FIN 534 Week 6 Quiz 5 Chapters 8 And 9

This is a multiple choice quiz for FIN/534. I have posted just the correct answers

Quiz 5 Chapters 8 and 9

Question 1

Call options on XYZ Corporation’s common stock trade in the market.  Which of the following statements is most correct, holding other things constant?

Question 2

Other things held constant, the value of an option depends on the stock’s price, the risk-free rate, and the

Question 3

Which of the following statements is CORRECT?

Question 4

Which of the following statements is CORRECT?

Question 5

An investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?

Question 6

An option that gives the holder the right to sell a stock at a specified price at some future time is

Question 7

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17.  The annual risk-free rate is 6.0%, based on daily compounding.  A 1-year call option on the stock, with an exercise price of $22, is available.  Based on the binominal model, what is the option’s value?

Question 8

The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells for $7.20.  What is the value of a put option, assuming the same strike price and expiration date as for the call option?

Question 9

Which of the following statements is CORRECT?

Question 10

Deeble Construction Co.’s stock is trading at $30 a share.  Call options on the company’s stock are also available, some with a strike price of $25 and some with a strike price of $35.  Both options expire in three months.  Which of the following best describes the value of these options?

Question 11

Which of the following statements is CORRECT?

Question 12

Warner Motors’ stock is trading at $20 a share.  Call options that expire in three months with a strike price of $20 sell for $1.50.  Which of the following will occur if the stock price increases 10%, to $22 a share?

Question 13

Suppose you believe that Johnson Company’s stock price is going to increase from its current level of $22.50 sometime during the next 5 months.  For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per share.  If you buy this option for $310.25 and Johnson’s stock price actually rises to $45, what would your pre-tax net profit be?

Question 14

Which of the following statements is CORRECT?

Question 15

Suppose you believe that Delva Corporation’s stock price is going to decline from its current level of $82.50 sometime during the next 5 months.  For $510.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $85 per share.  If you bought this option for $510.25 and Delva’s stock price actually dropped to $60, what would your pre-tax net profit be?

Question 16

Which of the following statements is CORRECT?

Question 17

Which of the following statements is CORRECT?  Assume that the firm is a publicly-owned corporation and is seeking to maximize shareholder wealth

Question 18

When working with the CAPM, which of the following factors can be determined with the most precision?

Question 19

For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT?

Question 20

Which of the following statements is CORRECT?

Question 21

Safeco Company and Risco Inc are identical in size and capital structure.  However, the riskiness of their assets and cash flows are somewhat different, resulting in Safeco having a WACC of 10% and Risco a WACC of 12%.  Safeco is considering Project X, which has an IRR of 10.5% and is of the same risk as a typical Safeco project.  Risco is considering Project Y, which has an IRR of 11.5% and is of the same risk as a typical Risco project. Now assume that the two companies merge and form a new company, Safeco/Risco Inc.  Moreover, the new company’s market risk is an average of the pre-merger companies’ market risks, and the merger has no impact on either the cash flows or the risks of Projects X and Y.  Which of the following statements is CORRECT?

Question 22

Which of the following statements is CORRECT?

Question 23

Which of the following statements is CORRECT?

Question 24

Schalheim Sisters Inc. has always paid out all of its earnings as dividends; hence, the firm has no retained earnings.  This same situation is expected to persist in the future.  The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock,

Question 25

Which of the following statements is CORRECT?

Question 26

For a typical firm, which of the following sequences is CORRECT?  All rates are after taxes, and assume that the firm operates at its target capital structure.

Question 27

Which of the following statements is CORRECT?

Question 28

The MacMillen Company has equal amounts of low-risk, average-risk, and high-risk projects.  The firm’s overall WACC is 12%.  The CFO believes that this is the correct WACC for the company’s average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects.  The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources.  If the CEO’s position is accepted, what is likely to happen over time?

Question 29

Which of the following statements is CORRECT?

This is a multiple choice quiz for FIN/534. I have posted just the correct answers

Quiz 5 Chapters 8 and 9

Question 1

Call options on XYZ Corporation’s common stock trade in the market.  Which of the following statements is most correct, holding other things constant?

