NEW Glo-Bus 2017 - AC Camera and UAV Drone - Business Strategy
Action-Capture Camera Design
GLO-BUS 2017 - Quiz 2 - Answers - TEST 2
Which one of the following is NOT a way to improve the P/Q rating of a company's brand of UAV
Decreasing the number of models in the company's line-up from 2 to 1
Improving the battery pack to permit more minutes of flying time on a single charge
Offering all buyers of the company's UAV drones a full day of flight training at a nearby
independently-operated drone flight training center for a modest extra $50 charge
Increasing the number of rotors
Improving the caliber and functionality of the camera stabilization device (so that video quality
is not so adversely affected by strong wind conditions)
2. Which one of the following is unlikely to be an attractive and effective way to reduce the design,
assembly. marketing, and other costs of UAV drones and help achieve a sizable competitive
advantage over rival companies based on lower overall costs per UAV drone sold?
Trying out numerous different combinations of design components, performance
enhancements, and extra performance features to be used in the company's UAV drones in
order to discover the lowest cost combination for achieving a competitively appealing P/Q
Spending only modest amounts annually for Corporate Social Responsibility and Citizenship
Switching to robot-assisted assembly methods to lower labor costs per drone assembled
Designing, assembling, and selling UAV drones having a P/Q rating of 0.5 stars
Trying to keep the warranty period to 60 days or 90 days (but no more than 120 days), if it is
competitively feasible to do so
3. Which one of the following actions is MOST likely to REDUCE the productivity of camera/drone
Failing to have a total annual compensation package for camera/drone PAT members that is
at least equal to the prior-year industry-average compensation level
Boosting the annual base wage of camera/drone PAT members by only 2% in any given year
Not raising the annual bonus for perfect attendance for a period of 3 years
Cutting the number of camera models being assembled from 4 models to 3 models and the
number of drone models being assembled from 3 models to 2 models
Decreasing the size of the assembly quality incentive for cameras to a maximum of
$0.40 and the assembly quality incentive for drones to a maximum of $1.00
4. 11Which of the following is an action that merits serious consideration in trying to improve a
company's credit rating? In answering this question, you may wish to consult the Help section
for page 5 of the Camera & Drone Journal and read the discussion pertaining to The Credit
Avoid all use of overtime in assembling cameras and drones
Do not increase the compensation paid to PAT members (until the desired credit rating is
achieved)--this will help keep production costs for both cameras and drones from rising
Issue additional shares of common stock and use the proceeds to pay off bank loans,
thereby immediately improving the company's debt-equity percentages
Cut the prices the company charges for both cameras and drones in all four geographic
regions by at least 10% in order to improve the company's EPS, ROE, and stock price
Increase the size of the company's dividend payments to stockholders--this helps reduce the
amount of retained earnings on the company's balance sheet (which in turn helps increase
the company's interest coverage ratio)
5. As a general rule, it is important for company managers to be aware of the regions where the
company's UAV drone business was most profitable and least profitable in the just-completed
decision round (so they can pursue corrective actions in the underperforming regions in the
upcoming decision round); the best information, then the best place(s) to look for this
page 1 of the Company Operating Report showing "Assembly and Facilities Operations."
the top section of page 5 of the Camera & Drone Journal.
the benchmarking data for operating profits and operating profit margins on p. 7 of the
Camera & Drone Journal and the region-by-region breakdowns of drone net sales
revenues, costs, total operating profits, and operating profit margins displayed on
page 3 of the Company Operating Report. on page 3 of the Company Operating Report
page 4 of the Company Operating Report showing the company's financial statements and
selected financial statistics.
in the 4-page section of the Competitive Intelligence Report that shows the comparative
competitive efforts of rival companies for each region.
6. A company's managers should almost always give serious consideration to making significant
adjustments in its camera/drone strategies and competitive approaches when
the company has been unsuccessful in achieving the investor-expected targets for
EPS, ROE, and stock price appreciation in the prior decision round and certainly if it
has been unsuccessful for the past two decision rounds.
the number of camera and drone workstations the company has installed is NOT well above
the industry-averages (as reported on pages 6 and 7 of the most recent Camera & Drone
several rival companies are charging prices below the regional averages in all four regions for
cameras and drones with a four-star or lower P/Q rating.
the company's total production/assembly costs for both action cameras and UAV drones are
above the industry averages (as reported on pages 6 and 7 of the latest issue of the Camera
& Drone Journal).
its sales and market shares for cameras and drones are below the industry averages in as
many as two geographic regions.
7. The makers of action-capture cameras have good reason to sell their camera models to camera
retailers in Europe-Africa at lower average wholesale prices than the average wholesale prices
charged to camera retailers in Latin America because
the costs of shipping AC cameras from Taiwan to camera retailers in Europe-Africa are $2
lower per camera than the costs of shipping AC cameras from Taiwan to retailers in Latin
annual interest rates on bank loans in the Europe-Africa region are 1%-2% lower than
interest rates on bank loans in Latin America.
the administrative costs per camera sold that camera-makers incur on sales to camera
retailers in Europe-Africa are about S4 lower than those incurred on sales to camera retailers
in Latin America.
the warranty repair costs for cameras all companies have to pay in the Europe-Africa region
are $10 lower than in Latin America.
they incur lower import duties per action camera sold/shipped to camera retailers in
Europe-Africa than the import duties they have to pay on each action camera sold/
shipped to camera retailers in Latin America.
