Final

De Bruyne Inc., a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to De Bruyne's board to achieve board independence?

7

Which of the following accurately describes a common difference between a merger and an acquisition?

A merger tends to be friendly; an acquisition can be friendly or unfriendly.

Braintree Inc.m 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 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 Braintree and the software company best referred to as in this scenario?

A strategic alliance

Which of the following statements is true of shareholders in a public stock company? A) They are granted a charter of incorporation by the state and legally own company stock. B) They directly supervise and coordinate the manufacture of products and deliveryof services. C) They are the centerpiece of corporate governance. D) They are appointed by a board of directors to oversee the company'smanagement.

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

Which of the following scenarios best exemplifies a leveraged buyout of a microchip manufacturer, Rigoletto Inc.? A) The owner of another company buys all the outstanding shares of Rigoletto in order to take it private. B) A private equity firm, Stormcloud Inc., buys a large number of shares of Rigoletto in order to publicly trade it under a new name. C) Rigoletto sells all its shares and declares bankruptcy. D) Rigoletto buys back a large amount of its own shares from the stock market.

A). The owner of another company buys all the outstanding shares of Rigoletto in order to take it private.

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

A. values.

When large, incumbent firms buy start-up companies, the transaction is generally described as a(n)

Acquisition.

Which of the following statements about managing alliance-related tasks is true?

Alliance management capability is based on three alliance-related tasks

All of the following are examples of external-governance mechanisms except? Please choose you answer wisely.

Auditors (MAYBE)

Janessa Inc., a reputed brand for fine art supplies, is implementing an international strategy. Slalom 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 Janessa Inc.'s competitive advantage lies in its high local responsiveness, Slalom Corp. will lack such capabilities. B) Slalom Corp. focuses more on cost-reductions when compared to Janessa Inc. C) Slalom's business functions are highly centralized, whereas Janessa. organizes its activities worldwide. D) Slalom is exposed to greater risks of exchange rate fluctuations.

B) Slalom Corp. focuses more on cost-reductions when compared to Janessa Inc.

For which of the following companies will geographic distance be the most relevant factor in deciding whether 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) a firm that extracts and exports iron ore

Sky Pioneers Inc. manufactures airplane parts. It wants to globalize and is willing to spend a considerable amount to protect its intellectual property. Which of these business ventures makes the most sense for Sky Pioneers? A) licensing some of its newest designs to overseas competitors B) acquiring an airplane-parts manufacturer in another country C) beginning a brownfield project in its home country D) exporting airplane parts to many other countries

B) acquiring an airplane-parts manufacturer in another country

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) exporting

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) franchising

Which of the following is an observable feature in the Globalization 3.0 stage?

Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

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

Building downstream complementary assets can be expensive and time-consuming.

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) Australia

How did Canada, Mexico, and the United States reduce the administrative and political distance between them? 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) by establishing the North American Free Trade Agreement (NAFTA)

Because of poor management, the stock prices of DigiKing Inc. falls and many investors sell their shares. Soon DigiKing becomes the target of a hostile takeover, during which Charles buys enough shares to exert control over the firm. In this scenario, Charles performs the role of a(n) A) outside director. B) inside director. C) corporate raider. D) corporate consultant.

C) corporate raider.

Which of the following characteristics of a public stock company deals with principals and agents? A) limited liability of investors B) transferability of investor ownership C) separation of legal ownership and management control D) legal personality

C) separation of legal ownership and management control

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?

C. By lowering competitive intensity in the industry overall

Anita has been named CEO of a popular sports apparel company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Anita most likely to make?

C. what range of products the firm should offer

Firms that consider international expansion will often examine absolute metrics on which countries to pursue investments in but also consider relative distance. To help firms decide where to compete, the ________ was developed to help firms make this decision.

CAGE distance framework

Jane is the CEO of Aperture Science LLC and wishes to develop additional competencies for her business. She is mostly interested in taking advantage of the ________, which are clustered firms that have unique skill sets located in specific geographic regions.

Communities of learning

This scenario at Gregarious Simulation Systems is a consequence of

Corporate Governance

Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading? A) Forbid managers and executives from having access to private information. B) Forbid board members from having access to private information. C) Work with analysts and customer-facing employees to root out information asymmetry. D) Create a strict code of ethics and explain that inside traders will be fired.

D) Create a strict code of ethics and explain that inside traders will be fired.

