MIDTERM EXAM (90 mins.

)
BUSINESS ANALYSIS BSA2016
Fall 2024
Part 1. Multiple Choice (3 points)

1A 2C 3B 4D 5D 6B 7D 8A 9B 10A

1. Which of these could be a partaker in business analysis?

A. Stakeholders C. Journalist
B. Bankers D. Officers

2. To identify whom could potentially influence the deliverables of the project. What should
the business analyst analyze stakeholders?
A. The mission statement of the business area and it organizational charts
B. A description of the type of sole components that will be delivered
C. A description of the approach that will be taken to implement a new set of
capabilities
D. A description of the methodology that will be used to deliver the new set of
capabilities

3. What is the definition of business analysis?

A. A list of tasks a Business Analysis must complete
B. The set of tasks and techniques used to work as a liaison among stakeholders in order
to understand the structure, policies and operations of an organization, and to recommend
end solutions that enable the organization to achieve its goals
C. The set of techniques used to analysis
D. The entire task a Project Manager carries out

4. Which of the following is not part of the micro environment?

A. Shareholders C. Public
B. Competitors D. Technology

5. What does Dog symbolize in BCG matrix?

A. Introduction C. Maturity
B. Growth D. Decline

6. One of the strategic decisions relating to the value chain concerns vertical integration
A. Deciding whether to locate operations in the home country or in a foreign location
B. Deciding whether the activity should be performed within the organization or by a
different firm
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 C. Directly involved in the production and delivery of the product or service
D. Directly involved in the production, marketing and delivery of the product or service

7. This is where the poor performing dogs are phased out or sold off?
A. Building strategy C. Harvesting strategy
B. Holding strategy D. Divesting strategy

8. What does Question Mark in BCG matrix?

A. Remain Diversified C. Stable
B. Invest D. Liquidate

9. If you own a bookstore and decide to purchase the vintage clothing boutique next door,
what type of diversification are you using?
A. Concentric diversification C. Vertical integration
B. Conglomerate diversification D. Horizontal integration

10. What is primary activities in the value chain

A. Directly involved in the production, marketing and delivery of the product or service
B. Those activities that are all undertaken in-house
C. Those activities that support the production, marketing and delivery of the product or
service
D. Directly involved in the production and delivery of the product or service

Part 2: Questions (7 points) Choose 2 out of 4 questions

1. [Strategy Analysis] Explain why you agree or disagree with each of the following
statements.
a. It is better to be a differentiator than a cost leader, since you can then charge premium
prices.
b. It is more profitable to be in a high-technology than a low-technology industry.
c. The reason why industries with large investments have high barriers to entry is because
it is costly to raise capital.
MY ANSWER

a. AGREE
Because you can then charge premium prices. Being a differentiator means offering
unique and innovative products or services that stand out from competitors. This allows
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a company to create a perceived value in the minds of customers, which can justify
higher prices. Customers are often willing to pay more for products or services that offer
distinct features, superior quality, or a unique brand image. By charging premium prices,
a differentiator can generate higher profit margins and potentially achieve long-term
success.
b. AGREE
High technology industries typically involve advanced and innovative products or
services that have a higher demand and can command higher prices. These industries
often experience rapid growth and offer opportunities for companies to gain a
competitive advantage through technological advancements. Additionally, high
technology industries often have higher barriers to entry, which can limit competition
and allow companies to maintain higher profit margins. On the other hand, low
technology industries may have lower profit margins due to intense competition and
commoditization of products or services.
c. AGREE
Because it is costly to raise capital. While raising capital can be a significant barrier to
entry for industries with large investments, it is not the only factor. Other factors such as
economies of scale, brand loyalty, regulatory requirements, and access to distribution
channels can also contribute to high barriers to entry. Industries with large investments
often require substantial financial resources to establish production facilities, develop
technology, or build infrastructure. This can deter potential entrants who may not have
the necessary capital or face difficulties in securing funding. However, it is important to
note that barriers to entry can vary across industries and are influenced by multiple
factors beyond just the cost of raising capital.

3. [Accounting Analysis] Fiona argues: ‘The accounting standards that I like most are the
ones that eliminate all management discretion in reporting – that way I get uniform numbers
across all companies and don’t have to worry about doing accounting analysis.’ Do you
agree? Why or why not?
MY ANSWER

We don’t agree with Fiona. First, this assumes that the uniform accounting
standard is the best method that reflects the underlying economics. Furthermore, the
delegation of financial reporting decisions to corporate managers may provide an
opportunity for managers to convey their superior information to investors. Corporate
managers are typically better than outside investors at interpreting their firm’s current
condition and forecasting future performance. Since managers have better knowledge
of the company, they have the potential to choose appropriate accounting methods and
accruals that portray business transactions more accurately. Note that accrual
accounting not only requires managers to record past events, but also to make
forecasts of future effects of these events. If all discretion in accounting is eliminated,
managers will be unable to reflect their superior information in their accounting choices.

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 When managers’ incentives and investors’ incentives are different and
contracting mechanisms are incomplete, giving no accounting flexibility to managers
may result in a costlier solution to investors. Further, if uniform accounting standards
are required across all companies, corporate managers may expend economic
resources to restructure business transactions to achieve a desired accounting result.
Manipulation of real economic transactions is potentially more costly than manipulation
of earnings