Final Review

Question 1

Which of the following is NOT one of Cope’s five drivers?

a. ) Sales
b. ) Cash
c. ) Growth
d. ) Assets

Answer 1

Sales is not one of Cope’s five drivers

Question 2

The phrase “the bottom line” refers to:

a. ) Operating Income
b. ) Gross Income
c. ) Gross Margin
d. ) Net Income

Answer 2

Net Income is referred to as “the bottom line”

Question 3

A company can grow profits by:

a. ) Expanding Operations
b. ) Increasing Price
c. ) Decreasing Volume
d. ) Increasing Sales Staff

Answer 3

Increasing price grows profits

Question 4

A firm with greater equity:

a. ) Is poorly managed
b. ) Is less risky
c. ) Has higher new income
d. ) Has better cash flow

Answer 4

A firm with greater equity Is less risky

Question 5

Which of the following would tell you about a firm’s degree of “liquidity”?

a. ) The amount of profit
b. ) The amount of cash a firm has
c. ) The amount of debt a firm has
d. ) The number of staff a firm has

Answer 5

The amount of cash a firm has tells you about their “liquidity”

Question 6

According to Peter Drucker, at the beginning of Cope’s cash flow chapter, which of the following is a true statement?

a. ) Cash flow is over-rated
b. ) Profit is more important than cash flow
c. ) Cash flow is more important than profit
d. ) Cash flow is the only way to truly measure a firms success

Answer 6

Cash flow is more important than profit, according to Peter Drucker

Question 7

Which of the following statements about the value chain is TRUE?

a. ) At least five activities MUST be exceptional to achieve a competitive advantage
b. ) Support activities are more important than primary activities
c. ) Any value chain element can be a source of competitive advantage
d. ) Primary activities are more important than support activities

Answer 7

Any value chain element can be a source of competitive advantage

Question 8

Which of the following is NOT an example of a primary value chain activity?

a. ) Inbound logistics
b. ) Human resource management
c. ) Operations
d. ) Marketing and sales

Answer 8

Human resource management is not a primary value chain activity

Question 9

The term used to describe Ford’s business structure in the 1920’s is:

a. ) Value-spanning
b. ) Horizontal integration
c. ) Vertical integration
d. ) Geographically dispersed

Answer 9

The term vertical integration was used to describe Ford’s business structure in the 1920’s

Question 10

In “How Will You Measure Your Life”, Christensen encourages us to allocate which resources to accomplishing our strategy?

a. ) Time, energy, and talent
b. ) Money, long-term investments, and personal equity
c. ) Mind, passion, and social network
d. ) Education, experiences, and personality

Answer 10

Christensen encourages us to allocate time, energy, and talent to accomplish our strategy

Question 11

In “How Will You Measure Your Life”, what does Christensen mean by advising us to avoid the marginal costs mistake?

a. ) To have a strategy for our life even if it is not well defined
b. ) To never think small wrongs are ok
c. ) To apply financial acumen to our decision-making
d. ) To use the right yardstick when measuring our success

Answer 11

Avoiding the marginal costs mistake means to never think small wrongs are ok.

Question 12

Which of the following ratios measures asset utilization?

a. ) Debt to equity
b. ) Return on assets
c. ) Return on investments
d. ) Earnings per share

Answer 12

Return on assets measures asset utilization

Question 13

Company leaders consider which of the following measures to be the most important indicator of financial strength?

a. ) A company’s cash position
b. ) The total amount of assets owned by the company
c. ) The level of cash flow generated from operations
d. ) The total number of shareholders

Answer 13

The level of cash flow generated from operations is the most important indicator of financial strength

Question 14

Which of the below is not one of the four basic categories of expenses or costs for any business?

a. ) Costs of good sold
b. ) Operating expenses
c. ) Interest expense
d. ) Inventory

Answer 14

Inventory is not one of the four categories of expenses or costs

Question 15

When comparing Company A’s gross profit margin of 15%, to the S&P average of 13%, we would conclude:

a. ) Company A is spending more cash to make profit
b. ) Company A has a higher cost structure
c. ) Company A is more efficient at converting revenue into profit
d. ) No conclusion can be made

Answer 15

Company A is more efficient at converting revenue into profit than the S&P average

Question 16

When a firm grows by mergers and acquisitions, we call this:

a. ) Internal growth
b. ) Inordinate growth
c. ) Inorganic growth
d. ) Unnatural growth

Answer 16

When a firm grows be mergers and acquisitions, it is called inorganic growth

Question 17

Top-line growth refers to increases in:

a. ) Revenue
b. ) Profit
c. ) Debt
d. ) EPS

Answer 17

Revenue is the top line

Question 18

Which of the following is NOT a result of business growth?

a. ) Innovative products
b. ) Market share decline
c. ) Excited employees
d. ) Shareholder value

Answer 18

Market share decline is not a result of business growth

Question 19

According to Cope, management’s general objective is to:

a. ) Maximize profits over people
b. ) Minimize assets
c. ) Balance the five drivers
d. ) Use cash

Answer 19

Management’s general objective is to balance the five drivers

Question 20

Wal-Mart has EPS of $4.32 and Target has EPS of $2.37. What do we know about these firms?

a. ) Wal-Mart is doing better than Target
b. ) We can’t make any comparisons using EPS this way
c. ) Target is doing better than Wal-Mart
d. ) Both firms are better than average

Answer 20

We can’t make any comparisons using EPS this way

Question 21

The major benefit of a posted price buyer seller exchange is?

a. ) The ability for both buyer and seller to negotiate
b. ) The use of internet auction capabilities
c. ) The price is set by the buyer
d. ) The speed of the transaction

Answer 21

The major benefit of a posted price buyer seller exchange is the speed of the transaction

Question 22

If a manager communicates to employees that their bonus level will be 110% of target, and then the actual bonus is 105%, which of the following will be the likely result?

a. ) Employees will be satisfied with the company’s overall results
b. ) Employees will be really excited due to a bonus higher than their 100% target
c. ) Employees will be dissatisfied because of their expectations
d. ) Employees will not even notice the small difference in the final payout

Answer 22

If managers communicate a higher bonus than their employees actually get, employees will be dissatisfied because of their expectations

Question 23

Which of the following entries on the income statement tell you what “your piece” of the profit equals?

a. ) Earnings per share
b. ) Total operating expenses
c. ) Net income
d. ) Total revenue

Answer 23

Earnings per share tells you “your piece” of the profit

Question 24

Which of the following statements is TRUE about business models?

a. ) There is “one best way” to make money in an industry
b. ) Once you find a successful business model, it will always work
c. ) There can be multiple successful business models in an industry
d. ) If the business model is good, it doesn’t matter how you organize things

Answer 24

There can be multiple successful business models in an industry

Question 25

Which of the following is a test that a business model MUST pass before you employ it?

a. ) The narrative test
b. ) The plausibility test
c. ) The math test
d. ) The profit test

Answer 25

A business model must pass the narrative test before you employ it

Question 26

eBay is an example of which buyer seller exchange?

a. ) Posted price
b. ) Negotiated price
c. ) Horizontal interaction
d. ) Reverse buying

Answer 26

eBay is an example of a horizontal interaction

Question 27

Business professionals know creating value is essential for profitability, growth and organizational longevity. Using the simple formula for value, business is successful when:

a. ) C-P=V
b. ) P>C>V
c. ) P-V=C
d. ) V>P>C

Answer 27

The simple formula for value is V>P>C

Question 28

The term, “getting the right people on the bus” implies which of the following?

a. ) Attract and retain talented people
b. ) Create strategy and align resources
c. ) Build operational capabilities
d. ) Market to the right customer base

Answer 28

“Getting the right people on the bus” implies attract and retain talented people

Question 29

Which statement best describes a business model?

a. ) A company’s big idea
b. ) A company’s inputs
c. ) A company’s macro economic environment
d. ) A company’s approach to creating value

Answer 29

A business model is a company’s approach to creating value

Question 30

According to Cope’s CEO Urgency Continuum, a CEO considering the long-term would focus on:

a. ) Cash generation
b. ) Profit
c. ) Growth and people
d. ) Assets

Answer 30

A CEO considering the long-term would focus on Growth and people

Question 31

Which of the following “ARTI” words is INCORRECT?

a. ) R = Rationale
b. ) A = Amounts
c. ) T = Trends
d. ) I = Industry and competitor analysis

Answer 31

R does not stand for Rationale

Question 32

Conducting an industry and competitor analysis is easier with:

a. ) Non profit organizations
b. ) Privately owned corporations
c. ) Venture start up corporations
d. ) Publicly traded corporations

Answer 32

Competitor analysis is easier with publicly traded corporations

Question 33

Which of the following statements is true?

a. ) We would like to see margins expand
b. ) We would like to see revenue decline
c. ) We would like to see margins shrink
d. ) We would like to see cash flow reduced

Answer 33

We would like to see margins expand

Question 34

Which of the following is NOT a category of cash flow listed on the cash flow statement?

a. ) Cash from operating activities
b. ) Cash from investing activities
c. ) Cash form profitable activities
d. ) Cash from financing activities

Answer 34

Cash from profitable activities is not a category of cash flow

Question 35

The consolidated annual financial reports a public traded corporation files with the Securities and Exchange Commission are called:

a. ) Balance sheets
b. ) P&L Statements
c. ) Form 10-K
d. ) Form 10-Q

Answer 35

The 10-K form is the annual report filed with the SEC

Question 36

Generally, who signs the annual letter to shareholders?

a. ) The Boards of Directors
b. ) The CEO
c. ) The Executive Committee
d. ) The letter is never signed

Answer 36

The CEO signs the annual letter to shareholders

Question 37

When we calculate “margins”, which of the following lines in the income statement will be our denominator?

a. ) Line 1
b. ) Line 3
c. ) Line 5
d. ) Line 6

Answer 37

When calculating margins, Line 1 will be our denominator

Question 38

Which line is used to calculate EPS?

a. ) Line 1
b. ) Line 3
c. ) Line 5
d. ) Line 6

Answer 38

Line 6 is used to calculate EPS

Question 39

Which of the following is the most direct way to reduce the firm’s expenses in Line 2?

a. ) Following a cheaper source for manufacturing inputs
b. ) Moving to a “lower-tax” state
c. ) Getting a better loan rate form the bank
d. ) Cutting sales commission

Answer 39

Following a cheaper source for manufacturing inputs is the most direct way to reduce the firm’s expenses

Question 40

Which statement is true?

a. ) Line 13 MUST always be positive
b. ) Line 9 MUST always be greater than line 5
c. ) Line 14 does not always have to be equal to Line 9
d. ) Line 14 MUST always be equal to Line 9

Answer 40

Line 14 must always be equal to line 9

Question 41

Which of these firms is “more liquid”?

a. ) Firm A
b. ) Firm B
c. ) It is not possible to tell from the numbers

Answer 41

Firm B is “more liquid” because it has more cash

Question 42

For Firm B, Which of these numbers is the most worrying?

a. ) Line 1
b. ) Line 9
c. ) Line 10
d. ) Line 11

Answer 42

Line 11 is most worrying to Firm B

Question 43

The cash flow statement shows:

a. ) Where you got your money
b. ) Where you spent your money
c. ) All of them
d. ) How much you have left over

Answer 43

All of them

Question 44

What is the most important line/entry on the statement of cash flows?

a. ) Line 4
b. ) Line 1
c. ) Line 6
d. ) Line 7

Answer 44

Line 4 is the most important line on the statement of cash flows

Question 45

When looking at the ratio of Line 4 over Line 1, what would you hope to see in a healthy firm?

a. ) A ratio of exactly 1
b. ) A ratio less than one
c. ) A ratio greater than one
d. ) An even number

Answer 45

When looking at the ratio of Line 4 over Line 1, you hope to see A ratio greater than one

Question 46

A pattern of shared norms, values, and beliefs shared among members of a group is:

a. ) Organizational identity
b. ) Organizational behavior
c. ) Organizational diversity
d. ) Organizational culture

Answer 46

Organizational culture

Question 47

What did the authors of “What Really Works” conclude with respect to organizational structure?

a. ) Simple structures and processes deliver superior results
b. ) More bureaucracy creates superior results
c. ) Matrix structures provide faster results
d. ) P&L structures deliver superior results

