DBA Doctor of Business Administration MCQ 4 — Questions and Answers
Question 1: In strategic management, the concept of 'blue ocean strategy' developed by Kim and Mauborgne focuses on:
- Winning market share in existing competitive spaces
- Creating uncontested market space by making competition irrelevant (Correct answer)
- Differentiating products within established industry boundaries
- Cost reduction through lean manufacturing in mature markets
Correct answer: Creating uncontested market space by making competition irrelevant
Blue ocean strategy advocates creating new demand in untapped market spaces rather than competing in existing 'red ocean' markets.
Question 2: Which financial metric represents the minimum return a project must generate to satisfy all providers of capital, weighted by their proportion in the firm's financing?
- Return on equity (ROE)
- Weighted average cost of capital (WACC) (Correct answer)
- Economic value added (EVA)
- Internal rate of return (IRR)
Correct answer: Weighted average cost of capital (WACC)
WACC blends the cost of debt and equity proportionally and serves as the hurdle rate for investment decisions.
Question 3: Transformational leadership theory, as defined by Bass, holds that leaders motivate followers by:
- Exchanging rewards for performance through contingent reinforcement
- Inspiring followers to transcend self-interest for collective goals (Correct answer)
- Maintaining strict organizational rules and hierarchical authority
- Setting individualized goals and monitoring compliance
Correct answer: Inspiring followers to transcend self-interest for collective goals
Bass's transformational leadership involves idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration to elevate follower performance.
Question 4: A company's Days Sales Outstanding (DSO) ratio increasing significantly over two consecutive quarters most likely signals:
- Improved supplier payment terms
- Deteriorating accounts receivable collection efficiency (Correct answer)
- Increased inventory turnover speed
- Better cash conversion cycle performance
Correct answer: Deteriorating accounts receivable collection efficiency
Rising DSO indicates customers are taking longer to pay, which strains cash flow and may signal credit quality issues.
Question 5: Which theory of organizational change argues that change is triggered by punctuated equilibria — long periods of stability disrupted by short bursts of radical transformation?
- Continuous improvement (Kaizen) theory
- Punctuated equilibrium model by Tushman and Romanelli (Correct answer)
- Lewin's unfreeze-change-refreeze model
- Kotter's 8-step change process
Correct answer: Punctuated equilibrium model by Tushman and Romanelli
Tushman and Romanelli's punctuated equilibrium model describes organizations as experiencing long convergent periods broken by revolutionary reorientations.
Question 6: In supply chain management, the 'bullwhip effect' refers to:
- Cost reduction achieved through volume discounts
- Amplification of demand variability as orders move upstream in the supply chain (Correct answer)
- Rapid delivery enabled by just-in-time inventory
- Supplier consolidation reducing procurement complexity
Correct answer: Amplification of demand variability as orders move upstream in the supply chain
The bullwhip effect occurs when small fluctuations in end-customer demand create increasingly large order swings at each upstream supply chain level.
Question 7: Corporate governance mechanisms designed to align executive compensation with long-term firm performance most typically include:
- High fixed salaries and guaranteed annual bonuses
- Equity-based compensation with multi-year vesting periods (Correct answer)
- Short-term cash incentives tied to quarterly earnings
- Seniority-based pay scales and defined benefit pensions
Correct answer: Equity-based compensation with multi-year vesting periods
Equity-based pay with vesting schedules ties executive wealth to long-term stock performance, aligning agent and principal interests.
DBA Doctor of Business Administration MCQ 4
In strategic management, the concept of 'blue ocean strategy' developed by Kim and Mauborgne focuses on: