s2

22. Diversification decisions by firms involve the following key issues: @ Pages and References: p346 a. The attractiveness of the industry to be entered and the potential for competitive advantage b. The potential for the diversification to increase growth and reduce risk c. The opportunities for exploiting economies of scope in resources and capabilities d. The benefits of synergy relative to the costs or coordination.

A

19. The opening quotation concerning Bath Fitter illustrates the following benefits of vertical integration: @ Pages and References: p295 a. Technical economies from the physical integration of processes b. Avoiding the transactions costs involved monitoring and enforcing contracts with external suppliers c. Economies of scale d. None of the above.

B

23. Competition in mature, low-technology industries such as tires, brassieres, and fishing rods reveals: @ Pages and References: pp282-283 a. In these classic "stalemate" industries the potential for competitive advantage is severely limited b. There is a steady stream of technological innovations c. The quest for cost advantage has resulted in these industries relocating to countries with low labor costs d. A price premium can only be earned through providing high quality.

B

24. Which of the following tends not a major source of strategic innovation in mature industries? @ Pages and References: pp282-284 a. Providing customer solutions b. Deploying state-of-the-art technology to upgrade products c. Embracing new customer groups d. Augmenting, bundling, and theming product offerings

B

29. The theory of comparative advantage is concerned with: @ Pages and References: p319 a. The sources of real income differentials among countries b. The impact of national resource availability on competitiveness in particular industries c. The competitive advantages of low-wage countries d. The determinants of capital flows between countries

B

30. In recent decades, the conventional wisdom concerning vertical integration has been: @ Pages and References: p299-300 a. Vertical integration reduces risk b. Outsourcing enhances flexibility and allows firms to focus on their core capabilities c. Outsourcing to low-wage countries is essential for western companies to remain cost competitive d. Coordination can be achieved by alliances

B

31. A dominant design is best described as: @ Pages and References: p211 a. A technical standard b. The product design chosen by the leading firm in an industry c. A common product architecture d. The culmination of the process of commodification that accompanies industry evolution

B

33. When an industry is subject to externally generated changes, the firms which are most likely to establish a competitive advantage are: a. Those with the highest market share b. Those that that respond most quickly to the change and have the resources and capabilities that are most closely aligned to the emerging success factors c. Those with the greatest capacity for innovation d. A combination of (a), (b), and (c).

B

47. Banks spend more money on their head office buildings than most other large corporations because: @ Pages and References: pp196-197 a. They tend to be located in financial centers where property prices are high b. They offer "experience goods", hence they need to signal wealth and stability c. Their CEOs are more committed to the display of wealth than other CEOs d. Because their products are essentially commodities, they need to find alternative ways of differentiating.

B

52. De facto standards suffer from the following weakness: @ Pages and References: p261 a. They are characterized by uncertainty b. They may take a long time to become established because adoption is voluntary c. They usually cost more to develop d. Rivals may not accept them and fight against their adoption by the industry

B

21. There are fewer opportunities for differentiation in mature industries, because: @ Pages and References: p281 a. Competition puts too much pressure on price b. Firms do not have enough resources to differentiate their offerings c. The trend toward commoditization narrows the scope for differentiation and reduces customer willingness to pay d. Technological innovation hinders the potential for differentiation

C

26. The duration of the industry life cycle: @ Pages and References: p213 a. Typically extends over a century or more b. Is determined by the longevity of the firms within the industry c. Has become compressed as the pace of technological change has accelerated d. Depends upon the ability of the firms within the industry to sustain innovation

C

28. The following industry offers a strong regime of appropriability for innovators: @ Pages and References: p250 a. Financial services b. Processed food products *c. Pharmaceuticals d. Handheld mobile devices.

C

30. To realize the potential for strategic innovation, managers in mature sectors need to escape from "industry recipes." J-C Spender concept of an "industry recipe" refers to: @ Pages and References: p284 a. The established process technology for manufacturing a product b. Isomorphism—the tendency for companies within an industry to adopt similar organizational structures c. The mental frameworks and systems of belief that that are common to senior managers within an industry d. The tendency for senior managers in an industry to come from similar social backgrounds and display similar psychological characteristics.

C

33. The evolution of the television receiver industry illustrates: @ Pages and References: p213 a. The level of returns that an industry may generate b. The phenomenon of consolidation c. Multiple revivals, based on radical new products d. The maturity stage in the industry life cycle

C

34. Since the 1980s, large industrial corporations have narrowed their product and vertical scope. The main reasons for this trend are: @ Pages and References: p298 a. Turbulence of the business environment and impact of the corporate scandals b. Increased government regulation c. Greater turbulence of the business environment and the impact of new digital information and communication technologies d. The impact of increasing competition from companies based in emerging market countries.

C

40. Product strategies that reconcile the exploitation of global scale economies with adaptation to distinct national preferences typically involve: @ Pages and References: pp332-333 a. Developing a standardized global product that is produced using local ingredients b. Developing a standardized global product that is then produced at multiple plants throughout the world c. Developing a global product platform that is then produced with locally-differentiated variants d. Adapting packaging, promotion, and pricing to meet local conditions.

C

46. In supplying "lifestyle" products which are designed to meet consumers ' social and psychological needs, the key to differentiation advantage is: @ Pages and References: pp194-196 a. A relentless pursuit of quality b. Thorough market research c. Product integrity d. Market segmentation.

C

51. Public vs. private standards are respectively: @ Pages and References: p260 a. Standards set by public firms vs. standards established by privately-owned companies b. Standards established by governments vs. standards set by companies c. Standards available for all organizations and industry players vs. standards owned by firms or individuals d. Free standards vs. standards users have to pay for

C

56. In video cassette recorders (VCRs), Matsushita's VHS format won against Sony's Betamax format because: @ Pages and References: p264 a. VHS was significantly superior to Betamax b. VHS VCRs were cheaper than Betamax VCRs c. Matsushita's licensing of its VHS format led to faster growth in market share d. Sony opened its standard to all players too early

C

22. The main business of the Coca-Cola Company is manufacturing, marketing and distributing concentrate for soda drinks to bottlers in over 200 countries of the world. The corporate scope of the Coca-Cola Company is best described as: @ Pages and References: p296 a. A broad product, geographical, and vertical scope b. A broad product and vertical scope, and a narrow geographical scope c. A broad geographical scope and narrow product and vertical scope d. A broad product and geographical scope and narrow vertical scope.

C/D

21. The corporate scope of Samsung Electronics may be described as follows: @ Pages and References: p296 a. A broad product and geographical scope, but narrow vertical scope b. A broad product and vertical scope, but a narrow geographical scope c. A broad vertical and geographical scope but narrow product scope d. A broad product, geographical and vertical scope.

