MGMT466 Test 3

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT

to enhance the compensation packages of top managers.

A characteristic of the manager that may affect managerial discretion is his/her

tolerance for ambiguity

An organization's ____ is composed of the key individuals who are responsible for selecting and implementing the firm's strategies

top management team

Induced strategic behavior as a form of internal innovation is a(n) ____ process.

top-down

The primary responsibility of the franchisor, such as McDonald's or Hilton International is to

transfer to the franchisee knowledge and skills needed to compete at the local level.

The most effective leadership style is ____ leadership.

transformational

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

-high levels of honesty, trustworthiness, and integrity. -high emotional intelligence. -Both A and B are correct.

Usually, large-block shareholders are considered to be those shareholders with at least _____ percent of the firm'sstock.

5

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is FALSE?

A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

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?

All of these options are correct

Which of the following statements is TRUE?

As many as 50 percent of cooperative strategies fail.

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT

adherence to the firm's traditional core values

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be most typical for a joint venture?

BPM and J3 will both own 50 percent of the venture and a new company will be formed.

Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas.

bottom-up

The primary responsibility for effective strategic leadership of the organization rests with the a. board of directors.

CEO

Which of the statements about CEO duality is FALSE?

CEO duality is relatively rare in the U.S. except in large Fortune 500 firms.

The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. The board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. CamCell is presently searching for a new CEO. Which of the following statements is true?

CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan.

Executive headhunters have approached Charles about taking the position of senior vice president of marketing for a well-known company. Although this company has been highly successful since 1995, Charles has heard persistent rumors of overly aggressive marketing tactics, questionable reporting of sales data, and an atmosphere of intolerance of criticism. The CEO is a powerful and charismatic individual, who built the company from a small regional firm to an international powerhouse in only a decade. The other top managers have been hand-picked by the CEO, as have a number of the members of the board of directors. The salary for this position is very high and includes generous stock options. It would be a major step up in Charles's career and would position him to move to CEO of another company in the future. Charles has prided himself on his high moral values and is viewed as an exceptionally ethical person by his peers. What should Charles do?

Charles should not take the job because the culture of the organization is set by the CEO and other top managers. He would have little influence on the organizational culture as one of many top managers.

Which of the following is TRUE of trends in Japan's corporate governance structure?

Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals.

Which of the following is a FALSE statement about corporate governance?

Corporate governance is best achieved with a board of directors with strong ties to management.

Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints Meredith manufactures. Which of the following would be the accurate interpretation of this announcement?

Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

______ exist(s) when there is a need in the market that can be satisfied by new goods or services.

Entrepreneurial opportunities

_______ 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.

Entrepreneurs

Which of the following statements is FALSE?

Franchising agreements require more trust between firms than do other cooperative strategies.

In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's ______.

brand name

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?

If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO.

______ involves internally developed incremental and radical innovations that result from deliberate efforts.

Internal corporate venturing

Which of the following is NOT a benefit to the firm using the internal labor market to select a new CEO?

Internal hiring results in an increased level of innovation.

James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. Mr. Abercrombie is considering expanding his consulting practice overseas. Which of the following statements is most likely to be TRUE?

Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level.

Which of the following statements is TRUE regarding effective organizational cultures?

Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

________ capital increases cooperation among individuals inside and outside the firm.

Social

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?

Sustaining an Effective Organizational Culture.

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?

The CEO and top executives should not consider their jobs secure.

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?

The CEO/chairperson of the board has been suspected of opportunistic behavior.

Which of the following statements is about corporate governance in Germany is FALSE?

The Vorstand is elected by the firm's employees.

Why are alliances in the airline industry unstable?

The alliances require cooperation among firms that must also compete with one another.

Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation?

The compensation committee may not have comprehensive firm performance data

Recently, Sony selected Sir Howard Stringer as CEO. Sir Howard is not Japanese and he was not a Sony employee before his selection. Which of the following statements is FALSE?

The decision-making process on Sony's top management team will be smoother and faster with the addition of Sir Howard.

Which of the following is FALSE about corporate governance in China?

The state still uses direct and/or indirect controls to influence the strategies employed by most firms.

Hewlett-Packard licenses some of its intellectual property through strategic alliances. Which of the following is correct about this relationship?

This is a nonequity strategic alliance with Hewlett-Packard leveraging its unique capabilities.

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees.

This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

Training and development programs.

