Best strat

Product-related diversification involves all of the following except: a. A single business strategy. b. Entries into activities that are related to a firm's existing markets and/or activities. c. The emphasis is on economies of scale rather than scope. d. Increases in competitiveness. e. Synergy.

a. A single business strategy.

Which is not one of the conclusions that can be drawn from this chapter? a. All MNEs need a common structure. b. Understand the nature and evolution of your industry. c. Actively develop learning and innovation capabilities. d. Mastering the external rules of the game. e. Understand and be prepared to change the internal rules of the game.

a. All MNEs need a common structure.

Which of the following is true regarding M&As? a. As many as 70 percent of M&As reportedly fail. b. On average, the acquiring firms' performance improves after acquisitions. c. Target firms, after being acquired and becoming internal units, often perform better than when they were independent, stand-alone firms. d. The only identifiable losers are the shareholders of target (acquired) firms. e. The outstanding success of M&As is due to pre- and post acquisition phases.

a. As many as 70 percent of M&As reportedly fail.

Diversification premium is the same thing as: a. Conglomerate advantage. b. Diversification discount. c. Conglomerate disadvantage. d. Level of product diversification. e. Measurement of firm performance.

a. Conglomerate advantage.

Which geographic diversification is most likely to reduce the liability of foreignness? a. Culturally adjacent countries. b. Extensive international scope. c. Beyond geographically neighboring countries. d. Beyond culturally neighboring countries. e. All of the above

a. Culturally adjacent countries.

A lower level of ____contribution may indicate a firm's relative lack of commitment: a. Equity b. Learning and experience c. Nationality d. Relational capabilities e. All of the above

a. Equity

The type of knowledge that is codifiable (that is, it can be written down and transferred without losing much of its richness) is called: a. Explicit. b. Implicit. c. Tacit. d. Lucid. e. Clear.

a. Explicit.

13. This structure is often used to supply customers (often other MNEs) in a coordinated and consistent way across various countries. a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.

a. Global account structure

Industry-Based Considerations regarding corporate governance include all of the following except: a. Having more outside directors on the board is often regarded as having a negative impact on performance because of their lack of understanding as compared to insiders. b. In industries characterized by rapid innovation requiring significant R&D investments (such as information technology), outside directors may have a negative impact on firm performance. c. Research finds that for firms in low-growth, stable industries, no relationship exists between inside management ownership and firm performance. d. In relatively high-growth, turbulent industries, there is a relationship between inside management ownership and firm performance. e. In industries experiencing great turbulence, the presence of a single leader may allow a faster and more unified response to changing events.

a. Having more outside directors on the board is often regarded as having a negative impact on performance because of their lack of understanding as compared to insiders.

Which of the following make up a governance package? a. Internal Mechanisms + External Mechanisms. b. Carrots to motivate managers such as stock options. c. Sticks that may result in CEO and top management team turnover. d. The Market for Corporate Control. e. The Market for Private Equity.

a. Internal Mechanisms + External Mechanisms.

In which of the following structures are foreign subsidiary managers not given sufficient voice relative to domestic managers? a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.

a. International division structure.

The structure that is typically set up when firms initially expand abroad is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.

a. International division structure.

Emerging trends concerning formal government policies on entry mode requirements include: a. More liberal policies. b. Imposing considerable requirements. c. A and B above. d. Welcoming wholly owned subsidiaries. e. Banning joint ventures.

a. More liberal policies. b. Imposing considerable requirements. c. A and B above.

Diffused ownership is the opposite of concentrated ownership, more common in: a. North America. b. South America. c. Asia. d. Africa. e. The Pacific.

a. North America.

Which of the following is a solution rather than a problem in knowledge management? a. Open innovation. b. Knowledge leakage. c. Not invented here syndrome. d. All of the above. e. None of the above.

a. Open innovation.

