MARA 466 Quiz 2
Integrated social contracts theory maintains that
"first-order" universal ethical norms always take precedence over "second-order" local ethical norms.
Which of the following is not an example of unrelated diversification?
A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans)
Corporate restructuring strategies
A) involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup.
Which of the following is not generally on a company's menu of actions to consider in crafting a strategy of social responsibility?
Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins
Which of the following is one of the eight principal managerial components associated with the process of implementing and executing strategy?
Allocating ample resources to strategy-critical activities
Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following?
B) Shifting from a multi-country to a global strategy.
Which of the following strategic business units generate operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends?
Cash cows
Which one of the following is not an offensive strategy option?
Deliberately attacking those market segments where key rivals make big profits
Checking a diversified company's business lineup for resource fit does not involve which one of the following "tests"?
Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses
Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of developing country markets?
Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals.
Which of the following is not a typical reason that many alliances do not live up to expectations?
Disagreement over how to divide the added market share and profits gained from joint collaboration
Which one of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?
Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.
Which of the following statements about matching organizational structure to strategy execution is not correct?
Functional structures are common among companies pursuing some form of diversification strategy.
Which of the following is typically the strategic impetus for forward vertical integration?
Gaining better access to end users and better market visibility
Which one of the following falsely describes a centralized approach to decision making?
Hierarchical command-and-control structures speed an organization's responses to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision.
Which of the following makes acquisition an attractive approach to diversifying into another industry?
If it is quicker than trying to launch a brand-new operation, offers an effective way to hurtle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry
Of the following examples of value chain activities, which is unlikely to be a primary building block in the company's organizational structure?
In automobile manufacturing, the critical value chain activities include raw materials procurement, offshore sourcing, and customer service.
Which of the following is not a characteristic of a compensation and reward system designed to help drive successful strategy execution?
Keeping performance incentives and bonuses to less than 15 percent of total compensation
Which of the following help in changing an unhealthy or problematic company culture?
Management needs to go on the offensive to reinterpret the culture and explain to company personnel why there really is a good overall cultural fit with the strategy.
Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is incorrect?
Profitability in emerging markets rarely comes quickly or easily. Building a market for the company's products can often turn into a long-term process that involves reeducation of consumers. Entering an emerging market often involves upgrading the local infrastructure (the supplier base, transportation systems, distribution channels, labor markets, and capital markets). Tailoring products to fit conditions in an emerging country market often involves more than making minor product changes and becoming more familiar with local cultures. Correct None of these
Which of the following is not an important nonmonetary approach to enhancing motivation and helping drive successful strategy execution?
Providing rank-and-file employees with representation on the company's board of directors
Which one of the following is not one of the elements of crafting corporate strategy for a diversified company?
Standardizing the resource fit across the group of businesses the company has diversified into
Which one of the following is not something that shapes and helps define a company's culture?
The strategy and business model that the company has adopted
A localized or multidomestic strategy
Two answers are correct: is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions; and has two big drawbacks: (1) it hinders transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.
Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous
Two answers are correct: when high transportation costs make it expensive to operate from central locations; and whenever buyer-related activities are best performed in locations close to buyers.
Which of the following is not a strategic disadvantage of vertical integration?
Vertical integration limits a company's ability to achieve greater product differentiation and to exercise direct control over the costs of performing value chain activities.
Being first to initiate a strategic move can have a high payoff in all but which one of the following instances?
When pioneering leadership is costlier than followership
First-mover advantages are unlikely to be present in which one of the following instances?
When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products
The hallmarks of a high-performance corporate culture include
a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat objectives.
The procedure for evaluating a diversified company's strategy involves all of the following steps except
a determination of the degree of risk involved with each business unit.
Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries?
a need to convince shippers to keep transportation costs low
Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is
a properly designed reward structure.
A company's strategy needs to be ethical because
a strategy that is unethical not only damages the company's reputation, but it also can have costly consequences.
Companies committed to environmental sustainability
adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future.
The strategic appeal of related diversification is that it
allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.
Ethical principles in business
are not materially different from ethical principles in general and have to be judged in the context of society's standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct.
As they apply to business conduct and business decisions, ethical principles
are not materially different from ethical principles in general.
Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical
are present in all societies, organizations, and individuals.
The advantages of manufacturing goods in a particular country and exporting them to foreign markets
are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
The overriding aim in building a management team should be to
assemble a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution.
The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to
assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender.
For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company must
be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop in quality.
A "think local, act local" multidomestic type of strategy
becomes more appealing the bigger the country-by-country differences are in buyer tastes, cultural traditions, and market conditions.
The advantages of using a licensing strategy to participate in foreign markets include
being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.
Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies?
better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization
Using domestic plants as a production base for exporting goods to selected foreign country markets
can be an excellent initial strategy to pursue international sales.
