450 Final

According to the perspective of shareholder capitalism, shareholders in public stock companies

Have the most legitimate claim on profits

In the US, the time period for the right to exclude others from the use of a patented technology is ___ from the filing date of a patent application

20 years

Which of the following is a drawback of vertical integration?

???

Employees learn about an organization's culture through the process of A. socialization. B. exploitation. C. co-opetition. D. acculturation.

A

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are A. similar to those that need to be developed and superior to those of competitors in the targeted area. B. similar to those that need to be developed and inferior to those of competitors in the targeted area. C. different from those that need to be developed and superior to those of competitors in the targeted area. D. different from those that need to be developed and inferior to those of competitors in the targeted area.

A

The root cause of the principal-agent problem between senior executives and lower-level employees can be explained by the A. informational advantage of the lower-level employees. B. higher number of lower-level employees than senior executives. C. knowledge of employees regarding day-to-day tasks. D. operational expertise of lower-level employees in concentrated areas of a particular field.

A

Which of the following accurately describes an organic organization?

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

A primary advantage of organizing economic activity within firms is the

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

What are the advantages and disadvantages of organizing economic activity within firms?

Advantages - transaction-specific investments, creation of community of markets, and highly complex tasks Disadvantages - admin costs and principal-agent problem

How is an equity alliance different from a joint venture?

An equity alliance involves taking ownership in a partner; a joint venture involves two or more entities owning a firm

Which of the following describes a firm in the Globalization 1.0 stage?

Asha Inc. had a base office in New York and distributed some of its products overseas

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. A. related-constrained strategy B. unrelated diversification strategy C. differentiation strategy D. dominant-business strategy

B

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

Business ethics

A firm is said to be pursuing a polycentric innovation strategy when A. its research facility is situated in the headquarters and all other business activities are located around the world. B. it draws from multiple, equally important research facilities located throughout the world. C. it restricts its innovation to Western economies and production to developing markets. D. its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.

B

A greater cultural distance between two trading countries A. increases linguistic similarities between the two countries. B. increases the liability of foreignness. C. reduces the uncertainty of doing business. D. reduces the transaction costs associated with business.

B

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A. differences in climates and time zones. B. the absence of a trading bloc. C. physical remoteness. D. the lack of connective ethnic and social networks.

B

Firms that use taper integration also use ___ when they rely on outside-market firms for some of their supplies

Backward vertical integration

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

The transnational strategy is similar to a ___ strategy because they both focus on product differentiation and low costs

Blue ocean

Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?

Both were able to enter a new market that they would not have been able to pursue alone

Which quadrant in the core competence-market matrix is the hardest to pursue?

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

A firm pursuing a transnational strategy would believe that A. key business functions should be located in its home country headquarters. B. local-responsiveness is more important than cost-reductions for competitive advantage. C. best practices, ideas, and innovations should be diffused throughout the world. D. the majority of the value creation should take place in the home country.

C

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A. level of diversification. B. geographic scope. C. vertical integration. D. absorptive capacity.

C

How does a conglomerate benefit from following an unrelated diversification strategy? A. The conglomerate can solely depend on its primary business activity for a major portion of its revenues. B. The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. C. The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. D. The conglomerate can limit the learning- and experience-curve effects it faces.

C

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly A. formalized. B. specialized. C. organic. D. mechanistic.

C

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

C

When firms innovate by leveraging existing technologies into new markets, they are said to be involved in A. incremental innovations. B. radical innovations. C. architectural innovations. D. disruptive innovations.

C

According to the agency theory,

Conflicts that arise in corporations should be addressed in the legal realm

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

Exporting goods

___, 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

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. A. political B. geographic C. administrative D. cultural

D

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

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

The customers entering the market in the growth stage are primarily

Early adopters

Which of the following best illustrates site specificity?

Equipment necessary for mining bauxite and aluminum smelting

Discuss the drawbacks of the industry life cycle

Expensive and decline phase

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

Exporting

In MP's diamond framework, ___ conditions describe a country's endowments in terms of natural, human, and other resources

Factor

Why do firms have more strategic variety in the growth rate of the industry life cycle?

