strategic management final

121) How did Uber conflict with Carnegie Mellon University's National Robotics 121) Engineering Center (NREC)? A) Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC. B) Uber bribed NREC officials to give permission for building an extension to the NREC facility that focuses solely on Uber research. C) Uber promised a large donation to NREC but then reneged on the offer when NREC would not provide Uber with researchers. D) Uber allegedly stole ideas from the NREC research team and then claimed that these ideas were generated by their own researchers.

A) Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC.

122) In late 2014, Uber senior executive Emil Michael was heard to say that Uber should spend a million dollars to hire private investigators to dig up dirt on journalists who wrote damaging pieces on Uber. When the remarks became public, he apologized. How did Uber's CEO deal with Michael? A) Uber's CEO refused to discipline Michael. B) Uber's CEO fired Michael. C) Uber's CEO promoted Michael. D) Uber's CEO demoted Michael.

A) Uber's CEO refused to discipline Michael.

95) W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has A) a decentralized structure. B) a top-down management style. C) organizational inertia. D) a formalized structure.

A) a decentralized structure.

28) Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario? A) a strategic alliance B) a leveraged buyout C) an acquisition D) a proprietorship

A) a strategic alliance

5) The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 5) billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate? A) an acquisition B) a merger C) a joint venture D) an equity alliance

A) an acquisition

73) Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A) because of the large economic distance between U.S. and India B) because Walmart's low-cost strategy has not been accepted by Indian consumers C) because NAFTA prohibits Walmart from investing in countries outside North America D) because of the political differences between India and U.S.

A) because of the large economic distance between U.S. and India

10) How foes horizontal integration within an industry affect the surviving firms? A) by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers B) by requiring the surviving firms to shift their focus from non-price to price competition C) by increasing the threat the surviving firms will face from new entrants D) by strengthening the rivalry among existing firms

A) by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

81) Which of the following terms or phrases best characterizes Zappos' organizational structure? A) extremely flat C) extremely tall B) mechanistic D) centralized

A) extremely flat

92) McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of A) formalization. B) hierarchy. C) decentralization. D) specialization.

A) formalization

150) The informational advantage that agents possess over principals is often based on the fact that A) insiders are the first to learn about important developments before the information is released to the public. B) agents are legally permitted to freely trade the information in exchange for benefits, unlike principals. C) the information is extremely secure and protected from exposure to anyone outside the company. D) public stock companies are characterized by information symmetry.

A) insiders are the first to learn about important developments before the information is released to the public.

41) Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) A) international strategy to a global-standardization strategy. B) transnational strategy to a global-standardization strategy. C) transnational strategy to a multidomestic strategy. D) international strategy to a multidomestic strategy.

A) international strategy to a global-standardization strategy.

130) Mario founded Tapoz Communications Inc. in 1993. Ten years later, the company went 130) public. Despite Mario's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify? A) legal personality B) transferability of investor ownership C) separation of legal ownership and management control D) limited liability for investors

A) legal personality

56) Ridemore Autos Inc. has shifted its research and development unit from its home 56) country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advance automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of A) location economies. C) resource immobility. B) resource ambiguity. D) economies of scope.

A) location economies.

54) India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because A) of an abundance of well-educated, English-speaking young people. B) of an efficient infrastructure and high labor costs. C) it has emerged as a manufacturing powerhouse. D) it has an abundance of uneducated workers who are highly trainable.

A) of an abundance of well-educated, English-speaking young people.

107) If a firm pursues only a differentiation strategy, it is most likely a(n) ________ organization. A) organic B) centralized C) integrated D) mechanistic

A) organic

154) An individual who is part owner of a company and hires another individual to act on his or her behalf is referred to as a(n) A) principal. B) employee. C) manager. D) agent.

A) principal

38) A ________ is best described as an approach to strategic decision making that breaks 38) down a larger investment decision into a set of smaller decisions that are staged sequentially over time. A) real-options perspective B) cost-leadership approach C) break-even analysis D) market risk framework

A) real-options perspective

65) SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to A) reduce its cultural distance from the other countries. B) reduce its geographical distance from the other countries. C) increase its administrative distance from the other countries. D) increase its economic distance from the other countries.

A) reduce its cultural distance from the other countries.

58) Which of the following statements accurately explains the primary reason behind 58) Walmart's failure in Germany? A) significant differences between its U.S. personnel policies and Germany's culture B) inability to implement its trademark focused-differentiation strategy in the German market C) Metro's hostile takeover of Walmart in Germany D) Germany's unfamiliarity with retail discount powerhouses

A) significant differences between its U.S. personnel policies and Germany's culture

115) While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a ________ structure. A) simple B) mechanistic C) matrix D) functional

A) simple

93) A high degree of formalization in an organization is most likely to A) slow down decision making. B) increase creativity and innovation. C) produce inconsistent results. D) improve customer service.

A) slow down decision making

101) Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n) A) tall hierarchical structure. B) organic organizational structure. C) flat hierarchical structure. D) decentralized organizational structure.

A) tall hierarchical structure.

