chapter 10
Which of the following are important factors in determining the intensity of rivalry among existing competitors?Â
Competitive industry structure,Industry growth,Exit barriers
Which of the following pressures opposes local responsiveness on the integration-responsiveness framework?Â
Cost reductions
Which of the following are questions that managers are likely to ask when beginning the strategic management process?
How can we achieve our goals?,What are our values?,What do we ultimately hope to achieve?
Which of the following are distinctive features of globalization 3.0? (Check all that apply.)
MNEs reorganize into a more seamless global enterprise.,Technology helps reduce communication distances.,Firms create global networks of local expertise.
Which statement about supplier power in the airline industry is true?
Supplier power is strong.
Which of the following are ways in which the power of buyers affects producers? (Check all that apply.)
by requesting more service,by demanding higher quality,by obtaining price discounts
What do stakeholders want above all else?
fair treatment
Incentives that are too high-powered, such as an outsized bonus, may cause individuals to ______.
focus too much attention on the incentive and not enough on strategic activities
Which of the following contribute to consumer buying power?
low switching costs,real time, accurate price comparisons
The online auction site eBay has more than 100 million active users, so buyers are more likely to find what they are looking for while sellers are more likely to find buyers for the items they are offering. This is an example of __.
network effects
What are three options used by executives to drive firm growth? (Check all that apply.)
organic growth,alliances,acquisitions
What are the phases of alliance management? (Check all that apply.)
post-formation alliance management,partner selection and alliance formation,alliance design and governance
What type of vision statement focuses on the good or service provided?
product-oriented
What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?
the brain's default mode
The belief that the importance of location is diminishing as an explanation of firm-level competitive advantage is called _____.
the death-of-distance hypothesis
Which theory suggests that location is diminishing in importance to firms since most inputs can be sourced globally?
the death-of-distance hypothesis
An executive can legally earn a significant profit from stock options if ______.
the firm performs well and the actual price per share exceeds the negotiated strike price
Horizontal integration can reduce ______.
the threat of entry
Foreign direct investments are investments in ______.
value chain activities abroad
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision
What does the Frappuccino story illustrate about the strategic management process?
Emergent strategies can be very successful.
When a new firm enters an industry, which of the following often occur? (Check all that apply.)
Industry profit potential declines.,Incumbent firms spend more to satisfy customers.,Incumbent firms lower prices.
Which of the following statements about scenario planning is true?
It starts with a top-down approach.
True or false: Multinational enterprises are the driving force behind globalization.
TRUE
How can horizontal integration increase product differentiation?
by filling the empty spaces in a firm's offerings
A statement of guiding principles that typically provides very specific ethical considerations is a(n) ______.
core values statement
The cultural disparity between the internationally expanding firm's home country and its targeted host country is known as ______.
cultural distance
On average, mergers and acquisitions ______ shareholder value.
destroy
A perfectly competitive industry has ______ entry barriers and ______ small firms.
low; many
The expected competitive intensity is stronger when the other four forces are ______, and weaker when the other four forces are ______.
stronger; weaker
In the late 2010s, a trade war between which two countries threatened to upend decades of globalization and international trade?
the United States and China
Upper-echelons theory views organizational outcomes as a reflection of the values of the ______.
top management team
Which of the following are addressed during corporate strategy formulation?
which geographic location to compete in,which industry to compete in,which market to compete in
What is a major problem for between 30% and 70% of all strategic alliances?
At least one partner in the alliance considers the venture to be a failure.
What are the components of post-formation alliance management? (Check all that apply.)
Establish knowledge-sharing routines.,Build inter-firm trust.,Make relation-specific investments.
Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.)
Fortuitous timing that led to growing demand,Ensuring a smooth transaction between hosts and guests,Presenting a well-designed website
The ideas of corporate social responsibility and stakeholder strategy are particularly prevalent in ______.
Germany
Which statement best describes the cognitive bias known as reason by analogy?
Individuals use simple examples to explain complex problems, even though the ideas in question may be very different from each other.
Which of the following is true of tacit knowledge?
It can only be acquired through actively participating in the process.
Which of the following statements is likely to be true about a fragmented industry?
It consists of small firms.
Which of the following are benefits of a transnational strategy? (Check all that apply.)
It promotes global learning and the diffusion of best practices and innovations.,It harnesses economies of scale.
Which of the following is a disadvantage of a joint venture?
Knowledge shared with the new partner could be misappropriated by opportunistic behavior.
Which of the following reduces profit margins for air carriers?
Large corporate customers contracting with the U.S. airline industry
According to ______, consumer needs and preferences throughout the world are converging and becoming increasingly homogeneous.
Levitt's globalization hypothesis
True or false: Because the size of organizations is typically positively correlated with prestige, power, and pay, principal-agent problems might be a reason to pursue M&As.
TRUE
True or false: Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.
TRUE
Which of the following statements about industry dynamics is true?
The five forces model is a static model.,Over time, industry structures are not stable.
Which of the following statements about stock options is true?
The recipient is given the right to purchase stock at a predetermined price sometime in the future.
Which of the following factors help define the administrative and political distance between two countries? (Check all that apply.)
The strength of legal or financial institutions,The absence or presence of political hostilities,The absence or presence of shared monetary associations
What is a true statement about strategic alliances?
They have a high failure rate.
The shared value creation framework is a tool intended to help businesses ______.
benefit all stakeholders, not just shareholders
In a public stock company, the centerpiece of corporate governance is the ______.
board of directors
In general, if a resource is highly tradable, then it should be ______ using a license or contractual agreement.
borrowed
Firms have a tendency to change the industry structure in their favor, for example by making industries more __ through mergers and acquisitions.
consolidated
Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.)
cost structure,product and service offerings,expenditures on research and development
In order to reconcile economic and social needs within the shared value creation network, managers need to focus on ______. (Check all that apply.)
creating new regional clusters and business centers,making products affordable for the poorest socioeconomic groups in order to improve standards of living,expanding value chains to include NGOs and other organizations committed to social goals
A company is a complementor to your company if ______.
customers value your product more when they can use it with the other company's product
Which of the following factors helped make Germany, which was a tough environment for a car company, conducive to successful car companies?
demanding customers,fierce domestic competition,no-speed-limit autobahn
When facing an ethical dilemma, a manager should ______. (Check all that apply.)
determine whether he or she could comfortably defend the action to the public,consider whether the action in question conforms to the firm's code of conduct and industry practices
Cost advantages that accrue for firms with larger output because they can spread fixed costs over more units and can employ technology more efficiently are called ______.
