CH 7, 8, 10, 12, 13

What is the term for a company's options outside the firm for managerial positions?

External managerial labor market

Which of the following is an example of innovation through acquisition?

Facebook choosing to innovate its advertising platform and seeing the value of the virtual reality technology that another company, Oculus, has already developed

What would an advantage be for Tomberlin Automotive to sell in China in addition to manufacturing?

Increased market size

What are the three basic benefits that firms can enjoy by successfully using international strategies?

Increased market size, increased economies of scale and learning, and development of a competitive advantage through location

GM, a world leader in auto manufacturing, has a strategy that has been very successful over the years. Each year's version of the same model is very similar in size, shape and look. But, the company slightly improves the vehicles for each year by improving gas mileage, enhancing technology, or adding special features. What strategy is GM utilizing?

Incremental innovation

Which of these terms would describe an innovation by a steel manufacturing company that finds a new way to produce its steel, saving 2% in production time?

Incremental innovation

Darren works in a metals factory and has repeated the same tasks for years now. He notices that he can save time if he repurposes one tool to assist in another process. He discusses the new tool with his supervisor, and the company realizes that it offers efficiencies and wants to use it in other factories. What describes Darren's actions?

Innovation

Disney, the entertainment company, sees the success that the super hero storytelling company, Marvel, has had over the years. Disney wants to enhance its movie-making capabilities and wants to gain Marvel's innovations for other uses. What is Disney's next logical move?

Innovation through acquisition

Luxottica, the leader in eyewear, has little in common with Google, the technology giant. But together, they are working on a breakthrough called Glass, which is a revolutionary eyewear with technological advancements. Google needs the expertise of Luxottica to effectively market the product as a fashion accessory as well as a piece of tech. What is this story describing?

Innovation through cooperative strategies

In June of 2007, Apple, the company well known for the music player iPod, released its first phone, the iPhone. One of its taglines, "Apple Reinvents The Phone," proved to be true. Since its launch, iPhone and its imitators have taken over the mobile phone industry. Apple's key feature was its touchscreen. Other companies have tried to copy the success. What would the iPhone be described as?

Novel or breakthrough innovation

A popular juniors clothing store features young designers and has been very successful. To gain strategic competitiveness, the clothing store frequently acquires young social-media sensations' designs and brings their designs to life in the store. What type of acquisition is the store using to increase its strategic competitiveness?

Related acquisition

Which function of a company must have the highest level of internal innovation in order for the company to have a competitive advantage?

Research and development

In which of the following scenarios would a firm choose to downsize rather than downscope?

A firm has excess resources after acquiring another firm.

A semiconductor company has established a plant overseas in South Africa, where the power grid is somewhat unreliable. The plant has a continuous manufacturing process. Of the two main risks of international strategy, which of the following is most relevant to the circumstances of the semiconductor company?

Economic risks

Establishing manufacturing in China for producing Tomberlin Automotive vehicles is an important international strategy for the company. However, if the country doesn't maintain proper infrastructure for shipping the product overland and exporting it back to the U.S., this strategy could pose what kind of risk to the company?

Economical

Why would a company want to have a heterogeneous top management team?

Thoughts coming from different expertise and backgrounds will provide a better decision

What is the reasoning behind P&G's commitment to giving employees of all levels meaningful and significant roles?

To develop talent that will be able to move up in the organization and be effective in the future

The Hong Kong Exchange denied Alibaba the IPO while the NYSE did not. Why would the Hong Kong Exchange be stricter in its acceptance rate of IPOs?

To ensure international investors have a strong corporate governance system and that their investment in the growing Chinese market will be protected.

Why are corporate governance mechanisms important to foreign investors?

To protect their investments; governance mechanisms are designed to protect shareholders

The long-term outcomes of a leveraged buyout are higher performance and higher risk. What two short-term outcomes lead to these long-term outcomes?

Emphasis on strategic controls and high debt costs

A top priority of General Motors' CEO Mary Barra is to change the organizational culture. The motivation behind this was the discovery of ignition problems. The company was aware of them but chose not to address them for many years. How may a change in culture prevent similar events in the future?

Employees with more of a customer focus will want to keep their buyers safe.

What is the process by which individuals, teams, or organizations identify and pursue opportunities without being immediately constrained by the resources they currently control?

Entrepreneurship

In what ways did Harley-Davidson implement a restructuring strategy?

Transforming its business management to a modern system

Cultural Concerns in International Expansion: lululemon athletica The Canadian-based company lululemon athletica has successfully entered international markets. Its expansion so far has been to countries that share a common language and similar cultures, including the United States, Australia, and New Zealand. The company has been apprehensive about expanding to markets with different cultural attitudes. The leadership is now prepared for this next international expansion and has decided to enter the Chinese market. You have been asked to be a part of the team developing the international strategy for the Chinese market. First, determine which approach to international strategy will best serve lululemon and be responsive to the company's fears about cultural sensitivity.

Transnational strategy

An institution that holds 15 percent of shares in a company in order to be a powerful governance mechanism is an example of a(n):

institutional owner.

Comcast had been planning to purchase Time Warner for $45 million as a(n) _____________.

merger

An entrepreneur just started a business and decides that she needs a team to help this new business grow. Which group of individuals, with their specific backgrounds, would give the entrepreneur a heterogeneous top management team?

1 Finance, 1 Marketing, 1 Technology

Activists are very unhappy with the Board of Directors' recent pattern of decisions. They believe that they need to be given more decision-making capabilities, have their voices heard, and nominate another Board member. What should the activists propose?

A proxy vote

What is an agency relationship?

