4490 Final Exam - Lexi, Kelsie, Amanda, Nicole, & Anna Combined

Which of the following describes a firm in the Globalization 1.0 stage?

Asha Inc. had a base office in New York and distributed some of its products overseas.

Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company?

Based on a tip-off by a Goldman Sachs employee, the Galleon Group sold its holdings in Goldman Sachs' stocks prior to the announcement of missed earnings estimates.

________determines the formal, position-based reporting lines and thus stipulates who reports to whom.

Hierarchy

Which of the following companies has leveraged the long-tail concept? Suburban Square is a big box retailer that features Halloween decorations, candy, and costumes in a seasonal department each fall. Boo-tique is a pop-up retailer that operates each fall in an otherwise empty mall space selling Halloween costumes and accessories. Howloween World is an online marketplace selling most of its items from a vast inventory of specialty costumes, wigs, and props. Second Street is a thrift store that creates a special Halloween-themed section in October highlighting items suitable for costume use.

Howloween World is an online marketplace selling most of its items from a vast inventory of specialty costumes, wigs, and props.

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

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

Why does a functional structure rely on a flat organizational structure? The work in the organization is centrally coordinated by the CEO. It allows for a higher degree of specialization and domain expertise. It allows for efficient bottom-up and top-down communication. It allows for the implementation of a differentiation strategy.

It allows for efficient bottom-up and top-down communication.

What is a drawback of pursuing a transnational strategy?

It requires a global matrix structure, which is difficult to implement.

Which of the following provides an example of a common drawback of a functional strategy? Jack had a difficult time communicating efficiently with the manager of another department. Leslie was surprised about the inflexibility of her firm when it rejected her marketing plan. Chris's manager dismissed his idea because it was too innovative. Denise did not accept the position with the firm because it has an ineffective cost-leadership strategy.

Jack had a difficult time communicating efficiently with the manager of another department.

Li runs a firm that has diversified into different product lines and geographies. She should probably use a(n) ________ organizational structure. Functional Simple Network M-form

M-form

Oceanic, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Macmillan, an air-conditioner manufacturer, faces intense pressure from its home market. Rent a Swag, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Oceanic invest? Macmillan, because air conditioners cost more to ship than dog toys do Macmillan, because firms that face stiff competition at home tend to do better abroad Rent a Swag, because firms that face little or no competition at home tend to do better abroad Rent a Swag, because dog toys cost less to ship than air conditioners do

Macmillan, because firms that face stiff competition at home tend to do better abroad

________ is the term that describes the difficulty of the principal to ascertain whether the agent has really put forth a best effort.

Moral hazard

E Corp is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike most other pharmaceutical companies, E Corp has a relaxed work environment. 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, E Corp Inc. is most likely an organization that is Formalized. Mechanistic. Centralized. Organic.

Organic.

______describes the collectively shared values and norms of an organization's members.

Organizational culture

Which of the following statements is true of strategy in an organization?

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

Los Pollos Hermanos is a company that makes frozen lunch and dinner entrées. Based on what you know about companies like Nestlé, what action should Los Pollos Hermanos take as it strives to become multinational?

Pursue a multidomestic strategy, customizing product offerings to suit local preferences.

General Electric's board has only one inside director, John Flannery, GE's CEO, who also acts as chairperson of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE?

The CEO possesses invaluable inside information that can help them lead the board effectively.

Which of the following scenarios best exemplifies a leveraged buyout of a microchip manufacturer, Sirius Cybernetics Corp.? The owner of another company buys all the outstanding shares of Sirius Cybernetics Corp. in order to take it private. A private equity firm, All Things Inc., buys a large number of shares of Sirius Cybernetics Corp.in order to publicly trade it under a new name. Sirius Cybernetics Corp. sells all its shares and declares bankruptcy. Sirius Cybernetics Corp. buys back a large amount of its own shares from the stock market.

The owner of another company buys all the outstanding shares of Sirius Cybernetics Corp. in order to take it private.

Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos?

Their culture reflects complex relationships with their employees, customers, and suppliers.

Which of the following is true of the codes of conduct of an organization? They detail how the organization expects an employee to behave and to represent the company in business dealings. They are a reiteration of the laws pertaining to business dealings in a corporate environment. They are a guide to determine what is lawful and what is unlawful. They help the board of directors and the CEO implement shareholder capitalism.

They detail how the organization expects an employee to behave and to represent the company in business dealings.

Three months ago, Colin became a board member at Hooli, a publicly traded company. Two weeks ago, the board members discovered that Hooli's CEO is facing a lawsuit from a family member who accuses the CEO of theft. Based on what you have read, to what ethical standard should Colin and the other board members hold the CEO? They should hold her to the same ethical standards that they would expect of any Hooli employee—no more, no less. They must hold her to the highest ethical standards because the leaders of publicly traded companies must withstand intense public scrutiny. If the board members determine that the CEO is not a "bad apple," then they should give her their full support. The board members must wait until the lawsuit results in a settlement or a guilty verdict.

They must hold her to the highest ethical standards because the leaders of publicly traded companies must withstand intense public scrutiny.

Maritza is trying to understand the relationship between what is legal and what is ethical. Tiffany explains that both of these terms are often synonymous in business. Your response is Tiffany is correct; law and ethics are synonymous and should be used interchangeably in business. Tiffany is correct; whatever is legal is always ethical in business. Tiffany is incorrect; a manager's actions can be legal but ethically questionable. Tiffany is incorrect; there is no relationship between laws and ethics except when the board of directors approve an action.

Tiffany is incorrect; a manager's actions can be legal but ethically questionable.

Hottechi Laminate has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Hottechi Laminate will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Hottechi Laminate to ask in order to put its strategy into action?

What activities need to be performed to create and deliver the offerings to consumers?

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set its own price.

Wholesale

Sergei is a manager at MasterBuilder Tools Inc. and is friends with the company's CEO. This privilege gives Sergei the information that MasterBuilder Tools is in talks to take over a leading rival. Sergei buys stocks of MasterBuilder Tools with the expectation that its stocks will appreciate. But the deal falls through, and the stocks of MasterBuilder Tools depreciate in the following months. Are Sergei's actions unethical? Why or why not?

Yes. It is unethical to trade stocks based on insider information, irrespective of the final outcome.

Yubaba Inc., a fidget spinner manufacturing company, encourages its employees to enjoy 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. Bill has worked at Yubaba for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario?

Yubaba Inc. has a flat organizational structure.

Which of the following types of groups is most susceptible to groupthink? a diverse group a cohesive group a heterogeneous group a decentralized group

a cohesive group

For which of the following companies will geographic distance be the most relevant factor in deciding whether to trade with a target country?

a firm that extracts and exports iron ore

Fierce domestic competition in Globex makes a tough environment for any motorcycle company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. As a result, Globex's motorcycles have a competitive advantage in the global market. According to Porter's diamond framework, this scenario shows the influence of competitive intensity in...

a focal industry

Entertainment 720 Inc. operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while making these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Entertainment 720 most likely implement? a multidomestic strategy a local-as-global strategy a transnational strategy a sole provider strategy

a multidomestic strategy

A firm that draws on multiple, equally important innovation hubs throughout the world is using...

a polycentric innovation strategy

Rainholm Industries is a large snack-food conglomerate that operates in more than 50 countries and employs more than 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Rainholm Industries most likely use? an international strategy a focused-differentiation strategy a multidomestic strategy a transnational strategy

a transnational strategy

Which of the following descriptions best exemplifies adverse selection? a) A manager cannot ascertain the contributions of individual team members in team production. b) A research scientist uses the organization's resources to conduct personal research. c) An employee spends time on social networking sites during work hours. d) An interview candidate lists his qualifications in chronological order.

a) A manager cannot ascertain the contributions of individual team members in team production. In principal-agent relationships, adverse selection describes a situation in which agents misrepresent their ability to do the job. The problem is especially pronounced in team production, in which the principal often cannot ascertain the contributions of individual team members.

Jeremy is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should he consider while choosing his strategy? a) He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance. b) He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. c) He should remember that he has only one framework at his disposal to make global strategy decisions. d) He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign-entry modes.

a) He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance.

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy? a) It allows a cost-leader to upgrade core competencies in manufacturing and logistics. b) It enables a cost-leader to build products that are different from its competitors' offerings. c) It enables a cost-leader to increase costs above that of its competitors. d) It allows a cost-leader to operate in a decentralized organizational structure.

a) It allows a cost-leader to upgrade core competencies in manufacturing and logistics.

