MGMT 10, MGMT 13, MGMT 11, MGMT 12

With a related diversification corporate-level strategy, financial controls are used by corporate leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and technologies across businesses. a. True b. False

False

The top management team at Ingenuity, Inc., has assigned a team of scientists to a multi-year project to investigate the viability of growing large amounts of fur from cloned cells of minks and foxes to produce no-kill fur products for coats and other clothing items. This idea would satisfy all the dimensions of the entrepreneurial orientation EXCEPT a. innovativeness. b. risk taking. c. proactiveness. d. competitive autonomy.

d

The Chapter 11 Opening Case about Borders shows that although strategy has an important influence on structure, once a particular structure is in place, that structure influences strategy. a. True b. False

True

The use or application of entrepreneurship within an established firm is called a. corporate emergence. b. transformational leadership. c. exceptional R&D. d. corporate entrepreneurship.

d

. In most cases, the focus strategy is best managed using a structure. a. simple b. functional c. multidivisional d. vertical

a

. In the balanced scorecard framework, climate that supports change and innovation. a. learning and growth b. financial c. operational d. innovational

a

A heterogeneous top management team is composed of individuals with a. different functional backgrounds, experience, and education. b. similar commitments to the organization's core ideology and culture. c. a high level of education and industry expertise. d. long tenure in the organization who have held various functional positions.

a

A successful innovation will be less risky but less profitable than a successful innovation. a. incremental; radical b. radical; incremental c. alliance-generated; acquisition-generated d. acquisition-generated; alliance-generated

a

A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. This may lead to all of the following EXCEPT a. high executive turnover. b. increased diversification of the firm. c. excessive management compensation. d. reduction in R&D expenditure.

a

Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT a. relying on the fundamental goodness of individuals. b. using reward systems that recognize acts of courage. c. communicating goals that describe the firm's ethical standards. d. creating a work environment where individuals are treated with dignity.

a

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to a. reduce transaction costs. b. increase negotiating leverage with suppliers. c. become less dependent on its suppliers. d. move toward horizontal alliances with its suppliers.

a

. In contrast to managers' desires, shareholders usually prefer that free cash flows be a. used to diversify the firm. b. returned to them as dividends. c. used to reduce corporate debt. d. re-invested in additional corporate assets.

b

. In the United States, the fundamental goal of business is to a. ensure customer satisfaction. b. maximize shareholder wealth. c. provide job security. d. generate profits.

b

. In the implementation of internal innovations, formal and informal processes are best supported through organizational structures. a. vertical b. horizontal c. functionally oriented d. multidivisional

b

. Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, he has been displaying a tendency toward personal extravagance at the firm's expense. In order to limit Mr. Leagreet's power, the board of directors plans to a. elect an insider as the lead director. b. appoint another individual as chairperson of the board of directors. c. require Mr. Leagreet to personally certify the firm's financial reports. d. reduce the size of the stock option package provided to Mr. Leagreet.

b

. Since it replaces existing products and methods of production, entrepreneurship is a process of a. harnessing the human potential. b. creative destruction. c. creation of opportunity. d. exploitation of innovation.

b

. The fewest integrative devices are used in the structure. a. simple b. competitive multidivisional c. SBU d. network

b

. capital increases cooperation among individuals inside and outside the firm. a. Human b. Social c. Visionary d. Cultural

b

A multidomestic strategy would be associated with a. high levels of coordination. b. informal coordination among units. c. many integrative mechanisms. d. interdependent divisions.

b

A negative effect of acquiring other firms for the purpose of innovation is a. innovations cannot be transferred between organizations. b. the effect it can have on the firm's own ability to produce innovations. c. innovations may not actually be present in the firm after the purchase is completed. d. the acquired firm's employees usually leave.

b

All of the following are external environmental sources that affect managerial discretion EXCEPT a. industry structure. b. corporate culture. c. market growth rate. d. potential for product differentiation.

b

Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. Which of the following statements is most likely to be TRUE? a. Agency costs at Amos Ball are high. b. If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO. c. At Amos Ball, the opportunity for managerial opportunism is high. d. The functions of risk-bearing and decision making are separate at Amos Ball.

b

An example of the external labor market is the situation where a. an assessment center operated by an external consulting firm evaluates company managers for promotion potential. b. a new vice president of marketing is hired from a competitor. c. the senior vice president of finance is promoted to CEO. d. a vice president of human resources is sent to a university executive MBA program for professional development.

b

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions a. increases. b. decreases. c. remains constant. d. is eliminated.

b

Compared to managers, shareholders prefer a. safer strategies with greater diversification for the firm. b. riskier strategies with more focused diversification for the firm. c. safer strategies with more focused diversification for the firm. d. riskier strategies with greater diversification for the firm.

b

Corporate governance is important to nations because a. shareholders want large stock returns. b. firms seek to invest in nations with national governance standards that are acceptable to them. c. company boards have lobbied for strong governance. d. the United States requires that other nations adopt its governance practices

b

Corporate governance revolves around the relationship between which two parties? a. shareholders and the board of directors b. shareholders and managers c. the board of directors and managers d. None of the these options are correct.

