CS Interview Questions and Answers

1 :: Explain Is there any difference between corporate profit maximization and maximization of shareholder wealth?

Sure, profit maximization relates to profits *only* while shareholder wealth also involves total company equity, debt ratios and any of 15 other financial performance measure ratios. Management could focus on profit maximization over a longer period of time, say, 40 years (Toyota), while the shareholder would rather see stock values and corporate total value increase immediately (get in and get out) (90% of American manufacturers). If management focused on short-term profit maximization, say at the expense of long-term sales revenues, then shareholder wealth (stock price) could actually decrease because of the loss of market share.

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2 :: Explain What still matters in strategic management lies in the value of planning?

There is an old saying that if you fail to plan, you are planning to fail. By acting on this, strategic management actually gives the organization direction, a sense of identity and unity towards what the business goal. Therein lays the continued importance of strategic management towards business success.

Every business has a vision and a mission. Strategic management takes into consideration both of these. Strategic management helps in achieving the organizational goals in an effective and efficient manner. For more details on importance of management, you can see the "Importance of Management" section on

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3 :: Explain What are the various uses for break-even analysis?

Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) and to explore the relationship between volume, costs, and profits. It helps the management that at current costs of products how many numbers of units must be sold to recover the cost of producing the product.

For Example: If you spend, $200 on producing a product and selling price is $20 then you must sale 10 units to recover the cost of product.

It also helps the management to determine how much of units to be sold to get desired profit on product. For example: if in the above example you want to earn $20 profit then add it to it's cost of $200 and it will become $220 now you need to earn profit of this $20 you need to sale 11 items of product.

As the word break even analysis is defined as the equilibrium point at where supply and demand intersect each other and at that price we fix our price and that point is also known as break even point. and with the help from that we can exactly fix the cost.

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4 :: Explain What can you do about tourists use of natural resources?

Countries have to legislate so that new tourist developments satisfy environmental safeguards. All development must be sustainable.

1) There must be no pollution into waterways and oceans.

2) Garbage and sewage must be collected and recycled as much as possible.

3) Tourist movements into natural areas must be limited so the numbers do not do any damage to the environment.

4) Building must blend into the natural environment.

5) There must be legal deforestation (e.g., cutting down rainforests to build a golf course).

6) New resorts and gardens must not put too great a demand on water and other natural resources.

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5 :: What is the theory of mercantilism?

Mercantilism was the economic philosophy underlying English colonial policy. The object of mercantilism was to increase the wealth of the Mother County (Great Britain) in gold and silver. To accomplish that goal, a favorable balance of trade was desired. That means that a nation would sell more than it would purchase, thus creating a surplus in the treasury. The name of the philosophy points out the importance is of merchants in this policy. Merchants would sell products to foreign nations and purchased items to be sold within the nation. Colonies played a vital role in mercantilism. A colony would supply the necessary raw materials to the industries of England and the colonists would be a source of income to the nation because they would buy the finished products and supplies they needed to grow, from the Mother Country. The ideal was to become self-sufficient. The nation would produce everything its people needed and buy nothing from foreign nations. Since the ideal could not be accomplished in the real world of economics, the object of mercantilism was to minimize imports that cost money and maximize exports and the trade that brought money in to the nation.

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