Strategic Management Final

A manufacturing business pursuing cost leadership is likely to: A. rely on experience effects to raise efficiency. B. use advertising to build brand image. C. put heavy emphasis on product engineering. D. focus on a narrow market segment.

A

Backward integration is when a company A. acquires a supplier. B. owns its distribution channels. C. acquires a customer. D. acquires a competitor.

A

Companies sometimes diversify into unrelated businesses in order to A. reduce portfolio risk. B. share infrastructure. C. capitalize on core competencies. D. all of the above.

A

Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of which type of organizational structure? A. matrix B. functional C. holding company D. divisional

A

In managing the corporate portfolio, the BCG matrix would suggest that A. question marks can represent future stars if their market share is increased. B. cash cows require substantial cash outlays to maintain market share. C. stars are in low growth markets and can provide excess cash to fund other opportunities. D. dogs should be invested in to increase market share and become cash cows

A

Strategic business unit (SBU) and holding company structures result from extensive A. diversification. B. international expansion. C. organizational flattening. D. vertical integration.

A

The primary advantage of a global strategy is _________ while the primary disadvantage of a global strategy is _________ . A. efficiency / interdependence B. interdependence / diseconomies of scale C. responsiveness to local conditions / lack of scale economies D. lower transportation costs / lack of responsiveness to local conditions

A

The primary aim of strategic management at the business level is: A. achieving competitive advantage. B. maximizing differentiation of products and/or services. C. achieving a low-cost position. D. maximizing risk to return trade-offs through diversification.

A

The primary means by which a firm can diversify are ________, ________, and ________. A. mergers and acquisitions; joint ventures and strategic alliances; internal development B. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital C. mergers and acquisitions; internal development; differentiation D. mergers and acquisitions; differentiation; overall cost leadership

A

The three primary dimensions of organizational structure are A. complexity, formalization, and centralization. B. functional, divisional, and matrix. C. policies, strategies, and goals. D. differentiation, core competency, and spatial dispersion.

A

To meet market needs companies sometimes change product names so that the name in the local language is culturally meaningful. This is an example of a company using ________ strategy. A. a multidomestic B. a transnational C. a single country D. an international

A

Which of the following describes the most typical order of entry into foreign markets? A. exporting, licensing, franchising, joint venture, and wholly owned subsidiary B. exporting, franchising, licensing, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. franchising, licensing, exporting, joint venture, and wholly owned subsidiary

A

Which of the following is an advantage of a functional type of organizational structure? A. Pooling of specialists enhances coordination and control. B. It is easy to establish uniform performance standards. C. It facilitates the development of general management talent. D. Decentralized decision-making enhances an organization-wide perspective across functions.

A

Which of the following statements about corporate level strategy is true? A. As part of corporate level strategy, managers often need to make acquisition and divesting decisiions. B. A company which competes in only one business area must develop a corporate level strategy to remain competitive. C. Corporate level strategy is developed with a clear set of strategic goals and a well-defined mission. D. All of the above statements are true.

A

Which of the following statements about strategy implementation is true? A. Implementation is difficult because human nature resists change. B. Planning and implementation at the strategic level are equally difficult. C. Computers have made implementation easier today than in the past. D. All of the above are true.

A

Which statement regarding competitive strategy is true? A. More than one competitor can successfully pursue a differentiation strategy within the same industry. B. Firms pursuing an innovator strategy hope to gain benefit from economies of scale. C. According to Porter, firms pursuing multiple competitive strategies have a better chance of success than firms pursuing a single strategy. D. None of the above are true.

A

A benefit of being the second mover in an industry is: A. higher profit margins than the first mover. B. learning from the mistakes of the first mover. C. sustaining competitive advantage based on proprietary knowledge. D. all of the above.

B

A firm following a focus strategy must focus on: A. rising cost of inputs. B. a market segment or group of segments. C. avoiding entering international markets. D. governmental regulations.