A situation in which one party delegates decision-making responsibility to a second party for compensation

Which is an alternate definition for "poison pill"?

A strategy whereby a company decides to increase the number of overall shares, which will both dilute the hostile company's shares and increase the cost of the company overall, making the company less appealing to take over

A firm is struggling with the behavior of its employees. There have been reports of ethically questionable behavior. When asking some employees about their motives for these actions, a common theme was uncovered. They were cutting corners to hit their performance numbers. The firm now wants to focus on ethical behavior and shift organizational culture. The company distributes emails from HR about appropriate behavior and ethics and hosts a series of office workshops on ethics. What is this firm attempting to become?

A values-based culture

Japan Airlines had to "survive the current economic storm" in 2009. From the video, what is a factor of Japan Airlines' structure you would recommend?

CEO duality

What does a firm have if its capabilities are valuable, rare, difficult to imitate, and not able to be substituted?

Competitive advantage

Many companies are confidential about their inventions until patents are filed. What would happen if an invention were leaked without the protection of a patent?

Competitors would be able to imitate without significant barriers.

A technology firm has had some issues in its decision making. The company is the leader in innovation and is always ahead of the curve on technological advances. But the business struggles with operations and marketing decisions. The leadership team is the same group of five people that started in a garage after meeting in a computer science class. What would you suggest to this company?

Create a more heterogeneous top management team.

A technology company is in need of a breakthrough innovation. It has been static in its innovations and needs something that will "change the game" to provide a new revenue stream. Which team is most likely to be charged with finding this next breakthrough?

Cross-functional development team

For innovations to be successful, the product needs to be of quality, the product needs to make sense economically, and the market needs to have a demand for it. What type of team does Ford most likely need to build to satisfy these criteria?

Cross-functional product development teams

Gina is a transformative leader. She wants as much input from others as possible and has developed a top leadership team. The team is composed of the brightest minds with the best backgrounds, ensuring that the decisions made will be the best and most thought out. However, the Board has concluded that the decision making is too slow and that the company is losing its competitive advantages as a result. What does Gina need to change?

Cut the number on her leadership team.

What is involved in identifying the vision and the strategy or strategies to achieve a goal over time?

Determining strategic direction

Alibaba is a company that is very profitable and has a large market value. What would be a beneficial use of the funds generated by the IPO?

Diversification and reinvestments to help the company and its stock grow, which benefits stakeholders and shareholders

An appliance company is considering entering the global market. It is unsure of what steps to take and is looking for a cost-effective method to work with a company that is already in the hosting country. Based on these preferences, which of the following modes of entry should the company choose?

Entering into a strategic alliance

On a macroeconomic level, what category of countries experience tremendous growth of personal and national wealth?

Entrepreneurial countries

What is the positive effect of downscoping?

Firms refocus on their core business.

Christopher is the CEO of a company that another company is trying to acquire. The success of Christopher's company has declined dramatically over recent years. Chris knows that the acquisition could help save the shareholders and other stakeholders from the turmoil that would ensue if the company went bankrupt. However, this is Christopher's only line of income for his family. He decides to defend his company from being taken over to help secure his position. Which defense strategy would you recommend be implemented that would benefit all stakeholders?

Golden parachute

Which of these is not an example of a strategic leader?

High performing sales associate

A shoe company has decided to downscope its designer sock business, as the firm is making more money in the shoe business. By eliminating its sock business, the company can focus exclusively on new developments in its shoe business. What is the long-term outcome of this move?

Higher performance

Not all CEO changes are successful. Which one of the following scenarios has the greatest chance of failure?

Hiring an international external CEO

What is referred to as the knowledge and skills of a firm's entire workforce?

Human capital

GM, a world leader in automotive manufacturing, is quickly losing market share to Toyota. Toyota's competitive advantage is that it can produce high-quality cars at a lower price than GM. This is due to Toyota's manufacturing innovation processes, resulting in quicker change and lower cost. What is the logical next step for GM to remain competitive quickly?

Imitation of Toyota's processes

Sheryl is in charge of developing consumer behavior trends. Some of the trends mentioned in the video for 2015 are, "Make way for Gen Z", "Flaunting failure", and, "Expanding next of kin". As a company, Ford will use these trends and try to innovate to appeal to these behaviors. What is this describing?

Induced strategic behavior

Of the three types of innovative activities, which of the following is the most critical for companies?

Innovation

Firms may hire a CEO from the external managerial labor market for which of the following reasons?

Innovation of the company

A CEO has just resigned and quickly vacated his role for a more lucrative opportunity. The company, with the rapid change, is in limbo and needs leadership. What is the Board of Director's next logical action?

Internal interim CEO

If IKEA chose to implement a multidomestic strategy in which it practiced global efficiency and local responsiveness instead of its current successful global strategy, which of the following would be the most likely outcome?

It would sacrifice the efficiency of centralized operations and distribution, which could affect its cost position, potentially driving up costs and prices.

The Board of Directors is deciding who the new CEO should be for a company. It has narrowed the candidates down to two highly-credentialed individuals. Steve is known to be harsh but fair. He is a proven CEO and has driven companies to success quickly. Kim, the other candidate, is known to be a "people person" with a high emotional intelligence. In the past she has demonstrated success building company culture to achieve great results. Knowing this, which candidate should the company choose if it is seeking to motivate its employees?

Kim, because she is a transformational leader.

Tomberlin Automotive has enjoyed which benefit of international strategy by manufacturing in China?

Location advantage

A large car manufacturer has cut all but two of the employees in its marketing department to save money and return to profitability. What is the likely long-term outcome of this move?

