MGT 3830 Final - CH 7-9 QUIZ Q's

The main concepts that assist us in analyzing the scope of a firm's activities are: Select one: a. Economies of scope b. Transaction costs c. Corporate complexity d. All three of the above concepts are relevant.

All three of the above concepts are relevant.

Why do firms engage in internationalization? Select one: a. To keep all strategic options open b. To exploit market opportunities in other countries c. To exploit resources and capabilities in other countries d. All of the above e. Both B and C Feedback

Both B and C

One challenge that job specialization creates for organizations is harmonizing the efforts of individuals who perform specialized, distinct tasks. This describes the __________ problem.

Coordination

All else held equal, the presence of high transaction costs suggest exporting as the mode of entry into a foreign market. true false

False

If a firm does not possess strong property rights over r&c, the it should enter in licensing and exporting True False

False

In the context of the demand conditions dimension of the national diamond, Porter argues that the globalization of competition has significantly reduced the importance of the home market's demand. True False

False

One of the ways in which internationalization directly influences the forces of competition is by decreasing the bargaining power of buyers. Select one: True False

False

Organic forms of organizing are most appropriate in stable environments.

False

Organic forms of organizing are most appropriate in stable environments. Select one: True False Feedback

False

Over time, the relative importance of an organization's coordination needs tends to stay the same. Select one: True False

False

Strategy follows structure. True False

False

The most important part of strategic plan is the complete, thorough plan that emerges once the process is completed. Select one: True False

False

In the beer industry, both trade and direct investment are important. Thus, we can say that beer is a _______ industry.

Global

Disadvantages of a _________ structure include slower decision-making, role conflict and ambiguity, and excessive complexity.

Matrix

Suppose that, with its current organizational structure, Firm A is having problems getting its work units to coordinate with each other. It seems that each unit has its own goals and performance targets, sub-culture, and way of doing things that makes getting them to work together difficult. Which of the following organizational structures would you recommend to fix these issues?

Matrix Structure

______________ identifies 4 key factors which determine a country's competitive advantage within a particular sector. Select one: a.The international BCG matrix b. Porter's national diamond c. Porter's five forces model d. The optimal location of value chain activities

Porter's national diamond

One common argument against diversification strategies is _________________. Select one: a. A company can usually enter a license arrangement b. Diversification is simply a poor strategy c. Shareholders can invest in other industries themselves, achieving risk-reduction more efficiently d. Managers do not have sufficient understanding of other industries

Shareholders can invest in other industries themselves, achieving risk-reduction more efficiently

Of Michael Porter's 3 essential tests of whether a proposed diversification will create value, the most important one is usually: Select one: a. The "better-off" test b. The "attractiveness" test c.The "diversification" test d. The "cost-of-entry" test

The "better-off" test

____________ refers to the idea that as the number and diversity of transactions performed internally increases, so do the costs of managing them. Select one: a.The costs of corporate complexity b. Transaction costs c. An internal capital market d.Technical economies

The costs of corporate complexity

All else held equal, if a firm's competitive advantage is based on country-specific resources, that firm should exploit an overseas market by trade. Select one: True False

True

All else held equal, if a firm's product is difficult to transport, it is better for the firm to expand overseas by issuing licenses to local companies in foreign markets rather than by exporting. Select one: True False

True

All else held equal, when there is significant information asymmetry between two vertical stages of production, vertical integration is preferred over market contracts. Select one: True False

True

If high transaction-specific investment is required between 2 stages of an industrial process, it is likely that these processes will be vertically integrated. Select one: True False

True

In situations where a firm is subject to significant uncertainty of market demand, there are flexibility benefits to engaging in market contracts rather than vertical integration. Select one: True False

True

n the context of the factor conditions dimension of the national diamond, Porter places particular emphasis on factors that are highly specialized to an industry's particular needs. True False

True

Comparative advantage refers to ___________. Select one: a. a country's absolute efficiency in producing goods or services b. a country's inefficiency in producing goods or services c. a country's total efficiency in producing goods or services d. a country's relative efficiency in producing goods or services

a country's relative efficiency in producing goods or services

Research shows the relationship between firm performance and diversification is: Select one: a. an inverted U-shape, such that firm performance increases with more diversification up to some point after which firm performance decreases as the firm further diversifies. b. a U-shape, such that firm performance decreases with more diversification up to some point after which firm performance increases as the firm further diversifies. c. positive, such that firm performance increases with more diversification. d. negative, such that firm performance decreases with more diversification.

an inverted U-shape, such that firm performance increases with more diversification up to some point after which firm performance decreases as the firm further diversifies.

