Bridgets final exam notecards

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A. level of diversification. B. geographic scope. C. vertical integration. D. absorptive capacity.

c

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy? A. the first-line employees B. the creditors C. the chief executive officer D. the middle manager

c

77. Which of the following is an advantage of joint ventures? A. They create strong ties, trust, and commitment between the partners. B. They are based on contractual agreements rather than partial ownership. C. They require the lowest amount of investment relative to the other alliance types. D. They can be easily initiated and terminated.

A

8. Which of the following statements is true of an international strategy? A. It enables firms to leverage their home-based core competencies in foreign markets. B. It is advantageous when firms face high pressures for both local responsiveness and cost reductions. C. It relies on joint ventures to reap economies of scale by accessing a larger market. D. It effectively protects a firm from exchange rate fluctuations

A

A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy. A. conglomerate B. single-business firm C. parent company D. subsidiary

A

A corporation's star SBUs will A. hold a high market share in a fast-growing market. B. experience low and unstable earnings in a fast-growing market. C. hold a small market share in a low-growth market. D. compete in a low-growth market but hold considerable market share.

A

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure. A. global matrix B. multidivisional C. functional D. simple

A

A primary advantage of organizing economic activity within firms is the A. ability to coordinate highly complex tasks to allow for specialized division of labor. B. low administrative costs because of reduced bureaucracy. C. eradication of the principal-agent problem. D. high-powered incentive to work as salaried employees for an existing firm.

A

A(n) _____ strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A. transnational B. multidomestic C. international D. global-standardization

A

A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. B. Strategy formulation and strategy implementation are independent activities. C. Organizing for competitive advantage is a static and not a dynamic process. D. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.

A

About 20 years ago, Sturdy Light, Inc., produced a sturdy, lightweight backpack in a market that was rapidly growing. Sturdy Light became a leader in this market. Eventually, the backpack market reached the maturity stage and slowed down. However, by this time, Sturdy Light had developed a strong brand name and continued to steadily lead the market. Which of the following describes this scenario? A. Sturdy Light was a star that developed into a cash cow. B. Sturdy Light was a question mark that developed into a star. C. Sturdy Light was a dog that developed into a question mark. D. Sturdy Light was a cash cow that developed into a star.

A

Adidas acquired Reebok primarily to A. overcome its competitive disadvantage against Nike. B. get access to the superior technology of Reebok. C. overcome its principal-agent problems. D. pursue an unrelated diversification strategy.

A

Although long-standing enemies, Apple and IBM formed an alliance partnership. How did this partnership benefit both Apple and IBM? A. Apple's core competency with consumer services and IBM's core competency with business services complemented each other. B. Apple's core competency with business services and IBM's core competency with consumer services complemented each other. C. Apple's core competency with marketing and IBM's core competency with manufacturing complemented each other. D. Apple's core competency with manufacturing and IBM's core competency with marketing complemented each other

A

BestDrive Inc. is a large automobile company. The company's petrol cars strategic business unit (SBU) has been recognized as a cash cow, and its hybrid electric cars SBU has been categorized under stars. Which of the following can be inferred from this scenario? A. The petrol cars SBU operates in a low-growth market, whereas the hybrid electric cars SBU operates in a high-growth market. B. The petrol cars SBU will have a relatively low market share in its industry, whereas the hybrid electric cars SBU will have the least market share in its industry. C. The strategic recommendation for the hybrid electric cars SBU will be to harvest it, whereas for the petrol cars SBU, the company should just maintain it. D. The petrol cars SBU is more important than the hybrid electric cars SBU in terms of future growth for the company.

A

Chao is in an interview for a sales job that requires no experience. He is trying to portray himself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills. The interviewer is convinced that Chao should be hired as a salesperson in the company. However, in his resume, Chao had not mentioned his previous work experience as he was fired from that job because he used illegal drugs. Which of the following does this scenario best illustrate? A. information asymmetry B. principal-agent problem C. experience-curve effect D. learning-curve effec

A

Decisions relating to the range of products and services a firm will offer determine the firm's A. level of diversification. B. geographic scope. C. vertical integration. D. absorptive capacit

A

Disney became the world's leading media company to a large extent by pursuing a corporate strategy A. related-linked diversification. B. cost-leadership. C. unrelated diversification. D. hostile takeovers.

A

Divina Pharma Inc. and MF Electronics Inc. have together invested and created a new organization, FirstHealth Inc., to focus on developing diagnostic devices. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. However, the new organization operates independent of Divina Pharma and MF Electronics. Which of the following alternatives to integration does this scenario best illustrate? A. a joint venture B. a franchisee C. a licensing contract D. a corporate acquisition

A

During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved A. exporting goods. B. making foreign direct investments. C. making foreign institutional investments. D. licensing production and distribution.

A

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing. A. industry B. functional department C. economy D. customer segment

A

Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer A. higher quality for lower costs for international routes. B. higher quality for similar costs for U.S domestic routes. C. similar quality for lower costs for international routes. D. similar quality for lower costs for U.S domestic routes

A

Employees learn about an organization's culture through the process of A. socialization. B. exploitation. C. co-opetition. D. acculturation.

A

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A. a multidomestic strategy B. an international strategy C. a global-standardization strategy D. a one-product strategy

A

Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies. A. backward vertical integration B. forward vertical integration C. backward horizontal integration D. forward horizontal integration

A

For which of the following products is an international strategy most suitable? A. for luxury goods that can be shipped across the globe B. for products with low value-to-weight ratios such as steel C. for food products that are specific to certain cultures D. for products with high linguistic content

A

Fragra Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. SaveMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A. Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements. B. Fragra Inc. will pursue a differentiation strategy at the business level, whereas SaveMarket Inc. will pursue a cost-leadership strategy at the business level. C. Fragra Inc. will be better protected from exchange rate fluctuations when compared to SaveMarket Inc. D. Fragra Inc. will not be able to leverage its home-based core competencies in foreign markets as much as SaveMarket Inc.

A

Global Frontier Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Global Frontier wants to maintain some control in the foreign market. Which of the following would be the best entry mode for this firm? A. joint ventures B. acquisitions C. greenfield operations D. exports

A

GreenValue Inc. started a chain of organic supermarkets that had initial success. The managers achieved a mastery of the firm's current environment, thereby filling a need in the market. However, GreenValue defined and measured it success by financial metrics, with a focus on short-term performance. As a result, the firm put in place metrics and systems to accommodate and manage increasing firm size due to continued success. As a result of this tightly coupled system, GreenValue developed a A. resistance to change. B. innovative approach. C. significant value gap. D. holacratic system

A

Grey Designs Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Charles Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Charles Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? A. Charles Grey has a wide span of control. B. Grey Designs Inc. has a tall hierarchical structure. C. Charles Grey is underworked. D. Grey Designs Inc. is a mechanistic organizatioN

A

Hans is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Hans consider while choosing his strategy? A. He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance. B. He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. C. He should remember that he has only one framework at his disposal to make global strategy decisions. D. He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign entry modes.

A

Hitoro Inc. developed a superior touch screen technology for tablet computers that enabled multiple users to operate the screen at the same time. The technology was leased to Revox Inc., a consumer electronics company, for five years. Which of the following alternatives to integration does this best illustrate? A. licensing B. franchising C. crowdsourcing D. bootlegging

A

How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies? A. by using internal capital markets as a source of value creation B. by adding more unrelated businesses into its corporate portfolio C. by increasing its coordination and influence costs D. by investing in businesses under the question mark quadrant of the BCG matrix

A

If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization. A. organic B. mechanistic C. integrated D. centralized

A

In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates A. the real-options perspective. B. co-opetition. C. explicit knowledge. D. the stakeholder strategy.

A

In Eli Lilly's Office of Alliance Management, the alliance champion is primarily responsible for A. making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy. B. providing technical expertise and knowledge needed for the specific technical area in an alliance. C. providing alliance training and development, as well as diagnostic tools. D. serving as an alliance process resource and business integrator between the two alliance partners.

A

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are A. similar to those that need to be developed and superior to those of competitors in the targeted area. B. similar to those that need to be developed and inferior to those of competitors in the targeted area. C. different from those that need to be developed and superior to those of competitors in the targeted area. D. different from those that need to be developed and inferior to those of competitors in the targeted area.

A

In the early 1990s, Gatorade dominated the market for sports drinks, a segment in which it had been the original innovator. For decades, Coca-Cola had been a leader in marketing, bottling, and distributing soft drinks. However these drinks did not include a sports drink. Soon after Gatorade appeared, Coca-Cola developed and marketed its own sports drink, Powerade. In this example, Coca-Cola A. built new core competencies to protect and extend its current market position. B. built new core competencies to create and compete in markets of the future. C. leveraged core competencies to improve current market position. D. redeployed and recombined core competencies to compete in markets of the future.

A

Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? A. greenfield operation B. export C. joint venture D. acquisition

A

McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of A. formalization. B. specialization. C. decentralization. D. hierarchy.

A

McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast-food chain pursuing? A. multidomestic strategy B. focused differentiation strategy C. global-standardization strategy D. international strategy

A

New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first _____ in the U.S. automobile industry. A. joint venture B. non-equity alliance C. hostile takeover D. equity allianc

A

Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal? A. Once the firm starts growing and attracting more customers she is likely to feel overloaded. B. Hiring more employees will result in loss of intellectual property. C. People are highly unlikely to buy clothes from a store run by a fashion design student. D. The online admiration of her designs will not translate into sales

A

Organizational culture can be the basis of a firm's competitive advantage if A. it is valuable, rare, and difficult to imitate. B. it is trademarked and copyright protected. C. it converts the organization's core competency into its core rigidity. D. it changes the organization's inertia into its core rigidity.

A

Organizational design is A. the process of creating, implementing, and modifying the structure of an organization. B. primarily focused on replacing a firm's competitive advantage with competitive parity. C. a process that always functions independently of strategy formulation. D. primarily focused on formulating effective strategies, not implementing them.

A

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by A. introducing results-only-work-environments to tap intrinsic motivations. B. refining the budgeting process to encourage more department collaboration. C. updating standard operating procedures to allow more process flexibility. D. using output controls only when the goal is to ensure a predictable outcome

A

Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures A. aspects of cultural fit between different firms in an alliance. B. features of the financial health of the different alliance partners. C. the readiness to accept short-term sacrifices to ensure long-term awards. D. the willingness to make available necessary resources.

A

Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.? A. It will be able to benefit from economic arbitrage. B. It will be able to successfully leverage its competitive advantage from economies of standardization. C. It will be able to replicate its existing business model easily. D. It will be able to easily sell products for which demand varies by income

A

PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma? A. PureSource Pharma will lower its costs through economies of scale. B. PureSource Pharma will diminish its economic value creation. C. PureSource Pharma will increase its cost of distribution. D. PureSource Pharma will reduce the size of its sales force.

A

RoboToys, Inc. is involved in the production of robotic toys. This firm produces the raw materials, including metals and oils for plastic; creates the integrated circuits, displays, and batteries; and assembles the toys. Which of the following stages of the industry value chain is RoboToys involved in? A. stages 1, 2, and 3 B. stages 1, 2, and 4 C. stages 2, 3, and 4 D. stages 2, 3, and 5

A

Susan is a strategist for the firm, DigiVision Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Tech Resources Inc. However, this material is difficult to trade for. Because of this, which of the following is most likely the best strategy for Susan to suggest? A. DigiVision should acquire Tech Resources. B. DigiVision should form a short-term agreement with Tech Resources. C. DigiVision should form a long-term agreement with Tech Resources. D. DigiVision should enter into co-opetition with Tech Resources.

