Exam prep 3

Since Coca-Cola focuses on selling only soft drinks, a low degree of product diversification, we would conclude that they compete in a(n) ________ market versus their main competitor PepsiCo, that sells a wide variety of products. A) single product B) multiple product C) related diversification D) unrelated diversification

A)

Fang and Bone Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Fang and Bone snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Fang and Bone take? A) Achieve economies of scale by using the global-standardization approach. B) Pursue a multidomestic strategy that includes new "local" brands. C) Keep costs low with undifferentiated product in the international strategy. D) Appease pressures for cost-reductions by following the transnational approach.

B) Pursue a multidomestic strategy that includes new "local" brands.

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 the United States B) because NAFTA prohibits Walmart from investing in countries outside North America C) because of the large economic distance between the United States and India D) because Indian consumers have not accepted Walmart's low-cost strategy

C)

Warephase Airway's decision to acquire Konex Fuels Inc. proved to be ill-fated because the Warephase managers 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 airline industry. What does this scenario best illustrate? A) knowledge race B) competitive feasibility C) managerial hubris D) unfettered free market

C) managerial hubris

Rainholm Industries is a large snack-food conglomerate that operates in more than 50 countries and employs more than 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 Rainholm Industries most likely use? A) an international strategy B) a focused-differentiation strategy C) a multidomestic strategy D) a transnational strategy

D)

Which of the following is an example of explicit knowledge? A) knowing how to create surveysB) a research skillC) knowing how to assemble semiconductorsD) a research summary

D)

There are some industries that are more competitive in some countries than others. In order to fully understand why this occurs, we need to examine Porter's Diamond framework. Which of the following below is NOT one of the four factors in this framework? A) industry-specific forces B) factor conditions C) competitive intensity in the focal industry D) demand conditions

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)

Dana wishes to strengthen her firm's marketing department by partnering with a large marketing firm that can complement her existing value chain. However, she fears potential legal repercussions including potential lawsuits filed by U.S. federal agencies such as the Federal Trade Commission (FTC). Which of the following strategic options should Dana pursue? A) Dana should implement green field operations with the marketing firm to strengthen her interanion reach. B) Dana should consider forming a strategic alliance with the marketing firm. C) Dana should move forward with a hostile takeover of the marketing firm. D) Dana should purchase the marketing firm outright via an acquisition.

B)

The Umbrella Corporation (UC) recently acquired a smaller competitor, Packer and Associates, which specializes in issues not previously covered by UC, such as land use and intellectual property cases. Given the increase in the firm's size and complexity, it is likely that its internal transaction costs will A) decrease. B) increase. C) become external transaction costs. D) be eliminated.

B)

Iselectrics, a medium-sized medical technology company, has been successful in its research and development but needs improvement in its European sales. Which of these actions would most likely lead to long-term success for Iselectrics's European sales? A) Alert the European Union that conditions in the European medical technology market are approaching oligopoly. B) Initiate a hostile takeover of a European rival. C) Acquire a company that has a successful medical technology sales force in Europe so that Iselectricscan gain access to new distribution channels. D) Contact its congressional representative to request higher tariffs on European technology products.

C) Acquire a company that has a successful medical technology sales force in Europe so that Iselectricscan gain access to new distribution channels.

Two leading home appliance companies, Globex Inc. and Pug Tech, are in competition for market share. In their quest for exciting new products, Globex employs an open innovation model, while Pug Tech pursues a closed innovation model. Which of the following statements is most likely true? A) Globex has a greater chance of capturing market share. B) Pug Tech has a superior absorptive capacity. C) Pug Tech will protect its intellectual property with patents and trade secrets. D) Globex is most concerned with securing first-mover advantages.

C) Pug Tech will protect its intellectual property with patents and trade secrets.

