Business Policy Final Connect Questions 7-12

Examples given in the text of visible actions to reallocate operating funds and move people into new organizational units have shown management's determined commitment to strategic change at which companies? Multiple Choice AT&T and Microsoft General Electric and Hallmark Bank of America and GEICO Allied Signal and Ford McDonald's and Value Corporation

AT&T and Microsoft

Shannon and Ian, student consultants, chose a home construction business as a client for a semester strategic planning assignment. Upon examination of the client's financial statements, the students discover that their client has been cheating the government out of several thousand dollars a year in taxes. Their client is a company owned by a couple who are in their late 50s and who have two children in college. Shannon and Ian are the only people other than the owners who are in a position to know about this situation. Which ethical principle should guide Shannon and Ian in their decision whether or not to report the owners to the Internal Revenue Service? Multiple Choice There should be no absolute limits put on what actions and behaviors fall inside the boundaries of what is ethically or morally right and which actions/behaviors fall outside. Ethical relativism should always be adhered to before ethical universalism when dealing within boundaries of a country's culture and norms. There is no such thing as "moral free space"—all ethical standards are determined by societal norms, and individuals have an implied social contract to live up to these standards. Adherence to universal ethical norms always takes precedence over local ethical norms. Few nations or cultures have common moral agreement on what is ethically right and wrong.

Adherence to universal ethical norms always takes precedence over local ethical norms. Explanation According to integrated social contracts theory, adherence to universal or "first-order" ethical norms should always take precedence over local or "second-order" norms.

Which company's unethical practices will tend to incur mainly internal administrative costs? Multiple Choice Company Y experiences massive customer defections when it is made public that it is engaging in price gouging, or selling low-cost products at high prices. Company W incurs penalties of $1.0 billion for auto and mortgage loan abuses. Company X pays its male employees higher wages than female employees even though it has been propagating messages of workplace equality and fair play. Company U must retrain its employees who are working in a toxic culture due to widespread reports of sexual harassment. Company V's tax evasion practices are revealed, leading to a dramatic drop in its stock price and simultaneously rising costs of debt.

Company U must retrain its employees who are working in a toxic culture due to widespread reports of sexual harassment. Explanation Among those in the listed responses to this question, only Company U incurs increased internal administrative costs since it must take corrective actions to revamp its HR department, as well as provide remedial education and ethics training to company personnel.

What is not part of the process of upgrading core competencies and competitive capabilities? Multiple Choice Core competencies have to be tweaked and adjusted to keep them fresh and responsive to changing customer needs and market conditions. Core competencies typically are lodged in the combined efforts of different work groups and departments. Core competencies tend to emerge gradually rather than blossom quickly. Core competencies can be leveraged into competitive advantage by concentrating sufficient effort and talent on deepening and strengthening them so that the firm achieves dominating depth and gains the capability to outperform rivals by a meaningful margin. Core competencies generally grow out of company efforts to master a strategy-critical technology or to invent and patent a valuable technology.

Core competencies generally grow out of company efforts to master a strategy-critical technology or to invent and patent a valuable technology. Explanation If the strategy being implemented is new, company managers may have to acquire new resources, significantly broaden or deepen certain capabilities, or even add entirely new competencies in order to put the strategic initiatives in place and execute them proficiently. A company's capabilities must be continually refreshed and renewed to remain aligned with changing customer expectations, altered competitive conditions, and new strategic initiatives. Since capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, they span a variety of departments and locations.

Nikki, CEO of an aspiring multinational craft vodka company, is researching cross-country differences in demographic, cultural, and market conditions. She would not likely discover that Multiple Choice Nike produces its own line of skate shoes. Latvia makes low-cost loans to U.S. vodka distillers to stimulate competition in its market. Keurig has acquired a large coffee farm in Costa Rica. Intel's silicon chips are identical across the world.

Latvia makes low-cost loans to U.S. vodka distillers to stimulate competition in its market. Explanation Buyer tastes for a particular product or service sometimes differ substantially from country to country. As it is the primary manufacturing base to some of the world's largest vodka distillers including Stolichnaya, the former Soviet republic of Latvia is unlikely to provide loans to U.S. rival entrants.

To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use the Multiple Choice barrier-to-entry test, the competitive advantage test, the growth test, and the stock price effect test. strategic fit test, the industry attractiveness test, the growth test, the dividend effect test, and the capital gains test. better-off test, the competitive advantage test, the profit expectations test, and the shareholder value test. attractiveness test, the cost of entry test, and the better-off test. profit test, the competitive strength test, the industry attractiveness test, and the capital gains test.

attractiveness test, the cost of entry test, and the better-off test. Explanation It is advantageous for a company to concentrate its activities in a limited number of locations when certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. Where just-in-time inventory practices yield big cost savings and/or where an assembly firm has long-term partnering arrangements with its key suppliers, parts manufacturing plants may be clustered around final-assembly plants.

From a strategy-implementing/strategy-executing perspective, operating budget allocations should Multiple Choice be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors. primarily be based on the number of new strategic initiatives being implemented in each operating department. be based on the number of people employed in each of the divisions. be strategy-driven and based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively. depend on how much stretch there is in each department's objectives and what additional resources are needed to help reach these performance targets.

be strategy-driven and based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively. Explanation Early in the strategy implementation process, managers must determine what resources (in terms of funding, people, and so on) will be required and how they should be distributed across the company's various organizational units. This includes carefully screening requests for such resources, approving those that will contribute to the strategy execution effort, and turning down those that don't.

Core competencies and competitive capabilities are usually Multiple Choice lodged in the narrow skills and specialized work efforts of a single department, as opposed to the combined expertise and capabilities of specialists scattered across several departments. built rapidly, usually in conjunction with important product innovations. found to result in competitive advantage when they involve highly specific technologies and are grounded in a company's own deep technical expertise. observed to stem from collaborative efforts with strategic allies. bundles of skills and know-how that most often grow out of the collaborative efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain.

bundles of skills and know-how that most often grow out of the collaborative efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. Explanation Capabilities develop incrementally along an evolutionary development path as organizations search for solutions to their problems. The process is a complex one, since capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.

What factor is not LIKELY responsible for Apple's decision to set up mobile phone manufacturing facilities in India? Multiple Choice global standardization of mobile phone technology comparatively lower exchange rate and political risks potential location advantages in wages, inflation rates, and tax rates that reduce costs growth potential of India's emerging market franchising opportunities in India

franchising opportunities in India

The Dow Jones sustainability index comprises the top 10 percent of the 2,500 companies listed in the Dow Jones World Index that excel in Multiple Choice economic performance, environmental performance, and social performance. mitigating the impact of climate change on the factory workers that make their products. corporate governance and climate change mitigation. economic performance and environmental performance. climate change mitigation and labor practices.

economic performance, environmental performance, and social performance.

