MGMT 352 Exam 2
Bellhaven Inc. has a board of directors that consists of seven members. Which of the following is most likely an accurate statement about Bellhaven's board of directors? Bellhaven's board of directors ensures the firm's compliance with laws and regulations but does not conduct risk assessments. Bellhaven's board of directors provides guidance for the firm's CEO but does not monitor the firm's corporate actions. Bellhaven's board of directors oversees the firm's succession plan but does not evaluate the firm's CEO. Bellhaven's board of directors has a minority number of inside directors and it evaluates the firm's strategic initiatives.
Bellhaven's board of directors has a minority number of inside directors and it evaluates the firm's strategic initiatives.
Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks? HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. HP was able to enter a new market, and DreamWorks was able to strengthen its old market. DreamWorks was able to enter a new market, and HP was able to strengthen its old market.
Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.
Which of the following is true of business ethics? Certain notions such as fairness, honesty, and reciprocity are universal norms. Business ethics is an agreed-upon code of conduct in business, based on laws. The perception of what is ethical and what is not is similar across different cultures. Business ethics needs to be codified into law in order to be followed.
Certain notions such as fairness, honesty, and reciprocity are universal norms.
_____, 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. Coordination costs Fixed costs Agency costs Network costs
Coordination costs
Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework? Doing so could yield significant business opportunities that could improve the standard of living of the poor. Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. Doing so could be the only way to meet stockholder expectations in a highly competitive market. Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.
Doing so could yield significant business opportunities that could improve the standard of living of the poor.
Galaxy Toys 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 Galaxy Toys for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? Galaxy Toys Inc. is a mechanistic organization. Galaxy Toys Inc. has a flat organizational structure. Galaxy Toys Inc. has a high degree of centralization. Galaxy Toys' organizational culture is governed by codified rules.
Galaxy Toys Inc. has a flat organizational structure.
Judging from the Disney-Pixar merger, which of these is an effective way to create shareholder value from a merger? Integrate the acquired company as fully as possible, merging staffs and locations, so that all employees have as similar an on-the-job experience as possible. If the acquired company creates high-quality products or services, don't force it to mirror the management style of the acquiring company. Cut prices at the acquired company but not the acquiring company so that the acquisition covers all consumer price points. Raise consumer prices at the acquiring company and the acquired company to reflect the fact that the market is now less competitive.
If the acquired company creates high-quality products or services, don't force it to mirror the management style of the acquiring company.
_____ 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. Fixed costs Influence costs Coordination costs Opportunity costs
Influence costs
_____ is best described as a situation in which one party is more informed than another, because of the possession of private information. Information governance Information asymmetry Information deregulation Information piracy
Information asymmetry
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? t is leveraging existing core competencies to improve current market position. It is building new core competencies to protect and extend its current market position. It is redeploying and recombining existing core competencies to compete in markets of the future. It is targeting the chasm between the early adopter and early majority market segment.
It is building new core competencies to protect and extend its current market position.
Which of the following is a feature of the Globalization 2.0 stage? Question options:Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. Two-way knowledge flowed between the local subsidiaries and their U.S. headquarters Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
_____ describes the collectively shared values and norms of an organization's members. Competitive advantage Organizational structure Organizational culture Core competency
Organizational culture
Which of the following statements is true with regard to international trade between countries? Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. Wealthy countries engage in relatively more cross-border trade than poorer ones. Political integrations decrease the expected trade intensity between two countries.
Political integrations decrease the expected trade intensity between two countries.
Juno LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Juno's owners or managers to take? Quickly build downstream complementary assets. Enter multiple learning races within strategic alliances. Seek an alliance with a company or companies that will complete the value chain. Pursue managerial hubris at all levels of development.
Seek an alliance with a company or companies that will complete the value chain.
Angie owns and runs Archana, a private start-up company with a current value of $1.3 billion. Archana is interested in going public to fund future growth. Which action should Angie take before Archana's initial public offering? Question options:Angie should come up with a business plan for what Archana will do once it is no longer publicly traded. She and senior managers should write down their code of ethics. Angie should not embark on an IPO until Archana's value is higher. She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage? W. L. Gore & Associates organizes its employees into project-based teams. Apple develops high-tech products that are preferred by consumers across the world. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. GM offers compensation if its products do not meet a consumer's expectations.
Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.
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? Sturdy Light was a star that developed into a cash cow. Sturdy Light was a question mark that developed into a star. Sturdy Light was a dog that developed into a question mark. Sturdy Light was a cash cow that developed into a star.
Sturdy Light was a question mark that developed into a star.
General Electric's board has only one inside director, John Flannery, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE? A CEO is likely to be more responsible because he or she is setting his or her own performance targets. The CEO might be able to influence the board through setting the meeting agendas. The CEO possesses invaluable inside information that can help him or her chair the board effectively. Any CEO will suggest board appointees who are friendly toward him or her.
The CEO possesses invaluable inside information that can help him or her chair the board effectively.
Overall, was the Adidas acquisition of Reebok a success? No. Adidas has slipped from number two in the U.S. market to number three. Yes. By acquiring Reebok, Adidas improved its market share and made sure that Nike could not acquire it. The acquisition was a success for Reebok but not for Adidas. The acquisition was a success for Adidas but not for Reebok.
The acquisition was a success for Adidas but not for Reebok.
A bank, CQC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical? The bank knows that the customer will be unable to pay the loan if the interest rate rises. The bank is not aware of the investments made by the customer. The bank has the financial statements of the customer, but it is not aware of each source of income. The bank is depending on the customer to pay back the loan before term completion.
The bank knows that the customer will be unable to pay the loan if the interest rate rises.
Banana 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? The firm will be protected against the principal-agent problem. The firm's administrative costs will be low because of necessary bureaucracy. The firm will have more flexibility in purchasing and comparing prices of goods and services. The firm will have high-powered incentives, such as hourly wages and salaries.
The firm will have more flexibility in purchasing and comparing prices of goods and services.
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 original core competency can turn from a liability into an asset. The firm's organizational inertia can turn into its core rigidity. The firm's competitive parity can turn into its competitive advantage. The firm's culture can turn from a core competency into a core rigidity.
The firm's culture can turn from a core competency into a core rigidity.
Uptown Office Systems recently underwent a reorganization. Based on customer feedback, the company eliminated many of its middle management positions and implemented a flatter structure. Which of the following is a possible drawback of this decision? Employees will have less power and autonomy, resulting in a loss of morale. Internal communications and decision-making processes will be slower. The increased span of control for remaining managers may lead to higher levels of stress and possible burnout. Employees will be forced to take on more specialized roles and may become bored by repetitive tasks.
The increased span of control for remaining managers may lead to higher levels of stress and possible burnout.
How did Uber conflict with Carnegie Mellon University's National Robotics Engineering Center (NREC)? Question options: Uber promised a large donation to NREC but then reneged on the offer when NREC would not provide Uber with researchers. Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC. Uber allegedly stole ideas from the NREC research team and then claimed that these ideas were generated by their own researchers. Uber bribed NREC officials to give permission for building an extension to the NREC facility that focuses solely on Uber research.
Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC.
Fierce domestic competition in New Schuyler 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, New Schuyler'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 peripheral industry. a focal industry. supportive complementors. related complementors.
a focal industry.
Braintree 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 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? an acquisition a strategic alliance a leveraged buyout a proprietorship
a strategic alliance
Nate is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A start-up recruits Nate based on his stated credentials without verifying them. Two days into the job, Nate's team lead realizes that Nate does not know much of what he claimed to know during the interview. This scenario best exemplifies moral hazard. adverse selection. shared value creation. corporate governance.
adverse selection.
The Palace Hotel Group purchased Orange Roof Hotels for an estimated value of $120 billion. All the hotels previously owned by Orange Roof Hotels are now managed by the Palace Hotel Group and are known as Palace hotels. What does this scenario best illustrate? a merger a joint venture an acquisition an equity alliance
an equity alliance
Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies. backward vertical integration forward vertical integration backward horizontal integration forward horizontal integration
backward vertical integration
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? because of the political differences between India and the United States because NAFTA prohibits Walmart from investing in countries outside North America because of the large economic distance between the United States and India because Indian consumers have not accepted Walmart's low-cost strategy
because of the large economic distance between the United States and India
Ancho Corp. 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, which uses both gas and electricity. In this scenario, Ancho is primarily leveraging new core competencies to improve current market position. redeploying existing core competencies to compete in future markets. unlearning existing core competencies to create and compete in markets of the future. building new core competencies to protect and extend current market position.
building new core competencies to protect and extend current market position.
The managers at Camphor Plastics decided that their firm needed to diversify because of overall falling sales and lower performance in one sector. How does diversifying compensate for the lackluster performance in this sector? by having higher performance in another sector by sharing their market power by increasing the firm's risk in another sector by motivating managers
by having higher performance in another sector
RHC Pharmaceuticals Inc., Lawrence Pharma Inc., and Quincy 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 one another. 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? Question options: takeover buyout co-opetition acquisition
co-opetition
Cheetah, 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? decision-making power distributed throughout the organization a wide span of control for managers dedication to a cost-leadership business strategy flexible job descriptions for employees
dedication to a cost-leadership business strategy
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? diversification discount learning-curve effects experience-curve effects economies of scale
diversification discount
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved exporting goods. making foreign direct investments. making foreign institutional investments. licensing production and distribution.
exporting goods.
Revolution Watches, a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of developing nations. Which of the following types of diversification strategies is the firm pursuing? product diversification strategy process diversification strategy geographic diversification strategy product-market diversification strategy
geographic diversification strategy
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. global matrix multidivisional functional simple
global matrix
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. CEO; COO COO; CEO outside director; inside director inside director; outside director
inside director; outside director
Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) Question options:transnational strategy to a multidomestic strategy.transnational strategy to a global-standardization strategy.international strategy to a multidomestic strategy.international strategy to a global-standardization strategy.
international strategy to a global-standardization strategy.
McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's is organic in nature. is mechanistic in nature. has an informal structure. has a decentralized structure.
is mechanistic in nature.
Nirvana Shoes Inc. and StepOut Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Nirvana Shoes entered the strategic alliance to acquire the production system pioneered by StepOut Shoes. Similarly, StepOut Shoes agreed to the strategic alliance to study the design process of Nirvana Shoes. However, Nirvana Shoes was more successful and faster than StepOut Shoes in accomplishing its alliance goal. What does this scenario best illustrate? network effects economies of scope learning races time compression diseconomies
learning races
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 leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. redeploying and recombining existing core competencies to compete in future markets. building new core competencies to create and compete in future markets. building new core competencies to protect and extend current market position.
leveraging existing core competencies to target the chasm between the early adopter and early majority market segment.=
There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? increasing profits lowering costs reducing risk motivating managers
lowering costs
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 eventually gives way to core rigidity obeys the VRIO principles. does not demonstrate causal ambiguity. displays an absence of social complexity.
obeys the VRIO principles.
Bulldog Holdings 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? venture capitalism franchising joint venture parent-subsidiary relationship
parent-subsidiary relationship
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 geographic diversification. product diversification. vertical integration. horizontal integration.
product diversification.
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 reverse engineering. benchmarking. restructuring. crowdsourcing.
restructuring.
Medequip Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medequip? mergers serial mergers acquisitions serial acquisitions
serial acquisitions
In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are similar to those that need to be developed and superior to those of competitors in the targeted area. similar to those that need to be developed and inferior to those of competitors in the targeted area. different from those that need to be developed and superior to those of competitors in the targeted area. different from those that need to be developed and inferior to those of competitors in the targeted area.
similar to those that need to be developed and superior to those of competitors in the targeted area.
A high degree of formalization in an organization is most likely to Question options:improve customer service. slow down decision making. produce inconsistent results. increase creativity and innovation.
slow down decision making.
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 question marks. stars. cash cows. dogs.
stars.
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 proprietorship. cooperative. strategic alliance. leveraged buyout.
strategic alliance.
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
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 the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive. the surviving firms will need to be protected against the increasing bargaining power of the suppliers. the horizontal integration activity has the potential to reduce competitive intensity in an industry. the surviving firms will need protection against the relaxed entry barriers.
the horizontal integration activity has the potential to reduce competitive intensity in an industry.
In a public stock company, senior executives, such as the CEO, face agency problems when they delegate authority of strategic business units to general managers. they decide to get involved in the day-to-day operations of a company. the board of directors possesses more information about the company than they do. the firm designs work tasks, incentives, and employments that minimize opportunism.
they delegate authority of strategic business units to general managers.
Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups? to pursue an unrelated-options perspective without disrupting existing market economics to make small-scale investments in ventures poised to disrupt existing market economics to invest their excess cash flow in the superior technology of the biotech start-ups to share their continuously updated research technology with the biotech start-ups
to make small-scale investments in ventures poised to disrupt existing market economics
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 it attempts to share best practices across units. Global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is following a(n) multidomestic strategy. international strategy. global-standardization strategy. transnational strategy.
transnational strategy.
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. related-constrained strategy unrelated diversification strategy differentiation strategy dominant-business strategy
unrelated diversification strategy
Gold Leaf 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. Gold Leaf 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, Gold Leaf should continue to outsource production. vertically integrate. exit the laptop industry. diversify its activities.
vertically integrate.
