MGMT exam 3 test bank
38. The existence of economies of scope are likely to lead a company to: @Pages and References: Pages 315-319 a. Reduce the number of industries and/or products it's directly involved in b. Expand the scope of its activities in some relevant way c. Create a brand d. Not worry too much about fixed costs
b
56. The basis for different structures is different ways of organizing: @Pages and References: Pages 446-448 a. The Board of Directors b. The firm's core processes c. Hierarchies within the firm d. Relationships between departments
c
66. International retailing has generally not succeeded because: @Pages and References: Pages 391-392 a. It should be a pleasurable experience that varies with national cultural differences b. It should be a pleasurable experience unless you have no money c. Retailers find it hard to get the same products at the same prices around the world d. Retailers find it hard to replicate the same logistic systems around the world
a
48. A major reason why managers are attracted to diversification is: @Pages and References: Pages 325-329 a. They believe that shareholders expect it of them, to show dynamism b. It sharpens their managerial skills c. Many managers are attracted to the extra complexity of diversification d. The experience may reduce risk, and secure their job; and if not it looks dynamic for securing their next job
d
68. Vertical integration may afford flexibility in responding to uncertain demand when: @Pages and References: Pages 335-338 a. The firm has built a capability to respond speedily in a coordinated fashion b. The firm maintains spare capacity, and can bear spare capacity c. The market cannot respond as quickly, or capacity is unavailable d. All of the above
d
37. In global industries: @Pages and References: Pages 369-371 a. Trade and direct investment are both important b. Firms trade commodities globally c. Capital is traded globally d. Employees move globally
a
57. A firm's culture could be shown by: @Pages and References: Pages 446-448 a. The way a customer complaint is handled b. The firm's profitability c. The growth rate of profits d. How rapidly its financial results are produced
a
60. Being international can be a source of competitive advantage if: @Pages and References: Page 388 a. Your product or service is tradable b. There are significant economies of scale in your industry c. Your customers only consider local conditions a. Answers a and b
b
50. One might expect corporate culture to be at least partly summarized in: @Pages and References: Page 442 a. A firm's Prospectus to Shareholders b. The latest quarterly earnings statement c. The staff handbook given to all new joiners d. A firm's Disciplinary Procedures
c
57. International strategic alliances allow: @Pages and References: Pages 385-387 a. Governments to share national resources b. Retailers to control their suppliers c. Strong firms to dominate weak ones without having to buy them d. Firms to share resources and capabilities
d
54. The diagram illustrating the optimal location of value chain activities shows that: @Pages and References: Pages 380-382 a. At least five factors need to be considered b. Having the lowest costs is the main factor c. Each stage can be looked at on its own d. Answers b and c
a
31. The commonest ways to achieve coordination are to use: @Pages and References: Pages 424-426 a. Laws, deterrents and an internal 'police force' b. Frequent short meetings with tight agendas c. Rules, routines and mutual adjustment d. Answers b and c
c
63. Competing strategically means: @Pages and References: Pages 389-390 a. Defeating the Gauls, Goths and Barbarians b. Using profits from one country to subsidize a price war in another country c. Answer b and subtler versions of the same principle d. Using tactics drawn from military manuals
c
40. Hairdressing is traditionally an example of: @Pages and References: Pages 369-371 a. A domestic industry b. A multi-domestic industry c. A declining industry d. A sheltered industry
d
33. Sheltered industries are protected from: @Pages and References: Pages 369-371 a. Imports b. Imports and Exports c. Inward direct investment and imports d. Direct and Indirect inward investment
c
22. Realized strategies are the result of: @Pages and References: Pages 414-416 a. Top managers' conscious strategic choices and middle managers' thousands of daily operational decisions b. Top managers' Board Room constraints and middle managers' daily implementation processes c. The firm's strategic position and its owners' long term vision d. The firm's environment and its strategic strengths and weaknesses
a
25. The 200-year-old quote from Adam Smith's early industrial pin factory illustrates: @Pages and References: Page 420 a. The gains to be had from task specialization b. The usefulness of 200-year-old economics textbooks c. How technology has progressed in 200 years d. Answers a and b
a
27. If well-designed, share options can be a way of aligning the: @Pages and References: Pages 420-421 a. Interests of managers with those of shareholders b. Customers' interests with those of suppliers' c. Employees' interests with those of government d. Customers' interests with those of employees
a