Question 2

Other things held constant, the value of an option depends on the stock’s price, the risk-free rate, and the

Question 3

Which of the following statements is CORRECT?

Question 4

Which of the following statements is CORRECT?

Question 5

An investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?

Question 6

An option that gives the holder the right to sell a stock at a specified price at some future time is

Question 7

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17.  The annual risk-free rate is 6.0%, based on daily compounding.  A 1-year call option on the stock, with an exercise price of $22, is available.  Based on the binominal model, what is the option’s value?

Question 8

The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells for $7.20.  What is the value of a put option, assuming the same strike price and expiration date as for the call option?

Question 9

Which of the following statements is CORRECT?

Question 10

Deeble Construction Co.’s stock is trading at $30 a share.  Call options on the company’s stock are also available, some with a strike price of $25 and some with a strike price of $35.  Both options expire in three months.  Which of the following best describes the value of these options?

Question 11

Which of the following statements is CORRECT?

Question 12

Warner Motors’ stock is trading at $20 a share.  Call options that expire in three months with a strike price of $20 sell for $1.50.  Which of the following will occur if the stock price increases 10%, to $22 a share?

Question 13

Suppose you believe that Johnson Company’s stock price is going to increase from its current level of $22.50 sometime during the next 5 months.  For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per share.  If you buy this option for $310.25 and Johnson’s stock price actually rises to $45, what would your pre-tax net profit be?

Question 14

Which of the following statements is CORRECT?

Question 15

Suppose you believe that Delva Corporation’s stock price is going to decline from its current level of $82.50 sometime during the next 5 months.  For $510.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $85 per share.  If you bought this option for $510.25 and Delva’s stock price actually dropped to $60, what would your pre-tax net profit be?

Question 16

Which of the following statements is CORRECT?

Question 17

Which of the following statements is CORRECT?  Assume that the firm is a publicly-owned corporation and is seeking to maximize shareholder wealth

Question 18

When working with the CAPM, which of the following factors can be determined with the most precision?

Question 19

For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT?

Question 20

Which of the following statements is CORRECT?

Question 21

Safeco Company and Risco Inc are identical in size and capital structure.  However, the riskiness of their assets and cash flows are somewhat different, resulting in Safeco having a WACC of 10% and Risco a WACC of 12%.  Safeco is considering Project X, which has an IRR of 10.5% and is of the same risk as a typical Safeco project.  Risco is considering Project Y, which has an IRR of 11.5% and is of the same risk as a typical Risco project. Now assume that the two companies merge and form a new company, Safeco/Risco Inc.  Moreover, the new company’s market risk is an average of the pre-merger companies’ market risks, and the merger has no impact on either the cash flows or the risks of Projects X and Y.  Which of the following statements is CORRECT?

Question 22

Which of the following statements is CORRECT?

Question 23

Which of the following statements is CORRECT?

Question 24

Schalheim Sisters Inc. has always paid out all of its earnings as dividends; hence, the firm has no retained earnings.  This same situation is expected to persist in the future.  The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock,

Question 25

Which of the following statements is CORRECT?

Question 26

For a typical firm, which of the following sequences is CORRECT?  All rates are after taxes, and assume that the firm operates at its target capital structure.

Question 27

Which of the following statements is CORRECT?

Question 28

The MacMillen Company has equal amounts of low-risk, average-risk, and high-risk projects.  The firm’s overall WACC is 12%.  The CFO believes that this is the correct WACC for the company’s average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects.  The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources.  If the CEO’s position is accepted, what is likely to happen over time?

Question 29

Which of the following statements is CORRECT?

Question 30

 

Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?

 
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HCC MAN1021 Final Exam (

Question

Question 1

1. Which of the following statements about the importance of communication is true?

a. Many of the basic management processes cannot be performed without effective communication.

b. Oral communication is the most important skill for college graduates who are entering the work force.

c. Poor communication skill is the single most important reason that people do not advance in their careers.

d. Communication is especially important for top managers.

e. All of these statements about the importance of communication are true.