One of Black Mesa's core values is to provide unbeatable customer service, a commitment introduced to the company by its founder more than 10 years ago. This value is expressed in the company's "Always You" campaign, which promises a no-questions-asked returns policy and an offer to stitch the customer's initials onto any item for free using a patented sewing technique, two features that are not offered by any of Black Mesa's competitors. Although the campaign has resulted in a 10 percent decline in profits, Black Mesa has decided to continue to pursue its founder's vision to reward customers and maintain employees' sense of purpose. Why does Black Mesa's culture, exemplified by the "Always You" campaign, fail to support a competitive advantage? a) It does not increase economic value creation for the firm. b) It is not a rare resource. c) Always lacks founder imprinting. d) The culture is not di

a) It does not increase economic value creation for the firm. For organizational culture to be the basis of a firm's competitive advantage, the firm's unique culture must help it in some way to increase its economic value creation (V - C). That is, it must either help in increasing the perceived value of the product/service and/or lower its cost of production/delivery. Moreover, according to the resource-based view of the firm, the resource—in this case, organizational culture—must be valuable, rare, difficult to imitate, and the firm must be organized to capture the value created.

Which of the following statements about multinational enterprises (MNEs) is true? a) MNEs benefit from advances in telecommunications technology. b) MNEs are hindered by falling investment barriers. c) MNEs benefit from rising trade barriers. d) MNEs are hindered by reduced transportation costs.

a) MNEs benefit from advances in telecommunications technology.

Which of the following best exemplifies the use of input controls? a) McDonald's use of standard operating procedures b) GM's use of the multidivisional strategy c) Zappos' use of monitoring-free customer service calls d) Southwest Airlines' use of employee friendliness

a) McDonald's use of standard operating procedures

Raul is the chief operating officer (COO) of Black Mesa Inc., a firm that produces handcrafted kitchen tables for both the residential and commercial markets. Raul believes that his domestic market is saturated and now wishes to go global. Which of the following would serve as an advantage for Raul if he chose to pursue international markets? a) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors. b) Raul could share his intellectual properties with another firm that operates in a foreign country in hopes of achieving collaboration. c) Raul's brand might suffer a loss in reputation if he goes global but could increase his market share. d) Raul may benefit from learning about Hofstede's cultural dimensions that could be leveraged on his current employees in his domestic market.

a) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors.

A bank, Seaside, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical? a) The bank knows that the customer will be unable to pay the loan if the interest rate rises. b) The bank is not aware of the investments made by the customer. c) The bank has the financial statements of the customer, but it is not aware of each source of income. d) The bank is depending on the customer to pay back the loan before term completion.

a) The bank knows that the customer will be unable to pay the loan if the interest rate rises. In this scenario, if the bank knows that the customer will be unable to pay the loan and still offers them a loan, it is an unethical decision. Law and ethics, however, are not synonymous. This distinction is important. Staying within the law is a minimum acceptable standard. A manager's actions can be completely legal, but ethically questionable.

Which of the following is a common result of a hostile takeover of a company? a) The new owner sells the company in pieces. b) The new owner keeps the company intact. c) The new owner keeps the board of directors of the company the same. d) The new owner enhances the reputations of the company's management.

a) The new owner sells the company in pieces. If a hostile takeover attempt is successful, the new owner is likely to replace the old management and board of directors so as to manage the company in a way that creates more value for shareholders. In some instances, the new owner breaks up the company and sells off its pieces. In either case, because a firm's existing executives face the threat of losing their jobs and their reputations in the face of a sustained competitive disadvantage, the market for corporate control is a credible governance mechanism.

Which of the following is true of the process of organizing for competitive advantage? a) To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. b) Strategy formulation and strategy implementation are independent activities. c) Organizing for competitive advantage is a static and not a dynamic process. d) Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.

a) To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.

Which of the following is true of the board of directors in a public stock company? a) Votes at shareholder meetings determine whose representatives are appointed to the board of directors. b) Because shareholders generally have uniform interests, the composition of the board is generally a unanimous decision. c) The board of directors acts as a facilitator to convey interests of the stockholders to the management without any real authority. d) The functions of the board of directors are limited to ensuring the hiring and firing of CEOs

a) Votes at shareholder meetings determine whose representatives are appointed to the board of directors. The shareholders of public stock companies appoint a board of directors to represent their interests. The board of directors is at the center of corporate governance in such companies. Votes at shareholder meetings, generally in proportion to the amount of ownership, determine whose representatives are appointed to the board of directors.

Yubaba Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. Axe Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? a) Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements b) Yubaba Inc. will pursue a differentiation strategy at the business level, whereas Axe Inc. will pursue a cost-leadership strategy at the business level. c) Yubaba Inc. will be better protected from exchange rate fluctuations when compared to Axe Inc. d) Yubaba Inc. will not be able to use its home-based core competencies in foreign markets as much as Axe Inc. will.

a) Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements An international strategy is essentially a strategy in which a company sells the same products or services in both domestic and foreign markets. Firms pursuing a multidomestic strategy attempt to maximize local responsiveness, hoping that local consumers will perceive their products and services as local.

To help increase and maintain ethical values for future managers, a group of Harvard Business School students developed a) an MBA oath that recognizes the role of business in society and its responsibilities beyond shareholders. b) the triple-bottom-line framework to guide managers ethical decisions. c) an ethical value chain that attempts to promote societal benefits. d) a new way to examine business processes that meet the needs of the community.

a) an MBA oath that recognizes the role of business in society and its responsibilities beyond shareholders.

Sonron Media sells books to libraries by having salespeople meet with potential customers to give them a sales pitch for the company's product line. When a salesperson makes a sale, they get a predetermined percentage commission based on the value of the books sold. This type of business model is called a) an agency. b) bundling. c) wholesale. d) a freemium.

a) an agency. In the agency business model, the producer relies on an agent or retailer to sell the product at a predetermined percentage commission.

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? a) benefits from lower labor costs in manufacturing and services b) free use of formerly protected intellectual property c) increasing trade barriers that protect businesses d) exporting newly available raw materials, such as rubber and coal

a) benefits from lower labor costs in manufacturing and services Access to low-cost raw materials such as lumber, iron ore, oil, and coal was a key driver behind Globalization 1.0 and 2.0. During Globalization 3.0, firms have expanded globally to benefit from lower labor costs in manufacturing and services.

Elvira is the CEO of All Things Inc. Her company employs a matrix structure, which is the combination of the ________ and ________ structure. a) functional; M-form b) simple; functional c) M-form; simple d) network; functional

a) functional; M-form

A firm that uses a structure organized along different business functions such as HR, R&D, sales, and marketing and also along different geographical areas of the world is most likely using a ________ structure. a) global matrix b) multidivisional c) functional d) simple

a) global matrix A matrix structure combines both the M-form and the functional structure. For example, a firm can be organized according to SBUs (along a horizontal axis, like in the M-form), and also have a second dimension of organizational structure (along a vertical axis). In this case, the second dimension could consist of different geographic areas, each of which generally would house a full set of functional activities. This exemplifies a global matrix structure.

Adverse selection in a public stock company occurs when... a) information asymmetry increases the likelihood of selecting inferior alternatives. b) a firm's work tasks, incentives, and employment contracts minimize opportunism by agents. c) a principal is not aware of the context from which information from an agent is derived. d) an agent manipulates information to benefit stockholders.

a) information asymmetry increases the likelihood of selecting inferior alternatives.

A mortgage loan officer persuades unsuspecting consumers to sign up for exotic mortgages, such as option ARMs. These mortgages offer borrowers the choice to pay less than the required interest, which is then added to the principal while the interest rate can adjust upward. Because of this setup, many borrowers are unable to repay the mortgage once the interest rates go up. Which of the following phrases best describes this scenario? a) legal but not ethical b) ethical but not legal c) legal and ethical d) neither legal nor ethical

a) legal but not ethical

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. which are benefits from locating value chain activities in the world's optimal geographies for a specific activity.

Raphael's team meets to discuss and improve "how things get done around here." The team is talking about its... a) organizational culture. b) formal operating procedures. c) open innovation framework. d) matrix structure.

a) organizational culture.

Shareholders of public companies need to appoint a board of directors to represent their interests because... a) ownership and control are separated in a public company. b) they want to limit the amount of money they can lose. c) the board of directors itself is made up of shareholders. d) the shareholders want to control day-to-day operations.

a) ownership and control are separated in a public company.

Karena owns a mid-priced clothing store that offers seasonal tops, bottoms, outerwear, and shoes in the most popular sizes and styles. The products in Karena's store represent the ________ of the distribution curve. a) short head b) mid slope c) Pareto point d) long tail

a) short head The products in Karena's store are those in the short head that tend to appeal to the largest segment of the mass market with tastes that are more or less homogenous (manufactured) through big marketing budgets combined with limited selection. In the physical world of bricks-and-mortar retail stores, these product selections are often the only choice on display because there are significant costs to carrying broader inventory to meet a wider variety of consumer needs.

Traditionally, 80 percent of sales in a given product category come from what part of the distribution curve? a) short head b) mid slope c) Pareto point d) long tail

a) short head Traditionally, 80 percent of sales in a given product category (such as music, books, and movies) come from blockbusters in the short head of the distribution curve, which represents only 20 percent of the offerings in a category.

