Business Communications with Data Questions & Answers

·         What is the difference between IRR and ROI?

IRR is used to calculate the annual growth rate of the investment made, whereas ROI gives the overall picture of the investment and its returns from beginning to end.

·         What is the function of the "differentiation" alternative (number of approaches to achieving advantage) in the Competitive Environment Matrix?

It represents the approach of differentiating products so that they do not compete head-on with their competitors.

·         Why is it recommended that you start the y-axis value at 0 in a plot?

Because starting the y-axis above zero truncates the visualization of values

·         What is a Growth Share Matrix?

It is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies.

·         What hypothesis states that a stable competitive market never has more than three significant competitors, and the largest has no more than four times the market share of the smallest?

The Rule of Three and Four

·         How would you classify "The number of different approaches to competitive advantage available," and "The potential size of the competitive advantage"?

As the two dimensions of the competitive advantage matrix

·         You're creating an area chart to show individual sales reps' contribution to total sales for the last quarter. You arrange the low-variable data (months January-April) on the y-axis, and the high-variable data ($0-$80k) on the x-axis. When the chart populates, it is difficult to read or understand. How can you simplify it?

Switch the high-variable data to the y-axis, and the low-variable data to the x-axis.

·         What is the Experience Curve?

The experience curve is a graphical representation of the effect that firms learn from doing, which means that the higher the cumulative volume of production (X), the lower the direct cost per new unit produced (C).

·         You are creating an agenda for the weekly project team meeting and there are two main items in your agenda. One is an informational agenda item and the other is an advisory agenda item. What should be taken into consideration when you are creating the agenda for the meeting?

Allocate more time for the advisory item since inputs, ideas and opinions of participants need to be obtained during the meeting.

·         What best describes body language?

A type of nonverbal communication

·         You sell all-natural house cleaning products, and are evaluating your investment in various marketing channels for your brand. According to the following Growth Matrix, what business strategy would best benefit your company, concerning your marketing investment with Vine?

It would be best to liquidate the investment and discontinue using Vine as a marketing channel.

·         How can you calculate ROI?

Divide the net profit by the cost of investment and multiply by 100.

·         Your company is evaluating 2 proposed projects. Project A is a $10,000 project with an expected 15% IRR. Project B is a large, $1 million project with an expected 10% IRR. Which project should your company invest in and why?

Project B because it would add much more overall value and cashflow to the organization.

·         Two firms sell toothpaste and have similar experience curves. Firm B has been in the market for a longer time than Firm A, and therefore its direct costs are lower than A’s. If price equals the direct costs of A, firm B will have profits, while A will just barely survive. What would firm B have to do to cause Firm A to leave the market?

Firm B could decrease its price.

·         Firm A is a growing company in the automobile industry that is considering entering the market. Its workforce hires highly qualified staff that allows for quicker modifications of the products. Consider the following 2 experience curves comparing Firm A and it's largest competitor, Firm B. What results can Firm A expect if it decides to enter the market, even with higher direct costs than Firm B?

It will ultimately catch up with firm B and get more experience, resulting in lower direct costs than firm B, even with having a lower cumulative volume.

·         An employee is at the annual Performance Review meeting with the boss. The employee observes that the boss is constantly smiling while listening. What is the most likely explanation for this non-verbal cue?

The boss is actively listening and comprehending what the employee is saying.

·         You're reviewing your company's month-end expenses. Each expense category has its own division. However, the pie chart shows an "other" category with £84.26 for business expenses, and you cannot seem to find any expense account that is not categorized. What is a possible explanation of why the graph shows "other"?

It is a combination of smaller expense accounts for that period that do not represent much individually, but were combined for visualization purposes since having a few slices at under 0.5% each would make the chart difficult to read.

·         You're presenting a bubble chart to end-users and before explaining the correlation of the data, you tell them ahead of time that the Y-axis shows the project's value, the X-axis indicates expected close date, and the size of the bubble indicates risk of a project finishing on time. Given this scenario, what is the expected reaction of the users when interpreting the data?

End-users' eyes will likely go to the highest, largest bubble to find the projects most at risk with the highest value, and most likely enter the presentation with a negative perspective.

