WPC 480 Final Exam

· U.S. Personal Consumption Expenditure as a percentage of Global GDP was approximately what percentage in 2019?

16%

· U.S. Global Domestic Product (GDP) as a percentage of Global GDP was approximately what percentage in 2019?

25%

· The two largest trading partner countries for the U.S. in 2019 were which countries of those listed below?

Canada and Mexico

· There are (at least) five different corporate governance models around the world. For the socially responsible governance model, which of the below represents that governance model's decision-making?

Consensus decision making

Clayton Christen from Harvard has developed a conceptualization of innovation he has called disruptive innovation. This type of innovation is based on the idea of what combination of markets and technologies?

Existing markets and new technology

Joseph Schumpeter developed the concept a conceptualization of creative destruction. This is the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." This occurs when innovation deconstructs long-standing arrangements and frees resources to be deployed elsewhere." This process, while important for the macroeconomy, has not seen much turnover (almost none) in the S&P 500. Is this statement true or false

FALSE

· Broadly speaking it can be said that large and well-known publicly-listed U.S. companies have typically not suffered impairment charges since these companies are professionally managed and have had the band-width and deep pockets to conduct deep due diligence and so establish acquisition prices that do not "over pay".

False

Which of the following is not true about the decline stage of an industry life cycle?

Firms that consolidate by purchasing their rivals will find themselves at a disadvantage

. The leading producer of cell phone backup batteries, Progyny, has achieved great success because they produce high-quality battery backups that are not too expensive. Even so, another company that produces lower-quality batteries at the same price has also achieved some success, but not as much as Progyny. Also, in general, the price of backup batteries has declined because of economies of scale and learning. In addition, Progyny has added complementary assets, such as a carrying case. Considering all of these factors, the backup battery industry is most likely in the ________ stage

Growth

The three elements of the Fraud Triangle are based on which of the three below

Pressure, Rationalization and Opportunity

Innovation can be described as problem solving true or false

TRUE

· Most acquisitions are disappointing or outright failures, largely because acquirers overpay. One of the main reasons put forward for this is that for many CEOs incentive compensation is tied to firm size - sales revenue, total assets and number of employees. Is this statement true or false or other?

True

While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data?

While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants

· Stark Industries Inc. manufactures airplane parts. It wants to globalize and is willing to spend a considerable amount to protect its intellectual property. Which of these business ventures makes the most sense for Stark Industries?

acquiring an airplane parts manufacturer in another country

· Denise wants to clearly communicate and create a ________, a key input control, before her team tackles business activities. This way the team will be able to better allocate her firm's scarce resources in order to accomplish the tasks at hand.

budget

A factor favoring the success of disruptive innovation is that

incumbent firms are slow to change.

· When a firm is facing high pressure for local responsiveness and low pressure for cost-reductions, the firm is likely to adopt a(n) ________ strategy according to the integration-responsiveness framework.

localization

· China has been a powerhouse of growth in GDP since the year 2000. It has also has been a major U.S. trading partner. This has resulted in what situation for the U.S.?

o An uninterrupted negative net trade balance over the period from 2020

· Why does a functional structure rely on a flat organizational structure?

o It allows for efficient bottom-up and top-down communication.

· _______, which captures the cultural fit between different firms, is one key element needed when selecting an alliance partner.

o Partner compatibility

· Which of the following is a major issue at the forefront of CEO compensation in recent years?

o the absolute size of the CEO pay package compared with the pay of the average employee

· Similar to Transparency International, the Organization for Economic Co-operation & Development (OECD) has developed a concord called the Anti-Bribery Convention which has 41 signatories. This Convention is focused on the export of corruption, mainly by bribery. The signatories to the convention control about what percentage of world exports and what percent of Foreign Direct Investment (FDI) outflows, respectively?

67% and 90%

Companies have acquired other companies in order to vertically integrate. In the case of the Foxconn Technology Group (owned by Hon Hai Precision Industry Co., Ltd, Taiwan), it has taken a substantial (66%) equity position in Sharp Corporation (Japan). Sharp produces branded appliances and electronics as well as electronic components such as OLED displays for iPhones. Foxxcon is well known as the assembler of Apple's iPhone models. . What is taking this equity position an example of?

Balanced integration

· Bob is the strategic business unit (SBU) CEO in charge of manufacturing cufflinks for men's clothing. While the market he competes in is low growth, Bob's SBU's earnings and cash flow are both ranked at high and stable. When examining Bob's SBU through the Boston Consulting Group (BCG) matrix lens, we can conclude that his SBU would be classified as a

Cash cow

· Archetypical globalization strategies have been defined according two dimensions - need for local responsiveness and need for global integration. Which of the below describes a multi-domestic strategy?

High need for local responsiveness & low need for global integration

Peloton Interactive is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Peloton Interactive a competitive advantage

Implement process innovations that lower per-unit costs.

· Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?

Many owners, managers, and business analysts believe they are essential to survive in an industry

Forward integration is which of the following:

Moving closer to the ultimate consumer

Related diversification is defined by which description below?

New geographies and new products but where there is a connection to the existing geographies and existing products

There are many reasons why individuals become entrepreneurs. Which among the following the most often cited reason for becoming an entrepreneur in a recent study?