D

25. Firms internationalize through two mechanisms: @ Pages and References: p316 a. Exports and imports b. Trade in goods (visible trade) and trade in services (invisible trade) c. Direct and indirect investment d. Trade and direct investment.

D

26. Global industries are those where: @ Pages and References: p318 a. International trading is high b. Technology transfers are high c. Foreign direct investment is low d. Both trade and direct investment are high

D

27. A major factor explaining the emergence of large firms during the 19th and the early 20th centuries is: @ Pages and References: p299 a. The impact of the First and Second World Wars b. The development of modern management techniques c. The improvement in telecommunications d. The decrease in administrative costs of the firm relative to the transaction costs

D

29. Firm entry rates tend to be highest during the growth stage of an industry life cycle because: @ Pages and References: pp214-215 a. Shortage of production capacity keeps margins attractive b. The propensity for entrepreneurs and venture capitalists to imitate one another c. Growing legitimacy of the industry attracts resources to the industry d. Both (a) and (c).

D

32. The creation of "shared service organizations" is an example of diversified firms creating value by: @ Pages and References: pp353 a. Transferring best practices between their businesses b. Economizing on transaction costs by providing business services internally rather than relying on third-party suppliers c. Reducing risk by ensuring that key business services are controlled by the corporate HQ d. Exploiting economies of scope in business services.

D

33. The growth in the size and scope of business enterprises for most of the 19th and 20th centuries can be attributed to a drop in administrative costs of firms relative to the transaction costs of market. This resulted from: @ Pages and References: p298 a. The power of large firms to push down wages b. The ability of the United States to impose market capitalism throughout the world c. The growing costs of using markets as a result of taxes and litigation d. The impact of information and communications technology and new management techniques in increasing the efficiency and scope of business management.

D

34. A technical standards tends to emerge when: @ Pages and References: p211 a. Economies of scale exist b. An industry has converged around a dominant design c. Economies of learning are present d. Network effects exist

D

34. As markets become more turbulent and unpredictable, quick-response capability depends upon: @ Pages and References: p172 a. Good forecasting b. Early identification of emerging changes c. Short cycle time d Early identification of emerging changes together with short cycle time.

D

37. There is little vertical integration between steel producers and shipbuilders because: @ Pages and References: p301-305 a. The market for steel has many suppliers and buyers, good information flows, and little need for transaction-specific investments b. High powered incentives are critical spurs to efficiency in the steel industry c. Steel production and shipbuilding are strategically very different industries d. Both (a) and (c) above

D

38. Chester Carlson invented xerography, but was unable for many years to bring it successfully to market. Why? @ Pages and References: p251 a. He lacked courage b. He lacked managerial skills c. He became sick d. He lacked complementary resources

D

38. Conditions conducive to a firm adopting a leadership strategy in a declining industry are: @ Pages and References: p289 a. A willingness by other firms to exit the industry b. Superior financial resources c. The presence of pockets of demand that are resilient and relatively price-insensitive d. Both (a) and (c).

D

39. According to institutional sociologists, the propensity for organizations to adopt similar structures ("institutional isomorphism") is primarily a result of @ Pages and References: p218 a. Common key success factors within an industry b. Bounded rationality c. The complementarity among different managerial practices within firms' "activity systems" d. The propensity of firms to imitate one another in order to gain legitimacy.

D

40. The degree of specialization of complementary resources affects: @ Pages and References: p252 a. The degree of concentration of the industries that will emerge b. The speed of acceptance of the innovation c. The division of value between the respective suppliers of the innovation and of its complementary resources d. Answers b and c

D

42. Patents offer better protection for innovation than any other protective mechanism. @ Pages and References: p253 a. A century of evidence shows this is true b. No one can confirm or disprove this statement c. The evidence is mixed d. Evidence shows that in most industries this is not true

D

43. The examples of Ikea and Southwest Airlines demonstrate: @ Pages and References: p202 a. The power of brand as a factor of success b. The quality of the top management of these firms c. The power of advertising d. How a low-price strategy be combined with distinctive product differentiation

D

47. When reliable forecasting is not available, managing risk can be implemented through: @ Pages and References: pp258-259 a. Alertness b. Responsiveness c. Avoiding large scale commitment d. All of the above

D

42. In retailing, the cost advantages of large retail chains (such as Wal-Mart in the US, Tesco in Britain, Metro in Germany, and Carrefour in France) is primarily the result of: @ Pages and References: p186 a. Scale economies in operating large individual retail units b. Lower costs of bought-in products as a result of superior bargaining power C. Higher capacity utilization in retailing and distribution d. Using superior bargaining power to pay lower wage rates.

B

45. When a company organizes its research, new business development, and product development activities into separate organizational units firm its operational and administrative activities, this is an example of: @ Pages and References: p225 a. Contextual ambidexterity b. Structural ambidexterity c. Both contextual and structural ambidexterity d. Neither contextual nor structural ambidexterity.

B

24. During recent years, the cycle of innovation (from initial knowledge generation to final diffusion) has: @ Pages and References: p247 a. Got faster b. Got slower c. Become more global d. Become more uncertain

A

29. The intellectual property of a firm comprises: @ Pages and References: p250 a. Copyrights, patents, and trade secrets b. Patents, trademarks, copyrights, trade secrets, and goodwill c. The total of its intangible assets d. . Patents, trademarks, copyrights, and trade secrets

A

23. Industries change mainly as a result of: @ Pages and References: p208 *a. The death of existing firms and the birth of new firms b. Continuous adaptation by a constant population of fi rms.

A

23. Which of the following statements about the relationship between innovation and invention are correct? @ Pages and References: p247 a. Invention is often the result of an individual's efforts; innovation typically involves business organizations b. Intellectual property law offers greater protection to innovation than it does to invention c. Complementary resources are more important in supporting invention than in supporting innovation d. None of the above.

A

25. An innovator's ability to derive profit from an innovation depends primarily upon: @ Pages and References: pp250-251 a. Factors that prevent would-be competitors from imitating the innovation b. The strength of the patents that protect the innovation c. Thru innovator's ability to produce and distribute the innovation d. The innovator's financial resources.

A

20. In mature industries, the most important sources of cost advantage are: @ Pages and References: pp279-280 a. Economies of scale and economies of learning b. Low-cost inputs, low overheads, and economies of scale c. Superior process technologies d. Business model innovation. @ Pages and References: p333

B

28. The main cause of downsizing, refocusing, and outsourcing during the latter part of the 20th century were: @ Pages and References: p299 a. Developments in IT—especially the advent of the internet b. A greater turbulence in the environment c. A loss of confidence in the organizational capabilities of corporate managers d. Financial crises.

B

34. The conventional approach to strategy implementation in mature industries utilizes controls that: @ Pages and References: p287 a. Limit the discretion of middle managers b. Are quantitative and short term c. Are linked to top management remuneration d. Are mainly qualitative milestones.

B

38. Causal ambiguity allows a firm's competitive advantage to be sustained because potential rivals are: @ Pages and References: pp175-176 a Deterred from directly competing with the advantaged firm b. Unable to identify the sources of the advantaged firm's superior performance c. Unable to acquire the resources needed to compete against the advantaged firm d. All the above

B

60. Monsanto's NutraSweet artificial sweetener, Pfizer's Viagra, and Pilkington's float glass process are examples of: @ Pages and References: p249 a. Weak regimes of appropriability *b. Strong regimes of appropriability c. Technological inventions that were not successful d. Technological innovations based upon chemistry

B

22. The difference between invention and innovation is: @ Pages and References: p247 a. Invention requires an inventor, innovation requires no individual person b. You must innovate before you invent c. Invention is the creation of a new device or process, innovation is its commercialization d. An inventor is guaranteed a payment, an innovator is not.

C

25. Which of the following developments is not a typical feature of the transition from the "introductory" to the "growth" phase of the industry life cycle? @ Pages and References: pp210-212 a. The emergence of a dominant design b. The shift from product to process innovation c. The shift of production from mature to emerging countries d. Rapid market penetration

C

27. With internationalization, competition from new entrants increases because: @ Pages and References: p318 a. The diversity of potential rivals increases b. Global profit rates are falling c. Barriers to entry that would deter domestic firms may be easily overcome by large specialist international firms d. Many cheap labor countries favor and subsidize a national champion to compete internationally

C

35. In a declining industry that lacks strong pockets of continuing demand, a suitable strategy would be: @ Pages and References: p289 a. Leadership b. Niche c. Harvest or divest d. All of the above

C

41. Several decades of empirical evidence indicates that the relationship between diversification and performance: @ Pages and References: pp358-359 a. Still appears mixed b. Has been proved as fully positive c. Is not consistent, nor is it systematic d. Still does not make sense

C

22. In a mature industry, the trend to commoditization makes differentiation a challenge. The major source of differentiation in mature industries is: @ Pages and References: pp281-282 a. Enhanced product features b. Customization c. Innovation to create enhanced product functionality d. Image differentiation and providing complementary services

D

25. Strategic innovation is defined as: @ Pages and References: pp282-284 a. A third phase of innovation, after product and process innovations b. A radical new strategy that changes a fundamental aspect of the competitive game c. Adding new products and services d. Both (a) and (b)

D

30. The effectiveness of the different instruments used to protect property rights depends on: @ Pages and References: pp251-252 a. The country in which a firm wants to protect is property rights b. The role of specialized state agencies in that protection c. The state of the economy *d. The type of innovation that is being protected

D

32. A firm's competitive advantage is not necessarily revealed in higher profitability, it may be reflected in: @ Pages and References: p171 a. Expanding market share b. An aggressive quest for acquisitions c. Increasing employee bonuses d. Expanding market share and/or increasing employee bonuses ○

D

24. The main forces driving industry evolution are: @ Pages and References: p208 *a. Technology and demand b. Technology and globalization c. The quest for cost and differentiation advantage d. Government policies and global financial flows.

A

24. The vertical scope of a firm relates to: @ Pages and References: p297 a. The extent to which a firm spans stages of the industry value chain b. The proportion of the firm's inputs that are produced in-house c. The size of the firm's value added d. The number of hierarchical layers of the firm's management structure.

A

31. Vertical integration is defined as: @ Pages and References: p300 a. A firm's ownership of vertically related activities b. A firm's control over its sources of inputs and distribution of its output c. A firm's involvement in a narrow range of products which it makes entirely in-house. d. A firm with a hierarchical structure.

A

32. Codifiable knowledge means that: @ Pages and References: p251 a. It can be written down b. It can be replicated at no cost c. It complies with local laws and regulations d. It cannot be demonstrated

A

34. Where do general management capabilities generally reside within the diversified firm? @ Pages and References: p354 a. At the corporate level b. At the divisional level c. At the operational entity level d. All of the above

A

40. An organizational routine is: @ Pages and References: pp217-218 a. A stable, repeatable, pattern of coordinated activity among organizational members b. A lower-level, operational capability (as opposed to a dynamic capability) c. The resource needed to create a new capability d. A new capability after it has been institutionalized within an organization

A

43. When an industry is subject to technological change, the ability of new entrants to displace incumbent firms will be increased by the following factors: @ Pages and References: pp222-223 a.. The extent to which the technological change is a source of architectural innovation rather than component innovation b. The technological change being competence enhancing rather than competence destroying c. Incumbent firms having close relationships with the industry's largest customers d. Incumbent firms being geographically dispersed.

A

48. "Experience goods" are those which: @ Pages and References: pp196-197 a. Have performance attributes that are difficult to ascertain at the moment of purchase b. Only customers with previous experience of using these goods would rationally consider purchasing c. Only firms with wide experience in an industry would rationally consider making d. Have been produced by the firm furthest down the Learning Curve

A

55. A typical outcome of network externalities is: @ Pages and References: pp261-262 a. A "winner-take-all" market b. Monopolistic abuse requiring antitrust intervention c. More rapid technological innovation d. Loss of consumer welfare.

A

21. The 1949 quotation that "computers in the future may...weigh only 1.5 tons" indicates: @ Pages and References: p245 a. Engineers are generally very poor at forecasting b. How difficult it is to forecast the development of technology c. The lack of communication among technologists—the transistor had been invented in 1947 d. The acceleration of technological change during the second half of the 20th century.

B

27. Porter's three tests help to determine: @ Pages and References: p352 a. The likely impact of diversification upon risk b. The potential for diversification would create shareholder value c. The impact of diversification on stakeholders d. How the financial markets would react to a diversification.

B

30. The key difference between economies of scale and economies of scope: @ Pages and References: p353 a. Economies of scale relate to manufacturing activities; economies of scope relate to a wide range of functions b. Economies of scale relate to expanding the output of a single product; economies of scope relate to expansion across multiple products c. There is no practical difference d. Scale economies are relevant to business strategy; economies of scope to corporate strategy.

B

39. The "centralized hub" strategy that Japanese multinationals pursued during the 1970s and 1980s is likely to be most successful in industries with the following characteristics: @ Pages and References: pp335-337 a. Engineering-based b. Large economies of scale and limited need for national differentiation c. Substantial opportunities for transfer of learning among countries d. All of the above

B

41. The field of "organizational ecology" studies: @ Pages and References: p219 a. Companies' contributions to environmental sustainability b. The evolution of the population of firms in an industry c. The process of competition between different types of firm d. Management practices that can best achieve the evolutionary adaptation of firms.

B

58. Cross functional product development teams, product champions, and incubators are organizational devices used: @ Pages and References: p266-267 a. By top managers to control the technological development of their firms b. To reconcile the conflicting requirements of operations and innovation c. To build new organizational structures, inspired by innovation in high-tech industries d. To reconcile coordination and specialization needs

B

24. The shift in the production of soccer balls from Pakistan to China is primarily the result of: @ Pages and References: p315 a. Better conditions of employment than in Pakistan b. The growing popularity of soccer in China, while the dominant sport in Pakistan continues to be cricket c. New process technology that has reduced the labor intensity of manufacture d. The rise of China as "workshop of the world"

C

27. The personal computer created a huge amount of value for users. The companies that profited most from the personal computer were: @ Pages and References: p249 a. The innovators b. The followers c. The suppliers d. None of the above

C

29. How does unpredictability in the environment influence the costs of organizing transactions within the form relative to transactions across markets? @ Pages and References: p299 a. It saturates the management of contracts activity and external relationships b. It disrupts processes and procedures c. It tends to increase administrative costs of vertical integration because of the need for flexibility and speed d. It has no influence at all

C

31. According to Porter's "national diamond" analysis, the competitive advantage of Swiss firms in watches, German firms in luxury cars, and Japanese firms in cameras is a result of: @ Pages and References: p321 a. The availability of highly skilled workers in each of these countries b. The lack of natural resources in each of these countries c. The characteristics of local demand in each of these countries d. The willingness of firms in these countries to invest heavily in technology, plants, and products.

C

38. In order for a manufacturer of consumer goods to maximize responsiveness to changes in consumer demand for its products: @ Pages and References: p305 a. It is best to outsource the production of components and materials b. It is best to be backward integrated into the production of components and materials c. It depends upon the type of flexibility that is desired d. It is best to be partially backward integrated.

C

40. According to Porter, cost leadership and differentiation are: @ Pages and References: p177 a. What leads a firm to "be stuck in the middle" b. Two names for the same fundamental strategy c. Distinct generic strategies d. Strategies that can be pursued simultaneously

C

27. According to Baden-Fuller and Stopford's approach to rejuvenating the mature enterprise regards maturity as: @ Pages and References: p284 a. A stage of the industry life cycle b. A consequence of inertia c. The triumph of exploitation over exploration d. A state of mind

D

32. Do all industries conform to the same life cycle patterns? @ Pages and References: p213 a. The duration of the life cycle varies from industry to industry b. The same stages exist, whatever the industry c. The stages have tended to become shorter. d. All of the above

D

36. A start-up company based in Canada and led by an academic microbiologist has patented genetically-modified, drought-resistant maize particularly suitable to arid regions of Africa. The firm has been unable to attract significant venture capital investment. How should the firm exploit commercial opportunities for its product in Africa? @ Pages and References: pp326-328 a. It should form a joint venture with a multinational agricultural seed company b. It should establish seed production in Canada and set up sales offices in African countries c. It should establish seed production in Canada and appoint sales agents in different African countries d. It should license its patent to a multinational agricultural seed company and continue research on other projects for the genetic modification of agricultural crops.

D

39. Barriers that impede the exit of capacity from a declining industry include not just the presence of durable, specialized assets and the costs of plant closure, but also: @ Pages References: p288 a. Resistance from labor unions b. Environmental clean-up costs c. Wishful thinking by senior managers *d. Top managers' emotional and moral commitment to continuity.

D

50. Firms that pursue cost advantage will different structures and systems than those pursuing differentiation advantages. Among the following features, which is not typically found among firms pursuing cost advantage: a. Employee remuneration based upon individual productivity b. Frequent performance reporting c. High levels of outsourcing d. Low levels of job specialization.

D

61. Microsoft's war against Netscape in the browser industry, and GE's lead over EMI in the CT scanner industry show that: @ Pages and References: p256 a. Size matters b. First movers always win the battle c. No real outcome can be predicted d. Strength in complementary resources and capabilities can allow an established firm to overcome the initial lead of an early innovator.

D

23. The concentration of soccer-ball production in the Pakistan city of Sialkot illustrates: @ Pages and References: p315 a. The global popularity of soccer b. The potential for small, localized business enterprises to participate in the global economy c. The dominant role of labor costs as a determinant of international trade d. The willingness of multinational corporations to do business in high-risk locations.

-

25. Vertical integration was a common strategy among large industrial companies: @ Pages and References: p299 a. From the late 19th to late 20th century b. From the establishment of Ford Motor Company until the present day c. Since the first oil shock in 1972/73 d. In Japan

A

27. The different stages of the industry life cycles are defined primarily on the basis of: @ Pages and References: p209 a. The rate of growth of industry sales b. The characteristics of competition within the industry c. The pace of innovation within the industry d. None of the above

A

28. Banks, hotels, and Las Vegas casinos seek to boost their overall profitability by focussing attention on: @ Pages and References: p283 a. High income/high spending customers b. Image differentiation c. Market segmentation d. Product integrity.

A

33. One of the greatest challenges of strategy implementation in mature industries is: @ Pages and References: p287 a. Reconciling differentiation and innovation with a relentless drive for cost efficiency b. Encouraging strategic innovation by widening the strategic planning process to include younger organizational members c. Continually adjusting the strategy to adapt to environmental changes d. Both b and c

A

34. The value chain for a product will tend to be dispersed across different countries when: @ Pages and References: pp323-326 a. Different stages of the value chain require different types of resources and capabilities ○ b. The product is subject to import tariffs and quotas c. The product is knowledge-intensive d. The different stages of the value chain need to be closely coordinated.

A

36. Isolating mechanisms are: @ Pages and References: p174 a. Barriers to the erosion of interfirm profit differentials b. Mechanisms that impede the equilibration of rents between industries c. A synonym for "barriers to mobility" d. Sources of disequilibrium that cause the profitability of different firms in an industry to diverge over time

A

37. The single most important factor that determines the profitability of a declining industry is: @ Pages and References: p288 a. The adjustment of capacity to shrinking demand b. The capacity of firms in the industry to devise innovative strategies c. The speed with which customers switch out of products supplied by the industry d. The ability of firms to reduce costs through off-shoring.

A

39. An innovation's complexity impacts: @ Pages and References: p251 *a. The ease with which it can be copied b. The resources needed to formalize it and to establish a patent to protect it c. The rate of diffusion of the innovation, and its acceptance by customers d. The probability for a firm to innovate

A

41. Advertising costs as a percentage of sales revenue for soft drink brands with large market shares (such as Coca-Cola and Pepsi-Cola) are lower than for brands with small market shares (Dr. Pepper, Schweppes, Fresca). This is because: @ Pages and References: p182 a. Advertising campaigns are subject to a large minimum budgets ("indivisibilities") b. Big brands can negotiate lower rates with advertising agencies and media owners c. Economies of learning—long-established brands such as Coca-Cola and Pepsi have learned how to be more efficient in their advertising campaigns

A

43. Licensing, joint ventures, and alliances, are examples of: @ Pages and References: pp254-255 a. Alternative strategies to exploit innovation b. Alternative strategies to create inventions c. Alternative strategies to sell inventions to another firm in the industry d. Strategies involving high levels of collaboration with third parties

A

43. Nokia, Swatch, AP Moller-Maersk, BHP, and Research In Motion illustrate: @ Pages and References: p329 a. The opportunities offered to firms with small domestic markets to become global leaders b. The complexity of the analysis of competitive advantage in global markets c. Different industries' profitability d. The ability of firms in mature industrialized countries to fend off emerging market competitors

A

45. Which of the following product categories offers the greatest potential for differentiation? @ Pages and References: p246 a. Clothes and restaurants b. Cement and wheat c. Jet fuel for airline jets d. Sulfur and ethylene

A

46. Risk in emerging industries is created by the following factors: @ Pages and References: pp258-259 *a. Market and technological uncertainties b. Market and cost uncertainties c. Rivalry and political uncertainties d. Having different customer tastes in emerging countries from your home market

A

47. The ability of firms such as BASF, Exxon, and General Electric to be industry leaders for over a century indicates: @ Pages and References: pp226-228 a. Their capacity for adaptation to changes in their environment b. The power of economies of scale to drive performance c. Size is the key predictor of resource superiority d. A firm's age is an indicator for capabilities developed through learning.

A

49. The Microsoft's support of multiple operating systems in 1988 (MS-DOS, Windows, PS/2, Unix) is an example of: @ Pages and References: p259 a. A robust strategy in the face of uncertainty over technical standards b. Microsoft's ability to exercise market dominance in the face of competition from Apple c. The use of alliances in winning standards wars d. The role of strategic deception to confuse competitors.

A

50. Standards are important in an industry because: @ Pages and References: pp259-260 a. They allow interoperability and industry growth, and are linked with network externalities b. They are established by the dominant player in the industry c. They are imposed by the government and have the force of law behind them d. High-tech industries are the only industries that cannot effectively function without standards

A

57. "Creative abrasion" is a concept used to describe: @ Pages and References: p266 a. Teams where different personalities and profiles interact to foster innovation and creativity b. Teams created specifically to provoke helpful organizational conflict c. Teams where conflict is artificially provoked in order to create idea generation d. A method for increasing effectiveness and efficiency in strategic decision-making processes

A

19. Warren Buffet's distinction between a "franchise" and a "business" refers to: @ Pages and References: p279 a. The advantage of starting a franchised business rather than an independent start-up b. The advantages that result from a distinctive differentiation advantage○ c. The importance of taking a contrarian approach in business d. The importance of selecting a business that is easy to manage.

B

20. The primary concern of corporate strategy is decisions over: @ Pages and References: p296 a. Establishing competitive advantage b. The scope of the firm's activities c. The geographical boundaries of the firm d. The optimal degree of product diversification of the firm.

B

21. Tyco International's decision to split into three separate companies was motivated by: @ Pages and References: p345 a. The scandal involving its former CEO b. The belief that Tyco's businesses could achieve greater flexibility and growth as independent companies than as subsidiaries of Tyco c. The belief that the synergies among Tyco's businesses were outweighed by the costs of Tyco's corporate HQ d. The recognition that Tyco was subject to a "conglomerate discount."

B

23. The capitalist economy comprises two forms of economic organization, the market mechanism operated by prices and the administrative mechanism of firms. @ Pages and References: p296 a. The market mechanism is referred to as the "visible hand" while the administrative mechanism of firms is referred to as the "invisible hand" b. The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand" c. The simultaneous operation of both "hands" means that the capitalist system is often referred to as an "ambidextrous organization" d. The notion of the capitalist economy as governed by market processes is a myth. In reality the global capitalist economy is controlled by large corporations.

B

23. The key drivers of diversification during the period 1950-80 were: @ Pages and References: pp347-350 a. Shareholder value maximization b. The quest for growth and risk reduction c. The desire to enter new, technology-based industries d. The desire to exploit economies of scope.

B

24. The emergence of "conglomerates"—widely diversified companies—during the 1960s and 1970s was a result of: @ Pages and References: p347 a. The desire of companies in low growth industries to diversify into higher growth industries b. The belief that the tools of strategic and financial management could be applied to any type of business c. The willingness of some CEOs to ignore shareholder interests and order to build large corporate empires d. Loose monetary policies that increased the availability of corporate finance.

B

25. The continuing prominence of large, highly diversified business groups in many emerging market countries (e.g. Tata Group in India) is mainly the result of: @ Pages and References: p347 a. The political connections of a few leading business leaders b. High transaction costs in capital and labor markets in these countries which favor the deployment of resources within large diversified corporations c. Barriers to direct investment which protect these companies from overseas competition d. The failure of emerging market business leaders to appreciate the benefits of refocusing.

B

31. Which of the following is not an example of an economy of scope from diversification? @ Pages and References: pp353 a. Samsung Group applying its Samsung brand name across a wide range of products b. Royal Dutch Shell engaging in forest development in order to offset some of the carbon dioxide produced by its petroleum business ○ c. Amazon using its website and distribution system to supply not only books and music but a wide array of other consumer products d. Fuji Film applying its thin-film, coatings, and polymer technologies not only to photographic film, but also to cosmetics.

B

32. In Porter's national diamond framework, Porter emphasizes that domestic rivalry within an industry plays a key role in: @ Pages and References: p377 a. Diverting the attention of national firms form the international market to the domestic market b. Driving innovation, efficiency and the upgrading of competitive advantages c. Preventing the emergence of a national champions d. Complicating government efforts to support the industry.

B

32. When a winery opens a tasting room through which it sells its wine to visitors, this represents a strategy of: @ Pages and References: p300 a. Backward integration b. Forward integration c. Partial integration d. Diversification.

B

33. Despite the heterogeneity of the goods and services supplied by General Electric (e.g. locomotives and consumer credit), we can consider GE's diversification to be into strategically related industries because: @ Pages and References: p354 a. Most products are supplied under the GE brand b. It applies similar general management capabilities across all its businesses ○ c. It operates a balanced portfolio of cash generating and cash using businesses d. It is continually looking for opportunities to generate additional revenues from cross-selling and product bundling.

B

35. A "proprietary technical standard" is one that: @ Pages and References: p211 a. Is established by a public authority and is a "public good" b. Is embodied in patents or copyrights and owned by a single firm c. Is owned by no one d. Is specific to a particular industry

B

35. An alternative approach to Porter's "three essential tests" in evaluating the value-adding potential of diversification is: @ Pages and References: p356 a. The Boston Consulting Group growth-share matrix *b. Goold, Campbell and Alexander's "corporate parenting" framework c. The Ansoff matrix d. Porter's value chain analysis.

B

35. Saudi Aramco and Petrobras are both major oil producers. Saudi Aramco's competitive advantage is based on its access to low-cost domestic oil reserves; Petrobras's competitive advantage is its capability in deep-water exploration and production. The implications for the internationalization strategies of the two companies are: @ Pages and References: pp323-326 a. Both companies should focus on exporting from their own countries b. Saudi Aramco should focus on exporting; Petrobras should pursue direct foreign investment c. Saudi Aramco should pursue direct foreign investment; Petrobras should focus on exporting d. Both companies should use a mixture of exporting and direct investment depending upon the nature of the foreign opportunity.

B

35. The reason that the producers of wood pulp have often forward integrated into the production of paper is: @ Pages and References: pp300-301 a. To increase value added by moving closer to the final customer b. To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments ○ c. To be able to respond quicker to demand fluctuations because of superior coordination d. To insulate the firm from fluctuations in the price of wood pulp.

B

36. "Shakeout"--a period when many firms exit from an industry following a period of intense competition—characterizes an industry's transition from: @ Pages and References: p215 a. Introduction to growth stage b. From growth to maturity c. From maturity to decline d. From product innovation to process innovation.

B

37. With the onset of the maturity stage, the number of firms in most industries: @ Pages and References: p215 a. Remains relatively stable b. Decreases significantly, then tends to stabilize c. Decreases significantly, and continues to do so d. Decreases or increases, depending on the industry

B

38. The statement: "Economies of scope in shared resources do not provide a sufficient justification for diversification" is: @ Pages and References: pp359-360 a. Correct: Cost savings form shared resources are of little value unless there are also organizational capabilities that can be transferred between the businesses b. Correct: to justify diversification economies of scope need to be supported by transactions costs in the market for the particular resources c. Incorrect: economies of scope are sufficient grounds for diversification on their own d. Incorrect: the benefits from economies of scope need to exceed the administrative costs of the corporate HQ.

B

39. Starbucks is owns and operates most of its retail outlets; McDonalds franchises most of its retail outlets. An advantage of franchising over vertical integration is: @ Pages and References: pp308-309 a. Franchising permits superior coordination of retail activities with upstream activities b. Franchising subjects the operators of retail outlets being subject to "high-powered" incentives c. Franchising permits more effective quality control of the retail outlet d. Franchising is always more profitable than vertical integration because the franchisor does not bear the costs of owning the retail outlets and paying their staff.

B

39. The difference between a "generic" and a "contextual" management practices is: @ Pages and References: p176 a. None: the concepts are identical in practice b. The performance impact of a generic practice is independent of the firm's other practices; the impact of a contextual practice depends upon the firm's other practices c. Generic practices relate to basic functions; contextual practices tend to be more idiosyncratic d. A generic practices offers incremental performance improvement; a contextual practices leads to a new fitness peak.

B

42. Vertical integration by Zara, the main division and brand of the Spanish clothing firm Inditex, illustrates: @ Pages and References: p309 a. The potential of vertical integration to offer flexibility in responding to seasonal fluctuations in demand b. The potential for vertical integration to offer flexibility in responding to rapid changes in customer product preferences c. The potential for vertical integration to overcome problems arising from the need for transaction-specific investments by garment manufacturers d. The potential for vertical integration to exploit technical economies from co-locating adjacent processes.

B

44. Compared with simple products like flour or toilet paper, complex products such as cars or hotels: @ Pages and References: p190 a. Fewer opportunities for differentiation b. Greater potential for differentiation c. It all depends upon the creativity of product designers d. Fewer incentives for differentiation because of their high costs

B

44. The steam ship was invented in 1781, yet sailing ships remained dominant for ocean transport for another 100 years. The main reason was that: @ Pages and References: p224 a. Shipping company owners were resistant to new technology b. Sailing ships were faster and cheaper over most of the period c. Complementary resources such as maintenance engineers and coaling stations were scarce d. Shipping company owners were unclear whether steam propulsion was a competence enhancing or competence destroying change.

B

46. The main reason why a firm's distinctive capabilities reflect the conditions that the firm faced during the early years of its development is because: @ Pages and References: p231 a. Most managers adhere to the old adage: "If it ain't broke, don't fix it" b. Capabilities that develop early become embedded in a firm's organizational culture c. Exploitation tends to dominate exploration d. New skills are difficult to acquire because of the propensity of senior organizational members to hire and promote junior employees who resemble them.

B

49. What is the difference between differentiation and segmentation? @ Pages and References: p191 a. There is no difference between the two b. Differentiation deals with the "how" a firm chooses to compete, while segmentation describes "where" in the entire market a firm chooses to compete c. Differentiation is a firm's strategic choice, whereas segmentation is given by its environment d. Segmentation is the head of the marketing department's responsibility, whereas the CEO is in charge of differentiation

B

53. Network externalities are: @ Pages and References: p261 a. The set of effects related to the network organizational structure, where many firms are connected through loose but efficient linkages b. The idea that the value of a product for a customer depends on the number of other users of the same product c. The costs incurred outside a firm when these costs are a direct consequence of that firm's activity d. The set of events, facts, and trends taking place in a firm's environment and that may impact its strategy

B

54. Computers, smartphones, search engines, and online dating agencies are examples of industries where the following phenomenon is at work: @ Pages and References: pp261-262 a. Product differentiation b. Network externalities c. Commoditization d. Radical innovation.

