BUS 4950 Test
Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading? Forbid managers and executives from having access to private information. Forbid board members from having access to private information. Work with analysts and customer-facing employees to root out information asymmetry. Create a strict code of ethics and explain that inside traders will be fired.
Create a strict code of ethics and explain that inside traders will be fired.
Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards? He should closely monitor the behavior and performance of new employees to be certain that they have the skills they claimed to have in interviews. Gino must increase hiring and develop influential relationships with government officials so that his firm will be considered "too big to fail." He must create a plan in which government agencies or a consortium of other financial services firms will assume any future debts of the company. Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.
Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.
____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy Embargoes Cartel arrangements Isolating mechanisms Market niches
Isolating mechanisms
_____ are best described as the ethical standards and norms that govern the behavior of individuals within a firm Job descriptions Customs duties Corrective controls Organizational core values
Organizational core values
The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & development expense/Revenue, and Accounting profitability/Revenue. Economic value created/Revenue. Total return to shareholders/Revenue. Selling, general, & administrative expense/Revenue.
Selling, general, & administrative expense/Revenue.
Which of the following is true of the process of organizing for competitive advantage? To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. Strategy formulation and strategy implementation are independent activities. Organizing for competitive advantage is a static and not a dynamic process. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.
To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.
Which of the following is the best characterization of sociocultural forces? a firm's culture, norms, and values a society's culture, norms, and values a competitor's culture, norms, and values a focus group's culture, norms, and values
a society's culture, norms, and values
O'Ryan Plastics maintains a manufacturing plant overseas. The local government has just been overthrown by a military group that opposes foreign influence in the country. According to the SWOT analysis, the political situation in this location is considered to be an a. external opportunity. b. external threat. c. internal strength. d. internal weakness.
b. external threat.
Heirloom Furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is Heirloom applying? mass customization economies of scope learning-curve effect network effect
economies of scope
The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms. managerial grid growth matrix experience curve diminishing utility curve
experience curve
Tina is the inventor of a personal fitness tracking device, and she is in the process of hiring employees after receiving investment funding. When considering how to structure her company, she should emulate the structure of the leading firm in the industry. first establish a strategy and let that be her guide. choose the structure that will give her the most control. ask employees what structure they are most comfortable with.
first establish a strategy and let that be her guide.
Economies of scale are cost advantages that accrue for firms with high fixed costs. low employee turnover. larger output. high capital risks.
larger output.
Both BioThink Inc. and GD Pharma Inc. have discovered similar vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per unit, BioThink sells its vaccine at $90 per unit. This price differentiation has mainly been attributed to the companies' capital decisions. While BioThink used its retained earnings to develop the vaccine, GD Pharma borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays a higher interest on its capital, which makes it necessary to price its vaccine higher. Thus, the key driver for BioThink's competitive advantage is low-cost input factors. economies of scale. superior customer service. availability of complements.
low-cost input factors.
Which of the following motivations for business growth involves principal-agent problems? increasing profits increasing market power reducing risk motivating managers
motivating managers
The competitive advantage that one firm has will be short-lived in an industry in which resource immobility is high. perfect competition exists. resource heterogeneity is high. capabilities of a firm are not easily replicate.
perfect competition exists.
Jen works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store? flat structure tall structure centralized structure decentralize structure
tall structure
Which of the following is the source of the principal-agent problem in publicly traded companies? the law of legal personality the separation of ownership and control limited liability for investors transferability of investor ownership
the separation of ownership and control
When does a merger between companies typically occur? when two firms of comparable size join to form a combined entity when large, incumbent firms buy start-up companies when a target firm does not want to be acquired when two or more firms enter a temporary vertical strategic alliance
when two firms of comparable size join to form a combined entity
Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats? a. It produced the highest-quality headphones. b.It created a perception that owning its products was cool. c. It emphasized marketing over core competency. d. It focused on sponsoring future athletic superstars
.b.It created a perception that owning its products was cool.
American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien's concern? Require business units at American Snacks and Très Bien to sign loyalty pledges. Encourage business units at American Snacks to act independently. Arrange for the alliance to be managed at the corporate level. Sever the relationship with Très Bien and find a more trusting corporate partner.
Arrange for the alliance to be managed at the corporate level.
Which of the following provides an example of a common drawback of a functional strategy? Bert had a difficult time communicating efficiently with the manager of another department. Marietta was surprised about the inflexibility of her firm when it rejected her marketing plan. Juan's manager dismissed his idea because it was too innovative. Mary did not accept the position with the firm because it has an ineffective cost-leadership strategy.
Bert had a difficult time communicating efficiently with the manager of another department.
Which of the following best explains why Disney showed superior post-merger integration capabilities? Disney pursued a combination of horizontal and vertical integration through its acquisitions. Disney did a thorough job in eliminating principal-agent problems in the firms it acquired. Disney managed its new subsidiaries more like alliances rather than attempting full integration. Disney used a corporate strategy based on a build-borrow-or-buy framework for its acquisitions.