28. Share option schemes go wrong when: @Pages and References: Pages 420-421 a. Bad senior managers manipulate reported profits b. Customers and suppliers cut out the firm and deal with each other directly c. Employees sue the government d. Employees become customers
a
31. Corporate strategy is concerned with: @Pages and References: Pages 308-310 a. Where a firm chooses to compete i.e. in which industries b. How a firm chooses to compete in a specific industry c. Why a firm chooses to compete or not d. Answers a and b
a
33. The rule to decide which of these four has priority is: @Pages and References: Pages 427-428 a. The individuals with the highest need to coordinate must work in the same unit b. The individuals with the highest need to control resources should work in the same unit c. Those with the highest need to meet customers should work in the same unit d. Either of answers b or c
a
33. What is the difference between a firm's geographical scope and its vertical scope? @Pages and References: Pages 308-310 a. The first describes the regions of the world where the firm is present and the second the stages of the industry value chain which the firm performs itself b. The first describes the number of countries and the second the number of horizontal businesses where the firm is present c. The two are highly inter-related d. It's not always clear what the difference is
a
34. The starting point for strategy is usually: @Pages and References: Pages 313-315 a. What business(es) are we in? b. How much profit do we want to make? c. Who are the customers? d. Should we be doing something else?
a
35. Trading industries are distinguished by: @Pages and References: Pages 369-371 a. The widespread practice of importing and exporting b. The widespread practice of moving capital investments from one country to another c. The tendency for employees to move from one country to another d. All of the above
a
39. "Psychic distance" is the least between: @Pages and References: Pages 369-371 a. The USA and Canada b. The USA and the UK c. The USA and the UAE d. Guinea-Bissau and Papua New Guinea
a
39. Total Quality Management requires that employees receive: @Pages and References: Page 437 a. Regular, timely, feedback on their performance b. Regular, timely, feedback on the quality of the whole firm's output c. Immediate quality control reports d. Reports that predict future quality
a
42. A significant determining factor on whether a firm conducts an activity internally is: @Pages and References: Pages 319-323 a. Whether the transaction costs of buying in the activity in the market exceed the administrative cost of doing it themselves b. Whether transaction costs in the market of buying in the activity exceed the administrative cost buying it in c. How reliable their workforce is, compared with an external supplier's reliability d. None of the above
a
43. In international industries competitive advantage often means a firm will: @Pages and References: Pages 372-373 a. Emerge from a strong national environment in this industry b. Overcome natural disadvantages in this industry, so that only the very strongest firms emerge internationally c. Use Porter's diamond as a strategic roadmap d. Pawn Porter's diamond and trade on the margin (but close out before margin call)
a
43. The practical importance of budgets is that: @Pages and References: Pages 439-440 a. Senior executives and divisional managers are held accountable against the figures in these budgets b. The CEO is accountable to shareholders and analysts against these detailed predictions c. The individual figures don't matter, it is the process by which the numbers were reached that matters d. Answers a and b
a
45. The most often cited benefits of diversification are: @Pages and References: Pages 325-329 a. Growth, risk reduction and value creation b. Risk reduction and economies of scope c. Value creation and cost reduction d. Cash balancing and risk reduction
a
48. Johnson says that a corporate culture includes a firm's: @Pages and References: Page 442 a. Mission and values, rituals, routines and myths b. Human Resource goals, values and stories c. Marketing objectives, strategic goals and financial targets d. Answers b and c
a
48. Porter's national diamond identifies some factors that: @Pages and References: Pages 373-375 a. Determine a country's competitive advantage for a sector b. Determine a country's national income c. Determine the growth rate of a country's national income d. Determine the growth rate of its exports
a
49. The primary source of value creation from diversification is likely to be: @Pages and References: Pages 325-329 a. The linkages or synergies between the businesses concerned b. Risk reduction through balancing of counter-cyclical businesses c. Getting a price reduction when purchasing common resource inputs d. Balancing of cash generation, reducing the need to obtain investment finance externally
a
52. A major problem associated with internal capital markets is: @Pages and References: Pages 325-329 a. Despite the cost-savings, poor investment decisions tend to be made b. They deny banks much-needed business c. They are illegal in some countries d. The money should have been given to shareholders as dividends
a