A

Swiss-based Nestlé, the largest food company in the world, is well-known for customizing its product offerings to suit local preferences, tastes, and requirements. By doing this, Nestlé is pursuing a(n) A. multidomestic strategy. B. international strategy. C. global-standardization strategy. D. transnational strategY

A

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because A. the U.S. population was growing slowly and becoming more health conscious. B. its strategic position in the U.S. market was well protected through high entry barriers. C. this would help the company gain access to large cocoa plantations in China. D. Hershey's main strategic focus was on product and market diversification and not on the domestic market.

A

The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally. A. death-of-distance hypothesis B. local-responsiveness hypothesis C. real options framework D. dynamic capabilities framewor

A

The global-standardization strategy arises out of the combination of A. high pressure for cost reductions and low pressure for local responsiveness. B. high pressure for local responsiveness and low pressure for cost reductions. C. low pressure for both local responsiveness and cost reductions. D. high pressure for both local responsiveness and cost reductions

A

The key components of organizational design are A. structure, culture, and control. B. structure, efficiency, and control. C. innovation, efficiency, and culture. D. innovation, culture, and control.

A

The main reason behind Google's decision to acquire the Israeli start-up company Waze for $1 billion was to A. preempt its competitors from buying Waze. B. share its capabilities with Waze. C. support start-up companies with venture capital. D. gain access to technology that is alien to it.

A

The managers at AHL Chemicals Inc. decided that their firm needed to diversify because of falling sales and lower performance in one sector. How does diversifying compensate for the lackluster performance in this sector? A. by having higher performance in another sector B. by sharing their market power C. by increasing the firm's risk in another sector D. by motivating managers

A

The most important yet least visible element of organizational culture is A. values. B. norms. C. laws. D. artifacts.

A

The process of alliance management begins with A. selecting the best possible partner. B. choosing an appropriate governance mechanism. C. designing the alliance. D. creating resource combinations that obey the VRIO criteria.

A

The relationship between strategy and structure that directly impacts a firm's performance is A. dynamic. B. independent. C. static. D. unpredictable.

A

To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate? A. how an organization accommodates strategy implementation through a flexible organizational structure B. how strategy implementation has an effect on resource allocation and power distribution C. how an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure D. how an organization optimizes its organizational structure to the current situation

A

Today, many companies use PeopleSoft and EDS to avoid maintaining a human resource management system. By doing this, these firms are A. engaging in strategic outsourcing. B. increasing their level of vertical integration. C. offshoring their core activities. D. engaging in unrelated diversification.

A

Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the A. globalization hypothesis. B. upper-echelons theory. C. real-options perspective. D. global scaling theory.

A

Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of A. location economies. B. economies of scope. C. learning races. D. network effects.

A

United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country A. is a world leader in the pharmaceutical industry. B. has nationalized the pharmaceutical industry. C. has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry. D. is a potential foreign market for multinational pharmaceutical companies to sell their products

A

W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity? A. an extremely formalized organizational structure B. a highly organic organizational structure C. a low degree of centralization D. a flat organization structure

A

Wave Motors Inc., a Kempa-based automobile company, has entered into a partnership with Sphere Autos Inc., headquartered in United Cadvia. The parent companies, together, have established a stand-alone firm called Genuine Autos Inc. This arrangement best exemplifies a A. joint venture. B. partnership. C. non-equity alliance. D. proprietorship.

A

What most likely happens when a firm optimizes its organizational structure to its current situation? A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B. It achieves superior performance. C. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. D. It transforms strategy into actions and business models

A

When does a merger between companies typically occur? A. when two firms of comparable size join to form a combined entity B. when large, incumbent firms buy start-up companies C. when a target firm does not want to be acquired D. when two or more firms enter a temporary vertical strategic alliance

A

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources, it can be concluded that the firm is using A. related-constrained diversification. B. related-linked diversification. C. strategic outsourcing. D. offshore outsourcing.

A

Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan? A. equity alliance B. non-equity alliance C. greenfield venture D. joint venture

A

Which of the following best exemplifies the use of input controls? A. McDonald's use of standard operating procedures B. GM's use of the multidivisional strategy C. Zappos' use of monitoring-free customer service calls D. Southwest Airline's use of employee friendliness

A

Which of the following best illustrates a non-equity alliance? A. a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. B. an alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third company C. a collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices D. an alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Finance Inc.

A

Which of the following best illustrates forward vertical integration? A. A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. B. A chain of ice cream parlors launches a brand of toys and accessories for children. C. A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. D. A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery

A

Which of the following best illustrates site specificity? A. equipment necessary for mining bauxite and aluminum smelting B. bottling machinery to manufacture bottles with trademarked shapes C. investment made in human capital to master procedures of a specific organization D. investment made to train employees to operate computers

A

Which of the following did management at Zappos do to reduce the level of formalization in their organization? A. They avoided asking their customer service reps in call centers to follow a detailed script. B. They increased their reliance on drop-shipment orders. C. They established top-down management as their primary strategy. D. They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.

A

Which of the following factors is the most important determinant of economic distance? A. the wealth and per capita income of consumers B. the ethnicity and religion of consumers C. the presence of legal institutions in a country D. the topography of a countr

A

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A. benefits from lower labor costs in manufacturing and services B. access to low-cost raw materials such as lumber and iron ore C. low levels of economic growth in emerging economies D. inefficient infrastructure in countries like China, which have brought down setting-up costs

A

Which of the following is a benefit of the transnational strategy? A. It facilitates global learning and harnesses economies of location. B. It completely eliminates a firm's risk of intellectual property expropriation. C. It helps to create a matrix global structure, which is cost-effective and easy to implement. D. It helps a firm pursue a cost-leadership strategy by minimizing the need for local responsiveness.

A

Which of the following is a common drawback of a non-equity alliance? A. lack of trust between partners B. difficulty initiating the contract C. difficulty terminating the contract D. lack of flexibility for the partners

A

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy? A. It allows a cost-leader to upgrade core competencies in manufacturing and logistics. B. It enables a cost-leader to build products that are different from its competitors' offerings. C. It enables a cost-leader to increase costs above that of its competitors. D. It allows a cost-leader to operate in a decentralized organizational structure.

A

Which of the following is most likely an accurate statement? A. The multinational enterprise PanDigital benefited from advances in communications technology. B. The multinational enterprise TransEuropa was hindered by falling investments barriers. C. The multinational enterprise ShopWorld benefited from rising trade barriers. D. The multinational enterprise GeoPlus was hindered by reduced transportation costs.

A

Which of the following is not a reason why firms enter alliances? A. to replace competitive advantage with competitive parity B. to strengthen competitive position C. to enter new markets, either in terms of geography or products and services D. to learn new capabilities

A

Which of the following is one of the features of an international strategy? A. It is characterized by limited local responsiveness. B. It is one of the newest types of global strategies. C. It is characterized by cost-leadership as a preferred business strategy. D. It is often used successfully by firms with relatively small domestic markets.

A

Which of the following is the best definition of a complementary asset? A. an asset a firm needs to complete the value chain from upstream innovation to downstream commercialization B. an asset a firm would like to add to its portfolio even though it is not vital to the running of the company C. an asset a firm can use to attract a potential joint venture partner D. an asset a firm keeps because it helps them maintain a strong image for marketing

A

Which of the following is true of acquisitions? A. Acquisitions can be friendly or hostile. B. Acquisitions can occur only when the involved entities are of comparable size. C. In acquisitions, two independent companies join to form a separate third entity. D. Acquisitions increase the competitive intensity in an industry.

A

Which of the following provides an example of a common drawback of a functional strategy? A. Bert had a difficult time communicating efficiently with the manager of another department. B. Marietta was surprised about the inflexibility of her firm when it rejected her marketing plan. C. Juan's manager dismissed his idea because it was too innovative. D. Mary did not accept the position with the firm because it has an ineffective cost-leadership strategy.

A

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012? A. the desire to gain a new capability B. the need to enter a new geographical market C. the need to reduce its level of horizontal integration D. the desire to pursue an unrelated diversification strategy

A

Which of the following shows founder imprinting? A. A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture persists for decades. B. A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture changes after a few years. C. A company's founder strongly influences her organization; the founder sells the company; the organization's culture changes despite resistance from some employees. D. A company's founder strongly influences her organization; the founder sells the company; the organization's culture changes after it is sold again in five years.

A

Which of the following statements is true of a multidomestic strategy? A. Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets. B. The multidomestic strategy is one of the main strategies companies pursued in the Globalization 1.0 stage. C. Companies pursuing a multidomestic strategy generally follow a cost-leadership strategy at the business level. D. The multidomestic strategy effectively protects firms from the risk of intellectual property appropriation.

A

Which of the following statements is true of joint ventures? A. They enable the exchange of both tacit and explicit knowledge. B. They reduce the possibilities of trust and commitment. C. They are characterized by single reporting lines. D. They cannot entail long negotiations.

A

Which of the following will most likely increase geographic distance between two countries? A. lack of adequate transportation between the two countries B. differences in consumer incomes between the two countries C. lack of human resources available in the two countries D. different knowledge base in the two countries

A

While KFC focuses on international markets, its competitor, Chick-fil-A, focuses on the domestic U.S. market. What is the reason behind this strategic difference? A. KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company. B. Chick-fil-A has a larger customer base and number of outlets in the U.S. market than its competitor KFC. C. KFC wants to follow a differentiation strategy, and Chick-fil-A wants to pursue a cost-leadership strategy. D. Chick-fil-A is part of a large conglomerate, whereas KFC has more flexibility to pursue a geographic diversification strategy.

A

While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure. A. simple B. matrix C. mechanistic D. functional

A

Why is following an unrelated diversification strategy especially advantageous in an emerging economy? A. It allows the conglomerate to overcome institutional weaknesses in emerging economies. B. It allows the conglomerate to form a monopoly in emerging economies. C. It allows the conglomerate to use well-defined legal systems in emerging economies. D. It allows the conglomerate to take advantage of strong capital markets in emerging economies.

A

Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos? A. Their culture reflects complex relationships with their employees, customers, and suppliers. B. They produce products that cannot be copied easily because of their complex designs. C. The employees in the organization themselves are unaware of the factors contributing to their organizational culture. D. It is not commercially viable for other companies to implement the same culture

A

Why is the optimal organizational structure a multidivisional structure? A. Its focus is on driving down costs. B. Its focus is on producing differentiated products. C. Its focus is on retaining activities within a single geographic area. D. Its focus is on establishing a flat hierarchy operated in a decentralized fashion

A

Why must managers use a mechanistic structure to implement a cost-leadership strategy? A. A mechanistic structure offers a centralized structure with well-defined lines of authority. B. A mechanistic structure allows for a lower degree of specialization. C. A mechanistic structure offers continuous innovation and flexibility as well as creativity. D. A mechanistic structure allows for the CEO to delegate tasks.

A

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization? A. It allows a high level of integration. B. It helps contain the core competencies within a strategic business unit (SBU). C. It leads to competition between SBUs. D. It helps evaluate each SBU as a stand-alone profit-and-loss center.

A

Win Goods Inc. is a large multinational conglomerate. As a single business unit, the company's stock price is estimated to be $200. However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. What is Win Goods experiencing in this scenario? A. diversification discount B. learning-curve effects C. experience-curve effects D. economies of scale

A

Zappos established its unique organizational culture A. through explicitly stated values that are connected to its reward system. B. through input control systems that mandated adherence to organizational values. C. by closely monitoring employees calls with customers. D. by giving employees gift cards to shop at Zappos and Amazon.

