MIE480 Exam 2: Part 1
This type of company is intensive rather than extensive; it usually focuses on a limited number of key criteria, analyzes their costs, and vigorously defends its competitive position against all competitors. A. Prospector B. Defender C. Reactor D. Analyzer
B. defender
We can classify organizations as Prospectors, Defenders, Analyzers or Reactors based on their ________, which may very well predict what they will do in the future. A. sunk investments B. past behaviors C. organizational structures D. management breadth
B. past behaviors
As sales fall in the decline stage of the industry life cycle firms typically A. lower prices to maintain market share B. shed assets and cut costs C. file for bankruptcy to be able to reorganize more easily D. invest greater amounts in research and development to begin the process of renewal
B. shed assets and cut costs
The recent battle between the high definition (HD) video standards offered by Toshiba (HD-DVD) and Sony (Blu-ray) was won by Sony. This is an example of - that will allow the HD video industry to grow more quickly. A. market power B. standardization C. a first-mover advantage D. the resolution of a conflict between competing economic logics
B. standardization
Manipulative and defiant tactical response styles are considered to be A. passive B. neutral C. active D. passive-aggressive
C. active
Value creation in the mature stage of the industry life cycle is largely focused internally on A. price reductions B. reorganization C. cost efficiency D. reducing employee turnover
C. cost efficiency
During a period of fast growth a company may experience a loss of "culture." This possibility can be forestalled by A. regular off-site outings B. participating in culture-building training seminars C. ensuring consistency with the original vision, mission and strategy D. limiting the rate at which new employees are added so that each new hire has the time to become acculturated
C. ensuring consistency with the original vision, mission and strategy
In an industry that is consolidated a strategic approach that is likely to be successful is a(n) - strategy, such as that used by Saks Fifth Avenue. A. integrated low-cost/differentiation B. retrenchment C. focused differentiation D. turnaround
C. focused differentiation
Which of the following is not a method described in the text for gathering competitive intelligence? A. talking with disgruntled former employees of competitors B. attending industry conferences and speeches C. joining the fitness centers to which competitors' CEOs belong D. talking with job candidates who currently work for competitors
C. joining the fitness centers to which competitors' CEOs belong
This competitive response to a strategic threat is generally adopted when the threat has spread widely. Threatened companies turn to very aggressive moves such as legal action, giving away the benefits offered by the new competitor for free, or engaging in a process of continuous improvement to existing products. A. containment B. absorption C. neutralization D. shaping
C. neutralization
This type of company tends to view the industry from its own perspective and that of customers rather than being concerned with the competition and is often a leader of industry change. A. Analyzer B. Defender C. Prospector D. Reactor
C. prospector
Industries mature when demand begins to slow down. Often this is because the market is -, meaning there are few new customers to bring into the industry A. soft B. volatile C. saturated D. standardized
C. saturated
Sources of timing advantages that first movers may enjoy include an installed base and its associated buyer switching costs, early building of a reputation, preemption by locking out competitors from locations or supply sources, and A. being able to conduct more accurate market research. B. founding a trade association C. setting a standard D. creating ties to regulatory agencies
C. setting a standard
What of the following is NOT one of the industry life cycle stages? A. introduction B. growth C. shakeout D. maturity
C. shakeout
Two kinds of advantages that can accrue to those who are first movers into an industry or market are timing advantages and - advantages. A. monopoly B. mobility C. size D. pricing
C. size
Richard D'Aveni's concept of hypercompetition suggests that the only real source of competitive advantage is A. first-order learning. B. expert competitive intelligence. C. speed. D. a sound strategic plan.
C. speed
Which of the following is a technique, described in the text, for gathering competitive intelligence? A. dumpster diving B. tracking the flight plans of corporate aircraft C. talking with suppliers D. temporarily taking a job with a rival
C. talking with suppliers
Industries evolve through life cycle stages because A. firms develop new knowledge about how to create value B. demand for the industry's products and services grows C. companies constantly enter and leave the industry D. A and B are fundamental determinants of industry evolution
D. A and B are fundamental determinants of industry evolution
We can see from the opening vignette for the chapter that the introduction of the MP3 player has had which of the following effects? A. CD sales have declined dramatically since their peak in 2000. B. At least one major music retailer has gone bankrupt and been liquidated. C. Music labels such as Warner and EMI find it more difficult to support musicians. D. All of the above have been associated with the introduction of the MP3 player.