economies of scale
Companies from wealthy countries benefit from cross-border trade with other wealthy countries when their competitive advantage is based on which of the following factors?
economies of scale,standardization,economies of experience
According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n) ______.
effective leader
Obstacles that determine how easily a firm can enter an industry, are called ______.
entry barriers
A partnership in which at least one partner takes partial ownership in the other is a(n) ______.
equity alliance
Which of the following have been found to be ethical norms in business? (Check all that apply.)
fairness,reciprocity,honesty
Which of the following are critical aspects of maintaining good relationships between a firm and its stakeholders?
fairness,transparency
During globalization 1.0 all important business functions were located in the home country, whereas during globalization 2.0 multinationals began to copy themselves _______.
in a few key countries
An industry analysis provides which of the following? (Check all that apply.)
insight into a firm's strategic position within an industry,the level of profitability that can be expected for the average firm in the industry,a rigorous way of identifying the industry's profit potential
Rising wages and other costs are likely to negate any benefits MNEs have of access to ______.
low-cost inputs
A company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries is a ______.
multinational enterprise
Despite a growing belief in the death-of-distance hypothesis, there remains evidence that certain countries remain leaders in specific industries and maintain a kind of ______ advantage.
national competitive
Gunther is transferred from the United States to Hong Kong for work. He notices that his colleagues at the new office, most of whom are Hong Kong natives, behave and communicate in a similar manner that is a striking contrast to what Gunther is accustomed to. Gunther is observing his colleagues' ______.
national culture
Global events in the 2000s and 2010s contributed to a rise of ______ political policies in the United States and Europe which could significantly alter the global trade landscape in coming years.
nationalist
A ______ occurs when a firm has accrued significant market power and is changing the industry structure in its favor.
near monopoly
There is a(n) ______ relationship between competitive intensity and the power of the five forces.
strong
A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to ______. (Check all that apply.)
take advantage of economies of scale,take advantage of location economies
Which of the following risks do companies face when expanding internationally? (Check all that apply.)
the liability of foreignness,loss of reputation,loss of intellectual property
The fact that tax preparation software such as Intuit's TurboTax is a valid alternative for professional services offered by H&R Block and others, is an example of ______.
the threat of substitutes
According to upper-echelons theory, the way strategic leaders of a firm interpret a situation is influenced by which of the following?
the values and experiences of the firm's leaders
A(n) ______ strategy focuses on integration at the business level by attempting to reconcile product differentiations at low cost.
transnational
Under the shared value creation framework, which of the following strategic actions would fail to connect economic and societal needs?
Focusing exclusively on maximizing returns for shareholders.
In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming?
It does not help us understand why there are performance differences among firms in the same strategic group.
In what way does the strategic alliance between GM and Lyft allow GM to hedge against uncertainty?
It gives GM access to the market of the future, in which traditional private car ownership no longer exists.
Strategy scholars believe that firms should create a dedicated alliance function with which of the following features? (Check all that apply.)
It should have its own resources and support staff.,It should be led by a vice president or director of alliance management.
______ describe(s) random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives.
Serendipity
True or false: Smart strategic leaders devise ways to make sure that their employees feel invested in the firm's vision.
TRUE
Which of the following statements about equity alliances is true?
They require larger investments than non-equity alliances.
What allows firms to manage both strategic alliances and mergers and acquisitions?
a relational capability
A key feature of an oligopoly is that the competing firms in the industry ______, meaning the actions of any one firm will influence the behaviors of the other firms.
are interdependent
At which level of the corporation should strategic alliances and mergers and acquisitions be managed?
at the corporate level
Firms can achieve increased competitive advantage as a result of ______, which are firms that produce a good or service that increases the perceived value of a focal firm's offering when the two are combined.
complementors
Optics Incorporated, a publicly traded eyewear business, places profits ahead of all other performance metrics. This practice ______. (Check all that apply.)
conforms to the traditional notion of shareholder capitalism,fails to take into account the idea of corporate social responsibility
When Walmart posted a list of banned suppliers on its website, this was an example of ______.
corporate social responsibility
When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) ______ investment.
corporate venture capital
At a basic level, the concept of \liability of foreignness\" refers to the additional ______."
cost of doing business in an unfamiliar cultural and economic environment
A firm has a core competency in R&D but little else, so it enters into a strategic alliance with a larger firm to gain distribution channels and marketing expertise. In this case, distribution channels and marketing expertise would be examples of ______.
critical complementary assets
Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.)
distribution channels,research and development,customer service,market segments
The idea of corporate social responsibility (CSR) suggests that a firm's obligations should ______.
exceed the traditional imperative to increase profits
Which of the following are important components of fostering ethical behavior in employees?
executive behavior that is in sync with the organization's vision and values,strategic goals that are achievable with legal means,board members setting clear ethical expectations
Porter's diamond framework to explain national competitive advantage includes four interrelated factors: demand conditions, competitive intensity in a focal industry, related and supporting industries/complementors, and ______.
factor conditions
Economist Michael Porter and many others argue that the value of public stock companies is too narrowly defined in terms of ______, leading to scandals and economic crises.
financial performance
Which of the following help determine competitive industry structure? (Check all that apply.)
firms' degree of pricing power,height of entry barriers,size and number of competitors
The process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs, is known as ______.
globalization
Chao's Coffee is a large chain of coffee shops. It wants to join with Rigoberto Roasters, a large coffee roasting company. Rigoberto Roasters wants to stay independent, but Chao's is able to purchase Rigoberto. This describes a(n) ______.
hostile takeover
Under agency theory, a manager should seek to align ______ between principals and agents to minimize opportunism.
incentives
Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs? (Check all that apply.)
increased potential for legal repercussions,reduced flexibility
Which of the following occurs when agents are better informed than principals?
information asymmetry
Sources of COSTS in a horizontal integration strategy are ______.
integration failure,reduced flexibility
A(n) _____ strategy is the outcome of a rational and structured, top-down strategic plan.
intended
As strategic commitments increase, rivalry within an industry ______.
intensifies
What are the four quadrants of the integration-responsiveness framework? (Check all that apply.)
international strategy,multidomestic strategy,transnational strategy,global standardization strategy
In regard to the public stock company, limited liability means that ______.
investors are not responsible for any debts incurred by the company and are only at risk of losing the invested capital
A fiduciary responsibility is a(n) ______.
legal duty to act in another party's interests
One notable advantage of a multidomestic strategy is ______.
