Strategic Management Test - Ch. 10-13

What is the market for corporate control? a. An external governance mechanism that is active when a firm's internal governance mechanisms fail b. A term that describes the power that purchasers have when buying shares of stocks c. A set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations d. The pool of prospects who are qualified to become CEO

a. An external governance mechanism that is active when a firm's internal governance mechanisms fail

Which of these is believed to be the economic driver in many nations? a. Entrepreneurship b. Exports c. Innovations d. Imports

a. Entrepreneurship

Which organizational structure has been deemed "the best"? a. None b. Multidivisional c. Functional d. Simple

a. None

A fashion apparel company has seen much success over the years. For almost a decade, it seems to have perfected the formula for success. The tenured CEO of 12 years has developed a strategy, and this success has become her career "legacy." Recently, the company has seen its growth slow. The year-to-year profit growth is also leveling out. The current CEO has stated that it is a bump in the road, and that changing strategy would be rash. What is the diagnosis of this CEO's mind-set? a. Risk averse b. Charismatic c. Risk favorable d. Denial of the circumstances

a. Risk averse

What tends to happen when the board of directors is involved in shaping the strategic direction of a firm? a. The firm's performance improves. b. There is a high rate of turnover among top-level managers. c. There is a high rate of turnover among middle-level managers. d. The firm is unable to respond quickly to market changes.

a. The firm's performance improves.

A firm that measures its success by performance standards that are previously established is one that has high: a. financial controls. b. strategic controls. c. structural stability. d. structural flexibility.

a. financial controls.

A company's structure should be aligned with: a. its strategy. b. its profit. c. the current market. d. rivals in the same industry.

a. its strategy.

Calming Hotels, Inc. has opened two more hotels near the state park. The owner believes that he is not working as efficiently as he did when he had only one hotel. All of the management and maintenance tasks are not completed in a thorough and timely manner. Which of the following could be a cause associated with his company's growth? a. Hotel employees are not performing like they should. b. The growth in sales has caused issues that the previous structure can no longer handle c. Poor marketing and commercialization strategies are in use. d. The hospitality industry as a whole is declining.

b. The growth in sales has caused issues that the previous structure can no longer handle

Which of the following is a potential benefit of establishing CEO duality? a. Higher performance b. Faster response to change c. Increased crisis management d. Higher CEO monitoring

c. Increased crisis management

Lisa is the CEO of her company and has a distinct leadership style. In order to empower her employees, she delegates responsibility for many things to them, and she strengths their capabilities through continuous training. She has built a team culture in which the team and the company are more important than personal interests. What type of manager is Lisa? a. Micromanager b. Performance leader c. Transformational leader d. Laissez faire

c. Transformational leader

Support from which of the following sources is crucial to successfully implementing a new organizational culture? a. CEO b. Top management c. Middle-level managers d. All of these

d. All of these

Which of the following structures is used by Visa credit cards, which coordinates bank affiliated credit cards and transactions in Asia Pacific, Canada, Europe, Latin America and United States regions? a. Functional b. Horizontal complementary strategic alliance c. Franchises d. Distributed strategic network

d. Distributed strategic network

Which of the following is a market-based measure? a. Return on assets b. Customer satisfaction c. Return on investment d. Economic value added

d. Economic value added

_____ capital refers to the knowledge and skills of a firm's entire workforce. a. Social b. Organizational c. Intellectual d. Human

d. Human

Which of these terms describes largely subjective criteria intended to verify that a firm is using appropriate strategies for the conditions in the external environment and that the company will maintain a competitive advantage? a. Organizational controls b. Corporate governance c. Financial controls d. Strategic controls

d. Strategic controls

Why is it challenging for firms using international strategies to effectively use executive compensation as a mechanism for corporate governance? a. Communication barriers b. Cultural differences in expectations c. Differences in currency conversion rates d. The diversity and complexity of compensation plans across a corporation

d. The diversity and complexity of compensation plans across a corporation

Why would a company want to have a heterogeneous top management team? a. To make it easier to cohesively implement strategies b. To increase the speed of decision making c. To ensure the CEO does not have too much power d. To make better decisions

d. To make better decisions

Luxottica, the leader in eyewear, has little in common with Google, the technology giant. But together, they are working on a breakthrough called Glass, which is revolutionary eyewear with technological advancements. Google needs the expertise of Luxottica to effectively market the product as a fashion accessory as well as a piece of tech. What is this story describing? a. Innovation through cooperative strategies b. Innovation through acquisition c. Internal innovation d. Incremental innovation

a. Innovation through cooperative strategies

Susan is worried that her company's poor performance is reflecting badly on her performance as CEO. She thinks she may lose her position, receive a cut to her salary, or be seen by her peers as incompetent and ineffective. What is another term for Susan's concerns? a. Managerial employment risk b. Unemployment risk c. Failure to perform d. Negative performance reviews

a. Managerial employment risk

A CEO wants to implement a new strategy for her firm. Previously, the company's strategy was differentiation and focused on having the highest quality product. Now, instead of increasing the quality of the product, she wants to maintain quality but drive down cost per unit. What term defines this scenario? a. Strategic change b. Strategic leadership c. Organizational change d. Industry shift

a. Strategic change

Jordan Brady just purchased an additional 2,000 shares of Singleton Inc., which means he now possesses about 6 percent of the firm's issued shares. This makes Jordan a(n): a. insider. b. institutional owner. c. angel investor. d. large-block shareholder.

d. large-block shareholder.

