WPC 480 Final Study Set

A primary advantage of organizing economic activity within firms is the a. ability to coordinate highly complex tasks to allow for specialized division of labor b. low administrative costs because of reduced bureaucracy c. eradication of the principal-agent problem d. high-powered incentive to work as salaried employees for an existing firm

a

According to the agency theory a. conflicts that arise in corporations should be addressed in the legal realm b. corporations are more than a set of contracts between parties c. companies should focus on generating profits for stockholders d. principals and agents have Interchangeable roles

a

Anheuser-Busch InBev sold Busch Entertainment, its theme park unit that owns SeaWorld and Busch Gardens, to a group of private investors for roughly $3 billion. This strategic move allowed InBev to focus more fully on its core business of brewing and distributing beer across the world. This is an example of a. restructuring b. corporate diversification c. a business level strategy d. the Core Competence-Market Matrix

a

As the CEO of a conglomerate, Sarah Cane exhibited her strong commitment toward the company's core value that customers' well-being is more important than profit when she convinced the board to liquidate the company's pesticide subsidiary. The pesticide brand sold by her company was a major revenue earner in lesser-developed nations, but studies indicate that it is a carcinogen. Eva persuaded the board that the company had to be responsible toward society. In this scenario, Sarah has demonstrated a. strategic leadership b. intrapreneurship c. machiavellianism d. individualism

a

Because Facebook receives almost all of its revenues from online advertising, we would conclude that Facebook would be characterized as a(n) ________ firm, which has the lowest levels of corporate diversification. a. single business b. dominate business c. related diversification d. unrelated diversification

a

In a large company, who is most responsible for devising the corporate strategy? a. the CEO b. the lower-level employees c. the head of production dept d. HR manager

a

In a public stock company, senior executives, such as the CEO, face agency problems when a. they delegate authority of strategic business units to general managers b. they decide to get involved in the day to day operations of a company c. the board possesses more info about the company than they do d. the firm designs work tasks, incentives, and employments that minimize opportunism

a

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are a. similar to those that need to be developed and superior to those of competitors in the targeted area b. similar to those that need to be developed and inferior to those of competitors in the targeted area c. different from those that need to be developed and superior to those of competitors in the targeted area d. different from those that need to be developed and inferior to those of competitors in the targeted area

a

Jill is the CEO of Note's Etc, a stationary manufacturer. She decides to open up a retail store to sell her products directly to consumers instead of just selling to retailers. In order to do this, Jill will need to engage in ________, which is a corporate level, strategy. a. forward vertical integration b. backward vertical integration c. horizontal integration d. differentiation

a

John owns John's Trucking Corporation and is trying to determine if his firm should engage in vertical integration and diversify the range of services his business sells. Before John goes through with these decisions, he'll need to consider what is his a. corporate level strategy b. business level strategy c. functional level strategy d. geographic scope

a

Sean was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically? a. observe executives at the company, and see whether they model ethical behavior and demand it of others b. research the results of tthe ethics violations. if the perpetrators were fired of jailed, then the rest of the company is sound c. check the company's mission statement to make sure that it guarantees respect and integrity d. ignore the alleged ethics violations bc there is no one standard of ethical behavior

a

Shareholders of public companies need to appoint a board of directors to represent their interests because a. of the separation of ownership and control b. employees of a company cannot be shareholders c. the board of directors itself is made up of shareholders d. the shareholders want tighter control over day-to-day operations of a company

a

Stephen is a mid-level manager for a high-tech start-up. He's just been asked by his boss to perform an activity that may be unethical. To improve his ethical decision making, Stephen should a. imagine whether he would feel comfortable explaining and defending the decision in public b. go forward with the decision without considering the ethical ramifications c. think about the ethical dilemma but base his decision upon what's best for his career in the short term d. call his parents and ask them for advice

a

Susan works for a firm that has high degrees of formalization in their organizational structure. She understands that one of the main drawbacks of working in a firm with such high levels of formalization can often result in which of the following? a. a slower decision-making process b. increased organizational inertia c. less co-opetition d. increased vertical integration

a

The executives at Dizzy & Sons Corp. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20%, appreciation in the value of the dollar, increase in the cost of labor by 30%, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situations occurs in the future. Thus, Dizzy & Sons Corp. is employing ________ as the approach to the development of strategy. a. scenario planning b. top-down strategic planning c. reverse engineering d. pattern recognition