34) One of the first new business apps resulting from the alliance of Apple and IBM will help airline pilots determine the right amount of fuel to carry on a particular flight. This task not only requires significant data analytics but also the need to display the information in an easily understandable way so that pilots can digest it quickly when glancing on their iPad in a cockpit prior to departure. Which of the following parts of this example will Apple be responsible for? A) the display of information in an easy-to-understand way B) the organization and analysis of data analytics C) the determination of the amount of fuel to carry on a flight D) the arrangement of the cockpit to facilitate the use of the iPad

A) the display of information in an easy-to-understand way

96) Which of the following is true of W. L. Gore & Associates, which has a lattice organizational form? A) All employees are empowered to speak to all other employees in the organization. B) It has a high degree of centralization. C) Its culture has been linked to lower employee satisfaction and retention. D) The degree to which a task is divided into separate jobs is high

A) All employees are empowered to speak to all other employees in the organization.

33) Although long-standing enemies, Apple and IBM formed an alliance partnership. How did this partnership benefit both Apple and IBM? A) Apple's core competency with consumer services and IBM's core competency with business services complemented each other. B) Apple's core competency with business services and IBM's core competency with consumer services complemented each other. C) Apple's core competency with manufacturing and IBM's core competency with marketing complemented each other. D) Apple's core competency with marketing and IBM's core competency with manufacturing complemented each other.

A) Apple's core competency with consumer services and IBM's core competency with business services complemented each other.

36) Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks? A) Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. B) HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. C) HP was able to enter a new market, and DreamWorks was able to strengthen its old market. D) DreamWorks was able to enter a new market, and HP was able to strengthen its old market.

A) Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.

69) The administrative and political distance between two trading countries reduces when A) there is a well-functioning capital market in the host country. B) there are tariffs and trade quotas in the host country. C) there are FDI restrictions in the host country. D) there is no independent central bank in the host country.

A) there is a well-functioning capital market in the host country.

32) Which of the following is not a reason why firms enter alliances? A) to replace competitive advantage with competitive parity B) to learn new capabilities C) to strengthen competitive position D) to enter new markets, either in terms of geography or products and services

A) to replace competitive advantage with competitive parity

102) Grey Designs Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Charles Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Charles Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? A) Charles Grey has a wide span of control. B) Grey Designs Inc. is a mechanistic organization. C) Grey Designs Inc. has a tall hierarchical structure. D) Charles Grey is underworked.

A) Charles Grey has a wide span of control.

155) Which of the following is not true of corporate governance in public stock companies? A) Corporate governance seeks to create a separation between ownership and control. B) Corporate governance provides rules for making decisions on corporate affairs. C) Corporate governance seeks to benefit multiple stakeholders, not just shareholders. D) Corporate governance attempts to address the principal-agent problem.

A) Corporate governance seeks to create a separation between ownership and control.

15) Which of the following is a disadvantage of a horizontal integration corporate strategy? A) It increases the potential for legal repercussions. B) It increases competitive intensity within an industry. C) It increases the costs associated with increasing value. D) It increases the threat of new entrants in an industry.

A) It increases the potential for legal repercussions

45) European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build 45) jetliners. Which of the following statements best explains why it is employing this strategy? A) to take advantage of lower taxes in the southern United States B) to take advantage of the high labor costs in the southern United States C) to take advantage of the high cost of living in the southern United States D) to take advantage of the low impact of globalization in the United States

A) to take advantage of lower taxes in the southern United States

87) What most likely happens when a firm optimizes its organizational structure to its current situation? A) It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B) It transforms strategy into actions and business models. C) It achieves superior performance. D) It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution.

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

128) Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company? A) Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well. B) Rosa can legally sell shares of Hoptin in the stock market. C) John is a shareholder of Hoptin but does not have any managerial duties. D) Kevin, an employee at Hoptin, is not responsible for any losses that Hoptin incurs.

A) Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.

4) When does a merger between companies typically occur? A) when two firms of comparable size join to form a combined entity B) when large, incumbent firms buy start-up companies C) when two or more firms enter a temporary vertical strategic alliance D) when a target firm does not want to be acquired

A) when two firms of comparable size join to form a combined entity

43) As a result of globalization, the A) world's market economies are becoming more integrated. B) economies around the world are becoming more independent. C) cultural distance between countries is increasing. D) cost of doing business around the world is increasing.

A) world's market economies are becoming more integrated.

47) Which of the following is a feature of the Globalization 2.0 stage? A) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries. B) Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. C) Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. D) Only sales and distribution operations took place overseas, while all the important business functions were located in the home country.

A) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

116) Opal, a recent fashion design school graduate, has received praise for her clothingdesigns from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal? A) Once the firm starts growing and attracting more customers she is likely to feel overloaded. B) The online admiration of her designs will not translate into sales. C) Hiring more employees will result in loss of intellectual property. D) People are highly unlikely to buy clothes from a store run by a fashion design student.

A) Once the firm starts growing and attracting more customers she is likely to feel overloaded.

14) PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma? A) PureSource Pharma will lower its costs through economies of scale. B) PureSource Pharma will increase its cost of distribution. C) PureSource Pharma will reduce the size of its sales force. D) PureSource Pharma will diminish its economic value creation.

A) PureSource Pharma will lower its costs through economies of scale.

125) Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability? A) Shareholders of Jamiro are responsible to the company only for the capital they have invested. B) Employees of Jamiro are also the owners of the company. C) Shareholders of Jamiro are not permitted to trade their company stock at the New York Stock Exchange (NYSE). D) Employees of Jamiro are legally permitted to invest their capital in the company's stock.

A) Shareholders of Jamiro are responsible to the company only for the capital they have invested.

140) Which of the following statements best supports the view that GE's ecomagination strategy is in line with the shared value creation framework? A) The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage. B) The ecomagination strategy is the brainchild of the founder of the company. C) The ecomagination strategy helps GE spend more on research and development than other similar companies. D) The ecomagination strategy generated $3 billion in revenues for GE during 2012.

A) The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage.

30) What does the relational view of competitive advantage propose? A) The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. B) Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing. C) A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price. D) A strategic alliance has the potential to help a firm gain a competitive advantage

A) The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.

27) Which of the following statements is true of strategic alliances? A) They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles. B) They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. C) They enable firms to achieve goals faster, but at higher costs. D) They are always focused on joining the same value chain activities.

A) They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.

100) Which of the following did management at Zappos do to reduce the level of formalization in their organization? A) They avoided asking their customer service reps in call centers to follow a detailed script. B) They established top-down management as their primary strategy. C) They increased their reliance on drop-shipment orders. D) They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.

A) They avoided asking their customer service reps in call centers to follow a detailed script.

6) Which of the following is true of acquisitions? A) In acquisitions, two independent companies join to form a separate third entity. B) Acquisitions can be friendly or hostile. C) Acquisitions can occur only when the involved entities are of comparable size. D) Acquisitions increase the competitive intensity in an industry.

B) Acquisitions can be friendly or hostile.

134) Vijay is a firm believer in Milton Friedman's view of a firm's social obligations. With which of the following statements is Vijay most likely to agree? A) Firms should define value creation more narrowly in terms of financial performance. B) Businesses can use their resources to create profit as long as they do so within the rules of the game. C) Firms should not go beyond their economic responsibility to increase profits. D) Businesses should engage in open and free competition without deception or fraud, only as long as their competitors do so.

B) Businesses can use their resources to create profit as long as they do so within the rules of the game.

99) ________ refers to the degree to which decision making is concentrated at the top of the organization. A) Naturalization B) Centralization C) Specialization D) Formalization

B) Centralization

31) How did the strategic alliance between HP and DreamWorks Animation SKG affect A) It failed because HP lacked the expertise in selecting and integrating technology acquisitions. B) It enabled HP to compete head on with Cisco's videoconferencing solution. C) It helped HP pursue a taper integration strategy. D) It resulted in depreciation of HP's shareholder value.

B) It enabled HP to compete head on with Cisco's videoconferencing solution.

16) How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010? A) It opens a market for it that is growing slowly but has high profit margins. B) It has access to convenience stores and a new distribution channel. C) It automatically gains monopoly in the chocolate-manufacturing industry. D) Its main strategic focus is now on the domestic market.

B) It has access to convenience stores and a new distribution channel.

112) Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? A) Its decision power is spread across the organization. B) Its job descriptions are very descriptive. C) Its communication lines are bottom-up and well-defined. D) It frequently ranks among the top 500 companies to work for.

B) Its job descriptions are very descriptive.

131) Which of the following statements best supports the separation of ownership and control in publicly traded companies? A) Shareholders can freely trade the company stocks. B) Shareholders own stocks but do not run the company. C) Shareholders are liable only for the capital they invest and not for their personal wealth. D) Managers control the company but may also have stock ownership.

B) Shareholders own stocks but do not run the company.

51) How has China been affected by its one-child-per-family policy and appreciation of its currency? A) The purchasing power of its workforce has reduced. B) The country's advantage in low-cost manufacturing has reduced. C) The standard of living within the economy has lowered. D) The value added to production has reduced.

B) The country's advantage in low-cost manufacturing has reduced.

123) Which of the following statements is true of shareholders in a public stock company? A) They are appointed by a board of directors to oversee the company's management. B) They are granted a charter of incorporation by the state and legally own company stock. C) They are the centerpiece of corporate governance. D) They directly supervise and coordinate the manufacture of products and delivery of services.

B) They are granted a charter of incorporation by the state and legally own company stock.

97) Which of the following statements about W. L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner? A) W. L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses. B) W. L. Gore & Associates refers to its employees as associates rather than employees. C) W. L. Gore & Associates is characterized by a vertical organizational form. D) W. L. Gore & Associates prefers e-mail communication to face-to-face communication.

B) W. L. Gore & Associates refers to its employees as associates rather than employees.

151) Sam is a manager at StyleOne Apparels Inc. and is friends with the company's CEO. This privilege gives Sam the information that StyleOne Apparels is in the midst of talks to take over a leading rival. Sam buys stocks of StyleOne with the expectation that its stocks will appreciate. But the deal falls through and the stocks of StyleOne depreciate in the following months. Are Sam's actions unethical? Why? A) No, because Sam did not ask the CEO to disclose such information to him. B) Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome. C) No, because Sam did not make any profits from trading stocks using this information. D) Yes, because it is illegal and unethical for Sam to possess any kind of insider information.

B) Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.