Rascal Interactive produces a few high-impact blockbuster video games and then leverages them through spinoffs, merchandise, and licensing. Rascal is focused on a) the short head. b) the long tail. c) bundling. d) disruption.

a) the short head. Like Disney, Rascal Interactive focuses on the short head, producing a few high-impact blockbusters. Disney then leverages each mega-hit success into billion-dollar franchises through movie sequels and prequels (e.g., Star Wars), theme-park attractions, merchandise, and licensing.

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

a) they delegate authority of strategic business units to general managers. Employees who perform the actual operational labor are agents who work on behalf of the managers. Such frontline employees often enjoy an informational advantage over management.

During the process of formulating an effective business model, a firm's managers should first a) transform their strategy of how to compete into a blueprint of actions and initiatives. b) implement their strategy at corporate, strategic business unit, and functional levels. c) implement their blueprint of actions and initiatives through structures, processes, culture, and procedures. d) evaluate the firm's strategy already in effect and take corrective actions if necessary.

a) transform their strategy of how to compete into a blueprint of actions and initiatives that support the overarching goals. Next, managers implement this blueprint through structures, processes, culture, and procedures.

At 3M, employees are encouraged to spend up to 15 percent of their time on projects of their own choosing. If any of these projects look promising, 3M provides financing to further develop their commercial potential. This is an example of a) using the ROWE framework to tap intrinsic employee motivation. b) relying on extrinsic motivation. c) taking advantage of strategy implementation. d) using OKRs (Objectives and Key Results) to monitor objectives and outcomes.

a) using the ROWE framework to tap intrinsic employee motivation. Over time, 3M has relied on the ROWE (results-only work environment) framework. ROWEs are output controls that attempt to tap intrinsic (rather than extrinsic) employee motivation.

The most important yet least visible element of organizational culture is a) values. b) norms. c) laws. d) artifacts.

a) values.

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 achieves superior performance. c. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. d. It transforms strategy into actions and business models.

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

Stratton Oakmont Inc., a well-established and reputed multinational enterprise, is headquartered in a highly developed economy. It wants to start its operations in Old Hebrides, considered one of the less developed nations in the world. How will this strategic move most likely affect Stratton Oakmont Inc.? a. It will benefit from economic arbitrage. b. Stratton Oakmont will use its competitive advantage from economies of standardization. c. Stratton Oakmont will replicate its existing business model easily. d. It will be able to easily sell products for which demand varies by income.

a. It will benefit from economic arbitrage.

Fang and Bone Meds is a successful manufacturer of pet medications. Because the pharmaceutical industry features a high rate of change and the threat of disruption is high, Fang and Bone Meds should a. be prepared to restructure as the landscape changes. b. stick with the structure that brought it success no matter what happens. c. attempt to implement an unstructured organization. d. switch to whichever structure is most common in the industry.

a. be prepared to restructure as the landscape changes.

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

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

Martha received a tip from a close friend who is an executive manager of a publicly traded company called TelAmeriCorp Inc. The manager received some inside information about how to trade TelAmeriCorp stock to get a huge profit. He shared this information with Martha. This scenario is an example of a. information asymmetry. b. adverse selection. c. stakeholder strategy. d. shared value creation.

a. information asymmetry.

Michael Porter developed the diamond framework to explain why some nations outperform others in specific industries. This is referred to as a. national competitive advantage. b. death-of-distance hypothesis. c. local responsiveness. d. international competitive advantage.

a. national competitive advantage.

Ethics is a. not synonymous with law. b. impossible to codify into law. c. universal and cannot differ between cultures. d. the minimum acceptable standard in business practice.

a. not synonymous with law.

Jack is a board member of firm A but is not an employee of firm A; Jack is a senior executive from firm B. Jack can best be described as a(n) a. outside director. b. inside director. c. shareholder. d. philanthropist.

a. outside director.

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

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

A defining characteristic of the pay-as-you-go business model is that the a. users pay for only the services they consume. b. users pay for access to a product or service whether they use it during the payment term or not. c. initial product is often sold at a loss in order to drive demand for complementary goods. d. the basic features of a service are provided free of charge, but the user must pay for premium services.

a. users pay for only the services they consume.

Gregarious Simulation Systems 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, although that may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign-entry modes would best suit Gregarious Simulation Systems?

acquisition

At Gregarious Simulation Systems, a cross-functional team is formed to work on a project for a new client. The team consists of David and four other members. At most of the team's presentations to senior management, David takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, David is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that David did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Gregarious Simulation Systems is a typical consequence of

adverse selection.

Domenick is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A start-up recruits Domenick based on his stated credentials without verifying them. Two days into the job, Domenick's team lead realizes that Domenick does not know much of what he claimed to know during the interview. This scenario best exemplifies moral hazard. adverse selection. shared value creation. corporate governance.

adverse selection.

Janelle hires Vanessa to perform a critical task in her organization. However, Vanessa has misrepresented her knowledge, skills, and abilities, and Janelle has no way of knowing whether Vanessa can indeed perform well. This is an example of agency theory. disparate treatment. adverse selection. ineffective corporate governance.

adverse selection.

Bayside Inc., a reputed brand for fine art supplies, is implementing an international strategy. Cyberdyne Corp., a maker of mini-computer tablets, is pursuing a global-standardization strategy. Which of the following statements most likely holds true in this scenario? a) While Bayside Inc.'s competitive advantage lies in its high local responsiveness, Cyberdyne Corp. will lack such capabilities. b) Cyberdyne Corp. focuses more on cost reductions when compared to Bayside Inc. c) Cyberdyne's business functions are highly centralized, whereas Bayside organizes its activities worldwide. d) Cyberdyne is exposed to greater risks of exchange rate fluctuations.

b) Cyberdyne Corp. focuses more on cost reductions when compared to Bayside Inc. The global-standardization strategy arises out of the combination of high pressure for cost reductions and low pressure for local responsiveness. An international strategy is advantageous when the multinational enterprise faces low pressures for both local responsiveness and cost reductions.

The Bulwark Tea & Coffee chain recently reorganized, laying off some managers and employees. The remaining managers were told they would each have an increased span of control. What does this mean? a) The remaining employees will have decreased power and autonomy. b) Each manager will have more employees to supervise and monitor. c) All employees will be expected to take on more specialized roles. d) Internal communications and decision-making processes will be monitored by top management.

b) Each manager will have more employees to supervise and monitor. In recent years, firms have de-layered by reducing the headcount (often middle managers), making the organization flatter and more nimble. However, this move to a flatter structure puts more pressure on the remaining managers, who have to supervise and monitor more direct reports due to an increased span of control.

Which of the following is an implication for the strategist in the context of corporate governance and a company's success? a) Very few corporate-governance mechanisms can be effective in addressing the principal-agent problem. b) Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage. c) Leading by ethical example often has a lesser effect on employee behavior than words do. d) A firm that restricts its responsiveness to stockholders (and no other stakeholders) and keeps them committed to its vision will be successful.

b) Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage.

Greg is the president of a technology firm that has recently gone public. What action, if any, should Greg take to build the confidence of his new shareholders? a) Greg needs to focus on the company's earnings because that is what shareholders care about. b) He should find out whether the majority of his shareholders want long-term steady growth or short-term spikes in the stock price. c) He should discourage pension funds from investing because they are interested in safety at the expense of growth. d) He should make the company stock available only to hedge funds so he will have the freedom to take risks as the firm expands.

b) He should find out whether the majority of his shareholders want long-term steady growth or short-term spikes in the stock price. Shareholders' interests may not be uniform. The goals of some shareholders, including institutional investors, such as retirement funds and governmental bodies, are generally the enterprise's long-term viability and profitable growth. Long-term viability and profitable growth should allow consistent dividend payments and result in stock appreciation over time. In contrast, other shareholders, such as hedge funds, have different goals, such as profiting from short-term movements of stock prices. These so-called activist investors often demand changes in a firm's strategy, such as spinning out certain divisions or splitting up companies into parts to enhance overall performance. Votes at shareholder meetings, generally in proportion to the amount of ownership, determine whose representatives are appointed to the board of directors.

Which of the following accurately describes a mechanistic organization? a) It has a low degree of specialization and formalization and decentralized decision making. b) It has a high degree of specialization and formalization and a tall hierarchy that relies on centralized decision making. c) It is a highly flexible organization that encourages slow decision making and boasts high employee motivation. d) It typically exhibits a higher rate of entrepreneurial behaviors and innovation.

b) It has a high degree of specialization and formalization and a tall hierarchy that relies on centralized decision making.

Which of the following statements is true of organizational culture? a) Changes in culture are too frequent to have any impact on strategic implementation. b) It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. c) It is always better to focus on output control and performance than on organizational culture. d) According to research, more than 50 percent of firms change culture successfully.

b) It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.