53. At BP, before Deepwater Horizon, drilling risks were evaluated: @Pages and References: Pages 441-442 a. Differently by managers and engineers, who belonged to different sub-cultures b. By big game hunters who 'shot from the hip' c. By managers who were too frightened d. By people on the wrong side of the Atlantic Ocean
a
55. That Tata Motors should stay in India and export its cars round the world shows that: @Pages and References: Pages 382-385 a. Where a firm's competitive advantage is based on national resource advantages it should not move production abroad b. If a firm's advantage is based on a strong local market it should keep production there c. Exporting is the optimal strategy for Tata d. Most companies should follow the cost leader's example
a
56. Mergers and acquisitions are frequent. Diversifying into another industry this way: @Pages and References: Pages 329-331 a. Tends to be particularly unsuccessful b. Tends to be particularly quickly successful, hence the frequency of this method c. Is advisable, because it's a relatively low-cost entry method d. Is preferred by shareholders, hence the frequency of this method
a
61. Knowledge-based assets are best exploited through: @Pages and References: Page 388 a. Replicating the product or service in other countries or markets b. Internationalizing the product or service c. A focus strategy d. Moving employees around every two years
a
62. An advantage of internationalizing can be: @Pages and References: Pages 387-390 a. To learn from the fiercest competition or most demanding customers in the world b. To drive the fiercest competitors in the world into bankruptcy c. To teach the most demanding customers in the world a lesson d. Answers a and b
a
64. Once a firm buys its supplier in order to vertically integrate a process: @Pages and References: Pages 335-338 a. The lack of a market removes the high-powered incentive of market forces to keep costs low b. Costs are certainly lower because the firm now knows what profit the supplier was making c. The supplier will now offer a better service, since it's owned by its customer d. It can close the purchasing department and save costs
a
65. High powered-incentives and low-powered incentives respectively generally apply to: @Pages and References: Pages 335-338 a. Externally and internally sourced inputs b. Internally and externally sourced inputs c. Market and alliance sourced inputs d. Joint venture and alliance sourced inputs
a
69. A symbol of TNCs acting differently from MNCs is: @Pages and References: Pages 397-399 a. Creating or moving divisional or corporate headquarters out of the firm's country of origin b. Developing product logos that are globally recognizable c. Listing the company's shares on several global stock markets d. All of the above
a
70. To make a choice between vertical integration or external sourcing, which statement is true? @Pages and References: Pages 335-338 a. It depends on the specific factors prevailing b. Vertical integration is preferable in a technology-intensive industry c. Market sourcing is preferable when the industry is very fragmented d. Is simply a matter of managerial preference
a
72. A hybrid vertical relationship is one which: @Pages and References: Pages 339-341 a. Attempts to secure optimum benefits from close collaboration whilst preserving some form of market transaction b. Attempts a relationship where for some products the supplier is integrated, whereas for others it is a competitor c. Is similar to a virtual vertical relationship d. Is a combination of two or more vertical relationships
a
21. Realized strategies are a mix of: @Pages and References: Pages 414-416 a. Practice and theory b. Unintended and intended actions c. Intended and unintended successes d. Dreams, despair and cynical calculation
b
29. By persuading employees to adopt common values of the firm's culture, managers aim to: @Pages and References: Page 423 a. Brainwash their gullible juniors b. Get all employees to align their actions to achieve company goals independently - reducing the need for close supervision c. Persuade employees to buy the firm's shares d. Propagate their own moral and religious views
b
29. Underlying both of these are the quests to: @Pages and References: Pages 362-364 a. Exploit foreign resources, capabilities, and competitive advantage b. Exploit foreign resources, capabilities and markets c. Limit foreign competitive advantages d. Limit foreign companies' ambitions
b
31. In its first, largely European, phase of internationalization IKEA: @Pages and References: Pages 364-369 a. Kept its markets and products unchanged b. Made minimal changes to its products and processes c. Consciously changed its culture but not its products d. Changed its products but not its culture
b
32. Corporate strategy is concerned with: @Pages and References: Pages 308-310 a. The scope of a firm's products b. The scope of a firm's activities c. The scope of a firm's structure and corporate governance system d. The firm's geographical scope
b
32. On expanding into the USA, IKEA changed: @Pages and References: Pages 364-369 a. Kept its markets and products unchanged b. Made minimal changes to its products and processes c. Consciously changed its culture but not its products d. Changed its products but not its culture
b
34. A functional structure means individual departments: @Pages and References: Page 430 a. Provide only a basic service to all the others b. Do the same kind of activity or task c. Adopt the same general approach d. Focus on producing one product each