39) Terranova Autos Inc., a large automobile company, made an initial small investment in 39) a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start-up company. However, Terranova Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Terranova Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as A) transaction cost economics. B) a real-options perspective. C) a break-even analysis. D) credible commitment.

B) a real-options perspective.

77) Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? A) franchise agreement B) acquisition C) licensing D) exporting

B) acquisition

12) How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers? A) by increasing the threat of entry in the industry B) by lowering competitive intensity in the industry overall C) by facilitating excess capacity in the industry D) by preventing mergers from taking place

B) by lowering competitive intensity in the industry overall

78) Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A) brownfield operations C) crowdsourcing B) exporting D) greenfield operations

B) exporting

18) Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to A) imitate the actions of its competitors like Apple and Facebook. B) fill gaps in its competency lineup. C) expand through unrelated diversification. D) solve its principal-agent problems.

B) fill gaps in its competency lineup.

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

B) increases the liability of foreignness.

113) McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's A) has a decentralized structure. B) is mechanistic in nature. C) has an informal structure. D) is organic in nature.

B) is mechanistic in nature.

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

B) it draws from multiple, equally important research facilities located throughout the world.

22) JetStream Airway's decision to acquire Rex Fuels Inc. proved to be ill-fated because itsmanagers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate? A) managerial feasibility B) managerial hubris C) managerial capitalism D) managerial empathy

B) managerial hubris

158) Travis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe. This is an example of A) shared value creation. C) adverse selection. B) on-the-job consumption. D) corporate governance.

B) on-the-job consumption.

105) Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is A) formalized. B) organic. C) mechanistic. D) centralized.

B) organic.

24) What causes the winner's curse? A) underpaying for an acquisition B) overpaying for an acquisition C) buying a firm with a competitive disadvantage D) buying a firm with principal-agent problems

B) overpaying for an acquisition

145) Which of the following could most likely have prevented the accounting scandals of the early 2000s and the global financial crisis? A) separating economic interests and social needs B) practicing effective corporate governance C) adopting a narrow shareholder perspective D) adopting the principles of shareholder capitalism

B) practicing effective corporate governance

148) Clare, the CEO of Femica Inc., reports to the board of directors appointed by the 148) shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n) A) fiduciary responsibility oversight. B) principal-agent problem. C) shareholder capitalism scenario. D) inside director-outside director conflict.

B) principal-agent problem.

29) The ________ is a strategic management framework that proposes that critical 29) resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. A) non-differentiation strategy B) relational view of competitive advantage C) stakeholder strategy D) real-options perspective

B) relational view of competitive advantage

88) A firm's ________ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed. A) culture B) structure C) norm D) control

B) structure

19) Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012? A) the desire to pursue an unrelated diversification strategy B) the desire to gain a new capability C) the need to reduce its level of horizontal integration D) the need to enter a new geographical market

B) the desire to gain a new capability

137) Which of the following real-world events would act as the most likely deterrent against adopting a purely stakeholder strategy approach to business? A) the collapse of the economy in the U.S. brought about by the housing crisis B) the nonsustainable debt levels incurred by sovereign governments to fund social programs C) the financial crisis in Europe brought about by money lenders seeking to make quick money D) the rise of GDP in countries that do not believe in Milton Friedman's philosophy

B) the nonsustainable debt levels incurred by sovereign governments to fund social programs

40) In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates A) the stakeholder strategy. B) the real-options perspective. C) explicit knowledge. D) co-opetition.

B) the real-options perspective.

1) The success of the Pixar-Disney strategic alliance demonstrated that A) Disney was in desperate need of Pixar's graphic display systems. B) the two entities' complementary assets matched. C) the companies were effectively managing an unrelated diversification strategy. D) it was easier for the alliance partners to reduce the value gap created.

B) the two entities' complementary assets matched.

160) In a public stock company, senior executives, such as the CEO, face agency problems when A) the board of directors possesses more information about the company than they do. B) they delegate authority of strategic business units to general managers. C) they decide to get involved in the day-to-day operations of a company. D) the firm designs work tasks, incentives, and employments that minimize opportunism.

B) they delegate authority of strategic business units to general managers.

120) Why did W. L. Gore reorganize itself into a functional structure from a simple structure? A) A functional structure is more decentralized. B) A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity. C) A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. D) A functional structure has a tall hierarchical structure that relies on bottom-up communication.

C) A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.

156) Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company? A) Goldman Sachs was party to the Abacus deal despite knowing its shortcomings. B) GE knew that it could create a profitable venture out of producing green products, so it rolled out the ecomagination strategy. C) Based on a tip-off by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement. D) Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise.

C) Based on a tip-off by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.

139) Which of the following perspectives best supports the shared value creation framework? A) A firm's competitive advantage depends on pitting economic and societal needs in a trade-off. B) Failing to create value for society almost always reflects on the bottom line. C) Externalities such as pollution, wasted energy, and costly accidents actually create internal costs. D) Markets are more often than not defined by societal needs rather than economic needs.

C) Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.

42) Although demand for IKEA's low-cost furnishings has increased, its annual store 42) growth has slowed to fewer than ten new stores a year. Why has this happened? A) IKEA has failed to hire top designers for its furniture. B) IKEA has had a revolving door of CEOs for the past 20 years. C) IKEA's global supply chain has become bottlenecked. D) IKEA's holding companies are all located in Sweden.

