WPC 480 Final

Joseph Schumpeter developed the concept of a conceptualization of creative destruction. This is the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." This occurs when innovation deconstructs long-standing arrangements and frees resources to be deployed elsewhere." This process, while important for the macroeconomy, has not seen much turnover (almost none) in the S&P 500. Is this statement true or false?

False

Innovation can be defined as problem-solving. Is this statement True or False?

True

U.S. Personal Consumption Expenditure as a percentage of Global GDP was approximately what percentage in 2019? a ) 16% b ) 12% c ) 8% d ) 20% e ) 24%

a ) 16%

Similar to Transparency International, the Organization for Economic Co-operation & Development (OECD) has developed a concord called the Anti-Bribery Convention which has 41 signatories. This Convention is focused on the export of corruption, mainly by bribery. The signatories to the convention control about what percentage of world exports and what percent of Foreign Direct Investment (FDI) outflows, respectively? a ) 67% and 90% b ) 33% and 67% c ) 33% and 90% d ) 50% and 33%

a ) 67% and 90%

The Herfindahl-Hirschman Index is used by various government department to judge whether an acquisition or merger proposal is material is reducing competition. Which of the below are the departments that can review merger or acquisition proposals? a ) Department of Justice & Federal Trade Commission b ) Federal Trade Commission & Securities Exchange Commission c ) Department of Justice & Securities Exchange Commission d ) Federal Trade Commission & Homeland Security e ) Department of Justice & Federal Drug Administration

a ) Department of Justice & Federal Trade Commission

The Foreign Corrupt Practices Act (FCPA) covers two aspects of company activities when such companies or individuals have a certain degree of connection to the United States? Two Departments oversee company and individual activities under the auspices of the FCPA. Which two are these? a ) Department of Justice & Securities Exchange Commission b ) Department of Justice & Federal Trade Commission c ) Federal Trade Commission & Securities Exchange Commission d ) Securities Exchange Commission & Federal Reserve Board of Governors e ) Federal Reserve Board of Governors & Federal Trade Commission

a ) Department of Justice & Securities Exchange Commission

Which of the following best illustrates forward vertical integration? a ) a firm that manufactures and sells car engines to major automobile companies launches its own line of cars b ) a designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery c ) a chain of ice cream parlors launches a brand of toys and accessories for children d ) a multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam

a ) a firm that manufactures and sells car engines to major automobile companies launches its own line of cars

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 ) location economies b ) economies of scope c ) learning races d ) network effects

a ) location economies

The management reporting model for any organization can be identified by the cascade sequence of three parameters. Which of the parameters below are these three parameters? a ) product b ) customer c ) technology d ) geography e ) origin

a ) product, b ) customer, and d ) geography

The three elements of the Fraud Triangle are based on which of the three below: (check all that apply) a ) rationalization b ) ambition c ) opportunity d ) ego e ) pressure

a ) rationalization, c ) opportunity, & e ) pressure

Which of the following is most likely an accurate statement? a ) the multinational enterprise Burns Industries benefited from advances in communications technology b ) the multinational enterprise Axe Capital was hindered by falling investment barriers c ) the multinational enterprise Rearden Steel benefited from rising trade barriers d ) the multinational enterprise Rainholm Industries was hindered by reduced transportation costs

a ) the multinational enterprise Burns Industries benefited from advances in communications technology

Hatfan Inc. is a large automobile company. The company's petrol cars strategic business unit (SBU) has been recognized as a cash cow, and its hybrid electric cars SBU has been categorized under stars. Which of the following can be inferred from this scenario? a ) the petrol cars SBU operates in a low-growth market, whereas the hybrid electric cars SBU operates in a high-growth market b ) the strategic recommendation for the hybrid electric cars SBU will be to harvest it, whereas for the petrol cars SBU, the company should just maintain it c ) the petrol cars SBU is more important than the hybrid electric cars SBO in terms of future growth for the company d ) the petrol cars SBU will have a relatively low market share in its industry, whereas the hybrid electric cars SBU will have the least market share in its industry

a ) the petrol cars SBU operates in a low-growth market, whereas the hybrid electric cars SBU operates in a high-growth market