Sometimes a company can short-circuit the task of building an organizational capability in-house by Multiple Choice putting in high-incentive bonuses to reward individual employees who train hard to develop the desired capability. using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed. empowering a team of employees to develop the capability however they best see fit. launching an extensive training effort to develop the capability quickly with newly hired employees. either acquiring a company that has already developed the capability or else acquiring the desired capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise.

either acquiring a company that has already developed the capability or else acquiring the desired capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise.

Imagine you are proposing that your organization reconfigure itself into a highly centralized organizational structure. Your major supporting rationale for proposing this change is that a highly centralized organizational structure Multiple Choice spurs new ideas and creative thinking, as well as allows for fast response to market change. encourages company employees to exercise initiative and act responsibly. requires fewer layers of management. promotes greater motivation and involvement in the business on the part of more company personnel. eliminates the potential for conflicting goals and actions on the part of lower-level managers.

eliminates the potential for conflicting goals and actions on the part of lower-level managers. Explanation A highly centralized structure eliminates the potential for conflicting goals and actions on the part of lower-level managers, fixes accountability through tight control from the top, and facilitates quick decision making and strong leadership under crisis situations. The other answers are advantages of decentralized structures.

A transnational strategy is sometimes referred to as a __________ strategy. Multiple Choice cross-border integrated synergistic global glocalization think-local, act-local think-global, act-global

glocalization

A viable strategy option for a local company when entering into competition with global challengers does not involve Multiple Choice transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale. developing business models to exploit shortcomings in local distribution networks or infrastructures. taking advantage of low-cost labor and other competitively important local workforce qualities. using acquisitions and rapid growth strategies to defend against expansion-minded multinationals. using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments.

using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments

What is not a recommended incentive when trying to gain employees' wholehearted commitment to good strategy execution and operating excellence? Multiple Choice relying on opportunities for promoting from within wherever possible withholding information from employees about financial performance, strategy, and competitors' actions creating a work atmosphere in which there is genuine caring and mutual respect among workers and between management and employees providing attractive perks and fringe benefits giving awards and public recognition to high performers and showcasing company successesIncorrect

withholding information from employees about financial performance, strategy, and competitors' actions

The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees. What would be their best approach? Multiple Choice Make the performance bonus at least 3 to 4 percent of base salary to have some impact. Make the performance bonus at least 10 to 12 percent of base salary to have some impact. Set unrealistic performance standards, but with an equally high compensation. Reward people who work very hard, even if they fall short of achieving performance targets.Incorrect Make the performance payoff equal for average and below-average performers.

Make the performance bonus at least 10 to 12 percent of base salary to have some impact. Explanation The performance payoff must be a major, not minor, piece of the total compensation package. Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak motivational impact. Moreover, the payoff for high-performing individuals and teams must be meaningfully greater than the payoff for average performers, and the payoff for average performers meaningfully bigger than that for below-average performers. The incentives must extend to all managers and all workers, not just top management. Also, if performance standards are set unrealistically high or if individual and group performance evaluations are not accurate and well documented, dissatisfaction with the system will overcome any positive benefits. It is also advisable to avoid rewarding effort rather than results. While it is tempting to reward people who have tried hard, gone the extra mile, and yet fallen short of achieving performance targets because of circumstances beyond their control, it is ill advised to do so.

Internal information business systems are primarily used to track data on Multiple Choice efforts by rivals to commit corporate espionage via hacking into virtual networks. competitive forces and competitor power. the company's stock price performance. the components of PESTEL analysis. financial and operating data.

financial and operating data.

Imagine that you are about to become the manager of a local chain consisting of four upscale restaurants. To prepare for the position, you have been reviewing the 10 managerial tasks of successful strategy execution. What would not be among those tasks? Multiple Choice managing the people, talents, and business processes of an operations-driven restaurant chain creating and nurturing a strategy-supportive culture across all restaurant locations directing organizational change and achieving continuous improvement in restaurant operations and business processes focusing on how market conditions impact your restaurant chain's resources and capabilities developing and meeting, or exceeding, performance targets consistently

focusing on how market conditions impact your restaurant chain's resources and capabilities

If management is to match a company's organization structure to its strategy in an effective way, then it is essential Multiple Choice that value chain activities be deliberately organized so as to produce maximum strategic fit. that company personnel be empowered to make both strategic decisions and operating decisions. for strategy-critical value-chain activities to be the main building blocks on the organization chart. to define the jobs of company personnel in terms of the functions to be performed rather than in terms of the results to be achieved. for the company to be organized around cross-functional teams rather than around functional specialties and functional departments.

for strategy-critical value-chain activities to be the main building blocks on the organization chart. Explanation Proficient strategy execution depends foremost on having in place an organization capable of the tasks demanded of it. Building an execution-capable organization is thus always a top priority. Three types of organization-building actions are paramount: (1) staffing the organization; (2) acquiring, developing, and strengthening the resources and capabilities required for good strategy execution; and (3) structuring the organization and work effort.It is important for management to build its organization structure around proficient performance of these three activities, making them the centerpieces or main building blocks on the organization chart.

The more a manager understands what motivates subordinates and the more he or she relies on motivational incentives as a tool for achieving the targeted strategic and financial results the Multiple Choice fewer the number of rivals will be attracted to enter the industry. greater the company's relative competitive strength in its industry. greater the employees' commitment to day-by-day strategy execution and achievement of performance targets. higher the incentives for employees to act ethically. greater the opportunity for the company to attune its value chains to the level of industry (buyer) demand.

greater the employees' commitment to day-by-day strategy execution and achievement of performance targets.

Coordinating the work efforts of internal organization units is best accomplished by Multiple Choice establishing a corporate culture where teamwork is a core value and decisions are made by general consensus among team leaders in the affected work units. establishing monetary incentives that reward people for being cooperative team players. having frequent meetings among the heads of closely related activities and work units to establish mutually agreeable deadlines. having the heads of support activities report to the heads of primary, strategy-critical activities. having closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision.

having closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision. Explanation Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel. In worker-empowered structures, jobs can be defined more broadly, several tasks can be integrated into a single job, and people can direct their own work.

A "best practice" standard Multiple Choice helps a company move toward performing its value chain activities more effectively and efficiently. is often sufficient justification for maintaining the status quo.Incorrect is the sole means of measuring whether or not a company performs a specific task or activity so as to achieve the lowest possible costs. is a measure of a company's core competence. conforms to established industry standards.

helps a company move toward performing its value chain activities more effectively and efficiently. Explanation A "best practice" refers to a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.

In 2020, Smithfield Foods, one of the nation's largest meat-packing companies, came under public scrutiny for refusing to disclose the number of positive novel coronavirus cases among its employees, as well as for its decision to export large amounts of meat to China while publicly warning about a looming meat shortage in the United States. Smithfield Foods's chief executive, Kenneth Sullivan, responded to critics of the company's actions by saying, "Processing plants were no more designed to operate in a pandemic than hospitals were designed to produce pork. In other words, for better or worse, our plants are what they are. Four walls, engineered design, efficient use of space, etc." How would you characterize Smithfield Foods' response in this situation? Multiple Choice Any strategy that increases the risk of continued scrutiny or eventual litigation would reflect badly on the character of Smithfield Foods' personnel. An ethical strategy would run counter to the self-interest of Smithfield Foods' shareholders, partly because an ethical strategy can reduce profits and partly because ethical behavior can impair employee productivity. A strategy that is perceived to be unethical but is actually ethical, but may be not good for business. Smithfield Foods' senior executives are correct in their assessment because it is considered to be an essential business. Smithfield Foods' customers in China will appreciate its efforts to sustain normal operations in the midst of a global health crisis.

A strategy that is perceived to be unethical but is actually ethical, but may be not good for business.

The implementation process is likely to be hampered by missed deadlines, misdirected efforts, and managerial ineptness if Multiple Choice top managers start asking tough, incisive questions. an additional investment in capital projects is required. important details require attention. a capable results-oriented management team is not in place. the personnel have different management styles.

a capable results-oriented management team is not in place.

When comparing and contrasting the differences between a localized multidomestic strategy and a global strategy you would not say that Multiple Choice a global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments). a global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country. a global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions. a global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries. a global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries.

a global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries. Explanation A multidomestic strategy is one in which a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. It is a think-local, act-local type of international strategy, facilitated by decision making decentralized to the local level. A global strategy is one in which a company employs the same basic competitive approach in all countries where it operates, sells standardized products globally, strives to build global brands, and coordinates its actions worldwide with strong headquarters control. It represents a think-global, act-global approach.

In formulating an action agenda to implement and execute a new or different strategy, the place for managers to begin is with Multiple Choice allocating more resources to strategy-critical parts of the business. a probing assessment of what the organization must do differently and better to carry out the strategy successfully. the task of revising and enhancing the company's core competencies. evaluating whether existing policies and procedures are adequately strategy-supportive. choosing which leadership style to employ in trying to carry out the strategy successfully.

a probing assessment of what the organization must do differently and better to carry out the strategy successfully. Explanation In devising an action agenda for executing strategy, managers should start by conducting a probing assessment of what the organization must do differently to carry out the strategy successfully.

Tiffany & Co. opted to enter into the mining industry in Canada in order to Multiple choice achieve lower costs and enhance the firm's competitiveness. access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa. build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market. gain access to new customers in new markets. capitalize on company competencies and capabilities.

access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa.

Imagine that you are the chief executive of an automobile manufacturer. Your management team brings you a proposal: Let's close a plant producing gasoline cars in Michigan and open one producing electric cars farther south. You must decide whether to approve the plan. Which action would typically be considered in crafting your company's strategy of social responsibility? Multiple Choice actions restricting community service endeavors by employees in order to maintain productivity and meet quotas actions to promote your shareholders' interests such as raising the dividend or boosting the stock price actions to ensure that your company provides relocation assistance and continuous employment for staff after the Michigan plant is closed actions that find loopholes in restrictive government regulations to permit the relaxation of workplace safety policies actions to increase profits by locating the new plant in a low-wage country like Mexico

actions to ensure that your company provides relocation assistance and continuous employment for staff after the Michigan plant is closed

The basic premise of unrelated diversification is that Multiple Choice the least risky way to diversify is to seek out businesses that are leaders in their respective industry. the task of building shareholder value is better served by seeking to stabilize earnings across the entire business cycle than by seeking to capture cross-business strategic fits. any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity. the best companies to acquire are those that offer the greatest economies of scope rather than the greatest economies of scale. the best way to build shareholder value is to acquire businesses with strong cross-business financial fit.

any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity. Explanation With a strategy of unrelated diversification, an acquisition is deemed to have potential if it passes the industry-attractiveness and cost-of-entry tests and if it has good prospects for attractive financial performance.

According to integrative social contracts theory, the ethical standards a company should try to uphold Multiple Choice are governed by the school of ethical universalism. are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not—but universal norms always take precedence over local ethical norms. should never be absolute but rather always provide some wiggle room according to the circumstances of the situation. should be determined by the company's board of directors. are governed by each country's Code of Required Ethical Conduct, which sets forth that each individual/group/business/organization has a "social contract" to observe the ethical and moral standards that the country has adopted.

are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not—but universal norms always take precedence over local ethical norms.

According to integrated social contracts theory, the ethical standards a company should try to uphold Multiple Choice should be determined by the company's moral managers. should be absolute and avoid wiggle room according to the circumstances of the situation. are governed by each country's Code of Required Ethical Conduct, which sets forth that each individual/group/business/organization has a "social contract" to observe the ethical and moral standards that the country has adopted. are governed both by a limited number of universal ethical principles and the circumstances of local cultures, traditions, and shared values. are governed by the school of ethical universalism.

are governed both by a limited number of universal ethical principles and the circumstances of local cultures, traditions, and shared values.

The advantages of manufacturing goods in a particular country and exporting them to foreign markets Multiple Choice are largely unaffected by tariffs or quotas. are greatest when local consumers prefer products manufactured inside the country's borders. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. are largely unaffected by fluctuating exchange rates.

are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. Explanation Four important factors shape a company's strategic approach to competing in foreign markets: (1) the degree to which there are important cross-country differences in demographic, cultural, and market conditions; (2) whether opportunities exist to gain a location-based advantage based on wage rates, worker productivity, inflation rates, energy costs, tax rates, and other factors that impact cost structure; (3) the risks of adverse shifts in currency exchange rates; and (4) the extent to which governmental policies affect the local business climate. Franchising opportunities are not among these four important factors.

The overriding aim in building a management team should be to Multiple Choice assemble a critical mass of talented managers who can function as agents of change, work well together as a team, and produce organizational results that are dramatically better than what one- or two-star managers acting individually can achieve. choose managers experienced in gathering competitive intelligence. ensure oversight of every step of the value chain. choose managers who are competent in executing a strategy to keep a company's costs lower than rivals and become the industry's low-cost leader. select people who have similar management styles, leadership approaches, business philosophies, and personalities.

assemble a critical mass of talented managers who can function as agents of change, work well together as a team, and produce organizational results that are dramatically better than what one- or two-star managers acting individually can achieve.

The three tests for judging whether a particular diversification move can create value for shareholders are the Multiple Choice attractiveness test, the cost of entry test, and the better-off test. shareholder value test, the cost of entry test, and the profitability test. strategic fit test, the competitive advantage test, and the return-on-investment test. attractiveness test, the profitability test, and the shareholder value test. resource fit test, the profitability test, and the shareholder value test.

attractiveness test, the cost of entry test, and the better-off test

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world Multiple Choice is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. is competitively disadvantaged when the euro declines in value against the Brazilian real. has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro. is competitively advantaged when the euro appreciates in value against the Brazilian real. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.

becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.

The moral case for why a company should actively promote the betterment of society and act in a manner benefiting all its stakeholders Multiple Choice is based on the conviction that improving the well-being of society ranks higher in priority and is certainly nobler than making a profit and serving the interests of shareholders. is based on the principle of treating people fairly and with respect. is based on the principle that business activities lack real legitimacy and have few socially redeeming qualities unless and until a company exerts a significant and sincere effort to give something back to the community. boils down to "it's the right thing to do." rests on the principle that a business is duty bound to fulfill its social contract to serve the interests of all stakeholders in a business enterprise.

boils down to "it's the right thing to do."