Devonshire Ventures 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 Devonshire most likely use? A) an international strategy B) a focused-differentiation strategy C) a multidomestic strategy D) a transnational strategy

D) a transnational strategy

Screaming Eagle, 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 Screaming Eagle most likely pursue? A) a multidomestic strategy B) a transnational strategy C) a global-standardization strategy D) an international strategy

D) an international strategy

Landon is a senior manager for the firm Anderssen Inc. Because of his experience, he has been appointed to the board of EEC Inc., even though he doesn't work for this firm. He also serves on the boards of several other companies. Landon is a(n) ________ for Anderssen and a(n) ________ for EEC. A) CEO; COO B) COO; CEO C) outside director; inside director D) inside director; outside director

D) inside director; outside director

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 targets.

D. threaten to lay off employees if they do not achieve targets.

Burnley and Co., 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 Emma Burnley, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Emma Burnley 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?

Emma Burnley has a wide span of control.

Companies must evaluate the relevancy of their internal resources. This happens in two ways: they 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

Firms can apply the VARIO framework for the second test.

Future Clothes Inc., a publicly traded company, designs and manufactures wearable technology. What approach should Future Clothes 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.

Focus on research and development as a form of non-price competition.

Atangadi is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should he 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

He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance.

integration enables firms to increase their organizational boundaries because the number of competitors decreases.

Horizontal, Structure-conduct-preformance

The Martinez Legal Firm (MLF) recently acquired a smaller competitor, Miller and Associates, which specializes in issues not previously covered by MLF, 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

Increase

Each stage of the vertical value chain typically represents a distinct _________in which a number of different firms are competing

Industry

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?

It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.

In which of the following ways does Zappos achieve organizational control?

It enforces that each group member's compensation depends in part on the group's overall productivity.

Why is the optimal organizational structure a multidivisional structure?

Its focus is on driving down costs.

Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company?

Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.

Which of the following scenarios best illustrates horizontal integration?

King Autos Inc. joins with Dimitra Motors Inc., ONE of its direct competitors.

Why did Quaker Oats Company's acquisition of Snapple fail

Managerial hubris

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

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

Which of the following real-world scenarios best exemplifies formalization?

McDonald's use of standard operating procedures across the world

Macmillan Toys Inc. is looking to expand internationally and wishes to develop a new product line that is highly localized while keeping their cost structure below that of their rivals. Macmillan Toys Inc. has been successful with implementing a blue ocean strategy in their main strategic business units and as such wishes to pursue a ________ strategy for their international operations.

NOT multidomestic

The managers at Speed Automobile 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 Speed Automobile is most likely a result of

Principal-agent problems.

Nocturnal 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 Nocturnal pursuing in this scenario?

Related-linked strategy

A drawback involved in using cross-border strategic alliances to enter new foreign market is that

Some of the firm's proprietary know-how many appropriated by foreign partner.

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage?

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

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?

TL & Co. will share fewer common competencies and resources between its various businesses when compared to Soar Inc.

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because

The U.S. population was growing slowly and becoming more health conscious

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

The chief executive officer

Which of the following is an example of an internal transaction cost?-The cost of searching for a contract manufacturer -The cost of signing a contract with a supplier -The cost of buying raw materials -The cost of maintaining a production unit

The cost of maintaining a production unit

In a non-equity alliance, which of the following types of information would firms most likely share?

The documented information about the material composition of a product

Which of the following best supports the fact that Dieselgate was unethical when entering the U.S. market?

The engineers installed "defeat devices" that altered the concentration of harmful emissions when EPA regulators tested the vehicles.

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?

The firm's culture can turn from a core competency into a core rigidity.

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?

The petrol cars SBU operates in a low-growth market, whereas the hybrid electric cars SBU operates in a high-growth market.

Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos?

Their culture reflects complex relationships with their employees, customers, and suppliers.

Three months ago, Darren became a board member at Runswell, a publicly traded company. Two weeks ago, the board members discovered that Runswell's CEO is facing a lawsuit from a family member who accuses the CEO of theft. Based on what you have read, to what ethical standard should Darren and the other board members hold the CEO?

They must hold her to the highest ethical standards because the leaders of publicly traded companies must withstand intense public scrutiny.

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

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

Which of the following is true of the board of directors in a public stock company?

Votes at shareholder meetings determine whose representatives are appointed to the board of directors.