B

18. An implication of industry maturity for competitive advantage is that: @ Pages and References: pp278-279. a. Industries tend to become perfectly competitive, implying that competitive advantage disappears b. Lack of demand growth, diffusion of technology, and commoditization emphasize the quest for novelty and innovative business models *c. Lack of growth, diffusion of technology, and commoditization imply fewer opportunities for competitive advantage d. Maturity is irrelevant to for competitive advantage—opportunities in mature industries are as great as in younger industries.

C

26. If companies are to challenge the conventional wisdom of their industries and achieve strategic innovation, Gary Hamel argues that they should: @ Pages and References: pp282-284 a. Build upon their core competences b. Acquire innovative start-up companies c. Reorganize their strategic planning processes d. Augment products and services to enhance customer value.

C

26. The primary factor determining the degree of vertical integration in a firm is: @ Pages and References: p298 a. Transaction costs b. Administrative costs c. The relative level of transaction costs to administrative costs d. The nature of an industry

C

29. Themed restaurants such as Hard Rock Café and Planet Hollywood illustrate the concept of: @ Pages and References: p284 a. Intangible differentiation b. Strategic innovation c. Experience-based differentiation d. Niche marketing/

C

29. When a company in industry A makes a diversifying acquisition of a company in industry B, Porter's better-off test is met when: @ Pages and References: p352 a. The competitive advantage of the business B is increased b. The competitive advantage of business A is increased c. The competitive advantage of either or both businesses in increased d. There are shared resources and capabilities between the two businesses that offer economies of scope.

C

30. Large countries have an advantage over small countries in technology-intensive and capital-intensive industries, because: @ Pages and References: pp319-320 a. They may influence the rest of the world's technical standards b. Small markets keep firms from being too ambitious c. A large home market means development costs can be recovered more quickly and supports a more fully-developed industry infrastructure of specialist service providers d. Large countries tend to have superior educational systems

C

31. Competitive advantage can be defined as: @ Pages and References: pp170-171 a. A firm's ability to establish market leadership b. A firm's ability to grow faster than its competitors c. A firm's potential to earn a rate of profit that is persistently higher than its rivals d. A firm's potential for launching innovative new products.

C

35. A firm can pre-empt imitation by: @ Pages and References: p216 a. Vigorous legal action b. Threatening to imitate its imitators c. Introducing new products to fill each niche, investing in capacity ahead of market growth and filing many patents d. None of these: imitators should be welcomed

C

36. The reason that most food processing firms do not backward integrate into farming is that: @ Pages and References: pp301-305 a. Most food products are available on competitive markets where transaction costs are low b. Farming and food processing are strategically dissimilar businesses *c. Both (a) and (b) d. Both (a) and (b) together with the fact that agriculture is subject to a variety of government subsidies and support measures.

C

37. Lead-time refers to: @ Pages and References: p251 a. The period of time during which a firm is the leader of an industry b. The period of time during which a firm has discovered the largest number of innovations c. The time it takes followers to catch up d. None of the above

C

37. What does the expression "conglomerate discount" mean? @ Pages and References: p359 a. The ability of a widely diversified firm to exploit economies of scope to reduce its overall costs b. The willingness of stock exchanges to offer discounted listing fees in order to attract highly diversified firms c. The stock market tends to value diversified companies at less than their break-up value d. The lower rates of return that highly diversified companies offer to their shareholders.

C

37. Which of the following is not an isolating mechanism? @ Pages and References: p174 a. Private ownership of a company which means that it is not obliged to publish its financial statements b. Competitive advantage which is based upon the interaction of a number of different resources and capabilities c. Competitive advantage based upon exploiting pricing anomalies d. Competitive advantage that is based upon resources that is difficult to transfer and slow to replicate.

C

38. .The term "competency trap", refers to: @ Pages and References: p218 a. The hubris that affects the senior managers of successful firms b. The tendency for firms with competitive advantage based in one industry to fail when they diversify into a new industry c The tendency for capabilities based on highly developed organizational routines to be a source of inflexibility d. The tendency for highly competent manager to be reluctant to change the strategies that brought them their initial success.

C

41. One key strategic challenge for fuel cell developers in the automobile industry is: @ Pages and References: p252 a. There is not enough political backing at the Federal level b. They lack financial resources c. They need the cooperation of many other specialized players d. The technology is not yet fuel-efficient

C

41. The Dutch-based electrical and consumer electronics multinational, Philips, has transferred the headquarters for several of its global business away from the Netherlands. In terms of Bartlett and Ghoshal's typology of multinational strategies, this represents a transition from: @ Pages and References: pp328-335 a. A "centralized hub" to a "decentralized federation" b. A "centralized hub" to a "transnational" c. A "decentralized federation" to a "transnational" d. A "coordinated federation" to a "decentralized federation"

C

41. The main lesson to be drawn from the delays to the launch of Boeing's 787 Dreamliner is that, when developing complex products that embody diverse new technologies: @ Pages and References: p311 a. It is best to do it in-house without heavy reliance on external suppliers b. Extensive outsourcing is inevitable as no single company has sufficient technological capabilities in-house c. The principal firm must possess well-developed integration capabilities ○ d. A competitor such as Airbus Industrie which began as an alliance among a number of separate companies will always have an advantage.

C

42. To determine whether a firm's diversification is related or unrelated, we need to consider: @ Pages and References: pp359-360 a. Whether the businesses are within the same two-digit class of the Standard Industrial Classification b. Whether the two businesses have either common customers or utilize a common technology c. Whether the two businesses share some of the same resources and capabilities d. Whether the two businesses are in the same stages of their industry life cycles.

C

43. What are "strategic relatedness" (as distinct from "operational relatedness") in diversification refers to: @ Pages and References: p360 a. The ability to use very different marketing strategies that fit with different countries b. The ability to sell similar products *c. The ability to apply similar strategies, resource allocation procedures, and control systems across the businesses d. The ability to maximize the allocation of financial resources across the businesses

C

44. Which way of exploiting an innovation leaves the largest degree of control for the innovator? @ Pages and References: pp254-255 a. Licensing b. Joint venture c. Internal commercialization d. Strategic alliances

C

45. The choice of being a leader or a follower in innovation should depend on: @ Pages and References: pp256-257 a. The extent of protection of the innovation, the nature of the knowledge involved, and the potential to establish a standard b. The development cost of the innovation, the importance of complementary resources, and the shape of the economy c. The extent of protection of the innovation, the potential to establish a standard, and the importance of complementary resources d. The potential to establish a standard, the relative powers of the other players in the industry, and the development cost of the innovation

C

59. The examples of xerography, jet engines, mathematics of fuzzy logic, and MP3 format illustrate that: @ Pages and References: pp247-248 a. Invention always precedes innovation b. Financial resources are critical to introduce successful innovations c. The innovation cycle has speeded up over time d. Innovation never stops over time

C

26. An innovator may fail to earn any significant returns from an innovation if: @ Pages and References: pp250-251 a. The innovation fails to create value for users b. The innovator is unable to appropriate the value the innovation creates c. Both (a) and (b) are present d. If either (a) or (c) is present.