a

The process of alliance management begins with a. selecting the best possible partner b. choosing an appropriate governance mechanism c. designing the alliance d. creating resource combinations that obey the VRIO criteria

a

There are several mechanisms in which strategic alliance can be governed. Which of the following below is NOT one of those ways? a. acquisitions b. non-equity alliances that contain contractual agreements c. equity alliances d. joint ventures

a

To be effective, firms need to: A. back up their visions with strategic commitments that are costly and difficult to reverse. B. increase their strategic flexibility by developing product-oriented vision statements. C. isolate top managers from the organizational values. D. pursue visions that are exclusively financial and not aspirational.

a

Vanessa just graduated from law school and wants to open her own law firm. Vanessa should probably adopt a(n) ______ structure for the firm. a. simple b. functional c. M-form d. matrix

a

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources, it can be concluded that the firm is using a. related-constrained diversification b. related-linked diversification c. strategic outsourcing d. offshore outsourcing

a

Which of the following is true of acquisition? a. they can be friendly or hostile b. they can occur only when the involved entities are comparable size c. in acquisitions, two independent companies join to form a separate third entity d. acquisitions increase the competitive intensity in an industry

a

Which of the following is true of business ethics? a. certain notions such as fairness, honesty, and reciprocity are universal norms b. business ethics is an agreed-upon code of conduct in business, based on laws c. the perception of what is ethical and what is not is similar across different cultures d. business ethics needs to be codified into law in order to be followed

a

Which of the following statements about product-oriented visions is true? a. they tend to force managers to take myopic view of the competitive landscape b. they allow companies to effectively adapt to changing environments c. they define a business in terms of providing solutions to customer d. they allow firms to set goals that focus primarily on filling the organizations needs

a

Which of the following summarizes the difference btwn a firms vision and mission? a. vision states what a firm wants to accomplish, mission states how a firm plans to accomplish this vision b. vision states the ethical values of a firm, mission states the monetary goals c. vision states how much a firm wants to earn, mission states how these earnings will be accomplished d. vision states the management values of a firm, mission states the value of the other workers.

a

A candy company called Blackzim Inc forms an agreement with another candy company called Streethex Inc. Through this agreement, Blackzim owns 30% of Streethex. However, Steethex does not own any part of Blackzim. This type of agreement is called a(n) a. nonequity alliance b. equity alliance c. joint venture d. capital venture

b

A functional structure is recommended when a firm a. has a broad focus in terms of its product/service offerings b. has a low level of diversification c. has a low degree of specialization d. diversifies into different product lines and geographies

b

A high degree of formalization in an organization is most likely to a. improve customer service b. slow down decision making c. produce inconsistent results d. increase creativity an innovation

b

Angelika is the Chief Operating Officer of One Spice Inc., a firm that grows and processes the Naga Viper pepper, one of the world's hottest peppers. Angelika wants to better understand the relationship between her firm's organizational culture and the ability to achieve competitive advantage. The relationship between these two states that a. a firm is unable to achieve a competitive advantage if they are pursuing a differentiation strategy b. a firm can achieve competitive advantage if their organizational culture follows the VRIO principles c. a firm can achieve and sustain competitive advantage if their balances scorecard is implemented correctly d. a firm cannot achieve a competitive advantage when they have an effective organizational culture

b

Billy is the CEO of Billy's Kicks, a soccer ball retailer. He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores. In order to do this, Billy will need to engage in ________, which is a corporate level strategy. a. forward vertical integration b. backward vertical integration c. horizontal integration d. differentiation

b

Delos Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Delos Autos controlling interests in the start-up company. However, Delos Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Delos Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as a. a break-even analysis b. a real-options perspective c. credible commitment d. transaction cost economics

b

Geovax Inc., a biotechnology company, was established to develop an effective vaccine against a deadly virus. As such, a large investment firm formed an equity alliance with Geovax that resulted in a significant financial investment that followed a string of smaller investments so long as Geovax continued to make headway towards their vaccine. This "wait and see approach" can best be described as a. a strategic bet b. a real-options perspective c. a quick way to generate revenues d. horizontal integration

b

Homestyle is a company that manufactures and sells home furniture. It sources its materials from another country to keep costs low. An assembly line worker in one of its manufacturing centers noticed that there was increasing concern regarding the potential toxicity of the flame-resistant materials used in the furniture. In response, she compiled a list of nontoxic flame-resistant materials that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the A) top-down strategic planning approach. B) planned emergence approach. C) scenario planning process. D) reverse engineering process.

b

How do strong ethical values benefit a firm? A. They lay the groundwork for a quick increase of profits and short-term success. B. They serve as the guardrails put in place to keep the company on track when pursuing its mission. C. They provide strong public relations, which can either benefit or hinder competitive advantage. D. They emphasize benefiting employees by significantly increasing profit.

b

Jerry is one of the SBU managers for a firm that has been in business for over 50 years. The external environment in which they have operated has changed significantly in the past decade, but this firm is still operating under a "business as usual" mantra. Jerry can't seem to convince the upper level executives to reorganize the firm's structure and formal reporting relationships. This firm is probably experiencing a. a failed strategy b. organizational inertia c. a change in leadership d. increased morale due to their organizational culture

b

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate? a. diseconomies of scale b. principal-agent problem c. experience-curve effects d. information asymmetries

b

Mary owns Kind corporation and wants to maintain a dual focus on creating shareholder value while at the same time increasing value for society as a whole. Mary is following the a. balanced scorecard framework b. shared value creation framework c. shareholder capitalism framework d. philosophy of Milton Friedman

b

Nuke It is a major manufacturer of microwave ovens. Which of the following statements will best inspire the organization with a shared vision for Nuke It? a. employees know that they'll make a competitive wage b. employees at all levels are motivated to make the best microwave ovens on the market c. employees want to create a cheaper microwave oven than our closest competitor does d. employees can trust our managers to steer the company

b

Organizational values help people make choices that are ethical and company-goal oriented. These values answer which strategic management question? a. what do we want to accomplish as a company? b. how do we accomplish our goals in the organization? c. what are we about as a firm compared to our competitors? d. what is the best way to compete In the industry?

b

Strategic commitments are actions that are: A. inexpensive. B. long-term oriented. C. easy to reverse D. easy to imitate.

b

Stratton Oakmont Inc is a publicly traded company. The stockholders of this company delegate to the authority to make decisions for the company to a CEO named Terry. The stockholders expect Terry to make decisions that will benefit the company. However, Terry begins to find ways to maximize his total compensation, which hinders Stratton Oakmont Inc.'s performance. This scenario reflects a. value creation problems b. principal-agent problems c. inside director-outside director problems d. adverse selection problems

b

THe board of a public stock company consists of a. managers appointed by the owners of a company to run its day to day operations b. individuals who formally represent the firms shareholders and oversee the work of executives c. the legal owners of a publicly traded company that was purchased in a leveraged buyout d. employees of a company who belong to the senior mangement and directly report to the CEO of a firm

b

The Boston Consulting Group (BCG) growth-share matrix locates a firm's individual strategic business units (SBUs) in which two dimensions? a. start-up capital required and stage of industry life cycle b. relative market share and speed of market growth c. economic value created and costs incurred d. amount of debt financing and equity financing

b

Visionary companies are able to outperform their competitors because a. their vision statements are more product-oriented b. they provide more aspirational visions c. their visions are primarily financial d. they isolate internal stakeholders in defining their visions

b

What is the main reason that most mergers and acquisitions negatively affect shareholder value? a. The entire market becomes an oligopoly or a monopoly b. Promised synergies never take place c. Market conditions change too quickly d. Companies that resist acquisitions are subject to the "winner's curse"

b

When Aviato Inc. wanted to sell its cars in the country of Yugoslakia, it lacked access to distribution channels and marketing expertise in the country. Thus, Aviato Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? a. increasing competitive intensity b. accessing critical complementary assets c. procuring additional capital investments d. reducing differentiation of product and service offerings

b

Which of the following is a disadvantage of horizontal integration corporate strategy? a. it increases competitive intensity within an industry b. it increases the potential for legal repercussions c. it increases the costs associated with increasing value d. it increases the threat of new entrants in an industry