The nine-cell attractiveness-strength matrix provides clear, strong logic for considering using Multiple Choice only industry attractiveness in allocating resources and investment capital to its different businesses. both industry attractiveness and business strength in allocating resources and investment capital to its different businesses. only business strength in allocating resources and investment capital to the different businesses. both industry attractiveness and product strength in allocating resources and investment capital to its different businesses. both resource fit and product strength in allocating resources and investment capital to its different businesses.

both industry attractiveness and business strength in allocating resources and investment capital to its different businesses. Explanation The nine-cell attractiveness-strength matrix provides clear, strong logic for why a diversified company needs to consider both industry attractiveness and business strength in allocating resources and investment capital to its different businesses. A good case can be made for concentrating resources in those businesses that enjoy higher degrees of attractiveness and competitive strength, being very selective in making investments in businesses with intermediate positions on the grid, and withdrawing resources from businesses that are lower in attractiveness and strength unless they offer exceptional profit or cash flow potential.

In the order-processing section of General Electric's circuit breaker division, elapsed time from order receipt to delivery was cut from three weeks to three days by consolidating six production units into one, reducing a variety of former inventory and handling steps, automating the design system to replace a human custom-design process, and cutting the organizational layers between managers and workers from three to one. This is a good example of Multiple Choice performance yardsticks for judging effectiveness and efficiency for particular value chain activities and business processes that are deemed strategically critical. business process reengineering, to drive continuous improvement in how internal operations are and should be conducted. operating practices that generate economies of scale and scope. "best-in-company" operating activities and processes to standardize functions. benchmarking of operating activities and business processes against "best-in-industry" and "best-in-world" performers.

business process reengineering, to drive continuous improvement in how internal operations are and should be conducted.

Providing top-down guidance can aid the task of implementing strategy Multiple Choice provided it promotes greater use of and commitment to best practices and total quality management. because really effective internal policies and procedures are not easily duplicated by other firms. because astutely conceived policies or procedures can result in competitive advantage. by making it easier to impose tight budget controls and avoid wasting scarce resources. by helping align the actions and behavior of company personnel with the requirements for good strategy execution, placing limits on independent action, and helping overcome resistance to change.

by helping align the actions and behavior of company personnel with the requirements for good strategy execution, placing limits on independent action, and helping overcome resistance to change.

Critics of companies that use outsourcing contend that shifting responsibility for performing value chain activities to outside specialists Multiple Choice can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outside suppliers and short of the resource strengths to be a master of its own destiny. lowers the morale of company employees, dampens a company's ability to implement best practices, and results in greater bureaucracy and slower decision making. has the disadvantage of raising fixed costs and reducing variable costs and makes it harder to develop distinctive competencies. results in less organizational flexibility and leads to sometimes exorbitant costs in collaborating with outside suppliers and strategic partners. slows down decision making on key strategic issues because outside suppliers have to be consulted first.

can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outside suppliers and short of the resource strengths to be a master of its own destiny.

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following, except Multiple Choice shortening delivery times to customers by having geographically scattered distribution facilities. centralizing value chain activities to foster just-in-time inventory activities. being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions. being in a better position to choose where and how to challenge rivals. locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers.

centralizing value chain activities to foster just-in-time inventory activities. Explanation It is advantageous for a company to concentrate its activities in a limited number of locations when certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. Where just-in-time inventory practices yield big cost savings and/or where an assembly firm has long-term partnering arrangements with its key suppliers, parts manufacturing plants may be clustered around final-assembly plants.

Ethical principles as they apply to the conduct of personnel and business decisions Multiple Choice are generally less stringent than the ethical principles for society at large because it is well understood that businesses should not be expected to operate any differently than what the law requires of them. deal chiefly with standards a company has about what is right and wrong insofar as the conduct of its business is concerned and about what behaviors are expected of company personnel. deal chiefly with the behaviors that a company's board of directors expects of all company personnel in both their conduct on the job and off the job. deal primarily with the company's duty to comply with legal requirements and conform to ethical norms of society, in general. involve the rules a company's top management and board of directors make about "what is right" and "what is wrong."

deal primarily with the company's duty to comply with legal requirements and conform to ethical norms of society, in general.

A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because Multiple Choice changes in strategy often require resource reallocation, and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently. lean, carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash. lean, strictly enforced budgets are management's best and most used means of getting organizational units to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner. tight budget control is management's most powerful tool for first-rate strategy execution. accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do in carrying out management's directives to execute the chosen strategy proficiently.

changes in strategy often require resource reallocation, and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently. Explanation A company's ability to marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution process. Too little funding and an insufficiency of other types of resources slow progress and impede the efforts of organizational units to execute their pieces of the strategic plan proficiently. Too much funding and an overabundance of other resources waste organizational resources and reduce financial performance. Both outcomes argue for managers to be deeply involved in reviewing budget proposals and directing the proper kinds and amounts of resources to strategy-critical organizational units. A change in strategy nearly always calls for budget reallocations and resource shifting.

A company's social responsibility strategy typically comprises Multiple Choice conscious efforts to ensure that all elements of the company's strategy are ethical and that its actions protect or enhance the environment (beyond what is legally required). making trade-offs between the betterment of profits versus the quality of life in the local community in which it operates. actions to enhance workforce homogeneity. ensuring the company's pricing and profits will not be viewed by the general public as obscenely high or exorbitant. lobbying the government to rescind workplace safety and environmental regulations.

conscious efforts to ensure that all elements of the company's strategy are ethical and that its actions protect or enhance the environment (beyond what is legally required).

Six Sigma quality control Multiple Choice is a powerful tool for companies whose customers are very picky about product quality and product performance and who can't afford for the product they use to break down and require repairs. consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints per million customer transactions. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process. is a strategy implementer's best, most reliable tool for simultaneously achieving top-notch product quality and low manufacturing costs.

consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process. Explanation Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes. When performance of an activity or process reaches "Six Sigma quality," there are no more than 3.4 defects per million iterations (equal to 99.9997 percent accuracy).

Delegating greater authority to subordinate managers and employees Multiple Choice is very risky because it usually results in lots of "bad" decisions on the part of employees, as well as lower levels of financial performance. creates a more horizontal or flatter organizational structure with fewer management layers and usually acts to shorten organizational response times. can be a demotivating factor because it requires people to take responsibility for their decisions and actions. usually slows down decision making because so many more people are involved and it takes longer to reach a consensus on what to do and when to do it. enhances greater cross-unit coordination and aids the capture of strategic fit benefits across related businesses.

creates a more horizontal or flatter organizational structure with fewer management layers and usually acts to shorten organizational response times. Explanation Decentralized organizational structures have much to recommend them. Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel.