lower exchange-rate exposure
In the five forces model, threat of entry refers to the risk that ______.
potential competitors will enter a given industry
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.
powerful
Corporate governance addresses the ______ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interests in mind.
principal-agent
When a country's demand conditions include high-density urban living and high energy costs, consumers can be expected to prefer air conditioners that are which of the following? (Check all that apply.)
quiet,small,energy-efficient
When pursuing an international strategy, a company ______.
sells the same product in both domestic and foreign markets
The interests of inside directors on the board of directors typically align with those of ______.
senior management
The threat of entry is high when capital requirements are in comparison to the expected returns.
small
All other things equal, the greater the cultural distance, ______.
the greater the liability of foreignness
When a company has difficulty coordinating operations across geographic distance and between distinct culture environments, it experiences ______.
the liability of foreignness
Why might a firm create a joint venture when entering a new geographic market?
to access local expertise ,to adhere to local law,to access local contacts
Which of the following are reasons to pursue horizontal integration as a corporate strategy?
to provide such benefits as complementary products in their offering,to enhance their economic value creation,to lower costs
What are the four characteristics of a public stock company that make it an attractive corporate form? (Check all that apply.)
transferability of investor interests,separation of ownership and control,legal personality,limited liability for investors
If an MNE wishes to be responsive to the needs of its local consumers but also wants to attain a lowest-cost position, it should follow a(n) ______ strategy.
transnational
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
Corporate strategy concerns questions related to ______.
where to compete
True or false: U.S. MNEs have a disproportionately positive impact on the U.S. economy.
TRUE
What are three advantages of equity alliances? (Check all that apply.)
a window into new technology (option value),stronger ties,possible emergence of trust and commitment
Which of the following terms is used to describe cooperation by competitors?
co-opetition
True or false: Though low-skilled laborers make much less in developing countries, no such difference in wages exists for high-skilled workers.
FALSE
Which of the following statements about Airbnb is correct?
It handles more accommodations than the three biggest hotel chains combined.
How well the firms in an alliance fit together culturally is referred to as partner ______.
compatibility
Knowledge that can be codified is also called ______ knowledge.
explicit
A country's natural, human, and other resources can be expressed in terms of ______.
factor conditions
What should a successful vision do for an organization? (Check all that apply.)
It should make employees feel that their work is important.,It should inspire employees.
What are common reasons a firm might pursue a merger?
The desire to overcome competitive disadvantage.,Principalâ€"agent problems.,Superior acquisition and integration capability.
What is strategic leadership?
The use of influence and power by executives to direct the activities of individuals while pursuing an organization's goals
The ratio of CEO to average employee pay in the United States is about ______.
300 to 1
Why do airline suppliers, such as Boeing and Airbus, have so much power?
There are no readily available substitutes for commercial airlines.,Switching costs related to changing suppliers are high.,Their industry is more concentrated than the industry they supply.
What are some advantages of strategic alliances? (Select all that apply.)
They help firms achieve goals faster than they would alone.,They might give companies a competitive advantage.
In a global-standardization strategy, the main competitive element is ______.
reduced cost
The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of .
scale
Which of the following is a federal regulatory agency whose task it is to oversee stock trading and enforce federal securities laws?
Securities and Exchange Commission
True or false: The shared value creation framework aims to reconcile the concept of gaining and sustaining a competitive advantage with corporate social responsibility.
TRUE
The relationship between the natural environment and business organizations can best be described as ______.
interdependent
Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.)
interest rates,growth rates,price stability
Which of the following are examples of commonly encountered capital requirements? (Check all that apply.)
managing a production process,setting up production facilities,paying for start-up losses
During the first stage of globalization, business functions that took place abroad were limited to which of the following? (Check all that apply.)
sales,distribution
Why do incumbent companies enter into strategic alliances with startups?
to hedge against uncertainty
True or false: The benefits of local responsiveness always outweigh the costs.
FALSE
True or false: Emergent strategy is planned.
FALSE
Match the type of alliance (on the left) with its definition (on the right).
partnership based on contracts between firms,partnership in which at least one partner takes partial ownership in the other,standalone organization created and owned by two or more parent companies
Which type of knowledge cannot be codified and can only be gained through active participation in the task?
tacit knowledge
The positive effect that one user of a product or service has on the value of that product or service for other users is known as the ___.
network effect
One reason why a firm might enter into a strategic alliance is to _____.
hedge against uncertainty
Which approach to strategic decision making takes a larger investment decision and divides it into multiple smaller decisions that happen over time?
a real-options perspective
When an MNE does not face strong pressure for cost reductions or local responsiveness, an international strategy is typically ______.
advantageous
Which bodies regulate mergers and acquisitions?
European Commission ,Federal Trade Commission
Which one of the following is a capability a Level-3 leader typically exhibits?
Does things right.
Which country has become a hub for MNEs seeking to outsource business processes such as IT and customer service due to an abundance of highly educated but low-cost labor?
India
What is the result of low barriers to entry in the airline industry?
New airlines join the market from time to time.
The benefits of competing on a global scale exist ______.
for an increasing number of firms
In 2010 Kraft Foods bought UK-based Cadbury PLC in a hostile takeover. Kraft felt that a ______ with Cadbury would help Kraft break into emerging countries because of the strong position Cadbury had in India, Egypt, Thailand. and other countries.
horizontal integration
When two competitors merge, leading to industry consolidation, they are engaging in ______.
horizontal integration
With a multidomestic strategy, products are manufactured on a local level. This has the potential of ______.
increasing the risk of intellectual property appropriation
Managers who act upon secret company information for personal gain, such as by trading stocks based on the knowledge of future initiatives, are guilty of ______.
insider trading
The economic recession that began in 2008 in the United States was the result of unwise investment in ______.
real estate
What cognitive bias is in play when individuals draw conclusions based on very small samples or a single anecdote, thus violating the law of large numbers?
representativeness
Which term refers to a company's ability to handle the three specific tasks related to an alliance concurrently and effectively?
alliance management capability
Eli Lilly, a company known for its alliance management, manages its alliances using a three-person team consisting of which of the following? (Check all that apply.)
an alliance leader,an alliance manager,an alliance champion
Global warming would be an example of ___ factor in a firm's external environment.
an ecological
The partners in non-equity alliances can have weak ties because such alliances are often ______ in nature, which can cause lack of trust and commitment.
temporary
What is the main goal of corporate venture capital investments?
to create real options in terms of gaining access to new technologies
Which of the following are common reasons for companies to make foreign direct investments? (Check all that apply.)
to reduce tax burdens,to avoid import restrictions,to reduce labor costs
The integration-responsiveness framework suggests that companies facing high pressure for both local responsiveness and cost reduction should follow a(n) ______ strategy.
transnational
The extent to which members of a society feel anxious when faced with an unknown situation is known as ______.
uncertainty avoidance
Private start-up companies valued at over $1 billion, such as some of those in the tech sector, are called ______.
unicorns
If parts of a firm's intended strategy fall by the wayside, it is referred to as
unrealized strategy.