Firms have more strategic variety in the growth stage because the market is always growing. There are different strategies firms can utilize, and different ways they can gain competitive advantage

Which of the following is an ineffective practice in alliance management?

Focusing on developing an alliance-management capability in isolation

To be successful and to survive the shakeout stage of the industry life cycle, a firm should

Gain economies of scale

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales and Marketing

Global matrix

Which of the following examples describes the task of an alliance manager?

Hussein trained the employees of his alliance partner in the skills needed to create a display for an e-notebook

The four-step innovation process ends with

Imitation

The board of directors of a public stock company consists of

Individuals who formally represent the firm's shareholders and oversee the work of executives

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

Industry

Adverse selection in a public stock company occurs when

Information asymmetry increases the likelihood of selecting inferior alternatives

The informational advantage that agents possess over principals is often based on the fact that

Insiders are the first to learn about important developments before the information is released to the public

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, ...

Introducing results-only-work-environments to tap intrinsic motivations

Which of the following lists the stages of the industry life cycle in the correct order?

Introduction, growth, shakeout, maturity, and decline

Why is following an unrelated diversification strategy especially advantageous in an emergency economy?

It allows the conglomerate to overcome institutional weaknesses in emerging economies

What most likely happens when a firm optimizes its organizational structure to its current situation?

It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur

What is the result of managers' pursuit of strategies that define value creation too narrowly in public stock companies?

It reduces the trust of shareholders in the organization as a vehicle for value creation

How can strategists decide between borrowing and buying the resource in question?

Look at costs of borrowing and buying. Whichever is cheaper is what they should go for

An organization that is organized according to strategic business units and also along organizational structures is most likely using a ___ structure

Matrix

Which of the following motivations for business growth involves principal-agent problems?

Motivating managers

A trend observed during the Globalization 3.0 stage involves

Multinational companies organizing as global-collaboration networks

Michael Porter's diamond framework explains

National competitive advantage

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

Obeys the VRIO principles

Shareholders of public companies need to appoint a board of directors to represent their interests because

Of the separation of ownership and control

How is process innovation different from product innovation?

Process- involves change in way product is manufactured Product- changes to product

What is the main reason that most mergers and acquisitions negatively effect shareholder value?

Promised synergies never take place

The strategic objective of a first mover during the introduction stage of the industry life cycle is to

Pursue a harvest strategy

Which of the following scenarios would be characteristic of an entrepreneur?

Rachel implemented a new and more efficient way to produce pottery

Which of the following is a feature of the growth stage of the industry life cycle?

The consumer demand increases

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

Slow down decision making

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

The key objective for firms during the growth phase is to

Stake out a strong strategic position not easily imitated by rivals

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

Successful ___ requires managers to design and shape structure, culture, and control mechanisms

Strategy implementation

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

Structure

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

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

The chief executive officer

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

The documented information about the material composition of a product

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 is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?

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

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

The first mover will be able to reduce costs through economies of scale

It is necessary for government authorities such as the Federal Trade Commission and/or the European Commission to approve any large horizontal integration activity because

The horizontal integration activity has the potential to reduce competitive intensity in an industry

Which of the conditions prevail when an industry is at the end of its life cycle?

The level of process innovation reaches its maximum as firms attempt to lower cost

Organizational design is

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

What is horizontal integration?

The process of merging with a competitor at the same stage of the value chain

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

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

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

The wealth and per capita income of consumers

The administrative and political distance between two trading countries decreases when

There is a well-functioning capital market in the host country

How will an increase in coordinated economic and political integration between countries affect the world economy?

There will be gains in social welfare and living standards across the globe

Which of the following is true of acquisitions?

They can be friendly or hostile

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

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

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

A company that is using extrinsic motivation as an output control mechanism will most likely

Threaten to lay off employees if they do not achieve targets

The most important yet least visible element of organizational culture is

Values

When does a merger between companies typically occur?

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

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

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they

enter into the market in large numbers, creating a herding effect

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

globalization

A functional structure is recommended when a firm

has a low level of diversification.

In a radical innovation, a firm targets

new markets by using new technologies.

Ethics is

not synonymous with law

The process of alliance management begins with

selecting the best possible partner

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

The downside of equity alliances is

the amount of investment that can be involved.