Most acquisitions are disappointing or outright failures, largely because acquirers overpay. One of the main reasons put forward for this is that for many CEOs incentive compensation is tied to firm size - sales revenue, total assets and number of employees. Is this statement true or false or other? a ) true b ) false c ) incentive compensation is not part of this issue

a ) true

Tommy is the CEO of a private start-up firm that is valued at just over $1.2 billion dollars. His firm can be classified as being a: a ) unicorn b ) conglomerate c ) highly differentiated firm d ) dominate firm

a ) unicorn

The two largest trading partner countries for the U.S. in 2019 were which countries of those listed below? (check all that apply) a ) Japan b ) Canada c ) Germany d ) Saudi Arabia e ) Mexico

b ) Canada & e ) Mexico

Incumbent firms favor incremental innovation over radical innovation because: a ) Incremental innovations help firms sustain a permanent competitive advantage, whereas radical innovations only help gain a temporary advantage. b ) Radical innovation will disturb the existing power distribution within the firms. c ) Their business decisions are independent of the other parties in their innovation ecosystem. d ) Incumbent firms do not have formal organizational structures and processes like the way new entrants do.

b ) Radical innovation will disturb the existing power distribution within the firms.

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true? a ) The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price. b ) While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation. c ) The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. d ) While the industry for cellphones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits.

b ) While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation.

There are (at least) five different corporate governance models around the world. For the socially responsible governance model, which of the below represents that governance model's decision-making? a ) co-determination decision-making b ) consensus decision-making c ) command & control decision-making d ) directed decision-making e ) patriarchal or matriarchal

b ) consensus decision-making

Alliance formation is a complex activity. Compared to M&A, most of the time spent in alliance formation is spent in matters such as alliance structuring, representations and warranties and indemnification. Is this statement true or false? a ) true b ) false

b ) false

As companies grow, the build taller structures but do not widen their span of control. Is this statement true or false? a ) true b ) false

b ) false

Broadly speaking it can be said that large and well-known publicly-listed U.S. companies have typically not suffered impairment charges since these companies are professionally managed and have had the band-width and deep pockets to conduct deep due diligence and so establish acquisition prices that do not "over pay". a ) true b ) false

b ) false

Mechanistic structures are typified by wide spans of control, decentralization, low specialization and formalization and loose departmentalization. Is this statement true or false? a ) true b ) false

b ) false

The BSG market share / growth matrix is a cash management portfolio concept where cash cow businesses (business units) fund star businesses in order that they become the cash cows of the future. Is this statement true or false? a ) true b ) false

b ) false

Transparency International conducts an annual survey of 13 major data sources (like the World Bank, African Development Bank and The Economist Intelligence Unit) to establish its Corruption Perceptions Index. By and large, this survey shows that only very few countries are seen have problems with corruption at institutional level. Is this statement true or false? a ) true b ) false

b ) false

Forward integration is which of the following? a ) Capturing component or input suppliers in one's supply chain b ) moving closer to the ultimate consumer c ) growing one's position in the supply chain larger through making acquisitions of one's direct competitors d ) becoming better known in one's industry e) increasing returns

b ) moving closer to the ultimate consumer

Adidas acquired Reebok primarily to: a ) overcome its principal-agent problems b ) overcome its competitive disadvantage against Nike c ) pursue an unrelated diversification strategy d ) get access to the superior technology of Reebok

b ) overcome its competitive disadvantage against Nike

Micaela is the ethics officer at Oceanic Airlines, a publicly traded company. She wants to make sure that on-the-job consumption at Oceanic Airlines stays within legal and ethical bounds. Which action should she and the Oceanic Airlines board of directors take? a ) permit on-the-job consumption but cancel executive bonuses b ) set strict limits on what executives can spend on office redecoration or work-related celebrations c ) forbid high-cost items such as executive office decoration but permit lavish parties and celebrations because they are essential for morale d ) Do nothing. On-the-job consumption is a necessary part of hiring and retaining key executives

b ) set strict limits on what executives can spend on office redecoration or work-related celebrations

When goodwill is added to a company's balance sheet it represents what in terms of an acquisition? a ) all of the premium paid over the book value of an acquisition b ) the present value of future free cash flow expectations arising from an acquisition's synergistic benefits c ) the present value of profits expected to arise from the acquired company's existing client or customer base d ) the excess of an acquisition's purchase price after all of the acquired company's debt has been paid off e ) the amount paid for an acquisition in excess of the acquired company's book value that the acquiring company expects to write-off as an impairment charge

b ) the present value of future free cash flow expectations arising from an acquisition's synergistic benefits