b
36. A matrix structure means a firm is formally organized by: @Pages and References: Pages 431-433 a. Executive Committees b. Products, geography and functions simultaneously c. Products, functions and structure simultaneously d. Either of answers a or c
b
37. An adhocracy describes the kind of structure found in: @Pages and References: Page 434 a. A modern retail chain of supermarkets b. A research lab or new product development group - such as much of Google or Microsoft c. A prestigious firm of Latin-speaking lawyers d. A private hedge fund of financial traders with clear trading rules and limits
b
38. Consumer electronics (laptops, personal devices etc.) are an example of: @Pages and References: Pages 369-371 a. A multi-domestic industry b. A global industry c. A trading industry d. The phishing industry
b
40. A company in a mature industry which is good at cost-reduction is exhibiting: @Pages and References: Pages 315-319 a. Economy of scale through better use of fixed assets b. Potential for economy of scope based on organisational or managerial capability c. Potential for economy of scope based on intangible resources d. No potential for economy of scope
b
41. A good strategic plan is less important than: @Pages and References: Pages 437-439 a. A good month's financial results b. The process of strategic planning c. A good Chief Finance Officer d. A good Chief Human Resources Officer
b
41. Adam Smith, the famous economist, called the market mechanism: @Pages and References: Pages 319-323 a. A necessary evil b. The invisible hand c. The visible hand d. The iron fist in the velvet glove
b
42. Competitive advantage is achieved when a firm: @Pages and References: Pages 371-372 a. Achieves higher profit margins than its rivals b. Matches its strongest resources & capabilities to the key success factors of the industry c. Achieves the highest asset turnover ratio in the industry d. Answers b and c
b
45. Comparative advantage refers to: @Pages and References: Pages 372-373 a. A country's absolute efficiency in producing goods or services b. A country's relative efficiency in producing goods or services c. A country's total efficiency in producing goods or services d. A country's inefficiency in producing goods or services
b
46. Corporate culture typically means: @Pages and References: Page 442 a. The firm's official ethical position on issues such as bribery, equal rights and the environment b. The values and ways of thinking the firm's senior managers wish to encourage c. A derogatory term for junior employees, likening them to a growth on a Petri dish d. The diverse cultural patterns that exist in the informal organization
b
46. The managers of firms in low-growth, cash-generative industries often opt for diversification because: @Pages and References: Pages 325-329 a. Shareholders expect managers to go for growth b. Low growth does not look good for managers with an eye on their next job c. Managers must do something positive d. They are often advised to do so by business consultants
b
49. Schein says that corporate culture can be understood: @Pages and References: Page 442 a. At three levels: artificial constructs, values and explicit statements b. At three levels: artefacts, values and tacit beliefs c. As being at the intersection of personal, corporate and national values d. The acme of inimitable competitive advantage
b
51. An internal capital market occurs when: @Pages and References: Pages 325-329 a. A diversified company sets up a finance firm as one of its businesses b. Enough cash generated by one set of internal firms is used by other internal firms in need of cash c. A subsidiary starts a money-lending business, offering loans to other subsidiaries d. External sources of capital become too expensive
b
51. The Nokia example shows that: @Pages and References: Page 444 a. Engineers boast too much b. Too strong an internal culture can blind a firm to what its customers really want c. There is no market for phones called the "AJ473X" or anything like it d. A period of outstanding commercial success usually leads to excessive pride - arrogance
b
53. Firms can use a value chain analysis of their industry: @Pages and References: Pages 380-382 a. As the basis of their customer segmentation b. To divide and locate production between countries with different natural resources that suit each stage of production c. To identify the profitability of production at each stage of the firm value chain d. To definitively categorize their suppliers
b
54. Michael Porter's "attractiveness test" means that a firm considering diversifying into another industry should: @Pages and References: Pages 329-331 a. See that the barriers to entry to that industry are low b. Be able to see a way to make superior profits in that industry c. Also consider how unattractive their existing industry is, by comparison d. See that some firms in that industry have left, leaving space for newcomers
b
54. To sum up, strategy in practice may differ from top management's vision: @Pages and References: Pages 446-448 a. But not by much b. Because staff enact it, and they are influenced by the firm's structure, systems and culture around them c. Because staff enact it but they are not as experienced as top managers d. Because top management has failed to explain sufficiently clearly what it wants
