MAN 4720 FINAL

Firms can use one or more of five entry modes to enter international markets

1. Exporting 2. Licensing 3. Strategic alliances 4. Acquisitions 5. New wholly owned subsidiaries

__________ may be necessary because acquisitions create a situation in which the newly formed firm has duplicate organizational functions such as sales, manufacturing, distribution, and human resource management. a) Management buyout b) Leveraged buyout c) Downsizing d) Downscoping

Downsizing

CEO duality is relatively rare in the United States except in large Fortune 500 firms. True False

False

In the United States, the members of the board of directors are a firm's key stakeholders and a company's legal owners True False

False

__________ markets are often described as volatile and innovative. a) Slow-cycle b) Fast-cycle c) Standard-cycle d) Sheltered

Fast-cycle

Research suggests that __________ is needed to encourage entrepreneurial behavior. a) individualism rather than collectivism b) a balance between individual initiative and a spirit of cooperation and group ownership of innovation c) collectivism rather than individualism d) limited autonomy and incentives

a balance between individual initiative and a spirit of cooperation and group ownership of innovation

For firms to be entrepreneurial, they require a culture with a(n): a) emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b) exceptionally high level of collectivism. c) balance of individualism and collectivism. d) exceptionally high level of individualism.

balance of individualism and collectivism.

Sociocultural segment

• Women in the workforce • Workforce diversity • Attitudes about the quality of work life • Shifts in work and career preferences • Shifts in preferences regarding product and service characteristics

Technological Resources

Availability of technology-related resources such as copyrights, patents, trademarks, and trade secrets

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be MOST typical for a joint venture? a) BPM will own more than 50 percent of the venture and a new company will be formed. b) J3 will own more than 50 percent of the venture and a new company will be formed. c) BPM and J3 will both own 50 percent of the venture and a new company will be formed. d) BPM and J3 will both own 50 percent of the venture but no new company will be formed.

BPM and J3 will both own 50 percent of the venture and a new company will be formed.

Which of the following is NOT an entry barrier to an industry? a) Expected competitor retaliation b) Economies of scale c) Customer product loyalty d) Bargaining power of suppliers

Bargaining power of suppliers

The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. The board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. CamCell is presently searching for a new CEO. Which of the following statements is true? a) This plan will be very attractive in luring candidates for the CEO position. b) CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. c) Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. d)T his type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability.

CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan

Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is MOST likely? a) Circuit Inc. will likely continue to manufacture the component, even at a loss, due to low supplier power. b) Circuit Inc. will likely continue to manufacture the component, even at a loss, due to high strategic stakes. c) Circuit Inc. will likely discontinue manufacture of the component due to low strategic stakes. d) Circuit Inc. will likely discontinue manufacture of the component due to high supplier stakes.

Circuit Inc. will likely continue to manufacture the component, even at a loss, due to high strategic stakes.

The use of a differentiation strategy would likely be LEAST effective in which of the following markets? a) Commodity goods b) Motion pictures c) Popular music d) Writing instruments

Commodity goods

What is it called when a firm undertakes action to counter the effects of a competitor's competitive action? a) Competitive response b) Competitive action c) Tactical action d) Multi-market disposition

Competitive response

When a company performs a tactical or strategic action to counter the effects of a competitors competitive actions they are performing what? a) Strategic action b) Tactical response c) Competitive response d) Standard cycle reaction

Competitive response

__________ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. a) Complementary strategic goals b) Shared values c) An entrepreneurial mind-set d) Compatible organizational cultures

Complementary strategic goals

__________ is an important influence in Japanese corporate governance structures. a) Innovation b) Consensus c) Competition d) Individualism

Consensus

Which of the following statements about corporate governance is false? a) Governance is used to establish order between parties whose interests may be in conflict. b) Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. c) Corporate governance mechanisms can be in conflict with one another. d) Corporate governance is best achieved with a board of directors with strong ties to management.

Corporate governance is best achieved with a board of directors with strong ties to management.

Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage? a) Valuable b) Rare c) Costly to imitate d) Nonsubstitutable

Costly to imitate

Incentives for a company to become multinational:

- Gain access to critical raw materials, sometimes including relatively inexpensive labor • Integrate a firm's operations on a global scale to better serve customers in different countries • Better serve customers whose needs appear to be more alike today as a result of global communications media and the Internet's capabilities to inform • Meet increasing demand for goods and services that is surfacing in emerging markets

international strategic alliances are made for the following reasons:

-operate within government restrictions in the local country. -escape limited domestic growth opportunities. -leverage core competencies in new markets.

Firms choose between five business-level strategies to establish and defend their desired strategic position against competitors:

1. Cost leadership 2. Differentiation 3. Focused cost leadership 4. Focused differentiation 5. Integrated cost leadership/differentiation

What are the 5 strategic leadership actions?

1. Determining the firm's strategic direction 2. Effectively managing the firm's resource portfolio 3. Sustaining an effective organizational culture 4. Emphasizing ethical practices 5. Establishing balanced organizational controls

What are the 3 restructuring strategies

1. Downsizing 2. Downscoping 3. Leveraged buyouts

Costly-to-imitate capabilities reasons to emerge:

1. Historical: A unique and a valuable organizational culture or brand name 2. Ambiguous cause: The causes and uses of a competence are unclear 3. Social complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers

Three major types of strategic alliances that firms use include:

1. Joint ventures 2. Equity strategic alliances 3. Nonequity strategic alliances

Two important trends influencing a firm's choice and use of international strategies, particularly international corporate-level strategies, are:

1. Liability of foreignness 2. Regionalization

Firms choose from among three major types of organizational structures to implement strategies:

1. Simple 2. Functional 3. Multidivisional

Two barriers for cross-functional development team:

1. Team members' independent frames of reference • Individuals from various organizational functions have different orientations on issues. 2. Organizational politics • Determining how to allocate resources to different functions is a key source of organizational politics.

3 types of corporate level diversification

1. value-creating 2. value-neutral 3. value-reducing

What is a related acquisition?

Acquiring a firm in a highly related industry - Through a related acquisition, firms seek to create value through thesynergy that can be generated by integrating resources andcapabilities.

__________ controls are objective criteria that allow corporate managers to evaluate the firms performance returns earned by individual business units and against previously established quantitative standards. a) Strategic b) Managerial c) Financial d) Environmental

Financial

__________ and __________ describe the situation in which organizations are direct competitors and are fully aware of the competition. a) High market commonality; high resource similarity b) High market commonality; low resource similarity c) Low market commonality; high resource similarity d) Low market commonality; low resource similarity

High market commonality; high resource similarity

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. Which of the following effects will these conditions have on the domestic airline industry? a) It will make the airline industry more attractive because of decreased supplier power. b) It will make the airline industry less attractive because of decreased supplier power. c) It will make the airline industry more attractive because of increased supplier power. d) It will make the airline industry more attractive because of a new entrant.

It will make the airline industry more attractive because of decreased supplier power.

Which of the following is NOT a result of overdiversification? a) Executives do not have a rich understanding of all of the firm's business units. b) Managers emphasize strategic controls rather than financial controls. c) Firms use acquisition as a substitute for innovation. d) Managers become short-term in their orientation.

Managers emphasize strategic controls rather than financial controls.

What is the term use to describe the number of markets with which the firm and competitors are jointly involved and the degree of importance of the individual markets to each? a) Market commonality b) Multi-market tactics c) Resource similarity d) Competitive dynamics

Market commonality

When a company attacks a rival company or responds to a competitive attack by arrival company which of the following relates to the gains or losses the firm will experience? a) Motivation b) Awareness c) Responsiveness d) Ability

Motivation

Which of the following is NOT one of the three main restructuring strategies, which is it? a) Realigning b) Downsizing c) Downscoping d) Leveraged buyouts

Realigning

Two of the companies listed below have the least amount of resource similarity which is correct? a) Small, family-owned Italian restaurant; Olive Garden b) Target; Walmart c) HP; Dell d) FedEx; UPS

Small, family-owned Italian restaurant; Olive Garden

Single-business diversification strategy

The firm generates 95 percent or more of its sales revenuefrom its core business area.

Dominant-business diversification strategy

The firm generates between 70 and 95 percent of its total revenue within a single business area.

Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. Which of the following statements is true? a) The firm is not engaging in international trade. b) The firm is using a regional approach to international expansion. c) The firm will not be able understand the cultures, legal, and social norms of this market. d) Skaredykat is too afraid to implement an international strategy.

The firm is using a regional approach to international expansion.

Ability refers to

The quality of the resources available to the firm to attack and respond. • Without available resources (such as financial capital and people), the firm is not able to attack a competitor or respond to its action.

Dragonfly, publisher of children's books, has purchased White Rabbit, another publisher of children's books. Both companies' books are sold to the same retail stores and schools. Their content is different because Dragonfly produces children's literature, whereas White Rabbit focuses on child-level nonfiction scientific and nature topics. Which of the following statements is probably true about this acquisition? a) This is a horizontal acquisition. b) This is an example of virtual integration. c) Dragonfly is beginning to build a conglomerate. d) Economies of scope are unlikely to result from this acquisition.

This is a horizontal acquisition.

Which of the following firms would MOST likely be a successful candidate for acquisition and restructuring? a) Medical practice b) Management consulting firm that has a tradition of long-term, client-consultant relationships c) Tire manufacturer established in 1910 d) Start-up communications technology firm

Tire manufacturer established in 1910

Three of the following are incentives for a company to become multinational, which is NOT an incentive? a) To gain access to consumers in emerging markets b) To gain easier access to raw materials c) To avoid high domestic taxation on corporate income d) Opportunities to integrate operations on a global scale

To avoid high domestic taxation on corporate income

One of the following diversification methods creates maximum value through financial economies, which is it? a) Related constrained b) Operational and corporate relatedness c) Unrelated d) Related linked

Unrelated

An example of the external labor market is the situation where: a) an assessment center operated by an external consulting firm evaluates company managers for promotion potential. b) a new vice president of marketing is hired from a competitor. c) the senior vice president of finance is promoted to CEO. d) a vice president of human resources is sent to a university executive MBA program for professional development.

a new vice president of marketing is hired from a competitor.