2 points

Question 2

Which of the following statements about what makes a successful leader is true?

a. Successful leaders have the same traits that nonleaders have.

b. Successful leaders have drive, which is defined as the ability to attract and retain the best employees.

c. Successful leaders are confident about their ability to make long-term strategic decisions even if the decisions seem risky to others.

d. Successful leaders believe in individual reciprocity.

e. None of these statements about what makes a successful leader is true.

2 points

Question 3

Conscientiousness is ____.

a. the degree to which someone is organized, hardworking, responsible, and achievement-oriented

b. the degree to which someone is curious

c. the degree to which someone is active and gregarious

d. the degree to which someone is cooperative, flexible, good-natured, tolerant, and trusting

e. defined by none of these

2 points

Question 4

Of all types of departmentalization, ____ departmentalization requires the highest level of management skill for successful implementation.

a. functional

b. product

c. matrix

d. geographic

e. customer

2 points

Question 5

As a class project, Senora is working with other classmates to create a company that would market NASCAR memorabilia. Senora’s teacher has instructed her to use the traditional approach to create the organization’s structure. What should Senora do?

a. create a virtual organization

b. create an organizational structure with vertical and horizontal configurations

c. use an organizational process to create a matrix design

d. create a matrix structure that will adhere to the unity of command principle

e. use the organizational structure to control creativity

2 points

Question 6

Marketers often appeal to consumers’ needs as defined by Maslow’s hierarchy. Schlage, a lock manufacturer, shows how much protection its locks provide. Clorox developed several types of wipes to eliminate concerns about infectious germs. Both marketers are appealing to which need as defined by Maslow?

a. achievement

b. physiological needs

c. safety

d. achievement

e. belongingness

2 points

Question 7

The term ____ refers to the degree to which someone is cooperative, polite, flexible, forgiving, good natured, tolerant, and trusting.

a. self-reliance

b. emotional stability

c. conscientiousness

d. agreeableness

e. locus of control

2 points

Question 8

____ is a technique of assuming half the responsibility for successful communication by actively giving the speaker nonjudgmental feedback that shows you’ve accurately heard what he or she said.

a. Active listening

b. Hearing

c. Synergistic communication

d. Dyadic communication

e. Empathetic listening

2 points

Question 9

Two of the most important results of a job analysis are ____.

a. recruiting guidelines and selection boundaries

b. employee-needs assessment and job mapping

c. job descriptions and job specifications

d. rater training and selection validation

e. employee-needs assessment and performance appraisal evaluation

2 points

Question 10

Hot Topic is a fast-growing clothing chain targeted to the alternative teen demographic. Hot Topic’s CEO is Betsy McLaughlin, who relies on her employees to locate new trends. McLaughlin almost daily consults with her employees for suggestions on what the stores should carry. After attending an Insane Clown Posse concert, an employee suggested that the stores should carry Faygo soda (the kind the band sprays on audience members during a concert). The employee’s suggestion was an example of ____ communication.

a. horizontal

b. functional

c. upward

d. downward

e. dyadic

2 points

Question 11

The ____ states that people will be motivated to the extent to which they believe that their efforts will lead to good performance, that good performance will be rewarded, and that they are offered attractive rewards.

a. equity theory

b. theory of motivational instrumentality

c. expectancy theory

d. goal-setting theory

e. reinforcement theory

2 points

Question 12

When Billy Ingram founded White Castle, much of the public thought that hamburgers were made from rotten beef and not fit for human consumption. Ingram ground fresh beef in front of customers to prove it was safe and was the first to successfully sell hamburgers to the middle class. Today Ingram is credited as the founder of the fast-food industry. Understanding that Midwesterners wanted clean, convenient food when they were away from home was the information Ingram used to ____.

a. create a tactical advantage

b. create a first-mover advantage

c. sustain a competitive advantage

d. acquire a source of perceived knowledge

e. pioneer sales in the consumer food industry

2 points

Question 13

Excessive speed is a major cause of road crashes in Australia. The Australian government is thinking of using cameras to catch speeders, but it only has access to a limited number of cameras, and there are many areas where speeding is a problem. Government officials plan to put cameras at various locations for four weeks and give everyone who gets caught speeding during that period a substantial fine. According to reinforcement theory, Australian officials are using ____ to control speeding.