A

_____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies. A. Corporate venture capital investments B. Greenfield ventures C. Joint ventures D. Loan sharks

A

_____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary. A. Learning races B. Learning networks C. Learning effects D. Learning matrices

A

_____ is best described as changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain. A. Forward vertical integration B. Corporate divestiture C. Reverse engineering D. Closed innovation

A

_____ is best described as moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain. A. Strategic outsourcing B. Reverse engineering C. Forward integration D. Horizontal integration

A

_____, which are incurred when pursuing a related-diversification strategy, are a function of the number, size, and types of businesses that are linked to one another. A. Coordination costs B. Fixed costs C. Agency costs D. Network costs

A

5. Which of the following is an example of an external transaction cost? A. the cost of setting up a production unit B. the cost of searching for a contract manufacturer C. the cost of recruiting and retaining employees D. the cost of maintaining plant and machinery

B

A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n) A. non-equity alliance. B. equity alliance. C. joint venture. D. capital venture

B

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that A. the foreign firm will need to make larger investments when compared to entering the new market on its own. B. some of the firm's proprietary know-how may be appropriated by the foreign partner. C. all potential business risks in the new market will have to be faced alone by the foreign firm. D. the shareholder value of the foreign partner will decline drastically.

B

A drawback of joint ventures is that they are characterized by A. involuntary mergers. B. double reporting lines. C. contractual agreements rather than ownership. D. weak ties between alliance partners

B

A drawback of short-term contracting as an alternative to making a component in-house is that A. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. B. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. C. it fails to allow a long planning period that individual market transactions provide. D. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.

B

A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses. A. related-constrained strategy B. unrelated diversification strategy C. differentiation strategy D. dominant-business strategy

B

A firm is said to be pursuing a polycentric innovation strategy when A. its research facility is situated in the headquarters and all other business activities are located around the world. B. it draws from multiple, equally important research facilities located throughout the world. C. it restricts its innovation to Western economies and production to developing markets. D. its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.

B

A firm that engages in strategic outsourcing typically A. increases its internal transaction costs. B. reduces its level of vertical integration. C. reduces its level of external transaction costs. D. increases its level of horizontal integration

B

A functional structure is recommended when a firm A. has a broad focus in terms of its product/service offerings. B. has a low level of diversification. C. has a low degree of specialization. D. diversifies into different product lines and geographies.

B

A greater cultural distance between two trading countries A. increases linguistic similarities between the two countries. B. increases the liability of foreignness. C. reduces the uncertainty of doing business. D. reduces the transaction costs associated with busines

B

A high degree of formalization in an organization is most likely to A. improve customer service. B. slow down decision making. C. produce inconsistent results. D. increase creativity and innovation.

B

A trend observed during the Globalization 3.0 stage involves A. countries around the globe becoming more self-sufficient and independent. B. multinational companies organizing as global-collaboration networks. C. privately-owned firms getting nationalized. D. world's market economies becoming less integrated.

B

A(n) _____ organization always attempts to balance and harness different activities in trade-off situations. A. centralized B. ambidextrous C. mechanistic D. formalized

B

Nick just graduated from law school and wants to start his own law firm. It is best for Nick to use a _____ organizational structure. A. functional B. simple C. mechanistic D. matrix

B

After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company? A. The company's operations will become more cost-efficient. B. The company's exposure to exchange rate fluctuations will reduce. C. The company will be able to reap greater benefits from economies of scale. D. The company will be exposed to a lower risk of intellectual property appropriation.

B

Although demand for IKEA's low-cost furnishings has increased, its annual store growth has slowed to fewer than ten new stores a year. Why has this happened? A. IKEA has failed to hire top designers for its furniture. B. IKEA's global supply chain has become bottlenecked. C. IKEA has had a revolving door of CEOs for the past 20 years. D. IKEA's holding companies are all located in Sweden.

B

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of A. geographic diversification. B. product diversification. C. vertical integration. D. horizontal integration.

B

An organization is characterized as having a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature. A. specialized B. organic C. mechanistic D. formalized

B

BM Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate? A. process diversification B. product diversification C. geographic diversification D. market diversification

B

ChocoNuts Inc. produces an inexpensive candy bar that is well tailored for the tastes of U.S. consumers. However, it has failed to satisfy the consumer preferences of its host country, Japan. Which of the following categories has ChocoNuts performed poorly in? A. cost-reduction B. local-responsiveness C. global-standardization D. transnational strategy

B

Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola? A. It is leveraging existing core competencies to improve current market position. B. It is building new core competencies to protect and extend its current market position. C. It is redeploying and recombining existing core competencies to compete in markets of the future. D. It is targeting the chasm between the early adopter and early majority market segment.

B

Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through A. output controls. B. input controls. C. multidivisional strategy. D. centralization.

B

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a A. diversification discount. B. diversification premium. C. conglomerate discount. D. conglomerate premium

B

Cynthia works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store? A. flat structure B. tall structure C. centralized structure D. decentralize structure

B

ESB Group is the parent company of many related businesses under its banner. Each share of the parent company is quoted at $220. However, if this had to be assessed by adding the stock prices of each of its strategic business units, the value would only be $200 per share. In this scenario, what has ESB Group created? A. capital liquidity B. diversification premium C. diversification discount D. demand-pull inflation

B

FTZ Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, television and computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as A. competition. B. co-opetition. C. exploitation. D. exploration.

B

Fierce domestic competition in Lobekistan makes a tough environment for any motorcycle company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. As a result, Lobekistan's motorcycles have a competitive advantage in the global market. According to Porter's diamond framework, this scenario shows the influence of competitive intensity in A. a peripheral industry. B. a focal industry. C. supportive complementors. D. related complementors.

B

Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? A. Flight Stream Inc. is a mechanistic organization. B. Flight Stream Inc. has a flat organizational structure. C. Flight Stream Inc. has a high degree of centralization. D. Flight Stream's organizational culture is governed by codified rules.

B

Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company? A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets. B. Each country unit owned by the company will tend to be highly autonomous. C. Majority of the value creation for the company will take place in its home country. D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.

B

For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country? A. a firm that manufactures cell phone batteries B. a firm that extracts and exports iron ore C. a firm that produces movies D. a firm that sells wristwatches

B

GreenCure Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, GreenCure Pharma invested $100 million in the project. This investment made by GreenCure Pharma will result in a A. cartel. B. credible commitment. C. corrective action. D. parent-subsidiary relationship.

B

Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing A. competitive intensity. B. differentiation. C. costs. D. managerial efficienc

B

How did the strategic alliance between HP and DreamWorks Animation SKG affect HP? A. It helped HP pursue a taper integration strategy. B. It enabled HP to compete head on with Cisco's videoconferencing solution. C. It resulted in depreciation of HP's shareholder value. D. It failed because HP lacked the expertise in selecting and integrating technology acquisitions.

B

How is an equity alliance different from a joint venture? A. An equity alliance involves ownership that facilitates transaction-specific ventures; a joint venture involves taking ownership by buying stock. B. An equity alliance involves taking ownership in a partner; a joint venture involves two or more people owning a firm. C. An equity alliance involves taking ownership in a partner; a joint venture involves taking ownership by buying stock. D. An equity alliance involves partners contributing equity to a joint venture; a joint venture involves two or more people owning a firm.

B

How will an increase in coordinated economic and political integration between countries affect the world economy? A. The world's market economies will become self-sufficient and independent. B. There will be gains in social welfare and living standards across the globe. C. The cost of labor will further decline in emerging economies. D. There will be a movement away from global-collaboration networks among multinational enterprises (MNEs).

B

If a strategic business unit is recognized as a cash cow, it is advisable to A. harvest the business. B. invest into the business to hold its current position. C. divest the business due to its low market share. D. maintain it till it turns into a dog.

B

In Michael Porter's diamond framework, _____ describe a country's endowments in terms of natural, human, and other resources. A. market conditions B. factor conditions C. demand conditions D. supply conditions

B

In a strategic alliance, the firm that learns faster A. has the tendency to lose its competitive advantage. B. has the incentive to reduce its knowledge sharing. C. has the tendency to move up a learning curve. D. has the incentive to invest further in the alliance.

B

Investments in specialized assets tend to incur high opportunity costs because the A. assets can be profitably used for multiple purposes. B. threat of one of the partners pursuing his or her self-interest is high. C. social costs associated with these assets are high. D. firms can avoid backward integration by investing in these assets.

B

Learning Objective: 09-04 Describe the three phases of alliance management and explain how an alliance management capability can lead to a competitive advantage. Topic: Strategic Alliances 86. In Eli Lilly's Office of Alliance Management, who is responsible for providing the technical expertise and knowledge needed for the specific technical area and the day-to-day management of the alliance? A. the alliance champion B. the alliance leader C. the alliance manager D. the alliance boss

B

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate? A. diseconomies of scale B. principal-agent problem C. experience-curve effects D. information asymmetries

B

Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario? A. While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. B. Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc. C. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. D. Torque Inc. is exposed to greater risks of exchange rate fluctuations.

B

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's A. is organic in nature. B. is mechanistic in nature. C. has an informal structure. D. has a decentralized structure

B

Monica's Cosmetics Inc. has a functional structure that is flexible enough to allow it to leverage its brand name across different products. By doing this, Monica's is reaping ____ from its core competencies. A. economies of scale B. economies of scope C. diversification D. centralization

B

One of the first new business apps resulting from the alliance of Apple and IBM will help airline pilots determine the right amount of fuel to carry on a particular flight. This task not only requires significant data analytics but also the need to display the information in an easily understandable way so that pilots can digest it quickly when glancing on their iPad in a cockpit prior to departure. Which of the following parts of this example will Apple be responsible for? A. the organization and analysis of data analytics B. the display of information in an easy-to-understand way C. the determination of the amount of fuel to carry on a flight D. the arrangement of the cockpit to facilitate the use of the iPad

B

Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and A. eventually gives way to core rigidity. B. obeys the VRIO principles. C. does not demonstrate causal ambiguity. D. displays an absence of social complexity.

B

Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____ organization. A. simple B. organic C. mechanistic D. integrated

B

PrimoDisk Inc. holds the highest market share in the low-growth compact disk industry. With the introduction of flash drives, the market for compact disks has reduced. However, PrimoDisk has been able to generate sufficient revenues for the parent company by selling its products in less developed countries. In the Boston Consulting Group (BCG) growth-share matrix, PrimoDisk will be categorized under A. dogs. B. cash cows. C. stars. D. question marks.

B

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of A. economies of scope. B. location economies. C. resource immobility. D. resource ambiguity.

B

Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that A. have a tall hierarchical structure. B. pursue a differentiation strategy at the business level. C. have a high degree of specialization and centralization. D. focus on standardizing operating procedures.

B

StickOn Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies A. exploration. B. exploitation. C. co-opetition. D. competition.

B

Strong organizational cultures that are strategically relevant align employees' behaviors more fully with the organization's A. hierarchical rigidity. B. strategic goals. C. hierarchical structure. D. strategic flexibility.

B

Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of A. cartel arrangements. B. non-equity alliances. C. joint ventures. D. equity alliances.

B

Terranova Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start-up company. However, Terranova Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Terranova Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as A. a break-even analysis. B. a real-options perspective. C. credible commitment. D. transaction cost economics.

B

The Boston Consulting Group (BCG) growth-share matrix locates a firm's individual strategic business units (SBUs) in which two dimensions? A. start-up capital required and stage of industry life cycle B. relative market share and speed of market growth C. economic value created and costs incurred D. amount of debt financing and equity financing

B

The _____ structure consists of several distinct strategic business units (SBUs), each with its own profit-and-loss responsibility. A. ambidextrous B. multidivisional C. functional D. organic

B

The core competency of MotorCraft Inc. is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that there is a new market opportunity to diversify. Thus, it produces the car engines on a large scale and sells them to other automobile companies. In this scenario, MotorCraft is A. leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. B. redeploying and recombining existing core competencies to compete in future markets. C. building new core competencies to create and compete in future markets. D. building new core competencies to protect and extend current market position.

