Practice Exam 2

d. an incremental innovation.

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of: a. a novel innovation. b. imitation of a competitor's product. c. a(n) innovation created through a cooperative strategy. d. an incremental innovation.

b. corporate-level

A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both. a. national-level b. corporate-level c. industry-level d. business-level

a. gain access to Pet Resort's tacit knowledge.

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort and Day Spa in Houston to see if the owner is interesting in franchising the Pet Resort brand. The Atlanta businessperson's goal is to: a. gain access to Pet Resort's tacit knowledge. b. collude with Pet Resort to diminish competition in the kennel industry in Atlanta. c. get venture capital from Pet Resort. d. join in a vertical complementary alliance with Pet Resort.

c. tolerance for ambiguity.

A characteristic of the manager that may affect managerial discretion is his/her: a. level of education. b. length of tenure. c. tolerance for ambiguity. d. amount of industry experience.

a. relational

A competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n) ____ advantage. a. relational b. collusive c. economic d. alliance

b. formality of structure.

A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in: a. time orientation. b. formality of structure. c. interpersonal orientation. d. goal orientation.

d. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.

A firm may narrow its focus to a specific region of the world: a. in order to obtain greater economies of scale. b. to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions. c. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. d. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.

b. division managers' rewards based on division financial performance.

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT: a. centralization of some organizational functions for the sake of coordination. b. division managers' rewards based on division financial performance. c. frequent, direct contact between division managers. d. temporary teams or task forces formed around specific projects.

b. competitive form multidivisional

A firm pursuing an unrelated diversification strategy will utilize a ______ structure. a. network b. competitive form multidivisional c. functional d. cooperative form multidivisional

c. structure

A firm's ______ specifies the work to be done and how to do it given the firm's strategy or strategies. a. strategy b. controls c. structure d. culture

c. economies of scale.

A global corporate-level strategy emphasizes: a. decentralizing control and limited monitoring. b. sensitivity to local product preferences. c. economies of scale. d. differentiated products.

b. lacks responsiveness to local markets.

A global strategy: a. is easy to manage because of common operating decisions across borders. b. lacks responsiveness to local markets. c. achieves efficient operations without sharing resources across country boundaries. d. increases risk because decision making is centralized at the home office

a. different functional backgrounds, experience, and education.

A heterogeneous top management team is composed of individuals with: a. different functional backgrounds, experience, and education. b. long tenure in the organization who have held various functional positions. c. similar commitments to the organization's core ideology and culture. d. a high level of education and industry expertise.

c. they have been able to develop economies of scale at home.

A large domestic market can provide the country's industries a chance at dominating the world market because: a. they have access to abundant and inexpensive factors of production. b. the nation's culture and educational system will be adapted to producing the labor force needed for the industry. c. they have been able to develop economies of scale at home. d. the related and supporting industries will have been developed.

d. independent frames of reference of team members.

A major barrier to the use of cross-functional teams is: a. lack of social capital by team members. b. lack of communication skills of technical people. c. excessive individualism of creative people. d. independent frames of reference of team members.

d. low; high

A multi-domestic corporate-level strategy has ____ need for global integration and ____ need for local market responsiveness. a. high; low b. low; low c. high; high d. low; high

a. the firm customizes the product for each country in which it competes.

A multi-domestic corporate-level strategy is one in which: a. the firm customizes the product for each country in which it competes. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. d. the firm competes in a number of countries, but it is centrally coordinated by the home office

a. strategic business unit multidivisional

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the ______ organizational structure. a. strategic business unit multidivisional b. functional c. matrix d. network

b. economies of scale

A state-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of ____ resulting from an alliance. a. opportunistic behavior b. economies of scale c. distribution opportunities d. explicit collusion

b. national interests dominate and management adapts to local or cultural differences.

A worldwide geographic area structure is an organizational form in which: a. standardized products are offered across country markets. b. national interests dominate and management adapts to local or cultural differences. c. responsiveness to local demand is combined with economies of scale. d. multiple alliances across the globe link complementary businesses.

d. create wealth.

