BSG Comprehensive Exam (Fall 2019)
Questions & Answers20
The benefits of pursuing a strategy of social responsibility and corporate citizenship include -
ANSWERS-· The positive impact that such a strategy has on the company's image rating,
provided the company spends a meaningful amount on socially responsible activities and such
spending is sustained over a multi-year period
If a company's managers want to succeed in creating a differentiation-based competitive
advantage (And a potential cost advantage in achieving the differentiation) that is difficult for
rivals to quickly or easily copy (because every strategic move a company makes to outcompete
rivals and gain a competitive advantage is not apparent from information contained in the FIR
and the competitive intelligence Report), then the managers have to - ANSWERS-· Do a better
job then rivals in identifying and implementing ways to become very cost-efficient in producing
and marketing 350-500 models/styles of branded footwear that also have the highest S/Q rating
in the industry
Valid reasons to consider building a new plant in Latin America include - ANSWERS-· Low tariff
costs on footwear sales in Latin America (because no import tariffs are paid on footwear
produced at the Latin American plant and shipped to the distribution warehouses in Latin
America)
A company stands a better chance of achieving a sustainable cost-based competitive advantage
over rivals if its managers - ANSWERS-· Pursue a number of cost-reducing initiatives that can be
concealed from rivals (because such initiatives are not part of the information contained in the
FIR and the competitive intelligence report)
Which of the following actions does not help a company's social responsibility strategy result in
a higher image rating? - ANSWERS-· Reducing the prices, the company charges its customers for
branded footwear
,What does help a company's social responsibility strategy and results in a higher image rating -
ANSWERS-· Using environmentally friendly or 'Green' materials in producing footwear at the
company's plants
· Using recycled packaging materials to box each pair of athletic footwear at the company's
distribution centers
· Making donations to charities and charitable causes
· Investing to improve energy efficiency and the use of renewable sources at company facilities.
It makes good economic sense for company managers to consider investing $3.5 million per
million pairs of capacity for a plant facilities upgrade that will boost labor productivity by 25%. -
ANSWERS-· At a plant that currently has labor productivity of 3,200 pairs per worker and total
employee compensation of $20,000 annually because the upgrade will cause labor costs per
pair produced to decline from $6.25 to $5.00
o Labor cost per pair = Compensation/Productivity
o Labor cost per pair initially = 20,000/3,200 = $6.25
o After increase in productivity = 20,000/ (3,200*1.25) = $5.00
o Reduction = 6.25 * 5.00 = $1.25
Which of the following combinations of actions will likely provide the biggest competitive
benefits in helping a company achieve a differentiation-based competitive advantage over
some/many of its rivals? - ANSWERS-· Offering 400 or more models/styles to buyers in all four
geographic regions, maintaining a celebrity appeal rating of 200 or higher in all four geographic
, regions, selling branded footwear with a 7-star or higher S/Q rating in all four geographic
regions, and offering a rebate of $9 in all four geographic regions
It is both reasonable and wise for a company to consider shifting away from pursuit of a strategy
to strongly differentiate its branded footwear from the offerings of rival companies and sell its
footwear at a premium price when - ANSWERS-· A big percentage of industry rivals are trying to
outcompete each other with copycat differentiation strategies that include high S/W ratings,
many models/styles, high celebrity appeal ratings, and above-average advertising expenditures
Which of the following is NOT of much significance to company manager in deciding whether
profitable opportunity exist to build (or purchase) additional plant capacity in the upcoming
decision round? - ANSWERS-· Information in the most recent FIR indicates that more than half
of the companies in the industry have expanded their plant capacity since year 10
What IS significant to company managers in deciding whether profitable opportunity exist to
build (or purchase) additional plant capacity in the upcoming decision round? - ANSWERS-· The
growth in branded demand and private-label demand over the next 3 years (as reported in each
year FIR)
· How branded pairs available for sale in each geographic region in the past year compared with
projected branded demand and private label demand in each geographic region over the next
three years as shown in each year FIR
· The size of beginning inventories of branded footwear in each geographic region reported in
the most recent FIR
· Whether the most recent years FIR shows that the industry already has more than enough
production capacity worldwide to supply the combined demand for branded footwear and
private-label footwear worldwide for each of the next three years
If a company's actual results for revenues, net profits, EPS, and ROE turn out to be worse than
projected then it is usually because - ANSWERS-· The competitive efforts exerted by rival