Condax Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for Condax products. In response, Condax Electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retail stores. What does this scenario best illustrate? A) crowdsourcing B) new product development C) forward vertical integration D) conglomerate diversification

C) forward vertical integration

Piper Inc. is a large cosmetics company that made an initial small investment in a start-up company, Oscorp, which was developing an organic face lotion. This gave Piper controlling interests in the start-up company. However, Oscorp soon began to have financial difficulties because of principal-agent problems. As a result, Piper 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)

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)

Stratton Oakmont pursues a related diversification strategy, deriving less than 70 percent of revenues from its original business unit, Stratton Piedmont, and maintaining several related units including Stratton Wellmont and Stratton Fredmont. Which of the following structures is most likely to support this strategy? A) M-Form with centralized decision-making power (cooperative multidivisional) B) M-Form with decentralized decision-making power (competitive multidivisional) C) functional with centralized decision-making power D) functional with decentralized decision-making power

A) M-Form with centralized decision-making power (cooperative multidivisional)

Anheuser-Busch InBev sold Busch Entertainment, its theme park unit that owns SeaWorld and Busch Gardens, to a group of private investors for roughly $3 billion. This strategic move allowed InBev to focus more fully on its core business of brewing and distributing beer across the world. This is an example of A)restructuring. B)corporate diversification. C)a business level strategy. D)the Core Competence-Market Matrix.

A) restructuring.

Which of the following is true of acquisitions? A) They can be friendly or hostile. B) They 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 captures the cultural fit between different firms, is one key element needed when selecting an alliance partner. A) Partner compatibility B) Partner commitment C) Joint ventures D) Partner competency

A)

The managers at Statholdings Mobile Inc. want to diversify the 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 Statholdings Mobile Inc. is most likely a result of A) time compression diseconomies.B) experience-curve effects.C) principal-agent problems.D) resource ambiguity.

C)

Sean is having hard time replicating his competitors' strong organizational culture because of ________ and ________, which stem from the VRIO framework. A) tangible; intangible budgets B) organizational socialization; input controls C) causal ambiguity; social complexity D) historical conditions; external opportunities

C)

Which of the following is an advantage of equity alliances when compared to nonequity 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)

Siobhan, the chief financial officer at an office furniture manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors? A) "As the rest of the world globalizes, we will lead the way in strengthening our home nation." B) "Keeping our factories in Canada means facing up to the liability of foreignness." C) "Canada's wages and benefits are so low compared with the rest of the world that it makes the most sense to build factories here." D) "It will be much more difficult to protect our intellectual property if we build factories overseas."

D) "It will be much more difficult to protect our intellectual property if we build factories overseas."

Aperture Science Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will give it strong control over all its business activities. Which of these foreign-entry modes will Maddox most likely choose? A) greenfield operation B) export C) joint venture D) acquisition

A)

The core competency of Newex Motors is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that the growing demand for "green" vehicles has created a new market opportunity. Thus, it uses its existing technology to develop an engine that improves the fuel efficiency of recreational motorhomes. In this scenario, Newex Motors 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) redeploying and recombining existing core competencies to compete in future markets.

A payroll company in the nation of Osterlich is seeking to expand beyond its borders while limiting administrative and political distance in the new country. Which potential site is the best one for this type of expansion? A) one that considers payroll companies essential to national security B) one that is outside of any trading blocs that Osterlich participates in C) one that used to have a colonizer or colonized relationship with Osterlich D) in a country that has extensive tariffs and trade quotas to protect businesses

C) one that used to have a colonizer or colonized relationship with Osterlich

John owns John's Trucking Corporation and is trying to determine if his firm should engage in vertical integration and diversify the range of services his business sells. Before John goes through with these decisions, he'll need to consider what is his A) corporate level strategy. B) business level strategy. C) functional level strategy. D) geographic scope.

A) corporate level strategy.

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

A)

Los Pollos Hermanos is a company that makes frozen lunch and dinner entrées. Based on what you know about companies like Nestlé, what action should Los Pollos Hermanos take as it strives to become multinational? A) Pursue a multidomestic strategy, customizing product offerings to suit local preferences. B) Attempt an international strategy, controlling costs and taking advantage of economies of scale by selling the same (or very similar) products around the globe. C) Try a global-standardization strategy, which creates standardized products and competes mainly on price. D) Consider a transnational strategy by creating a blue ocean market.

A)

Because Facebook receives almost all of its revenues from online advertising, we would conclude that Facebook would be characterized as a(n) ________ firm, which has the lowest levels of corporate diversification. A) single business B) dominate business C) related diversification D) unrelated diversification

A) single business

Bayside Inc., a reputed brand for fine art supplies, is implementing an international strategy. Cyberdyne Corp., a maker of mini-computer tablets, is pursuing a global-standardization strategy. Which of the following statements most likely holds true in this scenario? A) While Bayside Inc.'s competitive advantage lies in its high local responsiveness, Slalom Corp. will lack such capabilities. B) Cyberdyne Corp. focuses more on cost-reductions when compared to Bayside Inc. C) Cyberdyne's business functions are highly centralized, whereas Bayside organizes its activities worldwide. D) Cyberdyne is exposed to greater risks of exchange rate fluctuations.