According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education.
upper-echelons theory
Why is employee involvement crucial when developing an inspiring vision and mission? (Check all that apply.)
Because belief in the vision and mission statements motivates employees.,Because employees may develop helpful strategic initiatives.
Which country experienced rapid economic growth in the early 21st century and now challenges the United States for global economic supremacy?
China
What are the factors in Michael Porter's model of national competitiveness? (Check all that apply.)
Demand conditions,Competitive intensity in a focal industry,Factors conditions,Related industries/complementors
Which of the following are characteristics of a perfectly competitive industry? (Check all that apply.)
Firms in the industry sell a commodity product.,The industry is fragmented.,Individual firms have little or no ability to raise prices.
What is an important aspect of alliance success?
Inter-organizational trust
How does Lyft benefit from its strategic alliances with GM and Waymo?
It allows Lyft to more effectively compete against Uber.
Which of the following statements about pursuing international expansion is true?
It can enhance a firm's competitive advantage.
Which of the following are true of alliance management capability? (Select all that apply.)
It involves partner selection and alliance formation.,A firm may need to employ it with several different alliances.
Which of the following statements about the CAGE distance framework is true?
It is designed to aid MNEs in deciding where to compete in the world.
Which of the following best defines national competitive advantage?
It is the extent to which a country can compete in international markets.
Though many benefits exist, which of the following are among the drawbacks of a transnational strategy? (Check all that apply.)
It requires implementing a complex organizational structure.,It's difficult to implement.
Which level of strategic leader presents a convincing vision and mission that helps groups improve their performance?
Level 4
Under Globalization 3.0, MNEs freely locate business functions anywhere in the world based on an optimal mix of which factors? (Check all that apply.)
PESTEL factors,capabilities,costs
Peter's Pans makes cast-iron cookware. It decides to acquire another similar-sized cast-iron cookware company in the hope that its larger size will enable it to snag some market share away from Iron Maiden, the industry leader. What is Peter's Pans strategy?
Peter's Pans is trying to overcome competitive disadvantage.
Which of the following are approaches for answering the question \How to enter?\" when a firm is considering entering an industry? (Check all that apply.)"
Reconfiguring value chains,Establishing a niche,Leverage existing assets
What are true statements about mergers and acquisitions?
Some firms are able to successfully complete mergers and acquisitions.,There is an unequal distribution of acquisition and integration capabilities across firms.
Which of the following are characteristics of the companies in a strategic group? (Check all that apply.)
The companies pursue similar strategies.,The companies differ in important dimensions from companies in other strategic groups.,The companies form part of a specific industry.
What conclusions can be reached about the airline industry using the five forces framework?
The supporting players, such as airports and aircraft suppliers, are quite profitable.,The mega-airlines must constantly struggle to achieve consistent profitability.
What are downsides of equity alliances? (Check all that apply.)
The time and effort for assembling the partnership,The amount of investment involved
Which statement best describes entry barriers in the airline industry?
They are relatively low.
Which statements about joint ventures are true?
They involve the sharing of both explicit and tacit knowledge.,They are the least common of the three types of strategic alliances.
Which of the following statistics regarding MNEs are correct? (Check all that apply.)
They pay 25% of the wages in the United States.,They account for 11% of the private sector employment growth since 1990.,They make up 74% of the private sector R&D.
Which of the following is a major drawback of public stock companies, according to Michael Porter and others?
They prioritize financial performance over all else.
Strategists can grow their firms by growing organically through internal development or externally through alliances and ______.
acquisitions
Pavel works for a successful pharmaceutical company. Despite several years of unprecedented growth, the company wants to boost profits even more. It has taken steps to drastically raise the prices of its most widely distributed medications, which are difficult to imitate. Research into employee ethical decision-making capacity indicates that Pavel will ______.
act in a manner that reflects his company's organizational culture
Financial statements by public companies must ______. (Check all that apply.)
adhere to generally accepted accounting principles (GAAP),be audited by certified public accountants
A group of companies that deal with more or less the same set of suppliers and buyers make up ______.
an industry
The amount that savers are paid for use of their money and the amount that borrowers pay for that use is known as ______.
an interest rate
A conceptual model that helps strategists choose between seeking internal development, entering into an alliance, or acquiring new resources, capabilities, and competencies is called the \______ framework.\""
build-borrow-or-buy
In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as _____ strategy.
business
The power of ______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality.
buyers
Production costs can increase when ______.
buyers demand higher quality and more service
The mechanism used to guide a company toward meeting its strategic goals within the bounds of the law is known as ______.
corporate governance
Marketing, manufacturing, and after-sale service are examples of ______.
critical complementary assets
What is a component of post-formation alliance management?
establishing knowledge-sharing routines
Although ______ coordination, such as price fixing, is illegal in the United States, ______ coordination such as \an unspoken understanding\" is not."
explicit; tacit
The oldest form of internationalization is ______, which involves producing goods in one country to sell in another country.
exporting
When looking at the modes of foreign-market entry, one could conclude that ______.
exporting might be the earliest stage of commitment because it allows the firm to test whether a foreign market is ready for its products
Social consequences of business activities, including pollution, energy loss, and dangerous accidents, are known as ______.
externalities
An advantage of using a non-equity alliance to govern a strategic alliance is its ______.
flexibility and ease of initiation
What must strategic alliances do in order to create the foundation for a competitive advantage?
form unique resource combinations that obey the VRIO criteria
Before World War II, business strategy, implementation, and knowledge typically flowed ______.
from domestic headquarters to outposts abroad
Michael Porter developed the five forces model to help firms do which of the following? (Check all that apply.)
gain and sustain a competitive advantage,determine the profit potential of different industries
Since expanding internationally, IKEA has shifted focus, concentrating on effectively managing a global supply chain in order to achieve economies of scale. This is reflective of a(n) ______ strategy.
global-standardization
In order for a company to be considered a multinational enterprise, it must operate ______.