Answer 47

Simple structures and processes deliver superior results

Question 48

Which of the following is NOT one of the four types of firms identified in the Nohria et al article

a. ) Winners
b. ) Losers
c. ) Sinkers
d. ) Climbers

Answer 48

Sinkers were not one of the four types of firms identified in the Nohria et al article

Question 49

The Toyota production system is based on:

a. ) A small set of undying principles
b. ) Specific tools and tactics
c. ) Lessons learned in the electric power industry
d. ) A rigid respect for authority

Answer 49

Toyota’s production system is based on a small set of undying principles

Question 50

How is TPS learned at Toyota?

a. ) Through online training
b. ) Through support groups and encounter session
c. ) By doing it
d. ) With factory walk-throughs and a welcome session

Answer 50

TPS is learned at Toyota by doing it

Question 51

Which of the following is NOT one of the lessons learned about leading at Toyota

a. ) Proposed changes should be structured as experiments
b. ) Managers should fix things first, then coach
c. ) Worker and managers should experiment
d. ) There’s no substitute for direct observation

Answer 51

“Managers should fix things first, then coach” is not a lesson learned at Toyota

Question 52

Which comes first, tacit or explicit knowledge?

a. ) They come at the same time
b. ) Tacit comes first
c. ) Explicit comes first
d. ) Neither - it’s a spiraling process

Answer 52

Neither tacit not explicit necessarily comes first, it’s a spiraling process

Question 53

According to Pixar’s way of managing, what is the thing you MUST get right, right from the beginning?

a. ) The financials
b. ) The people
c. ) The business model
d. ) The idea

Answer 53

According to Pixar, you must get the people right, right from the beginning

Question 54

Which of the following is NOT one of Pixar’s key cultural elements?

a. ) Respect
b. ) Trust
c. ) Learning
d. ) Consistency

Answer 54

Consistency is not one of Pixar’s key cultural elements

Question 55

At Pixar, when a senior expert gives you advice, you must:

a. ) Follow the letter of the law
b. ) Make your own choice about whether to accept the advice
c. ) Respond promptly, with an action plan
d. ) Provide a thorough set of reasons for how you will respond

Answer 55

At Pixar, when a senior expert gives you advice, you must make your own choice about whether to accept the advice

Question 56

In the spiral of knowledge, an apprenticeship program used for transferring learning would be an example of:

a. ) Explicit to Tacit
b. ) Explicit to Explicit
c. ) Tacit to Tacit
d. ) Tacit to Explicit

Answer 56

An apprenticeship program used for transferring learning is an example of tacit to tacit

Question 57

When describing the five “discovery skills” of innovators, the authors refer to associating as:

a. ) The brain of creative intelligence
b. ) An ecosystem for innovation
c. ) None of the above
d. ) The backbone of the innovator’s DNA

Answer 57

The backbone of the innovator’s DNA

Question 58

Which of the following is one of the five discovery skills for innovators?

a. ) Processing
b. ) Consulting
c. ) Networking
d. ) Assembling

Answer 58

Networking is one of the five discovery skills for innovators

Question 59

Converting tacit knowledge into explicit knowledge means finding a way to:

a. ) Reduce organizational knowledge
b. ) Increase employee awareness
c. ) Express the inexpressible
d. ) Develop more leaders

Answer 59

Converting tacit knowledge into explicit knowledge means finding a way to express the inexpressible

Question 60

What is the name of Pixar’s review process for giving and getting constant feedback?

a. ) The Dailies
b. ) The Total Production System
c. ) The Truth Session
d. ) The Workout Initiative

Answer 60

The dailies is the name of Pixar’s review process

Question 61

Which of the following is a factor related to CULTURAL distance?

a. ) Common language
b. ) Common legal system
c. ) Common border
d. ) Buying power

Answer 61

Common language is a factor related to cultural distance

Question 62

_____ would be an example of ADMINISTRATIVE distance

a. ) The physical size of a country
b. ) The wealth or income of consumers
c. ) Differences in religious beliefs
d. ) A country’s legal system

Answer 62

A country’s legal system is an example of administrative distance

Question 63

According to cultural relativism:

a. ) There is a single list of truths
b. ) Truths require the same behavior across countries
c. ) One set of concepts can be applied to truth
d. ) There are no universal rights or wrongs across countries