What are leveraged buyouts? (restructuring strategy)?

a party (typically a private equity firm) buys all of a firm's assets in order to take the firm private.

Entrepreneurs tend to have all the following characteristics EXCEPT: a) a willingness to take responsibility for projects. b) passion. c) a preference for certainly about projects. d) optimism.

a preference for certainly about projects.

What is downsizing (restructuring strategy)?

a reduction in the number of a firm's employees and, sometimes, in the number of its operating units. -legitimate strategy to adjust firm size and is not necessarily a sign of organizational decline.

What is a network cooperative strategy?

a strategy by which several firms agree to form multiple partnerships to achieve shared objectives

What is a cross-border strategic alliance

a strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage

What is the simple structure?

a structure in which the owner-manager makes all major decisions and monitors all activities while the staff serves as an extension of the manager's supervisory authority - Focus strategies, often used in small firms, require a simple structure until such time that the firm diversifies in terms of products and/or markets.

What is induced strategic behavior

a top-down process whereby the firm's current strategy and structure foster innovations that are associated closely with that strategy and structure.

The interests of multinational corporations' shareholders may be best served when there is: a) a uniform compensation plan for all corporate executives—both U.S. and foreign. b) executive compensation that is primarily based on long-term performance. c) elevation of foreign executive compensation to U.S. levels. d) a variety of compensation plans for executives of foreign subsidiaries.

a variety of compensation plans for executives of foreign subsidiaries.

The separation between firm ownership and management creates a(n) __________ relationship. a) governance b) control c) agency d) dependent

agency

What is a differentiation strategy?

an integrated set of actions taken to produce products (at an acceptable cost) that customers perceive as being different in ways that are important to them

What are focus strategies?

an integrated set of actions taken to produce products that serve the needs of a particular segment of customers. • Market segments firms may choose to serve by implementing a focus strategy include: • A particular buyer group • Example: Senior citizens

Large institutional investors, such as pension funds (outside of banks and insurance companies), are

are relatively insignificant owners of corporate stock.

Historically, __________ have been at the center of the German corporate governance system. a) banks b) institutional shareholders c) public pension funds d) government agencies

banks

Product differentiation refers to the: a) ability of the buyer of a product to negotiate a lower price. b) response of incumbent firms to new entrants. c) belief of customers that a product is unique d) fact that as more of a product is produced the cheaper it becomes per unit.

belief of customers that a product is unique

The communications industry is broadly defined as encompassing all of the following EXCEPT: a) media companies. b) smartphone producers. c) book retailers. d) entertainment companies.

book retailers.

Autonomous strategic behavior is a(n) __________ process in which product champions pursue new ideas. a) top-down b) horizontal c) integrated d) bottom-up

bottom-up

What are incremental innovations?

build on existing knowledge bases and provide small improvements in current products. Example: Adding a different kind of whitening agent to a soap detergent

A firm's core strategy is its __________ strategy. a) corporate-level b) business-level c) pricing d) international

business-level

When attempting to evaluate the worthiness of a corporate level strategy, one would consider whether the: a) corporation earns a great deal of money. b) top management team is satisfied with the corporation's performance. c) businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership. d) businesses in the portfolio increase the firm's financial returns.

businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.

What are rare capabilities?

capabilities that few, if any, competitors possess.

Multimarket competition occurs when firms: a) sell different products to the same customer. b) have a high level of awareness of their competitors' strategic intent. c) simultaneously enter into an attack strategy. d) compete against each other in several geographic or product markets.

compete against each other in several geographic or product markets.

A firm pursuing an unrelated diversification strategy will utilize a __________ structure. a) network b) cooperative form multidivisional c) competitive form multidivisional d) functional

competitive form multidivisional

The fewest integrative devices are used in the __________ structure. a) simple b) competitive multidivisional c) SBU d) network

competitive multidivisional

When there are numerous links between businesses, the level of diversification is more _________________. a) linked b) constrained c) integrated d) intense

constrained

The firm of Bergeron has existed for hundreds of years, having made exquisite clocks and watches. In its advertising it refers to clocks the firm made for such past royalty as Marie Antoinette and the czars of Russia. Employees are constantly reminded of the firm's rich history and its long tradition of excellence of design and execution. Bergeron is motivating its employees through its: a) core ideology. b) envisioned future. c) organizational culture. d) business strategy.

core ideology.

Geographic factors

cultural, regional, and national differences

Mercedes mass produces luxury vehicles at a premium price. It uses a(n) __________ strategy. a) differentiation b) focused differentiation c) integrated cost leadership/differentiation d) focused cost leadership

differentiation

When a company is newly acquired, research has shown that the shareholders _____: a) earn above-average returns. b) earn below-average returns. c) earn close to zero as a result of the acquisition. d) are not affected by the acquisition.

earn above-average returns.

Firms that achieve competitive parity can expect to: a) earn below-average returns. b) earn average returns. c) earn above-average returns. d) initially earn above-average returns, declining to average returns.

earn average returns.

Internationally diversified firms: a) earn greater returns on their innovations through larger or more numerous markets. b) are more likely to produce below-average returns for investors in the long run. c) may need to decrease international activities when domestic profits are poor. d) are generally unable to achieve high levels of synergy because of differences in cultures.

earn greater returns on their innovations through larger or more numerous markets.

Firms that have selected a related diversification corporate-level strategy seek to exploit: a) control shared among business-unit managers. b) economies of scope between business units. c) the favorable demand of buyers. d) market power.

economies of scope between business units.

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT to: a) enhance the compensation packages of top managers. b) leverage core competencies in new markets. c) operate within government restrictions in the local country. d) escape limited domestic growth opportunities.

enhance the compensation packages of top managers.

What is licensing?

entry mode in which an agreement is formed that allows a foreign company to purchase the right to manufacture and sell a firm's products within a host country's market.

The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm's motto, the title of its Web newsletter, and even on the company T-shirts and mugs. This is an example of the firm's: a) core ideology. b) organizational culture. c) strategy. d) envisioned future.

envisioned future.

When firms lay off employees, they are: a) treating employees as an intangible resource. b) recognizing the reduced value of labor in the value chain. c) eroding the organization's knowledge resources. d) temporarily sacrificing a tangible asset that is easily replaced.

eroding the organization's knowledge resources.

Valuable capabilities allow the firm to: a) exploit opportunities in its external environment. b) neutralize threats in its internal environment. c) exploit opportunities or neutralize threats in its external environment. d) neutralize opportunities in its internal environment.

exploit opportunities or neutralize threats in its external environment.

A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of: a) licensing. b) exporting. c) a strategic alliance. d) a greenfield venture.

exporting.

Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n): a) internal CEO with short tenure. b) external CEO with a heterogeneous top management team. c) dual CEO/chairperson with a homogenous top management team. d) CEO with long tenure who has a strong sense of hubris.

external CEO with a heterogeneous top management team.

What is cross-functional development team?

facilitate efforts to integrate activities associated with different organizational functions, such as design, manufacturing, and marketing. Two Barriers: 1. Team members' independent frames of reference • Individuals from various organizational functions have different orientations on issues. 2. Organizational politics • Determining how to allocate resources to different functions is a key source of organizational politics.

What are cross-functional teams?

facilitate efforts to integrate activities associated with different organizational functions, such as design, manufacturing, and marketing. • Contain individuals representing a wide swath of the organization and may also include individuals from external organizations, such as suppliers - Shared values and effective strategic leadership are important for achieving cross-functional integration and implementing internal innovations.

A friendly acquisition: a) raises the price that has to be paid for a firm. b) enhances the complementarity of the two firms' assets. c) facilitates the integration of the acquired and acquiring firms. d) allows joint ventures to be developed.

facilitates the integration of the acquired and acquiring firms.

When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are engaged in: a) scanning. b) monitoring. c) forecasting. d) assessing.

forecasting.

What is executive compensation?

governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentives such as stock awards and options

If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: a) achieve competitive parity. b) have a competitive disadvantage. c) have a temporary competitive advantage. d) gain a sustainable competitive advantage.

have a temporary competitive advantage.

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have: a) social capital. b) entrepreneurial capabilities. c) high absorptive capacity to learn. d) intellectual slack.

high absorptive capacity to learn.

Firms with __________ market commonality and __________ resource similarity are direct and mutually acknowledged competitors. a) low; high b) low; low c) high; high d) high; low

high; high

Cross-border acquisitions are critical to U.S. firms competing internationally: a) if they are to develop differentiated products for markets served. b) when market share growth is the focus. c) where consolidated operations are beneficial. d) if they wish to overcome entry barriers to international markets.

if they wish to overcome entry barriers to international markets.

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: a) causally ambiguous. b) unobservable. c) imitable. d) common.

imitable

Customer loyalty programs such as airline frequent flyer miles are an attempt to: a) decrease competitors' access to distribution channels. b) develop a cost advantage independent of scale. c) increase customers' switching costs. d) overcome the perishability of the hotel "product."

increase customers' switching costs.

All of the following are examples of efforts by firms to address the physical segment of the general environment EXCEPT the: a) development of sustainable packaging by McDonald's. b) reduction in carbon dioxide emissions by Procter & Gamble. c) reduction in water usage in plants by Unilever. d) increase in hiring of women and minorities at Microsoft.

increase in hiring of women and minorities at Microsoft.

Economies of scale refers to the fact that as the quantity of product produced in a given time period __________, the cost of manufacturing each unit __________. a) increases; increases b) increases; remains constant c) increases; decreases d) decreases; decreases

increases; decreases

A major barrier to the use of cross-functional teams is: a) excessive individualism of creative people. b) lack of communication skills of technical people. c) independent frames of reference of team members. d) lack of social capital by team members.

independent frames of reference of team members. -also organizational frames of reference

Multidivisional structure is used as an innovative response to

information processing, coordination, and control problems that the functional structure cannot handle

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek __________, while more established companies may need __________. a) distribution channels; tacit knowledge b) deep technological expertise; distribution channels c) social capital; technical capital d) investment capital; new technological knowledge

investment capital; new technological knowledge

What is a strategic alliance?

involves a firm collaborating with another company in a different setting in order to enter one or more international markets. -a cooperative strategy in which firms combine some of their resources to create a competitive advantage.

Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green: a) is likely to raise the level of competitive rivalry in the industry. b) probably has top management who are affected by emotional barriers to exit. c) has decided that long-run above-average returns are not important. d) will probably embark on an acquisition strategy.

is likely to raise the level of competitive rivalry in the industry.

Private synergy: a) occurs in most related acquisitions and allows firms to see increased returns. b) is frequently achieved in conglomerates. c) is not easy for competitors to understand and imitate. d) is assessed by managers during the due diligence process.

is not easy for competitors to understand and imitate.

The quickest way for a firm to diversify its portfolio of businesses is through acquisition, why? a) of barriers to entry in many industries. b) it is difficult and time intensive for companies to develop products that differ from their current product line. c) innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. d) unrelated acquisitions are usually uncomplicated since the acquired firm is allowed to continue to function independently as it did before acquisition.

it is difficult and time intensive for companies to develop products that differ from their current product line.

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that: a) it is difficult to achieve economies of scale. b) the firm must develop centers to offer after-sales service to customers. c) it is difficult to respond effectively to local market needs and preferences. d) achieving economies of scale with this strategy/structure combination is nearly impossible.

it is difficult to respond effectively to local market needs and preferences.

The transnational strategy is becoming increasingly necessary to compete in international markets for all of the following reasons EXCEPT: a) the growing number of competitors heightens the requirements to keep costs down. b) the desire for specialized products to meet consumers' needs. c) differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d) it is easy to use.

it is easy to use.

One of these answers is a fundamental reason for a country to utilize advanced and specialized factors of production, which is it ? a) lack of basic resources. b) monetary wealth. c) small workforce. d) protective tariffs.

lack of basic resources

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: a) lack of scientific transference. b) social complexity. c) unique historical conditions. d) causal ambiguity.

lack of scientific transference.

A global strategy: a) is easy to manage because of common operating decisions across borders. b) achieves efficient operations without sharing resources across country boundaries. c) increases risk because decision making is centralized at the home office. d) lacks responsiveness to local markets.

lacks responsiveness to local markets

Companies entering an international market have several choices to make. These include all the following except: a) exporting. b) licensing. c) leasing. d) acquisition.

leasing.

Disney suffered lawsuits in France, at Disneyland Paris, because of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of the: a) effects of regionalization. b) risks of a multidomestic strategy. c) liability of foreignness. d) effect of demand conditions.

liability of foreigness

Psychological factors:

lifestyle, personality traits

How does the textbook define free cash flows? a) liquid financial assets for which investments in current businesses are no longer economically viable. b) liquid financial assets that for tax purposes must be reinvested in the firm if not distributed as dividends to shareholders. c) the profits resulting after a restructured firm has been sold. d) dividends distributed to shareholders that are taxed as capital gains.

liquid financial assets for which investments in current businesses are no longer economically viable.

Starbucks determined that all of the following customer needs were important EXCEPT: a) low price. b) the experience associated with drinking coffee, not just the coffee. c) the actual product of service (e.g., a cup of coffee), not the experience. d) allowing customers to design their own drinks.

low price.

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT: a) low economies of scale needed for new firms to enter. b) low supplier power due to commodity inputs. c) high threat of substitute products due to a large number of low-cost alternatives. d) high bargaining power of buyers due to low switching costs.

low supplier due to commodity inputs.

All of the following statements are true about the use of defense tactics by the target firm during a hostile takeover EXCEPT defense tactics: a) are usually beneficial for the executives of the target firm. b) are opposed by institutional investors. c) vary in their effectiveness as a defense to takeovers. d) make the costs of a takeover lower.

make the costs of a takeover lower.

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to: a) make the partners' true loyalties and intentions unclear. b) make the role of the strategic center firms more critical to alliance success. c) distribute the alliances along several segments of the airline industry value chain. d) be most effective when the alliances are with airlines headquartered in different nations.

make the partners' true loyalties and intentions unclear.

The critical executive skill of the current business age is the ability to: a) manage technological innovation. b) manage intellectual capital. c) initiate change and overcome inertia. d) coordinate tangible and intangible resources.

manage intellectual capital.

Managerial employment risk is the: a) risk that managers will behave opportunistically. b) risk undertaken by managers to earn stock options. c) managers' risk of job loss, loss of compensation, and/or loss of reputation. d) risk managers will not find a new top management position if they should be dismissed.

managers' risk of job loss, loss of compensation, and/or loss of reputation.

Competitors are more likely to respond to strategic or tactical actions when they are taken by: a) differentiators. b) larger companies. c) first movers. d) market leaders.

market leaders.

What are fast-cycle markets?

markets in which competitors can imitate the focal firm's capabilities that contribute to its competitive advantages and where that imitation is often rapid and inexpensive. -Competitive advantages are not sustainable

What are slow-cycle markets?

markets in which competitors lack the ability to imitate the focal firm's competitive advantages that commonly last for long periods, and where imitation would be costly. - Firms may be able to sustain a competitive advantage over longer periods -Ex) Copyrights / patents

What are standard-cycle markets?

markets in which some competitors may be able to imitate the focal firm's competitive advantages and where that imitation is moderately costly. -competitive advantages are partially sustainable

When the costs of supplies increase in an industry, the cost leader: a) may continue competing with rivals on the basis of product features. b) will lose customers as a result of price increases. c) will be unable to absorb higher costs because cost leaders operate on very narrow profit margins. d) may be the only firm able to pay the higher prices and continue to earn average or above-average returns.

may be the only firm able to pay the higher prices and continue to earn average or above-average returns.

What is a cooperative strategy?

means by which firms collaborate to achieve a shared objective

When diversification results in two companies, such as UPS and FedEx, simultaneously competing in the same product areas or geographic markets, this is called __________ competition. a) multiple b) multiportal c) multipoint d) multiplicit

multipoint

A worldwide geographic area structure is an organizational form in which: a) multiple alliances across the globe link complementary businesses. b) standardized products are offered across country markets. c) national interests dominate and management adapts to local or cultural differences. d) responsiveness to local demand is combined with economies of scale.

national interests dominate and management adapts to local or cultural differences.

DDD Partners, a U.S. business consulting firm is considering a cooperative alliance with an Indian business consulting firm that has a wide practice in the Middle East and Asia. DDD has some European clients, but it sees the Middle East and Asia as growth opportunities. It hopes to learn how to navigate the different cultures and business practices in this part of the world from its alliance with the Indian firm. DDD's greatest risk here is that the Indian firm will: a) insist on excessively close monitoring of DDD's actions. b) gain access to DDD's core competencies and use them to become a future competitor. c) not fully share its intangible resources. d) not make equivalent investments to the alliance as does DDD.

not fully share its intangible resources

A manufacturer of washing machines has expanded its plant and created excess capacity, just as the general economy takes a downturn. The company is likely to: a) raise prices on washing machines to offset lost sales. b) be vulnerable to new entrants to an attractive market. c) suffer from intense rivalry from international manufacturers. d) offer rebates and incentives for customers who purchase washing machines.

offer rebates and incentives for customers who purchase washing machines.

What is the ideal partnership when using the cooperative strategy?

one in which the firms have complementary skills as well as compatible strategic goals

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all of the following reasons EXCEPT: a) a host nation may forbid a merger or acquisition. b) opportunistic behaviors are less likely. c) cooperative strategies require fewer resources. d) cooperative strategies allow greater flexibility in diversifying the firm's portfolio.

opportunistic behaviors are less likely.

Research suggests that boards of directors perform better if: a) the CEO is also the chairperson of the board of directors. b) the board includes employees as voting members. c) the board is homogenous in composition. d) outside directors own significant equity in the organization.

outside directors own significant equity in the organization.

Through the work of cross-functional teams, product development stages are grouped into __________ processes. a) short- and long-term b) parallel c) serially ordered d) complementary

parallel

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of the: a) perception of perceived prestige and status as a means of differentiating a product. b) importance of high-quality raw materials when using the differentiation strategy. c) risk of product imitation by competitors. d) danger counterfeiting holds for firms pursuing the differentiation strategy.

perception of perceived prestige and status as a means of differentiating a product.

Outsourcing is the: a) spinning off of a value-creating activity to create a new firm. b) selling of a value-creating activity to other firms. c) purchase of a value-creating activity from an external supplier. d) use of computers to obtain value-creating data from the Internet.

purchase of a value-creating activity from an external supplier.

The __________ dimension of relationships with customers is concerned with the firm's access and connection to customers. a) loyalty b) reach c) richness d) affiliation

reach

The __________ dimension of relationships with customers is particularly important for social networking sites such as Facebook and MySpace. a) reach b) richness c) affiliation d) social

reach

Terrorism creates an economic risk for firms, which: a) reduces the amount of investment foreign companies will make in a country perceived to be terror prone. b) is created by governmental bans on doing business with terrorist regimes. c) is offset by the above-average returns for firms that have learned how to operate in such an environment. d) is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations.

reduces the amount of investment foreign companies will make in a country perceived to be terror prone.

What is downscoping (restructuring strategy)?

refers to divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core businesses. • Has a more positive effect on firm performance than does downsizing • Causes firms to refocus on their core business • Is often used with downsizing simultaneously • Is used more frequently in U.S. firms than in European companies

Associations such as the European Union, Organization of American States, and the North American Free Trade Agreement encourage: a) global strategies. b) domestication. c) regional strategies. d) nationalization.

regional studies.