An entrepreneur just started a business and decides that she needs a team to help this new business grow. Which of the following groups of individuals, with their specific backgrounds, would give the entrepreneur a heterogeneous top management team? a. 1 Finance, 1 Marketing, 1 Technology b. 3 Finance c. 2 Marketing, 2 Finance d. 3 Technology, 1 Finance

a. 1 Finance, 1 Marketing, 1 Technology

What is a distributed strategic network? a. An organizational structure used to manage international cooperative strategies b. A corporate office and operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers. c. An M-form consisting of three levels: corporate headquarters, strategic business units (SBUs), and SBU divisions. d. An M-form structure characterized by complete independence among the firm's divisions that compete for corporate resources.

a. An organizational structure used to manage international cooperative strategies

Which of the following involves specifying the vision and the strategy to achieve the vision? a. Determining strategic direction b. Corporate governance c. Strategic planning d. Vision planning

a. Determining strategic direction

What will happen, in theory, if a company is able to align its strategy and structure? a. Performance will decline. b. Performance will improve. c. Flexibility will improve. d. Stability will decline.

b. Performance will improve.

_____ organizational cultures constantly use processes to anticipate future market needs and to satisfy them before competitors learn how to do so. a. Competitively aggressive b. Proactive c. Innovative d. Risk-averse

b. Proactive

Which function of a company must have the highest level of internal innovation in order for the company to have a competitive advantage? a. Marketing b. Research and development c. Design d. Finance

b. Research and development

Alesha has a gift for thinking of new and innovative ideas. As a child, she would sell lemonade for $0.50 and use the money to buy other ingredients to expand her offerings. She has now started her own fruit juice business after graduating from college with a finance degree. What would we call Alesha? a. A leader b. An entrepreneur c. An influencer d. A risk taker

b. An entrepreneur

Larry has noticed that the Internet is unorganized, and he wants a place where people can easily find the information or news that they want. He realizes that there are a couple of websites that attempt to do this, but he sees competitive flaws and knows that there has to be a better way. What has Larry stumbled upon? a. An invention b. An entrepreneurial opportunity c. An innovation d. An imitation

b. An entrepreneurial opportunity

Which of the following is NOT a trait commonly associated with young, internationally diversified firms? a. Fiercely competitive in their domestic markets b. Risk averse c. Innovative d. Technologically knowledgeable

b. Risk averse

An institution that holds 15 percent of shares in a company in order to be a powerful governance mechanism is an example of a(n): a. internal shareholder. b. institutional owner. c. external shareholder. d. corporate sponsor.

b. institutional owner

Managerial opportunism occurs when managers: a. seek the counsel of internal or external advisors. b. make decisions to satisfy their own self-interests. c. make strategic decisions to improve performance. d. agree to serve on other firms' boards of directors.

b. make decisions to satisfy their own self-interests.

What is organizational structure? a. The plan outlining how a company generates revenue and projects its growth b. The geographical location in which a company decides to do business c. A firm's formal reporting relationships, including procedures, controls, authority, and decision-making processes d. The personality of a company and the key elements to motivating employees and understanding why they want to work at that company

c. A firm's formal reporting relationships, including procedures, controls, authority, and decision-making processes

A firm is most likely to achieve success with its efforts toward innovation by: a. favoring innovation through acquisition over internal development of innovations. b. favoring internal development of innovations over innovation through acquisitions. c. developing an appropriate balance between innovation through acquisition and internal development of innovations. d. opting for an equal balance of innovation through acquisition and internal development of innovations.

c. developing an appropriate balance between innovation through acquisition and internal development of innovations.

On a macroeconomic level, what category of countries experience tremendous growth of personal and national wealth? a. Countries that have a coast b. Countries that have capitalism c. Countries with a younger overall population d. Entrepreneurial countries

d. Entrepreneurial countries

When entrepreneurial opportunities are realized, existing products and production methods are replaced with new products and production methods in a process known as: a. competition. b. invention. c. innovation. d. creative destruction.

d. creative destruction.