B

The downside of equity alliances is A. the weaker ties and reduced trust between partners. B. the amount of investment that can be involved. C. that the alliances cannot be abandoned if not promising. D. that they are not useful stepping-stones toward full integration of the partner firms.

B

The most efficient way to overcome the principal-agent problem in a firm is to A. increase the level of vertical integration within the firm. B. provide stock options to managers. C. downsize the existing workforce. D. organize economic activities within the firm.

B

The smartphone division of the large consumer electronics company, True Electra Inc., has a significant market share in the fast-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra will be categorized under A. question marks. B. stars. C. cash cows. D. dogs.

B

The solar-powered car division of a large automobile company has been experiencing negative cash flows though the market growth for such cars is predicted to be high. If the company invests further resources into this division, it can increase its relative market share in the future. However, if due to technological changes the car cannot create sufficient consumer demand, then the division can prove to be unprofitable. In the Boston Consulting Group (BCG) growth-share matrix, the solar-powered car division will be categorized under A. dogs. B. question marks. C. stars. D. underdogs.

B

The success of the Pixar-Disney strategic alliance demonstrated that A. Disney was in desperate need of Pixar's graphic display systems. B. the two entities' complementary assets matched. C. it was easier for the alliance partners to reduce the value gap created. D. the companies were effectively managing an unrelated diversification strategy.

B

There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? A. increasing profits B. lowering costs C. reducing risk D. motivating managers

B

Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to A. the lean manufacturing process pioneered by Tesla. B. the entrepreneurial spirit in Tesla. C. the safety measures followed in Tesla, recorded in its user manuals. D. the product information documented in Tesla's database.

B

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A. differences in climates and time zones. B. the absence of a trading bloc. C. physical remoteness. D. the lack of connective ethnic and social networks.

B

Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario? A. an acquisition B. a strategic alliance C. a leveraged buyout D. a proprietorship

B

Virtue Products Inc., a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. This apart, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Virtue Products applying? A. concentric integration B. taper integration C. horizontal integration D. conglomerate integration

B

W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has A. a formalized structure. B. a decentralized structure. C. organizational inertia. D. a top-down management style.

B

W. L. Gore has four product divisions: electronic products, industrial products, medical products, and fabrics division. It also has manufacturing facilities in the U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe. Based on this information, which of the following statements is most accurate? A. W. L. Gore is pursuing a cost-leadership strategy. B. W. L. Gore is using a multidivisional structure. C. W. L. Gore is using a simple structure. D. W. L. Gore is pursuing an integration strategy.

B

Walmart is an example of a(n) _____ organization. A. organic B. mechanistic C. decentralized D. informal

B

What causes the winner's curse? A. buying a firm with principal-agent problems B. overpaying for an acquisition C. buying a firm with a competitive disadvantage D. underpaying for an acquisition

B

What does the relational view of competitive advantage propose? A. A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate. B. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. C. Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing. D. A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price.

B

What is horizontal integration? A. the process of merging with a competitor at a different stage of the value chain B. the process of merging with a competitor at the same stage of the value chain C. the process of acquiring a competitor at a higher stage of the value chain D. the process of acquiring a competitor at a lower stage of the value chain

B

When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? A. increasing competitive intensity B. accessing critical complementary assets C. procuring additional capital investments D. reducing differentiation of product and service offering

B

When Toyota wanted to secure a long-term supply of lithium, it had to create a bond of trust with an Australian company, Orocobre Ltd. Orocobre wanted to establish the bond of trust before making huge investments in specialized equipment required to extract the high-quality lithium. What did Toyota do to instill this trust? A. It offered Orocobre exposure to Toyota's proprietary information. B. It made a credible commitment by taking an equity stake in Orocobre. C. It acquired Orocobre as part of its backward vertical integration plans. D. It offered Orocobre franchising opportunities to sell hybrid vehicles.

B

When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will A. introduce different products and services in an existing single market. B. sell its products in several different regional, national, and international markets. C. operate from multiple headquarters across the globe. D. depend solely on its in-house facilities for all its production purposes.

B

When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets. A. domestic strategy B. international strategy C. differentiation strategy D. localization strategy

B

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting. What is this situation referred to as? A. principal-agent problem B. information asymmetry C. experience-curve effect D. learning-curve effect

B

When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because A. the local partner can better protect its proprietary know-how. B. building downstream complementary assets can be expensive and time-consuming. C. the strategic alliance will reduce the differentiation of its product and service offerings. D. the value gap created by the firm can be easily lowered in an alliance.

B

When entering new geographic markets, some governments, such as those of Saudi Arabia and China, require that foreign firms have a local A. market partner. B. joint venture partner. C. strategic alliance partner. D. merger partner.

B

Which of the following accurately describes what the integration-responsiveness framework does? A. By juxtaposing the pressures a multinational company faces for export tariffs and foreign responsiveness, it devises four strategies to gain and sustain competitive advantage. B. By juxtaposing the pressures a multinational company faces for cost-reductions and local-responsiveness, it devises four strategies to gain and sustain competitive advantage. C. By juxtaposing the pressures a multinational company faces for export tariffs and local-responsiveness, it devises two strategies to gain and sustain competitive advantage. D. By juxtaposing the pressures a multinational company faces for cost-reduction and foreign responsiveness, it devises two strategies to gain and sustain competitive advantage.

B

Which of the following companies will be considered as a conglomerate? A. ExxonMobil, after it acquired XTO Energy—a natural gas company B. The Tata Group, active in industries such as tea, steel, IT, power, and automobiles C. Harley-Davidson, with its Harley-Davidson branded motorcycle clothing and attire D. Coca-Cola, which solely focuses on soft drinks but operates in many countries

B

Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones? A. the competitive intensity in the cell phone industry of Finland B. the huge demand for high-quality wireless services in Finland C. the abundance of natural resources in Finland D. the related and supporting industries present in Finland

B

Which of the following global strategies best matches with a multidivisional structure? A. international B. multidomestic C. global-standardization D. transnational

B

Which of the following is a benefit of a multinational enterprise (MNE) pursuing a global-standardization strategy? A. The firm customizes products and services to better suit local requirements. B. The firm reaps significant economies of scale and location economies. C. The firm follows a differentiation strategy at the business level. D. The firm has all its key business functions located in the home country.

B

Which of the following is a disadvantage of a horizontal integration corporate strategy? A. It increases competitive intensity within an industry. B. It increases the potential for legal repercussions. C. It increases the costs associated with increasing value. D. It increases the threat of new entrants in an industry.

B

Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy? A. They cannot leverage their home-based core competencies in foreign markets. B. They are highly affected by exchange rate fluctuations. C. They have to be highly responsive to local needs and preferences. D. They cannot reap the benefits of economies of scale due to their highly customized products.

B

Which of the following is a feature of a multinational company pursuing a global-standardization strategy? A. Its key business functions are located at the home country headquarters. B. Its business-level strategy tends to be cost-leadership. C. Its competitive advantage lies in its high local responsiveness. D. Its core competency lies in its strong product differentiation.

B

Which of the following is a primary reason why firms pursue a global strategy? A. to improve their reputation B. to enhance their competitive advantage C. to expand their research capabilities D. to gain more political influence

B

Which of the following is a result of horizontal integration in terms of Porter's five forces model? A. The industry structure becomes less consolidated. B. There is a reduction of excess capacity in the market. C. The industry structure becomes potentially less profitable. D. There is an increase in rivalry among existing firms.

B

Which of the following is an advantage of non-equity alliances? A. They produce strong ties between alliance partners as they are permanent in nature. B. They are flexible and easy to initiate and terminate. C. They facilitate the sharing of tacit knowledge between the alliance partners. D. They are based on ownership rather than contracts.

B

Which of the following is true of W. L. Gore & Associates, which has a lattice organizational form? A. It has a high degree of centralization. B. All employees are empowered to speak to all other employees in the organization. C. Its culture has been linked to lower employee satisfaction and retention. D. The degree to which a task is divided into separate jobs is high.

B

Which of the following is true of a functional structure? A. It offers a lower degree of specialization than a simple structure. B. It relies on a relatively flat organizational structure. C. It offers decentralized management. D. It relies on bottom-up communication rather than top-down communication.

B

Which of the following modes of entering a foreign market allows for the lowest level of control? A. greenfield ventures B. exporting C. joint ventures D. acquisitions

B

Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy? A. products with a high value-to-weight ratios like luxury goods B. commodity products like computer hardware C. consumer products related to national and/or religious identity like food D. products that carry country-specific quality associations like wine

B

Which of the following real-world scenarios best exemplifies formalization? A. Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B. McDonald's use of standard operating procedures across the world C. W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses D. Yahoo's decision to fire its CEO after incurring huge losses

B

Which of the following statements about an organization's culture is not true? A. A positive culture motivates employees by appealing to high ideals. B. A strong monitoring and supervision mechanism is needed to enforce the culture. C. A positive culture encourages employees to make decisions not only with their heads, but also with their hearts. D. Employees feel that they are part of a larger community by internalizing the firm's values and norms.

B

Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? A. inability to implement its trademark focused-differentiation strategy in the German market B. significant differences between its U.S. personnel policies and Germany's culture C. Germany's unfamiliarity with retail discount powerhouses D. Metro's hostile takeover of Walmart in Germany

B

Which of the following statements best describes local responsiveness? A. the process of producing goods in one country and selling them in another B. the need to tailor product and service offerings to fit native consumer preferences and host-country requirements C. the belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous D. the additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances

B

Which of the following statements is true about managing alliances-related tasks? A. Forming an alliance with another firm prohibits that firm from forming other alliances. B. Alliance management capability is based on three alliance-related tasks. C. A merger is one of the three options for alliance design and governance. D. In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage.

B

Which of the following statements is true of an equity alliance? A. An equity alliance is based on contractual agreements rather than partial ownership. B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible. C. In an equity alliance, a standalone organization is created that is jointly owned by two or more parent companies. D. An equity alliance creates weaker ties between the alliance partners when compared to a non-equity alliance.

B

Which of the following statements is true of organizational culture? A. Changes in culture are too frequent to have any impact on strategic implementation. B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. C. It is always better to focus on output control and performance than on organizational culture. D. According to research, more than 50 percent of firms change culture successfully.

B

Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks? A. HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. B. Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. C. HP was able to enter a new market, and DreamWorks was able to strengthen its old market. D. DreamWorks was able to enter a new market, and HP was able to strengthen its old market.

B

Which of the following types of groups is most susceptible to groupthink? A. a diverse group B. a cohesive group C. a heterogeneous group D. a decentralized group

B

Which of the following types of organizations comparatively requires the lowest levels of investment and control? A. joint ventures B. franchising C. acquisition D. greenfield operations

B

Which quadrant in the core competence-market matrix is the hardest to pursue? A. building new core competencies to protect and extend current market position B. building new core competencies to create and compete in markets of the future C. leveraging core competencies to improve current market position D. redeploying and recombining core competencies to compete in markets of the future

B

Why did Quaker Oats Company's acquisition of Snapple fail? A. strong competitive disadvantage B. managerial hubris C. inferior acquisitions ability D. shareholder unrest

B

Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups? A. to pursue an unrelated-options perspective without disrupting existing market economics B. to make small-scale investments in ventures poised to disrupt existing market economics C. to invest their excess cash flow in the superior technology of the biotech start-ups D. to share their continuously updated research technology with the biotech start-ups

B

Why does strategy implementation often require changes within an organization? A. Strategy implementation is less important than strategy formulation. B. Strategy implementation transforms strategy into actions and business models. C. Strategy always follows structure. D. Strategy implementation does not affect resource allocation and power distribution within an organization.