·         You want to analyze daily closing stock prices for $UPWK over a period of five years to determine if it goes through any peaks or troughs through the summer seasons. What steps can you take to achieve this?

Obtain a list of all the closing prices for the stock from each day for the past five years, list them in chronological order, and correlate them to the chosen season.

·         What is the difference between a regular stacked bar chart and a 100% stacked bar chart?

The lengths of regular stacked bar charts vary according to the total value of all the segment values added together, whereas the lengths of 100% stacked bars always add up to 100%.

·         You are assessing a business that has little competitive advantage. How would you categorize this business by using the Competitive Environment matrix?

Stalemate Business

·         Which of the following is a data visualization tool that illustrates data points at successive intervals of time with each point on the chart corresponding to both a measured time and a quantity?

Time series

·         A Pet Supply Company is comparing four projects to invest in. You have access to the net present value (NPV) for each project, but no other data points. The NPV data for each project is: Project 1= $15,398 Project 2 = $18,426 Project 3 = $25,998 Project 4 = $20,426 . Which project should the company invest in?

Project 3 because it has the highest NPV value

·         Which option is the best example of gender bias?

An audience being more/less attentive to a woman speaker

·         Your company is developing a new software program. Initial costs to develop the software program are very high, but incremental costs for the next copy are low, causing the average unit costs to fall quickly as volume increases. Which of the four categories does your company belong to?

Volume business

·         What is a Gantt chart?

A horizontal bar chart that visually represents tasks scheduled over time

·         Which of the following is an emotional barrier to communication?

Anxiousness

·         You create a time series chart of Retail Sales for three New Zealand regional councils ($1000/Quarter) to analyze any correlating trends or patterns. Which of the following explains why there is a high value every 4th quarter?

It is most likely due to increased customer shopping around the Christmas holiday season.

·         Nike is evaluating its investment in various marketing channels through a Growth Share Matrix, and is trying to decide what to do with the marketing channels in the "question mark" quadrant. According to the following Growth Matrix, what could be the best course of action in handling your marketing investment with Instagram?

Give them some experimental funds to see if they can move from question marks to stars in the matrix.

·         When producing a product, what is the experience curve?

It is a relationship between the experience of producing goods and the efficiency of the production.

·         Your company sells premium, paleo-friendly protein bars in all of the organic grocery stores in Massachusetts, USA. Your brand is an advocate for fighting hunger, and its slogan is, "This bar saves lives." Your bars are placed in front of checkout registers to increase your average purchase amount. This strategy is effective, but a competitor recently also started placing their protein bars at checkout and your sales have dropped gradually over the past quarter. Customer feedback surveys say that they are not able to read the slogan at first glance. Which strategy could have a good chance to differentiate your product?

Redesign the protein bar wrapper to include the company slogan, "This bar saves lives," in large-print lettering. This will draw the consumer's eyes and raise the percentage of purchase triggers.

·         Which type of graph is a two-dimensional data visualization that uses dots plotted along the x and y axis to represent the values obtained for two different variables?

Scatter plot

·         What would you do to demonstrate active listening using Mirroring when dealing with a Customer complaint?

Repeat the complaint back to the customer after listening attentively.

·         As a facilitator of a meeting, what would you do if you observe that one participant is dominating the discussion?

Ask if the quieter attendees have input.

·         What is difference between data and insights?

Data is a raw form of facts, while insights are a processed form of information.

·         An investor buys $1,000 worth of stocks and sells the shares two years later for $1,200. What is his ROI?

20%

·         You are delivering a training program to a group of undergraduate students who you realize are not actively participating in the program. How would you use eye contact effectively to get the students to actively listen to you?

Look at each student in the audience, one person at a time while speaking

·         During a discussion, a superior observes rapid eye blinking in a subordinate. What is the most likely explanation for this?

The subordinate is feeling distressed or uncomfortable with what is being discussed.

·         You schedule a task for three days with the start date being Friday. You need the task completed by Monday, however, the task’s end date is set for Tuesday of the following week. Why did this happen, if you specified the task date to be completed in three days from the start date?

Because by default, only weekdays are taken into account when scheduling a task, and you didn't include weekends in the task duration to have it completed by Monday.