Thomás works in a rare metals industry and wants to open a business in a foreign country that is rich with natural resources. He believes that natural resources are the one and only mechanism that can help him achieve an international competitive advantage. After all, countries like Afghanistan, Iran, and Venezuela are home to the world's richest natural recourses, so in theory they too should be able to leverage those resources in order to create a national competitive advantage. Which of the statements below best represents an appropriate response to Thomás and his theory? a) Natural resources almost always help countries achieve a national competitive advantage. b) Natural resources are often not needed to generate world-leading companies because competitive advantage is often based on other factor endowments such as human capital and know-how. c) Natural resources can help create world-leading companies but o

b) Natural resources are often not needed to generate world-leading companies because competitive advantage is often based on other factor endowments such as human capital and know-how.

Why does strategy implementation often require changes within an organization? a) Strategy implementation is less important than strategy formulation. b) Strategy implementation transforms strategy into actions and business models. c) Strategy always follows structure. d) Strategy implementation does not affect resource allocation and power distribution within an organization.

b) Strategy implementation transforms strategy into actions and business models. However, strategy implementation often fails because managers are unable to make the necessary changes due to the effects on resource allocation and power distribution within an organization.

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

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

In 2013, then-CEO Tony Hsieh announced that Zappos would implement a reorganization in which, as Hsieh said, "employees ... act more like entrepreneurs and self-direct their work ... ." At that point, Hsieh changed Zappos from a) a holacracy to a hierarchy. b) a hierarchy to a holacracy. c) a decentralized structure to a formalized structure. d) a bottom-up to a top-down style.

b) a hierarchy to a holacracy.

Kenyatta's main competitor is known for its strong organizational culture, which gives it a competitive advantage in a tight market. Kenyatta is eager to duplicate his competitor's culture but is finding it difficult. Two reasons why are likely the successful competitor's ________ and ________. a) historical conditions; external opportunities b) causal ambiguity; social complexity c) organizational socialization; input controls d) tangible budgets; intangible budgets

b) causal ambiguity; social complexity

Dolores is the CEO of Quantum Electronics LLC and wishes to develop additional competencies for her business. She is mostly interested in taking advantage of the ________, which are clustered firms that have unique skill sets located in specific geographic regions. a) CAGE distance framework b) communities of learning c) advantages of foreignness d) transnational strategies

b) communities of learning

When Amal, the CEO of Explore Complexity Simulation Systems, expanded her operations to a different international market, she was surprised to see how little competition she faced. In her home country, the competition for simulation systems is incredibly fierce. As a result of her international expansion, Explore Complexity has been able to easily position themselves as a major player. Which of the four categories of Porter's diamond framework best explains this advantage? a) factor conditions b) competitive intensity in the focal industry c) demand conditions d) related and supporting industries/complementors

b) competitive intensity in the focal industry Companies that face a highly competitive environment at home tend to outperform global competitors that lack such intense domestic competition.

One way to foster ethical behavior in employees is to a) avoid codifying organizational culture. b) create a control system that encourages desired values. c) view clients as counter parties to transactions. d) align the vision statement of the organization with its informal culture.

b) create a control system that encourages desired values. To foster ethical behavior in employees, boards must be clear in their ethical expectations, and top management must create an organizational structure, culture, and control system that values and encourages desired behavior. Furthermore, a company's formal and informal cultures must be aligned, and executive behavior must be in sync with the formally stated vision and values.

Which of the following modes of entering a foreign market allows for the lowest level of control? a) greenfield ventures b) exporting c) joint ventures d) acquisitions

b) exporting

In Michael Porter's diamond framework, ________ conditions describe a country's endowments in terms of natural, human, and other resources. a) market b) factor c) demand d) supply

b) factor

Dontechi is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate? a) subscription-based b) freemium c) pay-as-you-go d) razor-razor blade

b) freemium The freemium (free + premium) business model provides the basic features of a product or service free of charge, but it charges the user for premium services such as advanced features or add-ons.

McDonald's operates Hamburger University, which trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's a) is organic in nature. b) is mechanistic in nature. c) has an informal structure. d) has a decentralized structure.

b) is mechanistic in nature.

Jean Gene Inc. produces an inexpensive frozen croissant that is well tailored for the tastes of U.S. consumers. However, it has failed to satisfy the consumer preferences of its host country, France. In which of the following categories has Jean Gene performed poorly? a) cost-reduction b) local responsiveness c) global standardization d) transnational strategy

b) local responsiveness which is the need to tailor product and service offerings to fit local consumer preferences and host-country requirements

Duke & Duke Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Duke & Duke Autos Inc. is reaping the benefits of... a) economies of scope. b) location economies. c) resource immobility. d) resource ambiguity.

b) location economies which are benefits from locating value chain activities in the world's optimal geographies for a specific activity.

Which of the following global strategies best matches with a multidivisional structure? a) international b) multidomestic c) global-standardization d) transnational

b) multidomestic

PolyCon Corp., a tool and die maker, is considering where to locate its new factories and offices. According to the CAGE distance model, which of these countries is statistically most attractive to PolyCon? a) one that is much poorer than the country where PolyCon has its headquarters b) one that is in the same trading bloc as PolyCon's home country c) a country that does not share the same currency as PolyCon's home country d) the country that is the greatest physical distance from existing PolyCon's facilities

b) one that is in the same trading bloc as PolyCon's home country Most of the costs and risks involved in expanding beyond the domestic market are created by distance. Distance not only denotes geographic distance (in miles or kilometers) but also includes, per the CAGE acronym, cultural distance, administrative and political distance, and economic distance.

Stratton Oakmont Inc. is a publicly traded company. The stockholders of this company delegate the authority to make decisions for the company to a CEO named Terry. The stockholders expect Terry to make decisions that will benefit the company. However, Terry begins to find ways to maximize his total compensation, which hinders Stratton Oakmont Inc.'s performance. This scenario reflects: a) value creation problems. b) principal-agent problems. c) inside director-outside director problems. d) adverse selection problems.

b) principal-agent problems.

Nam-zim sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Nam-zim implementing? a) subscription-based b) razor-razor blade c) pay-as-you-go d) direct sales

b) razor-razor blade In the razor-razor blade business model, the initial product is often sold at a loss or given away to drive demand for complementary goods. The company makes its money on the replacement part needed.

Which of the following defines the term globalization? a) part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world b) the process of closer integration and exchange between different countries, businesses, and peoples worldwide c) a firm's investments in value chain activities abroad d) the process of reaping benefits from locating value chain activities in the world's optimal geographies for a specific activity

b) the process of closer integration and exchange between different countries, businesses, and peoples worldwide

Peter is a senior vice president at a textile manufacturer that wants to move from being 20 percent globalized to 70 percent globalized in the next 10 years. What are some possible drawbacks that Peter's company must anticipate? a. None. All political and economic factors point to the rise of globalization. b. Rising wages may cancel out cost savings of access to low-cost input factors. c. Governments may lower barriers to international trade. d. Improved communication technology may lead to longer production cycles.

b. Rising wages may cancel out cost savings of access to low-cost input factors.

Angelika is the CEO of One Spice Inc., a firm that grows and processes the Naga Viper pepper, one of the world's hottest peppers. Angelika wants to better understand the relationship between her firm's organizational culture and the ability to achieve competitive advantage. The relationship between these two states that a. a firm is unable to achieve a competitive advantage if they are pursuing a differentiation strategy. b. a firm can achieve competitive advantage if their organizational culture follows the VRIO principles. c. a firm can achieve and sustain competitive advantage if their balanced scorecard is implemented correctly. d. a firm cannot achieve a competitive advantage when they have an effective organizational culture.

b. a firm can achieve competitive advantage if their organizational culture follows the VRIO principles.

Threadless allows customers to submit their own designs and to vote on which designs they would like to see printed on a T-shirt. This business uses a(n) ________ technique. a. offshoring b. crowdsourcing c. peer-to-peer d. ultra-low cost

b. crowdsourcing

A greater ________ distance between two trading countries increases the liability of foreignness. a. economic b. cultural c. political d. administrative

b. cultural

A functional structure is recommended when a firm a. has a broad focus in terms of its product/service offerings. b. has a low level of diversification. c. has a low degree of specialization. d. diversifies into different product lines and geographies

b. has a low level of diversification.

A trend observed during the Globalization 3.0 stage involves a. countries around the globe becoming more self-sufficient and independent. b. multinational enterprises (MNEs) organizing as global collaboration networks. c. privately owned firms getting nationalized. d. world's market economies becoming less integrated.

b. multinational enterprises (MNEs) organizing as global collaboration networks.

A high degree of formalization in an organization is most likely to a. improve customer service. b. slow down decision making. c. produce inconsistent results. d. increase creativity and innovation.

b. slow down decision making.

The translation of strategy into action primarily takes place in a firm's

business model.