8. Which of the following actions does NOT help improve a company's image rating/brand
Successfully increasing its global market share of worldwide action-capture camera sales
Building a widely recognized reputation for paying camera/drone PAT members the
biggest total annual compensation package of any company in the industry
Increasing the company's P/Q ratings of both action cameras and UAV drones
Successfully increasing its global market share of worldwide UAV drone sales
Spending sizable sums of money for multiple social responsibility initiatives and good
corporate citizenship over a multi-year period
9. If a company adds 40 new workstations at a cost of $75,000 each and also spends $14 million
for addition space in its camera/drone assembly facilities to accommodate more workstations,
then its annual depreciation costs will rise by
10% of the capital cost or $1.700,000.
5% of the capital cost or $850,000.
4% of the capital cost or $680,000.
10. Which of the following actions are most likely to catch the eye of action camera shoppers,
generate the biggest boost in overall buyer appeal for a company's camera models versus rival
brands. and cause the biggest number of additional camera shoppers to purchase its brand
instead of rival brands?
Boosting merchandising support to camera retailers stocking the company's brand by 15%
Reducing average wholesale prices to camera retailers by $5 in all four geographic regions
Increasing the annual number of weekly sales promotion campaigns from 2 to 3 and also
increasing the discount to camera retailers during these weekly promotions by 1%
Boosting the number of camera models from 3 to 4 while also keeping the company P/Q
rating at the same star rating
Raising the P/Q rating on the company's camera models from 4.2 stars to 4.9 stars and
only increasing the average wholesale prices to retailers by $4 in all four regions
11. Which of the following results from the latest decision round are LEAST important in providing
guidance to company managers in making their strategic moves and decisions to improve their
company's competitiveness and rank among the top-performing companies in the upcoming
The information concerning the company's market segment performance for both action
cameras and UAV drones found on pages 2 and 3 of the Company Operating Report
The comparative competitive efforts of rival companies in each geographic region that are
found in Competitive Intelligence Report
Each company's performance on EPS, ROE. stock price. credit rating. and image rating
displayed on the pp. 2 and 3 of the Camera & Drone Journal
The industry-low, industry-average, and industry-high benchmarks on pp. 6-7 of each issue of
the Camera & Drone Journal
The balance sheet data in the middle section of page 5 of the Camera & Drone Journal
12. If your company earns $3.00 per share of common stock (in a year when the investor-expected
EPS target is $3.60), if another company has an industry-leading EPS of S5.00, and if EPS has
a scoring weight of 20 points, then your company's EPS score on the Best-in-Industry scoring
standard will be
17 points (83.3% of the 20 points awarded for meeting the EPS target)
13. The industry-low. industry-average. and industry-high benchmarks on pp. 6-7 of each issue of
the Camera & Drone Journal
are of little value to company managers in making decisions to improve company
performance in the upcoming decision round because the benchmarking data do not identify
which particular companies have the lowest/highest costs and operating profits in each
are most valuable to the managers of companies whose costs are close to the industry-low
values and to the managers of companies whose operating profits and operating profit
margins are at or close to the industry-high benchmarks.
are worth careful scrutiny by the managers of all companies because when the
camera/drone benchmarking data signals that a company's costs/operating profits for
one or more of the benchmarks are clearly out-of-line (or unappealing), managers are
well advised to take corrective action in the upcoming decision round.
have the greatest value to the managers of companies that have negative operating profit per
camera sold in one of more geographic regions because their marketing andlor
administrative expenses per camera sold are too far above the industry averages.
are of considerable value to the managers of companies pursuing a low-cost strategy but are
of very limited value to managers of companies pursuing all other types of strategies to
outcompete and outperform rival companies.
14. Which of the following is an action company co-managers can take that will help the company
meet or beat the investor-expected ROE targets in upcoming years?
Making it standard practice to issue more shares of common stock to fund all capital
expenditures for camera/drone workstation space, the installation of additional camera/drone
workstations, and any robotics upgrades that company co-managers decide to undertake
Not paying an annual dividend to shareholders or else paying only a small portion of net
profits (say less than 15%) to shareholders in the form of an annual dividend because
retaining more earnings in the business makes it easier to meet the higher ROE targets
expected by investors
Frequently increasing annual dividend payments to shareholders, perhaps reaching a
dividend payout ratio of 30% to 50% (or more) in years 11-15: retaining a smaller
fraction of earnings for use in the company's camera/drone business makes it easier
for the company to achieve the higher ROE targets expected by investors.