·         You've created a cluster bar graph to show financial data from Profit and Loss statements for years 2014-2019. You can see the relationship between revenue and cost items for each year, however it is difficult for you to compare the trends over time. What can you do to compare the financial data over time?

Turn the cluster chart into a stacked bar chart with a net line and a compound annual growth rate (CAGR) column.

·         What is the function of NPV when considering your business' returns on investment (ROI)?

The NPV method helps you evaluate the profitability of current or proposed investments and projects, and allows you to calculate the expected ROI you'll receive.

·         What is Net Present Value (NPV)?

NPV is the value of projected cash flows, discounted to the present.

·         What factor determines if you should use a bar chart or a histogram to compare different categories of data?

If the data is discrete, use a bar chart over a histogram.

·         You have sales data of your top three sales reps, and need to know how each sales rep´s yearly sales contribute to the total value of sales from the past 5 years combined. How can you effectively display this information

Plot the sales data from the past 5 years on a 100% stacked bar graph, and it will show us each sales rep's percentage breakdown per year.

·         Two firms compete in the water bottle industry, and the same experience curve. Firm B has been in that market for a longer time than Firm A, and therefore its direct costs are lower than A’s. If price equals the direct costs of A, firm B will have profits, while firm A will just survive. What will happen over time if A and B maintain a price level at which firm A can endure?

Direct costs for A will decrease at a higher rate than B, and the longer A stays in the market, the lower the profits for B.

·         When visualizing financial statements, how do waterfall charts help you see how you have arrived at a net value?

By breaking down the cumulative effect of positive and negative contributions

·         What is the difference between learning curves and experience curves?

Learning curves only consider time of labor production (in terms of labour costs), while the experience curve is a broader phenomenon related to the total efficiency of any function (such as manufacturing, marketing, or distribution).

·         You're reviewing the business portfolio of Marks & Spencer, a British retailer. Consider the following elements of the M&S brand: - Lingerie: M&S lingerie is the UK’s market leader with high growth and high market share. - Premium Clothing: Premium-priced range of men’s and women’s clothing, with low market share and low growth. Using the Growth Share Matrix model, how should the M&S brand classify each of these element to evaluate its investments?

Lingerie- star

Premium Clothing- dog

·         An investor bought $1,000 worth of shares in ABC Corp. and sold them for $1,400 two years later. Then the investor bought $5,000 worth of shares in XYZ Corp. and sold them for $7,500 five years later. Which investment yielded a higher annual ROI?

The ABC Corp. investment because it returned a higher annual ROI (20% each year)

·         What are three different ways a company can effectively exploit its internal economies of scale to increase buying power and reduce expenses?

Enter into a consortium

Enter a joint venture

Outsource

·         You're working on a web developing project and must indicate in the Gantt chart that a full debugging of the new site must be completed before commencing its 3-day trial run. What Gantt chart feature should you use to specify the relationships between these two tasks, and indicate when one task should begin in relation to the other?

A "finish-to-start" dependency

·         Firm A and Firm B both sell premium granola bars for $3.75 each. Even though Firm A has been in the market less time than Firm B, it has been able to sustain the same price per product as firm B for the past year, causing its direct costs to decrease at a higher rate than Firm B. Consider the following experience curve. If both firms maintain the same price per granola bar, what business impact can Firm B anticipate, the longer Firm A stays on the market?

The longer Firm A stays in the market, the lower the profits for Firm B.

·         You're analyzing the portfolio of your firm's refrigeration industry with the Growth Share Matrix and need to calculate your relative market share. If your competitor’s market share is 25% and your firm’s brand market share was 10% in the same year, what is your relative market share?

0.4

·         What is the correct definition of Mirroring, in the context of communication and listening?

It is a form of reflecting that involves repeating what was said by the speaker using almost the exact words.

·         You are analyzing the following experience curve comparing data between Company A and Company B. Both companies currently sell a new smart refrigerator for $2,500. Company A has been in the market for 10 years, while Company B has been in the market for more than 25 years, resulting in lower direct costs. What will likely happen to Company A if Company B lowers its price to $2,000 per refrigerator?

This will force Company A to also lower its price to $2,000, incurring losses. Company A may ultimately have to leave the market.