Kate is the CEO of a firm. She has an opportunity to increase the competitive advantage of her company but is not sure if accepting the opportunity is ethical. Which of the following questions would help her decide if accepting the opportunity is ethical? a) What are the chances that her decision to accept the opportunity will be made public? b) How much profit would be made if she decided to accept the opportunity? c) How would the media report her decision to accept the opportunity if it were to become public? d) How long lasting would the competitive advantage be if she decided to accept the opportunity?

c) How would the media report her decision to accept the opportunity if it were to become public?

Which of the following is a disadvantage of a functional strategy? a) It frequently lacks the tools required to pursue a cost-leadership strategy. b) It does not facilitate rich communication between members of the same department. c) It cannot effectively address a higher level of diversification. d) It does not allow organizations to be flexible or innovative.

c) It cannot effectively address a higher level of diversification.

Aperture Science is a publicly traded manufacturer of home electronics. Based on what you have read, which of these actions would be wisest for Aperture Science's board of directors to take to be sure that the company's new CEO is as motivated as possible? a) Encourage the CEO to take all of her compensations in stock options, which will motivate her to keep the stock price high. b) Offer the largest bonus possible to prevent the CEO from leaving to go a rival firm. c) Link the CEO's pay to her performance but avoid high-powered incentives that may cause reckless behavior. d) Encourage her to emulate Warren Buffett and to take a lower salary than she might command elsewhere.

c) Link the CEO's pay to her performance but avoid high-powered incentives that may cause reckless behavior. Survey results show that two-thirds of CEO pay is linked to firm performance. However, although the relationship between pay and performance is positive, the link is weak at best. Although agency theory predicts a positive link between pay and performance, some recent experiments in behavioral economics caution that incentives that are too high-powered (e.g., outsized bonuses) may have a negative effect on job performance. That is, when the incentive level is very high, an individual may get distracted from strategic activities because too much attention is devoted to the outsized bonus to be enjoyed in the near future. This situation can increase job stress and negatively impact job performance.

Los Pollos Hermanos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. The firm's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's? a) Los Pollos Hermanos has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. b) Los Pollos Hermanos has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. c) Los Pollos Hermanos has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. d) Los Pollos Hermanos has a low degree

c) Los Pollos Hermanos has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.

Rosemont-Cambridge pursues a related diversification strategy. It derives less than 70 percent of revenues from its original business unit, Rosemont- Baskin, and maintains several related units including Rosemont-Ortega and Rosemont-Elm. Which of the following structures is most likely to support this strategy? a) functional with centralized decision-making power b) M-Form with decentralized decision-making power (competitive multidivisional) c) M-Form with centralized decision-making power (cooperative multidivisional) d) functional with decentralized decision-making power

c) M-Form with centralized decision-making power (cooperative multidivisional) For firms that pursue either related or unrelated diversification, the M-form is the preferred organizational structure. Firms using the M-form organizational structure to support a related-diversification strategy tend to concentrate decision making at the top of the organization. Doing so allows a high level of integration. It also helps corporate headquarters leverage and transfer across different SBUs the core competencies that form the basis for a related diversification.

Dinotopia is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Dinotopia in terms of cultural distance? a) Khemed, which has the same wealth and per capita income as Dinotopia b) Luftnarp, which has a very profitable economy and where people speak Luftnarpian c) Maldonia, where people speak English and have a low standard of living d) Moloni Republic, which is located close to Dinotopia and is easily accessible by road

c) Maldonia, where people speak English and have a low standard of living

________ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure. a) PESTEL factors b) Formalization c) Organizational inertia d) Centralization

c) Organizational Inertia

Two leading home appliance companies, Globex and Pug Tech, are in competition for market share. In their quest for exciting new products, Globex employs an open innovation model, while Pug Tech pursues a closed innovation model. Which of the following statements is most likely true? a) Globex has a greater chance of capturing market share. b) Pug Tech has a superior absorptive capacity. c) Pug Tech will protect its intellectual property with patents and trade secrets. d) Globex is most concerned with securing first-mover advantages.

c) Pug Tech will protect its intellectual property with patents and trade secrets. Firms in the closed innovation model are extremely protective of their intellectual property. This not only allows the firm to capture all the benefits from its own R&D, but also prevents competitors from benefiting from it.

Which of the following best supports the fact that Dieselgate was unethical when entering the U.S. market? a) Dieselgate manipulated "triple A" bond ratings to entice investors. b) VW made no effort to ascertain the stability of the automobile market, even though it had the resources and time to do so. c) The engineers installed "defeat devices" that altered the concentration of harmful emissions when EPA regulators tested the vehicles. d) The VW CEO misled investors by spending $50 million on lavish, corporate parties.

c) The engineers installed "defeat devices" that altered the concentration of harmful emissions when EPA regulators tested the vehicles.

What helps notions such as fairness, honesty, and reciprocity to be codified into law? a) The notions are synonymous with law. b) The notions differ to some degree in different cultures around the globe. c) The notions are universal norms. d) The notions are characteristics inherited by each person irrespective of the culture.

c) The notions are universal norms. The principles, norms, and standards of business practice differ to some degree in different cultures around the globe. Nonetheless, many research studies have found that some notions—such as fairness, honesty, and reciprocity—are universal norms.

Which of the following is the most likely advantage of using foreign acquisitions as a foreign-entry mode? a) They are easy to initiate and terminate. 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 based on contracts rather than ownership.

c) They reduce a firm's exposure to loss of reputation. Foreign-entry modes with a high level of control such as foreign acquisitions reduce the firm's exposure to two particular downsides of global business: loss of reputation and loss of intellectual property.

Perfect Paws Inc., a pet supply chain, is implementing a multidomestic strategy. Heartland Express, a company that manufactures small engines for the agricultural industry, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? a) Perfect Paws Inc. will focus more on cost-reduction than Heartland Express. b) Perfect Paws Inc. will have its business functions spread across the world; Heartland Express's business functions will be highly centralized. c) Unlike Heartland Express, Perfect Paws Inc. will be able to pursue a differentiation strategy at the business level. d) Unlike Heartland Express, Perfect Paws Inc. will be able to reap significant economies of scale and location economies.

c) Unlike Heartland Express, Perfect Paws Inc. will be able to pursue a differentiation strategy at the business level. For firms following a global-standardization strategy, their business-level strategy tends to be cost leadership. Firms following a multidomestic strategy generally pursue a differentiation strategy at the business level.

Nerissa sets up a business consulting firm in which the employees are motivated because they find their work interesting and creative. She carefully hires workers who fit well with their assigned tasks. She also clearly defines the results expected of each worker, but allows the workers to determine the means to these results. Which of the following best describes Nerissa's business? a) a firm that relies on high input controls to tap into intrinsic motivation b) a firm that relies on high input controls to tap into extrinsic motivation c) a firm that relies on high output controls to tap into intrinsic motivation d) a firm that relies on high output controls to tap into extrinsic motivation

c) a firm that relies on high output controls to tap into intrinsic motivation

Which of the following types of organizations comparatively requires the highest levels of investment and control? a) joint venture b) franchising c) acquisition d) licensing

c) acquisition

You are the founder of Newex Surfboards, and you are considering methods of gaining and sustaining a competitive advantage. Which of the following changes has the best chance of quickly creating a sustainable advantage? a) devoting significant resources to researching and developing new products that will be more durable than competitors' products b) automating the manufacturing process to reduce production costs c) allowing customers to upload their own image designs and help assemble the finished product at retail locations d) switching to a just-in-time inventory system to reduce inventory costs

c) allowing customers to upload their own image designs and help assemble the finished product at retail locations

Khalil is interested in building the centerpiece of his firm's corporate governance, and so hires a ________ that is made up of individuals from both inside and outside the firm. a) strategy consultant b) C-level suite team c) board of directors d) shareholders

c) board of directors

A firm that uses a functional structure will typically have efficient top-down and bottom-up communication, but a) dual reporting relationships typically blur lines of authority. b) the top management team may fail in their coordination and control efforts of functional-level employees. c) communication may be hampered among the horizontal, distinct organizational functions. d) career paths and professional development are limited.

c) communication may be hampered among the horizontal, distinct organizational functions.

Simple organizational structures often exhibit low levels of formalization and specialization. Which of the following is not a benefit of employing a simple organizational structure? a) being able to easily and quickly coordinate and communicate within the firm b) not having the need for sophisticated information technology/management systems c) employing specialists that can develop deep knowledge/expertise in their field d) being able to converse with the CEO and other upper level executives

c) employing specialists that can develop deep knowledge/expertise in their field

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

c) insiders are the first to learn about important developments before the information is released to the public. Managers, executives, and board members tend to have access to private information concerning important company developments to which outsiders, especially investors, are not privy. Often this informational advantage is based on timing—insiders are the first to learn about important developments before the information is released to the public.

An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a ________ structure. a) functional b) multidivisional c) matrix d) simple

c) matrix To reap the benefits of both the M-form and the functional structure, many firms employ a mix of these two organizational forms, called a matrix structure. The idea behind the matrix structure is to combine the benefits of the M-form (domain expertise, economies of scale, and the efficient processing of information), with those of the functional structure (responsiveness and decentralized focus).

