B6 Flashcards
1
Q
What is Business Process Management (BPM)?
A
A management approach that seeks to coordinate functions of an organization to increase customer satisfaction. Seeks effectiveness & efficiency through promotion of innovation, flexibility, & integration with technology
2
Q
Compare BPM vs. Project Management.
A
BPM attempts to improve processes continuously. There is no end
3
Q
What are the 5 categories of BPM?
A
Design, Modeling, Execution, Monitoring, Optimization
4
Q
What are the 5 techniques of BPM?
A
Define, Measure, Analyze, Improve, Control
5
Q
What is the other technique to BPM?
A
Plan-Do-Check-Act (Sigma Six)
6
Q
What are the measures of BPM?
A
Financial: Gross Revenue,
Non-financial: Customer Contracts, Customer Satisfaction, Operational Statistics
7
Q
What are the benefits of BPM?
A
Efficiency, Effectiveness, Agility
8
Q
What are shared services?
A
When you seek out redundant services in an organization, combine them, & share them.
9
Q
What are the implications of shared services?
A
service flow disruption & failure demand
10
Q
What is outsourcing?
A
using an external provider
11
Q
What are the implications of outsourcing?
A
Quality, Productivity, Staff Turnover, Security, Labor insecurity
12
Q
What are offshore operations?
A
outsourcing to a different country
13
Q
What are the 4 types of offshore operations?
A
IT, Business Process (call center), Software R&D, Knowledge Process (skill)
14
Q
What are the implications of offshore operations?
A
Language Skills & qualifications
15
Q
What are 2 types of improvement initiatives?
A
Irrational (intuitive & emotional) and Rational (structured & systematic)
16
Q
How do you implement improvement initiatives?
A
Internal Leadership, Inspections, Executive Support, Internal Process Ownership
17
Q
What is Business Process Re-engineering (BPR)?
A
techniques to help organizations rethink how work is done to dramatically improve (radical) customer satisfaction, customer service, cut costs of operations, & enhance competitiveness
18
Q
Compare BPM vs. BPR.
A
BPR is radical and BPM is incremental/tweak
19
Q
What does performance improvement seek to do?
A
provide the highest quality goods/services in the most efficient & effective manner possible
20
Q
What is Just in Time (JIT)?
A
A pull approach. Costs go down, WIP goes down, Quality goes up. JIT schedules deployment of resources JIT to meet customer or production requirements
21
Q
What is a key part of JIT?
A
Inventory does not add value!
22
Q
What are the costs of JIT?
A
a reduction in the number of suppliers
23
Q
What are the benefits of JIT?
A
scheduling with demand. Supplies arrive at regular intervals during the day. Improved coordination with suppliers. Reduced set up time
24
Q
What is quality?
A
the ability to meet or exceed customer expectations
25
What are the costs of quality?
Conformance & Non conformance (inverse) APIE
26
What are the quality control principles of Conformance?
AP: Appraisal= costs incurred to detect before, & Prevention= investment cost to prevent defects
27
What are the quality control principles of Non-Conformance?
IE: Internal= before customer, & External= after customer (measures quality)
28
What is Total Quality Management (TQM)?
please customers through quality & continuous improvement
29
What are the 7 critical factors of TQM?
Customer Focus. Continuous Improvement. Workforce Involvement (Quality Circles). Top Management Support. Objective Measures. Timely Recognition. Ongoing Training
30
What are Quality Audits?
management assesses quality practices. Strengths & weaknesses
31
What are Gap Analysis?
difference between industry best practices & our current practices
32
What is Lean Manufacturing?
investing resources only in value added activities
33
What are the factors of lean manufacturing?
waste reduction, continuous improvement (Kaizen), Process Improvement/Activity Based Management (ABM)
34
What is Demand Flow?
uses customer demand as basis for resource allocation (JIT or lean)
35
What is a constraint?
it impedes the accomplishment of an objective. Internal or external
36
What is the Theory of Constraints (TOC)?
to maximize throughput by working around and leveraging (hedging) constraints
37
What is Six Sigma?
emphasizes cost reduction through rigorous metrics and continuous quality improvements. It expands on Plan-Do-Check-Act but for new or existing product or plans
38
What is a project?
a temporary undertaking intended to produce a unique product/service. Has a definite beginning and end
39
What is re the 5 phases of project management?
An authorized project plan, implemented, monitored and controlled, ends when the objectives have been met (we delivered). Authorization. Planning, Implementation. Monitoring. Closing
40
What is a statement of work?
included in authorization of the project management. = the products/services to be delivered at the end. = product scope.