in more than one country
Some foreign countries require companies to be structured as __ in order to enter that foreign market. The companies gain access to the market, while the country gains advanced technology and know-how.
joint ventures
Gaining new capabilities or competencies is one of the three main reasons companies ______.
make acquisitions
What are the most expensive, complicated, and difficult to undo options used to grow a firm?
mergers ,acquisitions
Top-down strategy is derived from ______.
military strategy
The main goal of a poison pill is to ______.
minimize the threat of a hostile takeover
In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.
mobility barrier
Industry-specific factors known as ______ separate one strategic group from another.
mobility barriers
The most common type of alliance is a(n) ______.
non-equity alliance
When companies face a highly competitive environment at home, they are more likely to ______.
outperform global competition that lacks such intense domestic competition
The primary difference between outside and inside members of the board of directors is that ______.
outside directors are not employees of the firms, whereas inside directors are
When a company makes incremental investments as part of a larger investment and takes the time to analyze the information gained following each incremental investment, the company is taking a ______.
real-options perspective
What are sources of value creation in a horizontal integration strategy? (Check all that apply.)
reduction in competitive intensity,lower costs
Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with ______ growth.
slow or negative
The shared value creation framework encourages managers to focus on which of the following needs? (Check all that apply.)
social,economic
Who sets the tone for the ethical climate within an organization?
strategic leaders
Why does Facebook acquire startups?
to preempt rivals
What are the two significant issues regarding the CEO pay debate? (Check all that apply.)
the size of the CEO compensation in relation to average employee pay,the relationship between firm performance and CEO pay
Horizontal integration is a good option if ______.
the target firm will have more value when combined with the acquiring firm
The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.)
the threat of entry,the threat of substitutes,the power of buyers and suppliers
Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?
theory of bounded rationality
If an alliance between two firms succeeds, it is likely that the firms in the alliance _____.
trust each other
Which of the following are advantages of joint ventures? (Check all that apply.)
trust,commitment,strong ties
Governments sometimes set up a natural monopoly when a venture ______.
would otherwise not be profitable
A benefit of an international strategy is ______.
leveraging core competences
Which of the following are examples of moral hazard? (Check all that apply.)
A CEO with a multi-million-dollar severance agreement performs poorly knowing he will be well compensated even if he is laid off.,Banks make very risky loans with the knowledge that the government will bail them out if necessary.,A company dumps pollution into a local lake that will be cleaned using taxpayer money.
Which of the following statements about workers in the United States versus workers in other countries is true?
A manufacturing worker in the United States makes several times what a similar worker in China.
How do mergers and acquisitions differ?
A merger describes the joining of two independent companies, while an acquisition describes the purchase or takeover of a firm.
Which of the following have helped make globalization possible? (Check all that apply.)
Advances in telecommunications,Reductions in transportation costs,Falling trade barriers
Which of the following statements are correct regarding the interests of principals and agents? (Check all that apply.)
Agents may be more interested in personal goals, such as maximizing their compensation or gaining power.,Principals want to maximize shareholder returns.
According to Daniel Kahneman and Amos Tversky, System 1 is analytical, logical, and deliberate.
FALSE
True or false: A Level-3 leader ought to be able to create long-lasting greatness through resolve and humbleness.
FALSE
True or false: Airlines that are strategically committed to the hub-and-spoke model face high fixed costs to maintain their network of routes that affords global coverage. Such strategic commitment leads to high fixed costs and therefore decreased rivalry.
FALSE
True or false: Any action taken by a manager that is within the bounds of the law is, by definition, an ethical action.
FALSE
True or false: Sociocultural factors tend to be fixed.
FALSE
A multidomestic strategy is appropriate when which of the following conditions exist? (Check all that apply.)
Markets in the host country are idiosyncratic.,The firm faces high demand for local responsiveness.,The firm feels little need to reduce costs.
For a U.S. company doing business internationally, which of the following would be examples of local responsiveness? (Check all that apply.)
McDonald's selling teriyaki burgers in Japan,Walmart selling live animals for food preparation in China
Which of the following statements regarding factor conditions in Porter's diamond framework is true?
Natural resources are not necessarily needed to generate world-leading companies.
Which framework can companies use to assess whether their internal resources are superior to those of competitors in the targeted area?
VRIO framework
What is the typical result of cognitive limitations?
We choose the option that is \good enough\" and satisfies immediate needs."
Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully? (Check all that apply.)
What type of entry should be made?,Who are the players?,When to enter?,How to enter?
According to the book Good to Great by Jim Collins, which of the following is companies that were able to gain a competitive edge all have what in common?
\great\" leaders "
In order to build alliance management capabilities in small companies, it is recommended that firms take the ______ approach.
\learning-by-doing\""
Which of the following have the effect of shrinking the administrative and political distance between countries? (Check all that apply.)
a colony-colonizer relationship,trade agreements,shared currency
Many drivers find a GPS navigation system useful. Because installing a GPS system in an automobile adds value to the vehicle, the system functions as ______.
a complement
Calculating cultural distance involves comparing the cultures of which of the following? (Check all that apply.)
a firm's home country,a targeted host country
According to Michael Porter, the profit potential of an industry is ______.
a function of five forces related to competition
Which of the following factors contribute to the existence of high-quality suppliers and complementors in a given industry?
a high level of competition,sophisticated customers
In ______, a single investor or group of investors buys, with the help of borrowed money, the outstanding shares of a publicly traded company and assumes control of it.
a leveraged buyout
When a firm in an oligopoly cuts prices, ______.
a price war is likely to result
Vasily is a manager at a large snack foods company. Vasily believes his company would benefit from being larger and thinks the shareholders would support such growth. The company is doing relatively well but needs to focus on stabilizing profits and expenditures. Vasily pushes for an acquisition anyway. The reason for this acquisition is ______.
a principal-agent problem
Which type of company is considered a unicorn?
a private start-up company valued at more than $1 billion
Which of the following did Kraft see as an advantage of integration with Cadbury?
access to new markets
Multinational enterprises need an effective global strategy in order to ______.
achieve a competitive advantage against other companies
In a perfectly competitive industry, firms have difficulty ______.
achieving competitive advantage
Which of the following terms refers to when one firm purchases or takes over another firm?
acquisition
A(n) ______ can help employees feel that they are doing something worthwhile and are part of something important and meaningful.
aspirational vision
The pressures that industry suppliers can exert on an industry's profit potential, is also called the ______.
bargaining power of suppliers
Following the rise of institutional investors, the use of poison pills to avoid hostile takeover has ______.