The strategic choice concerning whether to form cooperative interfirm relationships or to rely on pure market transactions or M&As to grow the firm is part of: a. Stage One. b. Stage Two. c. Stage Three. d. Stage Four. e. Stage Five.

a. Stage One.

Cooperation between rivals is usually suspected of being: a. Tacit collusion. b. Explicit collusion. c. Socialism. d. All of the above. e. None of the above.

a. Tacit collusion.

The first concern in determining whether a relationship should be based on contract or equity is: a. The kind of resources and capabilities that are shared. b. Direct monitoring and control. c. Real options. d. Institutional constraints. e. None of the above.

a. The kind of resources and capabilities that are shared.

Dumping is defined as: a. Shipping hazardous waste to locations in other countries. b. An exporter selling below cost abroad. c. Unloading unsold inventory from the US in other countries. d. Excessive criticism of international rivals. e. Getting rid of unprofitable operations.

b. An exporter selling below cost abroad.

This structure is commonly used in professional service firms: a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.

b. An industry sector structure.

Which is not an advantage of strategic alliances and networks? a. Reduce costs, risks and uncertainties. b. Costs of negotiation and coordination. c. Gain access to complementary assets and capabilities. d. Opportunities to learn from partners. e. Possibilities to use alliances and networks as real options.

b. Costs of negotiation and coordination.

Which of the following is not a legal means of signaling? a. Nonaggression or fat cat. b. Direct discussion of reduced rivalry with competitors. c. Truce seeking. d. Communication via governments. e. Strategic alliances.

b. Direct discussion of reduced rivalry with competitors.

Four strategic choices for MNEs do not include: a. Home replication. b. Domestic. c. Multidomestic. d. Transnational. e. Global.

b. Domestic

In some industries where pressures for globalization are relatively low, local firms may possess some skills and assets that are transferable overseas, thus leading to a/an_____strategy. a. Defender b. Extender c. Dodger d. Contender e. Transfer

b. Extender

A firm's attack on a focal arena important to a competitor, but not the attacker's true target area, is referred to as: a. Thrust. b. Feint. c. Gambit. d. Miscalculation. e. Practice attack.

b. Feint.

The most appropriate structure for a multidomestic strategy is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.

b. Geographic area structure

Which of the following are least likely to result in collusion? a. High concentration ratio. b. Heterogeneous products. c. High entry barriers. d. High market commonality. e. Industry price leader exists.

b. Heterogeneous products.

Which is one motive for M&A which does not necessarily increase shareholder value? a. Synergistic. b. Hubris. c. Performance. d. A and C above. e. None of the above.

b. Hubris.

Which of the following is true regarding CEO duality? a. From an agency theory standpoint, if the board is to supervise agents such as the CEO, it seems imperative that the board be chaired by the same individual. b. In US firms with CEO duality, the trend now is to appoint a lead independent director, who chairs the sessions held by outside directors that do not involve company executives. c. A corporation led by two top leaders—a board chairman and a CEO - will at least have unity of command and experience less top-level conflict. d. East Asia and Latin America where most firms have concentrated family ownership and control, there is less CEO duality. e. Firms around the world are being pressured to combine the two top jobs.

b. In US firms with CEO duality, the trend now is to appoint a lead independent director, who chairs the sessions held by outside directors that do not involve company executives.

Institution-based considerations in governance include all of the following except: a. Formal institutional framework. b. International experience of senior executives. c. Formal legal protection and impact on founder's dilution of equity. d. Lack of legal protection and its impact regarding large shareholders in emerging economies. e. Impact of informal norms and values.

b. International experience of senior executives.

"The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm" refers to similarity of: a. Strategy. b. Resources. c. Markets. d. Industry. e. Economic environment.

b. Resources.

