Extras

Question 1

Give four examples of things PEST looks at with Political?

Answer 1

• Tax policy
• Employment law
• Monopoly legislation
• Foreign trade regulation

Question 2

Give two examples of things PEST looks at with Economical?

Answer 2

• Interest/inflation rates
• Unemployment

Question 3

Give three examples of things PEST looks at with social?

Answer 3

• Income distribution
• Education and consumerism
• Population

Question 4

Give two examples of things PEST looks at with technological?

Answer 4

• Speed of technology transfer
• Rates of obsolescence

Question 5

What is the calculation for contribution?

Answer 5

Sales - Variable costs

Question 6

What are 6 advantages of VBM?

Answer 6

• Focus on value over profit
• Forward looking
• Value drivers established
• Controllable targets created
• Plans created to help employee reach target
• Performance metrics that are compatible with these metrics are created

Question 7

What are 6 disadvantages of VBM?

Answer 7

• Requires cultural shift
• Shareholders may need to be educated
• Motivation required for employees
• Identifying value drivers may be hard
• MIS updates
• Costly and potentially fruitless

Question 8

What are five characteristics of a good transfer price policy?

Answer 8

• Goal congruence
• Fairness
• Autonomy
• Bookkeeping
• Minimise global tax liability

Question 9

What is scenario 1 of transfer pricing?

Answer 9

There is a perfectly competitive market for the product/service transferred

Question 10

What should the transfer price be in scenario 1?

Answer 10

Transfer price = market price

Question 11

What is an additional consideration for scenario 1 of transfer pricing?

Answer 11

An adjusted market price should be used for differences in quality or service.

Question 12

What is scenario 2 of transfer pricing?

Answer 12

The selling division has surplus capacity

Question 13

What do we do for scenario 2 of transfer pricing?

Answer 13

Transfer price negotiated between:
- Minimal price selling division will accept
- Maximum price buying division will pay which is lower of…

• External purchase price of transferred products
• Net marginal revenue

Question 14

What do we do for scenario 3 of transfer pricing?

Answer 14

Transfer price is negotiated between:
- Minimum selling price division will accept = marginal cost + loss contribution from other products
- Max price buying division will pay which is lower of…

• External purchase price of transferred products
• Net marginal revenue (selling price minus marginal cost of buying divisions final product

Question 15

What are six ways six sigma is useful?

Answer 15

• It sets tight targets but accepts some failure
• The identification of business process improvements as key to success.
• Management decision making is driven by data and facts.
• The proactive involvement of management.
• It involves collaboration.
• The increased profile of quality issues.