1. Rank the BOD's Principles of Good Governance.

No more than two directors are current or former company executives.

No directors do business with the company or accept consulting or legal fees with the firm.
The audit, compensation, and nominating committees are made up solely of outside directors.
Each director owns a large equity stake in the company, excluding stock options.
At least one outside director has extensive experience in the company's core business and at
least one has been CEO of an equivalent-sized company.
Fully employed directors sit on no more than four boards and retirees sit on no more than
seven.
Each directors attend at least 75 percent of all meetings.
The board meets regularly without management present and evaluates its own performance
annually.
The audit committee meets at least four times a year.
The board is frugal on executive pay, diligent in CEO succession oversight responsibilities,
and prompt to act when trouble arises.
The CEO is not also the chairperson of the board.
Share holders have considerable power and information to choose directors.
2.What are the pros and cons of beginning export operations in a foreign country?
Pros

Enhancing domestic competitiveness

Econimies of scale
Access to new customers
Reduce dependents on existing markets & expanding into new ones
Lengthening the product life cycle
Selling excess production capacity
Increasing sales & profits
Gaining global market share
Raising awareness of foreign competition

Cons

costs

Incurring extra administrative costs, owing to tariffs, marketing expenses and transport
Trade barriers may be hard to overcome
Product modification
Cultural differences
Waiting longer for payments

3. Discuss the glass ceiling in the US giving your ideas and suggestions.
The glass ceiling is a barrier so subtle that it is transparent, yet so strong that it prevents
women from moving up the corporate hierarchy. From their vantage point on the corporate
ladder, women can see the high-level corporate positions but are kept from reaching the top.
It is not simply a barrier for an individual, based on the person's inability to handle a higherlevel job. Rather, the glass ceiling applies to women as a group who are kept from advancing
higher because they are women.
The very culture that needs to embrace change presents obstacles to entry for those women
who will make it happen.
4. Would you recommend a divisional structure by geographic area, product, customer, or
process for BPI, Why?
I would recommend divisional structure by process for BPI because its objective is to provide
different financial services to residents which include asset management, trust services,
mutual funds, broker services, electronic banking and others. In this case, all operations
related to these specific processes would be grouped under the separate divisions. Each
process would be responsible for generating revenues and profits. The divisional structure by
process can be particularly effective in achieving objectives when distinct production
processes represent the thrust of competitiveness in an industry.

5. Strategy evaluation allows an organization to take a proactive stance toward shaping its
own future. Discuss the meaning of this statement.
A proactive stance involves acting in advance of a future situation rather than simply
responding to a situation that has already happened. Proactivity is an important habit for
businesses to develop because it requires them to adopt a strategic approach to decision
making. Most companies repeatedly take the same actions because these actions have
worked in the past or represent the traditional approach to responding to adverse business
conditions. Instead of following the same pattern, an organization can proactively change
tactics, assess the conditions as they occur and develop new processes based on these
conditions. An organization's behaviors, successes and failures are the direct result of
decisions. After establishing what factors contribute to the success of the business, the
organization can start to put things in perspective, acting quicker and independent of what
other businesses do. Knowledge about the internal operations and how these operations
impact profitability and market position will enable the organization to respond to changing
circumstances while still focusing on business objectives.
6. Explain how you would estimate the total worth of a business. At least three approaches.
Asset Approach
The asset approach views the business as a set of asssets and liabilities that are used
as building blocks to construct the picture of business value. The asset approach is based on
the so-called economic principle of substitution which addresses this question:

What will it cost to create another business like this one that will produce the same economic
benefits for its owners?
Since every operating business has assets and liabilities, a natural way to address this
question is to determine the value of these assets and liabilities. The difference is the
business value.
Sounds simple enough, but the challenge is in the details: figuring out what assets and
liabilities to include in the valuation, choosing a standard of measuring their value, and then
actually determining what each asset and liability is worth.
Market Approach
The market approach relies on signs from the real market place to determine what a
business is worth. Here, the so-called economic principle of competition applies:
What are other businesses worth that are similar to my business?
No business operates in a vacuum. If what you do is really great then chances are there are
others doing the same or similar things. If you are looking to buy a business, you decide what
type of business you are interested in and then look around to see what the "going rate" is for
businesses of this type.
If you are planning to sell your business, you will check the market to see what similar
businesses sell for.
So the market approach to valuing a business is a great way to determine its fair market
value - a monetary value likely to be exchanged in an arms-length transaction, when the
buyer and seller act in their best interest.
Income Approach
The income approach takes a look at the core reason for running a business - making money.
Here the so-called economic principle of expectation applies:
If I invest time, money and effort into business ownership, what economic benefits and when
will it provide me?
Notice the future expectation of economic benefit in the above sentence. Since the money is
not in the bank yet, there is some measure of risk - of not receiving all or part of it when you
expect it. So, in addition to figuring out what kind of money the business is likely to bring, the
income valuation approach also factors in the risk.
7. Discuss the limitations of EPS/EBIT analysis.
Finance managers are very much interested in knowing the sensitivity of the earnings
per share with the changes in EBIT; this is clearly available with the help of EBIT-EPS
analysis but this technique also suffers from certain limitations, as described below:
No Consideration for Risk
Leverage increases the level of risk, but this technique ignores the risk factor. When a
corporation, on its borrowed capital, earns more than the interest it has to pay on debt, any

financial planning can be accepted irrespective of risk. But in times of poor business the
reverse of this situation ariseswhich attracts high degree of risk. This aspect is not dealt in
EBIT-EPS analysis.
Contradictory Results
It gives a contradictory result where under different alternative financing plans new equity
shares are not taken into consideration. Even the comparison becomes difficult if the number
of alternatives increase and sometimes it also gives erroneous result under such situation.
Over-capitalization
This analysis cannot determine the state of over-capitalization of a firm. Beyond a certain
point, additional capital cannot be employed to produce a return in excess of the payments
that must be made for its use. But this aspect is ignored in EBIT-EPS analysis.