______ are LEAST likely to involve potential or current competitors.

Vertical complementary strategic alliances

Greentech, Inc., is a bioengineering firm specializing in food crops. It is considering a cooperative alliance with an Asian agribusiness firm, AsiaFoods, to jointly produce improved crops for the Asian market. The risks that Greentech should consider before entering this alliance include all of the following EXCEPT:

Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

Innovation creates a(n)

commercial product

Research suggests that _____ is needed to encourage entrepreneurial behavior.

a balance between individualism and cooperative behavior

Which of the following is true? For firms to be entrepreneurial, they require a culture with

a balance of individualism and collectivism.

Which of the following is NOT related to a CEO having long tenure in his or her position?

a broader knowledge base

Omicron Artificial Intelligence is able to respond quickly to competitors' actions and to opportunities in the marketplace. This is an example of

a core competency.

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT

a direct effect on firm performance

The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization qualified to step into the former CEO's shoes. This is an example of

a failure of succession management.

Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to 3 years' salary because DictionAry has been bought in a hostile takeover by its main competitor. Ambrose received

a golden parachute.

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 long wait for an uncertain payoff.

An example of the external labor market is the situation where

a new vice president of marketing is hired from a competitor.

A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called

a poison pill

Japanese keirstsu are

a system of cross-shareholding among firms

Mutual forbearance is

a type of competition-reducing strategy

Research shows that _____ is the most effective means of ensuring that employees comply with the firm's ethical requirements.

a value-based culture

The interests of multinational corporations' shareholders may be best served when there is

a variety of compensation plans for executives of foreign subsidiaries.

The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. The CEO's behavior may be indication of

a weak board of directors

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

adhesion to the status quo.

The separation between firm ownership and management creates a(n) _____ relationship.

agency

Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to

align financial institutions' actions with society's interests.

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies

alignment of complementary assets.

The global airline industry is one in which

alliance versus alliance competition dominates firm versus firm competition.

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in

an act of courage

Value creation through internal innovation originates with

an entrepreneurial mind-set.

All of the following are consequences of the Sarbanes-Oxley Act EXCEPT

an increased number of IPOs (initial public offerings) are expected.

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

an incremental innovation.

Stable alliance networks will most often

appear in mature industries where demand is relatively constant and predictable.

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

appoint another individual as chairperson of the board of directors.

Induced strategic behavior is a process that fosters product innovations that

are aligned closely with current strategy and structure.

The _____ is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.

balanced scorecard

Historically, ____ have been at the center of German corporate governance structure.

banks

In Japan, the principal source of the active monitoring of large companies comes from

banks

Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated?

compensating directors with stock options rather than with fixed remuneration

Firms in a standard-cycle market may form alliances in order to

capture economies of scale

Dynamic alliance networks work best in industries

characterized by frequent product innovations and short product life cycles.

Which of the following is NOT a factor that determines the amount of a manager's decision discretion?

cohesiveness of the board of directors

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

competitive autonomy

______ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance.

complementary strategic goals

____ strategic alliances have stronger focus on value creation than do ____ alliances.

complementary; competition reducing

In general, cross-border alliances are more ____ and ____ than domestic alliances, especially in emerging markets.

complex; risky

______ is an important influence in Japanese corporate governance structures.

consensus

Strategic control focuses on the ______ of strategic actions, whereas financial controls focus on the _____ of strategic actions.

content; outcomes

a strategy in which firms work together to achieve a shared objective is a

cooperative strategy

The firm of Bergeron has existed for hundreds of years, having made exquisite clocks and watches. In its advertising it refers to clocks the firm made for such past royalty as Marie Antoinette and the Czars of Russia. Employees are constantly reminded of the firm's rich history and its long tradition of excellence of design and execution. Bergeron is motivating its employees through its

core ideology

All of the following are external environmental sources that affect managerial discretion EXCEPT

corporate culture

The use or application of entrepreneurship within an established firm is called

corporate entrepreneurship.

A _____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both.

corporate-level

Offshore Oil Exploration Partners (OOEP) has entered into a cooperative strategy with Malay Petroleum. The resulting documents are long, formal, and detailed. They specify detailed responsibilities of each partner and include methods of monitoring accounting and technical procedures. OOEP and Malay Petroleum are using the _______ management approach.

cost minimization

The Microsoft/Nokia alliance that had hundreds of pages to specify each partner's responsibilities would be closest to the approach to managing cooperative ventures. In contrast, the Renault/Nissan alliance was based on trust, respect, and transparency and is an example of the ________ approach to managing cooperative ventures.

cost minimization; opportunity maximization

The two basic approaches to successfully manage cooperative strategic alliances involve _____ and _____.

cost minimization; opportunity maximization

When using cooperative strategies, firms most frequently develop strategic alliances that _______.

create a competitive advantage

Firms needing to change their strategies should

create more heterogeneous top management teams.