b
56. "Appropriating the returns to a resource" means: @Pages and References: Pages 382-385 a. Having some of the resources and capabilities needed to able to earn a higher potential profitability from your unique resources b. Having all of the resources and capabilities needed to earn a higher potential profitability c. Obtaining workers for the lowest wage possible d. Ensuring that capital earns the full cost of capital
b
57. Over the past 30 years, the tendency in the USA and Europe has been: @Pages and References: Page 333 a. A trend for highly diversified groups to dominate industries b. A trend for diversified firms to refocus and reduce their diversification c. Reduced opportunity for firms to further diversify d. A deliberate move to avoid copying the strategy of firms in emerging economies
b
60. The move over the past 25 years to refocus and de-integrate has not been universal; some industries have further vertically integrated: @Pages and References: Page 334 a. Because those industries are old-fashioned and behind-the-times b. Because in some industries the conditions favouring further vertical integration outweigh the benefits of focusing and outsourcing c. Because those industries have probably sought no advice from academics, or taken no notice of the advice d. Answers a and c
b
61. A "technical economy" is: @Pages and References: Pages 335-338 a. A saving which is only theoretically feasible b. A cost-saving arising from the technicalities of performing integrated processes c. An economy based on technology d. One which is not worth the effort of gaining
b
64. If a rival uses cash flows from one country to finance aggressive pricing in another: @Pages and References: Pages 389-390 a. This is illegal under World Trade Organization rules b. Now is the time to attack his high-price markets and grow your market share there c. You must retaliate in the price war - or drop all your strategic goals in this country d. Stay out of this price war
b
67. One huge problem with vertical integration of activities with only one major sellable output is: @Pages and References: Pages 335-338 a. The company will be too large to manage efficiently b. The entire integrated value-chain is subject to the same single market risk c. Upstream stages are isolated from market forces d. It's no longer possible to use external suppliers
b
76. A key message for corporate bosses is to recognise that diversification is: @Pages and References: Pages 348-350 a. Always very risky, so should only be attempted when there's no other option b. Inherently risky, but at some stage necessary - so should be based on sound analysis c. Well-known to be primarily about empire building - so is to be discouraged d. Only works in emerging economies nowadays
b
23. In this chapter we examine how three key factors shape and are shaped by strategy: @Pages and References: Pages 414-416 a. Purpose, structure, and culture b. Values, structure and culture c. Systems, structure and culture d. Structure, structure and structure - it's all about structure!
c
26. Internationalization has: @Pages and References: Pages 362-364 a. Increased global efficiency but reduced consumer choice b. Increased global efficiency and growth options for large and small firms c. Increased global efficiency and growth options, and widened consumer choice d. Increased global efficiency and growth options but reduced consumer choice
c
26. The 'cooperation problem' is: @Pages and References: Pages 420-424 a. How to persuade customers to cooperate with each other when supplies are scarce b. How to get workers to coordinate their actions so that something is produced on time c. How to align the interests of the different participants who make up a firm d. How to get rival commercial firms to cooperate during disasters or emergencies
c
30. Internationalization opens: @Pages and References: Pages 362-364 a. Borders for foreign workers b. Doors for commercial spies c. Domestic markets to foreign competitors d. Answers a and c
c
32. Ways to group employees in international multiproduct companies include by: @Pages and References: Pages 427-428 a. Geography, Products, Processes, and People b. Geography, Products, Tasks and People c. Geography, Products, Tasks and Processes d. Geography, Products, Stars and Cash Cows
c
35. In a multidivisional structure each division is responsible for: @Pages and References: Pages 430-431 a. A major market or country b. A major function or task of the firm c. All functions necessary to produce one range of products d. Either of answers a or b
c
37. Economies of scope and economies of scale both relate to lower average cost but: @Pages and References: Pages 315-319 a. Economies of scale refer to cost-advantage from higher volume of a single product b. Economies of scope refer to cost-advantage from spreading a common cost over multiple products c. Answers a and b d. None of the above
c
38. In an adhocracy a person: @Pages and References: Page 434 a. Specializes in one role b. Performs at least two roles simultaneously c. Switches between roles as needed by the team at that period in the project's life d. Has no role at all, but performs whichever task the group decides to do that day