According to Peter Drucker,the primary goal of innovation is to: a. promote social well-being. b. increase the number of jobs. c. support national economies. d. create wealth.

b. opportunity

Agency costs reflect all of the following EXCEPT ____ costs. a. incentive b. opportunity c. monitoring d. enforcement

a. Multidivisional

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory? a. Multidivisional b. Functional c. Vertically integrated d. Simple

a. an increased number of IPOs (initial public offerings) are expected.

All of the following are consequences of the Sarbanes-Oxley Act EXCEPT: a. an increased number of IPOs (initial public offerings) are expected. b. a decrease in foreign firms listing on U.S. stock exchanges. c. Section 404 creates excessive costs for firms. d. internal auditing scrutiny has improved and there is greater trust in financial reporting.

c. widespread multilingualism.

All of the following complicate the implementation of an international diversification strategy EXCEPT: a. logistical costs. b. increased costs of coordination between business units. c. widespread multilingualism. d. cultural diversity.

c. Opportunistic behavior

Amylin Pharmaceuticals has an alliance with Eli Lilly & Co. to produce diabetes drugs. Lilly, however, recently signed an alliance agreement with another company to also produce diabetes drugs. As a result, Amylin sued Lilly for breach of the alliance agreement. Which of the following risks of cooperative strategies discussed in the chapter is most likely occurring here? a. Failing to make available to its partners the resources and capabilities that it committed to the cooperative strategy b. The partner misrepresenting competencies it can bring to the partnership c. Opportunistic behavior d. Having a true perception of the partner's trustworthiness

a. a new vice president of marketing is hired from a competitor.

An example of the external labor market is the situation where: a. a new vice president of marketing is hired from a competitor. b. an assessment center operated by an external consulting firm evaluates company managers for promotion potential. c. a vice president of human resources is sent to a university executive MBA program for professional development. d. the senior vice president of finance is promoted to CEO.

d. expands into a potentially large number of geographic locations and markets

An international diversification strategy is one in which a firm: a. expands into one or a few markets. b. acquires a firm in a foreign country. c. expands into nearby markets. d. expands into a potentially large number of geographic locations and markets

d. decreases.

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions: a. increases. b. is eliminated. c. remains constant. d. decreases.

c. creative destruction.

Because it replaces existing products and methods of production, entrepreneurship is a process of: a. harnessing the human potential. b. exploitation of innovation. c. creative destruction. d. creation of opportunity.

a. Russia's recent actions to gain state control of private firms' assets.

Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The MAIN concern of the committee is probably: a. Russia's recent actions to gain state control of private firms' assets. b. the fluctuation in the value of the ruble. c. loss of intellectual property due to Russian piracy. d. the numerous and conflicting legal authorities in Russia.

a. the situation where the CEO is also chairperson of the Doard of Directors.

CEO duality refers to: a. the situation where the CEO is also chairperson of the Doard of Directors. b. CEOs who sit on the Board of Directors of other firms. c. CEOs who hold office in more than one company. d. firms where there is both a president and a CEO.

c. propensity to take actions that allow it to outperform rivals consistently and substantially.

Competitive aggressiveness describes a firm's: a. tendency to engage in new ideas and creative processes. b. ability to be a leader in the marketplace. c. propensity to take actions that allow it to outperform rivals consistently and substantially. d. willingness to allow employees to take actions free of organizational constraints.

a. Shareholders and managers

Corporate governance revolves around the relationship between which two parties? a. Shareholders and managers b. None of the the above c. The Board of Directors and managers d. Shareholders and the Board of Directors

b. not fully share its intangible resources.

