Under what circumstances should a company’s management team give serious consideration to bidding aggressively to win contract to supply private-label footwear to chain retailers in a particular geographic region?

Answer: When the company has excess production capacity in one or more geographic regions that would otherwise be idle (because the number of pairs of branded footwear that company management is planning to produce is below full production capacity.

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The benefits of pursuing a strategy of social responsibility and corporate citizenship include

Answer: The positive impact that such a strategy can have on the company’s image rating if the company spends a meaningful amount on socially responsible activities over a multi-year period


Which one of the following actions is NOT an attractive option for trying to lower production costs per pair produced at one of your company’s plants?

Answer: Increased spending for enhanced styling and features for branded footwear


Which one of the following are effective ways to try to boost a company’s stock price?

Answer: Strive to increase earnings per share each year, raise the company’s dividend each year (ideally by at least $0.05 per share), and repurchase shares of common stock


Assume a company has 10 million shares of stock outstanding and that its Income Statement for Year 12 is as follows… Based on the above income statement data, the company’s operating profit margin and EPS are

Answer: 25.7% and $4.34


The most important/essential results from the latest decision round that company managers need to review/study in order to guide their strategic moves and decisions to improve their company’s competitiveness and rank among the top-performing companies in the upcoming decision round are

Answer: the Market Snapshot data in the top half of the Competitive Intelligence Report that shows each company’s competitive efforts (prices, S/Q rating, models available, and so on) in each geographic region


Assume a company’s Income Statement for Year 12 is as follows… Based on the above income statement data (assume interest income is zero), the company’s interest coverage ratio is

Answer: 3.20


The industry-low, industry-average, and industry-high cost benchmarks on page 6 of each issue of the Footwear Industry Report

Answer: are worth careful scrutiny by the managers of all companies because they help managers determine the degree to which their company’s costs for the benchmarked cost categories are competitive with those of rival companies


Assume a company’s Income Statement for Year 12 is as follows… Based on the above data, which of the following statements is false?

Answer: Interest expenses are 2.7% of net revenues


In supplying private-label footwear to chain retailers, the sizes of a company’s margins over direct costs (as reported on page 6 of each issue of FIR) should be viewed as

Answer: How many dollars the company earned from each pair of private-label footwear sold that could, in turn, be allocated to (a) helping pay the company’s administrative expenses and interest costs and (b) boosting the company’s pretax profits


According to the cost allocation procedures discussed on the Help screens for the Private Label Sales Report and the Marketing and Admin Report, which of the following is NOT included as part of a company’s production costs for private-label footwear?

Answer: A proportionate share of marketing expenses in those regions where private-label pairs are sold


The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a company’s distribution warehouse in Latin America is to

Answer: Build a plant in Latin America and then expand its capacity as may be needed so that the plant has the capability to supply all (or at least most) of the pairs the company intends to try to sell in Latin America


Based on the industry-low, industry-average, and industry-high values for the benchmarked data in each issue of the FIR, which of the following is an unconvincing or untrustworthy indication that one or more elements of your company’s costs are too high relative to the costs of rival companies?

Answer: Your company’s operating profits per pair sold in all 4 geographic regions of the wholesale segment for branded footwear are below the industry-high values.


As can be confirmed from information on the Help Screen for a company’s Plant Operations Report (see the Plant Investment section), if a company adds new plant capacity at a cost of $30 million, then its annual depreciation costs will rise by:

Answer: 5% or $1,500,000


The plant and production benchmarking cost data on page 6 of each issue of the Footwear Industry Report

Answer: Provide managers with solid evidence regarding the degree to which various costs at the company’s plants are competitive with the costs at the plants of rival companies


Which of the following statements about striving to reduce labor costs per pair produced at each of the company’s plants is true?

Answer: All companies, regardless of the strategy being employed, should pursue actions to manage employee compensation and labor productivity in a manner that results in labor costs per pair produced equal to (or very close to) the industry-low in each region where the company has plants.


Given the following Year 12 balance sheet data for a footwear company… Based on the above figures and the formula for calculating the debt-assets ratio, the company’s debt-assets ratio (where debt is defined to include both short-term and long-term debt) is

Answer: 0.436


Which one of the following is NOT a way to improve the S/Q rating of branded pairs produced at a particular plant?

Answer: Increasing the number of models/styles produced


If a company wants to enhance the profitability of differentiating its branded product offering from rivals by offering buyers 500 models/styles to choose from, then it should consider reducing the $14 million annual costs for production run setup costs associated producing 500 models/styles at each of its plants by

Answer: Instituting plant upgrade option B (at a cost of $8 million per million pairs of plant capacity).


Which one of the following is NOT a way to effectively differentiate a company’s branded footwear offering from the brands of rivals?

Answer: Achieve a lower reject rate on pairs produced than most all other rivals.


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