MGTA04-Introduction to Management II
MGTA04-Exam Practice SAQs
1. A Toronto cab driver spends $10,000 per year in fixed costs for licenses, permits and
insurance. His variable costs (gasoline, oil, etc) are $0.20 (20 cents) per kilometer.
Although he expects to drive between 100,000 and 125,000 kilometers during the year,
he wants to break-even after just 25,000 kilometers. How much must he charge his
passengers (per km) in order to break-even after 25,000 kilometers? Show your
2. Traditionally, money consisted of a physical substance such as gold coins or bank notes.
These objects that served as money had certain characteristics that made them suitable as
a medium of exchange, a store of value and a unit account. Today, “money” often
consists of nothing more than electronic messages of nothing more than electronic
messages that serve these same functions. How well do these electronic forms of money
satisfy each of the 4 traditional characteristics of items that represent money?
3. Suppose that the 1 of September 2010, Professor Bovaird deposits $5,000 (the earnings
he made from teaching summer school) in his saving account with the Bank of Montreal.
They will pay him an interest of 2%. Suppose that on the same day, you can come and go
to school and work during the next academic year. The bank has calculated that it costs
$100 of its staff time to arrange and process the loan, including the cost of sending yost
the monthly statements. You intend to repay the loan, in full, in one year (August 31
2012), with the money you make from the job you will get next summer. What is the
minimum rate of interest that the bank must charge you on your loan, in order to break
even on this financial transactions? Show your calculations.
4. There are exactly 100,000 shares outstanding in the XYZ Company Ltd. You own 100
shares. XYZ Company Ltd makes a $1,000,000 profit in the year 2000. At the Annual
General Meeting, the directions recommend a 50% dividend payout . How big the
cheque will you receive in the mail? Show your calculations.
5. Suppose you were thinking of opening a sandwich bar at UTSC. To be certain that your
proposed sandwich bar was a viable idea, you thought that you should do some market
a. What secondary market research would you do?
b. What primary market research would you do? Explain your choice of research
6. Companies are often faced with a decision as to whether or not to finance major capital
undertakings by either debt or equity. List and describe the advantages and disadvantages
of debt vs equity financing from the company’s perspective. MGTA04-Introduction to Management II
In one week, you sell 100 glasses of delicious home-made lemonade. At the end of the week,
your dog “Fluffy” accidently bumps into the table and the jug falls onto the sidewalk and
breaks. So, you decide to close the business, and start taking piano lessons. Because you are a
full time student, and the lemonade stand is your only source of income, assume that you are
below the minimum personal income tax deduction, so your tax rate is 0%.
a. Calculate your fixed cost.
b. Calculate the variable costs.
c. Calculate your selling price.
d. Calculate your Break-Even quantity, and clearly show the formula.
e. Show the complete income statement, in the correct format. (Hint: create a Balance Sheet)
8. List and describe the five major steps in the Consumer Buying Process.
9. Discuss four ways in which electronic information systems are changing business for
the better. For each, also discuss how much systems have at the same time introduced
new problems or challenges (Ch.3)
10. Does Mercedes Benz automobile company employ a pricing policy of penetration or
skimming? Explain and justify your answers.
11. Explain how a lack of quality in the production of manufactured goods affects an
economic level of productivity. MGTA04-Introduction to Management II
12. In the mid 1990s after relying very heavily on Michael Jordan, a star professional
basketball player with the Chicago Bulls, Nike added two new-spokes persons into its
roster: Mia Hamm, Captain of the World champion USA Women’s Soccer Team and
Tiger Woods why? And What do you suppose Nike’s product marketing strategists
were thinking when they made these two endorsement decisions?
13. BravoCorp is a leading band of fashion wear for women. The company has built a
strong reputation for quality, service and unique styling. It holds a dominant market
position across New England region of the United States among women aged 25-45
who earn at least $60,000 per year and have a post-secondary degree. The company is
considering its first move into Canada, planning to open retail outlets in Atlantic
Canada (New Brunswick, Nova Scotia, PEI, and Newfoundland & Labrador)
a. Identify at least two types of segmentations that the company has used thus far in
marketing its products. Justify each answer with relevant information mentioned in
b. Before moving into Atlantic Canada, explain (at least two) methods of market
research that you would have suggested the company use, and what kind of
information would you wish to have gained from this research?
14. You are a marketing consultant. A friend of yours who is the President of an
Advertising firm, has just won two new clients: Molson Breweries (Quebec Division)
and Petro-Canada. Your friend says to you
“There’s no point in changing away from past success. Two of our most successful recent
campaigns have been the “I am Canadian” series of ads for Molson Canadian, and the
“Canada’s gas station” campaign for Petro-Canada. I think we should just translate the
advertising copy into French”.
As an expert marketing consultant, what would you advise your friend.
15. Excelsior Wines is a mid-sized wine producer located just outside of Sydney,
Australia. The company focuses on medium priced ($15-25) wines, produced entirely
with Australian grapes. It holds a dominant market position across the state of New
South Wales (where it is located) and a lesser but increasing position in the rest of
Australia. But it is looking to grow its presence dramatically in North America, where
it has very little presence and almost no brand recognition. Currently, its target
market is men aged 35-55 who earn at least $100,000 per year and have a post- MGTA04-Introduction to Management II
secondary degree. The typical consumer also belongs to a golf or social club and likes
to entertain their friends and business associates frequently throughout the year.
a. From the information above, list and explain two types of segmentation the
company appeared to use thus far in marketing its products?
b. Suggest two reasons why it may NOT be effective for Excelsior to use the same
segmentation strategy in North America as it has used, effectively, in Australia.
16. McDowell Corp owns and operates a series of fast food restaurants across the tri-
state area. Its chief strategist, Roy McDowell, wants to try out some new service
designs in an attempt to increase profitability and to further standardize service