DDD Partners, a U.S. business consulting firm is considering a cooperative alliance with an Indian business consulting firm that has a wide practice in the Middle East and Asia. DDD has some European clients, but it sees the Middle East and Asia as growth opportunities. It hopes to learn how to navigate the different cultures and business practices in this part of the world from its alliance with the Indian firm. DDD's greatest risk here is that the Indian firm will: a. insist on excessively close monitoring of DDD's actions. b. not fully share its intangible resources. c. gain access to DDD's core competencies and use them to become a future competitor. d. not make equivalent investments to the alliance as does DDD.

a. the liability of foreignness.

Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of: a. the liability of foreignness. b. the effects of regionalization. c. the effect of demand conditions. d. the risks of a multi-domestic strategy.

d. competitive multidivisional

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the ______ structure. a. hybrid combination b. horizontal complementary strategic alliance c. matrix d. competitive multidivisional

a. internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience.

FrameCo, a maker of commercial greenhouses, has just extricated itself from a failing cooperative alliance with another firm. The expected synergies never were achieved, and FrameCo lost most of its investment. The top management of FrameCo should: a. internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience. b. enter into future cooperative alliances only if the alliance is closely monitored by a third party to prevent opportunistic behavior by the alliance partner. c. realize that most cooperative alliances fail and that it should ally itself only with an experienced alliance partner in the future. d. avoid future cooperative alliances because they lack the skills needed to manage them successfully.

d. joint venture; tacit knowledge

Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50 percent. This collaboration is an example of a ________, which is effective at transferring ________. a. equity strategic alliance; tacit knowledge b. nonequity strategic alliance; explicit knowledge c. joint venture; explicit knowledge d. joint venture; tacit knowledge

a. inside

Generally, a Board member who is a source of information about a firm's day-to-day activities is classified as a(n) ____ director. a. inside b. lead independent c. encumbered d. related

d. Compensating directors with stock options rather than with fixed remuneration

Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many Boards of Directors have initiated? a. Moving toward having directors from different backgrounds b. Strengthening the internal management and accounting control systems c. Establishing and using formal processes to evaluate the Board's performance d. Compensating directors with stock options rather than with fixed remuneration

c. are network member firms while Olympia is the strategic center firm.

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules: a. use integrative mechanisms to share core competencies. b. compete with one another in Olympia's internal capital markets. c. are network member firms while Olympia is the strategic center firm. d. are not necessarily related to one another in terms of products or markets.

b. hybrid combination

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the ______ organizational structure. a. horizontal complementary strategic alliance b. hybrid combination c. strategic business unit multidivisional d. competitive multidivisional

d. poorly performing firms

If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. a. firms with unethical top executives b. firms earning above-average returns c. over-valued firms d. poorly performing firms

c. facilitate the tailoring of products to the demand in local markets.

Implementing the multi-domestic strategy requires decentralization to: a. achieve economies of scope. b. reduce bureaucracy and speed up decision making. c. facilitate the tailoring of products to the demand in local markets. d. develop economies of scale.

b. advanced; specialized

In Porter's model, if a country has both ________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; specialized c. basic; generalized d. advanced; generalized

a. the government

In free-market economies, ____ must decide how rivals can collaborate with their competitors without violating established regulations. a. the government b. the business community c. consumers d. the invisible hand

c. trustworthiness

In managing cooperative strategies, research indicates that ____ can be a capability that is valuable, rare, imperfectly imitable, and often nonsubstitutable giving these firms a competitive advantage. a. stability b. extensive capitalization c. trustworthiness d. Internet competency

c. litigation

In the United States, cooperative strategies to reduce competition may result in ____ if they are explicit. a. increased tax liabilities b. dissolution of the firm c. litigation d. government takeover of the firms

a. learning and growth

In the balanced scorecard framework, ____ controls are used to assess the organization's success in creating a climate that supports change and innovation. a. learning and growth b. operational c. financial d. innovational

a. are aligned closely with current strategy and structure.

Induced strategic behavior is a process that fosters product innovations that: a. are aligned closely with current strategy and structure. b. will come to market in a short period of time. c. will lead to greater financial returns. d. are likely to change a firm's strategic intent and mission.

b. commercial product.