B) Cyberdyne Corp. focuses more on cost-reductions when compared to Bayside Inc.

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)

Betatech 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 Betatech Group created? A) capital liquidityB) diversification premiumC) diversification discountD) demand-pull inflation

B)

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

C)

E Corp is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, E Corp 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, E Corp Inc. is most likely an organization that is A) formalized. B) mechanistic. C) centralized. D) organic.

D) organic.

Amy is the CEO of a line of accessories and cosmetics, Hooli Inc., which has retail stores and production units in five countries. In this scenario, Hooli Inc. is most likely a A) nonprofit organization. B) nationalized firm. C) sole proprietorship. D) multinational enterprise.

D)

Hooper's Store, a luxury motorcycle company, sells the same motorcycles 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 Hooper's Store most likely pursue? A) a multidomestic strategy B) a transnational strategy C) a global-standardization strategy D) an international strategy

D)

One of Black Mesa's core values is to provide unbeatable customer service, a commitment introduced to the company by its founder more than 10 years ago. This value is expressed in the company's "Always You" campaign, which promises a no-questions-asked returns policy and an offer to stitch the customer's initials onto any item for free using a patented sewing technique, two features that are not offered by any of Black Mesa's competitors. Although the campaign has resulted in a 10 percent decline in profits, Black Mesa has decided to continue to pursue its founder's vision to reward customers and maintain employees' sense of purpose. Why does Black Mesa's culture, exemplified by the "Always You" campaign, fail to support a competitive advantage? A) It does not increase economic value creation for the firm. B) It is not a rare resource. C) Always lacks founder imprinting. D) The culture is not difficult to imitate.

A)

Paper Street Soap Company, a cosmetics 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 Jennifer Watson, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Jennifer Watson 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) Jennifer Watson has a wide span of control. B) Paper Street Soap Company has a tall hierarchical structure. C) Jennifer Watson is underworked. D) Paper Street Soap Company is a mechanistic organization.

A) Jennifer Watson has a wide span of control.

Raul is the Chief Operating Officer (COO) of Black Mesa Inc., a firm that produces handcrafted kitchen tables for both the residential and commercial markets. Jose believes that his domestic market is saturated and now wishes to go global. Which of the following below would serve as an advantage for Raul if he chose to pursue international markets? A) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors. B) Raul could share his intellectual properties with another firm that operates in a foreign country in hopes of achieving collaboration. C) Raul's brand might suffer a loss in reputation if he goes global but could increase his market share. D) Raul may benefit from learning about Hofstede's cultural dimensions that could be leveraged on his current employees in his domestic market.

A) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors.

Which of the following statements about managing alliance-related tasks is true? 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 about managing alliance-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) Alliance-management capability is based on three alliance-related tasks.

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) Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.

Sirius Cybernetics 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)

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

A)

While working a night job at a call center, John creates an app called iFood, 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 iFood. He creates a start-up called JohnBuilt1 and hires three people to help him improve iFood and maintain the servers that run it. In this scenario, JohnBuilt1 most likely has a ________ structure. A) simple B) matrix C) mechanistic D) functional

A)

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)

Massive Dynamic Computers sources the components for its laptops from various suppliers on the market. The firm pays $100 for processors, $35 for disk drives, $50 for screens, $10 for memory, and $40 for graphics and wireless internet cards. Massive Dynamic has determined that it would cost $200 per unit to produce all of the necessary components in its in-house manufacturing facility. In this scenario, Massive Dynamic should A) continue to outsource production.B) vertically integrate.C) exit the laptop industry.D) diversify its activities.

B)

Weyland Yutani 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)

When Aviato Inc. wanted to sell its cars in the country of Yugoslakia, it lacked access to distribution channels and marketing expertise in the country. Thus, Aviato 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 offerings

B)

Plexzap Sodas has been a market leader in the soft drink industry for several decades. However, its market research shows that consumer tastes have begun to shift to sugar-free flavored seltzer waters, a product that Plexzap is capable of producing with minimal changes to its facilities and production processes. Based on your knowledge of the core competence-market matrix, which diversification strategy should Plexzap pursue? A) Leverage existing core competencies to improve current market position. B) Build new core competencies to protect and extend current market position. C) Redeploy and recombine existing core competencies to compete in markets of the future. D) Build new core competencies to create and compete in markets of the future.