_____ entrepreneurship is defined as the use or application of entrepreneurship within an established firm. a. Innovative b. Corporate c. Managerial d. Internal

b. Corporate

Which of the following is NOT a form of executive compensation? a. Salaries b. Stock performance c. Stock options d. Stock awards

b. Stock performance

What is the proper order of changing corporate strategy and corporate structure? a. Strategy then structure b. Structure then strategy c. There is no proper way d. Simultaneously changing strategy and structure

d. Simultaneously changing strategy and structure

Which of the following criteria should companies give the most weight to when deciding who should lead an international entrepreneurial venture? a. Those with international experience b. Those who have an entrepreneurial mindset c. Individuals with strategic behavior d. Individuals who have a willingness to take risks

a. Those with international experience

Maria is the CEO of a company that has been a market leader for more than 20 years. Her company is starting to lose its market share to smaller companies that are new to the market. These smaller companies have products that the company cannot easily imitate. What does Maria's company need to do? a. Become more entrepreneurial and utilize its established strategic capabilities b. Become more strategic and utilize its established entrepreneurial capabilities c. Become less entrepreneurial and focus on its strategic capabilities d. Become less strategic and focus on its entrepreneurial capabilities

a. Become more entrepreneurial and utilize its established strategic capabilities

What does a firm have if its capabilities are valuable, rare, difficult to imitate, and not able to be substituted? a. Competitive advantage b. Invention c. Business level strategy d. Innovations

a. Competitive advantage

Which of these terms would describe an innovation by a steel manufacturing company that finds a new way to produce its steel, saving 2% in production time? a. Incremental innovation b. Radical innovation c. Breakthrough innovation d. Green innovation

a. Incremental innovation

With the help of investors, chefs and best friends Jacques and Pieter are planning to open a chain of fast-casual restaurants in six locations across Europe. Pending the chain's performance over the first 18 months, they plan to open eight more locations in Scandinavia and beyond. Their firm is: a. born global. b. internationally diversified. c. innovative. d. incremental.

a. born global

In June of 2007, Apple, the company well known for the music playing iPod, released its first phone, the iPhone. One of its taglines, "Apple Reinvents The Phone," proved to be true. Since its launch, iPhone and its imitators have taken over the mobile phone industry. Apple's key feature was its touchscreen. Other companies have tried to copy the success. What would the iPhone be described as? a. Incremental innovation b. Invention c. Radical or breakthrough innovation d. Imitation

c. Radical or breakthrough innovation

A technology company is in need of a breakthrough innovation. It has been static in its innovations and needs something that will "change the game" to provide a new revenue stream. Which team is most likely to be charged with finding this next breakthrough? a. Research and Development b. Marketing c. Manufacturing d. Cross-functional development team

d. Cross-functional development team

What is a potential risk of cooperative strategies in regards to innovation? a. Wasting of time and resources if the innovation fails b. Potential poaching of talent by the other company c. Sharing of company secrets and strategies with competitors d. One of the companies using the technology that is jointly developed for its own benefit

d. One of the companies using the technology that is jointly developed for its own benefit

Some years back, a number of manufacturers of low-end, inexpensive cell phones started introducing their products into the Eastern African market. David, the owner of a medium-sized firm manufacturing mid-priced cell phones, believes the Eastern African market is now ready for slightly more expensive phones with greater functionality. If he's right, David has identified a(n): a. competitive disadvantage b. innovation c. competitive advantage d. entrepreneurial opportunity

d. entrepreneurial opportunity

A technology firm has had some issues in its decision making. The company is the leader in innovation and is always ahead of the curve on technological advances. But the business struggles with operations and marketing decisions. The leadership team is the same group of five people that started in a garage after meeting in a computer science class. What would you suggest to this company? a. Create a more homogeneous top management team. b. Create a more heterogeneous top management team. c. Leave all decision making to a single leader. d. Continue operations as is.

b. Create a more heterogeneous top management team.

Not all CEO changes are successful. Which one of the following scenarios has the greatest chance of failure? a. Hiring an external CEO b. Hiring an international external CEO c. Hiring an international internal CEO d. Hiring an internal CEO

b. Hiring an international external CEO

Darren works in a metals factory and has repeated the same tasks for years now. He notices that he can save time if he repurposes one tool to assist in another process. He discusses the new tool with his supervisor, and the company realizes that it offers efficiencies and wants to use it in other factories. What describes Darren's actions? a. Imitation b. Innovation c. Invention d. Strategic entrepreneurship

b. Innovation

Target is a company that focuses on reasonable prices for goods that are of high quality, unlike its competitors. Walmart has a focus on cutting costs to save as much money as possible for its customers and has historically not focused on quality. Target has grown due to which strategy? a. Cost leadership b. Integrated cost leadership/differentiation strategy c. Innovation d. Formalization

b. Integrated cost leadership/differentiation strategy

What are the concepts that affect attitudes toward corporate governance in Japan? a. Friendship, honor, loyalty b. Obligation, family, consensus c. Service, responsibility, modesty d. Integrity, responsibly, respect

b. Obligation, family, consensus

Ross is the newly appointed CEO of an automobile manufacturer. While analyzing the business, he recognizes a competitive advantage his company could achieve if the organizational structure could change very quickly. What is a challenge the new CEO will have to overcome for this change to happen? a. Legal regulations b. Organizational inertia c. Board of Directors d. Structural stability

b. Organizational inertia

All of the following are the result of new changes to the organizational structure at McDonald's EXCEPT: a. reduced costs. b. cleaner facilities. c. increased effectiveness. d. improved customers' experience through technology.

b. cleaner facilities.