b

Firms seeking to compete on the basis of cost leadership particularly need support from the functions. a. finance; accounting b. manufacturing; process R&D c. product R&D; marketing d. management information; finance

b

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the structure. a. matrix b. competitive multidivisional c. hybrid combination d. horizontal complementary strategic alliance

b

Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(n) director. a. lead independent b. inside c. related d. encumbered

b

GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that a. this innovation will resist competitors' attempts to imitate it. b. its investors will react positively to the introduction of the new product because of the potential for higher returns. c. its investors will react negatively because of the risk and cost entailed in introducing a new product. d. this will be recognized in the industry as a radical innovation.

b

In an SBU structure, financial controls. is/are evaluated using strategic controls, whereas is/are evaluated using a. each SBU; divisions within the SBUs b. divisions within the SBUs; each SBU c. managers of the SBUs; headquarters staff d. headquarters staff; managers of the SBUs

b

Induced strategic behavior as a form of internal innovation is a(n) process. a. bottom-up b. top-down c. free-flowing d. external

b

Leslie is a newly graduated certified public accountant with a specialty in corporate tax. She wishes to join an organization (not an accounting firm) that will allow her to concentrate on corporate tax and become deeply proficient in this area. Leslie should look for a position in a firm with a structure.

b

Managers may decide to invest in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. a. unsubstantial profits b. free cash flows c. marginal profits d. frozen assets

b

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchises are creating the greatest possible value. This is an example of a(n) a. worldwide product divisional structure. b. strategic network. c. SBU multidivisional structure. d. simple structure.

b

Normally, the more involved a board of directors is in shaping the firm's strategic direction, the a. more balanced the organization is. b. higher the corporation's performance is. c. more rapidly executive decisions can be make. d. more difficult it becomes to make effective executive decisions.

b

Omicron Artificial Intelligence is able to respond quickly to competitors' actions and to opportunities in the marketplace. This is an example of a. agility. b. a core competency. c. flexibility. d. responsiveness.

b

Ownership concentration is determined by both a. the number of stockholders and the parties they represent. b. the number of stockholders and total percentage of shares they own. c. the number of outside directors and the parties they represent. d. the number of outside directors and total percentage of shares they own.

b

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect a. immediate wealth creation. b. a long wait for an uncertain payoff. c. a long wait for a high probability payoff. d. a large payoff in the short term with rapidly decreasing wealth generation in the longer run.

b

Research shows that internationally diversified firms tend to be than domestic-only firms. a. less profitable b. more innovative c. less technologically advanced d. more likely to have an individualistic culture

b

Research suggests that is needed to encourage entrepreneurial behavior. a. individualism rather than collectivism b. a balance between individualism and cooperative behavior c. collectivism rather than individualism d. limited autonomy and incentives

b

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS a. increases shareholder value significantly. b. may not have a direct effect on firm performance. c. is so aggressive that boards of directors have become overly cautious. d. has weakened the effect of other governance mechanisms.

b

Successful implementation of the differentiation strategy requires a structure that a. has specialized jobs. b. decentralizes decision making. c. focuses on the finance function. d. is dominated by the operations function.

b

Successfully creating innovations through internal means requires a. a highly individualistic culture. b. significant spending on R&D. c. acquisitions of innovative firms. d. venture capital.

b

The New York Stock Exchange requires that the audit committee be a. available to comment to external analysts. b. headed by outside directors. c. liable for any illegal actions by the top management team. d. made up of CPAs with auditing experience.

b

. Innovations that involve significant technological breakthroughs and create new knowledge a. build incrementally on the firm's existing technologies and knowledge. b. are the most common type of innovation. c. involve substantial uncertainty and risk. d. typically have clear market opportunities.

c

. Institutional owners are a. shareholders in the large institutional firms listed on the New York Stock Exchange. b. banks and other lending institutions that have provided major financing to the firm. c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. d. prevented by the Sarbanes-Oxley Act from owning more than 50 percent of the stock of any one firm.

c

. Internal corporate venturing does NOT involve a. autonomous strategic behavior. b. induced strategic behavior. c. strategic alliances. d. product champions.

c

. The main risk in a strategic alliance is that a. the alliance will not result in a successful innovation. b. critical employees will be hired away by the strategic partner. c. one partner will use the other partner's knowledge and use it to enhance its own competitive abilities. d. the partners will lose control over their internal processes.

c

. ____ are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it.

c

. is one of the reasons for the differences in rates of entrepreneurship among different countries. a. Climate b. Competitiveness c. Culture d. Constitution

c

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of a. imitation of a competitor's product. b. a radical innovation. c. an incremental innovation. d. a(n) innovation created through a cooperative strategy.

c

A CEO gains power from all of the following circumstances EXCEPT a. when many of the outside directors are appointed by the CEO. b. when the CEO is also the chairman of the board. c. when tenure of the top management team is shorter than the tenure of the board. d. the fact that inside board members report to the CEO.

c

A CEO's breadth of knowledge base is constrained by a. his or her relationship with the board of directors. b. whether he or she is also the chairperson of the board of directors. c. his or her long tenure with the firm. d. the level of social capital in the firm.

c

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT a. centralization of some organizational functions for the sake of coordination. b. frequent, direct contact between division managers. c. division managers' rewards based on division financial performance. d. temporary teams or task forces formed around specific projects.

c

A firm pursuing an unrelated diversification strategy will utilize a structure. a. network b. cooperative form multidivisional c. competitive form multidivisional d. functional

c

A major barrier to the use of cross-functional teams is a. excessive individualism of creative people. b. lack of communication skills of technical people. c. independent frames of reference of team members. d. lack of social capital by team members.

c

A worldwide geographic area structure is an organizational form in which a. multiple alliances across the globe link complementary businesses. b. standardized products are offered across country markets. c. national interests dominate and management adapts to local or cultural differences. d. responsiveness to local demand is combined with economies of scale.

c

According to Peter Drucker,the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies.

c

Agency costs reflect all of the following EXCEPT costs. a. monitoring b. enforcement c. opportunity d. incentive

c

All of the following are consequences of the Sarbanes-Oxley Act EXCEPT a. a decrease in foreign firms listing on U.S. stock exchanges. b. internal auditing scrutiny has improved and there is greater trust in financial reporting. c. an increased number of IPOs (initial public offerings) are expected. d. Section 404 creates excessive costs for firms.

c

Two key strategic leadership actions include a. monitoring the hiring of key employees and focusing on growth but not learning initiatives. b. designing and then implementing the balanced scorecard. c. setting appropriate financial targets and establishing an effective business level synergy. d. determining strategic direction and establishing balanced organizational controls.

d

Typically, an organization using a simple structure would be a. large. b. small. c. of any size if the firm is privately held. d. a family-owned-and-managed firm of any size.

d

Which of the following is NOT related to a CEO having long tenure in his or her position? a. more effective strategic control b. greater influence on board decisions c. more limited perspective d. a broader knowledge base

d

Which of the following is TRUE? a. Organizations tend to change structure too frequently, which erodes their competitive advantage. b. Large organizations can retain a simple structure as long as they have a focus strategy. c. Flexibility in structure is more important than stability. d. Strategy has a more important influence on structure than structure has on strategy.

d

An important lesson from the Chapter 11 Opening Case about Borders is that a. Borders did a good job of implementing its strategy but its structure was wrong. b. structures rarely evolve in response to strategic change. c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy. d. Borders' decentralized structure led to poor decision making.

c

Complete the following: In small firms, managers often own a separation between ownership and managerial control. a. small; small b. small; large c. large; small d. large; large percentage of the firm, which means there is

c

Criteria for reevaluating internal business processes using the balanced scorecard include all of the following EXCEPT a. asset utilization improvements. b. improvements in employee morale. c. increases in employee skills. d. changes in turnover rates.

c

Determining the strategic direction of a firm involves a. implementation of a balanced scorecard. b. developing an entrepreneurial mind set. c. specifying the vision and the strategy to achieve that vision over time. d. exploiting and maintaining core competencies.

c

Entrepreneurs tend to have all the following characteristics EXCEPT a. willing to take responsibility for projects. b. passion. c. preference for certainly about projects. d. optimism.

c

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the a. customer. b. employee. c. shareholder. d. general society.

c

Functional structures work best for firms for all of the following strategies EXCEPT a. cost leadership strategy. b. differentiation strategy. c. related constrained diversification strategy. d. single or dominant business corporate strategy.

c

Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? a. moving toward having directors from different backgrounds b. strengthening the internal management and accounting control systems c. compensating directors with stock options rather than with fixed remuneration d. establishing and using formal processes to evaluate the board's performance

c

In the structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets. a. functional b. cooperative c. competitive d. SBU

c

Managerial employment risk is the a. risk that managers will behave opportunistically. b. risk undertaken by managers to earn stock options. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. d. risk managers will not find a new top management position if they should be dismissed.

c

One means that is considered to improve the effectiveness of outside directors is a. mandating that all outside directors be drawn from government or academia rather than industry. b. requiring that outside directors be former executives of the firm. c. requiring outside directors to own significant equity stakes in the firm. d. requiring that outside directors be truly objective by having no ownership interest in the firm.

c

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that a. it is difficult to achieve economies of scale. b. the firm must develop centers to offer after-sales service to customers. c. it is difficult to respond effectively to local market needs and preferences. d. achieving economies of scale with this strategy/structure combination is nearly impossible.

c

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore a. increasing its costs and reducing its potential to succeed. b. engaged in internal corporate venturing. c. pursuing innovation through both internal and cooperative strategies. d. not an innovative company.

c

Which of the following is NOT a factor that determines the amount of a manager's decision discretion? a. characteristics of the manager b. characteristics of the organization c. cohesiveness of the board of directors d. the external environmental

c

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? a. strategic outsourcing b. encouraging friendly rivalry among network members c. allocating internal capital d. supporting development of new core competencies

c

Which of the following is true? For firms to be entrepreneurial, they require a culture with a. an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b. an exceptionally high level of collectivism. c. a balance of individualism and collectivism. d. an exceptionally high level of individualism.

c

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy? a. competitive form with related-constrained strategy b. cooperative form with unrelated strategy c. SBU form with related-linked strategy d. competitive form with related-linked strategy

c

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance? a. functional b. cooperative M-Form c. SBU form d. competitive M-Form

c

controls are objective criteria that allow corporate managers to evaluate the returns earned by individual business units. a. Strategic b. Managerial c. Financial d. Environmental

c

exist(s) when there is a need in the market that can be satisfied by new goods or services. a. Potentiality b. Market readiness c. Entrepreneurial opportunities d. Critical core competencies

c

Human capital refers to a. the net present value of the future competencies of the workforce. b. the amount of money purchasers of the firm would pay for the continuing employment of the present workforce. c. the value-added that the firm's workforce contributes to each product produced or service rendered. d. knowledge and skills of the firm's work force.

d

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the organizational structure. a. horizontal complementary strategic alliance b. competitive multidivisional c. strategic business unit multidivisional d. hybrid combination

d

Japanese keiretsu are a. management structures related to total quality management systems. b. company unions, which are a type of governance system. c. the banks owing the largest shares of stock in the firm. d. a system of cross-shareholding among firms.

d

Monitoring by shareholders is usually accomplished through a. management consultants. b. government auditors. c. the firm's top managers. d. the board of directors.

d

New entrepreneurial firms are better than larger established firms at a. implementing innovations. b. gaining competitive advantage. c. making alliances. d. identifying entrepreneurial opportunities.

d

One disadvantage of the functional structure is that a. career paths and professional development are limited. b. dual reporting relationships blur lines of authority. c. the CEO cannot coordinate and control the efforts of functional-level employees. d. communication and coordination are difficult among organizational functions.

d

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so a. indicates to competitors that the firm is vulnerable to a hostile takeover. b. will only lead to inefficiencies. c. requires that the firm undertake a multi-year restructuring period that will delay retirement. d. suggests that the firm's previous choices were not the best ones.

d

Product diversification provides two benefits to managers that do not accrue to shareholders: and . a. greater experience in a wider range of industries; lessening of managerial employment risk b. the manager frequently invests in the acquired firm, which allows him or her extensive profits; the manager can frequently buy excess assets divested by the acquired firm c. the manager's supervisory needs are lowered; the manager is allowed greater time to oversee a wider range of activities d. the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

d

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek established companies may need a. distribution channels; tacit knowledge. b. deep technological expertise; distribution channels. c. social capital; technical capital. d. investment capital; new technological knowledge.

d

Research shows that firm's ethical requirements. a. a written code of ethics is the most effective means of ensuring that employees comply with the b. a statement in the firm's mission statement c. a speech on ethics by the CEO of the company d. a value-based culture

d

Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. b. the board includes employees as voting members. c. the board is homogenous in composition. d. outside directors own significant equity in the organization

d

Which of the following is a FALSE statement about corporate governance? a. Governance is used to establish order between parties whose interests may be in conflict. b. Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. c. Corporate governance mechanisms can be in conflict with one another. d. Corporate governance is best achieved with a board of directors with strong ties to management.

d

The structure is best for implementing the related-constrained diversification strategy. a. functional b. competitive form of the multidivisional c. SBU form of the multidivisional d. cooperative form of the multidivisional

d

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? a. dissension within the top management team b. informal organizational processes within the firm c. the firm's strategic orientation d. organizational politics

d

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to a. make the partners' true loyalties and intentions unclear. b. make the role of the strategic center firms more critical to alliance success. c. distribute the alliances along several segments of the airline industry value chain. d. be most effective when the alliances are with airlines headquartered in different nations.

a

An agency relationship exists when one party delegates a. decision-making responsibility to a second party. b. financial responsibility to employees. c. strategy implementation actions to functional managers. d. ownership of a company to a second party.

a

An organization's firm's strategies. is composed of the key individuals who are responsible for selecting and implementing the a. top management team b. board of directors c. keiretsu d. governance circle

a

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the structure.

a

Boards of directors are now becoming more involved in a. the strategic decision-making process. b. selecting new CEOs. c. the firm's tax issues. d. governmental relations.

a

Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to a. align financial institutions' actions with society's interests. b. increase the number of foreign firms listing on U.S. stock exchanges. c. require CEOs to attest to the accuracy of their companies' financial reports. d. increase consumer protection in pharmaceutical products.

a

Cross-functional teams are useful in developing and commercializing new products because each team member brings his or her special competencies to the project. Each team member brings his/her point of view from his/his experience and background. On the other hand, these team members. a. independent frames of reference b. entrepreneurial mind-sets c. professional rivalries d. politicized points of view

a

Entrepreneurship is the process by which individuals or groups identify and pursue without being immediately constrained by the they currently control. a. opportunities; resources b. opportunities; core competencies c. threats; resources d. threats; core competencies

a

Faced with declining enrollment and increased competition from not-for-profit organizations offering inexpensive art courses for new hobbyists, the for-profit Delta Academy of Art has steadfastly stayed true to its mission of offering high-quality classical art instruction for both beginners and advanced artists at high tuition. Delta has been noted for the excellence of its artistic training for decades. This is an example of a. adhesion to the status quo. b. lack of an envisioned future. c. competence becoming a liability. d. failure to have a clear core ideology.

a

Firms needing to change their strategies should a. create more heterogeneous top management teams. b. focus on their core customer base. c. implement transformational leadership. d. emphasize the training and development of internal managerial talent.

a

Implementing the multidomestic strategy requires decentralization to a. facilitate the tailoring of products to the demand in local markets. b. develop economies of scale. c. achieve economies of scope. d. reduce bureaucracy and speed up decision making.

a

In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT a. integration. b. performance appraisal. c. resource allocation. d. long-range planning.

a

Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three years. It currently has a simple structure with Jared Smith, the owner-manager, making all major decisions. Jumbo is probably now experiencing or will soon experience a. coordination and control problems. b. bureaucratic inefficiencies. c. excessive competition among division managers. d. limited communication among functional specialists.

a

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that a. the receiving party have adequate absorptive capacity to learn. b. the communication process be highly intensive. c. the knowledge be broken into the smallest comprehensible units. d. training consultants be involved in every step of transference.

a

One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process a. is encouraged through a bottom-up or top-down process. b. is encouraged by a product champion or an entrepreneur external to the organization. c. relies on internal structure or existing strategy to encourage innovation. d. is in a large or small organization.

a

Organizational controls provide a. the parameters within which strategies are to be implemented. b. goals and objectives that must be achieved. c. information on action steps to be taken to implement the corporate strategy. d. managers with guidelines on how to treat employees.

a

Organizational structure a. specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes. b. specifies the firm's informal reporting relationships, procedures, controls, and authority and decision-making processes. c. specifies the firm's formal value proposition, the markets it will serve, and how the firm will provide value in those markets. d. specifies the firm's control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes.

a

Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of a. incremental innovation. b. invention. c. imitation. d. the use of social capital.

a

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-to-moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of a. taking advantage of a need in the marketplace. b. creative destruction of existing services for pet boarding. c. institutionalized entrepreneurship. d. internal corporate venturing.

a

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because a. firms must be flexible while retaining a degree of stability. b. managers are never able to obtain all the information necessary to make the best selection. c. the structure of a firm should not duplicate the structures of its competitors. d. the environment changes too rapidly for corporations to maintain a consistent corporate structure.

a

The ability to attract and manage may be the most important skill a strategic leader must have. a. human capital b. financial resources c. responses to competitors' actions d. investment strategies

a

The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. Consequently, the board is a. setting the option strike price substantially higher than the current stock price. b. insuring that the strike price value of the options can be lowered if the organizational environment becomes more risky. c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope.

a

The heavy use of integrative mechanisms in the achieve a. cooperative; economies of scope. b. competitive; cost efficiencies. c. functional; sensitivity to cultural diversity. d. SBU; quick response to local customer needs. multidivisional organizational structure is intended to

a

The idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of a. product champions. b. joint ventures. c. strategic leadership. d. cross-functional teams.

a

The integrated cost leadership/differentiation strategy is difficult to implement mostly because a. different primary and support activities are emphasized when using cost leadership and differentiation strategies. b. this strategic approach demands more flexibility than most firms can manage. c. the dual reporting relationships required for this strategy slow organizational decision making. d. the cost leadership strategy requires less structured job roles than does the differentiation strategy.

a

The more heterogeneous the top management team, the a. more difficult it will be for the team to implement strategies. b. more likely it is that the team will be cohesive. c. less innovative the team's decisions will tend to be. d. less diverse the team membership will be.

a

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits? a. aligning the corporate structure with the demands of global expansion b. more accurate monitoring of the performance of each business c. facilitating comparison between divisions d. stimulating managers of poorly performing divisions to look for ways of improving performance

a

The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for a. increased diversification of Sierra Infusion. b. the addition of outside directors to the board. c. increased shareholder participation in decision making. d. greater concentration on Sierra's core industry.

a

To be successful, an autonomous process for developing new products relies on a. the diffusion of tacit knowledge. b. the acquisition of innovative firms. c. strategic alliances with other firms. d. internal corporate venturing.

a

Usually, large-block shareholders are considered to be those shareholders with at least stock. a. 5 b. 25 c. 50 d. 75 percent of the firm's

a

Value creation through internal innovation originates with a. an entrepreneurial mind-set. b. cross-product development teams. c. shared values and entrepreneurial leadership. d. innovation.