b

Which of the following is an implication for the strategist in the context of corporate governance and a company's success? a. very few corporate-governance mechanisms can be effective in addressing the principal-agent problem b. effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage c. leading by ethical example often has a lesser effect on employee behavior than words do d. a firm that restricts its responsiveness to stockholders (and no other stakeholders) and keeps them committed to its vision will be successful

b

Which of the following statements about managing alliance-related tasks is true? a. Forming an alliance with another firm prohibits that firm from forming other alliances b. Alliance-management capability is based on three alliance-related tasks c. a merger is one of the three options for alliance design and governance d. in post-formation alliance management, none of the girms in an alliance is permitted to gain a competitive advantage

b

Why does strategy implementation often require changes within an organization? a. strategy implementation is less important than strategy formulation b. strategy implementation transforms strategy into actions and business models c. strategy always follows structure d. strategy implementation does not affect resource allocation and power distribution within an organization

b

_________ is best described as a situation in which one party is more informed than another, because of the possession of private information. a. Information governance b. Information asymmetry c. Information deregulation d. Information piracy

b

which of the following is the source of the principal-agent problem in publicaly traded companies? a. the law of legal personality b. the separation of ownership and control c. limited liability for investors d. transferability of investor ownership

b

A traditional top-down strategic planning process typically begins with a. employees at the operational level identifying problems within an organization b. functional managers formulating functional strategies for their respective departments c. strategic leaders adjusting a company's vision and mission based on environmental analysis d. employees who have close contact with customers taking autonomous actions

c

A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a a. proprietorship b. cooperative c. strategic alliance d. leveraged buyout

c

Finjob Inc. is following a related-linked diversification strategy, and Rangreen Inc. is following a related-constrained diversification strategy. How do the two firms differ from each other? a. Rangreen generated 70% of its revenues from its primary business, while Finjob generates only 10% of its revenues from its primary business. b. Rangreen pursues a backward diversification strategy, while Finjob pursues a forward diversification strategy. c. FInjob will share fewer common competencies and resources between its various businesses when compared to Rangreen. d. Finjob pursues a differentiation strategy, and Rangreen pursues a cost-leadership strategy, to gain a competitive advantage.

c

Hottechi Inc., a large multinational conglomerate, had begun to experience declining revenues over the years. The top management at the headquarters of the company decided that it was important for the company to avoid deviating from its core competencies. Thus, a few of the company's key business like energy, telecommunications, and automobiles were centralized, giving the top management more control over them. Also, relatively newer businesses like beverages and food processing were divesting. In this scenario, Hottechi is involved in a. reverse engineering b. benchmarking c. restructuring d. crowdsourcing

c

Jennifer is the strategic business unit (SBU) CEO in charge of manufacturing stereo speakers for computers and laptops. Her SBU earnings and cash flow are both low and unstable. Which of the following strategies should Jennifer enact if examining her SBU through the Boston Consulting Group (BCG) matrix lens? a. hold b. invest for growth c. harvest and/or divest d. allocate more resources for manufacturing

c

Los Pollos Hermanos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. The firm's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's? a. lph has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy b. lph has a high degree of specialization and formalization, a low degree of centralization, and relies on tall hierarchy c. lph has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy d. lph has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy

c

Simple organizational structures often exhibit low levels of formalization and specialization. Which of the following is NOT a benefit of employing a simple organizational structure? a. being able to easily and quickly coordinate and communicate within the firm b. not having the need for sophisticated information technology/management systems c. employing specialists that can develop deep knowledge/expertise in their field d. being able to converse with the CEO and other upper level executives

c

Sterling Cooper Footware and NERV Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Sterling Cooper Footware entered the strategic alliance to acquire the production system pioneered by NERV Shoes. Similarly, NERV Shoes agreed to the strategic alliance to study the design process of Sterling Cooper Footware. However, Sterling Cooper Footware was more successful and faster than NERV Shoes in accomplishing its alliance goal. What does this scenario best illustrate? a. network effects b. economies of scope c. learning races d. time compression diseconomies

c

The Estelle Leonard talent Agency recently underwent a reorganization. Based on customer feedback, the company eliminated many of its middle management positions and implemented a flatter structure. Which of the following is a possible drawback of this decision? a. employees will have less power and autonomy, resulting in a loss of morale b. internal communications and decision-making processes will be slower c. the increased span of control for remaining managers may lead to higher levels of stress and possible burnout d. employees will be forced to take on more specialized roles and may become bored by repetitive tasks