Disney managed its new subsidiaries more like alliances rather than attempting full integration.
_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it. Economic value created Break-even point Consumer surplus Cost of capital
Economic value created
Judging from the Disney-Pixar merger, which of these is an effective way to create shareholder value from a merger? Integrate the acquired company as fully as possible, merging staffs and locations, so that all employees have as similar an on-the-job experience as possible. If the acquired company creates high-quality products or services, don't force it to mirror the management style of the acquiring company. Cut prices at the acquired company but not the acquiring company so that the acquisition covers all consumer price points. Raise consumer prices at the acquiring company and the acquired company to reflect the fact that the market is now less competitive.
If the acquired company creates high-quality products or services, don't force it to mirror the management style of the acquiring company.
Angie owns and runs Archana, a private start-up company with a current value of $1.3 billion. Archana is interested in going public to fund future growth. Which action should Angie take before Archana's initial public offering? Angie should come up with a business plan for what Archana will do once it is no longer publicly traded. She and senior managers should write down their code of ethics. Angie should not embark on an IPO until Archana's value is higher. She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
Years ago, the travel industry was controlled by a few large travel companies that booked holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of the internet, smaller travel agencies started mushrooming in the industry and customers started making their own reservations. Which of the following can be inferred from this information? a. The travel industry changed from a consolidated structure to a fragmented one. b. The pricing power of the incumbent firms in the travel industry has increased. c. The bargaining power of buyers in the travel industry has decreased. d. The structure of the travel industry changed from monopolistic competition to an oligopolistic one.
a. The travel industry changed from a consolidated structure to a fragmented one.
In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because a. entering the aircraft manufacturing industry requires huge capital investments. b. there is expected to be a huge return on investment within this industry. c. there is no credible threat of retaliation from the incumbents. d. entering the aircraft manufacturing industry means violating government policies.
a. entering the aircraft manufacturing industry requires huge capital investments.
During strategy implementation, managers primarily focus on deciding the a. type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice. b. industries and markets the firm should compete in to be able to gain and sustain a competitive advantage. c. a relationship between competitive advantage and firm performance. d. role strategic leaders should play in gaining and sustaining a competitive advantage.
a. type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice.
Fuller Apparel's core value statement reads we will ensure our clothing is made with the highest respect toward human rights and environmental protection. Which of the following actions exemplifies how Fuller's core values drive its strategic decision making a.demanding that textile suppliers pay livable wages and maintain safe production facilities b.introducing an online customer service unit to keep customers happy c. investing in more efficient machinery to reduce costs and lower prices for consumers d. purchasing a full-page advertisement in a major newspaper touting the company's values
a.demanding that textile suppliers pay livable wages and maintain safe production facilities
In 2008, BlackBerry's market cap peaked at $75 billion. By 2017 this valuation had fallen more than 90 percent, to $3.9 billion. BlackBerry fell victim to two important PESTEL factors in its external environment: sociocultural and technological. How did technology contribute to BlackBerry's decline? a. BlackBerry failed to offer strong security features for its device. b. BlackBerry failed to change its device into one that could perform multiple tasks effectively. c. BlackBerry failed to adapt to a groundswell that involved workers bringing mobile devices to work. d. BlackBerry failed to produce an efficient emailing system using a keyboard.
b. BlackBerry failed to change its device into one that could perform multiple tasks effectively.
Marina manages the supply chain for a company that sells diamond watches. She learns that economists are predicting a moderate to severe recession in the next six to eight months. Based on that information, what action should Marina recommend to the company's owner a. Increase supply. During recessions, businesses that focus on low-cost solutions make significant profits. b. Reduce supply. Customers generally reduce their purchases of luxury items when the economy falters. c. Maintain the supply at its current rate. Economic forecasts are rarely accurate. d. Wait six months and see what happens. Recessions rarely affect consumer spending.
b. Reduce supply. Customers generally reduce their purchases of luxury items when the economy falters.
Which of the following applies to the Strength-Threats quadrant of the SWOT matrix a. The local fast-food chain Easy Hot Dogs expanded its limited menu to maintain its advantage against stiff competition. b. The local fast-food chain Easy Hot Dogs added a salad bar to maintain its competitive advantage against stiff competition. c. The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition. d. The local fast-food chain Easy Hot Dogs revised its image of being a cheap-food place to being a wholesome family place to maintain its competitive advantage against stiff competition.
b. The local fast-food chain Easy Hot Dogs added a salad bar to maintain its competitive advantage against stiff competition.