C)

Sonron Auto Corporation generates 85 percent of its annual revenues by manufacturing luxury cars. The company derives 15 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 Sonron Auto Corporation? A) a conglomerate B) a subsidiary C) a dominant-business firm D) a single-business firm

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)

American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien's concern? A) Require business units at American Snacks and Très Bien to sign loyalty pledges. B) Encourage business units at American Snacks to act independently. C) Arrange for the alliance to be managed at the corporate level. D) Sever the relationship with Très Bien and find a more trusting corporate partner.

C) Arrange for the alliance to be managed at the corporate level.

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

C) Both Globex Inc. and Omni Consumer Products will have to duplicate key business functions in multiple host countries.

Doncon Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results? A) Invest in vertical integration despite the cost of producing pickups. B) Abandon the idea of vertical integration entirely. C) Pursue taper integration. D) Introduce a budget line of guitars to diversify the firm's offerings.

C) Pursue taper integration.

Rantouch is one of the largest tax-preparation firms in the United States. It wants to acquire Doncon , a smaller rival. After the merger, Rantouch will be one of the two largest income-tax preparers in the U.S. market. What should Rantouch include in its acquisition plans? A) It should refocus its attention from the national to the international market. B) In addition to acquiring Doncon, it should also determine the best way to drive independent "mom and pop" tax preparers out of business. C) Rantouch will need to explain to the Federal Trade Commission how the acquisition will not result in an increase in prices for consumers. D) Rantouch should enter a price-based competition with its other major competitor to force it out of business and become a monopoly.

C) Rantouch will need to explain to the Federal Trade Commission how the acquisition will not result in an increase in prices for consumers.

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)

Grace wants to form a voluntary arrangement with another firm in order to gain more flexibility in her supply chain, complementarity to a few of her support activities via her value chain, and strengthen her firm's overall competitive position. Grace is looking for a simple and common type of alliances, like A) a nonequity alliance. B) an equity alliance. C) a joint venture. D) a merger.

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)

test whether resources are (1) similar to those the firm needs to develop and (2) superior to those of competitors in the targeted area. Which of the following is the best way in which firms assess the second test? A) Firms can apply the VRIO framework for the second test. B) Firms can implement various financial metrics like NPV and IRR. C) Firms can employ external analysis tool like PESTEL and Porters Five Forces. D) Firms can use an international framework to determine global relevancy.

A) Firms can apply the VRIO framework for the second test.

Using the Boston Consulting Group growth-share matrix, the managers of Fasehatice International determined that their business unit devoted to personal health monitoring devices was a star. Based on this finding, which of the following strategies is likely to produce the best results? A) Increase investment in the personal health monitoring unit to encourage future growth. B) Seek to lower costs in the personal health monitoring unit to increase market share. C) Harvest as much cash flow as possible before shutting the business down. D) Immediately divest from the personal health monitoring industry.

A) Increase investment in the personal health monitoring unit to encourage future growth.

Ganjaflex Industries is a major multinational conglomerate. Its business units compete in a range of industries, including home appliances, pharmaceuticals, commercial real estate, and plastics manufacturing. Although its largest business unit, which produces kitchen appliances, is among the most profitable in the industry, it generates only 35 percent of the company's revenues. Which of the following is most likely true of Ganjaflex's stock price? A) It is valued at less than the sum of its individual business units. B)It is valued at greater than the sum of individual business units. C)It is valued at the exact sum of individual business units. D)It is consistently lower than the industry average.

A) It is valued at less than the sum of its individual business units.

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

A) It will benefit from economic arbitrage.

Sarah, 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 Sarah? 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) Once the firm starts growing and attracting more customers she is likely to feel overloaded.

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

A) Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements.

Golddex Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Golddex should pursue A) backward integration. B) forward integration. C) product diversification. D) geographic diversification.

A) backward integration.

Fang and Bone Corp. is a successful drug manufacturer. Because the pharmaceutical industry features a high rate of change and the threat of disruption is high, Fang and Bone Corp. should A) be prepared to restructure as the landscape changes. B) stick with the structure that brought it success no matter what happens. C) attempt to implement an unstructured organization. D) switch to whichever structure is most common in the industry.