become rarer
Which of the following are part of culture?
beliefs,social norms,social mores
MNEs pursuing a ocean strategy tend to also pursue a transnational strategy.
blue
The external forces called technological factors ______.
capture the application of knowledge to create new process and products
A firm might want to use a strategic alliance to ______.
change the industry structure
One of the key characteristics of a leveraged buyout (LBO) is that it _______.
changes the ownership structure of a company from public to private
Corporate governance is a system of ______.
checks and balances
What are the three aspects of mapping strategic groups?
choosing two key dimensions for the horizontal and vertical axes,identifying the most important strategic dimensions,graphing the firms in the strategic group and indicating each firm's market share
When competitors enter strategic alliances and become collaborators, ______ ensues and can result in learning races.
co-opetition
How willing the firms in an alliance are to share necessary resources and make sacrifices in the name of long-term rewards is referred to as partner ______.
commitment
High-profile accounting scandals and the global financial crisis are examples of ___.
companies and industries that did not conform to business ethics
When Pfizer and Wyeth merged, they reduced the size of their combined sales force while also increasing the number of drugs they could promote. This is an example of which source of value creation for M&As?
decreased costs
The specific characteristics of needs in a firm's domestic market, such as customers who hold companies to a high standard of value creation and cost containment, are also called ______.
demand conditions
What is the primary focus of a customer-oriented vision statement?
developing goods and services that solve consumer problems
It might be a good idea to expand or upgrade a firm's human capital base during a ______, because unemployment is high and therefore human capital is abundant and wages usually _____.
downturn; fall
Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment.
economic
Which of the following is an example of an application of agency theory?
employment contracts
In the PESTEL model, political factors are those that relate to ______.
government bodies
Which of the following are important sources of entry barriers? (Check all that apply.)
government policy,credible threat of retaliation,economies of scale,capital requirements,network effects
Jennie is the CEO of an information technology company. Based on the data that her researchers have compiled, she feels confident that her strategic plan for the company will be successful in the future, regardless of what happens. Based on this information, it seems that Jennie ______.
has an illusion of control
Horizontal integration can ______.
help a firm improve its strategic position in an industry
In an oligopoly, which of the following conditions exist? (Check the three that apply.)
high barriers to entry,a few large firms,differentiated products
If a company is poorly managed, its stock price may fall low enough for the firm to become a target for a(n) ______.
hostile takeover
The acquisition of PeopleSoft enabled Oracle to offer its customers expertise in human resource management systems (PeopleSoft's core competency) in addition to database management systems (Oracle's core competency). This is an example of which source of value creation of M&As?
increased differentiation
What three of the following are the primary benefits of horizontal integration? (Check all that apply.)
increased differentiation,lower costs,a reduction in competitive intensity
Which of the following are benefits of a horizontal integration? (Check all that apply.)
increased differentiation,reduced competition
Companies seek to access international markets as a means of ______.
increasing their economic value creation
Which of the following are the three choices in the build-borrow-or-buy framework? (Check all that apply.)
internal development,acquisition of new resources,strategic alliances
Dream Donuts is a very successful business in the United Kingdom. It is contemplating global expansion. Which of the following strategies is Dream Donuts most likely to pursue at these beginning stages of expansion?
international
IKEA offers the same products in every market. This indicates that IKEA has followed a(n) ______ strategy.
international
If a firm's goal is to leverage home-based core competencies in foreign markets, it should pursue a(n) ______ strategy.
international
A firm should consider using mergers and acquisitions only when ______.
it is important to be extremely close to the resource partner in order to understand underlying information
Which of the following factors enabled India to gain a competitive advantage in business process outsourcing? (Check all that apply.)
its low-cost labor,its well-educated, English-speaking workforce
A standalone organization that two or more parent companies create and own together is a ___.
joint venture
The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ______.
joint venture
What are the three mechanisms that alliances can be governed by? (Check all that apply.)
joint ventures,equity alliances,non-equity alliances
Which of the following characteristics help make an MNE's international strategy successful? (Check all that apply.)
large domestic markets,strong reputation,prominent brand names
Which of the following are factors in a firm's legal environment? (Check all that apply.)
laws,regulations,mandates
An example of a recent innovation in process technology is ______.
lean manufacturing
When two firms that have formed a strategic alliance to learn vary in the rate at which they learn, a(n) __ may result.
learning race
According to agency theory, conflicts such as the principal-agent problem are considered ______ issues.
legal
Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business.
legal
Benicio's Burritos is a leader in the Mexican fast-food category in the United States. It decides to expand internationally, starting in Japan. Benicio's Burritos fails within a year, learning later that Mexican food is uncommon in Japan and that the flavor profiles are not compatible with Japanese palates. The failure of Benicio's Burritos can be attributed to which of the following?
liability of foreignness
When managers of acquiring companies incorrectly convince themselves that they are able to manage the business of the target company more effectively than its current managers, they are engaging in ______.
managerial hubris
Zoe is a manager at a large company engaged in the acquisition of a smaller company. The smaller company has operated at a loss for the last three years under three different managers, but Zoe is convinced that she can turn the company around despite the evidence to the contrary. Zoe is engaging in ______.
managerial hubris
In ______ societies, competitiveness, assertiveness, and the exercise of power are considered ideal.
masculine
Studies show that CEOs spend the majority of their time ______.
meeting people face-to-face
A(n) ______ is when two firms agree to join and create a combined entity, and a(n) ______ is when one firm buys or takes over another firm.
merger; acquisition
Many firms of all sizes actively compete in the computer hardware industry, and there are no firms with a large market share. Product offerings tend to be similar but are differentiated in ways that enable some firms to raise or impact pricing. The computer hardware industry is an example of ______.
monopolistic competition
A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as ______.
moral hazard
What are some managerial advantages of building a firm into a large organization? (Check all that apply.)
more job security,greater prestige,increased power
Employees who work in organizations that emphasize ethical behavior are ______.
more likely to act ethically.
