Strategic Management Practice Exam 2

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

Terranova autos inc a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start up company. However, terranova autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new products success at each stage of its development. If the product proved to be successful, terranova autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as

A real-options perspective

A primary advantage of organizing economic activity within firms is the

Ability to coordinate highly complex tasks to allow for specials division of labor

In publicly traded companies, individuals who are delegated to perform buries in behalf of company owners are known as

Agents

Primodisk inc holds the highest market share in the low-growth compact disk industry. With the introduction of flash drives the market for compact disks has reduced. However primodisk has been able to generate sufficient revenues for the parent company by selling its products in less developed countries. In the Boston consulting group growth-share matrix, primodisk will be categorized under

Cash cows

On which of the following tenets is the crossing-of-the-chasm framework, suggested by Geoffrey Moore, based?

Each stage of the industry life cycle is dominated by a different customer group

In which of the following stages of the industry life cycle is a standard first established?

Growth stage

_______ is best described as a situation in which one party is more informed than another, because of the possession of private information

Information asymmetry

What best describes transferability of investor ownership in a public stock company

Investors are allowed to trade shares of stocks

Why should managers using the M-form organizational structure to support a related diversification strategy ideally concentrate decision making at the top of the organization?

It allows a high level of integration

How does taking a real-options perspective by entering strategic alliances help incumbent firms?

It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade

Dream slope inc is a leader is producing winter sports entertainment, including skis and skates. Recently the firm decided to expand into the bobsled market and acquired sleek phantom inc. this company produced bobsleds, but its sales had slowed. The managers of dream slope convinced themselves that they were able to manage the business of sleek phantom more effectively even though they had no experience in the bobsled market. However this move backfired and the sale of sleek phantoms bobsleds plummeted. Which of the following terms is often used to describe this scenario?

Managerial hubris

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

McDonald's use of standard operating procedures across the world

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly

Organic

What causes the winners curse

Overpaying for an acquisition

Which of the following scenarios best illustrates horizontal integration

Regal Autos Inc joins with Marcus Motors one of its direct competitors

A high degree of formalization in an organization is most likely to

Slow down decision making

Which of the following is an example of an external transaction cost

The cost of searching for a contract manufacturer

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the stakeout phase. What does this imply?

The industry for electric cars will focus more on product innovation whereas in the MP3 player industry the focus will be on process innovation

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porters suggestion that

The largest but poorest socioeconomic group can yield significant business opportunities

A drawback of short-term contracting as an alternative to making a component in-house is that

The supplying firm has no incentive to make any transaction-specific investments to increase performance or quality

Why is the phase after the growth stage of the industry life cycle referred to as the stakeout stage

The weaker firms are forced out of the industry in this stage

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

How do firms benefit from vertical integration?

Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities