Policy and Strategy

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

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

Arnold is a firm believer in Milton Friedman's view of a firm's social obligations. Which which of the following statements is Arnold most likely to agree?

Businesses can use their resources to create profit as long as they do so within the rules of the game

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 also improve societal needs

Which of the following is an implication for the strategist in the context of corporate governance and a company's success?

Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage

During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved

Exporting goods

Which of the following is an advantage offered by a functional structure?

It allows for a higher degree of specialization and deeper domain expertise

Nirvana Shoes Inc. and SepOut 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?

Learning Races

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

McDonald's use of standard operating procedures across the world

A trend observed during the Globalization 3.0 stage involves

Multinational companies organizing as global-collaboration networks

Ignacio Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?

Shareholders of Ignacio are responsible to the company only to the capital they have invested.

Why does strategy implementation often require change within an organization?

Strategy implementation transforms strategy into actions and business models

Which of the following statements best supports the view that GE's Ecomagination strategy is in line with the shared value creation framework?

The Ecomagination strategy allows GE to produce "green" production while increasing revenue and competitive advantage

Showstopper Inc. dominates the ladies' wig market and wants to expand into men's toupees. How can Showstopper's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm?

The managers need to determine whether the skills needed to create wigs and toupees are similar and whether Showstopper creates better hairpieces than its competitors do

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?

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

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

There is a reduction of excess capacity in the market

According to Michael Porter, which of the following is a problem with many publicly traded companies?

They have defined value creation too narrowly in terms of financial performance

Which of the following statements is true with regard to international trade between countries?

Wealthy countries engage in relatively more cross-border trade than poorer ones

When does a merger between companies typically occur?

When two firms of comparable size join to form a combined entity

ValueHealth is a successful drug manufacturer. Because the pharmaceutical industry features a high rate of change and the threat of disruption is high, ValueHealth should

be prepared to restructure as the landscape changes

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?

benefits from lower labor costs in manufacturing and services

One way to foster ethical behavior in employees is to

create a control system that encourages desired values

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance

culture

Which of the following foreign entry modes primarily involves producing goods in one country to sell in another?

exporting

Which of the following modes of entering a foreign market allows for the lowest level of control?

exporting

A greater cultural distance between two trading countries

increases the liability of foreignness

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 mechanistic in nature

1. A mortgage-loan officer persuades unsuspecting consumers to sign up for exotic mortgages, such as "option ARMs." These mortgages offer borrowers the choice to pay less than the required interest, which is then added to the principal while the interest rate can adjust upward. Because of this setup, many borrowers are unable to repay the mortgage once the interest rates go up. Which of the following phrases best describes this scenario?

legal but not ethical

A mortgage-loan officer persuades unsuspecting consumers to sign up for exotic mortgages, such as "option ARMs." These mortgages offer borrowers the choice to pay less than the required interest, which is then added to the principal while the interest rate can adjust upward. Because of this setup, many borrowers are unable to repay the mortgage once the interest rates go up. Which of the following phrasesbest describes this scenario?

legal but not ethical

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

multidivisional

Which of the following global strategies best matches with a multidivisional structure?

multidomestic

Esther is the CEO of a line of accessories and cosmetics, Starring Me! Inc. a publicly traded company, which has retail stores and production units in five countries. In this scenario, Starring Me! Inc. is most likely a

multinational enterprise or multinational corporation

Michael Porter's diamond framework explains

national competitive advantage

Ethics is

not synonymous with law

What causes the winner's curse?

overpaying for an acquisition

Which of the following countries has a high geographic distance but a low cultural distance from the United States?

Australia

A firm's ______ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed

structure

Organizational design is

the process of creating, implementing, and modifying the structure of an organization

Which of the following is the source of the principal-agent problem in publicly traded companies?

the separation of ownership and control

Which of the following factors is the most important determinant of economic distance?

the wealth and per capita income of consumers

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

they detail how the organization expects an employee to behave and to represent the company in business dealings

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because

they offer the same products or services in all their stores throughout the world

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

to make small-scale investments in ventures poised to disrupt existing market economics

The most important yet least visible element of organization culture is

values

__________ refers to the degree to which decision making is concentrated at the top of the organization.

Centralization

Which of the following is true of business ethics?

Certain notions such as fairness, honesty, and reciprocity are universal norms

Which of the following statements is true of explicit knowledge?

Explicit knowledge is shared in non-equity alliance firms

Tina is the inventor of a personal fitness tracking device, and she is in the process of hiring employees after receiving investment funding. When considering how to structure her company, she should

First established a strategy and let that be her guide

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

Igor assembles a motorcycle from memory

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 is a feature of the Globalization 2.0 stage?

Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries

________ define appropriate employee attitudes and behaviors.

Norms

Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically?

Observe executives at the company, and see whether they model ethical behavior and demand it of others.

Which of the following statements is true of strategy in an organization?

Organizational structure must follow strategy in order for firms to achieve superior performance

What is horizontal integration?

Process of merging with a competitor at the same stage in the value chain

How has China been affected by its one-child-per-family policy and appreciation of its currency?

The country's advantage in low-cost manufacturing is now reduced.

In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems?

The expectation that the agent will act in the principal's best interest

What helps notions such as fairness, honestly, and reciprocity to be codified into law?

The notions are universal norms

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

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

Which of the following is true of acquisisitons?

They can be friendly or hostile

W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has

a decentralized structure

Which of the following accurately describes an organic organization?

a flexible organization that fosters fast decision making and high employee motivation

Which of the following is an example of explicit knowledge?

a research summary

Which of the following will most likely harm a multinational enterprise's (MNE's) reputation?

a sweatshop owned by an MNE has a explosion that kills hundreds of workers

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

acquisition

1. 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

The name for an agreed-upon code of conduct in business, based on societal norms, is

business ethics

How did Canada, Mexico, and the United States reduce the administrative and political distance between them?

by establishing the North American Free Trade Agreement (NAFTA)

Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing

differentiation

The process of closer integration and exchange between different countries and peoples worldwide is

globalization

____describes the collectively shared values and norms of an organization's members

organizational culture

______ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure

organizational inertia

Which of the following is part of Geert Hofstede's cultural dimensions?

power distance

Disney became the world's leading media company to a large extent by pursuing a corporate strategy of

related-linked diversification

Which of the following characteristics of a public stock company deals with principals and agents?

separation of legal ownership and management control

Employees learn about an organization's culture through the process of

socialization

a drawback involved in using cross-border strategic alliances to enter new foreign markets is that

some of the firm's proprietary know-how may be appropriated by the foreign partner

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

strategic alliance

The MBA oath first developed at Harvard Business School and now signed by students at over 300 business schools is modeled after

the Hippocratic oath in medicine