The Japanese market is very particular, and MNEs tend to have a challenging time breaking into the market successfully. To provide the most local responsiveness and to influence Japanese consumers in believing that the products are local, an MNE should follow a(n) ______ strategy.
multidomestic
The Finnish company Nokia was an early industry leader in cell phones. This is an example of ______.
national competitive advantage
When firms compete by offering unique product features rather than competing on price, ______ occurs.
non-price competition
If the economic value creation of international expansion is negative, a firm should ______.
not expand internationally
What are cognitive biases?
obstacles in thinking that result in systematic errors in decision making and hinder rational thinking
Which of the following are characteristics of a monopolistically competitive industry? (Check all that apply.)
obstacles to entry,the ability to raise prices for differentiated products,a differentiated product
What are the two necessary conditions for successful alliance formation? (Check all that apply.)
partner commitment,partner compatibility
Although the three tasks of alliance management capability often occur at the same time, in general what is the first phase of alliance management?
partner selection and alliance formation
Although the five forces model is useful in understanding an industry's profit potential, it provides only a ___.
point-in-time snapshot of a moving target
An approach in which MNEs draw on multiple, equally important innovation hubs throughout the world characteristic of Globalization 3.0 is known as a(n) ___.
polycentric innovation strategy
The subprime mortgage crisis of the early 2000s is an example of ______.
poor corporate governance
Firms are able to create a near monopoly by maximizing ______.
product differentiation
A ______ vision statement defines a business by describing the goods or services it produces or offers.
product-oriented
In the global economy, according to Porter, competitive advantages increasingly exist in _______, such as Silicon Valley.
regional geographic clusters
Additional functions of a board of directors beyond general strategic oversight include ______. (Check all that apply.)
selecting, evaluating, and compensating the CEO,ensuring that the firm's accounting practices and reports are accurate,assessing and mitigating risk
The right to buy a company's stock at a predetermined price sometime in the future is known as a(n) ______.
stock option
A(n) group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.
strategic
A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop products, processes, or services is known as a ______.
strategic alliance
The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.
substitutes
If a business considers changing vendors, but doing so would require that business to alter product specifications, retrain employees, and/or modify existing processes, we would say the business faces significant ______.
switching costs
When a person that has been using a PC with a Microsoft Windows operating system starts using an Apple computer (which has a different operating system), that person will incur significant customer ______________.
switching costs
Equity alliances allow for the sharing of ______, which involves information that cannot be codified for completing tasks.
tacit knowledge
Which of the following were black swan events that occurred in the early 21st century and helped reshape the global economy?
the European refugee crisis,the Global financial crisis,the European debt crisis
Which of the following is the conceptual framework developed by Jim Collins that describes the progression of leadership through distinct, sequential levels?
the Level-5 leadership pyramid
A company should only expand abroad if ______.
the benefits outweigh the costs
Which of the following are among the primary considerations when determining the mode in which a firm enters a foreign market? (Check all that apply.)
the desired level of control over foreign operations,the degree of investment
The risk that potential competitors will enter the industry is known as the ______.
threat of entry
The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers.
threat of substitutes
Which of the following are reasons why firms enter into strategic alliances? (Check all that apply.)
to strengthen their competitive position,to learn new capabilities,to enter new markets
The relationship between CEO pay and job performance has been shown to be ______.
weak
Which of the following is the most important determinant of economic distance?
wealth and per capita income
The decision framework that is based on the relative distance between home and a foreign target country is the ______.
CAGE distance framework
Searching for low-cost labor can lead to a loss of reputation for MNEs under which of the following conditions?
Corrupt local governments fail to enforce safety standards.
True or false: In most cases, mergers and acquisitions create competitive advantage.
FALSE
How does horizontal integration affect Porter's Five Forces for the surviving firms? (Check all that apply.)
It reduces rivalry among existing firms.,It reduces the threat of entry.
Svanhildur's company is committed to corporate social responsibility but also understands that growth and profit are imperative for survival. What should Svanhildur's company do to achieve this balance?
It should use the shared value creation framework.
Which of the following is true regarding the government and horizontal integration?
Large horizontal integration activity typically needs to be approved by government authorities.
Which of the following is true of firms' acquisition and integration capabilities?
Some firms can consistently use mergers and acquisitions to increase their competitive advantage.
True or false: A horizontal integration strategy leads to industry consolidation.
TRUE
Which of the following best exemplifies the relational view of competitive advantage?
The strategic alliance between company A and company B creates more value than either company individually.
Which of the following are ways that powerful suppliers are a threat to firms? (Check all that apply.)
They can capture part of the economic value created by firms.,They can force the cost of production to increase.,They can reduce the industry's profit potential.
In team-based environments, the principal may have difficulty determining individual contributions by members. This can create a situation in which an opportunistic employee does little work but takes credit. This is known as ______.
adverse selection
The idea that a corporation is simply a collection of legal contracts is known as ______.
agency theory
Spex is a leading manufacturer of eyeglasses. Spex is based in the United States but opens a facility in a Japanese city known for cutting-edge eyeglass innovations. Spex is counting on which of the following?
benefiting from location economies
Narrowly defining public stock companies in terms of financial performance can lead to ______.
black swan events
Internal development should occur when the firm's resources are _____ to those of competitors in the targeted area.
both similar and superior
Which strategy addresses the question of how to compete?
business
The code of professional conduct based on societal norms and expectations is known as ______.
business ethics
A real option gives a firm the right to continue making investments ______.
but does not obligate the firm to do so
The strategic foundations of the globalization hypothesis are based primarily on ______.
cost reduction
Which of the following forms of agreement do non-equity alliances typically take? (Check all that apply.)
distribution,supply,licensing
Non-equity alliances tend to share ______, which allows the firms to understand a certain process or product.
explicit knowledge
Which of the following are likely outcomes of a competitive rivalry based entirely on price cutting? (Check all that apply.)
firms struggle to make profits,investments from firms drop off,most or all value is transferred to customers
Which of the following does the five forces model to help firms do?
gain and sustain a competitive advantage,determine the profit potential of different industries
The primary purpose of the board of directors is ______.
general strategic oversight and guidance
A company's ______ is the part of a corporate strategy that addresses how to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.
global strategy
Multinational enterprises that manufacture commodity products that focus on cost leadership tend to use a(n) ______ strategy.
global-standardization
An unfriendly acquisition of one company of another is known as a(n) ______.
hostile takeover
As the standard of living rises in emerging economies, MNEs are hoping that ______.
increased purchasing power will enable workers to purchase the products previously made only for export
Due to globalization, the world's market economies are becoming more ______.
integrated and interdependent
Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________.
intensity of rivalry
Research about how CEOs spend their days suggests that CEOs spend most of their time ______.
interacting with others
A public stock company is considered by law to be an entity with legal rights and obligations. This is known as ______.
legal personality
Which of the following tend to result from strong competitive rivalry?
limits to the industry's profit potential
MNEs pursuing a multidomestic strategy hope that ______.
local consumers will perceive them to be a domestic company
According to Porter, the enduring competitive advantages in a global economy lie increasingly in _____.