A) be prepared to restructure as the landscape changes.

Can't Believe It's Not Hair Inc. (CBNH) dominates the ladies' wig market and wants to expand into men's toupees. How can CBNH 's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm? A) To protect themselves, CBNH's managers should choose the option that leads to the largest company with the most managerial positions. B) The managers need to determine whether the skills needed to create wigs and toupees are similar and whether CBNH creates better hairpieces than its competitors do. C) The managers must determine whether wig making and toupee making require substantially different skills. If so, the company should pursue internal development. D) Unless the market for toupees is booming, CBNH should stick to what it knows and focus on creating the best ladies' wigs in the industry.

B)

DalTech Inc., a publicly traded company, designs and manufactures wearable technology. What approach should DalTech take after a long period of horizontal integration in its industry? Assume that the industry is now stable and competitors have not made any major changes in price or marketing recently. A) Compete based on price in order to drive out remaining competitors and create a monopoly. B) Focus on research and development as a form of nonprice competition. C) Encourage new competitors to enter the market to improve competition. D) Prepare to resist a hostile takeover by buying back as much stock as possible.

B) Focus on research and development as a form of nonprice competition.

Oceanic, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Macmillan, an air-conditioner manufacturer, faces intense pressure from its home market. Rent a Swag, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Oceanic invest? A) Macmillan, because air conditioners cost more to ship than dog toys do B) Macmillan, because firms that face stiff competition at home tend to do better abroad C) Rent a Swag, because firms that face little or no competition at home tend to do better abroad D) Rent a Swag, because dog toys cost less to ship than air conditioners do

B) Macmillan, because firms that face stiff competition at home tend to do better abroad

Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them? A) Recent advances in management science have greatly improved the success rate of strategic alliances. B) Many owners, managers, and business analysts believe they are essential to survive in an industry. C) Government entities such as the Federal Trade Commission or the European Union sometimes force companies into strategic alliances. D) These alliances have an excellent record of success if managers have enough confidence in the outcome.

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

Tom is the inventor of a personal fitness tracking device, and he is in the process of hiring employees after receiving investment funding. When considering how to structure his company, he should A) emulate the structure of the leading firm in the industry. B) first establish a strategy and let that be him guide. C) choose the structure that will give him the most control. D) ask employees what structure they are most comfortable with.

B) first establish a strategy and let that be him guide.

Delos Inc. is an apparel manufacturer. The management at Delos Inc. 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)input controls.

29) Weyland Yutani Inc., a supermarket chain, is implementing a multidomestic strategy. TelAmeriCorp , 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) Weyland Yutani Inc. will focus more on cost-reduction than TelAmeriCorp.B) Weyland Yutani Inc. will have its business functions spread across the world; TelAmeriCorp's business functions will be highly centralized.C) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to pursue a differentiation strategy at the business level.D) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to reap significant economies of scale and location economies.

C)

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

C)

Hooli Computers has decided to procure processing chips required for its laptops from external suppliers instead of manufacturing them in their own 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)

Nerissa 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 followingbest describes Nerissa'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)

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

Los Pollos Hermanos 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. The firm'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 Tony's? A) Los Pollos Hermanos has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. B) Los Pollos Hermanos has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. C) Los Pollos Hermanos has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. D) Los Pollos Hermanos has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.

C) Los Pollos Hermanos has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.

A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. What approach could these companies take so that both can serve stockholders well? A) Both companies should reduce prices to force out competitors and make entering the market less appealing to potential rivals. B) Whichever company is larger should acquire the smaller one and impose its management system on the acquired company. C) The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power. D) For data security reasons, both companies should remain separate and refrain from sharing information.

C) The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power.

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) They are considered before employees make any decisions.

Hooli, a web development firm, wants to implement an organic structure to foster innovation and attract the most talented creative minds. Which of the following features will make it difficult to do so? A) decision-making power distributed throughout the organization B) a wide span of control for managers C) dedication to a cost-leadership business strategy D) flexible job descriptions for employees

C) dedication to a cost-leadership business strategy

Aperture Science relies on its employees to provide innovative ideas for new educational products. To foster intrinsic motivation in its workforce, Aperture Science should A) offer bonuses to employees whose ideas go into production. B) threaten to fire employees who do not come up with at least one new idea per week. C) give employees a "free day" every two weeks to pursue ideas for new educational toys. D) distribute a list of standard operating procedures for employees to follow.