Answer 63

There are no universal rights or wrongs across countries according to cultural relativism

Question 64

Which of the following is one of Donaldson’s “three guiding principles”?

a. ) Apply one global standard
b. ) Respect local traditions
c. ) Always have a passport
d. ) Adopt host countries ethics

Answer 64

Respect local traditions is one of Donaldson’s three guiding principles

Question 65

Which of the following is NOT one of the guiding principles for shaping ethical behavior in a global business?

a. ) Respect for core human values
b. ) Respect for local traditions
c. ) Always default to the home country’s value
d. ) The belief that context matters

Answer 65

Always default to the home country’s value is not one of the guiding principles for shaping ethical behavior

Question 66

With respect to global ethics, the desire for tolerance is cause for tension when:

a. ) Establishing an innovative new product
b. ) Building a global brand
c. ) Trying to ensure consistency
d. ) Hiring domestic employees

Answer 66

Trying to ensure consistency causes tension in global ethics

Question 67

Serving the market segment made up of the world’s poor requires:

a. ) A short-term perspective
b. ) Applying existing business models
c. ) Little research and development expenditures
d. ) A change of mindset

Answer 67

A change of mindset is required to serve the worlds poor

Question 68

Which of the following is a strategy for engaging the “bottom of the pyramid”?

a. ) Expanding offerings of premium products
b. ) Aggregating demand through building network communities
c. ) Using existing products from top-selling brands
d. ) Exploring only mature markets

Answer 68

Aggregating demand through building network communities is a strategy for engaging the bottom of the pyramid

Question 69

Which of the following statements is CONSISTENT with Donaldson’s views of how to manage global ethical dilemmas?

a. ) Gift-giving is to be avoided
b. ) Go along to get along
c. ) A code of conduct is the key to success
d. ) It is ok to be less careful in a less-developed country

Answer 69

It is ok to be less careful in a less-developed country

Question 70

According to Friedman, who does a corporate executive work for?

a. ) The owners of the firm
b. ) The public at large
c. ) The workers of the firm
d. ) Themselves

Answer 70

According to Friedman, corporate executives work for the owners of the firm

Question 71

Which of the following is NOT an assumption of the perfect market?

a. ) Perfect information
b. ) Irrational actors
c. ) Perfect mobility
d. ) Limited need for government

Answer 71

Irrational actors are not an assumption of the perfect market

Question 72

Which of the following IS a reason cited by Stone for why the “market can’t do it”?

a. ) Many times, you don’t even know you are being harmed
b. ) Boycotts are often very effective
c. ) Big companies are usually easy to influence
d. ) Most consumers have a good idea of which firm hurt them

Answer 72

Many times, you don’t even know you are being harmed is a reason cited by Stone for why the market can’t do it

Question 73

Which of the following is NOT part of the “triple bottom line”?

a. ) People
b. ) Profit
c. ) Planning
d. ) Planet

Answer 73

Planning is not part of the triple bottom line

Question 74

Which statement comes closest to agreeing with the “old way” of viewing sustainability?

a. ) How can I use this to be more innovative?
b. ) What will this cost me?
c. ) How can I take better care of the environment?
d. ) What can it do for me?

Answer 74

What will this cost me?

Question 75

In your sustainability reading, HP removed lead from the soldering material before anyone made them do it. This is an example of:

a. ) Building a more sustainable value chain
b. ) Using compliance as an opportunity
c. ) Using sustainability to improve operations
d. ) Developing a new business model

Answer 75

HP removing lead before being made to is an example of using compliance as an opportunity

Question 76

DePree describes his concept of Theory Fastball simply as:

a. ) A faster pitcher gets better results
b. ) Every pitcher needs an outstanding catcher
c. ) Throwing the curve ball introduces change
d. ) DePree makes no connection between baseball and business

Answer 76

Every pitcher needs an outstanding catcher

Question 77

Roving leadership as described by Max DePree, refers to which of the following?

a. ) Hierarchal leaders who permit others to share ownership
b. ) Global leaders who have lived in international locations
c. ) Engaging leaders who lead by walking around
d. ) Cultural leaders who share the company’s values

Answer 77

Roving leadership refers to hierarchal leaders who permit others to share ownership