C) IKEA's global supply chain has become bottlenecked.

129) What best describes transferability of investor ownership in a public stock company? A) Investors can give out company stocks as a gift. B) Investors are allowed to participate in strategy formulation. C) Investors are allowed to trade shares of stocks. D) Investors can be hired as employees.

C) Investors are allowed to trade shares of stocks.

133) What is the result of managers' pursuit of strategies that define value creation too narrowly in public stock companies? A) It enables companies to create social value by addressing society's needs but prevents them from creating economic value for shareholders. B) It helps companies increase firm profits by creating shared value. C) It reduces the trust of shareholders in the organization as a vehicle for value creation. D) It gives the managers greater control of the performance of the organization in the long term.

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

74) Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.? A) It will be able to replicate its existing business model easily. B) It will be able to easily sell products for which demand varies by income. C) It will be able to benefit from economic arbitrage. D) It will be able to successfully leverage its competitive advantage from economies of standardization.

C) It will be able to benefit from economic arbitrage.

141) If the board of directors at GE decides to pursue a stakeholder strategy, should they change the ecomagination strategy? A) No, they should not change the strategy because the change would necessitate making tough ethical decisions. B) Yes, they should change the strategy because it provides benefits to the society. C) No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues. D) Yes, they should change the strategy because creating value for society is against the principles of stakeholder strategy.

C) No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues.

85) Which of the following statements is true of strategy in an organization? A) Strategy implementation is considered unsuccessful if it requires changes within an organization. B) To implement a strategy successfully, an organization's structure must be rigid. C) Organizational structure must follow strategy in order for firms to achieve superior performance. D) Strategy implementation does not affect resource allocation and power distribution within an organization.

C) Organizational structure must follow strategy in order for firms to achieve superior performance.

157) Which of the following acts in the Goldman Sachs-Galleon Group insider trading scandal is an egregious exploitation of information asymmetry? A) Rajaratnam receiving information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs B) Warren Buffet's decision to inject a huge amount of money into Goldman Sachs based on its financial reports C) Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs D) Galleon Group's decision to trust Rajat Gupta's information as accurate

C) Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs

124) What does "limited liability for investors" imply in a public stock company? A) Shareholders are liable for their invested capital and personal wealth and not for any other investments made. B) Shareholders are liable for all the decisions made by the board of directors of the company. C) Shareholders who provide the risk capital are liable only to the capital specifically invested. D) Shareholders have financial but not legal responsibilities toward the public stock company.

C) Shareholders who provide the risk capital are liable only to the capital specifically invested.

84) Why does strategy implementation often require changes within an organization? A) Strategy implementation does not affect resource allocation and power distribution within an organization. B) Strategy implementation is less important than strategy formulation. C) Strategy implementation transforms strategy into actions and business models. D) Strategy always follows structure.

C) Strategy implementation transforms strategy into actions and business models.

98) How does W.L. Gore exemplify founder imprinting? A) The compensation of Gore associates is decided through a peer review system. B) W. L. Gore & Associates is organized in a formal and centralized manner. C) The four core values articulated by Bill Gore guide the company and its associates to this day. D) Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list.

C) The four core values articulated by Bill Gore guide the company and its associates to this day.

76) Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A) They are based on contracts rather than ownership. B) They require low amounts of investments in terms of capital. C) They reduce a firm's exposure to loss of reputation. D) They are easy to initiate and terminate.

C) They reduce a firm's exposure to loss of reputation.

136) Leila is a graduate student pursuing a course in business. Presented with the case of 136) Uber's unethical behavior, Leila wonders if Uber's board of directors should ask the CEO of Uber, Travis Kalanick, to step down. Having a strong belief in Michael Porter's idea of value creation, Leila is most likely to conclude that A) Uber's board of directors should not ask Kalanick to step down because he was responsible for an almost 90 percent appreciation of the company's stock. B) Uber's board of directors should ask Kalanick to step down because agents, unlike principals, are disposable. C) Uber's board of directors should ask Kalanick to step down because it has a greater obligation toward society. D) Uber's board of directors should not ask Kalanick to step down because doing so would cause a profit dip that would affect its shareholders.

C) Uber's board of directors should ask Kalanick to step down because it has a greater obligation toward society.

7) When large, incumbent firms buy start-up companies, the transaction is generally 7) described as a(n) A) joint venture. B) alliance. C) acquisition. D) partnership.

C) acquisition.

119) A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) ________ structure. A) matrix B) M-form C) functional D) simple

C) functional

108) Which of the following is a feature of an organic organization? A) clear lines of authority B) high degree of specialization C) high span of control D) rigid division of labor

C) high span of control

52) Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer A) higher quality for similar costs for U.S domestic routes. B) similar quality for lower costs for U.S domestic routes. C) higher quality for lower costs for international routes. D) similar quality for lower costs for international routes.

C) higher quality for lower costs for international routes.