In regards to family ownership, all of the following are true except: a. Most small firms in the world are owned and controlled by families. b. The vast majority of large corporations throughout continental Europe, Asia, Latin America, and Africa no longer feature concentrated family ownership and control. c. Family ownership and control may provide better incentives for the firm to focus on long-run performance. d. Such ownership may also minimize the conflict between owners and professional managers typically encountered in widely owned firms. e. Family ownership and control may lead to the selection of less qualified managers who happen to be the sons, daughters, and relatives of owners.

b. The vast majority of large corporations throughout continental Europe, Asia, Latin America, and Africa no longer feature concentrated family ownership and control.

Which represents an alliance with suppliers? a. Horizontal alliances. b. Upstream vertical. c. Downstream vertical. d. All of the above. e. None of the above.

b. Upstream vertical.

Select the best choice: a company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in ______________ expansion. a. Horizontal b. Vertical c. Conglomerate d. Friendly M&A e. Hostile M&A

b. Vertical

Agency theory assumes that managers: a. Have a responsibility to the owners. b. Are agents who are opportunistic and engage in self-serving activities. c. A and B above. d. Can be left to their own devices. e. Are effective steward of the owners' interests.

c. A and B above.

In Japan and the EU, crisis cartels: a. Involve firms in an industry facing a severe crisis. b. Are legally allowed. c. A and B above. d. Are cartels that are creating a crisis. e. Are cartels that are in a crisis.

c. A and B above.

Which of the following is not true regarding large institutional investors? a. They include professionally managed mutual funds and pension pools. b. They now own over 50 percent of the stock in major corporations. c. Are the controlling stockholders in China. d. Their ability to dump the stock is limited because selling out depresses the share price and harms the institutions. e. Are more likely to exercise shareholder rights than smaller investors. AACSB: Tier 1: Reflective Thinking; Tier 2: Leadership Principles

c. Are the controlling stockholders in China.

Which is true regarding restructuring? a. There are two primary ways of restructuring namely downsizing and upsizing. b. A rising level of competition within an industry normally prevents restructuring. c. Corporate restructuring is not widely embraced around the world. d. Restructuring is one of first things to consider when trying to improve profitability. e. Restructuring is easier in knowledge-intensive firms than capital intensive firms.

c. Corporate restructuring is not widely embraced around the world.

Contractual alliances include all of the following except: a. Co-marketing. b. Research and development (R&D) contracts. c. Cross-shareholding. d. Turnkey projects. e. Licensing/franchising.

c. Cross-shareholding.

Conglomeration tends to provide all of the following except: a. Product-unrelated diversification. b. Financial synergy. c. Economies of scale. d. Economies of scope. e. Internal capital market.

c. Economies of scale.

Which of the following aspects of U.S. competition/antitrust policy has been opposed by the EU? a. Collusive price setting. b. Predatory pricing. c. Extraterritoriality. d. Court decisions. e. Changes in policy.

c. Extraterritoriality.

Knowledge management uses "centers of excellence" in which type of MNE? a. Home replication. b. Local (multidomestic). c. Global. d. Transnational. e. All of the above.

c. Global.

The following managerial motives for conglomerations do not benefit shareholders except: a. Norms. b. Reducing managers' employment risk. c. Organizational stability. d. Pursuing power, prestige, and income. e. Empire building.

c. Organizational stability.

Which of the following is not an argument in favor of centralization in knowledge management but instead is an argument in favor of decentralization? a. Capability to facilitate corporate-wide coordination. b. Consistency in decision-making. c. Permits greater speed, flexibility, and innovation. d. Sufficient power for corporate-level managers to initiate necessary actions. e. None of the above.

c. Permits greater speed, flexibility, and innovation.

To ensure the success of the M&A, managers need to make sure of all the following except: a. Be willing to walk out when premiums are too high. b. Engage in adequate due diligence concerning strategic fit. c. Seek organizational contrast and variety rather than organizational fit. d. Address the concerns of multiple stakeholders. e. Recognize that that integration management is a fulltime job. AACSB: Tier 1: Reflective Thinking; Tier 2: Leadership Principles

c. Seek organizational contrast and variety rather than organizational fit.