C) give employees a "free day" every two weeks to pursue ideas for new educational toys.

Sterling Cooper Footware and NERV Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Sterling Cooper Footware entered the strategic alliance to acquire the production system pioneered by NERV Shoes. Similarly, NERV Shoes agreed to the strategic alliance to study the design process of Sterling Cooper Footware. However, Sterling Cooper Footware was more successful and faster than NERV 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) learning races

Soylent Corporation is a major nutritional supplement chain. Its managers are motivated to grow the firm in order to increase their market power and change the industry structure in their favor. Which of the following strategies is most associated with their motive for growth? A) employing celebrity spokespeople B) implementing automated soy-making machinery C) purchasing competitors D) increasing executive salaries

C) purchasing competitors

Better Pill LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Better Pill's owners or managers to take? A) Quickly build downstream complementary assets. B) Enter multiple learning races within strategic alliances. C) Seek an alliance with a company or companies that will complete the value chain. D) Pursue managerial hubris at all levels of development.

C)Seek an alliance with a company or companies that will complete the value chain.

Many financial service firms, IT firms, and health care companies are among the most active when it comes to________, which occurs when value chain activities are taken care of outside the home country of the firm. A) strategic outsourcing B) procurement C) offshore outsourcing D) diversification

C)offshore outsourcing

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)

Janet wants to restructure the portfolio of all her firm's strategic business units. Janet will more than likely employ the ________ tool. A) value chain analysis B) VRIO C) diversification premium D) Boston Consulting Group (BCG) matrix

D)

Li runs a firm that has diversified into different product lines and geographies. She should probably use a(n) _______ organizational structure. A) functional B) simple C) network D) M-form

D)

Susan owns a firm that is considered fully integrated. Which of the following statements below would best describe a firm that is fully integrated? A) Susan's firm is a single-business organization. B) Susan's firm is more than likely a conglomerate. C) Susan's firm is still reliant on certain key suppliers in the industry value chain. D) All of Susan's business activities are conducted within the boundaries of the firm.

D)

________ enables firms to increase their organizational boundaries because the number of competitors decreases. This is demonstrated through the ________ model. A) Vertical integration; horizontal integration B) Horizontal integration; vertical integration C) Vertical integration; Porter's Five Forces D) Horizontal integration; structure-conduct-performance

D) Horizontal integration; structure-conduct-performance

Todd is a strategist for a furniture manufacturer that has a large presence in the United States and Canada. By checking economic and political reports, he knows that trade and investment barriers are falling among wealthy nations. He also knows that the price of oil has dropped 50 percent in the previous two years. Based on this information, what action should Todd and his company take? A) Todd and her employer should wait out this period of uncertainty and take action when market forces are more stable. B) They should anticipate market corrections because investment barriers and the price of oil inevitably rise. C) Todd and his employer need to prepare for the cost of doing business to increase. D) They should seriously consider globalization because of the falling trade and investment barriers.

D) They should seriously consider globalization because of the falling trade and investment barriers.

Managers at Umbrella Corporation, a firm in East Asia, want to make their company a global leader in business process outsourcing (BPO). What should the Umbrella managers look for as they decide where to locate their BPO facilities? A) large, undeveloped plots of land for greenfield projects B)plentiful natural resources C)many uneducated workers who are highly trainable D)an abundance of well-educated English speakers

D) an abundance of well-educated English speakers

Aldorria and Estoccia are 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 Estoccia. B) movies and TV shows produced in Aldorria. C) iron ore extracted in Estoccia. D) luxury items manufactured in Aldorria.

D) luxury items manufactured in Aldorria.

Plexzap Products 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 of the common competencies in products, services, technology, and distribution. Which of the following corporate strategies is Plexzap pursuing in this scenario? A)taper integration strategy B)niche marketing strategy C)related-constrained strategy D)related-linked strategy

D) related-linked strategy

Mary has been named CEO of an office furniture manufacturing company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Mary most likely to make? A) whether to pursue a differentiation or cost-leadership strategy B) which customer segments to target C) how to achieve the highest levels of customer satisfaction D) what range of products the firm should offer

D) what range of products the firm should offer