Innovation creates a(n): a. idea for potential exploitation. b. commercial product. c. new product or process. d. opportunity for a new product or process.

b. The Board of Directors of IFS

International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? a. The head of contract services for the Marines b. The Board of Directors of IFS c. The employees directly involved in the wrongdoing d. The director of food service for IFS

b. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees. Which one of the following is true? a. Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value. b. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship. c. This example shows the dysfunctional aspects of unrestricted entrepreneurialism. d. This is an example of the lack of human capital hampering internal innovation.

d. a system of cross-shareholding among firms.

Japanese keiretsu are: a. management structures related to total quality management systems. b. company unions, which are a type of governance system. c. the banks owing the largest shares of stock in the firm. d. a system of cross-shareholding among firms.

d. equity strategic alliance.

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80 percent of this collaboration with DoCoMo holding the remaining 20 percent. This collaborative arrangement is an example of a(n): a. network strategy. b. joint venture. c. nonequity strategic alliance. d. equity strategic alliance.

d. coordination and control problems

Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three years. It currently has a simple structure with Jared Smith, the owner-manager, making all major decisions. Jumbo is probably now experiencing or will soon experience: a. limited communication among functional specialists. b. bureaucratic inefficiencies. c. excessive competition among division managers. d. coordination and control problems

c. to enhance the compensation packages of top managers.

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT: a. to leverage core competencies in new markets. b. to operate within government restrictions in the local country. c. to enhance the compensation packages of top managers. d. to escape limited domestic growth opportunities.

d. disciplining whistle-blowers.

Managerial actions that support development of an ethical organizational culture include all of the following EXCEPT: a. disseminating the code of conduct to all stakeholders to inform them of the firm's ethical standards and practices. b. establishing a code of conduct. c. creating a work environment in which people are treated with dignity. d. disciplining whistle-blowers.

c. free cash flows

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. a. unsubstantial profits b. frozen assets c. free cash flows d. marginal profits

d. external CEO with a heterogeneous top management team.

Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n): a. dual CEO/chairperson with a homogenous top management team. b. CEO with long tenure who has a strong sense of hubris. c. internal CEO with short tenure. d. external CEO with a heterogeneous top management team.

c. the Board of Directors.

Monitoring by shareholders is usually accomplished through: a. management consultants. b. government auditors. c. the Board of Directors. d. the firm's top managers.

d. are limited in opportunities for growth.

Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. have developed unfriendly business attitudes toward the industry. c. have too much regulation. d. are limited in opportunities for growth.

d. are limited in opportunities for growth

Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. have developed unfriendly business attitudes toward the industry. c. have too much regulation. d. are limited in opportunities for growth

c. spontaneous opportunities are minimized.

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that: a. firms will have to accept greater risks. b. power coalitions will still develop. c. spontaneous opportunities are minimized. d. trust will be eroded.

c. communication and coordination are difficult among organizational functions.

One disadvantage of the functional structure is that: a. dual reporting relationships blur lines of authority. b. the CEO cannot coordinate and control the efforts of functional-level employees. c. communication and coordination are difficult among organizational functions. d. career paths and professional development are limited.

a. requiring outside directors to own significant equity stakes in the firm.

One means that is considered to improve the effectiveness of outside directors is: a. requiring outside directors to own significant equity stakes in the firm. b. requiring that outside directors act objectively and have no ownership interest in the firm. c. mandating that all outside directors be drawn from government or academia rather than industry. d. requiring that outside directors be former executives of the firm.

c. alignment of complementary assets.

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies: a. intellectual capital. b. technological capital. c. alignment of complementary assets. d. institutional capital.

c. alignment of complementary assets.