86) To maintain its core competency of providing a superior customer experience in the 86) face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate? A) how an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure B) how strategy implementation has an effect on resource allocation and power distribution C) how an organization accommodates strategy implementation through a flexible organizational structure D) how an organization optimizes its organizational structure to the current situation

C) how an organization accommodates strategy implementation through a flexible organizational structure

59) Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It 59) has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because A) it overestimates its need to protect its intellectual property. B) it overestimates the geographic and cultural distance between Pelo and Zevar. C) it underestimates its liability of foreignness when entering the Zevar market. D) it underestimates its dwindling reputation before it enters the Zevar market.

C) it underestimates its liability of foreignness when entering the Zevar market.

63) United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of A) food processed in Fernsland. B) iron ore extracted in Fernsland. C) luxury items manufactured in United Nerumbia. D) movies and TV shows produced in United Nerumbia

C) luxury items manufactured in United Nerumbia.

49) A trend observed during the Globalization 3.0 stage involves A) privately-owned firms getting nationalized. B) world's market economies becoming less integrated. C) multinational companies organizing as global-collaboration networks. D) countries around the globe becoming more self-sufficient and independent.

C) multinational companies organizing as global-collaboration networks.

44) Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a A) sole proprietorship. B) nonprofit organization. C) multinational enterprise. D) nationalized firm.

C) multinational enterprise

21) The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of A) experience-curve effects. problems. B) time compression diseconomies. C) principal-agent D) resource ambiguity.

C) principal-agent

138) Creating economic value for shareholders while also creating social value is known as creating A) stakeholder strategy. B) shareholder capitalism. C) shared value. D) a social market economy.

C) shared value.

135) According to the perspective of shareholder capitalism A) shareholders in public stock companies have unlimited financial liability. B) shareholders in public stock companies have significant decision-making power. C) shareholders in public stock companies have the most legitimate claim on profits. D) shareholders in public stock companies are restricted from buying shares of two competing companies.

C) shareholders in public stock companies have the most legitimate claim on profits

117) Nick just graduated from law school and wants to start his own law firm. It is best for Nick to use a ________ organizational structure. A) mechanistic B) functional C) simple D) matrix

C) simple

35) A drawback involved in using cross-border strategic alliances to enter new foreign 35) markets is that A) all potential business risks in the new market will have to be faced alone by the foreign firm. B) the shareholder value of the foreign partner will decline drastically. C) some of the firm's proprietary know-how may be appropriated by the foreign partner. D) the foreign firm will need to make larger investments when compared to entering the new market on its own.

C) some of the firm's proprietary know-how may be appropriated by the foreign partner.

26) A ________ is best described as a voluntary arrangement between firms that involves 26) the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services. A) leveraged buyout B) cooperative C) strategic alliance D) proprietorsh

C) strategic alliance

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

C) the absence of a trading bloc.

146) In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems? A) the expectation that the agent will reconnect economic and social needs B) the expectation that the agent will follow the country's laws and regulations C) the expectation that the agent will act in the principal's best interest D) the expectation that the agent will go above and beyond the call of duty

C) the expectation that the agent will act in the principal's best interest

149) The conflict in a principal-agent relationship arises when A) the strategy adopted by the company's agents tries to emulate the mission statement created by the principals. B) the company has more outside directors than inside directors. C) the goals of the principals and agents are not aligned with each other. D) stockholders and agents are involved in the day-to-day operations of the company.

C) the goals of the principals and agents are not aligned with each other.

13) It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because A) the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive. B) the surviving firms will need protection against the relaxed entry barriers. C) the horizontal integration activity has the potential to reduce competitive intensity in an industry. D) the surviving firms will need to be protected against the increasing bargaining power of the suppliers.

C) the horizontal integration activity has the potential to reduce competitive intensity in an industry.

82) Organizational design is A) primarily focused on formulating effective strategies, not implementing them. B) a process that always functions independently of strategy formulation. C) the process of creating, implementing, and modifying the structure of an organization. D) primarily focused on replacing a firm's competitive advantage with competitive parity.

C) the process of creating, implementing, and modifying the structure of an organization.

147) Which of the following is the source of the principal-agent problem in publicly traded companies? A) limited liability for investors B) the law of legal personality C) the separation of ownership and control D) transferability of investor ownership

C) the separation of ownership and control

144) ________ is a mechanism to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully and legally. A) Stakeholder impact analysis B) Shareholder capitalism C) Corporate social responsibility D) Corporate governance

D) Corporate governance

142) Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework? A) Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. B) Doing so could be the only way to meet stockholder expectations in a highly competitive market. C) Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains. D) Doing so could yield significant business opportunities that could improve the standard of living of the poor.

D) Doing so could yield significant business opportunities that could improve the standard of living of the poor.

103) Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy 103) their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? A) Flight Stream Inc. has a high degree of centralization. B) Flight Stream's organizational culture is governed by codified rules. C) Flight Stream Inc. is a mechanistic organization. D) Flight Stream Inc. has a flat organizational structure.

D) Flight Stream Inc. has a flat organizational structure.

3) Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.? A) GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. B) GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase. C) GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately. D) GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

D) GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

118) Which of the following is an advantage offered by a functional structure? A) It allows for an efficient top-down communication chain and thus relies on a relatively tall structure. B) It facilitates a lower level of specialization. C) It facilitates a lower division of labor, which is linked to higher productivity. D) It allows for a higher degree of specialization and deeper domain expertise.