Loss of human capital and lower performance

Which of the following is the result of a merged firm that maintains a low to moderate debt position?

Lower financing cost

What is most likely to happen to a firm whose Board of Directors automatically approves the decisions made by the CEO and the management team?

Lower performance

A company is part of a keiretsu in Japan. Its leaders are worried about the company's financial viability and ask for help from other members of the keiretsu. Why would other participants of the keiretsu feel the need to aid the failing company?

Members of the keiretsu are seen as family, which commands attention and allegiance.

In which of the following international strategies are strategic and operating decisions decentralized to the strategic business units in individual countries or regions in order to allow each unit the opportunity to tailor its products to the local market?

Multidomestic strategy

Question of Duality Before you look to change the strategy, you take a look at the leadership team and see a concern. A positive of the team is that it is very heterogeneous with a wide variety of experience and expertise. But, you realize the limitations of the duality. The CEO, James Morgan, is also the Chairman of the Board. Mr. Morgan is a very confident man who has had success in the past. He has held his duality for several years and is known to fight changes in strategic direction. Based on the Board's overall desire for change, should you keep the current structure or split Morgan's duality?

No duality

Sales Representatives and Customers The Board is pleased with your decision and wants to know exactly how you will prioritize Avon's efforts and resources. In Avon's history, sales representatives have been priority number one and the selling of beauty products second. The majority of the Board believes this solution is perfect. But times have changed, and the customers have different needs. Some members of the Board wonder if customers need more focus rather than the sales representatives. Which choice is most closely aligned with the company's stated goals?

Prioritize sales representatives

Spark is the only energy company in the fictional country of Blacksburgia and therefore holds a monopoly in its home country. Spark's lack of competition in its home country can contribute to an international strategy in what way?

Profits gained at home can be invested in international markets.

A fashion apparel company has seen much success over the years. For almost a decade, it seems to have perfected the formula for success. The tenured CEO of 12 years has developed a strategy, and this success has become her career "legacy." Recently, the company has seen its growth slow. The year-to-year profit growth is also leveling out. The current CEO has stated that it is a bump in the road, and that changing strategy would be rash. What is the diagnosis of this CEO's mindset?

Risk adverse

Which of the following is a component of an acquisition that managers can become overly focused on?

Searching for viable acquisition candidates

A firm is attempting to break into an international market. It easily establishes alliances in that foreign market and is able to successfully expand. What concepts help the firm with its transition?

Social capital

The quotes, "I feel close to him, it's encouraging" and, "All together in the same boat", indicate that the Japan Airlines CEO is focusing on what?

Social capital

What is another instance in which decision-making bodies are separated like the Board structure in German firms?

The United States' three branches of government

What are the benefits of having strong corporate governance?

The ability to be strategically competitive and perform without risk of being ethically or legally exposed.

Which of the following most describes a limitation of Tomberlin Automotive's international expansion of its manufacturing?

The farther geographically the operations are dispersed, there are higher costs of coordination between units and the distribution of the products.

When a firm takes over another firm in an unfriendly acquisition process, what is a challenge to its future success?

The firm will struggle to effectively integrate its operations.

Why would Alibaba have a high likelihood of the managers and the Board of Directors making decisions that best serve shareholders' interests?

The large-block ownership concentration is in play

Why did the government and consumers have regulatory opposition to the proposed merger between Comcast and Time Warner?

The merger would result in Comcast and Time Warner providing more than half of all broadband services in the U.S.

What is the definition of ownership concentration?

The number of large-block shareholders and the total percentage of the firm's shares they own

Although French-based Cap Gemini SA performed an extensive due-diligence process prior to acquiring U.S.-based iGate Corp, analysts worry about the integration process following the acquisition. What is a difference between the two that might cause difficult integration?

There may be cultural differences in operations between the two firms.

Which of the following criteria should companies give the most weight to when deciding who should lead an international entrepreneurial venture?

Those with international experience

Many companies encourage employees to take on entrepreneurial pursuits. While this could cause companies to lose top talent, why may companies want to foster this behavior?

To spark innovation that the company may be able to use

Which of the following is an example of a problem that can prevent an acquisition from being successful?

Too much diversification

Mark Zuckerberg demonstrated an aptitude for entrepreneurship at an early age. When did he create his first business?

While in high school

When a firm acquires another firm competing in the same industry, market power is increased by exploiting cost and revenue-based synergies. This type of acquisition is called:

a horizontal acquisition.

If a firm chooses exporting as its preferred entry into the international market, its advantages include:

avoiding the costs of establishing manufacturing operations in the host country and experiencing scale economies.

Harley-Davidson's new stakeholders understood that the company's strategy must focus on leveraging its most important asset:

brand name.

Interactions among the four determinants of national advantage influence a firm's:

choice of international business-level strategy.

Companies such as Google Plus, Myspace, LinkedIn, Twitter, and emerging social media platforms represent threats to Facebook's:

competitive advantage.

When a firm standardizes the processes used to produce, sell, distribute, and service its products across country borders, its ability to learn how to continuously reduce costs and increase the value of its products for its customers is enhanced. The firm is:

developing economies of scale and learning.

Utilizing ideas for innovation submitted on its own social media platform, Facebook developers have created apps, electronic platforms, and operating systems. One of these innovations, the game Farmville, led to 12 percent of Facebook's total revenues. The is an example of:

internal innovation.

Environmental trends, such as the liability of foreignness, can impact a firm's choice of:

international corporate-level strategy.

In Zuckerberg's continuous quest to create and innovate, he would be considered a(n):

entrepreneur

A firm can cope with differences in government policies and practices in the host country in which it has implemented an international strategy by:

forming a strategic alliance.

When a firm buys a competitor, supplier, distributor, or business in a highly-related industry so a core competency can be used to gain competitive advantage, this demonstrates an acquisition strategy to gain:

increased market power.

Although Facebook has seen tremendous growth, its challenge for the future will be maintaining its current user base and:

monetizing users.

The partnership between Tomberlin Automotive and the Chinese manufacturing plant can best be described as a(n):

strategic alliance.

Strategic competitiveness is achieved when a firm successfully manages political, economic, and other institutional risks while implementing international strategies. The degree of strategic competitiveness depends on:

successful implementation of an international diversification strategy.

Corporate governance is:

the set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations.

Harley-Davidson may have opportunities to serve its future customers with which of the following potential acquisitions?

A company with technology to make motorcycle engines more environmentally friendly

Exporting You have chosen a transnational strategy so that your company can adapt to the needs of individual markets—in this case, China. To introduce your product into the Chinese market, you believe exporting offers the best mode of entry. Exporting will give you the greatest amount of control over the quality of your products and help you control costs because the products will be coming from your existing suppliers. However, you have not addressed any concerns that the team has raised about the liability of foreignness and the ability of the lululemon brand to connect with customers with such a different cultural experience. Which products should lululemon export to China?

A customized product line aimed at Chinese customers lululemon sought to expand into cultural markets with differing cultural attitudes. Your suggestion of using a transnational strategy by exporting products aimed at the Chinese market was the ideal choice in entering the new marketplace. You were right to pursue a transnational strategy rather than a global strategy. A transnational strategy allows the company to regionalize its business. You also chose to export products, which served the company well. lululemon has an established supplier network, and your export strategy was able to capitalize on the company's economies of scale and location advantages. Perhaps most importantly, you realized the importance of being locally responsive to the Chinese market. You developed products and marketing that met the needs of Chinese customers and avoided concerns surrounding the liability of foreignness. You have chosen the best approach for lululemon to realize the desired outcomes.

What is believed to be a likely consequence if shareholders, lawmakers, and regulators are not critical and attentive to the actions of a company's top managers?

A financial crisis due to manager ineffectiveness and lack of focus on all stakeholders, causing the company to fail, resulting in a rise in unemployment

Now that Comcast is still in the market to create a merger, which of the following companies would be the ideal candidate?

A small broadband service company with similar operations as Comcast

Which of the following statements best explains how shareholders are affected by acquisitions?

Acquired firms' shareholders often earn above-average returns as a result of acquisitions, whereas acquiring firms' shareholders often earn returns that are close to zero as a result of acquisitions.

A jewelry firm has recently acquired its gem supplier. The jewelry firm prides itself on always being the first to predict and serve new trends. For example, the firm was one of the first to introduce rose gold jewelry pieces after research predicted a large demand. Which of the following attributes of the firm helps it to maintain a long-term competitive advantage in markets?

Acquiring firm has a sustained and consistent emphasis on research and development (R&D) and innovation

Which of the following is an attribute of a successful acquisition?

Acquiring firm has financial slack

After a recent round of share releases, many individuals bought up shares and reduced the number of large-block shareholders. The company's managers recently had the luxury of performing without much interference or monitoring by their shareholders. The managers are now engaging in risky strategic tactics that may not be in the best interest of shareholders. What type of ownership does this company have?

Diffuse ownership

_____ generally leads to more positive outcomes in both the short and long term.

Downscoping

Based on the various long-term outcomes, which restructuring strategy is the least recommended to implement?

Downsizing

A large software company is in the process of acquiring a small tech startup that has built an app for developers to code websites on their smartphones. It is rumored that the software company has grossly overestimated the future growth as a result of the acquisition. If this turns out to be true, what common acquisition problem has the software company encountered?

Inadequate evaluation of target

Export vs. Wholly Owned Subsidiary You have decided to pursue a transnational strategy in order to maximize lululemon's local responsiveness for Chinese consumers. The key to profitability in the Chinese market will be lululemon's ability to leverage its network of suppliers to maintain high-quality products, even if the overall pricing structure must be lower to appeal to the Chinese consumer. The entry mode into China that will best accomplish this is through:

Exporting from an existing network of suppliers

Germany is known for its technical training system, which has a strong emphasis on continuous product development and improvements. If Germany did not have such a system, it would lack which of the following determinants of national advantage?

Firm strategy, structure, and rivalry

The probability of disruption of operations of multinational enterprises by political forces in host countries or a company's home country describes which of the following risks associated with international strategy?

Political risk

Licensing is similar to franchising in which of the following ways?

Franchisees pay a royalty to their parent company.

Which of the following is not an incentive for pursuing an international strategy?

Gaining a bigger share of the national market

A firm is hoping to coordinate its operations in a uniform fashion across all its markets, domestic and international. It has a great track record for its efficiency of operations. The firm hopes that through integrating and centralizing its operations and support across all markets it will increase productivity and save on costs. Based on this firm's strategic preferences and background, which of the following corporate-level strategies would benefit it the most?

Global strategy

How can firms implementing an international strategy become limited by diversification?

Greater geographic dispersion across country borders results in increased costs of coordination between units and distribution of products.

The high cost of entry into a foreign market describes one disadvantage of which of the following entry modes?

Greenfield venture

The short-term outcomes of downscoping include reduced debt costs and an emphasis on strategic controls. What is the long-term outcome that results from the short-term outcomes?

Higher performance

What does it mean when an acquisition is unable to achieve synergy?

When the acquiring firm and acquired firm do not effectively share resources, economies of scale, and economies of scope across the businesses

A firm seeks to implement an international strategy in a location with which it is unfamiliar. Unaware of the economics and cultural preferences of the location, the firm is influenced by which of the following environmental factors?

Liability of foreignness

Susan is worried about her performance as CEO. She thinks that she may lose her position, receive a cut to her salary, or be seen by her peers as incompetent and ineffective. What is another term for what Susan is worried about?

Managerial employment risk

A firm owns a wide variety of consumer goods businesses. Its portfolio includes a grocery store, shoe store, and gas station. How might the diversification of its businesses impact its ability to have successful acquisitions?

Managers are unequipped to evaluate the success of businesses on a deeper level than finances.

Two specialty craft stores have just been bought by craft giant Ultimate Crafts. By rebranding the small stores, Ultimate Crafts' executives hope to gain strategic competitiveness in what way?

Market power

Which of the following statements does NOT describe a challenge associated with the integration process of an acquisition?

Meld two or more similar businesses' cultures

A convenience store chain recently implemented an international diversification strategy by opening stores in Canada, Australia, and several South American countries. As a U.S.-based company, the chain is still actively learning how to manage its new geographical diversification. Six months in, the firm has seen a drop in its return on investment. Should executives be concerned for the firm's future?

No, typically when a firm implements an international diversification strategy, its return on investment decreases initially and then increases quickly as the firm learns how to manage its new geographical diversification.

A clothing manufacturer that sells wholesale to small fashion boutiques has just expanded its operations internationally to South Korea. In that country, labor costs and various materials are cheaper. If South Korea contemplates closing its border to importing and exporting because of an international conflict, the clothing manufacturer would suffer as a result of which of the following environmental risks to its international strategy?

Political risks

If a company were to have only insider directors and related outsider directors, which would leave out the independence of outsider directors, what could the consequences be?

Stockholders' interests could be ignored due to executives' desire for personal financial gain without regard for all shareholders

Kevin is on the Board of Directors of a local company and has become concerned with a situation that came to his attention. The Board is in talks to elect the current CEO as Chairman of the Board. Does Kevin have a reason for concern?

Yes, as the CEO will not be able to be forced out if his or her performance becomes unacceptable.

The Carter family has been the successful owner of a manufacturing company for over 50 years. The company has always performed better than expected and was projected to grow for years to come. To help with this growth, the Carters decided to hire a CEO who is not from the family, the first time in its history. After the hire, the performance of the company shifts for the worse, and there is a separation of ownership and managerial control. What factors should the Carter family change?

The Carters should appoint a family member as CEO, as research shows that family-owned firms perform better when a member of the family is the CEO.

As demonstrated by the attempted merger of Comcast and Timer Warner, what factor prevented the firms from receiving regulatory approval in a merger?

The anti-competitiveness that the merger would have created in the market.

Why would Comcast's partnership with Time Warner be considered a merger instead of an acquisition?

The companies would have integrated their operations on a coequal basis.

Laws and regulations require independent outsider directors to lead important committees, such as audit and compensation. Why are these rules in place?

To avoid the influence of insider directors who may sway the Board in their self-interests

Although the merger between Comcast and Time Warner didn't go through, why might Comcast continue exploring merger options?

To bring its services to new locations

A large car manufacturer has acquired its tire supplier through a vertical acquisition. Unfortunately, instead of realizing economy of scale by adding to its value chain, the manufacturer has had very small return on its investment. The firm is struggling to prioritize its efforts between manufacturing and acting as a tire supplier for outside businesses. With so much production power and so little use of it, the manufacturer's operations have become ineffective. What common problem of acquisitions has the manufacturer encountered?

Too large

Upon reaching saturation level in the U.S. market, a fitness firm with an activity tracker decides to expand its service internationally. Throughout its history, the company has been a pioneer in the technological capabilities to understand customer activity patterns and provide suggestions for its customers. This illustrates which of the following incentives for implementing an international strategy?

Using rapidly developing technologies in other countries

If Harley-Davidson were to pursue an acquisition in the future, by which of the following methods might it experience the greatest success?

Vertical integration of a key supplier to lower the cost structure

Harley-Davidson's target audience has primarily been 29- to 55-year-old men. Recently, Harley-Davidson has started to market to a more diverse audience in terms of age, gender, and ethnicity. This is Harley-Davidson's attempt to gain a larger market share through:

diversification

An influence that impacts a firm's decision to pursue a merger or acquisition is increased confidence in its:

domestic economy.

A once-popular grocery retailer has had declining profits over the past year as non-genetically modified organism (GMO) food brands have demanded the attention of the market. The retailer has decided to scale back its number of employees and focus on its retail locations bringing in a new line of products that are non-GMO certified. In addition, the retailer is branding itself as organic. This restructuring strategy is called:

downsizing

Harley-Davidson is able to face challenges and remain relevant by:

exclusively manufacturing motorcycles.

The strategy through which a firm changes its set of businesses or its financial structure is called:

restructuring

Harley-Davidson's success can be attributed to its branding in selling:

the American dream of freedom.

Without strong corporate governance, what is likely to become of a company?

The company will fail because of legal issues, lack of strategic focus, and risky behavior.

Throughout the years, Facebook has added products and technologies to the firm's portfolio and pursued access to human capital. To do this, Facebook integrated other companies through:

acquisitions

What is an international diversification strategy?

A strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations or markets

What is a possible outcome for a company that does not have an entrepreneurial mindset as an aspect of its corporate culture?

