In the Course of Crafting a Strategy, Which of the Following

question 25

Multiple Choice

In the course of crafting a strategy, which of the following is NOT a common management function?

• A) abandoning certain strategy elements that have grown stale or become obsolete
• B) modifying the current strategy when market and competitive conditions take an unexpected turn or some aspects of the company's strategy hit a stone wall
• C) modifying the current strategy in response to the fresh strategic maneuvers of rival firms
• D) taking proactive actions to improve this or that piece of the strategy
• E) sharing the strategy with the public to gain additional customer and shareholder support

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Definitions:

Debt-Equity Ratio

A ratio representing the degree of financial leverage of a company, calculated through the division of its total liabilities by shareholders' equity.

After-Tax Cost of Debt

The total expense of borrowing for a business, after subtracting the tax savings gained from deducting interest expenses.

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital, weighting each category of capital (equity, debt, etc.) proportionally.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are expected to generate the most profit or benefit to the organization over time.