D) It allows for a higher degree of specialization and deeper domain expertise.

83) What was one of the reasons for Jerry Yang's failure at Yahoo? A) Jerry made many necessary changes to the company's organizational structure. B) Jerry focused most strategic changes on improving user experience and increasing advertising revenues. C) Jerry established a successful organizational structure and culture, but could not assert control. D) Jerry's preference for obtaining consensus among his managers led to bickering and infighting.

D) Jerry's preference for obtaining consensus among his managers led to bickering and infighting.

126) Which of the following is a characteristic of a public stock company? A) In publicly traded companies, professional managers are the legal owners of the company. B) Investor ownership cannot be transferred easily between investors. C) Shareholders who provide risk capital are liable for all losses incurred by the company. D) Legal personality allows a firm's continuation beyond the founder or the founder's family.

D) Legal personality allows a firm's continuation beyond the founder or the founder's family.

132) According to Michael Porter, which of the following is a problem with many publicly traded companies? A) The legal owners of publicly traded companies also make management decisions for the company. B) There is no transferability of stock ownership in publicly traded companies. C) Shareholders of publicly traded companies do not have a legitimate claim on profits. D) Many publicly traded companies have defined value creation too narrowly in terms of financial performance.

D) Many publicly traded companies have defined value creation too narrowly in terms of financial performance.

89) Which of the following real-world scenarios best exemplifies formalization? A) Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B) W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses C) Yahoo's decision to fire its CEO after incurring huge losses D) McDonald's use of standard operating procedures across the world

D) McDonald's use of standard operating procedures across the world

111) ________ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making. A) Virtual B) Organic C) Flat D) Mechanistic

D) Mechanistic

104) ________ organizations have a low degree of specialization and formalization as well as a flat organizational structure. A) Centralized B) Mechanistic C) Top-down D) Organic

D) Organic

9) Which of the following scenarios best illustrates horizontal integration? A) Regal Autos Inc. enters into a licensing contract with a distributor in a new international market. B) Regal Autos Inc. sets up its own distribution channel and retail stores. C) Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor. D) Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.

D) Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.

67) Zeda is a country of English-speaking people and has a very profitable economy. Which 67) of the following countries is most likely to be the closest to Zeda in terms of cultural distance? A) Terra, which is located close to Zeda and is easily accessible by road B) Olax, which has the same wealth and per capita income as Zeda C) Jordax, which has a very profitable economy and where people speak Jordaxian D) Segar, where people speak English and have a low standard of living

D) Segar, where people speak English and have a low standard of living

91) ________ describes the degree to which a task is divided into separate jobs. A) Hierarchy B) Centralization C) Formalization D) Specialization

D) Specialization

11) Which of the following is a result of horizontal integration in terms of Porter's five forces model? A) The industry structure becomes potentially less profitable. B) The industry structure becomes less consolidated. C) There is an increase in rivalry among existing firms. D) There is a reduction of excess capacity in the market.

D) There is a reduction of excess capacity in the market.

50) How will an increase in coordinated economic and political integration between countries affect the world economy? A) The cost of labor will further decline in emerging economies. B) The world's market economies will become self-sufficient and independent. C) There will be a movement away from global-collaboration networks among multinational enterprises (MNEs). D) There will be gains in social welfare and living standards across the globe.

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

72) Which of the following statements is true with regard to international trade between countries? A) Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B) Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C) Political integrations decrease the expected trade intensity between two countries. D) Wealthy countries engage in relatively more cross-border trade than poorer ones.

D) Wealthy countries engage in relatively more cross-border trade than poorer ones.

70) For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country? A) a firm that produces movies B) a firm that manufactures cell phone batteries C) a firm that sells wristwatches D) a firm that extracts and exports iron ore

D) a firm that extracts and exports iron ore

153) In publicly traded companies, individuals who are delegated to perform duties on behalf of company owners are known as A) clients. B) principals. C) shareholders. D) agents.

D) agents.

94) W. L. Gore & Associates is the inventor of path-breaking new products such as 94) breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity? A) a highly organic organizational structure B) a flat organization structure C) a low degree of centralization D) an extremely formalized organizational structure

D) an extremely formalized organizational structure

53) Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A) inefficient infrastructure in countries like China, which have brought down setting-up costs B) low levels of economic growth in emerging economies C) access to low-cost raw materials such as lumber and iron ore D) benefits from lower labor costs in manufacturing and services

D) benefits from lower labor costs in manufacturing and services

68) How has the administrative and political distance between Canada, Mexico, and the United States been reduced? A) by reducing their linguistic differences B) by lowering the disparities between their per capita incomes C) by adopting similar national cultures D) by establishing the North American Free Trade Agreement (NAFTA)

D) by establishing the North American Free Trade Agreement (NAFTA)

159) According to the agency theory, A) principals and agents have interchangeable roles. B) corporations are more than a set of contracts between parties. C) companies should focus on generating profits for stockholders. D) conflicts that arise in corporations should be addressed in the legal realm.

D) conflicts that arise in corporations should be addressed in the legal realm.

64) When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance. A) geographic B) administrative C) political D) cultural

D) cultural

114) The relationship between strategy and structure that directly impacts a firm's performance is A) unpredictable. C) independent. B) static. D) dynamic.