All are possible outcomes (competitive disadvantage, low innovation, slow or no growth)

Support from which of the following sources is crucial to successfully implementing a new organizational culture?

All of these (CEO, Top management, Middle-level managers)

Alesha has a gift for thinking of new and innovative ideas. As a child, she would sell lemonade for $0.50 and use the money to buy other ingredients to expand her offerings. She has now started her own business after graduating from college with a finance degree. What would we call Alesha?

An entrepreneur

Sherry is the HR manager at a real-estate firm. The company's sales have been in decline, and she believes the company is in need of innovation. She wants the employees to be able to continuously identify opportunities in their market, but the company does not currently focus on this. What is the firm in need of?

An entrepreneurial mindset

Larry has noticed that the Internet is unorganized, and he wants a place where people can easily find the information or news that they want. He realizes that there are a couple of websites that attempt to do this, but he sees competitive flaws and knows that there has to be a better way. What has Larry stumbled upon?

An entrepreneurial opportunity

What is the market for corporate control?

An external governance mechanism that is active when a firm's internal governance mechanisms fail

A technology company is looking for a new CEO because it is in need of a new strategy to remain competitive. The firm needs someone who will be able to analyze the market and industry to develop many options on how to turn the company around. Which of the following candidates hold the best chance to help this company achieve their goals?

An outside industry C-level candidate with short tenure

A company has a dashboard to monitor its progress. This dashboard analyzes the company's finances and its strategy. The C-level executives use this to inform decisions and determine next appropriate steps. What is this a description of?

Balanced scorecard

Maria is the CEO of a company that has been a market leader for over 20 years. Her company is starting to lose its market share to smaller companies that are new to the market. These smaller companies have products that the company cannot easily imitate. What does Maria's company need to do?

Become more entrepreneurial and utilize its established strategic capabilities

A firm that used to be valued because of its internal innovation has recently experienced struggles with developing the next big idea. For the past few years, it has successfully acquired companies to aide in technological advancements. The company now has resorted to this as a permanent strategy, and the public no longer views the company as innovative. What has happened?

Business substituting internal innovation for external innovation

How does the market for corporate control help stakeholders?

By taking undervalued companies and helping them grow and become more profitable, thus benefitting all stakeholders

External Managerial Labor Market Developing your search plan, you begin to worry about the possibility that the company and its stakeholders may not buy into the new vision and strategic direction. Which characteristic should you also add to your criteria while vetting the possible CEO?

Charismatic

How did Nishimatsu "walk the walk" of being close to his employees during Japan Airlines' financial crisis?

Cutting his salary

What in Alibaba's current actions reflects its goal of helping it to create a presence in the U.S.?

Investing in U.S. technology startups

Ford prides itself on innovation. With this intense focus on continual improvement, the spirit of innovation has to be fed throughout the organizational culture. Most likely, what does Ford foster within their company culture?

Entrepreneurial mindset

Which of these is believed to be the economic driver in many nations?

Entrepreneurship

No Duality Mr. Morgan was receptive to the idea of separating his duality to be solely the Chairman of the Board. He has agreed to serve as CEO until a replacement qualified CEO is found. He realizes that a new strategy will be a breath of fresh air, and the implementation could be more effective if a new CEO comes with it. He appoints you as the leader of the talent search for the new CEO. There are two pools of individuals you can analyze to find the right candidate to lead Krispy Kreme during this time of transition. One pool is the internal managerial labor market, and the other is the external managerial labor market. Which market would serve you best to help bring a new strategic direction to Krispy Kreme?

External managerial labor market

Lisa is the CEO of her company and is on the Board of Directors as an insider director. She has recently become suspicious of certain events and discussions. The discussions have been about replacing management. These discussions have been sparked by letters from shareholders, which have become more frequent. What may Lisa be suspicious of?

Hostile takeover

What is a common way that firms encourage entrepreneurial behavior and development of innovations?

Incentive programs

Prioritize Sales Representatives The Board of Directors is excited to hear this news and wants to know the strategy of how Avon will serve the needs of the sales representatives. One suggestion is to give even more incentives for successful sales. This can be done by increasing incentives and commission rates. The associates have been demanding higher commission rates for a number of years, and they should respond well to the news. Another way to prioritize representatives is to give them more product options to sell. An increase in variety may fill voids on sales that were lost because there was no product to meet customer needs. This will require a considerable investment in research and development. Which strategy do you think will better empower Avon's sales representatives?

Increase incentives and commissions

Which of these is a potential benefit of establishing CEO duality?

Increased crisis management

A main focus of the Ford Innovation video was the fact that Ford is planning to focus on the elusive health of the global population. As noted, automobiles do not promote health or healthy habits. What is the next step for Ford in order to be a health conscious automobile brand?

Innovate and integrate health into the automobiles

Sheryl Connelly is in charge of finding trends for Ford Motors to gain or maintain competitive edges in the industry. You could also say Sheryl is responsible for what?

Innovation

One of Fords most successful innovations is SYNC, the interface that syncs media and cellphones to the vehicle for easy use. Ford partnered with Microsoft to develop this software, as they needed IT expertise. What does this scenario exemplify?

Innovation through cooperative strategies

An appliance company is looking for a new CEO. It is looking to continue—and rejuvenate—the vision that already exists. It wants someone who will be well versed in the appliance industry to more easily see the firm's potential for growth. What option should the Board focus on?

Internal managerial labor market

Carla is an executive who has had a lot of success starting international companies. What would Carla be described as?

