Mmgt 493 Final Exam

Usually, a large block shareholders are considered to be those shareholders with at least ______ percent of the firm's stock.

5

Which of the following is NOT a true statement about corporate governance?

A well functioning corporate governance and control system will seldom provide of competitive advantage.

The benefits of a simple structure include all of the following EXCEPT:

Active involvement by the owner-manager

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

An executives decisions often affect firm performance only over the long run.

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

Banks

The transnational strategy is best implemented using the __________ structure.

Combination

In the ________ multidivisional structure there is complete independence among the firm's divisions.

Competitive

The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for the past year. Now, at the end of the year, three of the Transector's seven divisions have not met this rate-of-return goal. The division managers of these three under-performing divisions have all secretly contacted executive placement firms to investigate openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all-important at Transector. Transector probably uses the _______ structure.

Competitive form of the multidivisional

________ is an important influence in Japanese corporate governance structures.

Consensus

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:

Coordination and Control problems

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

All of the following are characteristics of the organization that affect managerial discretion EXCEPT:

Degree if managerial self confidence

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

Develop oligopolies in a market and eliminate competition

Firms entering into synergistic strategic alliances expect to attain:

Economies of Scope

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

Entrepreneurial

A manager's decision discretion is influenced by his or her own characteristics, environmental sources external to the firm, and characteristics of the Board of Directors.

False

Alliances of organizations in the same position in the value chain are known as vertical alliances.

False

As a governance mechanism, the market for corporate control is ineffective when internal controls fail.

False

Because firms need to respond quickly to environmental opportunities and threats, the implementation of the differentiation strategy is positively affected when the firm is centralized and formalized.

False

Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing a firm's entreprenurial orientatio.

False

Executive compensation can be accurately compared across firms because the basic elements are the same: salary, bonus, stock issued, and stock options.

False

Executive compensation, ownership concentration, and the matrix organizational structure are all examples of internal governance mechanisms.

False

Generally, the board of directors can be classified as insiders, unrelated insiders, outsiders, and unrelated outsiders.

False

Mergers are the most popular cooperative strategy used in standard-cycle markets.

False

Mutual forbearance is a form of explicit collusion between firms.

False

Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share of the joint venture than do the remaining partner(s).

False

The appropriate use of a single mechanism results in the effective governance of a corporation.

False

The finance and R&D functions are emphasized in the differentiation strategy's functional structure.

False

The more heterogeneous and the larger the top management team, the easier it is to implement strategy effectively.

False

The primary factors that cause firms to change from a functional structure to a multidivisional structure are the CEO's increasingly limited ability to set a strategic direction for the firm and the focus of functional managers on local issues.

False

The scandalous behavior of executives at Tyco, WorldCom, and Enron could be considered the result of excessive focus on organizational controls.

False

The three multidivisional structures that are used to implement a diversification strategy are the competitive form, the strategic business unit form, and the integrated form.

False

When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive.

False

When the stock market declines, the value of CEO stock options decline. Consequently, executives prefer their pay to be based on measures of their individual performance rather than the value of the firm.

False

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort 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 Resorts tacit knowledge

Agatha Adams has founded Insurance Specialists to process medical claims for physicians' practices. She plans to compete on the basis of cost, offering the lowest processing cost per claim in her market area. Ms. Adams' company should:

Have a highly centralized, functional structure

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

High level of innovation

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

Long term incentives such as stock options

In many countries, but especially in the United States and the United Kingdom, the fundamental goal of business is to:

Maximize shareholder wealth

Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos' brother. The strategy of this company is probably:

Multidomestic

There is some evidence that those firms targeted for takeover by active corporate raiders are:

Performing above their industry averages in at least 50 percent of cases

The transnational strategy seeks to:

Provide local responsiveness and achieve global efficiency

After years of negotiation short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to:

Reduce transaction costs

Which of the following is NOT a variation of the multidivisional structure?

Regional Form

In most cases, the focus strategy is best managed using a _______ structure.

Simple

Which of the following is true of Japan's corporate governance structure?

Some major Japanese firms are bringing in more outsiders onto their boards of directors.

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

Synergistic strategic alliances

Managerial opportunism occurs when managers:

Take actions that benefit themselves, but are detrimental to firms owner.

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands, and she is not a believer in stewardship theory. Christina will probably NOT invest in Maximum Brands if:

There is CEO duality

External environmental factors that may affect managerial discretion include industry structure, rate of market growth, and degree of product differentiation.

True

Firm size, firm age, tolerance for ambiguity, and commitment to strategic outcomes are all examples of characteristics of the organization that may affect managerial discretion.

True

Hostile takeovers are a function of the market for corporate control.

True

Synergistic strategic alliances focus on economies of scope.

True

When a firm is in the early stages of geographic diversification, cross-border alliances may be a good learning step before contemplating mergers.

True

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

Unlikely for the current strategy to change

Financial controls are most important in the _______ strategy.

Unrelated Diversified

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.