When a firm diversifies into different product lines and geographies, a ________ structure is preferred. a) simple b) functional c) multidivisional d) network

c) multidivisional The multidivisional structure (or M-form) consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility.

San Francisco-based Shrimpton & Co. sells seafood products to natural foods markets across the country. The company has core values that define what its leaders consider important and guide employees in achieving and fulfilling its mission. It also has norms that define appropriate employee attitudes and behaviors. Collectively, these shared values and norms make up Shrimpton & Co.'s a) open innovation. b) functional structure. c) organizational culture. d) domestic strategy.

c) organizational culture.

Massey's regional chain of hardware stores were successful. The stores filled a need in a particular market at a particular time. Managers defined and measured success by financial metrics, focusing on short-term performance. They put in place structures, measures, and systems to accommodate and manage the firm's increasing size due to its continuing success. It's hard to argue with a formula for success, but as a result of such success, Massey's executive team became resistant to change. What was the team displaying? a) a significant value gap b) an innovative approach to organizational design c) organizational inertia d) organizational design

c) organizational inertia

Macmillan Toys Inc. is located in the nation of Ruffino near the nation of East Fenwick. Macmillan Toys is considering expanding into Rusalka. Both countries have similar consumer incomes and knowledge bases and share a common language. Also, the transportation networks between the countries are strong. Even so, the two nations have a long-standing dispute concerning the control of an area of land along their common border. Currently, Ruffino rules this land. Which of the following would most likely prevent Macmillan Toys from expanding into Rusalka? a) geographic distance b) economic distance c) political distance d) cultural distance

c) political distance

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

c) practicing effective corporate governance Corporate governance is about checks and balances and about asking the tough questions at the right time. The accounting scandals of the early 2000s and the global financial crisis of 2008 got so out of hand partly because the enterprises involved did not practice effective corporate governance.

Successful ________ requires managers to design and shape structure, culture, and control mechanisms. a) strategy innovation b) strategy formulation c) strategy implementation d) strategy diversification

c) strategy implementation In doing so, they execute a firm's strategy as they put its accompanying business model into action.

Which of the following problems can be overcome by leveraging the long tail? a) buyer inertia b) poison pills c) thin markets d) rising costs

c) thin markets

A firm pursuing a ________ strategy would believe that best practices, ideas, and innovations should be diffused throughout the world. a) global-standardization b) multidomestic c) transnational d) localization

c) transnational Multinational enterprises typically implement a transnational strategy through a global matrix structure. This organizational structure combines economies of scale along specific product divisions with economies of learning attainable in specific geographic regions. The idea is that best practices, ideas, and innovations will be diffused throughout the world, regardless of their point of origin.

Which of the following is an observable feature in the Globalization 3.0 stage? a. MNEs began to create smaller, self-contained copies of themselves, with all business functions intact, in a few key countries. b. While the U.S. corporate headquarters set overarching strategic goals and allocated resources through the capital budgeting process, local mini-MNE replicas had considerable leeway in day-to-day operations. c. Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. d. Strategy formulation and implementation, as well as knowledge flows, followed a one-way path—from domestic headquarters to international outposts.

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

Globex Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. Omni Consumer Products, a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? a. While Omni Consumer Products' competitive advantage will lie in its high local responsiveness, Globex Inc. will lack such competencies. b. Omni Consumer Products will face greater pressure for cost reductions than Globex Inc. due to strategy choice. c. Both Globex Inc. and Omni Consumer Products will have to duplicate key business functions in multiple host countries. d. While Globex Inc. will require a global matrix structure, Omni Consumer Products Inc. will require a traditional headquarters model.

c. Both Globex Inc. and Omni Consumer Products will have to duplicate key business functions in multiple host countries.

West Coast-based Dr. Suds Soap Company has offices in Los Angeles, San Francisco, Portland, and Seattle. Each office is headed by a vice-president who reports directly to CEO Ravi Satterjee. The heads of the HR, finance, and marketing teams also report to Satterjee. Based on this scenario, which of the following statements is most likely to be true? a. Ravi Satterjee is head of a decentralized organization. b. Dr. Suds Soap Company is a mechanistic organization. c. Ravi Satterjee has a wide span of control. d. Dr. Suds Soap Company is run as a formalized organization.

c. Ravi Satterjee has a wide span of control.

Why are controls like budgets and operating procedures that McDonald's implements known as input controls? a. They are independent of an organization's culture. b. They are implemented by corporate headquarters. c. They are considered before employees make any decisions. d. They are ad hoc and not codified.

c. They are considered before employees make any decisions.

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in China? a. because of the political differences between China and the United States b. because the USMCA treaty prohibits Walmart from investing in countries outside North America c. because of the large economic distance between the United States and China d. because Chinese consumers have not accepted Walmart's low-cost strategy

c. because of the large economic distance between the United States and China

Industry analysts, auditors, and government regulators are examples of a. inside board members. b. outside board members. c. external governance mechanisms. d. internal governance mechanisms.

c. external governance mechanisms.

What do we call the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance? a. investors b. outside directors c. inside directors d. auditors

c. inside directors

Michael Porter's diamond framework explains a. national value creation. b. domestic value creation. c. national competitive advantage. d. domestic competitive advantage.

c. national competitive advantage.

West State Utilities is an energy provider that charges its customers $0.05 per kilowatt hour for electricity use. So, if a customer uses 500 kilowatt hours during the billing period, the company charges them $25.00. Which of the following business models does this best illustrate? a. razor-razor blade b. subscription-based c. pay-as-you-go d. freemium

c. pay-as-you-go

Which of the following strategies might result in the long-tail phenomenon?

combining unlimited selection with algorithmic recommendations

Because of poor management, the stock price of Rearden Steel Inc. falls, and many investors sell their shares. Soon Rearden Steel becomes the target of a hostile takeover, during which Dildred buys enough shares to exert control over the firm. In this scenario, Dildred performs the role of a(n) _________________.

corporate raider

Which of the following will most likely harm the reputation of a multinational enterprise (MNE)? a) Principal-agent problems cause an MNE to merge with another MNE. b) Increased competition causes an MNE to close a factory in a developing country. c) Wages for workers in a factory owned by an MNE increase, causing profits to decline. d) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.

d) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.

Knitwear designer Ebony has decided to open a storefront where she can sell her products. Sales are encouraging, so Ebony hires a part-time employee to wait on customers and a part-time knitter to help create her designs. Meanwhile, Ebony is busy designing more knitted fashions and making as many as she can, all while handling the day-to-day responsibilities of running a store. Which of the following is likely to be a pitfall for Ebony as she experiences growth and runs her store in this way? a) Ebony will likely be pressured to expand her business before she is ready. b) Ebony will likely have to increase prices on her knitwear. c) Hiring employees could possibly dilute her brand and infringe on her intellectual property (her designs). d) As the store grows, Ebony is likely to feel overloaded and experience burnout.

d) As the store grows, Ebony is likely to feel overloaded and experience burnout.

Morgan accepts a job as head of human resources at an engineering firm and learns that the company believes teamwork is so important that it awards all raises and bonuses by splitting them equally within a team rather than presenting them to individual employees. What action should Morgan take regarding this program? a) Expand the program to allow teams to make all hiring and firing decisions. b) Make sure information asymmetry is corrected before the next round of raises. c) Make sure the plan goes into place only after the company has corrected information asymmetry. d) End the program because it encourages opportunistic employees to do little or no work.

d) End the program because it encourages opportunistic employees to do little or no work. In general, adverse selection occurs when information asymmetry increases the likelihood of selecting inferior alternatives. The problem is especially pronounced in team production, in which the principal often cannot ascertain the contributions of individual team members. This situation creates an incentive for opportunistic employees to take advantage of others' efforts ("free-rider problem").

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 oversees the firm's succession plan but does not evaluate the firm's CEO. d) 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 has a minority number of inside directors, and it evaluates the firm's strategic initiatives. The board of director's functions include: - Selecting, evaluating, and compensating the CEO. The CEO reports to the board. If the CEO loses the board's confidence, the board may fire that person. - Overseeing the company's CEO succession plan. - Providing guidance to the CEO in the selection, evaluation, and compensation of other senior executives. - Reviewing, monitoring, evaluating, and approving any significant strategic initiatives and corporate actions such as large acquisitions. - Conducting a thorough risk assessment and proposing options to mitigate risk. - Ensuring that the firm's audited financial statements represent a true and accurate picture of the firm. - Ensuring the firm's compliance with laws and regulations.