Who are seen as the most significant stakeholders in the United States? a. Employees b. Communities c. Shareholders d. Suppliers

c. Shareholders

Theresa is interviewing for a small startup in the technology industry. This startup is looking for qualities that will aid it in its fast-paced, fast-thinking atmosphere. Theresa is very hard working, accountable, excited to take on new challenges, and not afraid to take risks. On top of this, she also holds an advanced degree. Theresa has an incredible amount of experience, but not in the technology field. Would the startup benefit from hiring Theresa? a. Yes, because she is interviewing at a company that is in need of entrepreneurs. b. Yes, because she is perfectly qualified. c. No, because she does not have an entrepreneurial mindset. d. No, because she does not have experience that the startup can use.

a. Yes, because she is interviewing at a company that is in need of entrepreneurs.

Which of the following is an example of innovation through acquisition? a. Microsoft collaborating with Intel to incorporate the company's chips into its personal computers b. Facebook choosing to innovate its advertising platform and seeing the value of the virtual reality technology that another company, Oculus, has already developed c. Apple developing an online streaming service, Apple TV, and including popular channels, such as HBO d. Google choosing to create a holding company, known as Alphabet, to manage its various entities and acquisitions

b. Facebook choosing to innovate its advertising platform and seeing the value of the virtual reality technology that another company, Oculus, has already developed

What is a common way that firms encourage entrepreneurial behavior and development of innovations? a. Cultural norms b. Incentive programs c. Performance evaluation criteria d. Firms do not encourage entrepreneurial behavior as it will take away from their day-to-day tasks

b. Incentive programs

Disney, the entertainment company, sees the success that the superhero storytelling company, Marvel, has had over the years. Disney wants to enhance its movie-making capabilities and wants to gain Marvel's innovations for other uses. What is Disney's next logical move? a. Innovation through cooperative strategies b. Innovation through acquisition c. Internal innovation d. Incremental innovation

b. Innovation through acquisition

Which of the following factors is NOT required for turning an innovative product into a true competitive advantage? a. An effective introduction of the product into the marketplace b. A foundation in a recognized and viable market opportunity c. An attractive, below-average price point d. Protection against competitors

c. An attractive, below-average price point

Sherry is the HR manager at a real-estate firm. The company's sales have been in decline, and she believes the company is in need of innovation. She wants the employees to be able to continuously identify opportunities in their market, but the company does not currently focus on this. What, specifically, is the firm in need of? a. New leadership b. Change in corporate culture c. New employees d. An entrepreneurial mind-set

d. An entrepreneurial mind-set

Shareholder activists are very unhappy with a certain board of directors' recent pattern of decisions. The activists believe they need to be given more decision-making capabilities, have their voices heard, and have the opportunity to nominate another board member. What should the shareholder activists propose? a. A proxy vote b. A hostile takeover c. A coup d'état d. A dumping of shares to drop stock price and force actions by the board

a. A proxy vote

What is a simple structure? a. A structure in which the owner-manager makes all major decisions and monitors all activities while the staff serves as an extension of the manager's supervisory authority b. A non-complex structure that has a small probability of being successful c. A structure that consists of a chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas d. A structure in which manufacturing efficiency is the focus

a. A structure in which the owner-manager makes all major decisions and monitors all activities while the staff serves as an extension of the manager's supervisory authority

A company has a tool to monitor its progress. This tool analyzes the company's finances and its strategy. The executives use this tool to understand how the firm responds to shareholders, how customers view the firm, what processes to focus on to successfully use its competitive advantage, and how it can use innovation to improve its performance. What is this a description of? a. Balanced scorecard b. Control dashboard c. Business analytics d. Corporate monitoring

a. Balanced scorecard

What is the main reason why bribery is a major issue for governments, especially countries with emerging economies? a. Bribery tends to limit entrepreneurial activity that could help a country's economy grow. b. Bribery negatively impacts the performance of firms by eating up profits. c. Bribery is impossible to monitor. d. Bribery makes firms less competitive, which negatively impacts a country's economy.

a. Bribery tends to limit entrepreneurial activity that could help a country's economy grow.