Among the factors that do not determine whether to employ entry strategy options are Multiple Choice cross-border transfer activities and home country advantages. country-specific factors such as trade barriers and transaction costs, such as the cost of contracting with a partner and monitoring compliance with the terms of the contract. the nature of the firm's objectives and trade barriers. transaction costs, such as the cost of contracting with a partner and monitoring compliance with the terms of the contract. whether the firm has a full range of resources and capabilities needed to operate abroad along with trade barriers.

cross-border transfer activities and home country advantages.

Profit sanctuaries are country markets or geographic regions where a company Multiple Choice creates substantial investment strategies because it is losing competitive advantage over competitors. possesses good strategic fit with other businesses and identifies the value chain where this fit occurs. invests its dividends in expanding its foreign market presence. can rank the competitive advantage opportunities in each industry. derives substantial profits because of its protected market position or unassailable competitive advantage.

derives substantial profits because of its protected market position or unassailable competitive advantage.

To create value for shareholders via diversification, a company must Multiple Choice get into new businesses that are profitable. spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries. diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses. diversify into businesses that have either key success factors or value chains that are similar to its present businesses. diversify into industries that are growing rapidly.

diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses. Explanation Diversification cannot be considered a success unless it results in added shareholder value—value that shareholders cannot capture on their own by spreading their investments across the stocks of companies in different industries.

Strategies to restructure a diversified company's business lineup involve Multiple Choice divesting low-performing businesses that do not fit and acquiring new ones where opportunities are more promising to put a new face on the company's business makeup. broadening the scope of diversification to include a larger number of smaller and more diverse businesses. revamping the strategies of its different businesses, especially those that are performing poorly. focusing on restoring the profitability of its money-losing businesses and thereby improving the company's overall profitability. revamping the value chains of each of a diversified company's businesses.

divesting low-performing businesses that do not fit and acquiring new ones where opportunities are more promising to put a new face on the company's business makeup. Explanation Corporate strategic options for diversified companies include sticking closely with the existing business lineup and pursuing the opportunities these businesses present, broadening the company's business scope by making new acquisitions in new industries, divesting certain businesses and retrenching to a narrower base of business operations, and restructuring the company's business lineup and putting a whole new face on the company's business makeup.

The likelihood of ethical lapses as well as poor long-term company performance tends to increase when there is/are Multiple Choice hiring and maintaining a skilled and diverse workforce. executive commitment to implementing strategic suggestions from the board of directors. attracting investors who think the company's industry will grow. dramatic cuts in research and development expenditures in years when low earnings are reported by the company. increases in research and development expenditures in years when low earnings are reported by the company.

dramatic cuts in research and development expenditures in years when low earnings are reported by the company. Explanation Short-termism is the tendency for managers to focus excessively on short-term performance objectives at the expense of longer-term strategic objectives. It has negative implications for the likelihood of ethical lapses as well as company performance in the longer run. Companies that decrease spending on research and development use a short-term approach to profit maximization.

Well-conceived policies and operating procedures facilitate good strategy execution by Multiple Choice removing roadblocks to creativity and innovation. channeling individual and group efforts along a strategy-supportive path.Incorrect fostering a work climate that preserves the status quo whenever possible. enforcing consistency in how strategy-critical activities are performed. leaving it up to employees regarding how things are to be done.

enforcing consistency in how strategy-critical activities are performed. Explanation Well-conceived policies and operating procedures facilitate strategy execution by providing top-down guidance regarding how things are to be done, ensuring consistency in how execution-critical activities are performed, promoting the creation of a work climate that facilitates good strategy execution, and channeling individual and group efforts along a strategy-supportive path.

Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically Multiple Choice aim at creating a no-pressure/no-adverse-consequences work environment. use only positive rewards and never involve the use of tension, fear, job insecurity, stress, or anxiety. entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently negative consequences when actual performance falls short of the target. put top priority on making employees happy and secure in their jobs. entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing nonmonetary rewards, like cash bonuses for high-performing employees.

entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently negative consequences when actual performance falls short of the target.

The idea behind benchmarking and best practices is to Multiple Choice identify which companies are the best performers of a strategically relevant activity and then copy their methods exactly. identify companies that are the best performers of an activity and then adapt their practices to fit the company's own specific circumstances and operating requirements. perform each activity in the industry value chain according to standard industry practice and then regularly benchmark the company's performance to see if it is actually achieving the industry standard. search the world for a company that performs a strategically relevant task or value chain activity at the lowest possible cost and then use business process reengineering techniques to try to meet or beat the costs of the world's low-cost performer of that activity. determine whether a company has a world-class value chain.

identify companies that are the best performers of an activity and then adapt their practices to fit the company's own specific circumstances and operating requirements.

Despite their obvious benefits, think-local, act-local strategies have all of the following drawbacks except Multiple Choice in globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries. in global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries. with multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries. in global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes. in multidomestic competition, there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets.

in global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes. Explanation When a company's competitive approach and product offering vary from country to country, the nature and size of any resulting competitive edge also tends to vary.

It is ideal for key management slots to be filled from outside Multiple Choice in a worst-case scenario. in a centralized structure. when problems with the old strategy are obvious. when the managerial whole is greater than the sum of individual efforts. in turnaround and rapid-growth situations.

in turnaround and rapid-growth situations. Explanation In turnaround and rapid-growth situations, and in instances when a company doesn't have insiders with the requisite know-how, filling key management slots from the outside is a standard organization-building approach.

The strategic options to improve a diversified company's overall performance do not include which of the following categories of actions? Multiple Choice pursuing multinational diversification and striving to globalize the operations of several of the company's business units divesting weak-performing businesses and retrenching to a narrower base of business operations increasing dividend payments to shareholders and/or repurchasing shares of the company's stock broadening the company's business scope by making new acquisitions in new industries restructuring the company's business lineup with a combination of divestitures and acquisitions to put a whole new face on the company's business makeup

increasing dividend payments to shareholders and/or repurchasing shares of the company's stock

The businesses in a diversified company's lineup exhibit good resource fit when Multiple Choice each business generates just enough cash flow annually to fund its own capital requirements and thus does not require cash infusions from the corporate parent. there are enough cash cow businesses to support the capital requirements of the cash hog businesses. the resource requirements of each business exactly match the resources the company has available. each business unit produces sufficient cash flows over and above what is needed to build and maintain the business, thereby providing the parent company with enough cash to pay shareholders a generous and steadily increasing dividend. individual businesses have matching resource requirements at points along their value chain and add to a company's overall resource strengths and when solid parenting capabilities exist without spreading itself too thin.

individual businesses have matching resource requirements at points along their value chain and add to a company's overall resource strengths and when solid parenting capabilities exist without spreading itself too thin.

Essential state-of-the-art operating and information systems that support Amazon's strategies and value-creating internal processes encompass Multiple Choice barometers and benchmarking data. information systems to track supplier/partner/collaborative ally data. data management systems for undertaking benchmarking, TQM, and Six Sigma quality control.Incorrect competitor intelligence databases. systems to secure corporate espionage data.

information systems to track supplier/partner/collaborative ally data.