c
42. The main components of financial plans are: @Pages and References: Pages 439-440 a. The Income Statement and the Balance Sheet b. The Balance Sheet and the Cashflow forecast c. The capital budget and the operating budget d. All of the above
c
44. A country has a comparative advantage: @Pages and References: Pages 372-373 a. In producing milk if its cows are heavy milk producers b. In producing mobile phones if it has a big timber industry c. In producing those products or services that make intense use of those resources in which it has a relative abundance d. In producing those products or services that make intense use of those resources for which it has the lowest domestic demand
c
44. A strategy of unrelated diversification is: @Pages and References: Page 324 a. Always a mistake b. Likely to be less risky than related diversification c. Not always as unrelated as it may seem e.g. the businesses may share some common attributes which can be exploited d. Always the last resort
c
45. After BP moved from strategic controls to financial controls: @Pages and References: Pages 440-442 a. Financial controllers like John Brown rose to the top b. Environmental worries were completely ignored c. Operational managers were being asked to trade off savings that were certain against risks they thought very unlikely d. The company withdrew from all risky exploration activities
c
46. For the theory of comparative advantage a country's innate national endowments include its: @Pages and References: Pages 372-373 a. Climate, labour and exports b. Climate, labour and its steel industry c. Climate, minerals, history and culture d. Climate, labor and its financial wealth
c
47. In a weak culture: @Pages and References: Page 442 a. People interpret a senior manager's statement or signal differently b. People hold contrary views on how they should behave at work c. Answers a, b or both d. Non-aggression and meekness are espoused and practiced by all staff
c
47. One common argument against diversification strategies is: @Pages and References: Pages 325-329 a. Managers do not have sufficient understanding of other industries b. Diversification is simply a poor strategy c. Shareholders can invest in other industries themselves, achieving risk-reduction more efficiently d. All of the above
c
51. When considering where to locate production globally: @Pages and References: Pages 378-380 a. Exporting firm-specific competitive capabilities from home territory is easy b. Exporting firm-specific competitive capabilities from home territory is practically impossible c. Exporting firm-specific competitive capabilities from home territory requires close attention and may not even be possible d. None of the above
c
52. Tradability refers to the idea that: @Pages and References: Pages 378-380 a. Some products or services are almost impossible to export or import b. Some goods have to be produced where they are consumed: eating a meal in a restaurant would be a good example c. Answers a and b both illustrate the idea of tradability d. All other answers are wrong; tradability simply means the shipping cost as a percentage of the sales price
c
53. An advantage of diversification is a better internal labour market because: @Pages and References: Pages 325-329 a. There's a saving on advertising costs b. There's no commission payable to the internal Human Resources department c. Employees can be transferred rather than hired / fired, and the firm knows these people well d. The firm does not need to invest so much in training new recruits
c
58. A firm becomes more vertically integrated when: @Pages and References: Page 333 a. It buys a direct competitor b. Its management and staff are better aligned c. It moves to own more stages of the value chain, either upstream or downstream of its core activity d. It owns only some activities on the upstream or supply-side of its foremost activity
c
58. The advantage of alliances is that they: @Pages and References: Pages 385-387 a. Allow firms to economize on resources b. Allow firms access to specialized resources or capabilities c. Answers a and b d. Keep all strategic options open
c
58. The main management systems that can affect how strategy is implemented are: @Pages and References: Pages 446-448 a. Information and human resource management systems b. Strategic and financial planning systems c. Answers a and b d. Strategic, financial, operational and marketing planning systems
c
59. Outsourcing is a form of: @Pages and References: Page 334 a. Increased vertical integration b. Decreased horizontal integration c. De-integration or disaggregation d. Answers b and c
c
63. Large transaction-specific investments tend to lead to: @Pages and References: Pages 335-338 a. The firms failing, when an inevitable dispute occurs, and one holds the other to ransom b. The customer having to accept a higher price to pay for the investment c. Vertical integration of the processes involved d. Suppliers refusing to get involved with such unreasonable demands
c
65. The "triad doctrine" no longer works because: @Pages and References: Pages 389-390 a. The triads were wiped out in the 1990s b. Linking to organized crime doesn't work because it is actually not well organized c. The world now has more than three major economic centres d. In reality there is no such thing as an economic centre of activity