41
Who are the stakeholders in a project\>
Project manager, members & steering group
42
What does the Project Manager do?
administration for day to day business
43
What do project members do?
perform the project tasks
44
what does the project sponsor do?
executive level of management. Allocates $ and resources
45
what does the executive steering committee do?
the board of directors
46
What is the reporting order for a project?
Manager to Sponsor to Steering Committee
47
What is project risk
the chance that something will go wrong
48
What are the steps for planning for risk management?
risk assessment and risk control
49
What is a risk assessment?
anticipate. Analyze. Prioritize
50
What is risk control?
Spend $ in advance to prevent risk. Plan for emergencies
51
What is the HR Plan?
a formal document of the labor plans for a project
52
What are the factors of the HR plan?
influences on the HR plan. Tools to enhance communication and success in HR plan. Conflict resolution strategies. Plan for things to go wrong and identify an appropriate response
53
What is the scope of the project?
all work required to complete the project and nothing else
54
What is product scope?
defines the deliverables
55
What is project scope
defines the work needed to produce the deliverables
56
what is the scope baseline?
formal written statement of project scope and product scope
57
What is the requirements documentation?
written document describing project requirements
58
what is the requirements management plan?
documents how the requirements will be analyzed, documented and managed, tracked, and reported
59
what is the cost baseline?
the amount of $ expected to spend on the project
60
When does the maximum project expenditure occur? Beginning middle or end?
middle
61
What is judgment?
historical info and experience
62
what is parametric estimating?
statistical relationship
63
what is analogous estimating?
cost of similar sized projects
64
what is the work breakdown structure (WBS) estimating?
bottom up analysis
65
what are three point estimates?
a range... optimistic assumption = best case, base case = most likely, and pessimistic assumption = worst case
66
What is a reserve analysis?
plan for a reserve (uncertain cost estimates)
67
What are deliverables?
the product/service the project must deliver
68
What are the 5 criteria for the quality of the deliverables?
SMART- specific, measurable, attainable, relevant, time-based
69
what is globalization?
distribution of the industrial and service activities across an increasing number of nations (more integrated and interdependent)
70
How do you measure globalization?
world trade as a % of GDP
71
What are the factors that drive globalization?
transportation, technology, deregulation, options for international business
72
what does globalization promote?
Specialization & comparative advantage
73
What are the motivations for international business operations?
comparative advantage, imperfect markets, product cycle
74
what are the methods for conducting international business operations?
international trade, licensing, franchising, joint ventures, direct foreign investment, global sourcing (combination)
75
What are the relevant factors of globalization?
political and legal influences, risk of asset expropriation, taxes and tariffs, limitations on asset ownership or joint venture, content or value added limits, foreign trade zones, economic systems, culture.
76
what are content or value added limits?
NAFTA. Government may provide tariff reductions to companies whose imports include specified % of material & labor in their products
77
What are the different types of economic systems?
centrally planned economies (China, govt control assets) vs. market economies (US, indiv own assets)
78
what are the different factors of culture?
individualism vs. collectivism, uncertainty avoidance, ST vs. LT orientation, acceptance of leadership hierarchy, tech & infrastructure (main diff)
79
what are the 3 inherent risks of international business operations?
exchange rate fluctuations, foreign economies, political risks
80
What are the factors of foreign economies that affect international business?
foreign demand (income & purchasing power), interest rates increase AD dec, inflation inc AD dec, exchange rates inc AD inc
81
what are the political risks of international business?
bureaucracies and trade barriers, corruption, host govt attitude toward foreign firms, consumer attitude toward foreign firms, inconvertibility of foreign currency, war
82
what are the complications of global sourcing?
multiple sources for raw materials & multiple exchange rates
83
what is a unipolar economy?
one lone superpower (US)
84
what is multipolarity?
power is distributed among many nations
85
what are the dimensions of national power?
geography, population, resources, economy, military, diplomacy, identity
86
what is functional interdependence?
cooperation amongst nations to address global issues
87
what is systemic interdependence?
the global issues
88
Compare developed nations vs. emerging nations.
Developed (US) nations usually have trade deficits. While emerging nations (BRIC Brazil Russia India china) usually have trade surpluses
89
Risk and return are both a function of what?
market conditions and risk preferences
90
what are the 3 types of risk preferences?
risk averse. Risk seeking. Risk indifferent
91
Compare diversifiable risk vs. nondiversifiable risk.
DUNS. Diversifiable risk is Unsystematic (unique) and Nondiversifiable risk is Systematic (market)
92
What are 4 types of financial risk?
IR risk. Market Risk. Credit risk. Default risk.
93
What is the stated interest rate?
the rate shown in agreement, before compounding
94
How do you calculate the effective periodic IR?