The Publicis Groupe has three major groups of business (advertising, media, and digital) that share resources and capabilities. The Publicis Groupe is using a(n) __________ diversification strategy. related linked related constrained

related constrained

Scott Paper Co. has a paper towel and baby diaper business, both of which use paper products. The firm's paper production plant produces inputs for both businesses. Scott MOST likely uses the __________ diversification strategy to create __________. a) related constrained; operational relatedness b) related linked; corporate relatedness c) related constrained; corporate relatedness d) related linked; operational relatedness

related constrained; operational relatedness

Research has shown that the more __________, the greater is the probability that an acquisition will be successful. a) related the acquired and acquiring firms are b) diverse the resulting portfolio of competencies c) disparate the corporate cultures d) involved investment banking firms are in the due diligence process

related the acquired and acquiring firms are

A competitive advantage developed through a cooperative strategy often is called a collaborative or __________ advantage. a) economic b) collusive c) alliance d) relational

relational

What is reach (reach, richness, affiliation)

relationships with customers revolves around the firm's access and connection to customers.

Firms participate in strategic alliances for all of the following reasons EXCEPT to: a) create value that they could not develop by acting independently. b) enter competitive markets more quickly. c) gain access to resources. d) retain tight control over intangible core competencies.

retain tight control over intangible core competencies.

Customer ratings of products they bought online is an example of: a) loyalty. b) reach. c) richness. d) affiliation.

richness.

Compared to managers, shareholders prefer: a) safer strategies with greater diversification for the firm. b) riskier strategies with more focused diversification for the firm. c) safer strategies with more focused diversification for the firm. d) riskier strategies with greater diversification for the firm.

riskier strategies with more focused diversification for the firm.

The longer the focus of managerial incentive compensation, the greater the __________ top-level managers. a) earnings potential for b) risks borne by c) incentives for d) potential tax burden for

risks borne by

The firm's culture promotes unity of purpose for cross-functional work teams through: a) a collectivist structure. b) an entrepreneurial mind-set. c) shared values. d) resource allocation.

shared values.

In the United States, a firm's key stakeholder(s) is(are) the: a) government. b) executives. c) shareholders. d) customers.

shareholders.

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the __________ structure. a) simple b) functional c) matrix d) network

simple

In most cases, the focus strategy is best managed using a __________ structure. a) simple b) functional c) multidivisional d) vertical

simple

Sustained competitive advantage is most achievable in a __________ market. a) slow-cycle b) medium-cycle c) standard-cycle d) fast-cycle

slow-cycle

Lawsuits over patent and copyright infringements are more common and intense in: a) fast-cycle markets because the market is innovation-driven. b) standard-cycle markets because the firm's brand name is such an important competitive advantage. c) slow-cycle markets because of the ability to shelter the company from imitation of its competitive advantage. d) standard-cycle markets because innovation is rare, which gives the innovating firm a significant competitive advantage.

slow-cycle markets because of the ability to shelter the company from imitation of its competitive advantage.

Socioeconomic factors:

social class, stage in the family life cycle

In a cross-border alliance, the local partner is often a useful source of information about: a) sources of capital. b) the strengths of the foreign firm's technology. c) market synergies. d) long-term planning.

sources of capital.

Because Coca-Cola, Nestlé, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is MOST likely that the bottled water market is a(n): a) slow-cycle market. b) standard-cycle market. c) fast-cycle market. d) intermediate-cycle market.

standard-cycle market.

All of the following are reasons why firms use international strategic alliances EXCEPT: a) sharing of risks and resources. b) alliances facilitate the development of new capabilities. c) learning new competencies particularly those related to technology. d) strategic alliances are easy to manage.

strategic alliances are easy to manage.

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n): a) worldwide product divisional structure. b) functional structure. c) SBU multidivisional structure. d) strategic network.

strategic network.

Matching what a firm can do (a function of its resources, capabilities, and core competencies in the internal organization) with what it might do (a function of opportunities and threats in the external environment) yields insights for the firm to select its

strategies.

Of the value-neutral incentives to diversify, all of the following are internal firm incentives EXCEPT: a) overall firm risk reduction. b) uncertain future cash flows. c) stricter interpretation of antitrust laws. d) low performance.

stricter interpretation of antitrust laws.

The risks of international entrepreneurship include all of the following EXCEPT: a) unstable foreign currencies. b) problems with market efficiencies. c) limitations on market size. d) strong "buy-domestic" programs.

strong "buy-domestic" programs.

A firm's __________ specifies the work to be done and how to do it given the firm's strategy or strategies. a) structure b) controls c) culture d) strategy

structure

Buyers are powerful when: a) there is a threat of forward integration. b) they purchase a small proportion of the supplier's output. c) switching costs are low. d) the buyers' industry is fragmented.

switching costs are low.

A __________ is a strategy in which firms share some of their resources to create economies of scope and is similar to the business-level horizontal complementary strategic alliance. a) joint venture b) synergistic strategic alliance c) diversifying strategic alliance d) dynamic alliance network

synergistic strategic alliance

The Renault Nissan alliance is an example of a __________ created to gain economies of scope by sharing resources and capabilities. a) diversifying strategic alliance b) vertical complementary alliance c) synergistic strategic alliance d) nonequity-based horizontal complementary alliance

synergistic strategic alliance

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-to-moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of: a) taking advantage of a need in the marketplace. b) creative destruction of existing services for pet boarding. c) institutionalized entrepreneurship. d) internal corporate venturing.

taking advantage of a need in the marketplace.

The CEO of Icon Image Associates wishes to radically change the corporate culture of the firm. She knows that she must convince others at Icon Image of the necessity for the culture change and gain their active support. The CEO knows that the key players in energizing the culture change and fostering alignment with the new strategic vision are: a) the members of the board of directors. b) top management team members. c) the CEO, top managers, and middle managers. d) rank-and-file employees.

the CEO, top managers, and middle managers.

Sustaining an Effective Organizational Culture

the complex set of ideologies, symbols, and core values that individuals and groups share throughout the firm and that influence how the firm conducts business. - influences how the firm conducts its business and helps to regulate and control employees' behavior, it can be a source of competitive advantage.

Awareness refers to

the extent to which competitors recognize the degree of their mutual interdependence. • Awareness tends to be greatest when firms have highly similar resources (in terms of types and amounts) to use when competing against each other in multiple markets.

In the opportunity-maximization approach

the firm develops less formal contracts, with fewer constraints on partners' behaviors, which makes it possible for partners to explore how their resources can be shared in multiple value-creating ways.

What is differentiation?

the firm produces distinctive products for customers who value differentiated features more than low cost the firm must: • Consistently upgrade differentiated features that customers value • Create new valuable features without significant cost increases

What is a differentiation strategy?

the firm produces distinctive products for customers who value differentiated features more than low cost.

Organizational structure essentially specifies

the functions that must be completed so the firm can implement its strategy.

In free-market economies, __________ must decide how rivals can collaborate with their competitors without violating established regulations. a) the invisible hand b) the government c) consumers d) the business community

the government

All of the activities listed below are a part of due diligence except assessing __________. a) differences in firm cultures. b) tax consequences of the acquisition. c) the level of private synergy between the two firms. d) financing for the intended transaction.

the level of private synergy between the two firms.

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands. Christina does not believe that the CEO can act as a steward. Christina will probably be most concerned if: a) there is CEO duality. b) many of the members of the board of directors are outsiders. c) the positions of chairman of the board and CEO are held by different persons. d) there is an independent board leadership structure.

there is CEO duality.

A firm successfully implementing a differentiation strategy would expect: a) customers to be sensitive to price increases. b) to charge premium prices. c) customers to perceive the product as standard. d) to have high levels of power over suppliers.

to charge premium prices.

A nonequity strategic alliance exists when: a) two firms join together to create a new company. b) two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage. c) two partners in an alliance own unequal shares in the combined entity. d) the partners agree to sell bonds instead of stock in order to finance a new venture.

two or more firms have a contractual relationship to share resources and capabilities.

Value chain analysis is a tool used to: a) analyze a firm's external environment for value-creating opportunities. b) analyze a firm's value chain activities and support functions in isolation from its competitors' value chain. c) understand the parts of the firm's operation that create value and those that do not. d) identify the firm's core competencies in each of the primary activities of the firm.

understand the parts of the firm's operation that create value and those that do not.

When the top management team is homogeneous and a new CEO is selected from inside the firm, it is: a) unlikely that the current strategy will change. b) likely that product innovation will continue. c) likely that there will be a change in strategy. d) unlikely that the new CEO will have a long tenure.

unlikely that the current strategy will change.

What are radical (novel) innovations?

usually provide significant technological changes and create new knowledge. • Example: The development of driverless cars

Smithfield Meats produces pork products including hams, bacon, and does so through its own hog farms. This is an example of a business that is ____________. a) reducing vertical integration. b) vertically integrated. c) totally integrated. d) horizontally integrated.

vertically integrated.

The proper matching of what a firm CAN DO with what it MIGHT DO: a) balances the internal characteristics of the firm with the characteristics of the external environment. b) overcomes the rigidity and inertia resulting from a history of success. c) yields insights the firm requires to select its strategy. d) develops core competencies based on human knowledge.

yields insights the firm requires to select its strategy.

Competitive risks associated with the cost leadership strategy include:

• A loss of competitive advantage to newer technologies • A failure to detect changes in customers' needs • The ability to imitate the cost leader's competitive advantage through competitors' own distinct strategic actions

The strategic center firm engages in four primary tasks:

1. Strategic outsourcing • The strategic center firm outsources and partners with more firms than other network members. 2. Competencies • The strategic center firm supports each member's efforts to develop core competencies with the potential of benefiting the network. 3. Technology • The strategic center firm is responsible for managing the development and sharing of technology-based ideas among network members. 4. Race to learn • The strategic center firm guides members in efforts to form network -specific competitive advantages which, in turn, encourages friendly rivalry among members to develop the skills needed to quickly form new capabilities that create value for the network.