According to Peter Drucker,the primary goal of innovation is to

create wealth

Since it replaces existing products and methods of production, entrepreneurship is a process of

creative destruction.

The collaboration between Volvo Aero (a subsidiary of Sweden's AB Volvo) and U.S.-based Pratt & Whitney to produce a new jet engine would be characterized as a(n)

cross-border strategic alliance.

_____ is one of the reasons for the differences in rates of entrepreneurship among different countries.

culture

an agency relationship exists when one party delegates

decision-making responsibility to a second party

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions ____.

decreases

All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT

defense tactics make the costs of a takeover lower.

Two kew strategic leadership actions include

determining strategic direction and establishing balanced organizational controls.

The goal of investing in human capital is to

develop a workforce capable of continuous learning

A heterogeneous top management team is composed of individuals with

different functional backgrounds, experience, and education.

Which of the following is NOT associated with heterogeneous top management teams?

diminished debate among top managers

Managerial actions that support development of an ethical organizational culture include all of the following EXCEPT

disciplining whistle-blowers.

A state-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of _______ resulting from an alliance.

economies of scale

Firms entering into synergistic strategic alliances expect an attain

economies of scope

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are

engaging in tacit collusion.

Which of the following is NOT one of the four perspectives in the balanced scorecard framework?

entrepreneurial

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

envisioned future

A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n)

equity strategic alliance

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80 percent of this collaboration with DoCoMo holding the remaining 20 percent. This collaborative arrangement is an example of a(n)

equity strategic alliance.

A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with______

excess resources for investing

Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n)

external CEO with a heterogeneous top management team.

The alliance between Nokia and Microsoft calls for Nokia to transition its smartphone portfolio to Microsoft's Windows phone platform. This is an example of using an alliance in a ____ to speed up development of new products and services.

fast-cycle market

When used effectively, cross-functional teams will often bring about

faster product development processes.

_______ provide information about the results of past actions, but do not communicate the drivers of the firm's future performance.

financial controls

Institutional owners are

financial institutions such as mutual funds and pension funds that control large-block shareholder positions.

Corporate governance is important to nations because

firms seek to invest in nations with national governance standards that are acceptable to them.

A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in

formality of structure.

McDonald's, Hilton International, and Subway all heavily rely on the _____ strategy.

franchising cooperative

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.

free cash flows

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort and Day Spa in Houston to see if the owner is interesting in franchising the Pet Resort brand. The Atlanta businessperson's goal is to

gain access to Pet Resort's tacit knowledge.

The repurchase at a premium of the target firm's shares that were acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the company for takeover is called

greenmail

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2 years. To maximize the chances of success it is critical that the new executive______

have international experience.

The New York Stock Exchange requires that the audit committee be

headed by outside directors.

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have

high absorptive capacity to learn.

A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. This may lead to all of the following EXCEPT

high executive turnover.

Exploiting and maintaining core competencies is part of the key strategic leadership action "Effectively Managing the Firm's Resource Portfolio." Which of the following is most important for developing and using core competencies?

high-quality human capital

Why have large pharmaceutical companies been forming alliances with biotechnology companies?

to develop new products and bring them to market

Billy Kroghmen is the son of a very prominent Fortune 500 CEO. Billy has had troubles. He failed out of multiple colleges, universities, and correspondence schools. He finally received his undergraduate degree from a university with only a post office box for an address. He then enrolled in the school's combined graduate accounting and law school programs, graduating with honor with degrees in both areas. After graduation, he twice failed both the CPA and bar exams, managing to set record low scores on the ethics portions of both. Despite these academic setbacks, Billy's career now seems to be thriving. He has been appointed to a number of "blue ribbon" government committees, is on the board of directors of two corporations and one prestigious not-for-profit organization. In at least one instance, a donor credited Billy with the idea for making a large contribution to the not-for-profit. Widespread speculation is that his career advancement is based largely on social relationships through friends and family. We would classify Billy as ______ on _____ capital, and ____ on _____ capital.

high; social; low; human

Managers in the United States receive ______ compensation than managers in the rest of the world.

higher

Normally, the more involved a board of directors is in shaping the firm's strategic direction, the

higher the corporation's performance is.