D. All of the above have been associated with the introduction of the MP3 player.
This famous technology prediction claimed that the number of transistors placed on an integrated circuit would double about every two years. A. the Intel postulate B. Amdahl's argument C. the processor theory D. Moore's law
D. Moore's law
This is a joint venture or partnership formed with other companies (sometimes competitors) to develop a new technology, process, or other type of strategically important resource. A. a research consortium B. an integrated associative venture C. a corporate marriage D. a strategic alliance
D. a strategic alliance
The challenges inherent in the commercialization stage of the organizational life cycle include A. consistent production or service delivery at a larger scale B. the development of administrative reporting and control systems C. hiring the right people to staff the growing business D. All of the above are challenges in the commercialization stage.
D. all of the above are challenges in the commercialization stage
Which of the following is a potential disadvantage that results from being a first mover? A. pioneering costs B. technology uncertainty C. demand uncertainty D. all of the above are potential disadvantages that result from being a first mover
D. all of the above are potential disadvantages that result from being a first mover *Inertia is also a disadvantage that results from being a first mover.
A specific tactic associated with the "defy" tactical response style is A. dismiss B. challenge C. attack D. All of the above are specific tactics associated with the "defy" tactical response style.
D. all of the above are specific tactics associated with the "defy" tactical response
A style of tactical response that companies might use in dealing with regulators, direct competitors, and stakeholders is to A. acquiesce. B. compromise. C. defy. D. All of the above are styles of tactical responses.
D. all of the above are styles of tactical responses
- is an industry condition in which a standard set of features and benefits is required for any serious competitor, and in which the materials needed to provide those features and benefits are readily available from a variety of suppliers. A. developmental stability B. product consistency C. supplier stability D. commoditization
D. commoditization
In a fragmented industry it may be desirable to initiate a(n) -, where many small competitors are combined into a larger company. A. industrial trust B. interlocking structure C. concentration process D. industry roll-up
D. industry roll-up
A company in an industry where there is little pressure for efficiency and where variations in country markets is significant would choose a - international strategy A. global B. transnational C. centralized single country D. multidomestic
D. multidomestic
T or F: The strong performance of a company subsequent to an acquisition depends on managers who are pressed to make up for having paid a high acquisition premium; without that incentive performance is likely to be low.
F
T or F: The three vignettes that open the chapter show that all merger and acquisition activity involves companies buying businesses that are related to what they already do.
F
T or F: Vertical diversification results from two companies combining to share supply chains.
F
The balanced scorecard model considers only the most important stakeholder - shareholders - in its definition of company performance.
F
The final step in the value-driver-action implementation process is to ask every employee to state how his or her contributions have made the company better over the prior year.
F
The pilots employed by airlines in the United States are typically in the strategic core of the company.
F
The support staff of an organization consists of groups whose activities provide advice and policy input to the core.
F
T or F: A company that provides a complete, detailed record of all available public information about a particular company, area, person, or situation offers what is known as a data development service.
F A company that provides a complete, detailed record of all available public information about a particular company, area, person, or situation offers what is known as a clipping service.
T or F: An Analyzer merely reacts (often very slowly) to changes or conditions in the competitive environment rather than actively seeking advantages and is usually an unstable form of organization.
F A reactor merely reacts to changes or conditions in the competitive environment rather than actively seeking advantages and is usually an unstable form of organization.
T or F: Horizontal diversification occurs when a merger or acquisition combines two companies that are in different industries but share the same customers.
F Horizontal diversification occurs when a company enters another business in the same industry and essentially employs the exact same value chain as is used in its core business.
T or F: Operational fit occurs when an acquiring corporation can take advantage of synergies stemming from the support activities of the value chain, such as in human resource management or research and development.