Two barriers with the potential to generate conflict and prevent effective use of cross-functional teams are:

1. Team members' independent frames of reference • Individuals from various organizational functions have different orientations on issues. 2. Organizational politics • Determining how to allocate resources to different functions is a key source of organizational politics.

five forces that affect the ability of all firms to operate profitably within a given industry:

1. The threats posed by new entrants 2. The power of suppliers 3. The power of buyers 4. Product substitutes 5. The intensity of rivalry among competitors

core competencies are capabilities that are

1. Valuable 2. Rare 3. Costly to imitate 4. Non-substitutable

Which of the following statements about organizational structures for implementing business-level strategies is true? a) A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. b) A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. c) An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination. d) A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits? a) Aligning the corporate structure with the demands of global expansion b) More accurate monitoring of the performance of each business c) Facilitating comparison between divisions d) Stimulating managers of poorly performing divisions to look for ways of improving performance

Aligning the corporate structure with the demands of global expansion

The CEO and chairman of the board of directors of Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. The directors are all outsiders, are experienced, and run their own successful firms. The CEO/chair genuinely seeks their greater involvement. Which of the following would you recommend? a) Requiring that the directors own stock in the company b) Establishing a formal process to evaluate the board's performance c) Electing a lead director d) All of these are correct.

All of these are correct.

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? a) Strategic outsourcing b) Encouraging friendly rivalry among network members c) Allocating internal capital d) Supporting development of new core competencies

Allocating internal capital

Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will MOST likely be secure if: a) Ambrose's research is in a non-core activity. b) the acquisition has been financed by junk bonds. c) Ambrose is in a position to take a poison pill. d) Ambrose is a key employee in the firm's primary business.

Ambrose is a key employee in the firm's primary business.

Which of the following represents a competitive intelligence practice that is both legal and ethical? a) A firm hires a competitor's employees and asks them to share the names and addresses of business contacts from their previous company. b) An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products. c) A city council member shares information about the decision process for selecting a contractor to build a new city council building with his wife, an executive with a construction firm bidding on the contract. d) A marketing manager sells confidential plans for a company's expansion into the Far East to a firm that is not a direct competitor.

An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products.

Which of the following is NOT a component of internal analysis leading to competitive advantage? a) Tangible and intangible resources b) Analysis of supplier power c) Capabilities d) Core competencies

Analysis of supplier power

Political Legal Segment

Antitrust laws • Taxation laws • Deregulation philosophies • Labor training laws • Educational philosophies and policies

What is the goal of strategic controls?

Are concerned with examining the fit between what the firm might do (as suggested by opportunities in its external environment) with what it can do (as indicated by its internal organization in the form of its resources, capabilities, and core competencies)

Which of the following statements is true? a) Most cooperative strategies are successful if the basic agreements are well written and include appropriate monitoring strategies. b) As many as 50 percent of cooperative strategies fail. c) Opportunistic behaviors are usually focused on gaining the use of the partner's manufacturing and financial resources. d) Problems with international cooperative strategies usually concern financial-system differences between the partners.

As many as 50 percent of cooperative strategies fail.

Three of the following are factors which pressure companies for local responsiveness, which is NOT? a) Differences in employment laws b) Customization due to cultural differences c) Government pressure for firms to use local sources for procurement d) Availability of low labor costs

Availability of low labor costs

Which of the following industries can be LEAST described as a slow-cycle market? a) Freight railroads b) Pharmaceuticals c) Cell phone providers d) Private ownership of highways and bridges

Cell phone providers

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a widespread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of the following statements is MOST likely true? a) The owners of Bubble-Up are unconcerned about Mega-Toy's entry to the market because of the resource dissimilarity between the firms. b) Bubble-Up's greater organizational slack will allow it to aggressively attack Mega-Toy. c) Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy. d) Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent on the educational toy market.

Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy.

Which of the following must a company remember when pursuing a cost leadership strategy? a) Buyers will be reluctant to pay for a product unless the quality is acceptable. b) Buyers will be reluctant to pay for a product unless the quality is superior. c) Buyers will be reluctant to pay for the product unless it is customized. d) Product quality is more important in a broad market than in a narrow one.

Buyers will be reluctant to pay for a product unless the quality is acceptable.

The primary responsibility for effective strategic leadership of the organization rests with the: a) board of directors. b) top management team. c) CEO. d) stakeholders.

CEO

Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S. package delivery operations, 22 percent from international package delivery, and 18 percent from non-packaging operations. Which of the following best describes the corporate-level strategy of UPS? a) Single business b) Dominant business c) Related constrained d) Related linked

Dominant business

What term is used to define cost savings the firm creates by successfully sharing resources and capabilities or transferring one or more corporate level core competencies that were developed in one of its businesses to another one of its businesses? a) Economies of scale b) Economic readiness c) Economic core competency transfer d) Economies of scope

Economies of scope

Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints Meredith manufactures. Which of the following would be the MOST accurate interpretation of this announcement? a) Meredith will own a majority equity stake in the new venture. b) JaZz will own a majority equity stake in the new venture. c) Meredith or JaZz will own an equal equity stake in the new venture. d) Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

Which of the following is NOT one of the four perspectives in the balanced scorecard framework? a) Entrepreneurial b) Financial c) Customer d) Learning and growth

Entrepreneurial

__________ exist(s) when there is a need in the market that can be satisfied by new goods or services. a) Potentiality b) Market readiness c) Entrepreneurial opportunities d) Critical core competencies

Entrepreneurial opportunities

Strategic actions are a major strategy in companies throughout the world. Which of the answers below is an example of a strategic action? a) A "two movies for the price of one" campaign by Redbox b) Use of product coupons by a local grocer c) Entry into the European market by Home Depot d) Fare increases by Southwest Airlines

Entry into the European market by Home Depot

Which of the following is a value-reducing reason for diversification? a) Enhancing the strategic competitiveness of the entire company b) Expanding the business portfolio in order to diversify managerial employment risk c) Gaining market power relative to competitors d) Conforming to antitrust regulation

Expanding the business portfolio in order to diversify managerial employment risk

What is unrelated diversification?

Firms do not seek operational relatedness or corporate relatedness when using the unrelated diversification corporate-level strategy. - Financial economies

What is a vertical complimentary alliance

Firms with competencies in different stages of the value chain form vertical alliances to cooperatively integrate their different, but complementary, skills.

The new generation of lunch trucks serving high-end fare in cities such as New York, San Francisco, and Los Angeles share which of the following business strategies? a) Cost leadership b) Focused differentiation c) Integrated cost leadership/differentiation d) Differentiation

Focused differentiation

__________ is the degree to which rules and procedures govern work. a) Formalization b) Centralization c) Specialization d) Unification

Formalization

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a) Japanese cameras and copiers b) Italian leather processing and shoes c) U.S. computers and software d) Highway systems and the supply of debt capital

Highway systems and the supply of debt capital

Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. Which of the following statements is MOST likely to be true? a) Agency costs at Amos Ball are high. b) If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO. c) At Amos Ball, the opportunity for managerial opportunism is high. d) The functions of risk bearing and decision making are separate at Amos Ball.

If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO.

Three of the following answers are limitations directly related to vertical integration, which is not a limitation? a) Bureaucratic costs b) The loss of flexibility through investment in specific technologies c) Capacity balance and coordination problems from changes in demand d) Imitation of core technology by potential competitors

Imitation of core technology by potential competitors

Zara has pioneered "cheap chic" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which of the following business-level strategies? a) Cost leadership b) Differentiation c) Integrated cost leadership/differentiation d) Stuck in the middle

Integrated cost leadership/differentiation

Which of the following factors most encourages stability in a firm's strategy? a) A new CEO hired from outside the firm but within the industry b) Internal CEO succession and a homogeneous top management team c) External CEO succession and a heterogeneous top management team d) A new CEO hired from outside the industry

Internal CEO succession and a homogeneous top management team

Which of the following is NOT a benefit to the firm using the internal labor market to select a new CEO? A. Internal hiring results in an increased level of innovation. B. Insiders are familiar with the firm's products, markets, technologies, and operating procedures. C. Use of the internal labor market reduces turnover among existing employees. D. Insiders are more familiar with a firm's operating procedures.

Internal hiring results in an increased level of innovation.

Which of the following statements regarding effective organizational cultures is true? a) Once a corporate culture is developed, strategic leaders can focus on other activities. b) A strategy that is historically new for a firm should be implemented by incremental changes in the organization's culture. c) A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment. d) Organizational culture can be a source of competitive advantage because it helps regulate and control employee behavior and influences how the firm conducts its business.

Organizational culture can be a source of competitive advantage because it helps regulate and control employee behavior and influences how the firm conducts its business.

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? a) Dissension within the top management team b) Informal organizational processes within the firm c) The firm's strategic orientation d) Organizational politics

Organizational politics

__________are the source of a firm's __________, which are the source of the firm's __________. a) Resources; capabilities; core competencies b) Capabilities; resources; core competencies c) Capabilities; resources; above-average returns d) Core competencies; resources; competitive advantage

Resources; capabilities; core competencies

__________ capital increases cooperation among individuals inside and outside the firm. a) Human b) Social c) Visionary d) Cultural

Social

Corporate governance revolves around the relationship between which of the following two parties? a) Shareholders and the board of directors b) Shareholders and managers c) The board of directors and managers d) None of these is correct

Shareholders and managers

In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which of the following segments of the environment did the store owners fail to take into account when they began selling the lingerie? a) Sociocultural b) Economic c) Demographic d) Political/legal

Sociocultural

Regionalization

Some firms choose to concentrate their international strategies on regions (e.g., the European Union, Asia, Latin America) rather than on individual country markets

If Southwest Airlines' employees lost their high enthusiasm and commitment to the company: a) the airline could continue without problems because its cost leadership strategy is dependent on its efficient internal procedures. b) replacement employees could be hired from rival airlines that are laying off employees and easily be merged into the Southwest culture. c) there would be no impact on Southwest's profitability because Southwest's customers value the low fares rather than being "entertained" by the employees. d) Southwest would have lost one of its competitive advantages, and its performance would be threatened.

Southwest would have lost one of its competitive advantages, and its performance would be threatened.

The typical risks of a differentiation strategy do NOT include which of the following? a) Customers may find the price differential between the low-cost product and the differentiated product too large. b) Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features. c) Counterfeit goods are widely available and acceptable to customers. d) Suppliers of raw materials erode the firm's profit margin with price increases.