What should the CEO of a company suggest to another CEO if their companies have a very similar product but do not share the same market? a. Create a horizontal alliance so that each firm can compete better in its respective market b. Compete c. Implement a flexible structure d. Implement environmentally safe initiatives

a. Create a horizontal alliance so that each firm can compete better in its respective market

Which of the following best explains the underlying premise of the balanced scorecard? a. Firms jeopardize their future performance when they emphasize financial controls at the expense of strategic controls. b. Managers tend to make self-serving decisions when they focus on the long term. c. Focusing on long-term goals rather than short-term goals generally leads to higher performance. d. Financial control encourages lower-level managers to make decisions that incorporate moderate and acceptable levels of risk.

a. Firms jeopardize their future performance when they emphasize financial controls at the expense of strategic controls.

What are some of the largest factors for a firm when it demands continuous product innovation? a. Interpreting and taking action on often ambiguous information b. Disposable income c. Cost leadership programs d. Board of Directors

a. Interpreting and taking action on often ambiguous information

A company consists of a corporate office and operating divisions. Each operating division represents a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers. What type of structure does this company have? a. Multidivisional structure b. Functional structure c. Simple structure d. Complex structure

a. Multidivisional structure

A CEO recently led her company through a period of significant growth and profitability. Her structure change, new strategy, and other decisions caused the company to grow beyond expectations. As a result of her efforts, the CEO and her company won several awards and received press in magazines such as Forbes, Inc., and Chief Executive. But recently her decisions have been poor, which may have to do with lack of analysis and attention to the details of projects put before her. When her team suggests alternatives, she pushes back. What most likely happened to the CEO? a. Power and influence b. Overconfidence c. Overexertion d. Too much span of control

b. Overconfidence

_____ is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. a. Strategic power b. Strategic leadership c. Influence d. Teamwork

b. Strategic leadership

Which is an alternate definition for "poison pill"? a. A contract between the target firm and the potential acquirer specifying that the acquirer will not purchase additional shares of the target firm for a specified period of time in exchange for a fee paid by the target firm b. The repurchase of the target firm's shares of stock that were obtained by the acquiring firm at a premium in exchange for an agreement that the acquirer will no longer target the company for takeover c. A strategy whereby a company decides to increase the number of overall shares, which will both dilute the hostile company's shares and increase the cost of the company overall, making the company less appealing to take over d. A lump-sum payment of cash that is given to one or more top-level managers when the firm is acquired in a takeover bid

c. A strategy whereby a company decides to increase the number of overall shares, which will both dilute the hostile company's shares and increase the cost of the company overall, making the company less appealing to take over

Some strategic leaders who are committed to identifying the best organizational activities to take, regardless of their cultural origin, have been successful in building a short-term foundation to reach a long-term vision. Which of the following terms describes this type of leader? a. Risk averse b. Charismatic c. Ambicultural d. Long tenure

c. Ambicultural

Clark has a business and is in need of a functional structure. His strategy is to sell as much as possible and spend the least amount of capital as possible. He wants his employees to be compensated when they can find cost-cutting tactics. What type of functional structure would you recommend Clark implement? a. Structure flexibility b. Structure stability c. Cost leadership d. M-form structure

c. Cost leadership

A company's strategy is misguided due to poor reporting on how to enhance performance and maintain a competitive edge. Which aspect of structure is this company missing? a. Corporate governance b. Structural flexibility c. Organizational controls d. Simple structure

c. Organizational controls

A firm is attempting to break into an international market. It easily establishes alliances in that foreign market and is able to successfully expand. Which of the following has helped the firm with its transition? a. Intellectual capital b. Innovations c. Social capital d. Corporate culture

c. Social capital

What is the definition of a functional structure? a. An organizational structure that has proven to be successful and works correctly for all businesses b. A structure that has the owner as a manager who also handles all day-to-day activities c. A group of industry experts and experts of other industries d. A chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas

d. A chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas

What is the cooperative form? a. A situation in which industry leaders (that are competitors) will work together to benefit both of their companies b. A structure in which employees are incentivized to help each other c. An M-form structure in which vertical integration is used to bring cost saving incentives d. An M-form structure in which horizontal integration is used to bring about interdivisional cooperation

d. An M-form structure in which horizontal integration is used to bring about interdivisional cooperation

What is one risk companies could be vulnerable to if participating in a horizontal alliance? a. Deciding to change industries and having the wrong structure b. Developing a poor strategy c. Competitors taking advantage of their distraction d. Government action due to collusion

d. Government action due to collusion

_____ has _____ success as a hostile takeover defense strategy and _____ effects on shareholder wealth. a. A golden parachute; high; positive b. A standstill agreement; low; positive c. A capital structure change; high; inconclusive d. Greenmail; medium; negative

d. Greenmail; medium; negative

A CEO has just resigned and quickly vacated his role for a more lucrative opportunity. The company, with the rapid change, is in limbo and needs leadership. What is the board of directors' next logical action? a. Cautiously hiring a CEO b. Rapidly hiring a CEO c. Hiring an external interim CEO d. Hiring an internal interim CEO

d. Hiring an internal interim CEO

Acer, the electronics company, is always behind the technological curve. When products are ready to hit the market, the trend has already passed and it continues to lose market share. What change to its organizational structure might you recommend to counteract this trend? a. Decreasing structural flexibility b. Decreasing structural stability c. Increasing structural stability d. Increasing structural flexibility

d. Increasing structural flexibility

A company is part of a keiretsu in Japan. Its leaders are worried about the company's financial viability and ask for help from other members of the keiretsu. Why would other participants of the keiretsu feel the need to aid the failing company? a. Members of the keiretsu are legally obligated to aid when members are in need. b. The keiretsu are companies that make a profit from lending money. c. Members of the keiretsu will not feel obligated to help, as they will have members of the company fend for themselves. d. Members of the keiretsu are seen as family, which commands attention and allegiance.

d. Members of the keiretsu are seen as family, which commands attention and allegiance.