local things such as knowledge, relationships, and motivation
Consumers tend to buy homes, automobiles, and computers when interest rates are ____ because credit is inexpensive.
low
As utility companies tend to serve a whole market exclusively, they are known as ______ because the governments involved believe that the product or service would not be supplied otherwise.
natural monopolies
In comparison to other countries, the United States ranks ______ in terms of its acceptance of Milton Friedman's philosophy that \the social responsibility of business is to increase its profits.\""
near the middle
A partnership that is based on contracts between companies is referred to as a(n) ______.
non-equity alliance
According to agency theory, which of the following managerial functions can be used to avoid adverse selection and moral hazard? (Check all that apply.)
organization,control
A firm with alliance management capability is able to effectively manage which of the following tasks? (Check all that apply.)
partner selection and alliance formation,post-formation alliance management,alliance design and governance
The intensity with which companies in an industry jockey for market share and profitability is known as ___.
rivalry
An external governance mechanism that makes a poorly managed company vulnerable to takeover by outside investors is known as ______.
the market for corporate control
A firm should use an equity alliance, a joint venture, or an outright acquisition in order to gain use of a resource when ______.
the resource is not easily traded
Which of the following are examples of sociocultural factors? (Check all that apply.)
An increased demand by consumers for gluten-free products,The growth of the Hispanic population
How do foreign governments typically influence a firm's use of strategic alliances to enter new markets?
Governments may require that foreign firms have a local joint venture partner in order to conduct business within the country's borders.
Which of the following statements about legal factors as an external force is true?
Regulatory changes tend to affect entire industries at once.
The hiring of a job seeker who claims to have extensive computer programming experience when his knowledge of the subject is minimal would be an example of ______.
adverse selection
A ______ is a product or service that adds value to the original product offering.
complement
How can firms build alliance management capability?
through repeated experiences over time
Which are the three main reasons firms make acquisitions? (Check all that apply.)
to gain access to a new capability or competency,to preempt rivals,to gain access to new distribution channels and markets
Which of the following helped motivate globalization after the end of World War II? (Check all that apply.)
unfilled needs during the war years,the need to reconstruct economies damaged by war
Which of the following conditions lead to a strong threat of substitutes? (Check all that apply.)
when the cost of switching to the substitute is low,when the price-performance trade-off is attractive
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Which statement best describes escalating commitment?
Individuals acting as decision makers continue to support and invest in a project despite feedback indicating that it will fail.
planning is a strategy-planning activity in which top management envisions various what-if scenarios to anticipate plausible futures in order to derive strategic responses.
Scenario
What distinguishes a Level-5 leader from other levels of leaders?
They create enduring greatness.
A rise in economic growth is reflected by ______.
businesses expanding operations to satisfy demand
Which cognitive bias refers to people's tendency to seek out information that aligns with their existing beliefs?
confirmation bias
All of the following are sources of strategic initiatives except ______.
consumer demand
A ______ vision statement defines a company by describing its interest in developing solutions to consumer problems.
customer-oriented
Which of the following leads to systematic errors in decision making and hinders rational thinking?
cognitive biases
A common cognitive bias is ______, which is when decision makers continue to support and invest in a project, even after receiving feedback indicating that it is likely to fail.
escalating commitment
A core values statement provides information to employees regarding the company's ______.
ethics and morals
According to the Level-5 pyramid, which level of leadership has the fewest members?
executives
An inspiring vision helps employees ______.
find meaning in their work.
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
Managers have ______ direct influence over external forces in the firm's general environment than those in the firm's task environment.
less
After creating a vision as part of the strategic management process, a firm must next establish a(n) ______.
mission
A outlines what an organization does, while a vision outlines what the organization wants to do.
mission statement
When managers understand the forces in the external environment, they are better able to ______.
mitigate threats and leverage opportunities
The executives of a computer software company developed an intended strategy to make the company more competitive. The company's ultimate ______ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) ______ strategy.
realized; emergent
In a period of economic boom, unemployment is ______, and human resources become expensive.
low
Managers are able to influence which of the following types of external forces? (Check all that apply.)
strategic group composition,the structure of their industry
A(n) ______ is any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.
strategic initiative
What are autonomous actions?
strategic initiatives that lower-level employees undertake of their own volition, often in response to unanticipated events
Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy?
strategic planning,strategy as planned emergence,scenario planning
Which of the following is the least formal approach to setting the strategy process?
strategy as planned emergence
Strategy Implementation primarily involves which of the following?
the organization, coordination, and integration of how work gets done
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?
top-down strategic planning
What cognitive bias involves using simple examples to make sense out of complex problems, even though the things being compared may be very different on a deeper level?
reason by analogy
______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms.
Political
Which of the following statements is correct?
Strategic initiatives can be the result of top-down planning or a bottom-up process.
What are the approaches that can be utilized when strategizing for competitive advantage?
Strategic planning,Strategy as planned emergence ,Scenario planning
Which term refers to strategic initiatives that lower-level employees undertake of their own volition, typically in response to unanticipated events?
autonomous actions
Which of the following is a term used to describe a highly unlikely event that has a significant impact on society?
black swan event
What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?
devil's advocacy
In the early 2000s, easy credit made real estate the investment of choice in the United States. By the end of the decade, however, a recession had set in, impacting almost all businesses in the country. This example shows that _____.
economic boom periods can overheat and lead to speculative bubbles
The ______ is a measure of the change in the amount of goods and services produced by a nation's economy.
economic growth rate
The story concerning the discovery of Starbucks’ Frappuccino is an example of a(n) ______ strategy, or an unplanned strategic initiative that originated at the bottom and moved to the top.
emergent
Larry, the owner of small hotel resort, would like to advertise his hotel in major American newspapers and magazines as a part of his larger strategy. However, he doesn't have enough money to do so. One day, he meets Todd, the owner of a group of newspapers and magazines, who offers him advertising space in his publications on the condition that Larry provide him with a free stay at the hotel. This is an example of which of the following?
serendipity
In the strategic management process, which basic principle must be defined first?
vision
Which of the following best describes an illusion of control?
a belief that a strategic plan will address any scenario
A black swan event has which of the following characteristics?
It has a major impact on society.
Which statement best describes representativeness?
Individuals reach conclusions based on a small sample size or otherwise limited data, thereby violating the law of large numbers.
Which statement best describes the confirmation bias?
Individuals search only for information that confirms their existing beliefs and ignore evidence that contradicts those beliefs.