B

Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems? A. Principals and agents have differing attitudes toward risk. B. Stockholders and management align with external stakeholders. C. Goals conflict between principals and agents. D. Verification of actual agency activity is expensive and difficult to obtain.

B

An organization with a simple structure would typically be A. large. B. small. C. pursuing a cost leadership strategy. D. at a mature stage of development.

B

At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as improving their accounting activities and centralizing union negotiations. This is an example of creating value by using: A. unrelated diversification to acquire financial synergies through portfolio management. B. unrelated diversification to acquire synergies through corporate restructuring and parenting. C. related diversification to acquire economies of scope by leveraging pooled negotiating power. D. related diversification to acquire market power by leveraging core competencies.

B

Diversification initiatives include all the following except: A. mergers and acquisitions. B. shareholder development. C. strategic alliances. D. joint ventures.

B

External governance control mechanisms include all the following except A. auditors. B. competitors. C. analysts. D. media.

B

In the BCG Matrix, a ________ is a business that has a low market share in an industry characterized by high market growth. A. star B. question mark C. cash cow D. dog

B

In the ________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. maturity B. introduction C. growth D. decline

B

Market power is derived from: A. innovation. B. firm size and reputation. C. the marketing talents of top management. D. synergy.

B

Markets that are volatile and innovative are called: A. slow-cycle markets. B. fast-cycle markets. C. standard-cycle markets. D. fragmented markets.

B

The authorized production and sale of clothing bearing pictures of Mickey Mouse and other Walt Disney characters by manufactures in foreign countries is an example of A. exporting. B. licensing. C. franchising. D. joint venture.

B

The downsides or limitations of mergers and acquisitions include all of the following except A. Premiums that are frequently paid to acquire a business are large. B. It is a slow means to enter new markets and acquire skills and competences. C. There can be many cultural issues that can doom an otherwise promising acquisition. D. Difficulties exist in integrating the activities and resources of the acquired firm into ongoing operations.

B

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all the following factors except the A. desire to get future auditing contracts from the company. B. failure of U.S. audit firms to hire technically qualified professionals. C. desire to get consulting work from the company because most audit firms also do consulting work. D. fact that auditors are appointed by the firm.

B

The most expensive and risky entry mode is A. joint ventures. B. wholly owned subsidiaries. C. franchising. D. strategic alliances.

B

The primary participants in corporate governance are all of the following except A. the shareholders. B. key stakeholders such as financial institutions. C. management (led by the CEO). D. the Board of Directors.

B

The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from A. reducing their exposure to currency risks. B. economies of scale. C. optimizing the location for many activities in their value chain. D. higher prices in their domestic markets.

B

The traditional approach to strategic control is sequential. Which of the following is not one of the steps in the sequence? A. Strategies are formulated and top management sets goals. B. Action plans are submitted by lower level managers. C. Strategies are implemented. D. Performance is measured against the predetermined goal.

B

Which of the following is an example of a non-equity strategic alliance? A. Two companies join together to create a third company. B. An exclusive contract is granted to a company to distribute another company's products. C. Two strategic partners own equal shares in a venture. D. Two strategic partners agree to sell bonds instead of stock to finance a joint venture.

B

Which of the following is not a source of political risk in many countries? A. the presence of violent conflict B. the presence of the rule of law C. the presence of military turmoil D. the presence of social unrest

B

________ are obstacles in which the design of organization structure, information processing, and reporting relationships, impede the proper flow and evaluation of information. A. Barriers to entry B. Systemic barriers C. Political barriers D. Behavioral barriers

B

A ________ is a business in which a multinational company owns 100 percent of the stock. A. franchising operation B. joint venture C. wholly owned subsidiary D. strategic alliance

C

A company with a successful low cost producer strategy is most likely to have ________ as its dominant value and a strategic leader with a(n) ________ background. A. speed; administrative B. service; accounting C. efficiency; accounting D. efficiency; marketing

C

A corporation's board of directors has a duty to ensure that the company is run consistent with the long-term interests of the stockholders. Which of the following is NOT a duty of the board of directors? A. Determine top management compensation. B. Replace the CEO if necessary. C. Prevent a hostile takeover. D. Provide advice to top management.