Do German firms face agency problems to the same degree as U.S. firms? a. Yes, German firms have the same exact issues and difficulties as U.S. firms. b. Yes, German agencies have the same structures as U.S. agencies. c. No, many German firms are publicly owned by the government and its citizens. d. No, many German firms are managed and owned by the same individual.

d. No, many German firms are managed and owned by the same individual.

What is quite possibly the most critical skill for a strategic leader to possess? a. The ability to create a context in which stakeholders can perform efficiently b. The ability to think innovatively c. The ability to respond to changes in the external environment d. The ability to attract and manage human capital

d. The ability to attract and manage human capital

Which of the following statements about the German two-tiered board structure is true? a. Proponents of the German structure suggest that it helps prevent corporate wrongdoing and rash decisions by "dictatorial CEOs." b. The corporate governance practices in Germany make it easier to restructure companies more quickly. c. All German firms are required to have a two-tiered board structure. d. Critics of the German structure maintain it allows inside managers to dominate a firm's board of directors.

a. Proponents of the German structure suggest that it helps prevent corporate wrongdoing and rash decisions by "dictatorial CEOs."

A company that has alliances with its suppliers and aids them in becoming modern and sustainable is an example of: a. a horizontal alliance. b. a vertical alliance. c. collusion. d. innovation.

b. a vertical alliance.

Lester just created a new tool that helps him while cleaning the house. What would this be classified as? a. Imitation b. Innovation c. Invention d. Creativity

c. Invention

A company is thinking about changing its organizational structure to gain a competitive edge on a consumer trend. This new consumer behavior is very profitable, and the company sees the revenue that can stem from it. However, there is research stating that the trend may not last forever and could be a "fad." Changing the structure to accommodate this new behavior may have which of the following consequences? a. Simplifying the structure b. Creating a functional structure c. Achieving environmental sustainability d. Limiting future strategies

d. Limiting future strategies

Gina is a transformative leader. She wants as much input from others as possible and has developed a top management team. The team is composed of the brightest minds with highly diverse backgrounds. However, the team sometimes has trouble cohesively implementing strategies and making decisions in a timely manner. As a result, the company is losing its competitive advantages. What does Gina need to change? a. Create a homogeneous top management team. b. Cut the number on her top management team. c. Apply hard deadlines to decisions. d. Realign strategy.

b. Cut the number on her top management team

All of the following describe reasons that firms should select structures carefully EXCEPT: a. Structure influences current strategic actions. b. Structure ensures success. c. Structure limits possible future strategies. d. Structure defines how an organization completes its work.

b. Structure ensures success.

Greg is the CEO of a leading company in the consumer packaged goods industry. He is trying to grow his company for personal gain and wealth. However, Greg sees that his company has an opportunity to break into the chemical industry. He has decided to invest free cash flow into acquiring small chemical companies that have the potential for growth if funded properly. Shareholders are not happy because they are concerned about: a. underdiversification. b. overdiversification. c. diversification. d. segmentation.

b. overdiversification.

James is a consultant who helps guide businesses in their growth. His current client has previously streamlined its supply chain by acquiring a few of its suppliers. This is an attempt to increase cost efficiency and control. After a few years of growth, the client's performance has plateaued. What is James likely to recommend? a. Volume increases b. Geography c. Diversification through products or business d. More integration

c. Diversification through products or business

Individuals that act independently (or as part of an organization), perceive an opportunity, and then take risks to develop an innovation and exploit it can be described as: a. executives. b. employees. c. entrepreneurs. d. freelancers.

c. entrepreneurs.