There are three ways in which companies grow. This is through one or more of three growth avenues. Which of the below are these three avenues?(check all that apply) a ) through innovation b ) through organic growth c ) through alliances d ) through global expansion e) through M&A

b ) through organic growth, c ) through alliances, & e) through M&A

Organizational performance metrics can be categorized according whether the measures are leading, current or lag measures. Financial performance measures (which we all use) are represented by which one of the following temporal characterizations? a ) lead performance indicators b ) current performance measures c ) lag performance measures

c ) lag performance measures

U.S. Global Domestic Product (GDP) as a percentage of Global GDP was approximately what percentage in 2019? a ) 16% b ) 12% c ) 25% d ) 10% e ) 30%

c ) 25%

Which of the following countries has a high geographic distance but a low cultural distance from the United States? a ) Canada b ) Mexico c ) Australia d ) France

c ) Australia

Clayton Christen from Harvard has developed a conceptualization of innovation he has called disruptive innovation. This type of innovation is based on the idea of what combination of markets and technologies? a ) New markets & existing technologies b ) New markets & new technologies c ) Existing markets & new technologies d ) Existing markets & existing technologies e ) Disruptive innovation covers all market and technology conditions (new or existing)

c ) Existing markets & new technologies

Globex Inc. has a board of directors that consists of seven members. Which of the following is most likely an accurate statement about Globex's board of directors? a ) Globex's board of directors ensures the firm's compliance with laws and regulations but does not conduct risk assessments b ) Globex's board of directors provides guidance for the firm's CEO but does not monitor the firm's corporate actions c ) Globex's board of directors has a minority number of inside directors and it evaluates the firm's strategic initiatives d ) Globex's board of directors oversees the firm's succession plan but does not evaluate the firm's CEO

c ) Globex's board of directors has a minority number of inside directors and it evaluates the firm's strategic initiatives

Tyrell Corporation, 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 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 Tyrell Corporation and the software company best referred to as in this scenario? a ) a proprietorship b ) an acquisition c ) a strategic alliance d ) a leveraged buyout

c ) a strategic alliance

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 political differences between India and the United States b ) because NAFTA prohibits Walmart from investing in countries outside North America c ) because of the large economic distance between the United States and India d ) because Indian consumers have not accepted Walmart's low-cost strategy

c ) because of the large economic distance between the United States and India

Strategy and operations each have a different "doing' focus. Operational excellence combines the two foci. What is the most appropriate definition for operational excellence from those identified below? a ) doing the right things b ) concentrating on process efficiencies c ) doing the right things right d ) doing things right e ) controlling through end-to-end process mapping

c ) doing the right things right

A candy company called Blackizm Inc. forms an agreement with another candy company called Streethex Inc. Through this agreement, Blackizm owns 30 percent of Streethex. However, Streethex does not own any part of Blackizm. This type of agreement is called a(n): a ) joint venture b ) non-equity alliance c ) equity alliance d ) capital venture

c ) equity alliance

Strategic alliances can take many forms and can be represented on a continuum that is anchored by spot market transactions at one end to greater than 51% to 100% acquisitions at the other. Within this continuum there is a fundamental distinction between two classes of alliances. The two classes of alliance are distinguished by whether they are what? a ) domestic market vs. global market-based b ) product vs. service-based c ) equity vs. non-equity based d ) handshake vs. contract-based e) supplier vs. partner-based

c ) equity vs. non-equity based

The three main airline alliances - oneworld, Star Alliance and Skyteam - represent co-operation arrangements between alliance member airlines in terms of code sharing, lounge access, aircraft maintenance and so on. This alliance is best described as What kind of alliance? a ) external b ) vertical c ) horizontal

c ) horizontal

Danke Inc. is a diversified firm that creates more value than the cost that it incurs. As a result, they are experiencing a diversification premium in their stock price. Danke Inc. is able to accomplish all of the following except a ) provide economies of scale, which reduces Danke's costs b ) reduce Danke's costs and increase value c ) increase their costs but maintain their current stock price d ) exploit economies of scope, which increases Danke's value

c ) increase their costs but maintain their current stock price

Related diversification is defined by which description below? a ) existing products but new geographies b ) existing geographies but new products c ) new geographies and new products but where there is a connection to the existing geographies and existing products d ) new geographies and new products but where there is no connection to the existing geographies and existing products e) existing products and existing geographies

c ) new geographies and new products but where there is a connection to the existing geographies and existing products

The core competency of Newex Motors is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that the growing demand for "green" vehicles has created a new market opportunity. Thus, it uses its existing technology to develop an engine that improves the fuel efficiency of recreational motorhomes. In this scenario, Newex motors is: a ) building new core competencies to create and compete in future markets b ) leveraging existing core competencies to target the chasm between the early adopter and the early majority market segment c ) redeploying and recombining existing core competencies to compete in future markets d ) building new core competencies to protect and extend current market position

c ) redeploying and recombining existing core competencies to compete in future markets