a

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to a. use them without reducing cooperation among divisional managers. b. transfer capital between units. c. maintain an arms-length relationship between headquarters and the divisions. d. identify which objective criteria to monitor.

a

When the top management team is homogeneous and a new CEO is selected from inside the firm, it is a. unlikely that the current strategy will change. b. likely that product innovation will continue. c. likely there will be a change in strategy. d. unlikely the new CEO will have a long tenure.

a

When used effectively, cross-functional teams will often bring about a. faster product development processes. b. an increased need for additional information. c. conflicting information about the business environment. d. future cooperative alliances.

a

Which of the following is NOT one of the four perspectives in the balanced scorecard framework? a. entrepreneurial b. financial c. customer d. learning and growth

a

involves internally developed incremental and radical innovations that result from deliberate efforts. a. Internal corporate venturing b. Autonomous strategic behaviors c. Bottom-up strategic behaviors d. Product championing

a

is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. a. Complementary strategic goals b. Shared values c. An entrepreneurial mind-set d. Compatible organizational cultures

a

The development of the original personal computer (PC) was a(n) innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) a. incremental; radical b. radical; incremental c. concentric; radical d. radical; concentric

b

The effective development and management of the firm's may be its only sustainable competitive advantage. a. capital base b. human capital c. technology d. organizational culture

b

The market for corporate control serves as a means of governance when a. the firm is overpriced in the market. b. internal controls have failed. c. the corporation has greatly exceeded performance expectations. d. the top management team's interests and the owners' interests are aligned.

b

The need for the organization to combine local responsiveness and efficiency is most critical in a strategy. a. multidomestic b. transnational c. global d. focus

b

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of a. the use of autonomous strategic behavior. b. the use of induced strategic behavior. c. development of radical innovations. d. innovation through acquisitions.

b

The__ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy. a. simple b. functional c. multidivisional d. strategic business unit

b

Through the work of cross-functional teams, product development stages are grouped into processes. a. short-term and long-term b. parallel or overlapping c. serially ordered d. complementary

b

Which of the following factors most encourages stability in a firm's strategy? a. a new CEO hired from outside the firm but within the industry b. internal CEO succession and a homogeneous top management team c. external CEO succession and a heterogeneous top management team d. a new CEO hired from outside the industry

b

Which of the following is NOT a variation of the multidivisional structure? a. competitive form b. regional form c. cooperative form d. strategic business unit form

b

Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mind-set? a. autonomy b. reactivity c. risk taking d. innovativeness

b

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies? a. A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. b. A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. c. An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination. d. A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

b

. If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital. b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack.

c

. In the United States, a firm's key stakeholder(s) is(are) the a. government. b. executives. c. shareholders. d. customers.

c

. Induced strategic behavior is a process that fosters product innovations that a. are likely to change a firm's strategic intent and mission. b. will lead to greater financial returns. c. are aligned closely with current strategy and structure. d. will come to market in a short period of time.

c

. A characteristic of the manager that may affect managerial discretion is his/her a. amount of industry experience. b. level of education. c. tolerance for ambiguity. d. length of tenure.

c

. Financial controls are most important in the strategy. a. single business b. related constrained c. unrelated diversified d. vertical complementary

c

. Firms seeking to differentiate particularly need support from the and functions. a. finance; accounting b. engineering; operations c. product R&D; marketing d. management information; finance

c

. Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules a. use integrative mechanisms to share core competencies. b. compete with one another in Olympia's internal capital markets. c. are not necessarily related to one another in terms of products or markets. d. are network member firms while Olympia is the strategic center firm.

c

. Innovation creates a(n) a. opportunity for a new product or process. b. new product or process. c. commercial product. d. idea for potential exploitation.

c

Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal? a. ATP has been the initiator of several hostile takeovers in the last 2 years. b. The board has been successful in reducing the percentage of CEO pay that is composed of stock options. c. The CEO/chairperson of the board has been suspected of opportunistic behavior. d. The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules.

c

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT a. effective communication. b. effective performance appraisals. c. adherence to the firm's traditional core values. d. an appropriate reward system.

c

Some experts consider the structure to be one of the 20th century's most significant organizational innovations because of its value to diversified firms. a. network b. cooperative c. multidivisional d. functional

c

Strategic control focuses on the strategic actions. a. revenues; costs of strategic actions, whereas financial controls focus on the _____ of b. long-term financial outcomes; short-term financial performance c. content; outcomes d. outcomes; content

c

The is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance. a. managerial model b. holistic control system c. balanced scorecard d. internal auditing system

c

The board of directors for TundraPro, Inc., is searching for a new CEO. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees. The board has decided it needs a CEO who can be a transformational leader. To this specific end, the board needs to identify applicants who have a. high levels of honesty, trustworthiness, and integrity. b. high emotional intelligence. c. Both A and B are correct. d. low tolerance for ambiguity.