Suppliers of raw materials erode the firm's profit margin with price increases.

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior? a) Effectively managing the firm's resource portfolio b) Determining strategic direction c) Regulating and controlling employees d) Sustaining an effective organizational culture

Sustaining an effective organizational culture

What is a horizontal acquisition?

The acquisition of a company competing in the same industry as the acquiring firm

For which of the following reasons are alliances in the airline industry unstable? a) Unstable industries make for unstable alliances. b) The potential for firms to take opportunistic actions is too widespread. c) The industry is declining and profits are not sufficient to divide among alliance partners. d) The alliances require cooperation among firms that must also compete with one another.

The alliances require cooperation among firms that must also compete with one another.

Related linked diversification strategy

The firm's portfolio of businesses have only a few links between them. • A related linked firm concentrates on transferring knowledge and core competencies between its businesses.

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. Which of the following should the investor consider when making a decision? a) The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. b) The investor will find that the restaurant's financial statements undervalue the true value of its resources. c) The investor should be aware that intangible assets are difficult to leverage into additional businesses. d) The investor should search for a firm that has competitive advantages based on tangible resources.

The investor will find that the restaurant's financial statements undervalue the true value of its resources.

Physical Resources:

The sophistication of a firm's plant and equipment and the attractiveness of its location • Distribution facilities • Product inventory

Greentech, Inc., is a bioengineering firm specializing in food crops. It is considering a cooperative alliance with an Asian agribusiness firm, AsiaFoods, to jointly produce improved crops for the Asian market. The questions that Greentech should consider before entering this alliance include all of the following EXCEPT: a) Has AsiaFoods accurately represented its competencies? b) Will AsiaFoods make alliance-specific investments? c) Can Greentech expect opportunistic behavior from AsiaFoods? d) Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

What is an Autonomous strategic behavior

a bottom-up process in which a product champion pursues a new idea, often through a political process, by means of which she/he develops and coordinates the actions required to convert an invention into an innovative product and to introduce that product into the market

Omicron Artificial Intelligence is able to respond quickly to competitors' actions and to opportunities in the marketplace. This is an example of: a) agility. b) a core competency. c) flexibility. d) responsiveness.

a core competency

The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization qualified to step into the former CEO's shoes. This is an example of: a) a failure of succession management. b) managerial hubris. c) the risk inherent in CEO duality. d) excessive reliance on the internal managerial labor market.

a failure of succession management.

A vertical acquisition refers to

a firm acquiring a supplier or distributor of one or more of its products. • Through a vertical acquisition, the newly formed firm controls additional parts of the value chain, which leads to increased market power.

What is an integrated cost leadership/differentiation strategy?

a firm engaging simultaneously in primary value chain activities and support functions to achieve a low cost position with some product differentiation.

What is the integrated cost leadership/differentiation strategy?

a firm engaging simultaneously in primary value chain activities and support functions to achieve a low cost position with some product differentiation. - When using this strategy, firms seek to produce products at a relatively low cost that have some differentiated features that their customers value.

What is a second mover?

a firm that responds to the first mover's competitive action, typically through imitation. - Studies customers' reactions to product innovations • Tries to find any mistakes the first mover made so that it can avoid them and the problems they created • Has the time to develop processes and technologies that: • Are more efficient than those the first mover used • Create additional value for consumers

What is a first mover?

a firm that takes an initial competitive action to build or defend its competitive advantages or to improve its market position. • First movers emphasize research and development (R&D) as a path to developing innovative products that customers will value

Which of the following offers the largest amount of control when entering an international market? a) licensing. b) acquisitions. c) joint ventures. d) greenfield ventures.

a greenfield ventures.

If intellectual property rights in an emerging economy are not well protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, __________ is the preferred entry mode. a) exporting b) strategic alliance c) a joint venture or wholly owned subsidiary d) licensing

a joint venture or wholly owned subsidiary

What is liability of foreigness?

a set of costs associated with various issues firms face when entering foreign markets, including: • Unfamiliar operating environments • Economic, administrative, and cultural differences • The challenges of coordination over distances

liability of foreignness

a set of costs associated with various issues firms face when entering foreign markets, including: • Unfamiliar operating environments • Economic, administrative, and cultural differences • The challenges of coordination over distances

What are joint ventures (strategic alliance)

a strategic alliance in which two or more firms create a legally independent company to share some of their resources to create a competitive advantage. • Have partners who own equal percentages and contribute equally to the venture's operations • Are often formed to improve a firm's ability to compete in uncertain competitive environments

What is a synergistic strategic alliance?

a strategy in which firms share some of their resources to create economies of scope.

Japanese keiretsu are: a) management structures related to total quality management systems. b) company unions, which are a type of governance system. c) the banks owing the largest shares of stock in the firm. d) a system of cross-shareholding among firms.

a system of cross-shareholding among firms.

A cost leadership strategy provides goods or services with features that are: a) acceptable b) unique c) substandard d) mediocre

acceptable.

If conflict in a strategic alliance or joint venture is not manageable, a(n) __________ may be a better option. a) licensing strategy b) exporting strategy c) acquisition d) new wholly owned subsidiary

acquisition

When one firm purchases either a 100% interest or a controlling interest in a firm this is referred to as what? a) merger b) acquisition c) spin-off d) restructuring

acquisition

Viewing the world through the customer's eyes and constantly seeking ways to create more value for the company enhances: a) the reach of the company toward the customer. b) the ability to identify the customer. c) the richness of the relationship with the customer. d) affiliation with the customer.

affiliation with the customer

demographic factors:

age, income, sex, etc.

What are valuable capabilities

allow the firm to exploit opportunities or neutralize threats in its external environment

What are valuable capabilities (core competency)

allow the firm to exploit opportunities orneutralize threats in its external environment

A licensing agreement: a) results in two firms agreeing to share the risks and the resources of a new venture. b) is the best way to protect proprietary technology from future competitors. c) allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country. d) can be greatly impacted by currency exchange rate fluctuations.

allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country.

The term "leveraged" in leveraged buyouts refers to the: a) firm's increased concentration on the firm's core competencies. b) amount of new debt incurred in buying the firm. c) fact that the employees are purchasing the firm for which they work. d) process of removing the firm's stock from public trading.

amount of new debt incurred in buying the firm.

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in: a) managerial opportunism. b) white-collar crime. c) vindictive disloyalty. d) an act of courage.

an act of courage.

What is a nonequity strategic alliance?

an alliance in which two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage. - Are less formal - Demand fewer partner commitments than do joint ventures and equity strategic alliances - Generally do not foster an intimate relationship between partners

What is an equity strategic alliance (strategic alliance)

an alliance in which two or more firms own different percentages of a company that they have formed by combining some of their resources to create a competitive advantage. • Companies commonly form equity alliances because they want to ensure that they have control over assets that they commit to the alliance

What is exporting?

an entry mode through which the firm sends products it produces in its domestic market to international markets. • Is the initial mode of entry used for many firms • Is a popular entry mode choice for small businesses to initiate an international strategy • Requires no foreign manufacturing expertise

High levels of debt are often used in acquisitions, this has contributed to which of the following? a) the increase in above-average returns earned by acquiring firms. b) an increased risk of bankruptcy for acquiring firms. c) the confidence of the stock market in firms issuing junk bonds. d) an increase in investments that have long-term payoffs.

an increased risk of bankruptcy for acquiring firms.

What is a cost leadership strategy?

an integrated set of actions taken to produce products with features that are acceptable to customers at the lowest cost, relative to that of competitors.

Stable alliance networks will most often: a) be used to enhance a firm's internal operations. b) appear in mature industries where demand is relatively constant and predictable. c) emerge in industries with short product life cycles. d) emerge in declining industries as a way to increase process innovations.

appear in mature industries where demand is relatively constant and predictable.

What are Nonsubstitutable capabilities?

are capabilities that do not have strategic equivalents.

What are rare capabilities (core competencies)

are capabilities that few, if any, competitors possess.

What are costly to imitate capabilities?

are capabilities that other firms cannot easily develop -Historical -ambiguous -social complexity

Tangible resources include: a) assets that are people-dependent, such as know-how. b) assets that can be observed and quantified. c) organizational culture. d) a firm's reputation.

assets that can be observed and quantified.

A second mover: a) is typically ineffective in its response to a first mover. b) attempts to provide a product with greater customer value than the first mover's product. c) usually incurs higher expenses than the first mover since it must engage in reverse engineering. d) typically has a higher survival rate than first movers which typically take greater risks.

attempts to provide a product with greater customer value than the first mover's product.

All of the following are aspects of the political/legal segment of the general environment EXCEPT: a) antitrust laws. b) attitudes and values. c) taxation laws. d) deregulation philosophies.

attitudes and values.

What are Costly-To-Imitate Capabilities (core competencies)?

capabilities that other firms cannot easily develop

All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they: a) are more likely to have organizational slack. b) can launch competitive actions more quickly. c) have more loyal and diverse workforces. d) can wait for larger firms to make mistakes in introducing innovative products.

can launch competitive actions more quickly.

All of the following describe strategies EXCEPT that they: a) are purposeful. b) cannibalize the old strategy. c) precede the taking of actions to which they apply. d) demonstrate a shared understanding of the firm's vision and mission.

cannibalize the old strategy.

What are nonsubstitutable capabilities (core competencies)?

capabilities that do not havestrategic equivalents.

Companies engage in internal product development. It is often viewed as what? a) carrying a high risk of failure. b) the only reliable method of generating new products for the firm. c) a quicker method of product launch than acquisition of another firm. d) critical to the success of biotech and pharmaceutical firms.

carrying a high risk of failure.