Questions & Answers20
The benefits of pursuing a strategy of social responsibility and corporate citizenship include -
ANSWERS-· The positive impact that such a strategy has on the company's image rating,
provided the company spends a meaningful amount on socially responsible activities and such
spending is sustained over a multi-year period
If a company's managers want to succeed in creating a differentiation-based competitive
advantage (And a potential cost advantage in achieving the differentiation) that is difficult for
rivals to quickly or easily copy (because every strategic move a company makes to outcompete
rivals and gain a competitive advantage is not apparent from information contained in the FIR
and the competitive intelligence Report), then the managers have to - ANSWERS-· Do a better
job then rivals in identifying and implementing ways to become very cost-efficient in producing
and marketing 350-500 models/styles of branded footwear that also have the highest S/Q rating
in the industry
Valid reasons to consider building a new plant in Latin America include - ANSWERS-· Low tariff
costs on footwear sales in Latin America (because no import tariffs are paid on footwear
produced at the Latin American plant and shipped to the distribution warehouses in Latin
America)
A company stands a better chance of achieving a sustainable cost-based competitive advantage
over rivals if its managers - ANSWERS-· Pursue a number of cost-reducing initiatives that can be
concealed from rivals (because such initiatives are not part of the information contained in the
FIR and the competitive intelligence report)
Which of the following actions does not help a company's social responsibility strategy result in
a higher image rating? - ANSWERS-· Reducing the prices, the company charges its customers for
branded footwear
,What does help a company's social responsibility strategy and results in a higher image rating -
ANSWERS-· Using environmentally friendly or 'Green' materials in producing footwear at the
company's plants
· Using recycled packaging materials to box each pair of athletic footwear at the company's
distribution centers
· Making donations to charities and charitable causes
· Investing to improve energy efficiency and the use of renewable sources at company facilities.
It makes good economic sense for company managers to consider investing $3.5 million per
million pairs of capacity for a plant facilities upgrade that will boost labor productivity by 25%. -
ANSWERS-· At a plant that currently has labor productivity of 3,200 pairs per worker and total
employee compensation of $20,000 annually because the upgrade will cause labor costs per
pair produced to decline from $6.25 to $5.00
o Labor cost per pair = Compensation/Productivity
o Labor cost per pair initially = 20,000/3,200 = $6.25
o After increase in productivity = 20,000/ (3,200*1.25) = $5.00
o Reduction = 6.25 * 5.00 = $1.25
Which of the following combinations of actions will likely provide the biggest competitive
benefits in helping a company achieve a differentiation-based competitive advantage over
some/many of its rivals? - ANSWERS-· Offering 400 or more models/styles to buyers in all four
geographic regions, maintaining a celebrity appeal rating of 200 or higher in all four geographic
, regions, selling branded footwear with a 7-star or higher S/Q rating in all four geographic
regions, and offering a rebate of $9 in all four geographic regions
It is both reasonable and wise for a company to consider shifting away from pursuit of a strategy
to strongly differentiate its branded footwear from the offerings of rival companies and sell its
footwear at a premium price when - ANSWERS-· A big percentage of industry rivals are trying to
outcompete each other with copycat differentiation strategies that include high S/W ratings,
many models/styles, high celebrity appeal ratings, and above-average advertising expenditures
Which of the following is NOT of much significance to company manager in deciding whether
profitable opportunity exist to build (or purchase) additional plant capacity in the upcoming
decision round? - ANSWERS-· Information in the most recent FIR indicates that more than half
of the companies in the industry have expanded their plant capacity since year 10
What IS significant to company managers in deciding whether profitable opportunity exist to
build (or purchase) additional plant capacity in the upcoming decision round? - ANSWERS-· The
growth in branded demand and private-label demand over the next 3 years (as reported in each
year FIR)
· How branded pairs available for sale in each geographic region in the past year compared with
projected branded demand and private label demand in each geographic region over the next
three years as shown in each year FIR
· The size of beginning inventories of branded footwear in each geographic region reported in
the most recent FIR
· Whether the most recent years FIR shows that the industry already has more than enough
production capacity worldwide to supply the combined demand for branded footwear and
private-label footwear worldwide for each of the next three years
If a company's actual results for revenues, net profits, EPS, and ROE turn out to be worse than
projected then it is usually because - ANSWERS-· The competitive efforts exerted by rival