The board of directors is deciding who the new CEO should be for a company. It has narrowed the candidates down to two highly credentialed individuals. Steve is known to be harsh but fair. He is a proven CEO and has driven companies to success quickly. Kim, the other candidate, is known to be a "people person" with a high emotional intelligence. In the past she has demonstrated success building company culture to achieve great results. Knowing this, which candidate should the company choose if it is seeking to motivate its employees? a. Kim, because she is a transformational leader b. Kim, because she is easier to like c. Steve, because he is known to be successful d. Steve, because a CEO needs to be harsh to be effective

a. Kim, because she is a transformational leader

A firm is struggling with the behavior of its employees. There have been reports of ethically questionable behavior. When asking some employees about their motives for these actions, a common theme was uncovered. They were cutting corners to hit their performance numbers. The firm now wants to focus on ethical behavior and shift organizational culture. The company distributes emails from HR about appropriate behavior and ethics and hosts a series of office workshops on ethics. This firm is attempting to become a(n) _____ culture. a. performance-based b. values-based c. self-serving d. ethics-based

b. values-based

After a recent round of share releases, many individuals bought up shares and reduced the number of large-block shareholders. The company's managers recently had the luxury of performing without much interference or monitoring by their shareholders. The managers are now engaging in risky strategic tactics that may not be in the best interest of shareholders. What type of ownership does this company have? a. Universal ownership b. Diverse ownership c. Diffuse ownership d. Hostile ownership

c. Diffuse ownership

What are the benefits of having strong corporate governance? a. Because managers and employees fear for their jobs, it allows fear to improve productivity. b. It shifts accountability and responsibility for developing an ethical organizational culture and making sure the firm performs effectively from top-level managers to the board of directors. c. It encourages top-level managers to be strategically competitive. d. There are no benefits to corporate governance, which is seen as an unneeded expense.

c. It encourages top-level managers to be strategically competitive

Corporate governance is: a. a group of elected individuals whose primary responsibility is to act in the owners' best interests by formally monitoring and controlling the firm's top-level managers. b. a means by which firms collaborate to achieve a shared objective. c. the set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations. d. defined by the number of large-block shareholders and the total percentage of the firm's shares they own.

c. the set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations.

A _____ is composed of individuals who are responsible for making certain a company uses the strategic management process, especially to select and implement strategies. a. Strategy implementation team b. Strategy department c. Business development team d. Top management team

d. Top management team

All of the following are characteristics that account for how functional organizational structures handle the differences in their matching strategies EXCEPT: a. centralization. b. specialization. c. formalization. d. differentiation.

d. differentiation.

In strategic entrepreneurship, _____ refers to a firm's ability to identify external opportunities to exploit through innovation, while _____ refers to the firm's ability to manage innovation efforts effectively. a. strategic; entrepreneurship b. vision; mission c. inventiveness; competitiveness d. entrepreneurship; strategic

d. entrepreneurship; strategic

Over the past three years, Simcom's board of directors has become increasingly concerned about the top-level managers' reliance on external acquisitions, as opposed to internal product innovations. They are discussing the possibility of replacing the CEO. Their decision to exercise corporate governance is primarily motivated by concerns over a. the market for corporate control. b. ownership concentration. c. executive compensation. d. strategic direction.

d. strategic direction

What is the term for a company's options outside the firm for managerial positions? a. Job market b. External managerial labor market c. Resignation market d. Internal managerial labor market

b. External managerial labor market

GM, a world leader in automotive manufacturing, is quickly losing market share to Toyota. Toyota's competitive advantage is that it can produce high-quality cars at a lower price than GM. This is due to Toyota's manufacturing innovation processes, resulting in quicker change and lower cost. What is the logical next step for GM to quickly get back on a competitive par with Toyota? a. Invention of a new vehicle b. Imitation of Toyota's processes c. Innovation of a new vehicle niche d. Innovation through acquisition of Toyota

b. Imitation of Toyota's processes

What is the definition of ownership concentration? a. The ratio of owners and their specialty fields of training to the industry of the company b. The number of large-block shareholders and the total percentage of the firm's shares they own c. The total number of shareholders of a company d. The percentage of shareholders who are internal versus external

b. The number of large-block shareholders and the total percentage of the firm's shares they own

Melissa is the CEO of her company and has to make a business decision. She is faced with a scenario in which she can please one group of stakeholders, or all of them minimally. What is Melissa's most likely action? a. To please the suppliers, as they are the highest priority b. To please as many stakeholders as possible, because if stakeholders are not minimally satisfied, they will give support to another company c. To please the employees, because a happy workforce will have a ripple effect on the rest of the value chain d. To determine which action will result in higher executive compensation and make that choice

b. To please as many stakeholders as possible, because if stakeholders are not minimally satisfied, they will give support to another company

Why are corporate governance mechanisms important to foreign investors? a. To prove that the organization being invested in is legitimate b. To protect their investments c. To prevent exposure for investors who might otherwise place their money in a legal gray area d. To ensure that the country's government is in control of the business, which protects shareholders' investments

b. To protect their investments

Kevin is on the board of directors of a local company and has become concerned with a situation that came to his attention. The board is considering electing the current CEO as chair of the board. Does Kevin have a reason for concern? a. Yes, if Kevin knows the CEO and doesn't like his or her personality. b. Yes, as the CEO will not be able to be forced out if his or her performance becomes unacceptable. c. No, because the board will be sure to elect the best individual to the chair position, regardless of current title. d. No, because a single individual as CEO and chair of the board has proven to be very successful in the past.

b. Yes, as the CEO will not be able to be forced out if his or her performance becomes unacceptable.