Profit sanctuaries are found to differ by a company's strategy, such that a(n) Multiple Choice company competing in a few country markets has more profit sanctuaries. globally competitive company generally has a profit sanctuary outside its home market in countries where it is a market leader and enjoys a strong competitive position. transnational company has profit sanctuaries in every country where it operates. domestic-only company has access to many profit sanctuary locations worldwide. international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share

international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share. Explanation When a company's competitive approach and product offering vary from country to country, the nature and size of any resulting competitive edge also tends to vary.

Corporate restructuring strategies Multiple Choice focus on broadening the scope of diversification to include a larger number of businesses and boosting the company's growth and profitability. entail selling off marginal businesses to free up resources for redeployment to the remaining businesses. entail reducing the scope of diversification to a smaller number of businesses. involve making major changes in a diversified company's business lineup, divesting some businesses and/or acquiring others, so as to put a whole new face on the company's business lineup. focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability.

involve making major changes in a diversified company's business lineup, divesting some businesses and/or acquiring others, so as to put a whole new face on the company's business lineup.

Business process reengineering Multiple Choice is the major tool that ambidextrous organizations deploy to drive continuous improvement efforts. is typically cheaper and easier than using Six Sigma techniques to achieve the same cost savings. is a company's best justification for eliminating all nonmonetary rewards and incentives for its employees. is not a useful tool for streamlining a company's work effort and moving it closer to operational excellence. involves radically redesigning and streamlining the workflow (typically enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.

involves radically redesigning and streamlining the workflow (typically enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.

Implementing and executing a company's strategy Multiple Choice is primarily a responsibility of all company personnel because all personnel are active participants in the strategy execution process and their actions have a huge impact on the ultimate outcome. is primarily a task for middle and lower-level managers because it is they who have responsibility for pushing the needed changes all the way down to the lowest levels of the organization. should be delegated to a chief strategy implementer appointed by the chief executive officer. is primarily the job of the company's board of directors since they direct the actions and policies of the top senior executives in executing the strategy. is a task for every manager and the whole management team, but ultimate responsibility for success or failure falls upon the top senior executives, especially the chief executive officer of the company.

is a task for every manager and the whole management team, but ultimate responsibility for success or failure falls upon the top senior executives, especially the chief executive officer of the company.

Reengineering how a firm performs a business process Multiple Choice is the most frequently used tool of total quality management (TQM). is typically cheaper and easier to do than using Six Sigma techniques to achieve the same cost savings. is usually a company's most important "best practice" for achieving operating excellence. requires that a company have many strategic partnerships and alliances with outsiders. is a tool for pulling the pieces of strategy-critical processes out of different departments and unifying their performance in a single department or cross-functional work group.

is a tool for pulling the pieces of strategy-critical processes out of different departments and unifying their performance in a single department or cross-functional work group.

Companies often implement a transnational strategy because it Multiple Choice is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner.Correct is the least complex and easiest to implement of all the strategy choices. combines flexible coordination with the pursuit of conflicting objectives simultaneously. is capable of achieving an efficiency potential through centralized decision making and strong headquarters control. provides an easy mode of operating to transfer and share resources and capabilities across borders.

is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner.

The degree of cross-country variability in paying bribes and kickbacks to grease business transactions Multiple Choice violates ethical principles of right and wrong in all countries. is ethically acceptable according to the principle of ethical universalism and ethically unacceptable according to the principle of ethical relativism. is more acceptable in dealing with a company's suppliers than in dealing with a company's customers. is acceptable to immoral managers but not to amoral managers. is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others.

is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others. Explanation In many countries it is normal to make payments to prospective customers in order to win or retain their business. Some people stretch to justify the payment of bribes and kickbacks on grounds that bribing government officials to get goods through customs or giving kickbacks to customers to retain their business or win new orders is simply a payment for services rendered, in the same way that people tip for service at restaurants.

The nine-cell industry attractiveness competitive strength matrix pinpoints what strategies are most appropriate for businesses positioned in the three top cells of the matrix, but is less clear about the best strategies for businesses positioned in the bottom six cells.Incorrect is useful for helping decide which businesses should have high, average, and low priorities in deploying corporate resources. identifies which sister businesses have the highest level of resource fit. identifies which sister businesses have the greatest strategic fit. indicates which businesses are cash hogs and which are cash cows.

is useful for helping decide which businesses should have high, average, and low priorities in deploying corporate resources.

A "think-local, act-local" multidomestic strategy works particularly well in all of the following situations, except when there are Multiple Choice significant country-to-country differences in distribution channels and marketing methods. large demands to pursue conflicting objectives simultaneously. regulations enacted by the host governments requiring that products sold locally meet strictly defined manufacturing specifications or performance standards. significant country-to-country differences in customer preferences and buying habits. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country.

large demands to pursue conflicting objectives simultaneously. Explanation A multidomestic strategy is one in which a company varies its product offering and competitive approach from country to country in an effort to meet differing buyer needs and to address divergent local-market conditions. It involves having plants produce different product versions for different local markets and adapting marketing and distribution to fit local customs, cultures, regulations, and market requirements. A think-local, act-local approach is possible only when decision making is decentralized, giving local managers considerable latitude for crafting and executing strategies for the country markets they are responsible for.

Visible costs that are incurred by companies and imposed for ethical wrongdoing include all of the following except Multiple Choice government fines and penalties. lower dividends for shareholders. civil penalties arising from class-action lawsuits or other litigation. legal and investigative costs. lower stock prices.

legal and investigative costs. Explanation Legal and investigative costs are internal administrative costs incurred by a company involved in implementing unethical strategies.

When a company's social responsibility initiatives become part of the way it operates its business every day, these initiatives are Multiple Choice likely to be fully effective in creating a competitive advantage. implausible to advance a positive, high-energy workplace environment. ambiguous and rarely make a difference in the way the company does business. heavily dependent on encouraging employee morality. normally based on a corporate social agenda.

likely to be fully effective in creating a competitive advantage. Explanation Unless a company's social responsibility initiatives become part of the way it operates its business every day, the initiatives are unlikely to catch fire and be fully effective.

Larger firms with more complex organizational structures are Multiple Choice not decentralized due to their operating size. less decentralized in their decision making than larger firms with simpler structures. more centralized in their decision making than smaller firms. more decentralized in their decision making than smaller firms. less decentralized in their decision making than smaller firms.

more decentralized in their decision making than smaller firms.

Well-conceived, state-of-the-art information and operating systems Multiple Choice help managers run a tight ship and preserve strong, centralized control over internal activities. make it simple and easy-to-spot cost overruns and inefficiencies. are valuable tools for shortening a company's value chain, boosting workforce morale and productivity, and simplifying the task of adopting best practices. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). are essential because business process reengineering efforts, TQM, Six Sigma, and benchmarking programs can't be carried out effectively without them.

not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). Explanation Well-conceived state-of-the-art operating systems not only enable better strategy execution but also strengthen organizational capabilities—enough at times to provide a competitive edge over rivals.