Interest paid per period (= Principal \* periodic rate) / Net Proceeds of Loan (= Principal - Fees)
95
How do you calculate the annual percentage rate (APR)?
Effective Periodic IR \* # compounding periods
96
How do you calculate the effective APR?
= ((1+Effective Periodic IR)# compounding pds) -1
97
How do you calculate simple interest?
Principal \* Annual Rate \* # years
98
How do you calculate compound interest?
Principal \* (1 + IR)# years
99
How do you calculate the required rate of return?
Risk Premium + Nominal RF (=Real RF + IP)
100
What are the 3 different risk premiums?
Maturity risk premium (MRP), Liquidity risk premium (LRP), Default risk premium (DRP)
101
What are the categories of international risk factors?
trade and financial factors
102
What are the categories of international risk exposure?
transaction, economic and translation exposures
103
What are trade risk factors?
the relative inflation rate inc thus AD dec and value of currency dec. or government controls
104
What are financial risk factors?
relative IR inc thus AD inc and value of currency inc
105
What is the export transaction exposure?
Have A/R in FC: 1) FC inc, A/R inc, Gain! 2) FC dec, A/R dec, Loss
106
What is the import transaction exposure?
Have A/P in FC: 1) FC inc, A/P inc, Loss 2) FC dec, A/P dec, Gain!
107
Economic Exposure: What happens w/ domestic currency appreciation?
Thus FC dec: 1) A/R dec BAD, 2) A/P dec GOOD!
108
Economic Exposure: What happens w/ domestic currency depreciation?
Thus FC inc: 1) A/R inc GOOD!, 2) A/P inc BAD
109
What are the factors of translation exposure?
As the degree of foreign involvement inc, translation exposure inc. As the stability of the FC inc, translation exposure dec
110
What are the 4 techniques for transaction exposure mitigation?
Futures Hedge. Forward Hedge. Money Market Hedge. Currency Option Hedge
111
What is a call option?
option to buy
112
What is a put option?
option to sell
113
If FC inc and A/P inc, how can you mitigate your transaction risk?
Buy Futures Hedge or Buy call option
114
If FC dec and A/R dec, how can you mitigate your transaction risk?
Sell Futures Hedge or Buy put option
115
What is economic exposure?
the extent to which Rev and Exp are denominated in different currencies
116
What is the ideal restructuring technique for economic exposure mitigation?
Denominate sales in FC increasing. Denominate expenses in FC that is decreasing.
117
What is transfer pricing
the goal is to reduce taxable income
119
What are specific types of DT or LT Financial Instruments?
working capital financing. Letter of credit. Line of credit. Leasing options. Debentures and bonds. Equity financing.
120
Compare Debentures and bonds vs. equity financing.
Debt: FC w/ maturity date, new debt decreases credit worthiness, EPS inc. Equity: VC w/o maturity, increases credit worthiness, EPS dec.
121
What are debt covenants?
they protect the value of the debt by protecting the the debtors credit rating. Debtors agree to debt covenants to secure a lower cost of borrowing the new debt.
122
What are common examples of debt covenants?
limitations on issuing additional debt. Restrictions on payment of dividends. Limitations on disposal of certain assets. Minimum WC req. collateral requirements. Limitations on spending borrowed $. Maintenance of specific ratios.
123
What happens if the debt covenants are violated?
technical default… usually just negotiate new terms
124
How do you calculate the PV of an annuity?
Pmt. \* (1-(1/(1+i)n)/i)
125
How do you calculate the price of perpetuity (PS)?
P = D(Par \* fixed %) / R (req return)
126
How do you calculate the price of constant growth (CS)?
P0 = D1/(R-G)
127
How do you calculate the Price-Earnings (P/E) Ratio?
P0/E1
128
How do you calculate the PEG Ratio?
P0/E1/G(whole number)
129
How do you calculate Price-to-Sales Ratio?
P0/S1 (used w/start-ups only)
130
How do you calculate Price-to-Cash-Flow-Ratio?
P0/CF1
131
What are different evaluating assumptions used in valuation?
Generalized rules of thumb can distort. Behavioral Biases distort judgment. Impact of Loss Aversion
132
Compare STD vs. LTD
ST Debt
* Lower Rates
* Adv: Higher liquidity and Profitability
* Dis: Higher IR Risk and Credit Risk
* Strategy: Use w/ higher levels of temporary WC
LT Debt
* Higher Rates
* Adv: Lower IR Risk and Credit Risk
* Dis: Lower liquidity and Profitability
* Strategy: Use w/ higher levels of permanent WC
133
Who does the International Professional Practices Framework Code of Ethics apply to?
Individuals and entities who provide internal auditing services