B

With reference to the Strategy Highlight 8.2, the Tata Group's corporate strategy is attempting to A. move from unrelated diversification to related-constrained diversification. B. integrate different strategic positions, pursued by different strategic business units. C. pursue a focused differentiation strategy over a focused cost-leadership strategy. D. depend on a single product market to generate most of its revenues.

B

With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota? A. to transfer its knowledge of a completely new production system B. to learn the lean manufacturing system pioneered by Toyota C. to better understand the American workforce D. to get access to Toyota's distribution system and marketing expertise

B

Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos. A. organizational structure B. organizational culture C. organizational strategy D. organizational controls

B

_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge. A. Cartels B. Licensing agreements C. Equity alliances D. Acquisitions

B

_____ are best described as costs that occur due to political maneuvering by managers to control capital and resource allocation and the resulting inefficiencies stemming from suboptimal allocation of scarce resources. A. Fixed costs B. Influence costs C. Coordination costs D. Opportunity costs

B

_____ is a process of closer integration and exchange between different countries and peoples worldwide. A. Diversification B. Globalization C. Standardization D. Modification

B

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property. A. Lean manufacturing B. Licensing C. Crowdsourcing D. Bootlegging

B

_____ is best described as a situation in which one party is more informed than another, because of the possession of private information. A. Information governance B. Information asymmetry C. Information deregulation D. Information piracy

B

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully. A. Reverse engineering B. Restructuring C. Rebooting D. Reverse brainstorming

B

ng Objective: 10-02 Explain why companies compete abroad, and evaluate the advantages and disadvantages of going global. Topic: Going Global: Why? 19. Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because A. it overestimates its need to protect its intellectual property. B. it underestimates its liability of foreignness when entering the Zevar market. C. it underestimates its dwindling reputation before it enters the Zevar market. D. it overestimates the geographic and cultural distance between Pelo and Zevar.

B

52. A(n) _____ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances that connect different parts of the industry value chain. A. equity alliance B. joint venture C. non-equity alliance D. greenfield venture

C

A _____ is best described as a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services. A. proprietorship B. cooperative C. strategic alliance D. leveraged buyou

C

A firm following a multidomestic strategy A. is highly efficient. B. lacks local responsiveness. C. faces a greater risk of intellectual property (IP) appropriation. D. requires exposing explicit knowledge because products are manufactured locally.

C

A firm pursuing a transnational strategy would believe that A. key business functions should be located in its home country headquarters. B. local-responsiveness is more important than cost-reductions for competitive advantage. C. best practices, ideas, and innovations should be diffused throughout the world. D. the majority of the value creation should take place in the home country.

C

A firm's _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed. A. norm B. culture C. structure D. control

C

A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it A. is pursued in response to low pressure for local responsiveness and low pressure for cost reduction. B. attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost. C. attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company. D. operates on the assumptions made in the globalization hypothesis in order to lower costs.

C

A(n) _____ is best used to depict the transformation of raw materials into finished goods and services along distinct vertical stages. A. encrypt B. chain of command C. industry value chain D. scatter chart

C

Allgreva Inc. is located in Movaria near the nation of Clozame. Allgreva is considering expanding into Clozame. Both countries have similar consumer incomes and knowledge bases and share a common language. Also, the transportation networks between the countries are strong. Even so, the two nations have a long-standing dispute concerning the control of an area of land along their common border. Currently, Movaria rules this land. Which of the following would most likely prevent Allgreva from expanding into Clozame? A. geographic distance B. economic distance C. political distance D. cultural distance

C

Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n) A. joint venture. B. acquisition. C. non-equity alliance. D. greenfield venture.

C

An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure. A. functional B. multidivisional C. matrix D. simple

C

Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n) A. organic organizational structure. B. decentralized organizational structure. C. tall hierarchical structure. D. flat hierarchical structure.

C

Caring Ketchup Inc. makes organic ketchup. To promote its products, this firm decided to make bottles in the shape of tomatoes. To accomplish this, Caring Ketchup worked with its bottle manufacture to create a set of unique molds for its bottles. Which of the following specialized assets does this example demonstrate? A. site specificity B. research specificity C. physical-asset specificity D. human-asset specificity

C

Comfort Shoes Inc. and InStep Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Comfort Shoes entered the strategic alliance to acquire the production system pioneered by InStep Shoes. Similarly, InStep Shoes agreed to the strategic alliance to study the designing process of Comfort Shoes. However, Comfort Shoes was more successful and faster than InStep Shoes in accomplishing its alliance goal. What does this scenario best illustrate? A. network effects B. economies of scope C. learning races D. time compression diseconomies

C

Companies that pursue related diversification are able to create a diversification premium because they A. are able to leverage time compression economies. B. can operate beyond the minimum efficient scale. C. are able to increase value due to economies of scope. D. can reduce the value gap created by its products.

C

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies? A. organic B. simple C. ambidextrous D. mechanistic

C

Diversification premium is a situation in which A. customers have to pay premium prices on products manufactured by firms pursuing unrelated diversification due to the lack of economies of scope. B. the overall value creation of highly diversified firms is more than the sum of the value created by individual business units. C. the stock price of related-diversification firms is valued at greater than the sum of their individual business units. D. shareholders are benefitted from the market capitalization of a highly diversified firm because of its economies of scale.

C

ElectraSync Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU). The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under A. stars. B. question marks. C. dogs. D. cash cows.

C

FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as? A. takeover B. buyout C. co-opetition D. acquisition

C

_____ describes the collectively shared values and norms of an organization's members. A. Competitive advantage B. Organizational structure C. Organizational culture D. Core competency

C

Fantastica Industries, a U.S.-based large conglomerate, competes in the hospitality, education, telecommunications, entertainment, airlines, and chemical industries. It currently operates in about 30 nations, and is planning to expand its portfolio by investing in rapidly developing countries. Which of the following strategies is Fantastica Industries pursuing? A. zone pricing B. niche marketing C. product-market diversification strategy D. process diversification strategy

C

For which of the following types of industries is a multidomestic strategy most common? A. machine-tool industries B. genetic industries C. food industries D. capital goods industries

C

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to A. imitate the actions of its competitors like Apple and Facebook. B. solve its principal-agent problems. C. fill gaps in its competency lineup. D. expand through unrelated diversification.

C

Grace Apparel Inc. has decided to procure fabrics required for its garments from external suppliers instead of maintaining its own dyeing and weaving facilities. How will this decision affect the firm A. The firm will be protected against the principal-agent problem. B. The firm's administrative costs will be low because of necessary bureaucracy. C. The firm will have more flexibility in purchasing and comparing prices of goods and services. D. The firm will have high-powered incentives, such as hourly wages and salaries.

C

GreenThings Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. TransGold Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A. While TransGold Inc.'s competitive advantage will lie in its high local responsiveness, GreenThings Inc. will lack such competencies. B. GreenThings Inc. will face greater pressure for cost-reductions than TransGold Inc. due to its strategy choice. C. Both GreenThings Inc. and TransGold Inc. will have to duplicate key business functions in multiple host countries. D. While GreenThings Inc. will require a global matrix structure, TransGold Inc. will require a traditional headquarters model.

C

Hank's Hot Dogs is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Hank's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Hank's? A. Hank's has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. B. Hank's has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. C. Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. D. Hank's has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.

C

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers? A. by facilitating excess capacity in the industry B. by preventing mergers from taking place C. by lowering competitive intensity in the industry overall D. by increasing the threat of entry in the industry

C

How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010? A. Its main strategic focus is now on the domestic market. B. It opens a market for it that is growing slowly but has high profit margins. C. It has access to convenience stores and a new distribution channel. D. It automatically gains monopoly in the chocolate-manufacturing industry.

C

How does a conglomerate benefit from following an unrelated diversification strategy? A. The conglomerate can solely depend on its primary business activity for a major portion of its revenues. B. The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. C. The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. D. The conglomerate can limit the learning- and experience-curve effects it faces.

C

How does taking a real-options perspective by entering strategic alliances help incumbent firms? A. It helps the incumbent firms gain the confidence of the partnering company by making credible commitments. B. It helps the incumbent firms reduce the value gap they create through their product and service offerings. C. It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade. D. It reduces the incumbent firms' cost of acquisition by enabling them to make the entire investment decision in the beginning itself.

C

How has the administrative and political distance between Canada, Mexico, and the United States been reduced? A. by adopting similar national cultures B. by lowering the disparities between their per capita incomes C. by establishing the North American Free Trade Agreement (NAFTA) D. by reducing their linguistic differences

C

In 1984, GM and Toyota formed a joint venture called New United Motor Manufacturing Inc. Each partner was motivated to learn new capabilities. This joint venture is an example of A. creating a real-options perspective. B. accessing complimentary assets. C. using co-opetition. D. forming a conglomerate.

C

In Eli Lilly's Office of Alliance Management, who is responsible for providing alliance training and development? A. the alliance champion B. the alliance leader C. the alliance manager D. the alliance boss

C

In a non-equity alliance, which of the following types of information would firms most likely share? A. a manager's knowledge related to solving non-routine problems B. a top-level manager's experience related to making strategic decisions C. the documented information about the material composition of a product D. the employees' entrepreneurial skills

C

In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy? A. Globalization 1.0 B. Globalization 2.0 C. Globalization 3.0 D. Globalization 4.0

C

It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because A. the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive. B. the surviving firms will need to be protected against the increasing bargaining power of the suppliers. C. the horizontal integration activity has the potential to reduce competitive intensity in an industry. D. the surviving firms will need protection against the relaxed entry barriers.

C

Jade Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Jade Mobiles Inc. most likely pursue? A. international strategy B. multidomestic strategy C. global-standardization strategy D. localization strategy

C

JetStream Airway's decision to acquire Rex Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate? A. managerial empathy B. managerial feasibility C. managerial hubris D. managerial capitalism

C

Kolt Inc., a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Kolt Inc. use? A. basic B. simple C. multidivisional D. functional

C

Maurice sent in a complaint about a rude salesperson he dealt with at FirstElectronics Inc. He didn't get a response for about three months. Also, when the response finally came, it was just a formal, cursory letter. Based on this scenario, FirstElectronics most likely has an extremely _____ organizational structure. A. specialized B. formalized C. centralized D. hierarchical

C

Michael Porter's diamond framework is used to explain A. national value creation. B. domestic value creation. C. national competitive advantage. D. domestic competitive advantage.

C

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because A. they pursue a cost-leadership strategy in their respective industries. B. they are highly responsive to the local needs and preferences of customers in the host countries. C. they offer the same products or services in all their stores throughout the world. D. they attempt to combine benefits of localization and standardization strategies simultaneously.

C

Neon Electronics Inc. sourced touch screens required for its tablet computers, cell phones, and televisions from a manufacturer in China. But the demand for such components was high globally, and the supplier could not meet the quality standards of Neon Electronics. Thus, Neon Electronics decided to set up its own unit to develop and manufacture the required touch screens. What does this scenario best illustrate? A. crowdsourcing B. new product development C. backward vertical integration D. conglomerate diversification

C

Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? A. exporting B. franchise agreement C. acquisition D. licensing

C

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A. backward integration B. forward integration C. horizontal integration D. vertical integration

C

PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in A. strategic outsourcing. B. lean manufacturing. C. product-market diversification. D. process diversification.

C

Real Goods Inc. is a large conglomerate. The company's beverages strategic business unit (SBU) has been recognized as a cash cow, and its tobacco SBU has been categorized as a dog. Which of the following can be inferred from this scenario? A. While the tobacco SBU operates in a low-growth market, the beverages SBU operates in a high-growth market. B. The management of the company should use the cash inflow from the beverages SBU and invest it in the tobacco SBU. C. While the market share of the company in the beverages industry will be high, the market share in the tobacco industry will be low. D. The tobacco SBU should follow a backward integration strategy, and the beverages SBU should pursue a forward integration strategy.

