the workplace and effective resolution of labour disputes
The Labour Market Review has sought to review the following legislations:
Basic Conditions Employment Act, Labour Relations Act, Employment Equity Act, Compensation for Occupational Injuries and Diseases Act, Unemployment Insurance Act, Skills Development Act
Basic Conditions Employment Act, and Labour Relations Act, Employment Equity Act
Compensation for Occupational Injuries and Diseases Act, Unemployment Insurance Act, Skills Development Act
Basic Conditions Employment Act, and Labour Relations Act, Unemployment Insurance Act, Skills Development Act
Amendments have been effected to the following Acts to fulfil South Africa’s obligations as a member state of the International Labour Organisation
Labour Relations Act , Basic Conditions of Employment Act , Employment Equity Act
none of the above
The ILO action their Decent Work agenda by focusing on four key objectives
Creating Jobs
Guaranteeing rights at work
Extending social protection
Promoting social dialogue
Unethical behaviour in business can be reduced if management does all of the following except
establish clear policies on unethical behavior.
limit opportunities for unethical behavior.
establish formal rules and procedures.
punish unethical behavior firmly.
depend totally on employees' personal ethics.
Which of the following best describes the relationship between utilitarianism and consequentialism?
Utilitarianism is a form of consequentialism.
Consequentialism is a form of utilitarianism.
Utilitarianism and consequentialism are completely independent theories.
Utilitarianism and consequentialism are inconsistent.