F Operational fit occurs when the corporation is able to combine similar primary value chain activities, such as manufacturing, transportation and warehousing. Management fit occurs when synergies might be realized in the administrative and support activities of the value chain.
T or F: The containment competitive response to a strategic threat involves forming a strategic alliance with the threatening organization or forming a group to influence the threatening organization by setting broad standards for accepted and acceptable practices in the industry.
F Shaping is undertaken as a competitive threat develops by organizing a group to influence the market through setting broad standards and creating acceptable practices within the industry.
T or F: The annulment competitive response to a strategic threat often involves aggressive actions such as legal maneuvers, giving away benefits offered by a new competitor for free, or engaging in a process of continuously improving existing products.
F The neutralization competitive response to a strategic threat often involves aggressive actions such as legal maneuvers, giving away benefits offered by a new competitor for free, or engaging in a process of continuously improving existing products.
T or F: The technique that causes organizations to consider dramatic shifts in their business environments over a set time period and then to map out a set of actions to take if warning signs of those shifts occur is called environmental impact analysis.
F The technique that causes organizations to consider dramatic shifts in their business environments over a set time period and then to map out a set of actions to take if warning signs of those shifts occur is called scenario analysis.
A typical orchestra is organized into a matrix structure, with each musician reporting to both the conductor and the concertmaster.
F - simple structure
T or F: A disadvantage to being a first mover is that a company moves down the experience curve and loses the benefits from its experiences.
F: Experience curve is considered a size advantage of being a first mover; the longer a company has done something, the more efficient they become because they can use their learning to improve their methods of operation.
T or F: In the commercialization stage of the organizational life cycle the company must develop a prototype product or service.
F: Having invented something, the company must figure out how to consistently make it or provide it in some quantity.
T or F: As revenue growth slows in the maturity stage of the organizational life cycle, profitability growth depends on innovation and creating routines that allow employees to work without direction.
F: The essential resource challenge for companies in the mature stage is to develop secondary or complementary resource positions, beyond those that led to their initial path of success.
T or F: An options approach to organizational renewal relies on the incentives provided by awarding stock options to managers at different levels of the firm.
F: The options approach entails making small investments in a series of internal new business developing initiatives and then evaluating whether further funding is warranted for each based upon the development milestones each effort achieves.
T or F: The organizational life cycle has the same stages as the industry life cycle.
F: The stages of the organizational life cycle are conception, commercialization, growth and maturity.
"Style" in the McKinsey 7-S framework refers to the symbolic behavior of the organization, and includes things like the company's dress code and the way employees treat each other.
T
A core responsibility of strategic leadership is establishing a culture that matches one's personal leadership style, as Steve Jobs has done at Apple.
T
A lag metric represents results that the company would expect to observe for each of the subdimensions in any one perspective of a balanced scorecard.
T
A lead metric, in the context of the balanced scorecard model, represents the observable actions of employees that the firm hopes will lead to the results it is ultimately trying to achieve.
T
A matrix structure is intended to make it easy to reassign functional specialists to lines of business where the work is most needed, since the normal ebb and flow of business can create situations in which a particular line of business is over-staffed while another is under-staffed.
T
As a company increasingly depends on a low-cost leadership competitive approach, consistency of output, or significant control over operations it will tend toward the direct supervision end of the coordination methods continuum.
T
Causal logic is a concept that refers to the assessment that a manager makes about the reasons that things work the way they do.
T
Communication, coordination, and control are issues that lie at the heart of aligning an organization's structure with its strategy.
T
Effective metrics should be able to be translated to all levels of employees in the organization
T
Growth in size and the need to better manage specialization often lead companies to adopt a functional structure.
T
If a company is using a differentiation approach, solely capturing information about efforts to reduce costs will be unproductive in allowing top management to assess whether progress is being made toward the company's important goals.
T
In a restructuring process one may decide what businesses to divest by looking at the same criteria that were used in making an acquisition decision.
T
In a simple structure all areas of the company report to a single person.
T
In the opening vignette for the chapter the CEO of McDonald's believed that the implementation of control measures would lead to improved performance to counter significant industry changes and competitive threats.