C

Silver Weave Inc., an apparel company, operates through a business model in which individuals can buy the rights to set up Silver Weave stores and sell the company's merchandise in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to stock the collection approved from the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate? A. crowdsourcing B. credit rationing C. franchising D. bootstrapping

C

Which of the following is an advantage offered by a functional structure? A. It allows for an efficient top-down communication chain and thus relies on a relatively tall structure. B. It facilitates a lower division of labor, which is linked to higher productivity. C. It allows for a higher degree of specialization and deeper domain expertise. D. It facilitates a lower level of specialization.

C

Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) _____ strategy. A. international B. multidomestic C. global-standardization D. localization

C

Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry. A. capital gain B. trade surplus C. national competitive advantage D. liability of foreignness

C

Stop n' Save Inc., a supermarket chain, is implementing a multidomestic strategy. SunLife Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? A. Stop n' Save Inc. will focus more on cost-reduction than SunLife Inc. B. Stop n' Save Inc. will have its business functions spread across the world; SunLife Inc.'s business functions will be highly centralized. C. Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level. D. Unlike SunLife Inc., Stop n' Save Inc. will be able to reap significant economies of scale and location economies.

C

Successful _____ requires managers to design and shape structure, culture, and control mechanisms. A. strategy innovation B. strategy formulation C. strategy implementation D. strategy diversification

C

Symphon Times Inc., a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations. Which of the following types of diversification strategies is the firm pursuing? A. product diversification strategy B. process diversification strategy C. geographic diversification strategy D. product-market diversification strategy

C

TL & Co. is following a related-linked diversification strategy, and Soar Inc. is following a related-constrained diversification strategy. How do the two firms differ from each other? A. Soar Inc. generates 70 percent of its revenues from its primary business, while TL & Co. generates only 10 percent of its revenues from its primary business. B. Soar Inc. pursues a backward diversification strategy, while TL & Co. pursues a forward diversification strategy. C. TL & Co. will share fewer common competencies and resources between its various businesses when compared to Soar Inc. D. TL & Co. pursues a differentiation strategy, and Soar Inc. pursues a cost-leadership strategy, to gain a competitive advantage.

C

The 3-D television division of a large consumer electronics company has been recognized as a question mark. The company's LCD television division has been categorized under dogs. Which of the following statements will hold well in this scenario? A. The strategic recommendation for the 3-D television division is to harvest it, and the strategic recommendation for the LCD television division is to invest further in it. B. The 3-D television division will have a high market share in its industry, whereas the LCD television division will have a low-market share in its industry. C. The 3-D television division operates in a high-growth market, whereas the LCD television division operates in a low-growth market. D. The LCD television division will benefit by pursuing a differentiation strategy, and the 3-D television division will benefit by following a cost-leadership strategy.

C

The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate? A. a merger B. a joint venture C. an acquisition D. an equity alliance

C

The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. A. real-options perspective B. stakeholder strategy C. relational view of competitive advantage D. non-differentiation strategy

C

The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of A. time compression diseconomies. B. experience-curve effects. C. principal-agent problems. D. resource ambiguity

C

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly A. formalized. B. specialized. C. organic. D. mechanistic

C

Veronica sets up a business consulting firm in which the employees are motivated because they find their work interesting and creative. She carefully hires workers who fit well with their assigned tasks. Also, she clearly defines the results expected of each worker, but allows the workers to determine the means to these results. Which of the following best describes Veronica's business? A. a firm that relies on high input controls to tap into intrinsic motivation B. a firm that relies on high input controls to tap into extrinsic motivation C. a firm that relies on high output controls to tap into intrinsic motivation D. a firm that relies on high output controls to tap into extrinsic motivation

C

WJ Group Inc., a large multinational conglomerate, had begun to experience declining revenues over the years. The top management at the headquarters of the company decided that it was important for the company to avoid deviating from its core competencies. Thus, a few of the company's key businesses like energy, telecommunications, and automobiles were centralized, giving the top management more control over them. Also, relatively newer businesses like beverages and food processing were divested. In this scenario, WJ Group is involved in A. reverse engineering. B. benchmarking. C. restructuring. D. crowdsourcing.

C

What was one of the reasons for Jerry Yang's failure at Yahoo? A. Jerry made many necessary changes to the company's organizational structure. B. Jerry established a successful organizational structure and culture, but could not assert control. C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting. D. Jerry focused most strategic changes on improving user experience and increasing advertising revenues.

C

When a firm diversifies into different product lines and geographies, a _____ structure is preferred. A. simple B. functional C. multidivisional D. network

C

When large, incumbent firms buy start-up companies, the transaction is generally described as a(n) A. joint venture. B. partnership. C. acquisition. D. alliance.

C

Which of the following aspects of alliance management capability is paired with partner selection? A. alliance governance B. alliance design C. alliance formation D. post-formation alliance management

C

Which of the following best explains why Disney showed superior post-merger integration capabilities? A. Disney pursued a combination of horizontal and vertical integration through its acquisitions. B. Disney did a thorough job in eliminating principal-agent problems in the firms it acquired. C. Disney managed its new subsidiaries more like alliances rather than attempting full integration. D. Disney used a corporate strategy based on a build-borrow-or-buy framework for its acquisitions.

C

Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy, a natural gas company? A. taper integration strategy B. differentiation strategy C. related diversification strategy D. cost-leadership strategy

C

Which of the following corresponds to the use of tacit knowledge? A. Pedro studies a fact sheet about France. B. Heather reads a demographic report about minorities in Texas. C. John assembles the motorcycle from memory. D. Henrietta uses a scientific article to defend her thesis about global warming.

C

Which of the following countries has a high geographic distance but a low cultural distance from the United States? A. Canada B. Mexico C. Australia D. France

C

Which of the following firms is most prone to experiencing a diversification discount? A. a company that deals in petroleum as well as natural gas B. a company that derives its revenues from selling aerated drinks and health drinks C. a company that pursues unrelated diversification D. a company that pursues related-constrained diversification

C

Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A. greenfield operations B. brownfield operations C. exporting D. crowdsourcing

C

Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally? A. international strategy B. global-standardization strategy C. transnational strategy D. focused-differentiation strategy

C

Which of the following is a disadvantage of a functional strategy? A. It frequently lacks the tools required to pursue a cost-leadership strategy. B. It does not facilitate rich communication between members of the same department. C. It cannot effectively address a higher level of diversification. D. It does not allow organizations to be flexible or innovative

C

Which of the following is a drawback of pursuing a transnational strategy? A. It creates bottlenecks for global learning. B. It exposes a firm to diseconomies of scale and location. C. It requires a global matrix structure, which is difficult to implement. D. It involves locating all key business activities in the home country headquarters.

C

Which of the following is a drawback of vertical integration? A. It increases the difficulty of securing critical supplies. B. It impedes scheduling and planning. C. It increases the potential of legal repercussions. D. It impedes investments in special assets.

C

Which of the following is an advantage of equity alliances when compared to non-equity alliances? A. They are more flexible and easy to initiate and terminate. B. They require smaller capital investments. C. They produce stronger ties between partners. D. They are based on contracts rather than ownership.

C

Which of the following is an observable feature in the Globalization 3.0 stage? A. Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B. Only sales and distribution functions of a multinational enterprise are located in a few key countries. C. Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D. Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries.

C

Which of the following is an unintended side effect of a high degree of specialization in an organization? A. decreased trade-off between breadth and depth of knowledge B. decreased opportunities for the division of labor C. reduced employee satisfaction due to repetition of tasks D. reduced productivity

C

Which of the following is not included within the types of strategic alliances? A. joint ventures B. franchising C. acquisitions D. licensing

C

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A. They are easy to initiate and terminate. B. They require low amounts of investments in terms of capital. C. They reduce a firm's exposure to loss of reputation. D. They are based on contracts rather than ownership.

C

Which of the following is true of the parent-subsidiary relationship? A. The ability to create a community of knowledge is low. B. The parent firm has no control and command over the subsidiary. C. The transaction costs that arise are frequently due to transfer prices. D. The parent firm will lack specialization and division of labor

C

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage? A. W. L. Gore & Associates organizes its employees into project-based teams. B. Apple develops high-tech products that are preferred by consumers across the world. C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. D. GM offers compensation if its products do not meet a consumer's expectations.

C

Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business? A. It weakens the national competitive advantage enjoyed by the focal firm. B. It improves the factor conditions in the focal firm's domestic market. C. It increases the value of the focal firm's offering from a customer's perspective. D. It reduces the economic contribution created by the focal firm

C

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A. because of the political differences between India and U.S. B. because NAFTA prohibits Walmart from investing in countries outside North America C. because of the large economic distance between U.S. and India D. because Walmart's low-cost strategy has not been accepted by Indian consumers

C

Which of the following statements is not true of tacit knowledge? A. It is concerned with knowing how to do a certain task. B. It is knowledge that cannot be easily codified. C. It is regularly shared between partners in a non-equity alliance. D. It is acquired only through actively participating in the process.

C

Which of the following statements is true about the use of functional structures with various business strategies? A. The goal of a differentiation strategy is to create competitive parity. B. The goal of a cost-leadership strategy is to create competitive parity. C. The goal of a differentiation strategy is to create a competitive advantage by controlling costs. D. A cost-leadership strategy can be effectively implemented with the help of an organic structure.

C

Which of the following statements is true of explicit knowledge? A. Explicit knowledge is about knowing how to do a certain task. B. Explicit knowledge is knowledge that cannot be codified. C. Explicit knowledge is shared in non-equity alliance firms. D. Equity knowledge is acquired only through actively participating in a process.

C

Which of the following statements is true of internal transaction costs? A. Internal transaction costs arise when companies transact in the open market. B. When the internal costs involved in pursuing an activity in-house are more than the costs of transacting, then the concerned firm should vertically integrate. C. Internal transaction costs tend to increase with organizational size and complexity. D. It is beneficial to "buy" goods or services rather than "make" when internal transaction costs are low.

C

Which of the following statements is true of taper integration? A. It is the most integrated alternative to performing an activity within one's own corporate family. B. It refers to a situation in which firms narrow their focus on downstream value chain activities and ignore the upstream value chain activities. C. It exposes in-house suppliers and distributors to market competition to make performance comparisons possible. D. It does not rely on outside-market firms for its supplies.

C

_____ are strategic business units that compete in a low-growth market but hold considerable market share. A. Dogs B. Question marks C. Cash cows D. Stars

C

Which of the following statements is true with regard to international trade between countries? A. Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B. Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C. Wealthy countries engage in relatively more cross-border trade than poorer ones. D. Political integrations decrease the expected trade intensity between two countries.

C

Which of the following types of organizations best helps match a differentiation strategy to a functional structure? A. ambidextrous organization B. mechanistic organization C. organic organization D. rigid organization

C

Which of the following would hinder firm performance? A. diversification providing economies of scale B. diversification exploiting economies of scope C. diversification raising costs D. diversification raising value

C

White Leo Motors (WLM) Inc. generates a major portion of its revenues by manufacturing luxury sports cars. However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes WLM? A. a conglomerate B. a subsidiary C. a dominant-business firm D. a single-business firm

C

Why are controls like budgets and operating procedures that McDonald's implements known as input controls? A. They are independent of an organization's culture. B. They are implemented by corporate headquarters. C. They are considered before employees make any decisions. D. They are ad hoc and not codified

C

Why did W. L. Gore reorganize itself into a functional structure from a simple structure? A. A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity. B. A functional structure is more decentralized. C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. D. A functional structure has a tall hierarchical structure that relies on bottom-up communication.