International entrepreneur

If Tomberlin Automotive decided to add a sales office in China, in addition to its manufacturing, it would be implementing a(n) __________________ by expanding manufacturing to China.

International strategy

Lester just created a new tool that helps him while cleaning the house. What would this be classified as?

Invention

Why could many large-block owners be beneficial to a company?

Large-block owners will be able to easily collaborate on current issues and drive change in an organization, more so than many small share owners.

The airline industry has been in a steady decline since 2008. There has been less leisure travel and less travel for business due to technological advances. Haruka Nishimatsu was able to navigate through the economic turmoil. What may have happened if Haruka Nishimatsu was not CEO at the time and there was a less transformational leader?

Less employee motivation, leading to less chances of success

A quick-service restaurant has recently seen its growth stall. The Board has noticed that other industries have been successful after expanding internationally. The restaurant decides to quickly follow suit and expand within a month of the decision. After a year of the expansion, it is deemed a failure and retracted. What went wrong?

Many international factors were ignored that needed analysis before making the transition

Do German firms have the presence of agency problems as much as U.S. firms?

No, many German firms are managed and owned by the same individual.

What are the concepts that affect attitudes toward corporate governance in Japan?

Obligation, family, consensus

What is a potential risk of cooperative strategies in regards to innovation?

One of the companies using the technology that is jointly developed for its own benefit

The Japan Airlines CEO's behavior has been unordinary according to usual industry practices. He doesn't have a corporate jet, as many CEO's do. He also knocked down his office walls and takes a bus to work. What device is Haruka Nishimatsu trying to exemplify and mold?

Organizational culture

Currently Alibaba offers a variety of services. The giant was compared to an 800-pound gorilla with the capabilities of Google, E-bay, PayPal, and Amazon. Knowing this, what may be a concern of stockholders of Alibaba?

Over diversification

A CEO recently led her company through a period of significant growth and profitability. Her structure change, new strategy, and other decisions caused the company to grow beyond expectations. But, recently her decisions have been poor, which may have to do with lack of analysis and attention to the details of projects put before her. When her team suggests alternatives, she pushes back. What most likely happened to the CEO?

Overconfidence

Alibaba is listed on the New York Stock Exchange instead of the Hong Kong Exchange. This is making it easy for Americans and American companies to invest in the Chinese company. What group of stakeholders did Alibaba not consider when choosing to list on the NYSE?

The citizens of China who will have a hard time investing in the company, even though Alibaba is from their nation

Increase Incentives and Commissions The sales representatives have responded very well to the incentives and are extremely motivated. They are more active in their selling and sales revenue is trending up. However, the representatives have voiced concern. They feel that they could be earning more with a few tweaks. You explain this to the Board and deliver two options. One option is to raise the price of the current collection to gain a higher margin. The other option is to cut some products and focus on product rationalization, making sales a simpler process for the sales representatives so they can serve more customers within the same timeframe. This will have a focus on the core products that have been tried and true throughout the history of Avon. Which direction is more likely to assist the sales representatives in their efforts to increase sales?

Product rationalization Because of your decisions, Avon has seen a dramatic increase in sales and employee satisfaction. The Board of Directors has congratulated you on your actions, and Avon is projected to be stronger than ever. Your decision to satisfy sales representatives and employees (rather than focusing on shareholders and profits) was the correct move and something David H. McConnell, the founder of Avon, would applaud. Next, focusing on the sales representatives (rather than the customers) proved to be a great move because the representatives became very motivated and felt valued. Employees responded dramatically to the increase in incentives packages; employee satisfaction and sales increased in correlation. It's a good thing you didn't risk the future of Avon investing heavily in new products nobody wanted or needed. Finally, your decision to rationalize the product selection instead of increasing prices was a big success. Sales representatives could speak confidently about the product line, and customers were aware that their favorite products were still being offered. Overall, you made decisions to make Avon strong financially and were able to satisfy all stakeholders.

Satisfying Stakeholders During collaboration with the Board of Directors there are two options that seem viable. One option is to focus on satisfying the needs and wants of the sales representatives and customers. This idea has a lot of traction because all of the board members agree that a larger focus on customers and representatives would increase sales as they are the true drivers of the company. This is much like the priorities of David H. McConnell, the founder of Avon. The other option is to focus on the goal of satisfying shareholders by focusing on profitability. This option has its opponents and supporters as well. Which option is aligned with the goal of bringing Avon back to its core mission and values?

Satisfy sales representatives and customers

What is the Board of Directors' most important responsibility?

Selecting the CEO

Who are seen as the most significant stakeholders in the United States?

Shareholders

If the Hong Kong Exchange did not deny Alibaba the initial public offering, what may have happened to the stakeholders of the Chinese internet giant?

Stakeholder interests may have not been addressed as diligently as they should, causing an agency relationship problem.

Which of the following is not a form of executive compensation?

Stock performance

A CEO wants to implement a new strategy for her firm. Previously, the company's strategy was differentiation and focused on having the highest quality product. Now, instead of increasing the quality of the product, she wants to maintain quality but drive down cost per unit. What term defines this scenario?

Strategic change

What term encompasses the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary?

Strategic leadership

Why is bribery a major issue confronted by multinational companies operating in international markets?

The prevalence of bribery in foreign markets leaves industries at a competitive disadvantage.

Melissa is the CEO of her company and has to make a business decision. She is faced with a scenario in which she can please one group of stakeholders, or all of them minimally. What is Melissa's most likely action?

To please as many stakeholders as possible, because if stakeholders are not minimally satisfied, they will give support to another company

What is the name for a group of individuals who are responsible for making certain a company uses the strategic management process, especially for the purpose of selecting and implementing strategies?