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies: a. intellectual capital. b. technological capital. c. alignment of complementary assets. d. institutional capital.

d. a long wait for an uncertain payoff

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect: a. immediate wealth creation. b. a large payoff in the short term with rapidly decreasing wealth generation in the longer run. c. a long wait for a high probability payoff. d. a long wait for an uncertain payoff

d. predatory alliances

Reduction of competition can be accomplished through all of the following EXCEPT: a. tacit collusion. b. mutual forbearance. c. explicit collusion. d. predatory alliances.

a. investment capital; new technological knowledge

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek ____ while more established companies may need _____. a. investment capital; new technological knowledge b. social capital; technical capital c. deep technological expertise; distribution channels d. distribution channels; tacit knowledge

c. a value-based culture

Research shows that ____________ is the most effective means of ensuring that employees comply with the firm's ethical requirements. a. a statement in the firm's mission statement b. a written code of ethics c. a value-based culture d. a speech on ethics by the CEO of the company

d. outside directors own significant equity in the organization.

Research suggests that Boards of Directors perform better if: a. the Board is homogenous in composition. b. the Bard includes employees as voting members. c. the CEO is also the chairperson of the Board of Directors. d. outside directors own significant equity in the organization.

d. outside directors own significant equity in the organization.

Research suggests that Boards of Directors perform better if: a. the Board is homogenous in composition. b. the Bard includes employees as voting members. c. the CEO is also the chairperson of the Board of Directors. d. outside directors own significant equity in the organization.

a. appear in mature industries where demand is relatively constant and predictable.

Stable alliance networks will most often: a. appear in mature industries where demand is relatively constant and predictable. b. emerge in declining industries as a way to increase process innovations. c. emerge in industries with short product life cycles. d. be used to enhance a firm's internal operations.

b. content; outcomes

Strategic control focuses on the ________ of strategic actions, whereas financial controls focus on the _____ of strategic actions. a. outcomes; content b. content; outcomes c. revenues; costs d. long-term financial outcomes; short-term financial performance

d. depends on the degree of diversification.

The BEST multidivisional structure to use: a. is the competitive form. b. is the SBU form. c. is the cooperative form. d. depends on the degree of diversification.

a. setting the option strike price substantially higher than the current stock price.

The Board of Directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. Consequently, the Board is: a. setting the option strike price substantially higher than the current stock price. b. insuring that the strike price value of the options can be lowered if the organizational environment becomes more risky. c. having the stock option plan designed by insiders on the Board of Directors who are familiar with day-to-day operations of the firm. d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope.

b. envisioned future.

The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm's motto, the title of its Web newsletter, and even on the company t-shirts and mugs. This is an example of the firm's: a. core ideology. b. envisioned future. c. strategy. d. organizational culture.

b. a weak Board of Directors.

The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the Board of Directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. The CEO's behavior may be indication of: a. the difference in risk propensity between owners and managers. b. a weak Board of Directors. c. reasonably compensating a CEO. d. the laxity of institutional investors.

a. headed by outside directors.

The New York Stock Exchange requires that the audit committee be: a. headed by outside directors. b. made up of CPAs with auditing experience. c. available to comment to external analysts. d. liable for any illegal actions by the top management team.

a. synergistic strategic alliance

The Renault Nissan alliance (Chapter 9 Mini Case) is an example of a _______ created to gain economies of scope by sharing resources and capabilities. a. synergistic strategic alliance b. nonequity-based horizontal complementary alliance c. vertical complementary alliance d. diversifying strategic alliance

a. matrix

The ______ structure is an organizational structure that combines both functional specialization and business product or project specialization. a. matrix b. functional c. worldwide geographic area d. network

c. favorable tax concessions and economic incentives by home-country governments.

The benefits of expanding into international markets include each of the following opportunities EXCEPT: a. location advantages. b. increasing the size of the firm's potential markets. c. favorable tax concessions and economic incentives by home-country governments. d. economies of scale and learning.

b. novel; incremental

The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation. a. concentric; novel b. novel; incremental c. incremental; novel d. novel; concentric

a. technological

The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation. a. technological b. time c. customer d. interpersonal

a. shared values.