C

A firm can achieve differentiation through all the following means except: A. adding additional product features. B. better customer service. C. offering lower prices to frequent customers. D. improving brand image.

C

According to Dr. Mueller, A. management is about coping with change, whereas leadership is about coping with complexity. B. management is about coping with technology, whereas leadership is about coping with innovation. C. management is about coping with complexity, whereas leadership is about coping with change. D. instilling a vision is equally important for management and leadership.

C

According to Miles and Snow, a firm that imitates the innovations of the first mover and is the second mover in an industry can be labeled: A. a reactor. B. a defender. C. an analyzer. D. a copy cat.

C

Firms following a global strategy strive to offer ________ products and services as well as locate manufacturing, research and development, and marketing activities in a limited number of locations. A. internationally differentiated B. widely differentiated C. standardized D. more expensive local

C

Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them? A. using unrelated diversification to acquire financial synergies B. using related diversification to acquire market power C. using related diversification to acquire parenting and restructuring synergies D. using related diversification to acquire economies of scope

C

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. global strategy B. transnational strategy C. multidomestic strategy D. overall cost leadership strategy

C

It is generally argued that the takeover constraint deters management from A. increasing the level of borrowing of a firm. B. declaring dividends. C. engaging in opportunistic behavior. D. considering acquiring other companies.

C

Multinational firms are constantly faced with the decision of choosing between ________ adaptation and ________ integration. A. global; global B. global; local C. local; global D. local; local

C

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by: A. competing in an industry for a long time. B. spreading out a given expense or investment over a greater volume. C. repeating a process until a task becomes easier. D. hiring more experienced personnel.

C

Panasonic entered the market in China and found that it needed to balance global integration with local adaptation. It set up a Lifestyle Research Center in China to interpret data on customer wants and needs. This is an example of a company using ________ strategy. A. a single country B. an international C. a transnational D. a multidomestic

C

Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate research and development facility and staff departments that support all the Polaris operating divisions. This is an example of creating value by using: A. unrelated diversification to acquire financial synergies through portfolio management. B. related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting. C. related diversification to acquire economies of scope by sharing. D. related diversification to acquire market value by leveraging core competencies.

C

Portfolio management matrices are applied to what level of strategy? A. business level B. departmental level C. corporate level D. international level

C

Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change? A. behavioral barriers B. systemic barriers C. political barriers D. entry barriers

C

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of A. sharing activities. B. leveraging core competencies. C. vertical integration. D. pooled negotiating power.

C

The Sarbane Oxley Act imposes restrictions and reporting requirements on all of the following corporate governance parties EXCEPT A. CEOs. B. auditors. C. shareholders. D. CFOs.

C

The board of directors is a group that has a ________ duty to ensure that the company is run consistently with ________ interests of the owners, or shareholders of a corporation and that acts as an ________ between the shareholders and management. A. formal; short-term; advisor B. legal; short-term; intermediary C. fiduciary; long-term; intermediary D. sworn; long-term; advisor

C

The use of cultural or behavioral norms to implement strategy is most closely associated with which of the following management styles? A. Theory X B. Theory Y C. Theory Z D. None of the above

C

Top managers at ABC Company meet every Friday to review daily operational reports and year to date data. This is an example of A. behavioral control. B. strategy formulation. C. informational control. D. strategy implementation.

C

When management uses common production facilities or purchasing procedures to distribute different but related products, they are: A. building on core competencies. B. using portfolio analysis. C. sharing activities. D. achieving process gains.