T
In the value-driver-action model of implementation key value drivers are behaviors linked to the primary activities of the value chain but not behaviors that might be considered linked to support activities
T
One of the weaknesses of a matrix structure is that employees each have two bosses - a functional area head and a line of business head.
T
Post-acquisition efforts likely to improve the chances for a successful combination include the immediate establishment of an integration team, the visible involvement of senior managers, and early and frequent communication.
T
Qualitative metrics are measures of success that are descriptive and relative rather than point-specific.
T
Stretch metrics are measures that are perceived by employees to be flexible and subject to change should targets not be met.
T
T or F: A Defender carefully attends to a limited number of key criteria, analyzes their costs and vigorously defends its competitive position against all rivals.
T
T or F: A global strategy should be used when there is high pressure for value chain efficiency and value is created upstream, closer to manufacturing or supply activities.
T
T or F: A strategic business unit is that part of a company charged with developing both business and corporate strategy.
T
T or F: A transnational international strategy is appropriate when value is added downstream, near the customer or use, and efficiencies attained through scale and scope are competitively important.
T
T or F: A variety of studies over the years conclude that diversification is nearly as likely to destroy shareholder value as it is to create shareholder value.
T
T or F: Classifying companies as Prospectors, Analyzers, Defenders or Reactors depending on their relative industry positions helps to predict the likely strategic and tactical moves that companies will make.
T
T or F: Competitive responses to strategic threats, in contrast with those for tactical moves, include containment, shaping, and neutralization among others.
T
T or F: Corporate strategy answers the question "What businesses should we be in?" while business strategy answers the question "How should we compete in this business?"
T
T or F: Diversified corporations are a significant part of the business landscape in the United States; indeed, they comprise most of the Fortune 500 companies.
T
T or F: Fast-growth organizations often find themselves challenged to implement the right kind of organizational structure to support their strategic approaches.
T
T or F: Firms that find themselves in situations where their returns are not as they anticipated are more likely to act in unpredictable ways, such as by starting industry-damaging price wars.
T
T or F: First mover advantages can be classified as stemming from either timing or size.
T
T or F: Founders of a company in the conception stage of the organizational life cycle face the tasks of having a product or service that works, developing a market entry strategy, and obtaining financial capital.
T
T or F: Fragmented industries behave much more like perfectly competitive markets than other types of industries and, therefore, there are few opportunities to earn superior profits.
T
T or F: From an opening vignette for the chapter we see that game console manufacturers have increased the frequency with which they introduce new consoles.
T
T or F: General Electric is an example of a conglomerate while Warren Buffet's company, Berkshire Hathaway, is an example of a holding company.
T
T or F: In the 1980s conglomerates began to shed unrelated businesses and leveraged buyouts (LBOs) were one tool used to accomplish this. An LBO is when a company is bought primarily using debt and often it is the managers of the company who buy it with the help of this financial tool.
T
T or F: In the growth stage of the organizational life cycle flaws in the systems and processes developed by the business are exposed.
T
T or F: In the maturity stage of the industry life cycle companies shift value creation activities toward identifying cost efficiencies.
T
T or F: Microsoft's approach to selling the Xbox 360 illustrates the first mover advantage that comes from creating an installed base and the existence of buyer switching costs.
T
T or F: One might glean valuable information about competitors while attending industry conferences or listening to the speeches given by competitors' senior managers.
T
T or F: One of the benefits of market power (a reason for diversification) is that a firm can have more influence with the EPA and other government agencies.
T
T or F: Related diversification results from a merger or acquisition in which there is some similarity of industry and/or value chain between the corporation and the company it seeks to acquire.
T
T or F: Risk spreading as a reason for diversification involves attempts to reduce the unsystematic risk that a firm experiences.
T
T or F: Styles of tactical responses that are relatively passive include acquiescence and compromise.
T
T or F: The consolidation of an industry that occurs when many small competitors are combined into a larger company is called an industry roll-up.
T
T or F: The growth motivation for diversification is driven, in part, by the desire of managers to preside over a larger firm.