A CEO's breadth of knowledge base is constrained by

his or her long tenure with the firm

In the implementation of internal innovations, formal and informal processes are best supported through organizational structures.

horizontal

Within the Renault Nissan alliance both Renault and Nissan have each formed ________ strategic alliances at the business-unit level with other companies.

horizontal complementary

Smith Commercial Lighting, Inc., which sells lighting for factories and businesses, has entered into an alliance with Revelation Lighting, Inc., a retailer of home decor lighting, in order to expand into the trend of using industrial-type lighting in non-traditional style homes. Smith has invested 40 percent and Revelation has invested 60 percent into the new operation. This is an example of a(n)

horizontal complementary strategic alliance.

The ability to attract and manage may be the most important skill a strategic leader must have.

human capital

The effective development and management of the firm's may be its only sustainable competitive advantage

human capital

New entrepreneurial firms are better than larger established firms at

identifying entrepreneurial opportunities.

Products developed through ____ are often offered at lower prices without as many features than products developed through ____.

imitation;innovation

The three types of innovative activity include all of the following EXCEPT

implementation.

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

increased diversification of Sierra Infusion.

Criteria for reevaluating internal business processes using the balanced scorecard include all of the following EXCEPT

increases in employee skills.

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

incremental innovation

A successful _____innovation will be less risky but less profitable than a successful ____innovation.

incremental; radical

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 ______ may because barriers to effective communication among team members.

independent frames of reference

A major barrier to the use of cross-functional teams is

independent frames of reference of team members.

Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(n) _____ director.

inside

Which of the following is NOT a risk for firms engaged in cooperative strategies?

insufficient variation in firms' core competencies

Which of the following factors most encourages stability in a firm's strategy?

internal CEO succession and a homogeneous top management team

The market for corporate control serves as a means of governance when

internal controls have failed.

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

internal corporate venturing.

FrameCo, a maker of commercial greenhouses, has just extricated itself from a failing cooperative alliance with another firm. The expected synergies never were achieved, and FrameCo lost most of its investment. The top management of FrameCo should

internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience.

Blixin Concrete Products, an established firm, is seeking a technologically advanced partner for a strategic alliance. If the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably

investment capital.

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek _____ while more established companies may need

investment capital; new technological knowledge.

Innovations that involve significant technological breakthroughs and create new knowledge

involve substantial uncertainty and risk.

a cooperative strategy

is a strategy in which firms work together to achieve a shared objective

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

is encouraged through a bottom-up or top-down process.

the use of strategic alliiances

is more frequent than other types of cooperative strategies.

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

its investors will react positively to the introduction of the new product because of the potential for higher returns.

In a(n) _______, two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage

joint venture

Moon Flower cosmetics company executives are aware that their Asian customer base is interested in advanced skin care treatments beyond Moon Flower's traditional herbal and organic compounds. Moon Flower and a large American chemical company are in discussions to create a 50-50 partnership in a new firm, which would create skin care treatments based on innovative chemical formulations that would be marketed both in Asia and in the United States. Beyond being a cross-border alliance, this partnership can be called a(n)

joint venture

Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50 percent. This collaboration is an example of a _______, which is effective at transferring _______

joint venture; tacit knowledge

Which type of strategic alliance is best at passing tacit knowledge between firms?

joint ventures

The top management team is composed of the

key individuals who are responsible for selecting and implementing a firm's strategy.

Human capital refers to

knowledge and skills of the firm's work force

Complete the following; In small firms, managers often own a ____ percentage of the firm, which means there is ____ seperation between ownership and managerial control

large; small

In the balanced scorecard framework, _____ controls are used to assess the organization's success in creating a climate that supports change and innovation.

learning and growth

The number of patents held by an organization is a rough guide to the

level of innovation in a firm.

In the United States, cooperative strategies to reduce competition may result in _____ if they are explicit.

litigation

Managerial employment risk is the

managers' risk of job loss, loss of compensation, and/or loss of reputation.

In the United States, the fundamental goal of business is to

maximize shareholder wealth

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS

may not have a direct effect on firm performance.

The more heterogeneous the top management team, the

more difficult it will be for the team to implement strategies.