c
68. Transnational corporations (TNCs) differ from multinational corporations (MNCs) in that: @Pages and References: Pages 397-399 a. They have different kinds of internal financial reconciliation processes b. TNCs are a globally integrated network of independent profit centers c. TNCs are a globally integrated network of independent resources and capabilities d. There is no real difference
c
70. The Philips example of developing TVs around the world shows: @Pages and References: Pages 397-399 a. How a good TNC can exploit its unique global resources b. The scale and scope of resources needed to compete in this industry nowadays c. The dangers of failing to integrate development properly d. The problems of decentralized European TNCs
c
71. Which of these choices is NOT an example of a vertical relationship? @Pages and References: Pages 339-341 a. A franchise agreement b. An exclusive single-supplier agreement c. A long-term agreement with competitors to fix the market price for a commodity product d. A joint development group between a supplier and a customer
c
24. The Deepwater Horizon oil spill taught us that: @Pages and References: Pages 416-419 a. Giant firms are often too ambitious b. Even the most professional risk plans can ignore some major risks c. Confused responsibilities can emerge from trying to coordinate complex teams and systems d. Answers b and c
d
27. For most of the last sixty years internationalization has been: @Pages and References: Pages 362-364 a. A source of increased tension between countries b. A source of innovative ideas for firms and individuals c. A source of higher earnings for firms and individuals d. A source of opportunity for firms and individuals
d
28. Two mechanisms promote internationalization: @Pages and References: Pages 362-364 a. Inter-governmental bond borrowing, and inter-bank capital flows b. Inter-bank capital flows and trade c. Inter-bank capital flows and direct investment d. Direct investment and trade
d
30. The coordination problem is: @Pages and References: Pages 424-426 a. Aligning the outputs of different divisions in a group b. Harmonizing the conflicting requirements of marketing, financial and operational plans c. Uniting the conflicting goals of all the firm's stakeholders d. Unless employees coordinate their efforts nothing will get produced
d
34. Sheltered industries are protected by their: @Pages and References: Pages 369-371 a. Perishability b. Transport difficulties and high transport costs c. Very small size of operation and lack of scale economies d. Any of the above
d
35. As a firm progresses, it is invariably the case that it expands its scope: @Pages and References: Pages 313-315 a. In terms of its product, geographic and vertical scope b. In terms of its geographic and vertical scope c. In terms of its geographic and product scope d. This is not true. Some firms narrow some aspects of their scope, or voluntarily even break up
d
36. Multi-domestic industries: @Pages and References: Pages 369-371 a. Are distinguished by their focus on products for the domestic sector b. Have very high transport costs c. Supply standard products around the world with instructions in the local language d. Internationalize though direct investment
d
36. The main concepts to determine the scope of a firm's activities are: @Pages and References: Page 315 a. Economies of scope b. Transaction costs c. Corporate complexity d. All of the above
d
39. Although economies of scope refer to spreading cost, this is not the case for brand extension: @Pages and References: Pages 315-319 a. Because a brand doesn't cost anything - it's an asset b. Because although the brand costs money, this does not appear in the accounts c. Because the brand is to do with the marketing department, not production cost d. It IS still true for brand extension, since creating and maintaining a brand does cost a lot e.g. in advertising
d
40. Whether formal or informal, all strategic planning systems: @Pages and References: Pages 437-439 a. Describe the company's ultimate goals b. Map stakeholders' influence on the company c. Coordinate financial results within a company d. Coordinate plans within a company
d
43. Increased corporate complexity because of expanded scope is caused by: @Pages and References: Pages 323-324 a. The need for managers to understand a wider range of businesses b. The need for managers to operate differently to succeed in different businesses c. The extent of the linkages between the various businesses d. All of the above
d
44. HR Management systems need to: @Pages and References: Pages 440-442 a. Record who is on the payroll and how much they get paid b. Keep a track of sick leave and holidays due and taken c. Monitor each employee's performance every day d. Set goals, create incentives, and monitor the performance of every individual
d
47. For a modern country innate resources include: @Pages and References: Pages 372-373 a. Management, developed capital markets and an efficient legal system b. A large home market, and good transport and communication facilities c. Large military forces and a space capability d. Answers a and b
d