T
T or F: The kinds of decisions typically made by those engaged in corporate strategy include establishing business unit investment priorities, deciding which industries to enter and exit, and making resource and management transfers.
T
T or F: The process of due diligence requires managers to examine closely all of the operating, financial, and other aspects of a company that they propose to acquire.
T
T or F: The stages of the industry life cycle are introduction, growth, maturity, and decline or renewal.
T
T or F: The success of a focused differentiation strategy in a consolidated industry in part depends upon the existence of mobility barriers.
T
T or F: The tactical responses to competitive moves associated with manipulation, the most active tactical response style, include co-opt, influence, and control.
T
T or F: There are significant ethical issues to be considered when talking to current or former employees of a competitor, especially when a current employee of a competitor is interviewing at one's company.
T
T or F: There are three kinds of "fit" that offer the opportunity for synergistic gains from an acquisition: Market fit, management fit, and operational fit.
T
T or F: Two occasions when cooperation between competitors may be useful are when competition is unusually destructive or when collaboration can lead to developments that exceed the capacity of any one company.
T
T or F: Value creation in the introduction stage of the industry life cycle occurs internally through product design and externally by building upstream and downstream relationships.
T
T or F: When a corporation can take advantage of synergies from relationships with suppliers and/or customers in an acquisition this is known as market fit.
T
The "complete alignment of the company's strategy , structure, and value chain" describes the concept of fit.
T
The GE Business Development Matrix and the BCG Growth Share Matrix are both examples of a portfolio management tool used to direct investment among businesses in a diversified firm.
T
The central notion of the balanced scorecard is that financial measures of performance are the result of a variety of activities in which people engage and not the cause.
T
The conflicts created by specialization, centralization and formalization are a major issue in both large and small organizations.
T
The coordination method of mutual adjustment seems to work best when there is a small group of people and the means to success is uncertain and a strong degree of innovation is required.
T
The coordination required in an organization becomes more difficult as the business becomes more multidimensional with different products and services.
T
The group or groups of an organization that are directly responsible for the competitive advantages that it enjoys are called the core.
T
The key components of an organization to be considered in the structuring process are the core, techno structure, and staff support.
T
The metrics created for each employee or level must be related to activities that are under the control of that employee or level.
T
The range or variation in a quantitative metric is as important and powerful an indicator of performance improvement as the average.
T
The second step in the value-driver-action implementation process requires managers to articulate desired statements from the point of view of stakeholders, such as "I'm really attracted by the look of the new BMWs."
T
When metrics are translated to the functional level to be effective they should be connected to incentives.
T
A ________ organizational structure is where employees are grouped by expertise or similar activities such as marketing or accounting/finance. a. functional b. divisional c. matrix d. simple
a
A company in which 70-95 percent of revenues comes from a single business is known as a(n) a. dominant business. b. conglomerate. c. integrated producer. d. related constrained business.
a
Gains in pricing authority, increased bargaining power, and mutual forbearance all underlie the ________ reason for diversification. a. market power b. market entry c. risk reduction d. shareholder
a
Many of the merger and acquisition deals announced in the newspapers claim that synergies from the combined companies will come from ________ and this has become a prevalent justification for mergers and acquisitions. a. economizing b. shared information c. international presence d. the CEO
a
One difficulty that employees face when organized into a matrix structure is that a. they each report to two bosses. b. there is no clear path for advancement. c. functional area managers make unreasonable demands. d. there is no clear way to physically arrange people to facilitate communication
a
One of the important, if not the most important, uses of portfolio management tools is a. to identify strategic linkages between the businesses in the portfolio. b. to effectively allocate capital to the different businesses in the portfolio. c. to shame the managers of underperforming businesses into higher levels of performance. d. to show analysts the structure of the conglomerate in a way that could be easily understood
a
The creation of written rules and procedures to replace "seat of the pants" methods for ensuring consistency in organizational operations is called a. formalization. b. bureaucratization. c. specialization. d. rationalization.