Question 78

What was the purpose of Max DePree’s story about Pink Ice in the urinal?

a. ) To highlight how important bathrooms are to employee engagement
b. ) To improve corporate culture through innovative process
c. ) To tell an interesting story with no business application
d. ) To recognize the signals of organizational deterioration

Answer 78

The purpose about DePree’s pink ice story was to recognize the signals or organizational deterioration

Question 79

According to Drucker, an effective executive ensures companywide accountability by:

a. ) Running productive meetings
b. ) Growing revenues
c. ) Reducing costs
d. ) Increasing product innovation

Answer 79

Effective executives ensure companywide accountability by running productive meetings

Question 80

In Collin’s research related to Level 5 leadership, first who… Then what, refers to:

a. ) Getting the people on the bus, then determining where to drive it
b. ) Developing your strategic plan and then staffing the organization
c. ) Building global infrastructure and then assembling the strategic plan
d. ) Finding your product expertise through innovation, then targeting the right market

Answer 80

First Who… Then What refers to getting the people on the bus, then determining where to drive it.

Question 81

In “Managing Oneself”, Drucker poses two important questions relating to your performance. What are they?

a. ) What’s my job? And How do I learn?
b. ) Am I a reader or listener? And how do I learn
c. ) Am I being paid fairly? And do I love my work?
d. ) How did I change myself? And how do I move from incompetence to mediocrity?

Answer 81

Drucker poses the questions “Am I a reader or listener? and How do I learn?

Question 82

A level 3 leader in Collin’s Level 5 Leadership Hierarchy is described as:

a. ) A competent manager
b. ) An effective leader
c. ) A highly capable individual
d. ) A contributing team member

Answer 82

A level 3 leader is a competent manager

Question 83

In “Managing Oneself”, Drucker advises us to consider the second half of our life as it relates to work. What does he advise us to prepare for?

a. ) A second career
b. ) A long retirement
c. ) Dramatic changes in technology
d. ) Changing business environments

Answer 83

Drucker advises us to prepare for a second career

Question 84

Which of the following did Collins describe as a firm knowing its “one big thing”?

a. ) A culture of discipline
b. ) The flywheel
c. ) The hedgehog concept
d. ) The doom loop

Answer 84

Collins described the hedgehog concept as a firms one big thing

Question 85

The progress and actions taken by a person throughout a lifetime that relates to their occupation is referred to as:

a. ) A career
b. ) Their resume
c. ) A job
d. ) The leadership pipeline

Answer 85

The progress and actions taken by a person throughout a lifetime that relates to their occupation is referred to as a career

Question 86

When building a “Culture of Leadership”, which of the following is the most important?

a. ) A process for finding leadership talent early in their career
b. ) A robust performance management system
c. ) An outstanding reward system focused on financial results
d. ) An employee suggestion system

Answer 86

A process for finding leadership talent early in their career is the most important thing when building a culture of leadership

Question 87

The Stockdale Paradox refers to

a. ) Confronting the brutal facts
b. ) building a culture of discipline
c. ) retaining your faith to prevail
d. ) Both A and C

Answer 87

The Stockdale Paradox refers to both confronting the brutal facts and retaining your faith to prevail

Question 88

In “What Makes an Effective Executive”, Drucker advises us to get the knowledge we need by doing which of the following?

a. ) Asking what needs to be done
b. ) To ask no questions, just learn from experience
c. ) Asking what is right for the business
d. ) Both A and C

Answer 88

Drucker advises us to get the knowledge we need by both asking what needs to be done and asking what is right for the business

Question 89

When addressing blame in an organization, a Level 5 Leader would:

a. ) Look out the window
b. ) Look in the mirror
c. ) Look in the garage
d. ) Look for others to blame

Answer 89

When addressing blame, a Level 5 leader would look in the mirror

Question 90

Drucker indicates that the first secret of effectiveness is to:

a. ) Understand the tasks you are assigned so that you can complete them
b. ) Understand your boss’ needs so that you can complete them
c. ) Understand the people you work with so you can make use of their strengths
d. ) Make plans in the 2 to 5 year range

Answer 90

The first secret of effectiveness is to understand the people you work with so you can make use of their strengths