Donna is the retired CEO of a large hospital chain. Although her former employer never did business with MediScan, a medical device manufacturing firm, she has been asked to sit on MediScan's board of directors. In this context, Donna is a(n): a. insider. b. outsider. c. related outsider. d. large-block shareholder.

b. outsider.

Christopher is the CEO of a firm that another company is trying to acquire. The success of Christopher's company has declined dramatically over recent years. Christopher knows that the acquisition could help save the shareholders and other stakeholders from the turmoil that would ensue if the company went bankrupt. However, this is Christopher's only line of income for his family. He decides to defend his company from being taken over to help secure his position. Which defense strategy would you recommend be implemented that would benefit all stakeholders? a. Capital structure change b. Charter amendment c. Golden parachute d. Litigation

c. Golden parachute

The CEO at MysTek is planning to retire at the end of the year. In narrowing its search for a replacement, the firm needs to decide whether to focus on the internal or external managerial labor markets. Which combination of circumstances would suggest that the firm should seek a new CEO from within MysTek? a. MysTek has a need to enhance its ability to innovate and undertake strategic change. b. The industry as a whole is experiencing rapid growth, MysTek needs to enhance its ability to innovate, and the firm needs a CEO with a clear understanding of the firm's personnel and their capabilities. c. MysTek needs a CEO with a clear understanding of the firm's personnel and their capabilities, knowledge of the firm's core competencies, and the ability to develop new core competencies as appropriate. d. The industry as a whole is experiencing rapid growth, MysTek has a need to enhance its ability to innovate and undertake strategic change, and the CEO must understand the firm's core competencies well enough to be able develop new ones as appropriate.

c. MysTek needs a CEO with a clear understanding of the firm's personnel and their capabilities, knowledge of the firm's core competencies, and the ability to develop new core competencies as appropriate

A company is being accused of polluting the environment through its manufacturing process. The company agrees that this is a problem but does not have the expertise or capital to investigate and produce a solution. What would you recommend for this company? a. Partner vertically to ensure better manufacturing b. Create and staff a department to clean up the environment. c. Partner horizontally with environmentally conscious organizations d. Innovate because it is the most cost-efficient option

c. Partner horizontally with environmentally conscious organizations

The Carter family has been the successful owner of a manufacturing company for more than 50 years. The company has always performed better than expected and was projected to grow for years to come. To help with this growth, the Carters decided to hire a CEO who is not from the family, the first time in its history. After the hire, the performance of the company shifted for the worse, and there is now a separation of ownership and managerial control. What is the best next step? a. The Carters should align the goals of the family and the CEO. b. The CEO should diversify the company, as it has reached the end of its growth projection. c. The Carters should appoint a family member as CEO, as research shows that family-owned firms perform better when a member of the family is the CEO. d. The Carters must sell the company to a larger corporation.

c. The Carters should appoint a family member as CEO, as research shows that family-owned firms perform better when a member of the family is the CEO.

Which of the following is a reason that a firm would want to hire a CEO from the internal managerial labor market? a. The firm needs to enhance its ability to innovate. b. The industry in which the firm competes is experiencing rapid growth. c. The firm needs a CEO who appreciates its culture and core values. d. The firm needs a CEO who can reverse recent poor performance.

c. The firm needs a CEO who appreciates its culture and core values.

What is an agency relationship? a. A group of people who are in disagreement b. A situation in which one party is responsible for the actions of another in a workplace setting c. A situation in which two parties decide to invest and act as one for a united goal d. A situation in which one party delegates decision-making responsibility to a second party for compensation

d. A situation in which one party delegates decision-making responsibility to a second party for compensation

Which of the following statements about the recent global emphasis on corporate governance is NOT true? a. Corporate governance is of concern to nations as well as to individual firms. b. Although corporate governance reflects company standards, it also collectively reflects the societal standards of nations. c. Research shows that firms seek to invest in nations with national governance standards that are acceptable to them. d. The recent global emphasis on corporate governance stems mainly from the need to give shareholders more power in organizations.

d. The recent global emphasis on corporate governance stems mainly from the need to give shareholders more power in organizations.

What is the reasoning behind P&G's commitment to giving employees of all levels meaningful and significant roles? a. To reduce turnover, as employees will feel more attached to the company b. To reduce the headcount of employees by having current employees take on more tasks c. To increase effectiveness by requiring employees to be subject matter experts in many fields d. To develop talent that will be able to move up in the organization and be effective in the future

d. To develop talent that will be able to move up in the organization and be effective in the future

Many companies encourage employees to pursue entrepreneurial opportunities. While this could cause companies to lose top talent, why may companies want to foster this behavior? a. To boost employee satisfaction b. To have employee downtime be constructive c. To increase their work efficiency d. To spark innovation

d. To spark innovation