Making it standard practice to use a combination of internal cash flows from operations and
new issues of common stock to finance the company's growth and new capital investments in
assembling action cameras and UAV drones.
Financing the installation of additional camera/drone workstations, and any robotics upgrades
that company co-managers decide to undertake with a combination of 50% debt (1-year, 5-
year, and/or 10-year bank loans) and 50% proceeds from the issue of additional shares of
15. Which one of the following is NEITHER an advantage or disadvantage of shifting to roboticsassisted camera assembly methods?
Installing robots at each camera workstation enables the size of PATs to be cut by one
The capital cost of converting to robot-assisted camera assembly results in higher annual
depreciation costs in producing/assembling cameras.
Robotics-assisted assembly increases workstation maintenance costs from $10,000
annually per camera workstation to $25,000 annually per camera workstation.
Robot-assisted camera assembly reduces total annual compensation costs per camera PAT.
If borrowing is used to partly or wholly finance the cash outlays required to pay for robotics
upgrades, the company will incur higher interest costs until the borrowed funds are repaid.
16. As explained in the Help section for the Workforce Compensation, Training, and Product
Assembly decision screen, if (1) a company pays a drone PAT member an annual base wage of
$25.000, an $800 year-end bonus for perfect attendance, and provides a company-paid annual
fringe benefits package worth $3,600 and (2) a PAT is paid a $4 assembly quality incentive per
UAV drone assembled that is equally divided among 4 PAT members, then if a drone PAT's
productivity is 1500 drones per year
the total compensation cost per drone assembled would be $82.40.
the total compensation cost per drone assembled would be $41.20.
the total compensation cost per drone assembled would be $37.33.
the total compensation cost per drone assembled would be $78.67.
the total compensation cost per drone assembled would be $42.00
17. One of the benefits of pursuing a strategy of social responsibility and corporate citizenship that
involves spending sizable sums of money for social responsibility initiatives and good corporate
citizenship over a multi-year period is
greater ease in achieving the investor-expected performance targets for EPS, ROE, and
stock price, provided a company wins one or more Gold Star Awards for Corporate
a higher image rating.
increased power and effectiveness of a company's advertising expenditures for action
cameras in all four regions in those years when the company's total annual spending for
socially responsible activities exceeds the industry average (as reported on p. 3 of the
Camera & Drone Journal.
increased company ability to charge higher prices for its action cameras and UAV drones
(because of widespread public enthusiasm for the company's social responsibility initiatives).
increased global sales volume and global market share of action cameras. provided as much
as 20% of company's advertising expenditures in each geographic region are devoted to
media ads informing the general public about all of the socially responsible activities being
18. If a company earns net income of S55 million in Year 8, has 10 million shares of common stock
outstanding, pays a dividend of $1.50 per share, and has annual interest costs of $15 million,
the company's credit rating would be at least a B+ because dividend payments are equal to
annual interest costs.
the company's EPS for Year 8 would be $2 50 (net income of $55 million less dividend
payments of $15 million less S15 million in interest payments = $25 million divided by 10
the company's credit rating would be no less than an A because net income is more than
three times higher than annual interest costs.
the company's EPS for Year 8 would be $4.00 (net income of $55 million less dividend
payments of $15 million = $40 million divided by 10 million shares).
the company's EPS for Year 8 would be $5.50 and Its retained earnings for Year 8
would be $40 million (net income of $55 million less dividend payments of $15 million).
19. If company co-managers wish :o pursue efforts aimed specifically at helping the company meet
or beat the investor-expected stock price appreciation targets in upcoming years, then comanagers should consider
issuing new shares of common stock to help fund needed capital investment expenditures in
those decision rounds when internal cash flows are insufficient to cover all the expenditures
on capital investment projects management has decided to undertake.
actions to boost the company's net income and EPS, increase annual dividend
payments to shareholders, and regularly allocate a portion of internal cash flows to
repurchasing shares of the company's common stock.
outspending rivals on corporate social responsibility initiatives and charitable contributions, so
as to convince civic-minded investors to purchase shares of the company's stock and thus
help drive up the stock price.
boosting the amount of earnings retained in the business, thereby increasing the hoard of
cash held in the company's retained earnings account on its Balance Sheet.
issuing additional shares of common stock and using the proceeds to pay off all bank loans
and then further issuing shares of stock as may be needed to help finance capital
expenditures for additional workstation space, new workstations, and possibly robotics
upgrades so as to completely avoid the use of debt-financing.
20. A company's EPS can most always be bolstered by managerial actions to
offer more camera/drone models to buyers than rivals: 7 models is ideal.
spend at least $1 million to $3 million more on various kinds of marketing efforts than any
other company in all four regions: the resulting annual increases in camera/drone sales
volumes, revenues, and profits will normally boost the company's EPS.
offer 1-year warranties on the company's cameras/drones.
achieve an A+ credit rating--the resulting lower interest rates on borrowings help drive
increases in EPS
allocate significant cash flows from operations to repurchasing shares of common
stock, ideally most every year.
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