Which are not among the aspects of globalization? a. Contact with different governance norms. b. FPI investors demand more protection. c. The focus on governance has been replaced by a focus on shareholder value. d. The thirst for global capital requires adherence to listing requirements. e. The global diffusion of "best practices."

c. The focus on governance has been replaced by a focus on shareholder value.

Which of the following are not true regarding managers involved in alliances and networks? a. They require relationship skills which foster trust with partners. b. They must guard against opportunism. c. They must recognize that interests of the firms fully overlap. d. They have to represent the interests of their respective firms. e. They must attempt to make the complex relationship work. AACSB: Tier 1: Reflective Thinking; Tier 2: Leadership Principles

c. They must recognize that interests of the firms fully overlap.

In developing a strategy regarding competition or cooperation, it would be useful to not: a. Understand the nature of your industry. b. Strengthen capabilities that more effectively compete and/or cooperate. c. Understand the rules of the game governing competition. d. "Look back, reason ahead." e. All of the above.

d. "Look back, reason ahead."

Strategic fit refers to whether the partner firm possesses: a. Technology. b. Capital. c. Distribution channels. d. A through C above. e. Goals, experiences, and behaviors that facilitate cooperation.

d. A through C above.

Unique to international competition are the pressures for local responsiveness, which are reflected in: a. Consumer preferences. b. Distribution channels. c. Host country demands. d. A through C above. e. Shareholder demands.

d. A through C above.

A joint venture can be described as: a. A special case of equity-based alliance. b. A new legally independent entity. c. A "corporate child" given birth by two (or more) parent firms. d. All of the above. e. None of the above.

d. All of the above.

Explicit collusion is exemplified by: a. Cartels. b. Trusts. c. Users of game theory. d. All of the above. e. None of the above.

d. All of the above.

Industry-based considerations regarding strategy: a. Focus on the nature of collusion. b. Deal with the relationship between industry structures and firms' propensity to collude. c. Deal with the relationship between industry structures and firms' propensity to collude to competing. d. All of the above. e. None of the above.

d. All of the above.

Pressures for cost reductions and local responsiveness include: a. The framework of how to simultaneously deal with these two sets of pressures. b. Host country demands and expectations. c. Being locally responsive makes local customers and governments happy but increase costs. d. All of the above. e. None of the above.

d. All of the above.

Sources of operation synergy: a. Technologies. b. Marketing. c. Manufacturing. d. All of the above. e. None of the above.

d. All of the above.

Sources of operational synergy include: a. Technologies. b. Marketing. c. Manufacturing. d. All of the above. e. None of the above.

d. All of the above.

The main types of attack include: a. Thrust. b. Feint. c. Gambit. d. All of the above. e. None of the above.

d. All of the above.

Which is true of strategy? a. Business strategy has similarities with military strategy. b. Military principles cannot be completely applied in business. c. Militaries fight over territories, waters, and air spaces, firms compete in markets. d. All of the above. e. None of the above.

d. All of the above.

Which of the following is a customer-focused dimension? a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.

d. All of the above.

Which of the following is a key idea regarding the reciprocal relationship between strategies and structures within MNEs? a. The fit between strategies and structures is crucial. b. The relationship is two way. c. Strategies and structures are not static. d. All of the above. e. A good strategy cancels the effect of a bad structure.

d. All of the above.

In comparing M&As with alliances and networks, which of the following is not correct? a. M&As are costly. b. M&As have significant transaction costs. c. Many M&As end up destroying value. d. Alliances and networks preclude future upgrading into possible M&As. e. Alliances and networks can be considered as a flexible intermediate solution.

d. Alliances and networks preclude future upgrading into possible M&As.

In combining product and geographic diversification, which is not one of the four possible combinations? a. Anchored replicators. b. Multinational replicators. c. Far-flung conglomerates. d. Classic replicators. e. Classic conglomerates.

d. Classic replicators

Diversification can pay off in all of the following situations except: a. Risk is spread over several (product or country) markets. b. Core resources are leveraged. c. The art of post-acquisition integration has been mastered. d. Commonly shared industry skills are used. e. Firms are organized to minimize the costs.

d. Commonly shared industry skills are used.

