Glo-Bus Quiz 1: Flashcards & Quiz Questions

Questions and Answers

What factors affect a company's P/Q rating for UAV drones?

The assembly quality incentives paid to drone PAT members, the company's prior-year brand reputation, and the prior year worldwide average warranty claim rate on the company's drones.

Which of the following ARE components of the compensation package for members of production assembly teams?

Year-end bonus for perfect attendance (correct)

Fringe benefit package (correct)

Annual base wage (correct)

Assembly quality incentives (correct)

What are the factors that affect the productivity of both camera PATs and drone PATs?

The size of assembly quality incentives paid to camera/drone PATs, how favorably the overall size of the company's total compensation package compares against the camera/drone all-company averages, and changes in the number of camera/drone models that have to be assembled.

What is the sufficient space for the company's present assembly plant?

Up to 150 workstations, without expanding the size of the plant. Signup and view all the answers

How is a camera-maker's price competitiveness in a particular geographic region determined?

By whether its price is above or below the average price of all companies competing in that geographic region. Signup and view all the answers

What does the interest rate a company pays on loans outstanding depend on?

Its credit rating. Signup and view all the answers

Which of the following are not factors in determining a company's credit rating?

Number of times put on credit watch Signup and view all the answers

What is the seasonal pattern of consumer purchases of digital cameras?

About 20% of consumer demand comes in quarter 1, 20% in quarter 2, 20% in quarter 3, and 40% in quarter 4. Signup and view all the answers

What are the four geographic regions in which the company is selling its cameras?

Asia-Pacific Signup and view all the answers

Which of the following currencies are involved in affecting the revenues your company receives on camera shipments to retailers?

Taiwan dollars Signup and view all the answers

Which of the following do not have a bearing in determining a company's unit sales and market share of entry-level or multi-featured cameras?

Quality of marketing materials Signup and view all the answers

What are the factors that affect a company's P/Q rating?

The caliber of core components, company's cumulative spending for new product R&D, engineering and design, the number of models, camera body ergonomics/durability, and the number of special utility features. Signup and view all the answers

Where does the company maintain a production facility?

Taiwan. Signup and view all the answers

What areas do company co-managers organize their decisions around each year?

Marketing, product design, assembly/shipping, compensation and labor force, and finance. Signup and view all the answers

Which options does the company have for assembling enough cameras to meet peak-quarter order from retailers?

Using overtime Signup and view all the answers

What factors affect the productivity of PATs?

The size of incentive bonuses to workers, base pay increases, perfect attendance bonuses, the size of the fringe benefits package, favorable comparisons with industry-average compensation, expenditures for PAT training and productivity improvement, and changes in the number of models. Signup and view all the answers

At what projected growth rate is the market for digital cameras expected to grow?

At 8-10% annually during the year 6-10 period and at 4-6% during the year 11-15 period. Signup and view all the answers

Retailers get their cameras from camera-makers on a just-in-time delivery basis.

False Signup and view all the answers

Which of the following are not measures on which a company's performance is judged/scored?

Revenues Signup and view all the answers

Which of the following accurately describes the company's production/assembly operations?

Cameras are outsourced and contractors are paid a fee per camera assembled. Signup and view all the answers

How are the company's unit sales distributed across the four geographic regions?

The company sells 40% of its cameras in its biggest region and 10% in its smallest region. Signup and view all the answers

Which one of the following is NOT a way to improve the P/Q rating of a company's brand of multi-featured cameras?

Increasing the number of models Signup and view all the answers

Based on the income statement, which of the following statements is false regarding delivery costs?

Delivery costs relate only to direct shipments. Signup and view all the answers

What is one benefit of pursuing a strategy of social responsibility and corporate citizenship?

An enhanced image rating, provided company spending for socially responsible activities is meaningful and sustained over a multi-year period. Signup and view all the answers

Which of the following is NOT an action company co-managers can take to boost a sub-par ROE?

Increase dividends paid out Signup and view all the answers

What is usually a dependable way for managers to boost EPS?

Achieving a differentiation-based competitive advantage over rivals in both entry-level and multi-featured camera segments. Signup and view all the answers

Why are the industry benchmarks for camera costs and operating profits important?

They signal when a company's costs/operating profits are out-of-line, suggesting corrective action may be needed. Signup and view all the answers

If a company adds 50 new workstations and spends on an addition to its plant, what will be the rise in annual depreciation costs?

$550,000. Signup and view all the answers

Given the income statement data, what are the company's operating profit margin and net profit margin?

26.8% and 17.7%. Signup and view all the answers

Which set of actions is unlikely to help achieve a differentiation-based competitive advantage over entry-level cameras?

Raising base pay of PAT members by 10% or more. Signup and view all the answers

Which action does NOT result in higher PAT labor productivity in assembling cameras?

Contracting assembly to outside suppliers. Signup and view all the answers

Which action does not help make a company's multi-featured cameras more competitive?

Increasing total compensation for PAT members. Signup and view all the answers

What is an action to improve a company's credit rating?

Issue additional shares of stock and use the proceeds to pay down the loans on the company's line of credit. Signup and view all the answers

What is the percentage of debt and equity in a company's capital structure?

32% debt and 68% equity. Signup and view all the answers

When is it reasonable to shift away from a strategy of strong differentiation?

When the high-end market is crowded with copycat differentiation strategies. Signup and view all the answers

What is the annual compensation cost of a single PAT member and a fully-staffed PAT?

$23,740 and $94,960. Signup and view all the answers

Given net income of $40 million, shares of stock, and dividends paid, what would be the EPS and retained earnings?