a
The pilots employed by commercial airlines in the United States are typically in the ________ of the company. a. techno structure b. strategic core c. policy group d. non-unionized part
a
When a corporation believes it can take synergistic advantage of administrative and support activities of the value chain in making an acquisition it is envisioning ________ fit. a. management b. market c. agency d. structural
a
When a corporation reduces its level of diversification and strategically refocuses on core businesses it is a. downscoping. b. "trimming the fat." c. downsizing d. re-synergizing
a
Which of the following is a variation of related diversification in which both the acquirer and the acquired are in the same industry and have essentially the same value chains. a. horizontal b. vertical c. cross-sector d. oblique
a
Within a diversified company a set of businesses that share identical or very similar strategies or strategic challenges is called a(n) a. strategic business unit. b. related group. c. intra-company planning group. d. common threat subunit.
a
A ________ is a corporation that owns the majority of voting shares of other companies, but that allows the other companies to operate as independent entities. a. conglomerate b. holding company c. passive LLC d. multiple proprietor
b
Companies diversify for a number of general reasons. Which of the following is not one of those reasons? a. seeking growth b. to increase the number of shareholders c. to gain market power d. to reduce financial risk
b
For the period beginning in 1949 and through 1974 the percent of Fortune 500 firms that operated in a single business ________, while the percent that were diversified ________. a. remained constant; fell b. fell; rose c. fell; remained constant d. rose; fell
b
High-yield debt that is rated below investment grade at the time of purchase and, beginning in the 1980s, has often been used in mergers and acquisitions is called a. speculative paper. b. a junk bond. c. submarine debt. d. investment-derivative debt.
b
In a ________ organizational structure all areas of the company report to a single person. a. functional b. simple c. one-dimensional d. creative
b
The groups that are directly responsible for the competitive advantages that the firm enjoys are known as a. the techno structure. b. the core. c. line management. d. the key operators
b
The organizational structure that creates both a functional home and divisional home for each employee is called a(n) ________ structure. a. m-form b. matrix c. business neighborhood d. integrated
b
The two major types of diversification are ________ and ________ diversification. a. market; industry b. related; unrelated c. corporate; business d. resource; capability
b
This is a method of coordination where every individual knows everything that is happening in the organization and everyone adapts their work patterns for the conditions at hand. a. adhocracy b. mutual adjustment c. flattened e-mail d. ongoing phone tree
b
What type of diversification results when there is some similarity of industry or value chain between a business and the company that it wishes to acquire? a. congruent b. related c. matching d. attractive
b
Which of the following is not a structural facet of organizations? a. specialization b. operations. c. centralization d. formalization
b
_____________ is a method of managing or coordinating employees based upon the operations that they perform. a. direct supervision b. standardization of work processes c. outcome oversight d. standardization of skills
b
. ________ strategy involves the types of decisions made and direction created for a company that operates multiple lines of business. a. Business b. Acquisition c. Corporate d. Structuring
c
22.One of the factors on which a successful acquisition depends is the ability to capture synergies. Which of the following makes this a difficult task? a. The acquirer tends to "overcommunicate" during the process. b. The synergies dissipate over the time that it takes to complete the deal. c. It is very hard to integrate the cultures of the companies involved. d. Synergies don't want to be captured; they wish to remain free.
c
A method for managing or coordinating a large number of employees based on their abilities and proficiencies as validated by some external authority is called a. loosely-coupled management. b. tacit coordination. c. standardization of work skills. d. minimal interference management.
c
A(n) ________ organizational structure is used when everyone in a group is working toward a welldefined goal but the means to achieve that goal are not clear. a. matrix b. management by objectives (MBO) c. adhocracy d. incremental
c
Functional structures are an effective way to organize when a. the SEC requires the company to begin reporting its financial results. b. a company has completed the process of downscoping. c. business activity or volume has outgrown a simple structure. d. there is a need to train employees for general management positions.
c
Noncore functions of the business can be classified into two distinct areas: ________ and ________. a. domestic; international b. critical; non-critical c. techno structure; staff support d. primary activities; support activities
c
Should a company choose to divest a business unit it can create a new company from the business unit with its own shares of stock and its own board of directors. This is called a(n) a. satellite company. b. asset sale. c. spin-off. d. re-liquidation.