49. Besides demand conditions the other factors in Porter's national diamond are: @Pages and References: Pages 373-375 a. Strategy, structure and rivalry, such as intense domestic competition b. Factor conditions, such as the scarcity or abundance of certain resources c. Related and supporting industries, such as clusters of complementary or supporting industries d. All of the above
d
50. Gaining the advantage from economies of scope requires that: @Pages and References: Pages 325-329 a. A company must internally expand its scope b. A company must usually enter into a licence arrangement c. A company must usually acquire a company who is expert in an additional business d. The firm is be able to spread common cost somehow, either by performing the additional activity internally, or by licensing the resource
d
50. The people who might profitably use a Porter's national diamond analysis are: @Pages and References: Pages 373-375 a. Policymakers, such as politicians and civil servants b. The Boards of companies when deciding where to locate their major resource centers (Corporate HQ, R&D labs, Marketing etc.) c. Venture Capitalists when influencing where a start-up company should locate itself d. All of the above
d
52. The hypothetical link between culture and a company's performance has not been statistically demonstrated yet because: @Pages and References: Pages 444-446 a. It's a very weak link at best b. It's such an indirect link: culture affects people which affects actions which affect financial results c. No-one can control a company's culture: it just grows, or not, as fate determines d. Both 'culture' and 'relative company performance' are hard to measure statistically across many firms
d
55. Of Michael Porter's 3 tests of whether a proposed diversification will create value, the most important one is usually: @Pages and References: Pages 329-331 a. None. They are all equally important b. The "attractiveness" test c. The "cost of entry" test d. The "better-off" test
d
55. To bring labor specialization to a productive conclusion firms need to implement structures and systems that: @Pages and References: Pages 446-448 a. Command and Control employees b. Control and Coordinate employees c. Coordinate and Command employees d. Make employees Coordinate their actions and Cooperate with other stakeholders
d
59. Alliances usually go wrong if: @Pages and References: Pages 385-387 a. Firms squabble over the contributions and returns from the alliance b. Each firm really wants to acquire the other's core capabilities c. The firms are Customer and Supplier d. Either answers a or b
d
62. When a customer and a supplier choose to, or are technically obliged to, integrate their processes: @Pages and References: Pages 335-338 a. There can no longer be a market operating between them for the item concerned b. There can be an adversarial relationship as each tries to gain advantage c. There can be strategic benefit, so long as the partners try to jointly maximise their profit in the downstream market d. All of the above
d
66. When increased flexibility is required: @Pages and References: Pages 335-338 a. It is always best to source inputs from the open market b. It is always best to integrate key inputs, to maintain full control c. It is best to operate with a mix of both options d. It depends very much on the circumstances whether it's best to source from the market or vertically integrate
d
67. Many MNCs are 'captives of their history' because: @Pages and References: Pages 395-397 a. Structure follows strategy, and their original strategies may now be irrelevant b. Once you have established them successfully, it is hard to change both international structures and strategies c. Strategy follows structure, so they have to adapt their global strategies to the reality of global political structures d. Answers a and b
d
69. Full vertical integration compounds risk because: @Pages and References: Pages 335-338 a. Top managers have a complete knowledge of the entire value chain b. The capital invested and the fixed costs are often much higher for a vertically integrated firm c. A decline in sales and profits in the end market affects all stages simultaneously d. Answers b and c
d
73. There was a fashionable trend towards "virtual companies" in recent years, who make the largest profits in a value chain by co-ordinating all the other aspects. The risk with this plan is: @Pages and References: Pages 339-345 a. A virtual company has little control, so suppliers may collude to drive prices up b. Such a company may find it loses the ability to understand the industry it is in c. A group of suppliers and/or customers may decide to co-ordinate themselves, and isolate the virtual company d. Answers b and c
d
74. Which of these is NOT a factor to be included in "industry attractiveness" in the GE/McKinsey Matrix: @Pages and References: Pages 345-346 a. Stage of industry life-cycle b. International or globalisation potential c. Entry and exit barriers d. Relative market share
d
75. A major limitation of the BCG Growth-Share Matrix is: @Pages and References: Page 346 a. It's only based on one variable to judge market attractiveness b. It's only based on one variable to assess competitive strength c. It presumes a portfolio of businesses which have little synergy or mutual dependence d. All of the above
d