Companies aspiring for global market leadership have to prioritize competing in the markets Multiple Choice where they do not possess a strong competitive disadvantage compared with the domestic market leaders. where business risks are lowest. of emerging countries. of advanced industrialized nations. where high barriers to entry and government regulations protect incumbent firms.

of emerging countries.

Tiffany and Zulema have asked you for advice about strategic partners in Canada and Mexico to launch a new food truck locator app. You explain to them that the major pitfalls associated with pursuing strategic alliances with foreign partners are not likely to include Multiple Choice reaching mutually agreeable ways to deal with key issues or launching new initiatives fast enough to stay abreast of rapid advances in technology or shifting market conditions. discovering that a local partner has conflicting objectives and strategies, deep differences of opinion about how to proceed, or important differences in corporate values and ethical standards. offer a way to test the value and viability of a cooperative arrangement with a foreign partner before making a more permanent commitment. learning that a local partner's knowledge and expertise turns out to be less valuable than expected with respect to development and execution of mobile app-based businesses. overcoming language and cultural barriers and figuring out how to deal with diverse (or conflicting) operating practices.

offer a way to test the value and viability of a cooperative arrangement with a foreign partner before making a more permanent commitment.

A dynamic capability is the Multiple Choice functional and operating resources management process. most compelling product or service in a firm. ongoing capacity to modify existing resources and capabilities to create new ones. ongoing capability to understand and establish a rival commitment to resource alignment. improvement evaluation process for eliminating waste in the firm.

ongoing capacity to modify existing resources and capabilities to create new ones.

Common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, also known as ethical universalism, gives rise to Multiple Choice principles embodied in international law that all societies and countries are obliged to practice. standards of what's ethical and what's unethical, applicable to all businesses in all countries, irrespective of local business traditions and local business norms. principles that set forth the traits and behaviors considered virtuous, that is, which a good person is supposed to believe in and display. principles of right and wrong in judging the ethical correctness of business behavior. standards of what constitutes ethical and unethical behavior in business situations that are partly universal, but mainly are governed by local business norms.

principles that set forth the traits and behaviors considered virtuous, that is, which a good person is supposed to believe in and display. Explanation Common moral agreement about right and wrong actions and behaviors across multiple cultures and countries gives rise to universal ethical standards that apply to members of all societies, all companies, and all businesspeople. Thus, adherents of the school of ethical universalism maintain that it is entirely appropriate to expect all businesspeople to conform to these universal ethical standards.

Sourcing a supply from a small, women-owned business is an example of a corporate social responsibility action to Multiple Choice enhance employee well-being. support philanthropy. ensure honorable and ethical action. protect and sustain the environment. promote workforce diversity.

promote workforce diversity.

At the time when the French conglomerate LVMH (Louis Vuitton Moët Hennessy) was considering acquiring the American jeweler Tiffany & Company, LVMH management needed to determine whether or not there were opportunities to strengthen the business and strengthen its competitive advantage by Multiple Choice forcing cultural independence, operating diversity, and sophisticated analytical responsibility on Tiffany & Company in order to ensure compatibility with LVMH's corporate overhead identity. expanding into additional businesses such as Tiffany & Company that would unlock possibilities for a comprehensive cost enhancement strategy. refocusing LVMH's existing businesses on new substitute product-line opportunities outside the existing luxury goods industry framework. purchasing a powerful and well-known brand name, Tiffany & Company, that could be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. restructuring the entire company by adding and removing businesses to improve LVMH's overall performance.

purchasing a powerful and well-known brand name, Tiffany & Company, that could be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses

Business process reengineering is a tool for Multiple Choice radically redesigning and streamlining how an activity (workflow) is performed, by pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group. making the most effective use of Six Sigma techniques. the rapid redesign of an organization's structure so as to quickly create organizational competencies and capabilities. instituting total quality management. expediting the redesign of existing products and shortening the design-to-market cycle.

radically redesigning and streamlining how an activity (workflow) is performed, by pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group.

The value of determining the relative competitive strength of each business a company has diversified into is to have a quantitative basis for Multiple Choice identifying which businesses have large/small competitive advantages or competitive disadvantages vis-à-vis the rivals in their respective industries. comparing resource strengths and weaknesses, business by business. rating them from strongest to weakest in terms of contributing to the corporate parent's profitability. rating them from strongest to weakest in terms of contributing to the corporate parent's revenue growth. rating them from strongest to weakest in contending for market leadership in their respective industries.

rating them from strongest to weakest in contending for market leadership in their respective industries. Explanation Doing an appraisal of each business unit's strength and competitive position in its industry provides a basis for ranking the units from competitively strongest to competitively weakest and sizing up the competitive strength of all the business units as a group. Business units with competitive-strength ratings above 6.7 (on a scale of 1 to 10) are strong market contenders in their industries. Businesses with ratings in the 3.3 to 6.7 range have moderate competitive strength vis-à-vis rivals. Businesses with ratings below 3.3 are in competitively weak market positions. If a diversified company's business units all have competitive-strength scores above 5, it is fair to conclude that its business units are all fairly strong market contenders in their respective industries.

Valid business reasons for why companies should act in a socially responsible manner do not include Multiple Choice reducing the triple bottom line. acting in the best interest of shareholders in terms of increased stock price and financial performance. generating internal benefits (such as improved employee recruiting, workforce retention, training, and worker productivity). reducing the risk of reputation-damaging incidents. increasing buyer patronage and customer loyalty.

reducing the triple bottom line.

Initiating actions to boost the combined performance of the corporation's collection of businesses includes all of the following strategic options, except Multiple Choice broadening the scope of diversification by entering additional industries. divesting some businesses and retrenching to a narrower collection of businesses. refocusing the existing businesses on new substitute product-line opportunities outside the existing industry framework. sticking closely with the existing business lineup and pursuing available opportunities. restructuring the entire company by adding and removing businesses to improve overall performance.

refocusing the existing businesses on new substitute product-line opportunities outside the existing industry framework.

Designing a reward and incentive system that helps promote good strategy execution would not be characterized by Multiple Choice minor payoffs as a piece of the total compensation package. extending the program to all managers and all employees, not just top management. being administered with scrupulous objectivity and fairness. ensuring that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect. rewarding nonperformers who, despite expending tremendous effort, have not fared well in achieving the benchmarks under the incentive system.

rewarding nonperformers who, despite expending tremendous effort, have not fared well in achieving the benchmarks under the incentive system.

ExxonMobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for ExxonMobil to opt for this strategic alliance? Multiple Choice to better compete with Gazprom to gain access to new customers to restrict its factors of production to gain access to low-cost inputs of production to scale back its core competencies

to gain access to low-cost inputs of production

Calculating quantitative attractiveness ratings for the industries that a company has diversified into involves Multiple Choice determining each industry's key success factors, calculating the ability of the company to be successful at meeting or exceeding each industry benchmark, and obtaining overall measures of the firm's ability to compete successfully in each of its industries based on the combined ratings of industry benchmarks. determining each industry's competitive advantage factors, calculating the ability of the company to be successful on each competitive advantage factor, and obtaining overall measures of the firm's ability to achieve sustainable competitive advantage in each of its industries based on the combined competitive advantage factor ratings. identifying each industry's average profitability, rating the difficulty of achieving average profitability in each industry, and deciding whether the company's prospects for above-average profitability are attractive or unattractive, industry by industry. rating the attractiveness of each industry's strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to interpret the attractiveness of all the industries, both individually and as a group.

selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to interpret the attractiveness of all the industries, both individually and as a group. Explanation Calculating quantitative competitive strength ratings for each of a diversified company's business units involves selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, and multiplying the strength ratings by the assigned weight to obtain a weighted rating. The sum of the weighted ratings across all the strength measures provides a quantitative measure of a business unit's overall market strength and competitive standing.

