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Strategic Management (BUS 495 ) Answers 2019

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Strategic Management (BUS 495 )

BUS 495 COMPXM Exam Questions/Answers:
1. Investing $2,000,000 in TQM’s Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year’s sales were $163,508,343. Assuming similar sales next year, the 3.0% increase in demand will provide $4,905,250 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $1,672,690 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year’s levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month?

2. Bold’s product manager is under pressure to increase market share, but is uncertain about how to make the product more competitive. The product is reasonably well-positioned in the Thrift segment and enjoys relatively high awareness and accessibility. Which of the following would most likely result in a quick increase in market share?

3. In three years, assuming the competitive environment remains unchanged, how many units of Bat will Baldwin be selling in the Nano market segment?

4. Assuming no direct factory overhead costs (i.e., inventory carry costs) and $3 million dollars in combined promotion and sales budget, the Beetle product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at $35.00, what would they need to limit the material and labor costs to?

5. According to information found on the production analysis page of the Inquirer, Chester sold 1127 units of Coat in the current year. Assuming that Coat maintains a constant market share, all the units of Coat are sold in the Nano market segment and the growth rate remains constant, how many years will it be before Coat will not be able to meet future demand unless the company adds production capacity? Exclude any existing inventory.

6. Which description best fits Andrews? For clarity:
– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.
Which of these four statements best describes your company’s current strategy?

7. Dune is a product of the Digby company. Digby’s sales forecast for Dune is 1856 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected.
(They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Dune’s Production After Adjustment have to be in order to have a 10% reserve of units available for sale?

8. Chester’s Elite product Cure has an awareness of 72%. Chester’s Cure product manager for the Elite segment is determined to have more awareness for Cure than Andrews’ Elite product Alan. She knows that the first $1M in promotion generates 22% new awareness, the second million adds 23% more and the third million adds another 5%. She also knows one-third of Cure’s existing awareness is lost every year.
Assuming that Alan’s awareness stays the same next year (77%), out of the promotion budgets below, what is the minimum Chester’s Elite product manager should spend in promotion to earn more awareness than Andrews’ Alan product?

9. Looking forward to next year, if Chester’s current cash amount is $19,743 (000) and cash flows from operations next period are unchanged from this period and Chester takes ONLY the following actions relating to cash flows from investing and financing activities:
Issues $2,000 (000) of long-term debt Pays $4,000 (000) in dividends Retires $10,000 (000) in debt Which of the following activities will expose Chester to the most risk of needing an emergency loan?

10. A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Assume that Digby had a productivity index of 112% and that Baldwin had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Digby and Baldwin. Using the labor costs shown in the Income Statements, how much more did Digby save in direct labor costs compared to Baldwin by having a higher productivity index?

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Strategic Management (BUS 495 ) Answers 2019

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