Top management team

Lisa is the CEO of her company and has a distinct leadership style. She doesn't want her employees to be afraid to take an action they know is right. She wants her subordinates to be able to take matters into their own hands, so she delegates many things to empower them. She has built a team culture in which the team and the company are more important than personal interests. What type of manager is Lisa?

Transformational leader

Haruka Nishimatsu, the Japan Airlines CEO, has been described as encouraging, humble, and wanting to be close to the people. He also builds teams and wants his workers to think for themselves. What type of leader is Haruka Nishimatsu?

Transformative

Charisma After filtering the external candidate pool for the most charismatic, qualified candidates you share your findings with the Board. The consensus is that Krispy Kreme also needs a leader who will keep spirits high and be very motivational. You keep this in mind and discover there are only two executives who are qualified and have the attributes to lead Krispy Kreme with a new strategic direction. One candidate has the qualities of a transformational leader. She has a history of helping followers exceed their expectations, and she helps enrich their capabilities. The other candidate has the qualities of an analytical leader, and she is motivated only by number and results. Which candidate do you present as your final decision to the Board?

Transformative leader Because of your actions and decisions, Krispy Kreme has a CEO who has put the company in a position to be a market leader. You were right to abolish the CEO duality, generating positive momentum when the current CEO put stakeholders' interests above his own. You were also right to go with the external rather than internal managerial labor market. It's well known that external CEOs perform better than internal ones when change is needed. Furthermore, you were right to pick a charismatic rather than risk-averse CEO because charisma was necessary to guide Krispy Kreme through the difficult times of change. For similar reasons, picking the transformative over the analytical leader was also correct. Once the strategic direction was decided upon, the charismatic and motivational personality of the new CEO helped foster stakeholders' commitment to the new vision and strategic direction. The Board has determined that the new CEO was a perfect fit for Krispy Kreme.

Theresa is interviewing for a small startup in the technology industry. This startup is looking for qualities that will aid it in its fast-paced, fast-thinking atmosphere. Theresa is very hard working, accountable, excited to take on new challenges, and not afraid to take risks. On top of this, she also holds an advanced degree. Theresa has an incredible amount of experience, but not in the technology field. Would the startup benefit from hiring Theresa?

Yes, because she is an entrepreneur interviewing at a company that is in need of entrepreneurs.

In 1969, the American Machine and Foundry Company (AMF) purchased Harley-Davidson in a(n):

acquisition

After Harley-Davidson's image and business deteriorated, its employees managed to gain ownership of the company through a(n):

leveraged buyout.

Often an entrepreneurial opportunity is transformed as it is commercialized. Facebook's original mission was to:

connect college students.

In appointing a Chief Financial Officer, Chief Operations Officer, and Chief Technology Officer, Facebook chose the individuals to hold those positions based on their past successes working in an entrepreneurial environment and competencies to bring about:

corporate entrepreneurship.

One of the biggest economic risks of international strategy that can lead to the decrease in value of a firm's assets is:

currency fluctuations

Individuals that act independently (or as part of an organization), perceive an opportunity, and then take risks to develop an innovation and exploit it can be described as:

entrepreneurs

Firms investing in other countries when implementing their international strategies may be concerned about the stability of the foreign national governments and how that could affect the stability of their assets. As a result, firms are advised to conduct a political risk analysis. Possible red flags that could emerge in this analysis are a:

history of money laundering or other illegal activities within the host country's government.

A U.S.-based auto manufacturer is founded to focus on environmentally friendly smart cars. As it expands, it sets its sights on operating in France, where the population highly values compact green cars. By implementing an international strategy in France, the company will hope to gain:

increased market size.

Facebook developers are motivated to become a part of the hardest projects, the projects that build the background of the platform and that users have little direct interaction with. By celebrating the "offensive line," the company is:

inducing strategic behavior.

Facebook's mission statement is to "give people the power to share and make the world more open and connected." This ambitious proposition, which will require additional innovation to accomplish, points to the company's commitment to:

internal corporate venturing.

A strategy through which a firm sells its goods or services outside its domestic market is called a(n):

international strategy.

After AMF acquired Harley-Davidson, the brand became stale and no new models were released. AMF suspended research and development for the Harley-Davidson brand and used the division to:

make a profit.

Disney bought Pixar in 2004 to extend and begin a new partnership in its renewed focus on animation. In the deal, Steve Jobs, the CEO of Pixar at the time, vowed to preserve the independent nature of Pixar. Since then, the two have put out hits such as Wall-E and Up. This partnership is an example of a(n):

merger

Greg is the CEO of a leading company in the consumer packaged goods industry. He is trying to grow his company for personal gain and wealth. However, Greg sees that his company has an opportunity to break into the chemical industry. He has decided to invest free cash flow into acquiring small chemical companies that have the potential for growth if funded properly. Shareholders are not happy. Their case for wanting to cease these actions is that Greg is practicing:

overdiversification

As firms struggle to compete and deliver innovations in technology, it becomes more and more important for firms to upgrade their current product offerings continually to maintain competitiveness. By implementing an international diversification strategy, firms are able to achieve greater returns on their current innovations because the strategy:

reduces investment needed in expensive and risky research and development for new innovations and instead distributes and improves its current innovations in areas where they are treated as new products.

The four determinants of national advantage are factors of production; demand conditions; firm strategy, structure, and rivalry; and:

related and supporting industries.

The need to create _____ for stakeholders is a primary influence on a firm's decisions to engage in merger and acquisition activity.

value