Research shows that internationally diversified firms tend to be ____ than domestic-only firms.

more innovative

Burgess Corp. manufactures a line of heavy construction equipment. The company has announced a contractual relationship with FS Electronics whereby FS will supply Burgess with advanced GPS navigation and guidance systems. These systems will be an option on all bulldozers, dump trucks, and road graders Burgess produces. What type of alliance is this?

nonequity strategic alliance

The risks of being accused of collusion are MOST likely under what type of alliance?

nonequity-based horizontal complementary alliance

DDD Partners, a U.S. business consulting firm is considering a cooperative alliance with an Indian business consulting firm that has a wide practice in the Middle East and Asia. DDD has some European clients, but it sees the Middle East and Asia as growth opportunities. It hopes to learn how to navigate the different cultures and business practices in this part of the world from its alliance with the Indian firm. DDD's greatest risk here is that the Indian firm will

not fully share its intangible resources.

The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are ____.

often performing above their industry averages.

The main risk in a strategic alliance is that

one partner will use the other partner's knowledge and use it to enhance its own competitive abilities.

Amylin Pharmaceuticals has an alliance with Eli Lilly & Co. to produce diabetes drugs. Lilly, however, recently signed an alliance agreement with another company to also produce diabetes drugs. As a result, Amylin sued Lilly for breech of the alliance agreement. Which of the following risks of cooperative strategies discussed in the chapter is most likely occurring here?

opportunistic behavior

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT

opportunistic behaviors are less likely.

Entrepreneurship is the process by which individuals or groups identify and pursue _____ without being immediate constrained by the ____ they currently control.

opportunities; resources

Agency costs reflect all of the following EXCEPT _____ costs.

opportunity

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions?

organizational politics

The competition for resources among those representing different organizational functions within a firm often leads to

organizational politics.

Research suggests that boards of directors perform better if

outside directors own significant equity in the organization.

All of the following are correct about the status of CEO succession (Chapter 12 Strategic Focus) EXCEPT

over 90 percent of firms have succession plans.

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they

overemphasize financial controls and neglect strategic controls.

Through the work of cross-functional teams, product development stages are grouped into _____ processes.

parallel or overlapping

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

passion for his invention.

Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT

penalties for inadequate firm performance.

If the market for corporate control were efficient as a governance device, then only ______ would be targets for takeovers.

poorly performing firms

The level of entrepreneurial activity in a nation is ____ the nation's level of economic development.

positively related to

Reduction of competition can be accomplished through all of the following EXCEPT

predatory alliances

Entrepreneurs tend to have all the following characteristics EXCEPT

preference for certainly about projects.

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because

private shareholders and large institutional investors rarely have large ownership positions in firms.

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

product champions

Competitive aggressiveness describes a firm's

propensity to take actions that allow it to outperform rivals consistently and substantially.

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore

pursuing innovation through both internal and cooperative strategies.

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) innovation

radical;incremental

Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mind-set?

reactivity

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

recommend that the project be set aside.

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 _____.

reduce their employment risk; increase the company's value

a competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n)_______ advantage.

relational

Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT

relying on the fundamental goodness of individuals.

One means that is considered to improve the effectiveness of outside directors is

requiring outside directors to own significant equity stakes in the firm.

corporate governance is all of the following EXCEPT

resolve conflicts among corporate employees.

To successfully implement a firm's strategy, the workforce must be viewed as a

resource to be maximized

Firms participate in strategic alliances for all the following reasons EXCEPT to

retain tight control over intangible core competencies.

All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT

retirement accounts

In contrast to managers' desires, shareholders usually prefer that free cash flows be

returned to them as dividends

Compared to managers, shareholders prefer

riskier strategies with more focused diversification for the firm

The longer the focus of managerial incentive compensation, the greater the _____ top-level managers.

risks borne by

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

setting the option strike price substantially higher than the current stock price.

The firm's culture promotes unity of purpose for cross-functional work teams through

shared values.

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 ______.

shared values; effective leadership.

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the

shareholder

Corporate governance revolves around the relationship between which two parties?

shareholders and managers

In the United States, a firm's key stakeholder(s) is(are) the

shateholders

Successfully creating innovations through internal means requires

significant spending on R&D

U.S. Steel and Nucor (the two remaining major players in the U.S. steel industry) have been forming alliances as a means to enter markets in Eurome and Asia. The steel industry is an example of a ______ market in which firms typically use alliances to gain market access.

slow-cycle

In a cross-border alliance, the local partner is often a useful source of information about

sources of capital

Determining the strategic direction of a firm involves

specifying the vision and the strategy to achieve that vision over time.

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that

spontaneous opportunities are minimized.

Firms in _____ markets cooperate to pool resources and gain market power.

standard-cycle

In some countries, the only legal way for foreign firms to invest in the country is through

strategic alliance with a local firm.

Internal corporate venturing does NOT involve

strategic alliances

The risks of international entrepreneurship include all the following EXCEPT

strong "buy-domestic" programs.

The cooperation between Fiat and Chrysler to produce a Fiat-designed car in Chrysler's Illinois factory is a(n) _______ alliance because it allows the firms to share resources and capabilities across multiple functions.

synergistic

The Renault Nissan alliance discussed in the Opening Case is an example of a _____ in that the firms seek to create economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can be used to produce cars that will be either a Renault or a Nissan.

synergistic alliance

A________ is a strategy in which firms share some of their resources and capabilities to create economies of scope and is similar to the business-level horizontal complementary alliance.

synergistic strategic alliance

The Renault Nissan alliance is an example of a _____ created to gain economies of scope by sharing resources and capabilities

synergistic strategic alliance

All of the following are business-level cooperative strategic alliances EXCEPT

synergistic strategic alliances

The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in

tacit collusion

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

taking advantage of a need in the marketplace.

The dimensions on which functional departments can vary include all the following EXCEPT orientation.

technological

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all EXCEPT

technology

The CEO of Icon Image Associates wishes to radically change the corporate culture of the firm. She knows that she must convince others at Icon Image of the necessity for the culture change and gain their active support. The CEO knows that the key players in energizing the culture change and fostering alignment with the new strategic vision are

the CEO, top managers, and middle managers.

Monitoring by shareholders is usually accomplished through

the board of directors

The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is

the board of directors

International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing?

the board of directors of IFS

To be successful, an autonomous process for developing new products relies on

the diffusion of tacit knowledge

A negative effect of acquiring other firms for the purpose of innovation is

the effect it can have on the firm's own ability to produce innovations.

In free-market economies, ______ must decide how rivals can collaborate with their competitors without violating established regulations.

the governement

Which of the following is NOT an internal governance mechanism?

the market for corporate control

Ownership concentration is determined by both

the number of stockholders and total percentage of shares they own.

Product diversification provides two benefits to managers that do not accrue to shareholders: ______ and _____.

the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

To increase the likelihood of success between partners assuming that trust exists, approach(es) should be used to manage cooperative strategies.

the opportunity maximization

Organizational controls provide

the parameters within which strategies are to be implemented

In practice, the cost minimization strategy can be more expensive than the opportunity maximization strategy. Which of the following is a way in which the cost minimization strategy is less expensive than the opportunity minimization strategy?

the prevention of opportunistic behavior by the partner(s)

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that

the receiving party have adequate absorptive capacity to learn.

CEO duality refers to

the situation where the CEO is also chairperson of the board of directors.

Boards of directors are now becoming more involved in

the strategic decision-making process.

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of

the use of induced strategic behavior.

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands. Christina does not believe that the CEO can act as a steward. Christina will probably be most concerned if

there is CEO duality

In managing cooperative strategies, research indicates that _____ can be a capability that is valuable, rare, imperfectly imitable, and often nonsubstitutable giving these firms a competitive advantage.

trustworthiness

A nonequity strategic alliance exists when

two or more firms have a contractual relationship to share resources and capabilities.

When the top management team is homogeneous and a new CEO is selected from inside the firm, it is

unlikely that the current strategy will change.

Charles is a customer service representative for a home improvement store. He has creative ideas about how to increase customer satisfaction. Charles's talents will be most likely to be used in a firm that

uses the autonomous strategic behavior form of internal corporate venturing.

the two types of complementary strategic alliances are

vertical and horizontal

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(n) _______strategy.

vertical complementary

Of the various business-level strategic alliances, ______ alliances have the most probability of creating sustainable competitive advantage, and _____ have the lowest.

vertical complementary; competition reducing

Firms develop innovations in all the following ways EXCEPT

via divestiture of low-performing units.

A CEO gains power from all of the following circumstances EXCEPT

when tenure of the top management team is shorter than the tenure of the board