151. Which stage of the “Strategy Formulation Framework” includes an
External Factor Evaluation Matrix and a Competitive Profile Matrix?
► Matching
► Decision
► Input
► All of the given options
Ref: Stage 1 of the formulation framework consists of the EFE Matrix,
the IFE
Matrix, and the Competitive Profile Matrix. Called the Input Stage.(Page No.97)
152. Which one of the followings is a sign of strength in a
company's
competitive
position?
► A website with extensive information about the company and its
product line
► Annual R&D and advertising expenditures greater than Rs.10
million
► A strongly differentiated product, a strong
or rising market share
► A debt-to-asset ratio below 0.50 and a positive net cash flow
and higher EPS
153.
Firm with its SPACE matrix vector in conservative quadrant should peruse all of
the following strategies EXCEPT:
► Market penetration
► Product development
► Market development
► Divestiture
Ref: Quadrant 2 is known as conservative quadrant. In this
quadrant, following
strategies can be followed:
Quadrant II
Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation (Page
no.107)
154.
All of the following would be considered while judging the financial
strength
of an organization EXCEPT:
► Increase in revenues
► Market share
► Return on Investment
► Cash flow statement
Ref: Determining financial strengths and weaknesses key to strategy
formulation
Investment decision (Capital budgeting)
Financing decision
Dividend decision
Market share cannot be determined by above 3 decisions.
155. Which one of the following is NOT a major
region of IE matrix?
► Grow and build
► Grow and maintain
► Hold and maintain
► Harvest or divest
Ref: IE Matrix divided into three major regions.
Grow and build – Cells I, II, or IV
Hold and maintain – Cells III, V, or VII
Harvest or divest – Cells VI, VIII, or IX
156. Which of the following strategy should be
perused first by the Irtiza
Insurance Company as it is located in Quadrant
III of the Grand Strategy Matrix?
► Diversification
► Liquidation
► Retrenchment
► Divestiture
Ref: In quadrant III strategies should be followed in following
sequence:
Quadrant III
1. Retrenchment
2. Concentric diversification
3. Horizontal diversification
4. Conglomerate diversification
5. Liquidation
157. According to the Grand Strategy Matrix,
in which quadrant organizations
have a strong competitive position but are in
a slow-growth industry?
► I
► II
► III
► IV
Ref: See table on page 107.
158. Which of the following is TRUE about
weights assigned in QSPM?
► This refers to preference assigned to the internal and external
factors
► This refers to relative importance of the
internal and external factors
► This refers to the insignificance of the internal and external
factors
► This refers to the relative size of the internal and external
factors
Ref: The weight assigned to a given factor indicates the relative
importance of the
factor to being successful in the firm's industry. (Page No.75)
159. Which of the following is the first step
in preparing a pro forma financial
analysis?
► Prepare the projected balance sheet
► Perform EPS/EBIT analysis
► Calculate the projected net income
► Prepare the projected income statement
There are six steps in performing pro forma financial analysis:
1. Prepare income statement before balance sheet (forecast sales)
2. Use percentage-of-sales method to project CGS and expenses
3. Calculate projected net income
4. Subtract dividends to be paid from Net Income and add remaining
to Retained
Earnings
5. Project balance sheet times beginning with retained earnings
6. List comments (remarks) on projected statements.
160. In preparing projected statements, to
project cost of goods sold and the
expense items in the income statement, which
of the following is
recommended?
► Use the net worth method
► EPS/EBIT analysis
► Use percentage-of-sales method
► Use price-earnings ratio method
Use percentage-of-sales method to project CGS and expenses
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