a. positive reinforcement

b. negative reinforcement

c. punishment

d. expectancy modification

e. avoidance learning

2 points

Question 14

Pages listing all of the felony crimes perpetrated in New York during the last decade would be an example of ____.

a. a resource allocation table

b. traditional knowledge

c. raw data

d. perceived knowledge

e. information

2 points

Question 15

____ is the process by which individuals attend to, organize, interpret, and retain information from their environments.

a. Participative communication

b. Perception

c. Passive listening

e. Active hearing

e. Apprehension

2 points

Question 16

Mike is a big fan of all kinds of sports. As he walked past the snack room bulletin board, he was excited to notice that the company was sponsoring a softball team. Non-athletic Kenneth typically walks by the same bulletin board at least three times every day and has yet to see the softball notice. The fact that one saw the notice and the other did not is due to ____.

a. faulty closure

b. defensive biases

c. selective retention

d. selective perception

e. kinesics

2 points

Question 17

____ control is a method of gathering information about performance deficiencies as they occur.

a. Concurrent

b. Stasis

c. Feedback

d. Simultaneous

e. Feedforward

2 points

Question 18

____ control is top-down control in which managers try to influence employee behavior by rewarding or punishing employees for compliance or noncompliance with organizational policies, rules, and procedures.

a. Concertive

b. Administrative

c. Bureaucratic

d. Objective

e. Normative

2 points

Question 19

Noise can occur when ____.

a. the sender isn’t sure of what message to communicate

b. the receiver doesn’t have the time to understand the message

c. the message is not decoded properly

d. the message is not encoded properly

e.  any of these occur

2 points

Question 20

Which of the following is an example of an intrinsic reward?

a. a bonus

b. a contest prize

c. a sense of achievement

d. a trophy

e. all of these

2 points

Question 21

A group in Great Britain has been established to improve the employment, retention, and promotion prospects of black and other ethnic minorities as well as women in the Fire and Rescue Service, which at present has a largely white, male demographic. By the ____ stage of team development, the group members will have resolved petty differences, developed friendships, and established strong group cohesiveness.

a. forming

b. performing

c. storming

d. norming

e. reforming

2 points

Question 22

____ involves assigning direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible.

a. Staff functionality

b. Delegation of authority

c. Decentralization

d. A job description

e. An organization chart

2 points

Question 23

In the traditional control systems used at most companies, ____ measures are used to assess performance.

a. quality/profit

b. customer

c. optimization

d. financial

e. value/quality

2 points

Question 24

Users of GM Master Cards earn money toward the purchase of a new General Motors car or truck every time they use this credit card to make purchases. The rebate increases the more times the credit card is used. GM is using ____.

a. punishment

b. positive reinforcement

c. negative reinforcement

d. underreward

e. extinction

2 points

Question 25

Which of the following statements about 360-degree feedback is true?

a. With the 360-degree feedback approach, feedback comes from four sources.

b. 360-degree feedback is most effective when used to train performance raters.

c. Employees do not provide feedback about their own efforts in the 360-degree feedback approach.

d A 360-degree feedback provides feedback from peer workers only.

e. 360-degree feedback should not be used for developmental purposes.

2 points

Question 26

E-Lab (the “E” stands for experience) has project teams perform field research for its clients. These project teams are composed of students of theology, actors, and musicians as well as the more traditional marketing experts and statisticians. E-Lab teams benefit from ____.

a. structural accommodation

b. group norms

c. team diversity

d. collectivism

e. aggregated creativity

2 points

Question 27

Which of the following is another term for considerate leadership behavior?

a. employee-centered leadership

b. concern for production

c. job-centered leadership

d. initiating structure behavior

e. participative management

2 points

Question 28

A car manufacturer ordered 20,000 window assemblies from a supplier. To make sure the assemblies were made to specifications, the supplier of the window assemblies shipped a sample to the car manufacturer for testing. This is an example of ____ control.

a. feedforward

b. feedback

c. contiguous

d. suboptimal

e. synergistic

2 points

Question 29

Managers can motivate employees to increase their efforts by ____.