D) dynamic

75) Which of the following modes of entering a foreign market allows for the lowest level of control? A) greenfield ventures B) joint ventures C) acquisitions D) exporting

D) exporting

46) During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved A) licensing production and distribution. B) making foreign direct investments. C) making foreign institutional investments. D) exporting goods.

D) exporting goods.

80) Which of the following types of organizations comparatively requires the lowest levels 80) of investment and control? A) joint ventures B) acquisition C) greenfield operations D) franchising

D) franchising

79) Lucar Steels Inc. has decided to enter into a foreign market by setting up its own 79) production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? A) joint venture B) export C) acquisition D) greenfield operation

D) greenfield operation

8) Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A) forward integration B) backward integration C) vertical integration D) horizontal integration

D) horizontal integration

152) The risk of employee opportunism on behalf of agents in a public stock company is exacerbated by A) stakeholder strategy. B) groupthink. C) corporate governance. D) information asymmetry.

D) information asymmetry.

60) Japanese and European engineering companies entered China to participate in building 60) the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the ________ that firms can experience when expanding overseas. A) loss of reputation C) threat of new entrants B) liability of foreignness D) intellectual property exposure

D) intellectual property exposure

55) Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of A) learning races. B) network effects. C) economies of scope. D) location economies.

D) location economies.

25) Dream Slope Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleek Phantom Inc. This company produced bobsleds, but its sales had slowed. The managers of Dream Slope convinced themselves that they were able to manage the business of Sleek Phantom more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleek Phantom's bobsleds plummeted. Which of the following terms is often used to describe this scenario? A) managerial sympathy B) managerial empathy C) managerial disadvantage D) managerial hubris

D) managerial hubris

110) Walmart is an example of a(n) ________ organization. A) decentralized B) informal C) organic D) mechanistic

D) mechanistic

109) An organization is characterized as having a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely ________ in nature. A) formalized B) mechanistic C) specialized D) organic

D) organic

23) Adidas acquired Reebok primarily to A) pursue an unrelated diversification strategy. B) get access to the superior technology of Reebok. C) overcome its principal-agent problems. D) overcome its competitive disadvantage against Nike.

D) overcome its competitive disadvantage against Nike.

61) Which of the following is part of Geert Hofstede's cultural dimensions? A) locus of control B) span of control C) self-efficacy D) power distance

D) power distance

20) The main reason behind Google's decision to acquire the Israeli start-up company Waze 20) for $1 billion was to A) support start-up companies with venture capital. B) gain access to technology that is alien to it. C) share its capabilities with Waze. D) preempt its competitors from buying Waze.

D) preempt its competitors from buying Waze.

106) Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that A) focus on standardizing operating procedures. B) have a high degree of specialization and centralization. C) have a tall hierarchical structure. D) pursue a differentiation strategy at the business level.

D) pursue a differentiation strategy at the business level

90) Which of the following is an unintended side effect of a high degree of specialization in 90) an organization? A) reduced productivity B) decreased trade-off between breadth and depth of knowledge C) decreased opportunities for the division of labor D) reduced employee satisfaction due to repetition of tasks

D) reduced employee satisfaction due to repetition of tasks

2) Disney became the world's leading media company to a large extent by pursuing a corporate strategy of A) hostile takeovers. B) unrelated diversification. C) cost-leadership. D) related-linked diversification.

D) related-linked diversification

17) The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because A) its strategic position in the U.S. market was well protected through high entry barriers. B) Hershey's main strategic focus was on product and market diversification and not on the domestic market. C) this would help the company gain access to large cocoa plantations in China. D) the U.S. population was growing slowly and becoming more health conscious.

D) the U.S. population was growing slowly and becoming more health conscious

143) Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that A) a firm should expand its internal value chain to include nontraditional partners. B) businesses should focus on creating regional clusters such as Silicon Valley in the U.S. C) managers need to keep economic needs and societal needs disconnected from each other. D) the largest but poorest socioeconomic group can yield significant business opportunities.

D) the largest but poorest socioeconomic group can yield significant business opportunities.

71) Which of the following factors is the most important determinant of economic distance? A) the ethnicity and religion of consumers B) the presence of legal institutions in a country C) the topography of a country D) the wealth and per capita income of consumers

D) the wealth and per capita income of consumers

37) Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups? A) to invest their excess cash flow in the superior technology of the biotech start-ups B) to pursue an unrelated-options perspective without disrupting existing market economics C) to share their continuously updated research technology with the biotech start-ups D) to make small-scale investments in ventures poised to disrupt existing market economics

D) to make small-scale investments in ventures poised to disrupt existing market economics

127) Warren owns shares in a company called Gerarch Communications Inc. The company's 127) financial performance has been declining over the past few months, and the value of its stock has been decreasing. Warren wants to proactively cut his losses and therefore sells his shares. Lawrence, a trading enthusiast, buys shares in Gerarch Communications because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify? A) separation of legal ownership and management control B) limited liability for investors C) legal personality D) transferability of investor ownership

D) transferability of investor ownership

48) Which of the following is an observable feature in the Globalization 3.0 stage? A) Only sales and distribution functions of a multinational enterprise are located in a few key countries. B) Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries. C) Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. D) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

D) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world