Which of the following characteristics of a public stock company deals with principals and agents? a ) transferability of investor ownership b ) legal personality c ) separation of legal ownership and management control d ) limited liability of investors

c ) separation of legal ownership and management control

Bill's Hockey Pucks Inc. wishes to pursue international markets like China and Russia. In order to do this, they may wish to consider a possible: a ) hostile takeover with a firm operating in the United States b ) marketing strategy that strengthens the international value chain c ) strategic alliance with another firm already established in those markets d ) government partnership that may lead to lobbying

c ) strategic alliance with another firm already established in those markets

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because a ) they pursue a cost-leadership strategy in their respective industries b ) they are highly responsive to the local needs and preferences of customers in the host countries c ) they offer the same products or services in all their stores throughout the world d ) they attempt to combine benefits of localization and standardization strategies simultaneously

c ) they offer the same products or services in all their stores throughout the world

While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data? a ) The number of competitors will be greater in the domestic airline industry than the internet-enabled appliance industry b ) The internet-enabled appliance industry is ahead of the domestic airline industry in the industry life cycle c ) The mode of competition will be price-based in the internet-enabled appliance industry and will be non-price-based in the domestic airline industry d ) While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants

d ) While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants

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

d ) a real-options perspective

China has been a powerhouse of growth in GDP since the year 2000. It has also has been a major U.S. trading partner. This has resulted in what situation for the U.S.? a ) a trade balance that was negative for the U.S. from 2000 until just after the financial crisis (2009) and positive after that b ) a positive net trade balance over the period from 2000 c ) a zero-sum net trade balance over the period from 2000 d ) an uninterrupted negative net trade balance over the period from 2000 e ) a trade balance that was positive for the U.S. from 2000 until just after the financial crisis (2009) and negative after that

d ) an uninterrupted negative net trade balance over the period from 2000

Companies have acquired other companies in order to vertically integrate. In the case of the Foxconn Technology Group (owned by Hon Hai Precision Industry Co., Ltd, Taiwan), it has taken a substantial (66%) equity position in Sharp Corporation (Japan). Sharp produces branded appliances and electronics as well as electronic components such as OLED displays for iPhones. Foxxcon is well known as the assembler of Apple's iPhone models. What is taking this equity position an example of? a ) horizontal integration b ) backward integration c ) forward integration d ) balanced integration e ) does not represent and example of vertical integration

d ) balanced integration

Archetypical globalization strategies have been defined according two dimensions - need for local responsiveness and need for global integration. Which of the below describes a multi-domestic strategy? a ) low need for local responsiveness & low need for global integration b ) high need for global integration & low need for local responsiveness c ) high need for global integration & high need for local responsiveness d ) high need for local responsiveness & low need for global integration e ) none of the above, a multi-domestic strategy is not a globalization strategy

d ) high need for local responsiveness & low need for global integration

The informational advantage that agents possess over principals is often based on the fact that: a ) public stock companies are characterized by information symmetry 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 ) insiders are the first to learn about important developments before the information is released to the public

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

A new product often has a high price when it is launched because of a: a ) large investment in marketing a product while producing small quantities b ) large investment in marketing a product while producing large quantities c ) large investment in designing a product while producing large quantities d ) large investment in designing a product while producing small quantities

d ) large investment in designing a product while producing small quantities

Facebook has become one of the largest media companies in the world, valued at nearly 50 billion in 2019, but hasn't produced a single piece of content. Facebook is an example of a: a ) typical value chain driven business b ) pipeline business c ) strategic business unit d ) platform business

d ) platform business

There are many reasons why individuals become entrepreneurs. Which among the following is the most often cited reason for becoming an entrepreneur in a recent study? a ) have an idea that needs to be taken to market b ) scope to work in a more creative and innovative manner c ) have a desire for a better work-life balance d ) prefer to be my own boss e) feel that being an entrepreneur will be more financially rewarding

d ) prefer to be my own boss

Which of the following is an example of an external transactional cost? a ) the cost of setting up a production unit b ) the cost of maintaining plant and machinery c ) the cost of recruiting and retaining employees d ) the cost of searching for a contract manufacturer

d ) the cost of searching for a contract manufacturer

A number of publicly-listed companies have split themselves into two publicly-listed companies. What is the predominant rationale for doing this? a ) the original company is too big to manage effectively b ) shareowners and investors have difficulty understanding the original company c ) often the share price of the original company has gotten too big for investors to buy many shares d ) the brand perception of the company has gotten too stolid and this is a process for refreshing the brand e ) greater shareowner value is created by providing for ownership in both publicly-listed companies rather than just in the original company

e ) greater shareowner value is created by providing for ownership in both publicly-listed companies rather than just in the original company