a. relying on the innate value of extrinsic rewards

b. satisfying higher-order needs first

c. asking employees what their needs are then matching rewards to those needs

d. expecting employees’ needs to remain stable

e. doing all of these

2 points

Question 30

Job specialization can result in ____.

a. complicated job designs

b. high job satisfaction

c. employee boredom

d. low absenteeism

e. low employee turnover

2 points

Question 31

The ____ is a barrier that prevents women and minorities from advancing to the top jobs in an organizations.

a. missing key

b. diversity bottleneck

c. missing rung

d. organizational roadblock

e. glass ceiling

2 points

Question 32

Group cohesion tends to be relatively strong at the ____ stage of team development.

a. storming

b. conforming

c. norming

d. informing

e. forming

2 points

Question 33

____ is the relatively stable set of behaviors, attitudes, and emotions displayed over time that makes people different from each other.

a. Cognitive activity

b. Motivation

c. Self-concept

d. Disposition

e. Personality

2 points

Question 34

Relatively stable characteristics such as abilities, psychological motives, or consistent patterns of behavior, form the basis for the ____ of leadership.

a. path-goal theory

b. expectancy theory

c. situational theory

d. behavioral theory

e. trait theory

2 points

Question 35

The steps in the basic perception process include all of the following EXCEPT ____.

a. retention

b. organization

c. attention

d. analysis

e. interpretation

2 points

Question 36

According to a survey done on teaching evaluations, students’ motivation to participate in teaching evaluations is impacted significantly by their expectation that they will be able to provide meaningful feedback. In other words, if they are going to expend the thought and effort to fill out evaluation forms, (1) Is the form designed to gather meaningful information? and (2) Do the students have enough information to form a meaningful opinion about the instruction? In terms of expectancy theory, students are concerned with ____, or whether it is worth their efforts.

a. synergy

b. reciprocity

c. valence

d. instrumentality

e. expectancy

2 points

Question 37

Why is information strategically important for organizations?

a. Information can be used to obtain first-mover advantage.

b. Information is derived from perceived knowledge, which limits its availability.

c. Information cannot be used as a medium of exchange.

d. Information creates suboptimization opportunities.

e. All of these are examples of why information is strategically important for organizations.

2 points

Question 38

Airline companies have blamed their recent financial problems on labor unions, the events of September 11, and a weak economy. Those airlines in financial difficulties have tried to solve the problem through short-term price reductions, firings and early retirements, and asking for employees to take pay cuts. The CEOs of these companies have not tried to motivate employees to create long-term solutions to the problems facing the companies. The CEOs of these troubled companies ____.

a. are more interested in doing the right thing than doing things right

b. are more than likely managers rather than leaders

c. are true leaders

d. are promoting long-term change

e. tend to focus on organizational visions, missions, goals, and objectives rather than organizational efficiency and productivity

2 points

Question 39

Which of the following is an internal recruiting method?

a. advertising

b. job posting

c. walk-ins

d. job fairs

e. Internet job sites

2 points

Question 40

With divisions that focus on business clients and consumer clients, companies like Sprint, American Express, and others are examples of ____ departmentalization.

a. product

b. customer

c. matrix

d. boundaryless

e. functional

2 points

Question 41

The two basic methods of capturing information are ____.

a. manual and electronic

b. planned and unplanned

c. systematic and unsystematic

d. functional and hierarchical

e. continuous and intermittent

2 points

Question 42

The three components of ____ are initiation of effort, direction of effort, and persistence of effort.

a. motivation

b. performance

c. efficiency

d. self-management

e. compliance

2 points

Question 43

The fastest-growing population group in the United States is ____.

a. Hispanic-Americans

b. African-Americans

c. Canadians

d. Chinese-Americans

e. Vietnamese-Americans

2 points

Question 44

Which of the following statements about sexual harassment is true?

a. Only people who have themselves been harassed can file complaints or lawsuits.

b. Nonemployees cannot be guilty of sexual harassment.

c. Sexual harassment can occur between people of the same sex.

d. The three kinds of sexual harassment are quid pro quo, bona fide, and disparate treatment.

e. None of these statements about sexual harassment is true.