C

Why did the American MTV network cable channel fail when pursuing a global-standardization strategy? A. because MTV failed to understand that music videos were a commodity product B. because the globalization hypothesis holds true for the music industry C. because cultural distance most affects products with high linguistic content D. because an international strategy was more suitable for the music industry

C

Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job? A. It is confident that employees will be impressed with the company's creativity and will stay on for a longer term. B. It does not believe that a firm's culture can flow from its values when they are linked to the company's reward system. C. It believes that individuals who choose to stay on will fit in with the Zappos culture. D. It is certain that a firm's culture flows only from founder imprinting

C

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? A. It allows the firm to create incentives to foster process innovation in order to drive down cost. B. It allows the firm to reduce its cost below that of competitors while offering acceptable value. C. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. D. It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.

C

Why does a functional structure rely on a flat organizational structure? A. The work in the organization is centrally coordinated by the CEO. B. It allows for a higher degree of specialization and domain expertise. C. It allows for efficient bottom-up and top-down communication. D. It allows for the implementation of a differentiation strategy.

C

Zeda 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 Zeda in terms of cultural distance? A. Olax, which has the same wealth and per capita income as Zeda B. Jordax, which has a very profitable economy and where people speak Jordaxian C. Segar, where people speak English and have a low standard of living D. Terra, which is located close to Zeda and is easily accessible by road

C

____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage. A. Embargos B. Cartel agreements C. Strategic alliances D. Corporate acquisitions

C

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use. A. Cost drivers B. Value drivers C. Specialized assets D. Liquid asset

C

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs. A. Venture capitalism B. Bootlegging C. Vertical integration D. Crowdsourcing

C

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes. A. Taper integration B. Open innovation C. Diversification D. Differentiation

C

_____ is best described as cooperation by competitors to achieve a strategic objective. A. Limited liability B. Proprietorship C. Co-opetition D. Commerce

C

_____ is when a firm moves activities and jobs outside its home country. A. Conglomerate outsourcing B. Alliance outsourcing C. Off-shore outsourcing D. External outsourcing

C

_____ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making. A. Organic B. Virtual C. Mechanistic D. Flat

C

_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure. A. Mechanistic B. Centralized C. Organic D. Top-down

C

_____ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure. A. PESTEL factors B. Formalization C. Organizational inertia D. Centralization

C

n the New United Motor Manufacturing, Inc. (NUMMI) joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)? A. to access GM's completely new production system B. to learn and implement the just-in-time inventory system pioneered by GM C. to learn how to implement its lean manufacturing program with an American workforce D. to access GM's distribution system and marketing expertise

C

19. _____ refers to the degree to which decision making is concentrated at the top of the organization. A. Specialization B. Formalization C. Naturalization D. Centralization

D

75. When a stand-alone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) A. non-equity alliance. B. equity alliance. C. proprietorship. D. joint venture.

D

78. Which of the following is a drawback of joint ventures? A. They produce weak ties, trust, and commitment between the partners. B. They are based on contractual agreements rather than partial ownership. C. They do not enable the transfer and sharing of tacit knowledge. D. They necessitate the sharing of rewards between the partners.

D

80. Which of the following types of strategic alliances is the least common in terms of frequency? A. mergers B. acquisitions C. equity alliances D. joint ventures

D

A _____ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time. A. cost-leadership approach B. break-even analysis C. market risk framework D. real-options perspectiv

D

A company that is using extrinsic motivation as an output control mechanism will most likely A. organize training sessions for employees. B. cut budgets during recessions. C. implement a peer review system. D. threaten to lay off employees if they do not achieve target

D

A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment? A. the core competence matrix B. the Boston Consulting Group (BCG) matrix C. the transaction-cost economics model D. the VRIO framework

D

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers. In a similar fashion, another firm sells its products through company-owned retail outlets and through independent retailers. Both of these examples demonstrate A. strategic outsourcing. B. strategic insourcing. C. backward horizontal integration. D. taper integration.

D

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance. A. unrelated level of diversification B. single-business level of diversification C. dominant-business level of diversification D. related-linked diversification

D

A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) _____ structure. A. simple B. M-form C. matrix D. functional

D

A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. A. international strategy B. transnational strategy C. global-standardization strategy D. multidomestic strategy

D

A(n) _____ is best described as a partnership in which at least one partner takes partial ownership in the other partner. A. acquisition B. non-equity alliance C. joint venture D. equity alliance

D

According to Alfred Chandler in his book Strategy and Structure, implementing a successful strategy depends on having an organizational structure that is _____ enough to accommodate the formulated strategy and future growth and expansion. A. insightful B. strong C. complex D. flexible

D

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of A. monopsony. B. geographic diversification. C. crowdsourcing. D. taper integration.

D

As a result of globalization, the A. economies around the world are becoming more independent. B. cultural distance between countries is increasing. C. cost of doing business around the world is increasing. D. world's market economies are becoming more integrated

D

Broadview Company integrated certain important functions of Widget.com with Widget, while keeping other functions independent. To support this integration, the president of Widget shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance. This scenario best exemplifies a(n) A. multidivisional structure. B. organic organization. C. simple structure. D. ambidextrous organizatio

D

DigiGames Inc. established itself as the foremost producer of computer games. However, as the market for these games moved from laptop computers to cell phones based on cloud applications, DigiGames failed to adapt its games enough to this new environment. As result, the firm soon lost its competitive advantage. Which of the following best describes this scenario? A. movement from core rigidity to core competency B. movement from core rigidity to founder imprinting C. movement from founder imprinting to core competency D. movement from core competency to core rigidity

D

Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) A. equity alliance. B. sole proprietorship. C. non-equity alliance. D. joint ventur

D

Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify? A. factor conditions B. complementor availability C. competitive intensity D. demand conditions

D

Equity alliances are less common than non-equity alliances because they A. depend on contractual agreements. B. produce weaker ties between partners. C. fail to facilitate the transfer of tacit knowledge. D. often require larger investment

D

How does horizontal integration within an industry affect the surviving firms? A. by increasing the threat the surviving firms will face from new entrants B. by strengthening the rivalry among existing firms C. by requiring the surviving firms to shift their focus from non-price to price competition D. by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

D

European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy? A. to take advantage of the high labor costs in the southern United States B. to take advantage of the high cost of living in the southern United States C. to take advantage of the low impact of globalization in the United States D. to take advantage of lower taxes in the southern United States European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. It's doing so in order to avoid voluntary import restrictions, to take advantage of business-friendly conditions such as lower taxes, labor cost, and cost of living, as well as other incentives provided by host states in the southern United States, and to be closer to customers in North America.

D

Evara Inc. started as a luxury brand for designer apparel. Soon, the company expanded by launching its own line of premium perfumes, watches, bags, and home furnishings. This expansion allowed the businesses under the company to share a few, if not all, of the common competencies in products, services, technology, and distribution. Which of the following corporate strategies is Evara pursuing in this scenario? A. taper integration strategy B. niche marketing strategy C. related-constrained strategy D. related-linked strategy

D

EveningStar Inc. and The Luxur Group have together established The Luxur Star Group of hotels. EveningStar owns 49 percent and The Luxur Group has a 51 percent share in The Luxur Star Group of hotels. However, the management of The Luxur Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate? A. sole proprietorship B. non-equity alliance C. equity alliance D. joint venture

D

Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is A. formalized. B. mechanistic. C. centralized. D. organic.

D

For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? A. product differentiation B. superior customer service C. local responsiveness D. price

D

Frappe operates as a strategic business unit (SBU) under More or Less Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that A. Frappe does not have its own profit and loss responsibility. B. Frappe is dependent on the other SBUs in More or Less Inc. C. Frappe has a matrix organizational structure. D. Frappe is led by its own CEO (or equivalent general manager)

D

GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies A. decentralization. B. founder imprinting. C. groupthink. D. core rigidity

D

How do firms benefit from vertical integration? A. Vertical integration allows firms to reduce organizational complexity and administrative costs. B. Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. C. Firms that vertically integrate do not have to make transaction-specific investments. D. Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.

D

How does W. L. Gore exemplify founder imprinting? A. Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list. B. W. L. Gore & Associates is organized in a formal and centralized manner. C. The compensation of Gore associates is decided through a peer review system. D. The four core values articulated by Bill Gore guide the company and its associates to this day.

D

How has China been affected by its one-child-per-family policy and appreciation of its currency? A. The purchasing power of its workforce has reduced. B. The value added to production has reduced. C. The standard of living within the economy has lowered. D. The country's advantage in low-cost manufacturing has reduced.

D

In 2007, Salesforce.com recognized an emerging market for platform as a service (PaaS) offerings and developed a new competency in delivering software development and deployment tools. This allowed its customers to either extend their existing CRM offering or build completely new types of software. This is an example of A. leveraging existing core competencies to improve current market position. B. building new core competencies to achieve vertical integration. C. redeploying and recombining existing core competencies to compete in markets of the future. D. building new core competencies to create and compete in markets of the future.

D

In 2009, ExxonMobil bought XTO Energy, a natural gas company, for $31 billion. XTO Energy is known for its core competency to extract natural gas from unconventional places such as shale rock—the type of deposits currently being exploited in the United States. ExxonMobil hopes to leverage its core competency in the exploration and commercialization of oil into natural gas extraction. Based on this example, ExxonMobil is engaging in A. unrelated-linked diversification. B. unrelated-constrained diversification. C. related-linked diversification. D. related-constrained diversification.

D

In Eli Lilly's Office of Alliance Management, the _____ is a senior, corporate-level executive responsible for high-level support and oversight. A. alliance manager B. alliance leader C. alliance regulator D. alliance champion

D

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs A. compete in a low-growth market but hold considerable market share. B. hold a high market share in a fast-growing market. C. compete in a high-growth market but have low and unstable earnings. D. hold a small market share in a low-growth market.

D

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should A. infuse more capital into the strategic business unit. B. provide more human resources to the business. C. hold the business till it turns into a star. D. divest the strategic business unit.

D

In the market for used cars, which of the following is a reason behind the crowding out of desirable cars by lemons or inferior ones? A. experience-curve effects B. time compression diseconomies C. principal-agent problem D. information asymmetry

D

In which of the following situations is pursuing an international strategy advisable? A. when a firm manufactures products related to national and religious identity B. when a firm operates in an industry where the pressure to keep the costs low is extremely high C. when a firm wants to be perceived as a domestic company by the host-country consumers D. when a firm enjoys a large domestic market, strong reputation, and brand name

D

In which of the following ways does Zappos achieve organizational control? A. It continually changes the organizational values that guide its employees. B. It refrains from monitoring its employees' calls. C. It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience. D. It enforces that each group member's compensation depends in part on the group's overall productivity

D

India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because A. it has emerged as a manufacturing powerhouse. B. of an efficient infrastructure and high labor costs. C. it has an abundance of uneducated workers who are highly trainable. D. of an abundance of well-educated, English-speaking young people.

D

Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a A. nonprofit organization. B. nationalized firm. C. sole proprietorship. D. multinational enterprise.

D

Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas. A. threat of new entrants B. liability of foreignness C. loss of reputation D. intellectual property exposure

D

Larry's Auto Repair is a small business in which the founder, Larry, makes most of the important strategic decisions as well as runs the day-to-day operations. He has three mechanics and a financial secretary working for him. Based on this scenario, Larry's Auto Repair has a(n) _____ structure. A. ambidextrous B. organic C. functional D. simple

D

Luxura Inc. is a large cosmetics company that made an initial small investment in a start-up company, GreenDream, that was developing an organic face lotion. This gave Luxura controlling interests in the start-up company. However, GreenDream soon began to have financial difficulties because of principal-agent problems. As a result, Luxura did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a A. break-even analysis. B. partial joint venture. C. credible commitment. D. real-options perspective.