$4.00 and $25 million. Signup and view all the answers

What is an attractive way to reduce production costs of multi-featured cameras?

Striving to keep labor costs per camera assembled in-house below the industry-average benchmark. Signup and view all the answers

What should managers do if the company is being out-competed in the Europe-Africa market?

Explore correcting competitive weaknesses and initiate actions to gain competitive strengths. Signup and view all the answers

What are the essential results that company managers need to review after the latest decision round?

The Quarterly Snapshot data in the top sections of the Competitive Intelligence Report. Signup and view all the answers

When should a company's managers consider changing from a low-cost/low-price strategy?

When competition in the low-end segment makes it difficult to earn attractively large profits. Signup and view all the answers

Study Notes

P/Q Rating Factors for UAV Drones

Influences include assembly quality incentives, prior-year brand reputation, and average warranty claim rates.

Compensation Package for Production Assembly Teams (PATs)

Components feature fringe benefits, assembly quality incentives, attendance bonuses, and base wage.

Productivity Factors for Camera and Drone PATs

Productivity influenced by assembly quality incentives, total compensation comparison with industry averages, and assembly model counts.

Assembly Plant Capacity

Current plant can accommodate up to 150 workstations without expansion.

Price Competitiveness in Camera Markets

Determined by pricing relative to competitors in specific geographic regions.

Loan Interest Rate Determinants

Based primarily on the company's credit rating status.

Credit Rating Determinants

Not influenced by year-end cash balance, average ROE, or frequency of credit watch notifications.

Seasonal Demand for Digital Cameras

Consumer demand distribution: 20% Q1, 20% Q2, 20% Q3, 40% Q4.

Geographic Regions for Camera Sales

Company operates in Europe-Africa, Latin America, Asia-Pacific, and North America.

Currency Impact on Camera Revenues

Includes U.S. dollars, Taiwan dollars, Singapore dollars, euros, and Brazilian real.

Not determined by PAT incentive bonuses, outsourced camera percentages, or warranty claim costs.

Import Duty and Exchange Rates Impact

Camera shipments to foreign retailers subject to import duties and fluctuating exchange rates.

P/Q Rating Influencing Factors

Includes core component quality, R&D spending, number of models, ergonomics, and special utility features.

Production Facility Location

Company maintains a production facility in Taiwan.

Company Co-Managers' Annual Decisions

Focus on marketing, product design, assembly/shipping, labor compensation, and finance.

Options for Meeting Peak Camera Orders

Include hiring temporary PATs, overtime usage, and outsourcing assembly.

PAT Productivity Influencing Factors

Influenced by worker bonuses, attendance bonuses, training expenditures, and changes in model numbers.

Digital Camera Market Growth Projections

Expected growth rate of 8-10% annually in years 6-10, dropping to 4-6% in years 11-15.

Market for Digital Camera Misconceptions

Not accurately described by retailers obtaining cameras on a just-in-time basis.

Performance Metrics Not Used for Company Scoring

P/Q ratings, dividend payments, revenues, market share, total cameras sold, and balance sheet strength are excluded.

Production/Assembly Operations Overview

Most components sourced from external suppliers; assembly teams produce 2,500 cameras quarterly.

Geographic Sales Distribution

40% of cameras sold in the largest region; only 10% in the smallest region.

P/Q Rating Improvement Misconception

Increasing the model count of multi-featured cameras does not enhance P/Q rating.

Income Statement Analysis

Delivery costs inaccurately calculated as the smallest cost component.

Meaningful expenditures on social responsibility can enhance company image if sustained over time.

ROE Improvement Actions

Issuing additional shares to pay down debt is unlikely to boost sub-par ROE.

EPS Improvement Strategy

Achieving differentiation and sustaining a competitive advantage drives EPS growth.

Importance of Benchmarking

Managers should analyze industry benchmarks to identify cost and profit misalignments.

Depreciation Cost Increase from Expansion

Adding workstations and plant extensions raises annual depreciation by $550,000.

Profit Margins from Income Statement

Operating profit margin: 26.8%; net profit margin: 17.7%.

Differentiation Strategy Considerations

Avoid actions that result in excessive base pay increases or above-market pricing.

PAT Labor Productivity Influencers

Avoiding outsourcing does not contribute to higher labor productivity.

Multi-Featured Cameras Market Competitiveness

Increasing total compensation for PAT members does not enhance competitiveness.

Improving Credit Rating Considerations

Using proceeds from stock issuance to pay down debt is advisable for credit rating improvement.

Capital Structure Analysis

Company’s capital structure consists of 32% debt and 68% equity.

Evaluating Differentiation Strategies

Shift from premium pricing in crowded markets may be necessary to avoid low profits.

Annual PAT Compensation Cost

Single PAT member compensation: $23,740; fully-staffed PAT: $94,960.

EPS Calculation Example

EPS for Year 8 calculated at $4.00 with retained earnings of $25 million.

Cost Reduction Strategies

Keeping in-house labor costs below industry average aids in achieving a low-cost competitive advantage.

Action Plans for Competitive Weaknesses

Addressing weaknesses in the Europe-Africa market is vital for increasing sales volume and market share.

Data for Strategic Decision-Making

Managers should prioritize analyzing competitive efforts and performance data from decision rounds.

Budget Strategy Reevaluation

Low-cost strategies may need reassessment in competitive low-priced camera segments.

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Description

Test your knowledge on the key factors affecting a company's P/Q rating for UAV drones. This quiz covers important components like compensation packages for production assembly teams and assembly quality incentives. Perfect for GLO-BUS participants looking to sharpen their understanding.

GLO-BUS Quiz 1 Flashcards