2 points

Question 45

According to ____, leaders need to make clear how followers can achieve organizational goals, take care of problems that prevent followers from achieving goals, and then find more and varied rewards to motivate followers who achieve those goals.

a. Fiedler’s contingency theory

b. the path-goal theory

c. the Boston Consulting Group leadership matrix

d. the Vroom-Yetton-Jago normative decision model

e. Blake and Mouton’s leadership grid

2 points

Question 46

Teams are typically required when ____.

a. tasks are simple

b. tasks require multiple perspectives

c. synergy will complicate the problem solution process

d. the company has very limited resources

e. any of these conditions are met

2 points

Question 47

Effective managers define ____ as the process of influencing others to achieve group or organizational goals.

a. autonomy

b. interpersonal influence

c. supervision

d. leadership

e. management

2 points

Question 48

Functional departmentalization ____.

a. makes it easier for top managers to assess work-unit performance

b. enhances coordination between departments

c. allows work to be done by highly qualified specialists

d. produces managers with broader experience and expertise

e. encourages interdepartmental communicatione

2 points

Question 49

____ is leadership that creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting.

a. Visionary leadership

b. Supportive leadership

c. Leadership empowerment

d. Transactional leadership

e. Achievement-oriented leadership

2 points

Question 50

____ generates awareness and acceptance of a group’s purpose and mission and gets employees to see beyond their own needs and self-interest for the good of the group.

a. Charismatic leadership

b. Transformational leadership

c. Leadership empowerment

d. Virtual leadership

e. Transactional leadership

 

 

 
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Financial Management

CASE: DIVA SHOES, INC.

https://www.inkling.com/read/international-financial-management/chapter-8/diva-shoes-inc

Visit the above website and answer the following questions.

1.      What are Diva’s projected profits for the fiscal year ending September 1995?

2.      What factors affect a firm’s exposure to exchange-rate risk? How much exposure to exchange-rate risk does Diva Shoes have in April 1995?

3.      Suppose that Diva chooses to hedge its exposure in yen using the forward contract described in case Appendix A or the currency option described in case Appendix B. Assume that you lock in these contracts at the forward price implied by interest-rate parity for September 1995. Draw the payoffs to the position at maturity for each alternative with the exchange rate defined in USD/JPY × 10,000 units (i.e., the same units as the currency option is quoted). What do you see as the trade-offs between the alternatives?

4.      Do you think Bisno should remain strictly a shoe salesman or do you favor hedging his exposure? If you favor hedging, which alternative would you recommend to him?

5.      You have carefully assessed the situation at Diva Shoes; how serious is the firm’s exposure to exchange-rate risk?

6.      What factors significantly increase the firm’s exposure? Decrease the firm’s exposure?

7.      In your opinion, is the exposure large enough to warrant hedging? If so, do you favor hedging via a forward contract or currency option?

8.      Complete your paper with a conclusion and references. APA format.

 
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Marketing Project

Client Name: ACME

Industry: Apparel

Product Line: Designer jeans

Customers: North American (US and Canada) and European (Germany and UK) jeans buyers

Competitors:     1. Polo Ralph Lauren

                            2. Tommy Hilfiger

                            3. Nautica

“Thank you for meeting with us today,” Tarek says. “Market intelligence has shown that our major competitors—Polo Ralph Lauren, Tommy Hilfiger, and Nautica—are all developing new designer jeans. These new designer jeans have attractive designs and elastic fabric, and withstand wear and tear. These jeans are priced well above commonly known brands such as Levi’s and Wrangler, but also well below top designer jeans such as Hugo Boss.”

Tarek looks to you: “As ACME is debating whether to enter this market, we need you to participate in a new cross-functional product development team that will research the customer jeans buying habits in our three main markets: North America, Germany, and the UK. We also need to know if there’s an unmet demand for such jeans in those markets,” he says. Erik Knops, ACME’s CEO, nods his head in agreement.

Tarek continues, “We need to take into consideration the different needs and preferences of jeans buyers in those markets; as well as the demographics of those jeans buyers, such as age and gender. The customer requirements for each of those markets are quite different.”