The approach to organizational design that suggests that there is no one best way to organize is known as the __________. Select one: a. complexity theory b. the coordination theory c. contingency theory d. stakeholder theory

contingency theory

If well-designed, performance incentives can be a way of solving the ________ problem. Select one: a. cooperation b. complexity c. coordination d. managerial e. performance

cooperation

Mechanisms for organizations to solve the _________ include rules, routines, and mutual adjustment. Select one: a. coordination problem b. stakeholder problem c. cooperation problem d. complexity problem

coordination problem

A global strategy would be appropriate in product markets in which _______________. Select one: a. customer preferences are homogenous b. national preferences are pronounced c. the costs of customization are low d. few economies of scale are available

customer preferences are homogenous

Internationalization occurs via 2 mechanisms: Select one: a. inter-bank capital flows and trade b. inter-bank capital flows and direct investment c. direct investment and trade d. inter-governmental bond borrowing and inter-bank capital flows

direct investment and trade

Benefits of a __________ structure include economies of scale, the sharing of knowledge and learning capabilities within each unit, and centralized control. Select one: a. multidivisional b. product c. functional d. matrix

functional

The _______ the transaction costs of markets, the _______ likely the firm is to extend its corporate scope. Select one: a. lower; more b. greater; less c. greater; more d. None of these options complete this statement correctly.

greater; more

Vertical integration deals with a _______ degree of commitment and a _______ level of formalization. Select one: a. high; high b. low; high c. high; low d. low; low Feedback

high; low

The cooperation problem refers to _________________________. Select one: a. how to align the interests of the different participants who make up a firm b. how to get workers to coordinate their actions so that something is produced on time c. how to get rival commercial firms to cooperate during disasters or emergencies d. how to persuade customers to cooperate with each other when supplies are scarce

how to align the interests of the different participants who make up a firm

A firm becomes more vertically integrated when _____________. Select one: a. it outsources some activities either upstream or downstream of its core business b. its management and staff are better aligned c. it buys a direct competitor d. it moves to own more stages of the value chain, either upstream or downstream of its core business

it moves to own more stages of the value chain, either upstream or downstream of its core business

In choosing where to locate production, considering firm-specific competitive advantages means _________________. Select one: a. locating where the firm's distinctive resources and capabilities can be optimized b. locating where the firm's labor costs are most flexible c. finding a location that is a unique selling point d. locating where the firm's resource costs can be minimized

locating where the firm's distinctive resources and capabilities can be optimized

A key, distinguishing characteristic of a __________ structure is multiple lines of reporting, i.e. subordinates having multiple bosses. Select one: a. network b. multidivisional c. functional d. matrix

matrix

Disadvantages of a _________ structure include slower decision-making, role conflict and ambiguity, and excessive complexity. Select one: a. multidivisional b. functional c. matrix d. geographical

matrix

The milk industry is protected from both imports and inward direct investment and is thus an example of a ___________ industry. Select one: a. global b. multidomestic c. trading d. sheltered Feedback

sheltered

The fundamental issue in deciding how to define organizational units is _______________.

the intensity of coordination needs

Consider two activities that are adjacent to each other in a vertical supply chain. All else held equal, when these two linked activities require large transaction-specific investments, the outcome is usually: Select one: a. one or both of the firms performing these activities failing because of inevitable disputes b. the vertical integration of these two activities c. firms refusing to get involved and production ceasing d. the firm performing the more downstream activity will have to accept a higher price to pay for the investment

the vertical integration of these two activities

All else held equal, if a firm's competitive advantage is based on country-specific resources, that firm should exploit an overseas market by trade. true false

true

Economies of scope deals with _________ of products, while economies of scale deals with ________ of products. Select one: a. variety; volume b. variety; value c. volume; variety d. value; volume Feedback

variety; volume

Corporate strategy is concerned with ______________. Select one: a. where a firm chooses to compete b. how a firm chooses to compete in a specific industry c. why a firm chooses to compete or not d. Answers A and B

where a firm chooses to compete