The firm's culture promotes unity of purpose for cross-functional work teams through: a. shared values. b. a collectivist structure. c. an entrepreneurial mind-set. d. resource allocation

d. develop a workforce capable of continuous learning.

The goal of investing in human capital is to: a. increase the number of employees in the firm. b. reduce organizational slack. c. maximize current productivity per employee. d. develop a workforce capable of continuous learning.

a. the Board of Directors.

The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is: a. the Board of Directors. b. ownership concentration. c. the market for corporate control. d. executive compensation systems.

a. evasion of host country governmental regulations.

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT: a. evasion of host country governmental regulations. b. access to customers. c. access to critical supplies. d. low-cost labor

a. internal controls have failed.

The market for corporate control serves as a means of governance when: a. internal controls have failed. b. the corporation has greatly exceeded performance expectations. c. the top management team's interests and the owners' interests are aligned. d. the firm is overpriced in the market.

b. cooperative.

The most centralized and most costly form of the multidivisional structure is the: a. competitive. b. cooperative. c. integrated. d. SBU.

d. level off and become negative as diversification increases past some point.

The positive results associated with increasing international diversification have been shown to: a. be centered in only one or two industries. b. continue as the level of international diversification increases. c. become negative quickly. d. level off and become negative as diversification increases past some point.

d. greenmail.

The repurchase at a premium of the target firm's shares that were acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the company for takeover is called: a. a standstill agreement. b. a poison pill. c. crossing the palm with silver. d. greenmail.

d. Nonequity-based horizontal complementary alliance

The risks of being accused of collusion are MOST likely under what type of alliance? a. Equity-based horizontal complementary alliance b. Equity-based vertical complementary alliance c. Nonequity-based vertical complementary alliance d. Nonequity-based horizontal complementary alliance

a. implementation.

The three types of innovative activity include all of the following EXCEPT: a. implementation. b. imitation. c. innovation. d. invention.

d. key individuals who are responsible for selecting and implementing a firm's strategy.

The top management team is composed of the: a. officers listed in a firm's annual report and the Board of Directors. b. heterogeneous group of advisors selected by the CEO. c. CEO and chairperson of the Board. d. key individuals who are responsible for selecting and implementing a firm's strategy.

d. it is easy to use.

The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT: a. the desire for specialized products to meet consumers' needs. b. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. c. the growing number of competitors heightens the requirements to keep costs down. d. it is easy to use.

a. is more frequent than other types of cooperative strategies.

The use of strategic alliances: a. is more frequent than other types of cooperative strategies. b. is unlikely to yield success if partnering firms are headquartered in the same country. c. usually increases the investment necessary to introduce new products. d. may be too restrictive to facilitate entry into new markets.

b. the diffusion of tacit knowledge.

To be successful, an autonomous process for developing new products relies on: a. internal corporate venturing. b. the diffusion of tacit knowledge. c. strategic alliances with other firms. d. the acquisition of innovative firms.

c. small.

Typically, an organization using a simple structure would be: a. of any size if the firm is privately held. b. a family-owned-and-managed firm of any size. c. small. d. large.

d. slow-cycle

U.S. Steel and Nucor (the two remaining major players in the U.S. steel industry) have been forming alliances as a means to enter markets in Europe and Asia. The steel industry is an example of a ________ market in which firms typically use alliances to gain market access. a. standard-cycle b. intermediate-cycle c. fast-cycle d. slow-cycle

d. cost leadership/functional

Walmart's effective strategy/structure configuration is: a. related linked/multidivisional. b. differentiation/functional. c. related constrained/multidivisional. d. cost leadership/functional.

a. create a competitive advantage.

When using cooperative strategies, firms most frequently develop strategic alliances that: a. create a competitive advantage. b. will reduce the firm's political risk. c. are long-lived. d. enhance the firm's reputation in the marketplace.

a. Need for knowledge-sharing among specialists

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure? a. Need for knowledge-sharing among specialists b. Greater amounts of data and information to process c. Coordination and control issues d. Increasing diversification

a. The state still uses direct and/or indirect controls to influence the strategies employed by most firms.