c
The impetus for growth as a reason to diversify comes from ________ among other things. a. a desire to reduce the complexity of operations b. the need to placate governmental agencies c. the benefits to management and employees d. concerns about the natural environment
c
The issue of where important decisions are made in an organization, either by upper management or at lower levels of the firm, is one of a. formalization. b. accession. c. centralization. d. policy capturing.
c
When a company enters a new business in a different industry from that in which it currently operates and does not expect to achieve any value chain synergies, this is ________ diversification. a. financial b. capital-driven c. unrelated d. opportunistic
c
Which of the following is not a potential source of synergy between two companies that are proposing to merge? a. market fit b. operational fit c. legal fit d. management fit
c
A diversifying company might enter an attractive market by way of an acquisition instead of by internally developing a new business because a. it can do an end-run around the barriers to entry. b. it can avoid the costs and uncertainty inherent in building a new business. c. an acquisition gets the company into the market much more quickly. d. All of the above favor an acquisition over internal development.
d
A factor that is critical to engineering a successful acquisition is to a. select a target in an attractive industry. b. perform thorough due diligence on the acquisition target. c. avoid paying too high of an acquisition premium. d. All of the above are critical to engineering a successful acquisition
d
A typical decision made within the context of corporate strategy is a. which industries to enter and exit. b. establishing business unit investment priorities. c. effecting resource and management transfers. d. All of the above decisions occur within the context of corporate strategy.
d
A variety of studies over the years conclude that diversification is nearly as likely to ________ shareholder value as it is to ________ shareholder value. a. divide; unite b. dramatically increase; minimally increase c. maximize; optimize d. destroy; create
d
It becomes increasingly difficult to coordinate the activities of people in an organization as a. the number of employees increases. b. employees are increasingly dispersed geographically. c. the business becomes more multidimensional with different products, services, and operating divisions. d. all of the above contribute to difficulties in coordination.
d
The five coordinating mechanisms used by organizations can be placed on a continuum that ranges from ________ at one end to ________ at the other end. a. standardization of work skills; standardization of output b. policies; procedures c. instant messaging; written memos d. mutual adjustment; direct supervision
d
The fundamental issue that lies at the heart of the alignment of organizational structure with strategy is a. communication. b. coordination. c. control. d. All of the above are issues at the heart of aligning strategy and structure.
d
Which of the following is a variation of related diversification in which the acquirer and the acquired are in the same industry and the combined companies perform more of the activities in the industry value chain than either did separately before the acquisition? a. horizontal b. cross-sector c. aggregated d. vertical
d
Which of the following is not one of the five basic types of organizational structure? a. simple b. functional c. divisional d. network
d
Which of the following is not one of the stages in the organizational life cycle? A. conception B. decline C. commercialization D. growth
B. decline
Which of the following is one of the characteristics of a benign industry environment? A. Market demand exceeds supply. B. The industry is extraordinarily cost-focused. C. The industry is protected by one or more government regulations. D. Managers of industry participants are generally kind and humane.
A. Market demand exceeds supply
Value creation in the growth stage of the industry life cycle is typically accomplished by A. achieving scale to serve a broad swath of customers or markets B. continuing to add features to products in an effort to discover customer preferences C. strict attention to costs so that rivals do not become the leaders in this area D. tinkering with the organization's capital structure so that it is rationalized
A. achieving scale to serve a broad swath of customers or markets
When competition is unusually destructive or industry developments are desired that exceed the capacity of any one company, a ________ response with competitors may be needed. A. cooperative B. creative C. governmental D. tit-for-tat
A. cooperative
Innovation results in a wide variety of products or services in the introduction stage of the industry life cycle because A. early entrants are trying to figure out which bundle of characteristics customers prefer B. economic theory tells us that customers always receive the greatest utility from the highest number of product choices possible C. venture capitalists have funded companies with a variety of business models D. none of the above explains why innovation results in a wide variety of products or services
A. early entrants are trying to figure out which bundle of characteristics customers prefer
The dominant problems in the conception stage of the organizational life cycle include innovation efforts, strategy design, and A. raising capital B. identifying activities to outsource C. formalizing the organization structure D. physically locating the business
A. raising capital
As an alternative to decline an industry may be able to renew itself. This can be accomplished by A. reconfiguring the industry value chain B. acquiring the firms producing the products or services that have caused the industry's decline and closing them C. continuing to market the benefits of the industry's existing products so that interest in them is refreshed D. lowering the barriers to entry, thereby causing firms with new ideas to enter the industry
A. reconfiguring the industry value chain
The choice of a particular international strategy is driven by two factors, one of which is the source of value creation and the other is A. the pressure for value chain efficiency B. the ease of exporting the firm's products C. the availability of alliance partners in other countries D. the similarity in national culture to that of the firm's home country
A. the pressure of value chain efficiency
The sustainable competitive advantage that is sought by the first company to enter a new industry or industry segment is called: A. returns to novelty B. a first-mover advantage C. returns to innovated entry D. that barrier to fast followers
B. A first-mover advantage
Should a threat be truly strategic, a competitive response such as ________ is needed to avoid a significant impact on the long-term performance of the company. A. compromise B. absorption C. retrenchment D. divestment
B. absorption
Which of the following is not a motive for expanding internationally? A. new geographic revenue opportunities B. avoiding environmental regulations C. spreading risk D. achieving location advantages
B. avoiding environmental regulations
Products or services that have a relationship with and can affect the value of a company's own products or services are known as A. substitutes B. complements C. counterparts D. value enhancers
B. complements (?)
"Creating a single company currency," one of the five keys to successful implementation control, refers to the idea that everyone with an acceptable level of performance or better should receive equal merit raises.
F
A functional structure groups people together by their abilities as measured by an aptitude test given during the hiring process.
F
An adhocracy can be effective under certain special conditions such as when goals are unclear and there is no set deadline for a task.
F
Drawbacks of portfolio techniques include the dynamic view that they present and the overly precise recommendations for businesses in different areas of the matrices.
F
Guiding an organization through the combination of dynamic challenges from the general environment, aggressive competitors, demanding customers, and other stakeholders is a process that is scientific and requires very little, if any, "art."
F
It is crucial that the metrics of the company be unique to its mission. That is why ROE (return on equity) is a good metric for any company to use.
F
Organizations use five coordinating mechanisms, ranging from the standardization of work processes at one end of a continuum to the standardization of work output at the other end of the continuum.
F
Perceptual measures of performance should not be used since they only indicate how a customer or supplier feels about a company's products or processes.
F
Quantitative metrics may be numerically based or they may include things like descriptive statements made by customers.
F
Specialization, as one of the structural facets of organizations, refers to how narrow or broad the product scope of the company is.
F
Strategists using the McKinsey 7-S implementation framework identify strategy, structure, and systems as "soft" S's.
F
T or F: A firm's suppliers are not often a source of information about competitors since rivals typically use different suppliers.
F
T or F: A motive for diversification is that managers are aware that diversified firms always outperform undiversified firms.
F
T or F: A set of strategy or competitive maps showing the current relative market positions and historical trending of companies in an industry is unlikely to help a company predict competitor moves since past behavior does not predict future behavior well.
F
T or F: As an alternative to decline, the renewal of an entire industry depends solely on its ability to shift to complementary products or services.
F
T or F: Being a first mover in an industry or market guarantees that a company will develop a sustainable strategic position.
F
T or F: In the 1960s and 1970s conglomerates were waning in number since many industries had de-matured and were now ripe for organic growth.
F
T or F: It can be seen in the opening vignette for the chapter that the introduction of MP3 players has caused a decline in the sales of CDs but has had few other effects.
F
T or F: One of the reasons that companies expand internationally is to avoid strict environmental regulations in their home countries.
F
T or F: Products or services that come bundled with another product at no extra charge - such as a trial size sample of a consumer product - are called complements.
F
T or F: Standardization is an industry condition in which companies tend to adopt identical manufacturing processes because of intense rivalry.
F
T or F: The passage of industries through the life cycle stages has become significantly faster for all industries in the past two or three decades.
F