Layla is the CEO of a financial services firm. What action should she take to be sure the firm avoids moral hazards? a) She should closely monitor the behavior and performance of new employees to be certain that they have the skills they claimed to have in interviews. b) Layla must increase hiring and develop influential relationships with government officials so that the firm will be considered "too big to fail." c) She must create a plan in which government agencies or a consortium of other financial services firms will assume any future debts of the company. d) Layla should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.

d) Layla should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly. In general, moral hazard describes a situation in which information asymmetry increases one party's incentive to take undue risks or shirk responsibilities because the costs accrue to the other party. For example, bailing out homeowners from their mortgage obligations or bailing out banks from the consequences of undue risk-taking in lending are examples of moral hazard. The costs of default are rolled over to society. Knowing that there is a high probability of being bailed out ("too big to fail") increases moral hazard. In this scenario, any profits remain private, while losses become public.

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

d) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries. From 1945 to the end of the 20th century, in the Globalization 2.0 stage, MNEs began to create smaller, self-contained copies of themselves, with all business functions intact, in a few key countries: notably, Western European countries, Japan, and Australia.

________ define appropriate employee attitudes and behaviors. a) Values b) Artifacts c) Appraisals d) Norms

d) Norms Organizational culture describes the collectively shared values and norms of an organization's members. Values define what is considered important. Norms define appropriate employee attitudes and behaviors.

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 declined. b) The government no longer cares about capturing more of the value added. c) The standard of living within the economy has become lower. d) The country's advantage in low-cost manufacturing is now reduced.

d) The country's advantage in low-cost manufacturing is now reduced.

Which of the following scenarios best illustrates bundling? a) Yearin Inc. sells its electric toothbrushes for a low cost, but charges a high price for replacement brushes. b) CondaxMedia Inc. sells its cloud computing network by having customers pay for the service as they use it. c) Isdom Inc. sells its basic TV channels for free but charges high prices for any channels that customers add on later. d) Warephase Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.

d) Warephase Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.

The transnational strategy is similar to a(n) ________ strategy because they both focus on product and/or service differentiation and low costs. a) liquidation b) product diversification c) international d) blue ocean

d) blue ocean

Denise wants to clearly communicate and create a ________, a key input control, before her team tackles business activities. This way the team will be able to better allocate her firm's scarce resources to accomplish the tasks at hand. a) mission statement b) carrot-and-stick approach c) results-only-work-environment (ROWE) d) budget

d) budget The use of budgets is key to input controls. Managers set budgets before employees define and undertake the actual business activities.

Jordan is president of a medium-sized bank. What can Jordan do to lessen the chance of employees or board members taking part in insider trading? a) forbid managers and executives from having access to private information b) forbid board members from having access to private information c) work with analysts and customer-facing employees to root out information asymmetry d) create a strict code of ethics and explain that inside traders will be fired

d) create a strict code of ethics and explain that inside traders will be fired The risk of opportunism on behalf of agents is worsened by information asymmetry: The agents are generally better informed than the principals. Managers, executives, and board members tend to have access to private information concerning important company developments to which outsiders, especially investors, are not privy. Often this informational advantage is based on timing—insiders are the first to learn about important developments before the information is released to the public. Although possessing insider information is not illegal and indeed is part of an executive's job, what is illegal is acting on it by trading stocks or passing on the information to others who might do so. Insider-trading cases, therefore, provide good examples of the egregious exploitation of information asymmetry.

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) political b) geographic c) administrative d) cultural

d) cultural Cultural differences find their expression in language, ethnicity, religion, and social norms.

To effectively implement a blue ocean strategy, a firm must balance centralization to control costs with a) a functional structure that resembles an organic organization. b) specialization and formalization. c) a hierarchical organization. d) decentralization to foster creativity and innovation.

d) decentralization to foster creativity and innovation.

Which of the following entry modes was used extensively in Globalization 1.0 stage? a) strategic alliances b) acquisitions c) greenfield operations d) exports

d) exports Exporting is one of the oldest forms of internationalization. It was used extensively in the Globalization 1.0 stage.

Which of the following features helps match a cost-leadership strategy to a functional structure? a) decentralization b) process and product innovations c) flexibility and mutual adjustment d) focus on economies of scale

d) focus on economies of scale

Because keeping cost low is critical to IKEA's value innovation, it switched from a(n)... a) transnational strategy to a multidomestic strategy. b) transnational strategy to a global-standardization strategy. c) international strategy to a multidomestic strategy. d) international strategy to a global-standardization strategy.

d) international strategy to a global-standardization strategy.

Ghada is the CEO of Black Mesa Inc., a publicly traded company. The shareholders want Ghada on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Ghada is... a) a board member of a major client. b) more likely than other board members to take care of the stockholders. c) also the CEO of other companies. d) likely to provide the board with valuable inside information.

d) likely to provide the board with valuable inside information.

Aldorria and Estoccia are 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 Estoccia. b) movies and TV shows produced in Aldorria. c) iron ore extracted in Estoccia. d) luxury items manufactured in Aldorria.

d) luxury items manufactured in Aldorria. Economic distance most affects industries or products for which demand varies by income (such as cars).

Livia is the CEO of a line of luxury bedding, Livia Let Lie Inc., which has an online presence and production units in nine countries. In this scenario, Livia Let Lie Inc. is most likely a a) nonprofit organization. b) nationalized firm. c) sole proprietorship. d) multinational enterprise.

d) multinational enterprise. The engine behind globalization is the MNE—a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries.

Which of the following is part of Geert Hofstede's cultural dimensions? a) short-term orientation b) groupthink c) risk taking d) power distance

d) power distance Four main dimensions of culture have emerged: power distance, individualism, masculinity-femininity, and uncertainty avoidance. More recently, Hofstede added two more cultural dimensions: long-term orientation and indulgence.

Toyota's global success in the 1990s and early 2000s was based to a large extent on a network of world-class suppliers in Japan. This tightly knit network allowed for fast two-way knowledge sharing—which in turn improved Toyota's quality and lowered its cost, which it leveraged into a successful blue ocean strategy at the business level. This example shows the effectiveness of a) factor conditions. b) competitive intensity in a focal industry. c) demand conditions. d) related and supporting industries/complementors.

d) related and supporting industries/complementors. The availability of top-notch complementors, such as the suppliers in Japan, further strengthens a firm's national competitive advantage.

Saddiq's company has a high degrees of centralization in its organizational structure. Saddiq has learned that a main drawback of working in a firm with centralized decision making is that it can often result in which of the following? a) reduced creativity and innovation b) less employee job satisfaction due to the repetition of tasks c) increased levels of hierarchy d) slow response time and reduced customer satisfaction

d) slow response time and reduced customer satisfaction

Siobhan, the chief financial officer at an office furniture manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors? a. "As the rest of the world globalizes, we will lead the way in strengthening our home nation." b. "Keeping our factories in Canada means facing up to the liability of foreignness." c. "Canada's wages and benefits are so low compared with the rest of the world that it makes the most sense to build factories here." d. "It will be much more difficult to protect our intellectual property if we build factories overseas."

d. "It will be much more difficult to protect our intellectual property if we build factories overseas."

Which of the following contributed to the failure of Walmart in Germany? a. Germans were suspicious of Walmart's "always low" prices. b. German customers were expecting cheerful Walmart greeters but instead experienced gruff customer service. c. The first Walmart boss in the country was German and failed to appropriately translate the U.S.-based company's values. d. Germany's protective labor laws drove up costs.

d. Germany's protective labor laws drove up costs.

What is the important strategic trade-off that the long-tail business model solves? a. It increases the number of users paying for access even if they do not use the product or service during the payment term. b. It provides an opportunity to capture consumers who value one of the products but who have little interest in the second. c. It allows companies to create demand for replacement parts while taking only a small loss on the sale of the initial product. d. It lowers space, inventory, and distribution costs while enabling firms to match unique consumer preferences to supply.

d. It lowers space, inventory, and distribution costs while enabling firms to match unique consumer preferences to supply.

What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change? a. The firm's original core competency can turn from a liability into an asset. b. The firm's organizational inertia can turn into its core rigidity. c. The firm's competitive parity can turn into its competitive advantage. d. The firm's culture can turn from a core competency into a core rigidity.

d. The firm's culture can turn from a core competency into a core rigidity.

The administrative and political distance between two trading countries decreases when a. There are Foreign Direct Investment restrictions in the host country. b. The host country lacks an independent central bank. c. Tariffs and trade quotas exist in the host country. d. There is a well-functioning capital market in the host country.

d. There is a well-functioning capital market in the host country.

Duke & Duke is the parent company of GetItDone.com and NownNever Inc. To cut costs, Duke & Duke integrated GetItDone.com's and NownNever Inc.'s management functions with Duke & Duke's management, while keeping other functions such as product development independent. Duke & Duke has encouraged the senior teams at both GetItDone and NownNever to exploit the success of their existing products while exploring new products for the future. This scenario best exemplifies a(n) a. multidivisional structure. b. organic organization. c. simple structure. d. ambidextrous organization.

d. ambidextrous organization.

