Management/Leadership Principles: Chapter A

Question 1

Casual Forecasting

Answer 1

statistical method that can be used to obtain the equation that best fits a set of data when time series data is not available.

Question 2

Sensitivity analysis

Answer 2

multiplies the expected profit by the probability level and sums the amounts to determine the overall probability at each production level.

Question 3

Concept of quality defined as “Fitness for Use”

Answer 3

Quality is products or services that match or exceed customer expectations at an anticipated price.

Question 4

Exponential smoothing

Answer 4

has minimal data requirements and is used when forecasts are required for a large number of dependent variables.

Question 5

Cause and effect diagram

Answer 5

Uses a visual to map out a list of factors that are thought to affect a problem or a desired outcome

Question 6

TQM emphasizes use of a charter and work processes as appropriate

Answer 6

Effective teams will include a clear charter, a work process, and deadlines if appropriate.

Question 7

Deploy the harvesting approach when?

Answer 7

The customer group is shrinking for a manufacturing industry. Harvesting maximizes cash flow while minimizing investments.

Question 8

The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as

Answer 8

Appraisal costs. Those costs incurred to detect which products do not conform to specifications before they are shipped. These costs include inspecting products and testing raw materials and work-in-progress

Question 9

Objectives need to be continually updated to reflect environmental changes? True or False

Answer 9

True

Question 10

Cost leadership strategies to gain competitive advantage are exemplified by?

Answer 10

Operations with scale economies and Membership warehouses without extra services or amenities. Cost leadership is attained by scale economies or reduction of higher-cost services and amenities

Question 11

Which type of integration strategy includes upstream development and production activities

Answer 11

Backward vertical integration

Question 12

In Progressive model building the initial may be extremely ______?

Answer 12

Simple. Progressive model building usually starts with a very simple model that then evolves in complexity over time to yield better results. The factors added at each iteration are based on the decision maker’s comfort level and needs. This keeps the model from becoming more complex than the decision maker can understand.

Question 13

What are three reasons governments restrict trade?

Answer 13

The government normally restricts trade in order to foster national security, develop new industries, and protect declining industries.

Question 14

What are the five basic forces that drive industry competition?

Answer 14

Threat of new entrants, the threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, rivalry among existing firms

Question 15

The price charged on a consistent basis for a specific product would most likely be lowest during which stage of the product life cycle

Answer 15

Maturity Stage. Why? Because during the maturity stage, competition is at its greatest and costs are at their lowest; thus, prices prices would be at their lowest.

Question 16

Why is a backward strategy most appropriate when the firm’s current suppliers are not reliable?

Answer 16

Backward integration is appropriate when the firm’s current suppliers are unreliable so the organization has an upstream focus.

Question 17

What are the four basic stages in the industry life cycles

Answer 17

Introduction, Growth, Maturity, Decline

Question 18

An organization that seeks competitive advantage in the global marketplace might especially select which competitive strategy?

Answer 18

Synergy: To compete globally, an organization can benefit greatly from external alliances and partnerships.

Question 19

To remove the effect of seasonal variation from a time series, original data should be?

Answer 19

Divided by the seasonal factor. If the original data (with the four trends) is divided by the seasonal norm, the seasonal component is factored out of the data.

Question 20

When an organization wishes to enter an industry or change its competitive position, what should it do first?

Answer 20

Structural analysis.

An organization should study the structure of the industry and the competitive forces affecting the structure.

Question 21

Examples that exemplify a differentiation strategy to gain competitive advantage.

Answer 21

An ice cream brand low in calories and fat, but rich in flavor, A bookstore that offers a coffee shop and a relaxing environment, The most sophisticated global positioning (GPS) system available.
Differentiation strategies add value for customers in ways that differentiate the product or service from competitors. This includes different ingredients, higher quality products and services, and added services.

Question 22

Two key strategies in an emerging industry are to?

Answer 22

identify and target the most receptive customers and then provide support services for them.

Question 23

What is most true of a focus strategy to gain competitive advantage?

Answer 23

The competition is usually less intense. Competition is reduced, which helps balance the fact that profits may not be as high as in a larger market.

Question 24

A manufacturing company produces plastic utensils for a particular market segment at the lowest possible cost. The company is pursuing a cost?

Answer 24

focus strategy. A cost focus strategy aims to be a cost leader for a particular market segment.

Question 25

A primary part of the total quality management (TQM) philosophy is that gains in efficiency and effectiveness can

Answer 25

be realized with no net increase in costs over the short term and a medium- or long-term net decrease in costs.
The costs of implementing quality initiatives can be a substantial part of revenue. Yet part of the TQM philosophy is that gains in efficiency and effectiveness can also be realized with no net increase in costs and can ultimately create significant cost reductions.

Question 26

This will allow a manufacturer with limited resources to maximize profits.

Answer 26

Linear programming is a mathematical technique for maximizing or minimizing a given objective subject to certain constraints. It is the correct technique to optimize the problem of limited resources.

Question 27

What are the four phases in the benchmarking cycle AKA Deming Wheel

Answer 27

Plan - Do/Analyze - Check/Integrate/ - Act/Implement

Question 28

One factor that would encourage entry into an existing market.

Answer 28

Governmental subsidy for new investors. The subsidies for new players weaken the entrance barriers of the industry, allowing new players to get into the industry and producing a higher rivalry among more competitors.