Which of the following is FALSE about corporate governance in China? a. The state still uses direct and/or indirect controls to influence the strategies employed by most firms. b. With increasing frequency, the compensation of top executives of Chinese companies is closely related to prior and current financial performance of the firm. c. Firms with higher state ownership tend to have lower market value and more volatility in those values over time. d. The Chinese governance system may be tilting toward the Western model.

b. It is the slowest way to enter a new market.

Which of the following is NOT a disadvantage of international acquisitions? a. Merging the acquired and acquiring firm is difficult. b. It is the slowest way to enter a new market. c. They are very expensive and often require debt financing. d. The acquiring firm has to deal with the regulatory requirements of a host country.

d. Allocating internal capital

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? a. Strategic outsourcing b. Supporting development of new core competencies c. Encouraging friendly rivalry among network members d. Allocating internal capital

a. To avoid high domestic taxation on corporate income

Which of the following is NOT an incentive for firms to become multinational? a. To avoid high domestic taxation on corporate income b. To gain easier access to raw materials c. Opportunities to integrate operations on a global scale d. To gain access to consumers in emerging markets

a. Reactivity

Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mind-set? a. Reactivity b. Risk taking c. Autonomy d. Innovativeness

c. Strategy has a more important influence on structure than structure has on strategy.

Which of the following is TRUE? a. Large organizations can retain a simple structure as long as they have a focus strategy. b. Organizations tend to change structure too frequently, which erodes their competitive advantage. c. Strategy has a more important influence on structure than structure has on strategy. d. Flexibility in structure is more important than stability.

c. Corporate governance is best achieved with a Board of Directors with strong ties to management.

Which of the following is a FALSE statement about corporate governance? a. Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. b. Corporate governance mechanisms can be in conflict with one another. c. Corporate governance is best achieved with a Board of Directors with strong ties to management. d. Governance is used to establish order between parties whose interests may be in conflict.

c. SBU form with related-linked strategy

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy? a. Cooperative form with unrelated strategy b. Competitive form with related-linked strategy c. SBU form with related-linked strategy d. Competitive form with related-constrained strategy

b. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

Which of the following statements is TRUE regarding effective organizational cultures? a. Once a corporate culture is developed, strategic leaders can focus on other activities. b. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business. c. A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment. d. A strategy that is historically new for a firm should be implemented by incremental changes in the organization's culture.

a. highway systems and the supply of debt capital

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. highway systems and the supply of debt capital b. Italian leather-processing and shoes c. Japanese cameras and copiers d. U.S. computers and software

c. Joint ventures

Which type of strategic alliance is best at passing tacit knowledge between firms? a. primary cooperative strategic alliances b. Nonequity strategic alliances c. Joint ventures d. Equity strategic alliances

c. The alliances require cooperation among firms that must also compete with one another.

Why are alliances in the airline industry unstable? a. The potential for firms to take opportunistic actions is too widespread. b. Unstable industries make for unstable alliances. c. The alliances require cooperation among firms that must also compete with one another. d. The industry is declining and profits are not sufficient to divide among alliance partners.

a. Social

____ capital increases cooperation among individuals inside and outside the firm. a. Social b. Visionary c. Cultural d. Human

b. Internal corporate venturing

____ involves internally developed incremental and novel innovations that result from deliberate efforts. a. Autonomous strategic behaviors b. Internal corporate venturing c. Bottom-up strategic behaviors d. Product championing

c. Complementary strategic goals

____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. a. Compatible organizational cultures b. An entrepreneurial mind-set c. Complementary strategic goals d. Shared values

d. Financial controls

____ provide information about the results of past actions, but do not communicate the drivers of the firm's future performance. a. Strategic feedback systems b. Policies and procedures c. Accounting information systems d. Financial controls