Which of the following would not be considered an initial set of actions to gain competitive advantage: a. Price cuts. b. Advertising campaigns. c. Market entries. d. Counterattacks. e. New product introductions.

d. Counterattacks.

Which is true of globalized R&D? a. Is often known as innovation-avoidance expense. b. One way to access such a high technology and research-rich cluster is to avoid FDI. c. R&D work performed by different locations and teams around the world virtually guarantees failure. d. For large firms, there are actually diminishing returns for R&D. e. Global virtual teams, which do not meet face to face, may overcome communication and relationship barriers.

d. For large firms, there are actually diminishing returns for R&D.

At its core, diversification is essentially driven by all of the following except: a. Economic benefits. b. Bureaucratic costs. c. Synergy. d. Less complicated information systems. e. MEB.

d. Less complicated information systems.

As the opening case points out on the negative side, firms have been accused of all of the following except: a. Being "barbarians." b. Being "asset strippers," and "locusts." c. Internationally, causing shock in countries suddenly facing the full rigor of Anglo-American private equity. d. Placing CSR ahead of all rational economic decisions. e. None of the above.

d. Placing CSR ahead of all rational economic decisions.

Which is true of relatedness? a. Measurement of product relatedness is no longer debatable. b. A "product-related" firm will be considered related regardless of the measure used. c. Some argue that product relatedness refers specifically to the visible product linkages. d. Relatedness can be a common underlying dominant logic that connects various businesses in a diversified firm. e. Product-unrelated conglomerates may are not linked by institutional relatedness.

d. Relatedness can be a common underlying dominant logic that connects various businesses in a diversified firm.

Which of the following is not an argument in favor of decentralization in knowledge management but instead is an argument in favor of centralization? a. Better motivates subsidiary-level managers and employees through empowerment. b. Reduces corporate level overload of responsibilities. c. Better motivates subsidiary level managers. d. Sufficient power for corporate-level managers to initiate necessary actions. e. All of the above.

d. Sufficient power for corporate-level managers to initiate necessary actions.

Which is not true concerning US anti trust policy today? a. Legislation has legally permitted rivals to join hands in research and development (R&D). b. There is increased permissiveness regarding mergers among rivals. c. Clarity of policy has improved. d. The legal standards for interfirm cooperation are no longer ambiguous in the United States. e. The legal standards for interfirm cooperation are ambiguous in many other countries.

d. The legal standards for interfirm cooperation are no longer ambiguous in the United States.

In measuring the performance of strategic alliances and networks, subjective measures include: a. Market performance. b. Stability. c. A and B above. d. The level of managers' satisfaction. e. Longevity.

d. The level of managers' satisfaction.

Which of the following is not true of the global matrix structure? a. Is often used to alleviate the disadvantages associated with the geographic area structure. b. Is often used to alleviate the disadvantages associated with the global product division structures. c. Often used for sharing and coordinating responsibilities between product divisions and geographic areas. d. This structure benefits front-line managers who now have only one boss -either a country manager or a product division manager. e. The matrix structure may add layers of management.

d. This structure benefits front-line managers who now have only one boss -either a country manager or a product division manager.

Which of the following is true in regards to outside directors? a. The trend around the world is to introduce less outside directors. b. In the United States, less than a half century ago, most boards were made up entirely or largely of outside directors. c. Many US firms are now favoring a board that is entirely made of people who are insiders due the need for people who can understand the increasing complexity of MNEs. d. Japanese boards have not waited until they are in financial difficulty to bring in outside directors from banks. e. Academic research has failed to empirically establish a link between the outsider/insider ratio and firm performance.

e. Academic research has failed to empirically establish a link between the outsider/insider ratio and firm performance.