·         Company X must decide between two investment options. It can purchase a piece of factory equipment for $300,000. The equipment would only last three years, but is expected to generate $150,000 of additional annual profit during those years. If the IRR on the equipment purchase is 24.31%, and its other investment options would return about 10% over 5 years, what is the best course of action for Company X?

Company X should purchase the equipment because even though it will only last 3 years, it will generate a 24.31% return for the company.

·         Firm A and Firm B both sell baby bottles for $2.50 each. Firm B has been in the market much longer than Firm A, resulting in lower direct costs. However, Firm A has been able to sustain the same price per product as firm B for the past year. Consider the following experience curve. If both firms maintain the same price per product, what business insight can you deduce from the data?

Direct costs for Firm A will eventually decrease at a higher rate than Firm B, because it has a steeper slope for lower cumulative volumes of production.

·         Which option best describes eye contact?

A form of non-verbal communication; a mechanism of demonstrating active listening; an assertive behavior

·         You are assessing an industry in where there is a little gain from scaling up or further specialization. Currently you are reviewing brands that mimic Cereal Brand A with different brand names. Cereal Brand A is a big name when it comes to cereal but still has plenty of competition from these small brands mimicking them. What is the most likely explanation for this?

These stalemate businesses are able to produce cereals that taste like Cereal A's at lower prices.

·         What is a waterfall chart?

A type of graph that shows how a value changes from one state to another through a series of intermediate changes.

·         What are the four business categories evaluated in the Competitive Environment Matrix?

Stalemate

Volume

Fragmented

Specialized

·         What type of agenda item is created when a decision needs making and the meeting facilitator wishes to obtain input from the meeting participants?

Advisory agenda item

·         There are three significant competitors in the market, with the smallest competitor holding 9% of the market share. What would be the market share of the largest one to satisfy the Rule of Three and Four?

Less than or equal to 36%

·         What Excel chart type allows you to put sets of data in one graph?

Combo

·         What is the difference between a Marimekko chart and a stacked bar graph?

The Marimekko chart shows the relativity among the different stacked categories with increased or decreased width, whereas a stacked bar graph does not show relativity.

·         What type of graph shows the percentage-of-the-whole of each group and is plotted by the percentage of each value to the total amount in each group?

100% stacked bar chart

·         In 2006, four competitors—Avis, Enterprise Holdings, Hertz, and Vanguard Car Rental—had market shares exceeding 10 percent. According to the following exhibit, what does the impact of Hertz’s 2012 acquisition of Dollar Thrifty on the dynamics of the rule of three and four imply?

It caused the market share numbers to align even more closely with the rule.

·         What is the function of the market growth rate when evaluating a business portfolio?

A high market growth rate means higher earnings and sometimes profits. Therefore, business units that operate in rapid growth industries are worth investing in when they're expected to grow market share in the future.

·         What is an area chart?

It is a graph that represents the change in one or more quantities over time, and the area between the x axis and the line is filled in with color or shading.

·         In an area chart, what do the line segments and the axis line indicate?

The magnitude of a change or trend

·         Which actions does a meeting facilitator perform?

Listening and problem solving

·         How do Gantt charts help you provide up-to-the-minute status reports to managers and stakeholders in little-to-no time?

They give you a start-to-finish view of your entire project timeline so you can see how tasks are progressing in real time.

·         You're having a board meeting where you need to present and explain the company's ROI over a period of time, for the following categories of investments: mutual funds, index funds, stocks, and bonds. Which type of graph will communicate the correlation of the data most effectively?

Bubble chart

·         You are overseeing ten employees from different departments that are dispersed throughout the organization. Your subordinates from some of these departments are distressed by their inability to consult you face-to-face quickly when making urgent decisions. What would be the most appropriate solution to this problem?

Place the workstations of all your subordinates in close proximity to you as much as possible.

·         What is the difference between using line charts and bubble charts when displaying data?

A line chart commonly operates on two axes (a numeric axis and a categorical axis), whereas both axes of a bubble chart are numeric, with the size of the bubble indicating the magnitude of the third characteristic of data.

·         What is a Marimekko chart?