C

Which of the following best describes corporate governance structure? A. Shareholders elect CEO and CEO selects Board of Directors. B. Chairman of the Board selects CEO and CEO selects management team. C. Shareholders elect Board of Directors and Board of Directors select CEO and management team. D. Board of Directors elect CEO and CEO selects management team.

C

Which of the following does not explain why organizations are prone to inertia and slow to change? A. personal time constraints B. political barriers C. entry barriers D. vested interests in the status quo

C

Which of the following is NOT an organizational basis for a leader's power? A. Legitimate power B. Reward power C. Referent power D. Coercive power

C

Which of the following is NOT considered a lever for strategy implementation? A. Strategic leadership B. Policies C. Strategic alliances D. Systems

C

Which of the following is NOT one of Porter's generic strategies? A. Cost Leadership B. Differentiation C. Prospector D. Focus

C

Which of the following is not a key control lever of behavioral control? A. culture B. boundaries C. structure D. rewards

C

Which of the following is not an example of how organizational culture exerts behavioral control? A. Culture encourages individual identification with the organization and its objectives. B. Culture generates unwritten standards of acceptable behavior. C. Culture sets explicit boundaries. D. Culture helps maintain control by creating behavioral norms.

C

Which of the following is the primary drawback of traditional strategic control systems? A. They are only appropriate when the environment is stable and simple. B. They lead to complacency. C. They lack the flexibility needed to adjust to changes in the environment. D. Goals and objectives cannot be measured with a high level of certainty.

C

3M leverages its competencies in adhesives technologies to many industries, including automotive, construction, and telecommunications. This is an example of creating value by using A. unrelated diversification to parenting, restructuring, and financial synergies through restructuring and parenting. B. related diversification to acquire economies of scope by leveraging pooled negotiating power. C. unrelated diversification to financial synergies through portfolio management. D. related diversification to acquire economies of scope by leveraging core competencies.

D

A company pursuing a low cost producer strategy would most likely exhibit the following with respect to formalization and centralization: A. low formalization, low centralization B. low formalization, high centralization C. high formalization, low centralization D. high formalization, high centralization

D

According to Dr. Mueller, a differentiation strategy can be based on: A. actual differences. B. perceived differences. C. quality differences. D. all of the above.

D

According to the text, corporate restructuring includes A. management restructuring, financial restructuring, and procurement restructuring. B. capital restructuring, asset restructuring, and technology restructuring. C. global diversification, capital restructuring, and asset restructuring. D. capital restructuring, asset restructuring, and management restructuring.

D

Compared to internal product development, acquisitions A. provide quicker access to new markets. B. provide quicker access to new capabilities. C. are less expensive. D. provide both A and B.

D

Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using: A. excess personnel. B. deconstruction expertise. C. increased market positioning. D. parenting expertise.

D

In companies with "strong" cultures, there is A. a reduced need for rules and regulations. B. pressure to conform. C. a tendency to hire people with similar values and beliefs. D. all of the above.

D

In the context of strategy implementation, what is meant by "fit"? A. The leader should fit the strategy. B. The reward system should fit the strategy. C. The structure should fit the strategy. D. All of the above.

D

Procter & Gamble has been eliminating certain non-core strategic business units such as Olay cosmetics. This process is called A. outsourcing. B. refocusing. C. downsizing. D. divesting.

D

The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be A. franchising. B. joint venture. C. licensing. D. exporting.

D

To qualify as an organization, a group of people must have A. structure. B. a collective purpose. C. continuity. D. all of the above.

D

Which of the following elements of culture are common to both organizations and societies? A. Values B. Customs C. Traditions D. All of the above

D

Which of the following is a motive for international expansion? A. Growth B. Economies of scale C. Lower production costs D. All of the above

D

Zappos and Amazon focus on customer service. What purpose does this serve in terms of attaining behavioral control? A. It demonstrates to employees the importance of articulating explicit goals and objectives. B. It gives management more control over employees. C. It uses rewards and incentives to sustain corporate culture. D. It uses culture to sustain their primary source of competitive advantage.

D