Which (if any) of the following will not influence the performance of alliances and networks? a. Equity. b. Learning and experience. c. Nationality. d. Relational capabilities. e. All can have an influence.

e. All can have an influence.

Which (if any) of the following are not involved in the stages of forming business relationships? a. The decision to cooperate. b. The decision to not cooperate. c. The choice of contract or equity. d. Positioning the Relationship. e. All of the above are involved.

e. All of the above are involved.

Corporate scope is shaped by: a. Industry conditions. b. Firm capabilities. c. Institutional constraints. d. Opportunities in both developed and emerging economies. e. All of the above.

e. All of the above.

In regards to global convergence: a. Advocates argue that globalization will unleash a "survival-of the-fittest" process. b. Advocates claim firms will be forced to adopt globally the best practices. c. Others contend that governance practices will continue to diverge throughout the world. d. The text indicates that complete divergence in corporate governance is probably unrealistic. e. All of the above.

e. All of the above.

Institution-based considerations regarding organization include: a. Collusion concerns. b. Entry requirements. c. The social pressures to find partners. d. The internalized beliefs in the value of collaboration. e. All of the above.

e. All of the above.

Issues involved regarding how a board of directors can be established so as to be most effective include: a. The insider/outsider mix. b. CEO duality. c. Board Interlocks. d. The Role of Boards of Directors. e. All of the above.

e. All of the above.

Research regarding the relationship between product diversification and firm performance indicates that: a. Performance may increase as firms shift from single business strategies to product-related diversification. b. Performance may decrease as firms change from product-related to -unrelated. c. The linkage between diversification and performance is inverted U shaped. d. "Putting your eggs in similar baskets," has emerged as a balanced way to both reduce risk and leverage synergy. e. All of the above.

e. All of the above.

Strategic alliances involve: a. Voluntary agreements between firms. b. Compromises between short-term transactions and long-term solutions. c. Contracts. d. Equity-based arrangements. e. All of the above.

e. All of the above.

Strategists should: a. Understand the nature of principal-agent and principal-principal conflicts to create better governance mechanisms. b. Develop firm-specific capabilities to differentiate on governance dimensions. c. Understand the rules, anticipate changes, and be aware of differences, especially when doing business abroad. d. Use an understanding of corporate governance to help answer the four fundamental questions in strategy. e. All of the above.

e. All of the above.

The stock market responds favorably to alliance activities, but only under which circumstances? a. Complementary resources. b. Previous alliance experience. c. Ability to manage the host country's political risk. d. Partner buyouts. e. All of the above.

e. All of the above.

Weak ties in organizational relationships: a. Are more trustworthy and are cultivated over a long period of time. b. Are associated with exchanging finer-grained information. c. Provide an informal, social control mechanism. d. A through C above. e. Are less costly to maintain.

e. Are less costly to maintain.

Which would be more characteristic of conglomerates? a. "Putting one's eggs in one basket." b. "Putting one's eggs in similar baskets." c. "Putting one's eggs in different baskets." d. A and B above. e. B and C above.

e. B and C above.

As a type of relationship tie, exploitation refers to such things as: a. Selfishness. b. Choice. c. Efficiency. d. Execution. e. B through D above.

e. B through D above.

Most large, publicly traded UK corporations are now characterized by all of the following except: a. Diffused ownership. b. Numerous small shareholders. c. A separation of ownership and control. d. Control is largely concentrated in the hands of salaried, professional managers. e. Corporate managers who own a majority of the stock.

e. Corporate managers who own a majority of the stock.

Boards of directors perform all of the following except: a. Control. b. Service. c. Resource acquisition functions. d. A through C above. e. Day to day operations.

e. Day to day operations.

Multidomestic strategy involves all of the following except: a. Focuses on a number of foreign countries/regions. b. Each foreign country is regarded as a stand-alone "domestic" market. c. Is effective when there are clear differences among national and regional markets. d. A multidomestic strategy has high costs. e. Global standardization strategy is the same as a multidomestic strategy.

e. Global standardization strategy is the same as a multidomestic strategy.