Prefer to be my own boss

· As companies grow, the build taller structures but do not widen their span of control. Is this statement true or false?

false

· Mechanistic structures are typified by wide spans of control, decentralization, low specialization and formalization and loose departmentalization. Is this statement true or false?

false

· Transparency International conducts an annual survey of 13 major data sources (like the World Bank, African Development Bank and The Economist Intelligence Unit) to establish its Corruption Perceptions index. By and large, this survey shows that only very few countries are seen have problems with corruption at institutional level. Is this statement true or false?

false

· The Foreign Corrupt Practices Act (FCPA) covers two aspects of company activities when such companies or individuals have a certain degree of connection to the United States? Two Departments oversee company and individual activities under the auspices of the FCPA. Which two are these?

o Department of Justice & Securities Exchange Commission

· The Herfindahl-Hirschman Index is used by various government department to judge whether an acquisition or merger proposal is material is reducing competition. Which of the below are the departments that can review merger or acquisition proposals?

o Department of Justice and Federal Trade Commission

· Strategy and operations each have a different "doing' focus. Operational excellence combines the two foci. What is the most appropriate definition for operational excellence from those identified below?

o Doing the right things right

· Strategic alliances can take many forms and can be represented on a continuum that is anchored by spot market transactions at one end to greater than 51% to 100% acquisitions at the other. Within this continuum there is a fundamental distinction between two classes of alliances. The two classes of alliance are distinguished by whether they are what?

o Equity Versus non-Equity based

· Alliance formation is a complex activity. Compared to M&A, most of the time spent in alliance formation is spent in matters such as alliance structuring, representations and warranties and indemnification. Is this statement true or false?

o False

· The BSG market share / growth matrix is a cash management portfolio concept where cash cow businesses (business units) fund star businesses in order that they become the cash cows of the future. Is this statement true or false?

o False

· Finjob Inc. is following a related-linked diversification strategy, and Rangreen Inc. is following a related-constrained diversification strategy. How do the two firms differ from each other?

o Finjob Inc. will share fewer common competencies and resources between its various businesses when compared to Rangreen Inc

· A number of publicly-listed companies have split themselves into two publicly-listed companies. What is the predominant rationale for doing this?

o Greater share owner value is created by providing for ownership in both publicly-listed companies rather than just in the original company

· The three main airline alliances - oneworld, Star Alliance and Skyteam - represent co-operation arrangements between alliance member airlines in terms of code sharing, lounge access, aircraft maintenance and so on. This alliance is best described as what kind of alliance?

o Horizontal

· Creating the situation for the best probability for acquisition success (measured as a return on invested capital) is when which condition below is met? Is this when the company to be acquired meet the following criterion?

o It can be acquired at a sensible price

· Organizational performance metrics can be categorized according whether the measures are leading, current or lag measures. Financial performance measures (which we all use) are represented by which one of the following temporal characterizations?

o Lag performance measures

· Dinotopia is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Dinotopia in terms of cultural distance?

o Maldonia, where people speak English and have a low standard of living

· Genco Pura Olive Oil Company has established themselves as a strong differentiator in their respective SBUs but now wishes to explore international strategies. They are prepared to fully customize their product offerings to meet the needs of the foreign country that they are entering; having conducted many surveys on local preferences, tastes, and requirements, the Genco Pura Olive Oil Company will more than likely pursue a ________ strategy.

o Multidomestic

· Which of the following corresponds to the use of tacit knowledge?

o Phil assembles a motorcycle from memory

· The management reporting model for any organization can be identified by the cascade sequence of three parameters. Which of the parameters below are these three parameters?

o Product, customer, geography

· Doncon Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results?

o Pursue taper integration

· Which of the following best illustrates a merger between the two companies Scotfind Inc. and Inity Inc.?

o Scotfind Inc. and Inity Inc. join together to form a single new company called ScotfindInity Inc.

· Broadly speaking it can be said that large and well-known publicly-listed U.S. companies have typically not suffered impairment charges since these companies are professionally managed and have had the band-width and deep pockets to conduct deep due diligence and so establish acquisition prices that do not "over pay".

o The present value of future free cash flow expectations arising from an acquisition's synergistic benefits

· Which of the following statements is true of shareholders in a public stock company?

o They are granted a charter of incorporation by the state and legally own company stock.

· Which of the following is true of acquisitions?

o They can be friendly or hostile.

· Which of the following is true of the codes of conduct of an organization?

o They detail how the organization expects an employee to behave and to represent the company in business dealings.

· There are three ways in which companies grow. This is through one or more of three growth avenues. Which of the below are these three avenues?

o Through organic growth, Through alliances and Through M&A

· Which of the following is true of the process of organizing for competitive advantage?

o To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.

· How did Uber conflict with Carnegie Mellon University's National Robotics Engineering Center (NREC)?

o Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC.

· Mary has been named CEO of an office furniture manufacturing company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Mary most likely to make?

o What range of products the firm should offer

· One way to foster ethical behavior in employees is to

o create a control system that encourages desired values.

· Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany?

o significant differences between its U.S. personnel policies and Germany's culture

· A high degree of formalization in an organization is most likely to

o slow down decision making.

· Which of the following is an example of an external transaction cost?

o the cost of searching for a contract manufacturer

· Leslie has completed the organizational design of her firm but is now interested in the second key informal building block, which she believes will help her firm achieve a competitive advantage. Specifically, she's interested in how things will get done on a day-to-day basis and the intangible piece of her organization that cannot be easily codified. Leslie wants to build an effective

organizational culture

Pros and Cons of vertical integration

pros- permits investments in assets -allows more control over business units (value chain) -positive differentiation -lower transaction cost -increase certainty with quality cons- -cause capacity balancing problems -decrease flexibility -creates entry barriers confusion with business