D

26. Diversification whose sole impact is to reduce the variability of profits does not create value for shareholders because: @ Pages and References: pp350-351 a. Shareholders are interested in return more than in risk b. The most important risks (such as a global financial crisis or the collapse of the Euro) are systemic in nature, against which diversification offers little protection c. The risk which is relevant to stock market valuations is perceived risk--this bears little relationship to profit variability d. If investors can spread risk by diversifying their portfolios, diversification adds no additional value in terms of risk spreading.

D

28. Internationalization increases rivalry pressures because: @ Pages and References: p318 a. The number of producers in any market increases b. The diversity of those sellers increases c. Global excess capacity increases d. All of the above

D

28. The characteristic profile of an industry life cycle has an 'S' shaped curve because: @ Pages and References: p209 a. It is modeled on the Product Life Cycle, which is also 'S' shaped b. It is generated by a quadratic function c. It reflects the changing pace at which technology is diffused d. It is the result of changes in rates of growth of market demand.

D

28. When diversification combines two businesses in different industrial sectors, the key determinant of whether the diversification creates value is whether the diversification: @ Pages and References: p352 a. Change the debt/equity ratio of the combined company b. Is between culturally-compatible businesses c. Causes management to lose its focus on its core business d. Enhances the competitive advantage of either or both of the two businesses.

D

30. The transition from the introduction to growth phase of the industry life cycle features: @ Pages and References: p211 a. Increasing product differentiation b. Declining innovation c. Offshoring of production d. Product innovation giving way to process innovation

D

31. The distinction between codifiable and tacit knowledge is important in relation to property rights protection because: @ Pages and References: p252 a. Both types of knowledge are present in innovations b. Patents must be written clearly and in an accurate way, so that they only contain codifiable knowledge c. If an innovation is not described and embedded in a written form, it cannot be effectively protected d. In the absence of legal protection, the extent to which an innovation can be imitated depends on the ease with which the technology can be comprehended and communicated

D

31. The management systems of leading firms in mature industries such as UPS, Wal-Mart, Nucor, and ExxonMobil are characterized by: @ Pages and References: p285 a. High levels of decentralization b. Metrics-based management systems c. Stringent bureaucratic controls that also permit significant levels of individual autonomy d. Financial controls, HR policies, and operating practices which are tightly integrated with demanding performance targets.

D

32. The pursuit of efficiency within mature industries requires management systems that: @ Pages and References: p286 a. Disaggregate company-wide goals into specific performance targets for departments and individuals b. Embed performance goals within the company's organizational culture c. Utilize balanced scorecards to cascade company-wide goals d. (a) and (b).

D

33 Toyota operates automobile assembly plants in all five continents of the worlds. This reflects: @ Pages and References: pp323-325 a. The widespread availability of the resources needed for automobile production b. The high costs of transporting automobiles between countries c. The need to adapt products to the requirements of local markets d. Toyota's ability to transfer its production capabilities worldwide. ○

D

36. The failure of empirical research to find unambiguous evidence that related diversification outperforms unrelated evidence points to: @ Pages and References: pp358-359 a. The fact that firm performance is the outcome of many factors of which diversification strategy is only one b. Reverse causation: it may be that poorly performing firms are more likely to take the risk of unrelated diversification c. Difficulties in determining whether diversification is related or unrelated *d. All the above

D

37. Many retailers that have been outstandingly successful in their how markets have experienced much poorer performance when they have entered overseas markets. These include: Tesco, Marks& Spencer, Laura Ashley, and Body Shop in the UK); Best Buy, Sears, Macy's and Wal-Mart in the US. This reflects: @ Pages and References: pp326-328 a. The lack of major efficiency benefits from international scope in retailing b. The lack of scale economies in retailing c. Limited opportunities for exploiting learning benefits in retailing (e.g. by transferring best practices) d. The lack of major efficiency benefits from international scope combined with the need for national differentiation.

D

38. A common approach to reconciling the benefits of global scale with the need for national differentiation is to: @ Pages and References: pp328-333 a. Invest heavily in establishing a global brand b. Allowing nati.al subsidiaries to develop new products, then encouraging other subsidiaries to adopt them c. Developing globally standardized products but selling them under local brand names d. Creating standard product platforms in terms of design and components, then adapting product features, complementary services, and marketing approaches.

D

39. Which is the most efficient mechanism for allocating capital among different businesses: the internal capital allocation of diversified firms or the external capital market? @ Pages and References: pp356-357 a. The internal capital allocation process of diversified firms b. The external capital market c. It depends on the effectiveness of the specific firm's capital allocation process d. It depends on the effectiveness of the specific firm's capital allocation process and the efficiency of the capital market in the country where the firm is located.

D

40. The internal labor market provides a large, diverse firm with the chance to make savings, by: @ Pages and References: pp356-357 a. Developing senior managers with wide experience b. Relying less on external recruitment consultants c. Having first-hand knowledge of a large pool of internal recruits for transfer between businesses d. All of the above

D

40. Vendor partnerships based on relational contacts—such as the relationships between Toyota and its major component suppliers—are more successful than either pure market contracts or vertical integration because: a. They give the buyer immense bargaining power over its suppliers b. They offer similar benefits of high-powered incentives and flexibility that market contracts c. They offer similar coordination benefits as vertical integration d. They combine the coordination benefits of vertical integration with the incentive and flexibility benefits of market contracts. ○

D

42. The costs of national differentiation can be low if: @ Pages and References: pp330-331 a. A firm does not differentiate its products very much b. The firm has a strong brand c. A "global customer" exists d. A common basic design and common components are employed

D

42. Which of the following is not a source of organizational inertia? @ Pages and References: pp217-219 a. Limited search—the preference for exploitation over exploration b. Organizational routines c. Complementarities between the different activities of the firm d. The primacy of shareholder value maximization as a corporate goal..

D

48. Cooperation with lead users and flexibility are two illustrations of: @ Pages and References: pp258-259 a. Business level strategies b. Corporate level strategies associated with innovation and technological management c. Tactics to limit the exposure to financial risk in the context of a depressed economy *d. Strategies to limit the technological risk associated with emerging industries

D