The thesis that because different societies and cultures have divergent values and standards of what is "ethically right" and "ethically wrong," it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores
characterizes the school of ethical relativism.
Entering into strategic alliances and collaborative partnerships can be competitively valuable because
cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.
The major drivers of unethical business behavior include
corporate cultures that put the bottom line ahead of ethics, heavy pressures on company managers to meet or beat performance targets, and overzealous or obsessive pursuit of wealth accumulation, power, status, and other selfish interests.
A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when
country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.
Company strategies and value-creating processes cannot be effectively executed without internal operating systems that include
customer data, employee data, supplier/partner data, operations data, and financial performance data.
Environmental sustainability involves
deliberate actions to protect the environment, provide for the longevity of resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet.
Which of the following choices is not an additional strategic choice that a company makes once it has decided to employ a particular generic competitive strategy?
discontinue disruptive product innovation.
When trying to change a problem culture, management should undertake such steps as
drawing up an action plan to change the present culture and then persuading company personnel why this plan of action is good and will be successful.
The primary reasons that companies opt to expand into foreign markets are to
gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.
The advantages of using a franchising strategy to pursue opportunities in foreign markets include
having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.
Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find, particularly if intellectual capital greatly aids good strategy execution?
hiring only people below the age of 35 who have college degrees and a grade point average of B or better
Recruiting and retaining capable employees are
important because the quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.
The costs incurred when ethical wrongdoing occurs fall into three specific categories and include all except
intangible costs such as legal and investigative costs incurred by the company.
Outsourcing strategies
involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.
The Nine-Cell Industry Attractiveness-Competitive Strength Matrix
involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.
A hit-and-run or guerrilla warfare type offensive strategy
involves unexpected attacks (usually by a small to medium-sized competitor) to grab sales and market share from complacent or distracted rivals.
A strategic alliance
is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence.
Total quality management (TQM)
is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100% accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.
Six Sigma quality control
is based on three principles: (1) all work is a process, (2) all processes have variability, and (3) all processes create data that explain variability.
The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that
local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.
According to the school of ethical universalism
many of the same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.
Merger and acquisition strategies
may offer considerable cost-saving opportunities and can be beneficial in helping a company try to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
Merger and acquisition strategies sometimes fail because of the
misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.
A blue ocean strategy
offers growth in revenues and profits by discovering or inventing a new industry or distinct market segment that renders rivals largely irrelevant and allows a company to create and capture altogether new demand.
Business process reengineering is a tool for
pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work.
Which of the following is not one of the ways in which a company can pursue competitive advantage by expanding outside its domestic market and competing multinationally?
pursuing blue ocean opportunities in the company's home country market
Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel
quickly find themselves on a slippery slope with no ethical standards or principles of their own.
Which of the following is not a potential advantage of backward vertical integration?
reduced business risk because of controlling a bigger portion of the overall industry value chain
Among the purposes of defensive strategies are to
restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals.
Calculating quantitative attractiveness ratings for the industries a company has diversified into involves
selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.
Ranking a diversified company's businesses in terms of priority for resource allocation and new capital investment
should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and have solid and appealing strategic fits and resource fits.
Experience indicates that strategic alliances
stand a reasonable chance of helping a company reduce competitive disadvantage but very rarely form the basis of a durable competitive advantage over rivals.
Economies of scope
stem from cost-saving strategic fits along the value chains of related businesses.
The two best reasons for investing company resources in vertical integration (either forward or backward) are to
strengthen the company's competitive position and/or boost its profitability.
Which of the following is not a typical reason for a company to expand into the markets of foreign countries?
strengthening its capability to employ offensive strategies, especially those that involve preemptive strikes
The defining characteristic of unrelated diversification (as opposed to related diversification) is
that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities).
Business ethics can be defined as
the application of ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel.
To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests:
the attractiveness test, the cost-of-entry test, and the better-off test.
The theory of corporate social responsibility concerns
the company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.
According to integrated social contracts theory,
the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms.the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms.
The defining characteristic of related diversification (as opposed to unrelated diversification) is
the presence of cross-business value chain relationships and strategic fits.
The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on
the thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact they need, they have to be centerpieces in the organizational scheme.
If one adopts the thinking of the school of ethical relativism, then
there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another.
Multinational competitors tend to concentrate activities in a limited number of locations when
there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.
As long as a single-business company can achieve profitable growth opportunities in its present industry,
there is no urgency to pursue a diversification strategy.
Strategic alliances are more likely to be long lasting-when
they involve collaboration with suppliers or distribution allies or when both parties conclude that continued collaboration is in their mutual interests.
A change in strategy nearly always entails budget reallocations because
units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.
Companies tend to concentrate their activities in a limited number of locations
when the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. when there are significant scale economies. when there is a steep learning curve associated with performing an activity. when certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. Correct All of these choices are correct.
One of the biggest strategic challenges to competing in the international arena is
whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.