Successfully implementing a cost leadership strategy requires: a) freedom from constraining rules. b) centralization of authority. c) communication between functional silos. d) sharing of competencies among divisions.

centralization of authority

Firms such as Textron Inc. that frequently acquire and divest other firms are MOST likely to use the __________ structure. a) matrix b) competitive multidivisional c) hybrid combination d) horizontal complementary strategic alliance

competitive multidivisional

The risk for firms that follow the unrelated diversification strategy in developed economies is that: a) external investors tend to dump the stocks of conglomerates during economic downturns. b) conglomerates are typically owned by one powerful entrepreneur and do not survive his/her retirement or death. c) government regulations, especially in Europe, have periodically forced the dissolution of conglomerates. d) competitors can imitate financial economies more easily than they can replicate the value gained from the economies of scope developed through operational relatedness and corporate relatedness.

competitors can imitate financial economies more easily than they can replicate the value gained from the economies of scope developed through operational relatedness and corporate relatedness.

What is affiliation (reach, richness, affiliation)

concerned with facilitating useful interactions with customers.

What is richness (reach, richness, affiliation)

concerns the depth and detail of the two-way flow of information between the firm and customers.

What is a functional structure?

consists of a chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas such as production, accounting, marketing, R&D, engineering, and human resources.

What is a multidivisional structure?

consists of a corporate office and operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers

What is multipoint competition?

context in which firms engage in competitive interactions simultaneously across multiple products or markets

In order to meet and exceed customers' expectations, firms must: a) constantly manipulate customers' perceptions of their needs. b) answer the questions: who, what, when, where, how, and why as they apply to customers. c) continuously improve, innovate, and upgrade their core competencies. d) successfully defend their established core competencies from imitation by competitors.

continuously improve, innovate, and upgrade their core competencies.

Organizational structure specifies the firm's: a) formal reporting relationships, procedures, controls, and authority and decision-making processes. b) informal reporting relationships, procedures, controls, and authority and decision-making processes. c) formal value proposition, the markets it will serve, and how the firm will provide value in those markets. d) control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes.

control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes.

The most centralized and most costly form of the multidivisional structure is the: a) integrated. b) competitive. c) SBU. d) cooperative.

cooperative.

The heavy use of integrative mechanisms in the __________ multidivisional organizational structure is intended to achieve __________. a) cooperative; economies of scope b) competitive; cost efficiencies c) functional; sensitivity to cultural diversity d) SBU; a quick response to local customer needs

cooperative; economies of scope

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to: a) an emerging professional management philosophy. b) the increasing demand by consumers for both high quality and low prices. c) coordination and control problems. d) a shift toward the global economy.

coordination and control problems.

The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of: a) the hazard of competitors being able to imitate a firm's core competency. b) the need for firms to stick to their core competencies through temporary downturns in market demand. c) the lack of intangible resources undermining the core competencies of the firm. d) core competencies that have become core rigidities.

core competencies that have become core rigidities.

The use or application of entrepreneurship within an established firm is called: a) corporate emergence. b) transformational leadership. c) exceptional R&D. d) corporate entrepreneurship.

corporate entrepreneurship.

Walmart's effective strategy/structure configuration is: a) cost leadership/functional. b) differentiation/functional. c) related constrained/multidivisional. d) related linked/multidivisional.

cost leadership/functional.

The two basic approaches to successfully manage cooperative strategic alliances involve __________ and __________. a) cost minimization; opportunity maximization b) monitoring systems; multiple management approaches c) contractual systems; financial systems d) equity approaches; nonequity approaches

cost minimization; opportunity maximization

What is economies of scope (related diversification)?

cost savings a firm creates by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.

What are financial economies (unrelated diversification)?

cost savings realized through improved allocations of financial resources based on investments inside or outside the firm.

The Microsoft/Nokia alliance that had hundreds of pages to specify each partner's responsibilities would be closest to the __________ approach to managing cooperative ventures. In contrast, the Renault/Nissan alliance was based on trust, respect, and transparency and is an example of the __________ approach to managing cooperative ventures. a) cost-minimization; opportunity-maximization b) opportunity-maximization; cost-minimization c) cost-maximization; opportunity-minimization d) bureaucratic; organic

cost-minimization; opportunity-maximization

In order to work with various business functions in organizations, such as accounting, operations, and marketing, strategic managers need to: a) create integrative mechanisms, such as cross-functional teams. b) allow for specialization within functions. c) create functional silos. d) simply react to the environment.

create integrative mechanisms, such as cross-functional teams.

According to Peter Drucker, the primary goal of innovation is to: a) promote social well-being. b) increase the number of jobs. c) create wealth. d) support national economies.

create wealth.

What is private synergy

created when combining and integrating the acquiring and acquired firms' assets yield capabilities and core competencies that could not be developed by combining and integrating either firms' assets with another company. - Possible when firms' assets are complementary in unique ways • Difficult to create • Difficult for competitors to understand and imitate • Affected by direct transaction costs (e.g., legal fees, charges by investment banks to conduct due diligence) and indirect transaction costs (e.g., the time spent evaluating targets and negotiating the acquisition)

Currently, the rationale for making an acquisition includes all of the following EXCEPT to: a) increase market power. b) decrease taxes paid by shareholders. c) overcome entry barriers. d) increase diversification.

decrease taxes paid by shareholders.

How are a companies returns affected when it initially becomes internationally diversified? a) remain stable. b) decrease. c) become more variable. d) increase.

decrease.

Historically, women have paid more for dry cleaning than men. Signature Cleaners advertises "equal price" for all customers. Signature Cleaners appeals to women, which is market segmentation by __________ factors. a) demographic b) socioeconomic c) geographic d) consumption pattern

demographic

The BEST multidivisional structure to use: a) is the competitive form. b) is the SBU form. c) is the cooperative form. d) depends on the degree of diversification.

depends on the degree of diversification.

Two key strategic leadership actions include: a) monitoring the hiring of key employees and focusing on growth but not learning initiatives. b) designing and then implementing the balanced scorecard. c) setting appropriate financial targets and establishing an effective business-level synergy. d) determining strategic direction and establishing balanced organizational controls.

determining strategic direction and establishing balanced organizational controls.

A heterogeneous top management team is composed of individuals with: a) different functional backgrounds, experience, and education. b) similar commitments to the organization's core ideology and culture. c) a high level of education and industry expertise. d) long tenure in the organization who have held various functional positions.

different functional backgrounds, experience, and education.

The integrated cost leadership/differentiation strategy is difficult to implement mostly because: a) different primary and support activities are emphasized when using cost leadership and differentiation strategies. b) this strategic approach demands more flexibility than most firms can manage. c) the dual reporting relationships required for this strategy slow organizational decision making. d) the cost leadership strategy requires less structured job roles than does the differentiation strategy.

different primary and support activities are emphasized when using cost leadership and differentiation strategies.

In contrast to managers' desires, shareholders usually prefer that free cash flows be: a) used to diversify the firm. b) distributed to them as dividends. c) used to reduce corporate debt. d) reinvested in additional corporate assets.

distributed to them as dividends.

Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated. a) downsize b) spin off c) downscope d) buy out

downsize

Strategic controls allow corporate-level managers to: a) evaluate business-level performance on objective criteria. b) concentrate on day-to-day corporate operations. c) assess performance of employees and managers in each business unit. d) examine the fit between what the firm might do and what it can do.

examine the fit between what the firm might do and what it can do.

A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with: a) low-cost labor production facilities in another country. b) similar products that could help the firm establish economies of scale. c) access to franchises in new markets. d) excess resources for investing.

excess resources for investing.

The three dimensions of a firm's relationships with customers include all the following EXCEPT: a) exclusiveness. b) affiliation. c) richness. d) reach.

exclusiveness

What is vertical integration?

exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration).

What is market power?

exists when a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary and support activities below the competitive level, or both.

What is an agency relationship?

exists when one party delegates decision-making responsibility to a second party for compensation between owners and managers. - The separation between ownership and managerial control can create problems. • The principal and the agent may have different interests and goals. • The agent may make decisions that result in pursuing goals that conflict with those of the principal.

All of the following are forces that create high rivalry within an industry EXCEPT: a) numerous or equally balanced competitors. b) high fixed costs. c) fast industry growth. d) high storage costs.

fast industry growth.

By emphasizing core competencies when selecting and implementing strategies, companies learn to compete primarily on the basis of: a) intangible resources. b) their primary activities. c) firm-specific differences. d) efficiency of production.

firm-specific differences

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because: a) firms must be flexible while retaining a degree of stability. b) managers are never able to obtain all the information necessary to make the best selection. c) the structure of a firm should not duplicate the structures of its competitors. d) the environment changes too rapidly for corporations to maintain a consistent corporate structure.

firms must be flexible while retaining a degree of stability.

The Monteleone Company pays large fees to a highly recognizable, prestigious individual to be the spokesperson for the company's products, luxury private jets. Monteleone is probably following the a) focused cost leadership strategy b) focused differentiation strategy c) integrated cost leadership/differentiation strategy d) total quality strategy

focused differentiation strategy

What is a multidomestic strategy?

focuses on local responsiveness over global standardization, making it the most localized of the different models available

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by: a) avoiding global markets altogether. b) expanding only to developed countries. c) focusing on global niche markets. d) acquiring already established firms in foreign markets.

focusing on global niche markets.

Organizational Resources:

formal reporting structures

What is a horizontal complimentary alliance

formed by firms that combine their competencies to create value in the same stage of the value chain.

The cooperative multidivisional firm: a) establishes profit centers based on products or markets. b) has a flat organizational structure that broadens jobs and empowers workers. c) has a structure organized around both functional specialization and business projects. d) has a structure requiring heavy use of horizontal integrative devices.

has a structure requiring heavy use of horizontal integrative devices.

An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of: a) high barriers to exit. b) high switching costs. c) high fixed costs. d) low levels of competitive rivalry.

high barriers to exit.

First movers have many disadvantages in business. Which of the following is the largest disadvantage a first mover would face? a) high degree of risk. b) high level of competition in the new marketplace. c) inability to earn above-average returns unless the production process is very efficient. d) difficulty of obtaining new customers.

high degree of risk.