Backyard BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage? lowering the quality of ingredients below what customers expect to control costs eliminating brick-and-mortar locations and offering delivery from a central kitchen raising prices without improving on the quality of food marketing itself as a high-end restaurant and competing with more refined restaurants in the area
b. eliminating brick-and-mortar locations and offering delivery from a central kitchen
Elena is the CEO of Geode Technologies, a consumer electronics manufacturer. Last year, Geode's return on invested capital (ROIC) was 11.6 percent, while Geode's closest competitor, NorthWest Tech, had an ROIC of 17 percent. Which of the following factors might Elena use to convince investors to invest in Geode rather than NorthWest Tech? a. Geode had a Research & development (R&D) expense / Revenue ratio of 16 percent, while NorthWest Tech had an R&D / Revenue ratio of 12 percent. b. Geode's working capital to revenue ratio was 75 percent, while NorthWest Tech's was 68 percent. c. Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent. d. Geode's plant, property, and equipment (PPE) over revenue ratio was 19 percent, while NorthWest Tech's was 10 percent.
c. Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent.
Both Saturn Technologies and Granite Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Saturn Technologies charges a higher price than Granite Inc. does, but it still sells a higher number of phones. What does this imply? a. Saturn Technologies and Granite have achieved a competitive parity. b. Granite Inc. has a competitive advantage over Saturn Technologies. c. Saturn Technologies creates more economic value than Granite Inc. does. d. Granite Inc. is not charging enough for its product.
c. Saturn Technologies creates more economic value than Granite Inc. does.
Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking? a. No firm would face direct competition from others in the industry; hence, profit potential would be high. b.Each firm would be catering to a different customer segment. c. The firms would eventually have no resources to invest in product and process improvements. d. Each firm would be in a better position to gain a competitive advantage
c. The firms would eventually have no resources to invest in product and process improvements.
True Help is a nonprofit organization that works toward rehabilitating the homeless. The credo of the organization is "help us help you." For an organization like True Help, which of the following statements would make an appropriate mission a. Help us help you find a home. b. One day, everyone in this nation will have a home to protect themselves. c. We help the homeless gain and sustain financial independence by providing employment opportunities. d. Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders benefit.
c. We help the homeless gain and sustain financial independence by providing employment opportunities.
Airbase is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Airbase should ideally compare its strategic position with a. a company that sells small kitchen appliances at affordable prices. b. a consumer electronics company that sells high-end devices. c. a consumer electronics company popular among price-conscious customers. d. an online company that sells customized electronics accessories.
c. a consumer electronics company popular among price-conscious customers.
A positive relationship between vision statements and firm performance is more likely to exist when a. visions are product-oriented. b.internal stakeholders are isolated from defining and revising the visions. c. organizational structures are aligned with the firm's vision statement. d. vision statements are equivalent to listening to the customers.
c. organizational structures are aligned with the firm's vision statement.
Which of the following competitively important assets is typically excluded from a firm's balance sheet? land and building accounts payable patents customer experience
customer experience
Riya has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Riya owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Riya has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Riya's business? a. the investments made by Riya on the restaurant's interior b. the type of kitchen equipment widely used in her industry c. the restaurant's late entry into the market d. the building owned by Riya, which reduces cost of operations
d. the building owned by Riya, which reduces cost of operations
Mondo Tacos, a fast food restaurant, operates through a business model in which individuals can buy the rights to set up Mondo Taco stores and sell the company's food in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to offer a menu approved by the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate? crowdsourcing credit rationing franchising bootstrapping
franchising
Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation. have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events. do not focus enough on increasing firm profits, thereby contributing to low value creation. have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events.
have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.
Fleet Foot Shoes has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver? economies of scale low-cost input factors product features premium prices
product features
PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in strategic outsourcing. lean manufacturing. product-market diversification. process diversification.
product-market diversification.
Polygon sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Polygon implementing? subscription-based razor-razor-blade pay-as-you-go direct sales
razor-razor-blade
Elegance Inc. is a large cosmetics company that made an initial small investment in a start-up company, Peace Planet, which was developing an organic face lotion. This gave Elegance controlling interests in the start-up company. However, Peace Planet soon began to have financial difficulties because of principal-agent problems. As a result, Elegance did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a break-even analysis. partial joint venture. credible commitment. real-options perspective.
real-options perspective.
When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources, it can be concluded that the firm is using related-constrained diversification. related-linked diversification. strategic outsourcing. offshore outsourcing.
related-constrained diversification.
WJ Group Inc., a large multinational conglomerate, had begun to experience declining revenues over the years. The top management at the headquarters of the company decided that it was important for the company to avoid deviating from its core competencies. Thus, a few of the company's key businesses like energy, telecommunications, and automobiles were centralized, giving the top management more control over them. Also, relatively newer businesses like beverages and food processing were divested. In this scenario, WJ Group is involved in reverse engineering. benchmarking. restructuring. crowdsourcing.
restructuring.
While working a night job at a call center, Eric creates an app called EatOut, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on EatOut. He creates a start-up called BestApps and hires three people to help him improve EatOut and maintain the servers that run it. In this scenario, BestApps most likely has a _____ structure. simple matrix mechanistic functional
simple