D

Opula Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Opula Inc. most likely pursue? A. a multidomestic strategy B. a transnational strategy C. a global-standardization strategy D. an international strategy

D

Red Empire Inc., a large multinational company owned by two partners, is active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, education, automobiles, and consumer electronics industries. The company has multiple brands and a large product portfolio under its banner. Which of the following terms would best describe this company? A. a flagship brand B. a single-business firm C. a dominant-business firm D. a conglomerate

D

Remote Inc. is a notebook manufacturing company based in Ohio. Remote's main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Remote Inc. likely to use if it has functional setup? A. organic B. simple C. matrix D. mechanistic

D

Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Shine Enterprises Inc. most likely use? A. an international strategy B. a focused-differentiation strategy C. a multidomestic strategy D. a transnational strategy

D

SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to A. reduce its geographical distance from the other countries. B. increase its administrative distance from the other countries. C. increase its economic distance from the other countries. D. reduce its cultural distance from the other countries.

D

Stellar Products Inc. is a U.S.-based consumer electronics company. It owns smaller firms in Japan and Taiwan where most of its cell phone technology is developed and manufactured before being released worldwide. Which of the following alternatives to integration does this best illustrate? A. venture capitalism B. franchising C. joint venture D. parent-subsidiary relationship

D

Strategic business units that have a relatively low market share but have the potential to grow are best categorized under _____ in the Boston Consulting Group (BCG) growth-share matrix. A. dogs B. stars C. cash cows D. question marks

D

The German multimedia conglomerate Bertelsmann operates in more than 60 countries throughout the world and owns many regional leaders in their specific product categories, including Random House Publishing in the United States. Bertelsmann operates its more than 500 regional media divisions as more or less autonomous profit-and-loss centers. but attempts to share best practices across units; global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is an example of following a(n) A. multidomestic strategy. B. international strategy. C. global-standardization strategy. D. transnational strategy

D

The administrative and political distance between two trading countries reduces when A. there are FDI restrictions in the host country. B. there is no independent central bank in the host country. C. there are tariffs and trade quotas in the host country. D. there is a well-functioning capital market in the host country.

D

The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n) A. acquisition. B. joint venture. C. non-equity alliance. D. equity alliance.

D

The risk of intellectual property appropriation increases when companies follow a multidomestic strategy because products are A. difficult to differentiate. B. complex to produce. C. exported long distances. D. manufactured locally.

D

The transnational strategy is similar to a(n) _____ strategy because they both focus on product differentiation and low costs. A. liquidation B. product diversification C. international D. blue ocean

D

TimeEnough Inc. entered the low-priced digital watch market several years ago. This firm's earnings have been unsteady, but might be growing. According to the BCG growth matrix, TimeEnough is a A. cash cow. B. star. C. dog. D. question mark.

D

To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets? A. a transnational strategy B. a multidomestic strategy C. a localization strategy D. a global-standardization strategy

D

Toyota's global success in the 1990s and early 2000s was based to a large extent on a network of world-class suppliers in Japan. This tightly knit network allowed for fast two-way knowledge sharing—this in turn improved Toyota's quality and lowered its cost, which it leveraged into a successful blue ocean strategy at the business level. This example shows the effectiveness of A. factor conditions. B. competitive intensity in a focal industry. C. demand conditions. D. related and supporting industries/complementors

D

United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of A. food processed in Fernsland. B. movies and TV shows produced in United Nerumbia. C. iron ore extracted in Fernsland. D. luxury items manufactured in United Nerumbia

D

Vehmo Inc. is an automobile company whose core competency lies in manufacturing petrol- and diesel-based cars. The company realizes that more of its potential customers are switching to electric cars. The R&D department of the company acquires competencies in developing electric cars and launches its first hybrid car. In this scenario, Vehmo is primarily A. leveraging new core competencies to improve current market position. B. redeploying existing core competencies to compete in future markets. C. unlearning existing core competencies to create and compete in markets of the future. D. building new core competencies to protect and extend current market position.

D

What element of organizational structure deals with positioned-based reporting lines? A. specialization B. formalization C. centralization D. hierarchy

D

What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change? A. The firm's original core competency can turn from a liability into an asset. B. The firm's organizational inertia can turn into its core rigidity. C. The firm's competitive parity can turn into its competitive advantage. D. The firm's culture can turn from a core competency into a core rigidity.

D

When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to A. borrow via a contractual agreement. B. pursue internal development. C. enter into a licensing agreement. D. consider an outright acquisition.

D

When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement? A. when the resource in question is highly tradable B. before the strategist has considered borrowing the necessary resources through integrated strategic alliances C. after it has been established that the firm's internal resources are sufficient to build D. when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge

D

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ______ distance. A. political B. geographic C. administrative D. cultural

D

Which of the following accurately describes a common difference between a merger and an acquisition? A. A merger tends to include mostly small firms; an acquisition can often involve large firms. B. A merger involves the combination of three or more firms; an acquisition involved the combination of two firms. C. A merger involves firms of different size; an acquisition involved firms of the same size. D. A merger tends to be friendly; an acquisition can be friendly or unfriendly.

D

Which of the following accurately describes an organic organization? A. an inflexible organization that fosters slow decision making and high employee motivation B. an inflexible organization that fosters fast decision making and high employee motivation C. a flexible organization that fosters slow decision making and high employee motivation D. a flexible organization that fosters fast decision making and high employee motivation

D

Which of the following alternatives on the make-or-buy continuum allows for most integration? A. short-term contracting B. joint ventures C. licensing D. parent-subsidiary relationship

D

Which of the following motivations for business growth involves principal-agent problems? A. increasing profits B. increasing market power C. reducing risk D. motivating managers

D

Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.? A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase. B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately. C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

D

Which of the following best illustrates an equity alliance? A. a contractual agreement that provides Ocia Pharma Inc. the exclusive rights to distribute the drugs of Marvel Pharma Inc. in the Asian market B. an alliance between GoldWing Systems Inc. and GM Computers Inc. that results in GM Wing Inc., an independent third company C. a collusion between two competitors, Torque Steels Inc. and Vizor Metals Inc., to fix prices D. a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.

D

Which of the following best illustrates physical-asset specificity? A. a unique training program developed in an organization B. a ship container designed to carry more than the average load of iron ore C. a generic machine that can be used to churn different mixtures D. a machine solely designed to give a candy its trademarked shape

D

Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? A. It frequently ranks among the top 500 companies to work for. B. Its communication lines are bottom-up and well-defined. C. Its decision power is spread across the organization. D. Its job descriptions are very descriptive.

D

Which of the following describes a firm in the Globalization 1.0 stage? A. Robinson Inc. has a large office in New York, which is one cog in a global network. B. Robinson Inc. has a large office in New York, which functions with other large offices in Europe and Asia. C. Robinson Inc. has a base office in New York and a replica office in Amsterdam. D. Robinson Inc. has a base office in New York and distributes some of its products overseas

D

Which of the following entry modes was used extensively in Globalization 1.0 stage? A. strategic alliances B. acquisitions C. greenfield operations D. exports

D

Which of the following examples describes the task of an alliance manager? A. Sophia oversaw the agreement between her company and the potential alliance partner and offered support when needed. B. Ira used his knowledge of digital watches to help him to manage the day-to-day operations of the alliance. C. Natasha reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm. D. Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook.

D

Which of the following features helps match a cost-leadership strategy to a functional structure? A. decentralization B. process and product innovations C. flexibility and mutual adjustment D. focus on economies of scale

D

Which of the following firms is least integrated? A. a firm that enters a joint venture with another company to develop a new technology B. a firm that owns production subsidiaries across the globe C. a firm that makes equity investments in its supplier's company D. a firm that buys all the required raw materials from multiple external vendors

D

Which of the following is a disadvantage of equity alliances? A. They are reflective of weaker ties between firms. B. They do not permit the exchange of explicit knowledge. C. They can bring about a lack of commitment. D. They can entail significant investments

D

Which of the following is a drawback of pursuing a multidomestic strategy? A. The strategy allows for the lowest possible local responsiveness. B. The strategy lowers the differentiation of a firm's product and service offerings. C. The strategy exposes a firm to greater exchange rate fluctuation when compared to an international strategy. D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.

D

Which of the following is a feature of an organic organization? A. high degree of specialization B. rigid division of labor C. clear lines of authority D. high span of control

D

Which of the following is a feature of the Globalization 2.0 stage? A. Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B. Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C. Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. D. Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries

D

Which of the following is an example of an internal transaction cost? A. the cost of searching for a contract manufacturer B. the cost of signing a contract with a supplier C. the cost of buying raw materials D. the cost of maintaining a production unit

D

Which of the following is an example of explicit knowledge? A. knowing how to create surveys B. a research skill C. knowing how to assemble semiconductors D. a research summary

D

Which of the following is an ineffective practice in alliance management? A. coordinating a firm's portfolio of alliances B. establishing knowledge-sharing routines between alliance partners C. developing relational capabilities to manage mergers and acquisitions D. focusing on developing an alliance-management capability in isolation

D

Which of the following is part of Geert Hofstede's cultural dimensions? A. locus of control B. self-efficacy C. span of control D. power distance

D

Which of the following organizational structures matches best with an international strategy? A. simple B. matrix C. multidivisional D. functiona

D

Which of the following scenarios best illustrates horizontal integration? A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market. B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor. C. Regal Autos Inc. sets up its own distribution channel and retail stores. D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.

D

Which of the following statements about W. L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner? A. W. L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses. B. W. L. Gore & Associates prefers e-mail communication to face-to-face communication. C. W. L. Gore & Associates is characterized by a vertical organizational form. D. W. L. Gore & Associates refers to its employees as associates rather than employees.

D

Which of the following statements best describes groupthink? A. It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure. B. It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies. C. It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.

D

Which of the following statements is true of strategic alliances? A. They are always focused on joining the same value chain activities. B. They enable firms to achieve goals faster, but at higher costs. C. They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. D. They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.

D

Which of the following statements is true of strategy in an organization? A. Strategy implementation is considered unsuccessful if it requires changes within an organization. B. To implement a strategy successfully, an organization's structure must be rigid. C. Strategy implementation does not affect resource allocation and power distribution within an organization. D. Organizational structure must follow strategy in order for firms to achieve superior performance.

D

Which of the following statements is true of transaction costs? A. When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. B. When companies transact in the open market, they incur internal transaction costs. C. Transaction costs exclusively consist of external costs associated with economic exchanges. D. Transaction costs are necessary to explain and predict the boundaries of a firm.

D

Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost? A. a multidomestic strategy B. an international strategy C. a global-standardization strategy D. a transnational strategy

D

Which of the following terms or phrases best characterizes Zappos' organizational structure? A. centralized B. mechanistic C. extremely tall D. extremely flat

D

Which of the following will most likely harm a MNE's reputation? A. Principal-agent problems cause a MNE to merge with another MNE. B. Increased competition causes a MNE to close a factory in a developing country. C. Wages for workers in a factory owned by a MNE increase, causing profits to decline. D. A sweatshop owned by a MNE has an explosion that kills hundreds of workers

D

Why did Pixar enter into a strategic alliance with Disney? A. to develop into a live-action feature film company B. to finance and distribute high-end graphic display systems for theaters C. to develop into a computer hardware company D. to finance and distribute its newly created computer-animated movies

D

___ define appropriate employee attitudes and behaviors. A. Values B. Artifacts C. Appraisals D. Norms

D

_____ describes the degree to which a task is divided into separate jobs. A. Hierarchy B. Formalization C. Centralization D. Specialization

D

Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) A. transnational strategy to a multidomestic strategy. B. transnational strategy to a global-standardization strategy. C. international strategy to a multidomestic strategy. D. international strategy to a global-standardization strategy.

d