Issues affecting collaboration include: a. Secrecy. b. Exclusivity. c. Informality. d. All of the above. e. None of the above.

e. None of the above

Local firms in emerging economies typically can at least match the ________ of MNEs. a. Expertise b. Experience c. Endowments d. A and B above e. None of the above

e. None of the above

Firm A may be more successful in imitating Firm B if Firm B: a. Is competitively aggressive. b. Carries out complex actions. c. Uses difficult to execute maneuvers. d. All of the above. e. None of the above.

e. None of the above.

Ownership will likely be diffused under which of the following situations? a. A start up firm. b. Family owned firm. c. State ownership. d. All of the above. e. None of the above.

e. None of the above.

Which of the following will enable a firm to be competitive even if there is a lack of top management commitment and employee involvement? a. Organizational structure. b. Use of stealth attacks. c. Rapid responses, and willingness to answer challenges. d. All of the above. e. None of the above.

e. None of the above.

Which is not true regarding geographic diversification and firm performance? a. U-shaped relationship at low level of internationalization. b. Initially a negative effect of international expansion on performance. c. Affected by the liability of foreignness. d. Inverted-U shape at moderate to high levels of internationalization. e. Positive only at high levels of internationalization.

e. Positive only at high levels of internationalization.

As the opening case points out, the positive side private equity firms excel in all the following ways except: a. They always send experts to sit on the board and are hands-on in managing. b. Use a high level of debt that imposes strong financial discipline. c. Private equity turns managers from agents to principals with substantial equity, thus providing a powerful incentive to them. d. Pay managers more generously, but also punish failure more heavily. e. Reduced income inequality between financiers and the rest of us.

e. Reduced income inequality between financiers and the rest of us.

The defense of private equity includes all of the following points except: a. While private equity results in job cuts, the same might happen if targets were acquired by public firms. b. It would not be rational for private buyers to destroy their prize therefore they attempt to avoid doing that. c. Their record as corporate citizens is no more barbaric than that of public firms. d. They point to a Texas utility in which owners paid shareholders a 25% premium, gave retail customers a 10% price cut, and dropped plans to build eight dirty coal- fired power plants—hailed by environmentalists as a major victory. e. The actions of U.S. private equity firms have enhanced the image of the U.S. and capitalism around the world.

e. The actions of U.S. private equity firms have enhanced the image of the U.S. and capitalism around the world.

Which are not true in regards to institution-based considerations? a. Externally, MNEs are subject to the formal institutional frameworks erected by various home- and host-country governments. b. Host-country governments often encourage, or coerce MNEs into undertaking certain activities. c. Strategists weigh the informal, backlash against activities which result in domestic job losses. d. Formal organizational charts do not necessarily reveal the informal rules of the game, such as organizational norms, values, and networks. e. To staff the position of the head of a subsidiary, MNEs, in the absence of formal regulations, essentially have only one choice: to use a home-country national as the head of a subsidiary.

e. To staff the position of the head of a subsidiary, MNEs, in the absence of formal regulations, essentially have only one choice: to use a home-country national as the head of a subsidiary.

The three drivers of counterattacks do not include: a. Awareness. b. Motivation. c. Capability. d. B and C above. e. Vengeance.

e. Vengeance.

Two decades of privatization suggest all of the following except: a. Privatization to insiders helps improve the performance of small firms. b. In large corporations privatization to insiders, without external governance pressures, is hardly conducive for needed restructuring. c. Outside ownership and control, preferably by blockholders, funds, foreigners, and/ or banks, are more likely to facilitate restructuring. d. Such outside ownership and control does not happen frequently because incumbent managers do not necessarily welcome such outside "intrusion." e. When outside investors such as institutional investors do come in, they fail to assert their power.

e. When outside investors such as institutional investors do come in, they fail to assert their power.