Finally, Tarek remarks, “In addition, we need to know how these customers wash their jeans and whether they dry clean them in order to decide on the type of fabric to use.”

Erik nods his head again, smiles, and adds, “Tarek and I want you to research the jeans buyers’ needs and preferences for those three markets and provide us with a customer buying behavior report in two weeks. Remember, the report should focus in the customers, and not the companies!”

You know that to give Erik and Tarek the most in-depth report, you will need to conduct an analysis of the jeans buyers in those markets. Each market has to be discussed and analyzed separately under its own headings and subheadings (three different discussions and analyses). In addition, you have to create a value proposition for ACME’s proposed product. The value proposition should be specific to ACME’s proposed new product. What value do customers see in the proposed product and what would compel them to buy it?

 

 

Project 1: Researching Consumer Buying Behavior

Step 3: Review Marketing Information on Consumer Buying Behavior

 

As you read through the following materials, begin to think about how this information will apply to the report you will prepare for Erik and Tarek. To successfully complete the report, you’ll need an understanding of marketing. You’ll also benefit from a keen understanding of digital marketing, consumer buying behavior, and evaluating business attractiveness.

 

As you conduct your analysis of ACME’s consumer environment, remember that there are two types of market research: primary and secondary research. Both types of research are required in real-life, and each of them has its pros and cons. However, for this Project, only secondary research is required.

 

Finally, to fully understand ACME’s position, read about offerings—what a company provides its customers, be it a product, a service, or a mix of both. Also consider the differences between a product and a service. You know that a product can be more than just a physical good, it can be a service attached to a physical product, a “pure” service, an idea, a place, an organization, or even a person.

 

After you have read these materials, proceed to the next step, where you will begin your analysis of the specified consumer markets.

 

How are things going?

 

As previously mentioned, I would like you to conduct an analysis of the consumers in our main markets. Your analysis should consider both current and potential product users and should address the following questions:

 

1.What needs are being met by the product purchase? What are the benefits to the consumers? Make sure that you differentiate between features and benefits; go beyond manifest motives and consider latent motives.

 

 

2.Who is involved in the purchase process? Who are the influencers? Who are the buyers? Who are the end users?

 

 

3.Where are the products sold, and what are the distribution channels?

 

 

4.How often are the products purchased? Is there seasonality to sales?

 

 

Deliverable: By the end of Week 1, I need you to produce a six-page preliminary consumer buying behavior report (excluding cover page, reference list, tables, graphs, and exhibits) explaining your findings on consumer needs, wants, and preferences in these markets. Make sure that your report is specific to consumers of ACME’s potential product and not to consumers in general.

 

Support your work with the course readings and at least two scholarly sources and eight reliable nonscholarly sources, such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, the Financial Times, the Wall Street Journal, and the Harvard Business Review, as well as the UMUC Library databases, such as Hoover’s and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list. The report should be organized using headings and subheadings to improve its readability.

 

 

Deliverable: Based on your research of consumer needs in our main markets, describe your value proposition, or the benefits that ACME and its potential new product would provide to customers. Remember, a value proposition is essentially the promise that is made to the customer. Also provide a half-page recommendation to ACME on whether or not to manufacture that product.

 

Support your work with the course readings, scholarly sources, and reliable nonscholarly sources, such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, the Financial Times, the Wall Street Journal, and the Harvard Business Review, as well as the UMUC Library databases, such as Hoover’s. All sources need to be cited using APA formatting, both within the text and in the reference list. The value proposition should be organized using headings and subheadings to improve its readability.

Deliverable: By the end of Week 2, combine the first two deliverables into a single report after making any necessary corrections and edit them to ensure that there is clear flow of ideas from one section to the other. In addition, prepare a one-page executive summary (following the cover page) that highlights the most important findings of the report. APA style should be applied to in-text citations and in the reference list.

 

 

Your final report to Erik should be eight to nine pages, excluding cover page, executive summary, the reference list, and appendices. Any graphs, tables, and figures should be included as appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.

 

Submit your report to the dropbox located in the final step of this project.

 
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