A two-dimensional stacked chart used to visualize categorical data where both axes are variables with a percentage scale that determines the width and height of each segment

·         What type of industries involve business with an excellent opportunity to profit from distinguishing itself from its competitors?

Fragmented

·         You need to plot your company's annual profit. What steps can you take to show your company's total profit (or loss) through a waterfall chart?

Plot your various sources of revenue.

Add your sources of revenue.

Deduct all your costs to arrive at the total profit.

·         Your company is considering investing in the following project, but you must first calculate its NPV value. Which of the following is the correct NPV value for this project?

Initial investment: $10,000 , Discount rate: 10% , Year 1: $5,000 , Year 2: $15,000 ,
Year 3: $9,000 , Year 4: $18,000

$25,998

·         You are using Excel to make a side-by-side comparison chart. You have revenue data for different years from Company A and Company B. You want to create a comparison chart. Which one of the following would be the first step?

Set the revenue data of one company to minus.

·         Which of the following is the percentage rate earned on each dollar invested for each period it is invested?

Internal Rate of Return (IRR)

·         You have your company's quarterly sales data for the past five years. What type of graph should you create if you want to show how the sales values have changed over the years?

area chart

·         What is a bubble chart?

A chart that allows the the comparison of three dimensions of data in terms of their relative positions with respect to each numeric axis and their size

·         You create a waterfall chart to display the income statement of your bookstore. It currently has 13 different categories of data and is difficult to read and analyze. What can you do to make your chart easier to understand, read, and digest?

Set your line item accounts as subtotals, so they will behave like checkpoints in the financial statement.

·         What is a non-verbal form of active listening that indicates the listener is present and understanding?

Smiling

·         According to the Rule of Three and Four, what does a ratio of 2 to 1 in market share between any two competitors imply in respect to the value of their shares?

It is the equilibrium point at which it is neither practical nor advantageous for competitors to increase or decrease share value.

·         You are creating a cluster bar graph to show financial data from a Profit and Loss statement, and the data in the data sheet is shown in millions. The range of the data is $11 million to $125 million. How can you change the values of this data to easily visualize it, without altering the underlying data?

Change the scale of data by converting the data from millions to billions.

·         What hypothesis states that a stable competitive market never has more than three significant competitors, and the largest has no more than four times the market share of the smallest?

The Rule of Three and Four

·         You want to compare the the correlation between GDP per capita and life expectancy, and how that has changed over time. You extract and plot data from years 1952, 1980, 2001, and 2018. You decide to add trend lines to highlight the patterns for each year, but find the chart busy and difficult to read. Which of the following describes what is the best way to solve this issue?

You should not have more than 2 trend lines in a scatter plot. Select which two years you want to compare, then add trendlines to clear up the data and make it easier to read.

·         You're reviewing the business portfolio of Marks & Spencer, a British retailer. Consider the following elements of the M&S brand: - Lingerie: M&S lingerie is the UK’s market leader with high growth and high market share. - Premium Clothing: Premium-priced range of men’s and women’s clothing, with low market share and low growth. Using the Growth Share Matrix model, how should the M&S brand classify each of these element to evaluate its investments?

Lingerie- star

Premium Clothing- dog

·         You sell all-natural house cleaning products and are evaluating your investment in various marketing channels for your brand. According to the following growth matrix, what business strategy would best benefit your company if the investment falls in low market share and low market growth quadrant?

Liquidate the investment and discontinue.

·         Acme and Coffee are both volume businesses. It costs each company the same amount to create advertisements and to buy advertisements on television. However, Coffee has approximately double the market share, making its unit costs about half of Acme's. How does this advantage benefit Coffee's business over Acme's?

It gives Coffee the choice of taking the cost advantage or spending twice as much on promotion, allowing them to spread their marketing and brand-building costs over a large number of sales.

·         What is the function of NPV when considering your business' growth?

The NPV method helps you evaluate the profitability of current or proposed investments and projects.

·         An investor bought $1,000 worth of shares in ABC Corp. and sold them for $1,400 2 years later. Then the investor bought $5,000 worth of shares in XYZ Corp. and sold them for $7,500 5 years later. Which investment yielded a higher annual ROI?

The ABC Corp. investment, because it returned a higher annual ROI.