c

The competition for resources among those representing different organizational functions within a firm often leads to a. erosion of social capital. b. heightened communication. c. organizational politics. d. empowerment of organizational members.

c

The dimensions on which functional departments can vary include all the following EXCEPT orientation. a. time b. customer c. technological d. interpersonal

c

The firm's culture promotes unity of purpose for cross-functional work teams through a. a collectivist structure. b. an entrepreneurial mind-set. c. shared values. d. resource allocation.

c

The level of entrepreneurial activity in a nation is the nation's level of economic development. a. negatively related to b. independent of c. positively related to d. weakly related to

c

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to a. an emerging professional management philosophy. b. the increasing demand by consumers for both high quality and low prices. c. coordination and control problems. d. a shift toward the global economy.

c

The primary responsibility for effective strategic leadership of the organization rests with the a. board of directors. b. top management team. c. CEO. d. stakeholders.

c

The separation between firm ownership and management creates a(n) relationship. a. governance b. control c. agency d. dependent

c

The three types of innovative activity include all of the following EXCEPT a. invention. b. imitation. c. implementation. d. innovation.

c

The top management team is composed of the a. heterogeneous group of advisors selected by the CEO. b. CEO and chairperson of the board. c. key individuals who are responsible for selecting and implementing a firm's strategy. d. officers listed in a firm's annual report and the board of directors.

c

To successfully implement a firm's strategy, the workforce must be viewed as a a. variable cost. b. depreciating asset. c. resource to be maximized. d. renewable asset.

c

Typically, a successful firm pursuing a differentiation strategy will a. have a very hierarchical structure. b. require a structure that is very formal. c. use cross-functional development teams. d. develop free-standing business units.

c

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in a. entrepreneurial incubation. b. creative destruction. c. internal corporate venturing. d. cooperative innovation strategies.

c

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure? a. increasing diversification b. coordination and control issues c. need for knowledge-sharing among specialists d. greater amounts of data and information to process

c

A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called a. greenmail. b. a standstill agreement. c. crossing the palm with silver. d. a poison pill.

d

. Independent frames of reference and organizational politics are the two primary barriers to cross-functional team integration. Two methods to facilitate cross-functional integration are _________ and a. autonomous strategic behavior; induced strategic behavior. b. incremental innovations; radical innovations. c. bottom-up integration; top-down integration. d. shared values; effective leadership.

d

. Structural stability affects the organization's ability to a. resist organizational inertia. b. cope with uncertainty about cause-and-effect relationships in the global economy. c. develop new competitive advantages. d. consistently and predictably manage its daily work routines.

d

. Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior? a. Effectively Managing the Firm's Resource Portfolio. b. Determining Strategic Direction. c. Regulating and Controlling Employees. d. Sustaining an Effective Organizational Culture.

d

A cross-functional product development team has been examining a proposed new product intensively for 6 months. The team has decided that although the product is unique and technologically advanced, the cost of production will exceed the price that the consumer would be willing to pay. At this point, the product development team should a. engage in creative destruction. b. recommend that the product be sold at a loss in order to create a new market. c. turn over the product evaluation to a new product-development team which may have more passion for the product. d. recommend that the project be set aside.

d

A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to , whereas owners wish to diversify the firm to . a. generate free cash flows; reduce the risk of total firm failure b. increase the price of the firm's stock; increase the dividends paid out from free cash flows c. reduce the risk of total firm failure; reduce their total portfolio risk d. reduce their employment risk; increase the company's value

d

Agricultural Chemicals, Inc., was the target of a hostile takeover 6 months ago. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Which of the following is most likely to be TRUE? a. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. They are more a function of general market conditions. b. The fact that a hostile takeover has occurred is proof that the firm was under-performing. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. d. The CEO and top executives should not consider their jobs secure.

d

All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT a. consumer protection. b. CEO compensation. c. regulation of derivatives. d. retirement accounts.

d

All of the following are correct about the status of CEO succession (Chapter 12 Strategic Focus) EXCEPT a. there is considerable CEO turnover in North American and European firms hence the need for succession plans. b. IBM has a succession plan for CEO Sam Palmisano. c. most formal succession plans call for the use of executive search firms. d. over 90 percent of firms have succession plans.

d

Autonomous strategic behavior is a(n) process in which product champions pursue new ideas. a. top-down b. horizontal c. integrated d. bottom-up

d

CEO duality refers to a. firms where there is both a president and a CEO. b. CEOs who sit on the board of directors of other firms. c. CEOs who hold office in more than one company. d. the situation where the CEO is also chairperson of the board of directors.

d

Cisco used the structure to implement its strategy. a. functional; cost leadership. b. SBU form of the multidivisional; related linked c. cooperative form of the multidivisional; related linked d. cooperative form of the multidivisional; related constrained

d

Cisco's corporate-level structure was useful in implementing its business-level strategy. a. SBU form; integrated cost leadership-differentiation b. competitive form; differentiation c. cooperative form; cost leadership d. cooperative form; integrated cost leadership-differentiation

d

Competitive aggressiveness describes a firm's a. tendency to engage in new ideas and creative processes. b. willingness to allow employees to take actions free of organizational constraints. c. ability to be a leader in the marketplace. d. propensity to take actions that allow it to outperform rivals consistently and substantially.

d

Corporate governance is all of the following EXCEPT a. mechanisms used to determine and control the strategic direction and performance of organizations. b. a means to establish and maintain harmony between owners and top managers whose interests may conflict. c. ensuring that top managers' interests are aligned with the interests of stockholders. d. resolve conflicts among corporate employees.

d

Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT a. bonuses. b. long-term incentives such as stock options. c. salary. d. penalties for inadequate firm performance.

d

Firms develop innovations in all the following ways EXCEPT a. through autonomous or induced strategic behavior. b. by acquiring other companies. c. through cooperative strategies. d. via divestiture of low-performing units.

d

Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After 6 months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is a. the ability to identify opportunities. b. a corporate sponsor. c. financial slack. d. passion for his invention.

d

Strategic controls allow corporate-level managers to a. evaluate business-level performance on objective criteria. b. concentrate on day-to-day corporate operations. c. assess performance of employees and managers in each business unit. d. examine the fit between what the firm might do and what it can do.

d

The structure is an organizational structure that combines both functional specialization and business product or project specialization. a. functional b. worldwide geographic area c. network d. matrix

d

The BEST multidivisional structure to use a. is the competitive form. b. is the SBU form. c. is the cooperative form. d. depends on the degree of diversification.

d

The CEO and Chairman of the board of directors Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. The directors are all outsiders, experienced, and run their own successful firms. The CEO/chair genuinely seeks their greater involvement. What would you recommend? a. Requiring that the directors own stock in the company. b. Establishing a formal process to evaluate the board's performance. c. Electing an lead director. d. All of these options are correct.

d

The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm's motto, the title of its Web newsletter, and even on the company t-shirts and mugs. This is an example of the firm's a. core ideology. b. organizational culture. c. strategy. d. envisioned future.

d

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in a. managerial opportunism. b. white-collar crime. c. vindictive disloyalty. d. an act of courage.

d

The benefits of a simple structure include all of the following EXCEPT a. ease of coordination within the organization. b. the lack of a need for sophisticated information systems. c. active involvement by the owner-manager. d. the ability of specialists to develop deep expertise.

d

The cooperative multidivisional firm a. establishes profit centers based on products or markets. b. has a flat organizational structure which broadens jobs and empowers workers. c. has a structure organized around both functional specialization and business projects. d. has a structure requiring heavy use of horizontal integrative devices.

d

The goal of investing in human capital is to a. increase the number of employees in the firm. b. reduce organizational slack. c. maximize current productivity per employee. d. develop a workforce capable of continuous learning.

d

The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is a. ownership concentration. b. the market for corporate control. c. executive compensation systems. d. the board of directors.

d

The most centralized and most costly form of the multidivisional structure is the a. integrated. b. competitive. c. SBU. d. cooperative.

d

The most effective leadership style is leadership. a. pragmatic b. charismatic c. inspirational d. transformational

d

The number of patents held by an organization is a rough guide to the a. effective use of organizational politics. b. future success of an initial public offering. c. amount of venture capital a firm will be able to attract. d. level of innovation in a firm.

d

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT a. making CEOs more accountable for their performance. b. challenges to the decisions of boards. c. focusing attention on ineffective boards of directors. d. a direct effect on firm performance.

d

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited a. centralization. b. coordination across divisions. c. ability to meet local market needs. d. potential for global efficiency.

d

The risks of international entrepreneurship include all the following EXCEPT a. unstable foreign currencies. b. problems with market efficiencies. c. limitations on market size. d. strong "buy-domestic" programs.

d

Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? a. The decisions made by top-level managers are typically complex and nonroutine. b. An executive's decisions often affect firm performance only over the long run. c. A number of factors intervene between top-level management decisions and firm performance (e.g., unpredictable economic, social, or legal changes). d. The compensation committee may not have comprehensive firm performance data.

d

Which of the following statements is TRUE regarding effective organizational cultures? a. Once a corporate culture is developed, strategic leaders can focus on other activities. b. A strategy that is historically new for a firm should be implemented by incremental changes in the organization's culture. c. A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment. d. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

d

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader? a. Appointing many outside board members. b. Increasing the firm's sales. c. Increasing the homogeneity of the top management team. d. Training and development programs.

d

As a rule, shareholders prefer more product diversification than do managers because shareholders wish to reduce risk and maximize wealth. a. True b. False

false

Both top executives and owners of the firm wish to diversify the firm to reduce risk. a. True b. False

false

Agency costs include incentives for executives, monitoring, enforcement costs, and any individual financial losses incurred by principals. a. True b. False

true

Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of an organization. a. True b. False

true