Which of the following types of groups is most susceptible to groupthink?

a cohesive group

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 global-standardization strategy

Hiesh changed Zappos from

a hierarchy to holocarcy

Which of the following best illustrates physical-asset specificity?

a machine solely designed to give a candy its trademarked shape

Elvira is the CEO of a firm. She has an opportunity to increase the competitive advantage of her company but is not sure if accepting the opportunity is ethical. Which of the following questions would help her decide if accepting the opportunity is ethical? a. How would the media report her decision to accept the opportunity if it were to become public? b. How long lasting would the competitive advantage be if she decided to accept the opportunity? c. What are the chances that her decision to accept the opportunity will be made public? d. How much profit would be made if she decided to accept the opportunity?

a. How would the media report her decision to accept the opportunity if it were to become public?

Which of the following descriptions best exemplifies adverse selection? a. A research scientist uses the organization's resources to conduct personal research. b. A manager cannot ascertain the contributions of individual team members in team production. c. An employee spends time on social networking sites during work hours. d. An interview candidate lists his qualifications in chronological order.

b. A manager cannot ascertain the contributions of individual team members in team production.

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) free use of formerly protected intellectual property C) increasing trade barriers that protect businesses D) exporting newly available raw materials, such as rubber and coal

benefits from lower labor costs in manufacturing and services

Several notable firms like Eli Lilly, HP, Procter & Gamble, and IBM each wish to become the alliance "partner of choice" for small technology ventures, colleges, and inventors. They each know that ________ is a necessary and critical element for an alliance to be a success.

building interorganizational trust

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

building new core competencies to create and compete in markets of the future

Sunset Foods relies on a highly centralized functional structure to ensure consistency in the quality and taste of its products and to drive down costs via process innovations. However, as a consequence of its highly compartmentalized structure, the firm has found it difficult to transfer information and ideas from one department to the next. With the launch of its new line of breakfast foods coming up, how can Sunset improve its ability to collaborate without sacrificing the benefits of its current structure?

by establishing cross-functional teams

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:_________________________.

c. related and supporting industries/complementors

The tata group...

conglomerate

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

core rigidity.

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?

diversification premium

Jill is the CEO of Note's Etc, a stationary manufacturer. She decides to open up a retail store to sell her products directly to consumers instead of just selling to retailers. In order to do this, Jill will need to engage in ________, which is a corporate level, strategy.

forward vertical integration

Which of the following organizational structures matches best with an international strategy?

functional

Turquoise Games relies on its employees to provide innovative ideas for new educational products. To foster intrinsic motivation in its workforce, Turquoise should

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

Sanibel Autos Inc. merged with its competitor Vroom Autos Inc. This allowed Sanibel Autos to use its technological competencies along with Vroom Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What type of integration does this scenario best illustrate?

horizontal

NoRu Inc. is a publicly traded firm that does not wish to be acquired by FRESHPoP Corporation, a much larger publicly traded firm, who is planning an acquisition of NoRu Inc. This is an example of a

hostile takeover.

Danke Inc. is a diversified firm that creates more value than the cost that it incurs. As a result, they are experiencing a diversification premium in their stock price. Danke Inc. is able to accomplish all of the following except

increase their costs but maintain their current stock price

Fakhir is a board member at Garfield Motors Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Blixt Electronics. According to this scenario, Fakhir

is an inside director of Garfield Motors

When a firm is facing high pressure for local responsiveness and low pressure for cost reductions, the firm is likely to adopt a(n) _____________.

localization

Fine Lines Inc. is a notebook manufacturing company based in Ohio. Fine Lines' main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Fine Lines Inc. likely to use if it has functional setup?

mechanistic

Rajat Gupta's role in providing inside information to Galleon Group for the benefit of Galleon Group's stockholders and Rajat Gupta himself is an example of _____. shareholder capitalism adverse selection shared value creation moral hazard

moral hazard

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

multinational enterprise

GLD Inc. is a publicly traded company. The stockholders of this company delegate the authority to make decisions for the company to a CEO named George. The stockholders expect George to make decisions that will benefit the company. However, George begins to find ways to maximize his total compensation, which at times hinders GLD's performance. This scenario reflects

principal-agent problems.

WellMade Manufacturing 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?

product diversification

The core competency of GoGo 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, GoGo Motors is

redeploying and recombining existing core competencies to compete in future markets.

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

related-constrained diversification

Mary owns Kind Corporation and wants to maintain a dual focus on creating shareholder value while at the same time increasing value for society as a whole. Mary is following the

shared value creation framework.

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.

single product

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

stars

Telescopic 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, Telescopic Inc. can be said to have a(n)

tall hierarchical structure.

which of the following reasons motivated facebook to acquire instagram, a photo and video-sharing social media site, for $1 billion in 2012?

the desire to gain a new capability

What action should los pollos hermanos take as it strives to become multinational

transnational ... (Maybe)

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

vertical integration