Hooper's Store, a luxury motorcycle company, sells the same motorcycles and offers the same superior services in both its home country and foreign markets. The market in which it operates faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the cost-responsiveness framework does Hooper's Store most likely pursue? a. a multidomestic strategy b. a transnational strategy c. a global-standardization strategy d. an international strategy

d. an international strategy

The name for an agreed-upon code of conduct in business, based on societal norms, is a. fiduciary responsibilities. b. poison pills. c. strategic business points. d. business ethics.

d. business ethics.

Blake is a newly elected board member of ABC Inc., a publicly traded stock. As a newly elected board member, Blake has a(n) ________, which is a legal duty to act solely in another party's interests. a. moral code b. ethical obligation c. competitive advantage d. fiduciary responsibility

d. fiduciary responsibility

Paul runs an organization that implements a cost-leadership strategy. This business-level strategy supports both a ________ and ________ structure. a. matrix; organic b. M-form; vertical c. simple; organic d. functional; mechanistic

d. functional; mechanistic

Umbrella Corp is a notebook manufacturing company based in Ohio. Umbrella Corps' main market is Texas. Its aim is to provide products at better prices than its competitors. Which of the following structures is Umbrella Corp likely to use if it has a functional setup? a. Organic b. Simple c. matrix d. mechanistic

d. mechanistic

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 follow the country's laws and regulations b. the expectation that the agent will go above and beyond the call of duty c. the expectation that the agent will reconnect economic and social needs d. the expectation that the agent will act in the principal's best interest

d. the expectation that the agent will act in the principal's best interest

Jamila, the CEO of Yakyshyn Enterprises, reports to the board of directors appointed by the shareholders of Yakyshyn Enterprises. Based on shareholder suggestions, the board ties Jamila's compensation to the performance of Yakyshyn Enterprises. Due to this pressure, Jamila begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. The reasons why the board ties Jamila's compensation to firm performance is to overcome a. shareholder capitalism scenario. b. inside director-outside director conflict. c. fiduciary responsibility oversight. d. the principal-agent problem.

d. the principal-agent problem.

Hooli, a web development firm, wants to implement an organic structure to foster innovation and attract the most talented creative minds. Which of the following features will make it difficult to do so? decision-making power distributed throughout the organization a wide span of control for managers dedication to a cost-leadership business strategy flexible job descriptions for employees

dedication to a cost-leadership business strategy

Maria wants to pursue an international strategy but is concerned that foreign markets aren't ready for her products and services. You recommend that she engage in ________, which would be contract based and would limit risk and exposure of her investments. exporting licensing equity alliance greenfield operations

exporting

The professional social media website LinkedIn allows its users to create their profiles for free, but it charges a premium price for additional services. This is an example of a ________ business model.

freemium

The University of Central Florida has a typical College of Business that houses several specific mini-departments such as management, marketing, finance, accounting, economics, and real estate. This College of Business best resembles a(n) ________ structure.

functional

Which of the following organizational structures matches best with an international strategy? Simple matrix Multidivisional functional

functional

Which type of organizational structure is recommended when a firm has a narrow focus in terms of product or service offerings and a small geographic footprint?

functional structure

Blue Cat Inc., a manufacturer of high-technology medical devices, has its product development centers located in the United States and South Korea. The manufacturing units are located in China and the Philippines to benefit from low labor costs and access to original equipment manufacturers. This allows the company to competitively price its devices. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Blue Cat most likely pursue?

global-standardization strategy

During which period of globalization did the mode of entry into foreign markets primarily involve exporting goods?

globalization 1.0

Aperture Science Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will give it strong control over all its business activities. Which of these foreign-entry modes will Maddox most likely choose?

greenfield operation

Hadiza wishes to have more control with her international strategy and is willing to increase her firms' investments in this foreign market. She considers creating a subsidiary but also wishes to build a manufacturing plant from the ground up. Hadiza is most likely interested in pursuing a(n) ________ strategy. red ocean greenfield operations exporting and importing black swan

greenfield operations

As firms grow in size and complexity, they have a tendency and an incentive to focus on ________, which can lead to inertia and even failure.

incremental innovation

Delos Inc. is an apparel manufacturer. The management at Delos Inc. prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through

input controls.

Beasea is a senior manager for the Wildwood Furniture Company. Because of her experience, she has been appointed to the board of Woodworks Inc., even though she does not work for this firm. She also serves on the boards of several other companies. Beasea is a(n) ________ for Wildwood Furniture and a(n) ________ for Woodworks Inc

inside director; outside director

Cyberdyne Systems Corp. manufactures cooking and baking equipment and has its base in the country of Handled. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika 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, Cyberdyne Systems Corp. incurs huge financial losses in Balalaika. In this scenario, Cyberdyne Systems Corp.'s failure to establish itself successfully in Balalaika occurs most likely because...

it underestimated its liability of foreignness when entering the Balalaika market.

Black Mesa Minerals Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Black Mesa Minerals wants to maintain some control in the foreign market. What would be the best entry mode for this firm?

joint ventures

Walmart sells live animals (snakes, eels, toads, etc.) for food preparation in China, whereas IKEA sells kimchi refrigerators and metal chopsticks in South Korea. These examples illustrate the need for ________, which often requires the competing firm to tailor their products and services to meet the needs of the market in which they are competing. Cost-leadership international strategy local responsiveness globalization hypothesis

local responsiveness

The ________ is a business-model innovation in which companies can obtain a large(r) part of their revenues by selling a small number of units from among almost unlimited choices.

long-tail concept

A company scientist at a biotechnology company decides to work on his own research project, hoping to eventually start his own firm, rather than on the project he was assigned. However, the company's stockholders are unaware of this situation. This is an example of a(n) ________ in the context of a principal-agent problem.

moral hazard

Gordon's role in providing inside information to Pearson Specter Litt for the benefit of Pearson Specter Litt's stockholders and himself is an example of...

moral hazard

The strategic leaders of Stafford Cookware, a large, successful retail chain based in the Midwest, want to expand its operations across the United States. What organizational structure should Stafford Cookware use?

multidivisional

Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and eventually gives way to core rigidity. obeys the VRIO principles. does not demonstrate causal ambiguity. displays an absence of social complexity.

obeys the VRIO principles.

Sirius Cybernetics Corp. produces touch-enabled wearable devices. Its research and development team recently became aware of a new, open-source technology produced by a firm overseas that would improve the processing speed and battery life of all Sirius Cybernetics devices. In this scenario, Sirius Cybernetics would be best served to embrace what type of innovation?

open innovation

Jerry is one of the SBU managers for a firm that has been in business for over 50 years. The external environment in which the firm has operated has changed significantly in the past decade, but it is still operating under a "business as usual" mantra. Jerry can't seem to convince the upper-level executives to reorganize the firm's structure and formal reporting relationships. This firm is probably experiencing

organizational inertia.

Exporting is best described as building new, fully owned plants and facilities from scratch. purchasing an existing facility to launch a new production activity. producing goods in one country to sell in another. bringing goods or services into a country from abroad for sale.

producing goods in one country to sell in another.

Pearson Specter Litt is a global internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries it serves. Pearson Specter Litt is most likely doing this to ________ distance from the other countries.

reduce its cultural

Freeport Bagel & Deli is a family-owned business with eight employees. Brother and sister Elise and Simon run the day-to-day operations and make all the key decisions, including what to include on the menu, which vendors to use, and how much to pay their staff. In this scenario, Freeport Bagel & Deli has adopted a ________ structure. simple tall hierarchical decentralized organizational functional

simple

A firm's ________ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.

structure

Bioplex requires its members to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. What business model does this best illustrate?

subscription-based

Jared works as a frontline employee for a nationwide retail store. He reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store?

tall structure

Firms that consider international expansion will often examine absolute metrics on which countries to pursue investments in but also consider relative distance. To help firms decide where to compete, ________was developed to help firms make this decision.

the CAGE distance framework

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with differences in consumer incomes. the absence of colonial ties. physical remoteness. the lack of trust and mutual respect.

the absence of colonial ties.

European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used this strategy? to take advantage of the high labor costs in the southern United States to take advantage of the high cost of living in the southern United States to take advantage of the low impact of globalization in the United States to take advantage of lower taxes in the southern United States

to take advantage of lower taxes in the southern United States

Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? inability to implement its trademark focused differentiation strategy in the German market transfusion of American corporate values into a German location Germany's unfamiliarity with retail discount powerhouses Metro's hostile takeover of Walmart in Germany

transfusion of American corporate values into a German location

Macmillan Toys Inc. is looking to expand internationally and wishes to develop a new product line that is highly localized while keeping their cost structure below that of their rivals. Macmillan Toys Inc. has been successful with implementing a blue ocean strategy in their main strategic business units and as such wishes to pursue a ________ strategy for their international operations.

transnational

Sales for Company B have slowed, and profits are way down. Its executive team is threatening managers with demotions and employees with layoffs unless sales pick up considerably in the next six months. This is an example of

using extrinsic motivation as an output control mechanism.