c

The managers at Statholdings Mobile want tto diversity the business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition tto greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Stateholdings Mobile is most likely a result of a. time compression diseconomies b. experience-curve effects c. principal-agent problems d. resource ambiguity

c

Which of the following best explains why a board of directors may grant stock options as part of compensation package? a. to reduct the transferability of stocks btwn stockholders b. to bring about separation of CEO/chair duality c. to align incentives between shareholders and management d. to change the liability of shareholders from limited to unlimited

c

Amanda, the CEO of company, reports to the board of directors appointed by the shareholders. Based on shareholder suggestions, the board ties amandas compensation to the performance of the company. Due to this pressure, amanda begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. the reasons why the board ties her compensation to performance is to overcome a. shareholder capitalism scenario b. inside director-outside director conflict c. fiduciary responsibility oversight d. principal-agent problem

d

Bill Lewis is the CEO of Nordic Technologies Inc., a firm that offers a limited line of standard products that competes in a similar manner with a narrow, local market focus and whose competitive advantage is a focus on low cost derived from gaining economies of scale. Bill should use a a. group of strategic business units that each have a geographic focus b. matrix structure that combines functional departments with geographic divisions c. simple structure d. functional structure

d

E Corp is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, E Corp has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, E Corp Inc. is most likely an organization that is a. formalized b. mechanistic c. centralized d. organic

d

How does horizontal integration within an industry affect the surviving firms? a. by increasing the threat surviving firms will face from new entrants b. by strengthening the rivalry among existing firms c. by requiring the surviving firms to shift their focus from nonprice to price competition d. by strengthening the bargaining power of the surviving firms vis-a-vis suppliers and buyers

d

In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems? a. the expectation that the agent will follow the country's laws and regulations b. the expectation that the agent will go above and beyond the call of duty c. the expectation that the agent will reconnect economic and social needs d. the expectation that the agent will act in the principal's best interest

d

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should a. infuse more capital into the strategic business unit b. provide more human resources to the business c. hold the business till it turns into a star d. divest the strategic business unit

d

Janet wants to restructure the portfolio of all her firm's strategic business units. Janet will more than likely employ the ________ tool. a. value chain analysis b. VRIO c. diversification premium d. Boston Consulting Group (BCG) matrix

d

Li runs a firm that has diversified into different product lines and geographies. She should probably use a(n) _______ organizational structure. a. functional b. simple c. network d. M-form

d

Strategic leadership pertains to the use of power and influence by __________ to direct the activities of others when pursuing an organizations goals. a. production workers b. lower-level managers c. external stakeholders d. corporate executives

d

Tom and James are customer care employees at Omni Consumer Products. In between calls, Tom and James spend time on Facebook and YouTube. The relaxed guidelines at Omni Consumer Products allow them to do that. However, sometimes, they knowingly avoid answering calls or keep customers on hold, while they check their social networking accounts. Such behavior a. is neither unlawful or unethical; hence, Tom and James cannot be reprimanded b. typically exemplifies the agency problem of adverse selection c. demonstrates the dangers of information asymmetry d. can be stopped by implementing performance incentives and strict control mechanisms

d

Which of the following accurately describes an organic organization? a. an inflexible organization that fosters slow decision making and high employee motivation b. an inflexible organization that fosters fast decision making and high employee motivation c. a flexible organization that fosters slow decision making and high employee motivation d. a flexible organization that fosters fast decision making and high employee motivation

d

Which of the following statements is true of strategy in an organization? a. strategy implementation is considered unsuccessful if it requires changes within an organization b. to implement a strategy successfully, an organizations structure must be rigid c. strategy implementation does not affect resource allocation and power distribution within an organization d. organizational structure must follow strategy in order for firms to achieve superior performance

d

Which of the following summarizes the difference btwn corporate strategy and business strategy? a. corp deals with HOW to compete and business deals with WHERE b. corp deals with WHEN and busi deals with HOW c. corp deals with HOW and busi deals with WHEN d. corp deals with WHERE and busi deals with HOW

d