When firms use core competencies to implement value-creating strategies, they are answering the "__________" question. a) who b) what c) why d) how

how

The effective development and management of the firm's __________ may be its only sustainable competitive advantage and this asset refers to the knowledge and skills of the firm's entire workforce. It also requires continuous investment. a) capital base b) human capital c) technology d) organizational culture

human capital

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market," is an example of a(n): a) imitation of a competitor's product. b) novel innovation. c) incremental innovation. d) innovation created through a cooperative strategy.

incremental innovation.

A nationwide chain of pet stores wishes to identify the trade-offs that its customers are willing to make between low-cost products such as generic pet foods and differentiated features such as pick-up and delivery of pets for grooming. The best technique for this firm to learn this information would be to use: a) information networks. b) a flexible manufacturing system. c) differentiation development planning. d) enterprise resource planning.

information networks.

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for: a) market discipline. b) innovation. c) risk analysis. d) international diversification.

innovation.

JCPenney attempted the strategy of __________. But it couldn't out __________ Walmart, nor could it __________ Macy's and Target. a) integrated cost leadership; price; compete with b) focused differentiation; cost; differentiate between c) cost leadership; cost; differentiate between d) focused cost leadership; price; differentiate between

integrated cost leadership; price; compete with

The market for corporate control serves as a means of governance when: a) the firm is overpriced in the market. b) internal controls have failed. c) the corporation has greatly exceeded performance expectations. d) the top management team's interests and the owners' interests are aligned.

internal controls have failed.

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in: a) entrepreneurial incubation. b) creative destruction. c) internal corporate venturing. d) cooperative innovation strategies.

internal corporate venturing.

An analysis of the activity map of a successful company such as Southwest Airlines emphasizes how: a) the organizational culture of Southwest Airlines is the key to its success. b) understanding the profitability in an industry indicates to companies where above-average returns can be earned. c) it is harder for rivals to match a configuration of integrated activities than to imitate a single activity. d) the primary and support activities of a successful company capture value all along the value chain.

it is harder for rivals to match a configuration of integrated activities than to imitate a single activity.

Firms able to standardize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to: a) learn how to continuously reduce costs while increasing the value of their products. b) increase investment in research and development. c) access a low-cost labor force in the host market. d) mitigate cultural differences.

learn how to continuously reduce costs while increasing the value of their products.

In general, compared with firms that compete in only one market, among firms that face one another in multiple markets there is: a) similar competitive rivalry. b) less competitive rivalry. c) more competitive rivalry. d) no competitive rivalry.

less competitive rivalry.

The positive results associated with increasing international diversification have been shown to: a) continue as the level of international diversification increases. b) level off and become negative as diversification increases past some point. c) become negative quickly. d) be centered in only one or two industries.

level off and become negative as diversification increases past some point.

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS: a) increases shareholder value significantly. b) may not have a direct effect on firm performance. c) is so aggressive that boards of directors have become overly cautious. d) has weakened the effect of other governance mechanisms.

may not have a direct effect on firm performance.

Financial Resources:

• The firm's capacity to borrow • The firm's ability to generate funds through internal operations

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) __________ resource. a) financial b) organizational c) physical d) technological

physical

All of the following are rationales for acquisitions EXCEPT: a) achieving greater market power. b) overcoming significant barriers to entry. c) increasing speed of market entry. d) positioning the firm for a tactical competitive move.

positioning the firm for a tactical competitive move.

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the United Kingdom and the United States largely because: a) the roles of CEO and chairperson of the board of directors are usually combined. b) large institutional investors control large blocks of stock. c) private shareholders and large institutional investors rarely have large ownership positions in firms. d) of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms.

private shareholders and large institutional investors rarely have large ownership positions in firms.

Firms seeking to differentiate particularly need support from the __________ and __________ functions. a) finance; accounting b) engineering; operations c) product R&D; marketing d) management information; finance

product R&D; marketing

All of the following are considered generic business-level strategies EXCEPT: a) product diversification. b) cost leadership. c) focused differentiation. d) integrated cost leadership/differentiation.

product diversification

The typical risks of a cost leadership strategy include: a) the inability to balance high differentiation and low price. b) production and distribution processes becoming obsolete. c) excessive differentiation to the point where the customer base is too small. d) loss of customer loyalty.

production and distribution processes becoming obsolete.

An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must: a) analyze the reach, richness, and affiliation the company must have with its customers. b) provide tax advice either in a different manner or provide a different kind of tax service than competitors. c) offer tax advice at a price lower than the cheapest competitor. d) offer tax advice at a higher quality than the best competitor.

provide tax advice either in a different manner or provide a different kind of tax service than competitors.

The book The Dyslexic Advantage appeals to a market of educators, people with dyslexia, their friends, family, and coworkers. This is customer segmentation by __________ factors. a) demographic b) socioeconomic c) psychological d) consumption

psychological

In terms of customers, when selecting a business- level strategy, the firm determines:

• Who will be served • What needs those target customers have that it will satisfy • How those will needs will be satisfied

Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing. This excess capacity will be useful in: a) unrelated diversification. b) related diversification projects. c) corporate restructuring. d) multipoint competition.

related diversification projects.

Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT: A. relying on the fundamental goodness of individuals. B. using reward systems that recognize acts of courage. C. communicating goals that describe the firm's ethical standards. D. creating a work environment where individuals are treated with dignity.

relying on the fundamental goodness of individuals.

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the __________ organizational structure. a) network b) strategic business unit multidivisional c) functional d) matrix

strategic business unit multidivisional

The dimensions on which functional departments can vary include all of the following EXCEPT __________ orientation. a) time b) goal c) technological d) interpersonal

technological

The opportunity-maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all of the following EXCEPT: a) laws. b) culture. c) trade policies. d) technology.

technology.

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. A national competitor concluded that Farm Fresh lacks strategic equivalents in its organizational structure. Fresh can expect that, at best, its competitive advantage will be: a) permanent. b) sustainable. c) temporary. d) defensible.

temporary.

A river barge company can offer cheaper, although slower, per-pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use: a) the integrated cost leadership/differentiation strategy. b) either of the focus strategies. c) the cost leadership strategy. d) any of the strategies except the focused differentiation strategy.

the cost leadership strategy.

Through the differentiation strategy

the firm produces distinctive products for customers who value differentiated features more than low cost. - Because it satisfies customers' unique needs, firms following the differentiation strategy are able to charge premium prices

The transnational strategy calls for

the firm to combine the multidomestic strategy's local responsiveness with the global strategy's efficiency.

Motivation refers to

the firm's incentive to take action or to respond to a competitor's attack. • A firm may not be motivated to engage in competitive rivalry if it perceives that its market position will neither improve nor suffer if it does not respond.

International corporate-level strategy focuses on: a) the scope of a firm's operations through geographic diversification. b) competition within each country. c) economies of scale. d) sophistication of monitoring and controlling systems.

the scope of a firm's operations through geographic diversification.

The threat from substitutes is high when: a) switching costs are high. b) the substitute product's price is lower than the industry product's price. c) the quality of the substitute product is lower than the quality of the industry's product. d) the substitute product stimulates new process innovations within the industry.

the substitute product's price is lower than the industry product's price.

What is internal corporate venturing?

the term used to describe the set of deliberate activities that firms use to develop internal inventions and particularly internal innovations. • There are two types of internal corporate venturing: 1. Autonomous strategic behavior 2. Induced strategic behavior

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of: a) the use of autonomous strategic behavior. b) the use of induced strategic behavior. c) the development of novel innovations. d) innovation through acquisitions.

the use of induced strategic behavior.

What is synergy? a) cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm. b) two units create value by utilizing market power in their respective industries. c) firms utilize constrained related diversification to build an attractive portfolio of businesses. d) the value created by business units working together exceeds the value that those same units create when working independently.

the value created by business units working together exceeds the value that those same units create when working independently.

Related constrained diversification strategy

• The links between the diversified firm's businesses use similar sourcing, throughput, and outbound processes. • A related constrained firm shares resources and activities across its businesses.

The need for the organization to combine local responsiveness with the global strategy's efficiency is most critical in a __________ strategy. a) multidomestic b) transnational c) global d) focus

transnational

Effectively implementing the __________ international corporate-level strategy often produces higher performance than does implementing either the __________ or __________ strategies. a) multidomestic; global; transnational b) global; multidomestic; transnational c) cost leadership; differentiation; focus d) transnational; multidomestic; global

transnational; multidomestic; global

In the airline industry, frequent flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are __________ but no longer __________. a) rare; valuable b) valuable; rare c) socially complex; rare d) valuable; causally ambiguous

valuable; rare

Research shows that a __________ is the most effective means of ensuring that employees comply with the firm's ethical standards. a) written code of ethics b) statement in the firm's mission statement c) speech on ethics by the CEO of the company d) value-based culture

value-based culture

Shown below are reasons a company will use a corporate level diversification strategy, which one is not correct? a) value-creating. b) value-neutral. c) value-reducing. d) value-diversifying.

value-diversifying.

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the supplier's products are sold. This purchase is a(n): a) merger. b) unrelated acquisition. c) horizontal acquisition. d) vertical acquisition.

vertical acquisition.

Sustainable physical environment segment

• Energy consumption • Practices used to develop energy sources • Renewable energy efforts • Minimizing a firm's environmental footprint • Availability of water as a resource • Producing environmentally friendly products • Reacting to natural or man- made disasters

In the cost-minimization approach, the firm develops formal contracts with its partners that specify:

• How the cooperative strategy is to be monitored • How partner behavior is to be controlled

Global Segment

• Important political events • Critical global markets • Newly industrialized countries • Different cultural and institutional attributes

Economicsegment

• Inflation rates • Interest rates • Trade deficits or surpluses • Budget deficits or surpluses • Personal savings rate • Business savings rates • Gross domestic product

Limitations of vertical integration

• Internal transactions may be expensive and reduce profitability. • Bureaucratic costs may be present. • Substantial investments in specific technologies are required, reducing a firm's flexibility. • Changes in demand create capacity balance and coordination problems.

Technological Segment

• Product innovations • Applications of knowledge • Focus of private and government-supported research and development (R&D) expenditures • New communication technologies