Marianne has opened a jewelry shop in your community and sources precious gems and metals only from Canada rather than Africa. Her rationale for her CSR and environmentally sustainable business practices includes all of the following except Multiple Choice creating opportunities for revenue enhancement and best long-term profits for shareholders. reducing her exposure to the risk of reputation-damaging incidents. increasing buyer patronage. lowering costs and enhancing employee recruiting and workforce retention. shortening the supply chain.

shortening the supply chain. Explanation A strong visible social responsibility or environmental sustainability strategy gives a company like Marianne's jewelry shop an edge in appealing to consumers who prefer to do business with companies that are good corporate citizens, thereby increasing buyer patronage.

Building an organization capable of good strategy execution entails Multiple Choice decentralizing authority for performing strategy-critical value chain activities, establishing at least two distinctive competencies, and hiring talented employees. empowering employees, maximizing internal operating efficiency, and optimizing core competencies. staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort. centralizing authority in the hands of a chief strategy implementer so as to create the leadership authority for driving implementation forward at a rapid pace. investing heavily in employee training, using an empowered organization design and organization structure in order to maximize labor productivity, and employing effective incentive compensation systems.

staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort. Explanation Despite the need to tailor a company's strategy-executing approaches to the particulars of the situation at hand, certain managerial bases must be covered no matter what the circumstances. These include 10 basic managerial tasks: 1. Staffing the organization with managers and employees capable of executing the strategy well. 2. Developing the resources and organizational capabilities required for successful strategy execution. 3. Creating a strategy-supportive organizational structure. 4. Allocating sufficient resources (budgetary and otherwise) to the strategy execution effort. 5. Instituting policies and procedures that facilitate strategy execution. 6. Adopting best practices and business processes to drive continuous improvement in strategy execution activities. 7. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently. 8. Tying rewards and incentives directly to the achievement of strategic and financial targets. 9. Instilling a corporate culture that promotes good strategy execution. 10. Exercising the internal leadership needed to propel strategy implementation forward.

One of the big weaknesses of organization structures that do not have cross-business collaboration is Multiple Choice that pieces of strategically relevant activities and capabilities often end up scattered across many departments, with each pursuing its own priorities, projects, and agendas. making it hard to fix managerial accountability for poor results. impeding the use of outsourcing. making it hard to effectively empower employees. making it difficult to have closely related activities report to a single executive.

that pieces of strategically relevant activities and capabilities often end up scattered across many departments, with each pursuing its own priorities, projects, and agendas.

Maya has chosen to research the export strategies of several global products. She would consider a good example of a DOMINANT export strategy to be Multiple Choice American Airlines' common stock, which is owned by AMR Corp., but is not available for public purchase. the popular Harry Potter character Voldemort, which can only be leased or rented for use by amusement park operators. the United States, which is home to the world's three largest producers and suppliers of artificial heart valves. ZipCar, which allows taxi fleet operators to use its trademarks, services, and products for a fee. Facebook, which generates 51 percent of its advertising revenue outside the United States.

the United States, which is home to the world's three largest producers and suppliers of artificial heart valves. Explanation The top three artificial heart valve manufacturers use U.S. domestic plants as a production base for exporting goods to foreign markets. It is a conservative way to dominate international markets.

The tests of whether a diversified company's businesses exhibit resource fit do not include whether Multiple Choice the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money. the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into. a business adequately contributes to achieving the corporate parent's performance targets. the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses. the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating.

the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money. Explanation To exhibit resource fit, it is not critical for a diversified company to check whether it has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.

A firm's organizational structure is composed of Multiple Choice the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered. a number of independent functional units involved in some common undertaking, with one unit typically in a more central role. resource strengths and competitive capabilities that allow it to incorporate attributes at lower costs than rivals whose products have similar attributes. sustainable distinctive competencies to ensure cost reduction and competitiveness. superior marketing and sales skills to convince buyers to pay a premium price for the attributes/features incorporated in its product.

the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered.

What makes related diversification an attractive strategy? Multiple Choice the potential for improving the stability of the company's financial performance the added capability it provides in overcoming the barriers to entering foreign markets the ability to broaden the company's product line the opportunity to convert cross-business strategic fit into competitive advantage over business rivals whose operations don't offer comparable strategic fit benefits the ability to serve a broader spectrum of buyer needs

the opportunity to convert cross-business strategic fit into competitive advantage over business rivals whose operations don't offer comparable strategic fit benefits Explanation What makes related diversification an attractive strategy is the opportunity to convert cross-business strategic fit into a competitive advantage over business rivals whose operations do not offer comparable strategic-fit benefits.

The contentions that (1) many of the same standards of what's ethical and what's unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances, are defining beliefs of which of the following? Multiple Choice the school of ethical universalism but not the school of ethical relativism the school of ethical relativism but not integrative social contracts theory the school of ethical relativism and the school of ethical universalism the school of ethical relativism but not the school of ethical universalism integrative social contracts theory but not the school of ethical universalism

the school of ethical universalism but not the school of ethical relativism

Short-termism is defined as Multiple Choice the tendency for managers to focus on immediate performance objectives at the expense of longer-term strategic objectives. making assessments of the moral character of a company's managers. assessing the short-term costs of complying with government regulations. assessing the costs and damages to the company's reputation as a result of ethical violations. weighing the short-term costs of regulatory compliance with the long-term costs of noncompliance.

the tendency for managers to focus on immediate performance objectives at the expense of longer-term strategic objectives.

Cross-business strategic fit in a diversified enterprise is not normally achieved when Multiple Choice related diversification produces a synergistic performance outcome. a company can transfer its brand-name reputation to the products of a newly acquired business and add to the competitive power of the new business. the value chain activities of unrelated businesses possess economies of scope and good financial fit. two businesses present opportunities to economize on marketing, selling, and distribution costs. the management know-how accumulated in one business is transferable to the other.

the value chain activities of unrelated businesses possess economies of scope and good financial fit.

A weighted industry attractiveness assessment is generally analytically superior to an unweighted assessment because Multiple Choice a weighted ranking identifies which industries offer the best/worst long-term profit prospects. an unweighted ranking doesn't discriminate between strong and weak industry driving forces and industry competitive forces. an unweighted ranking doesn't help identify which industries have the easiest and hardest value chains to execute. it does a more accurate job of singling out which industry key success factors are the most important. the various measures of attractiveness are not likely to be equally important in determining overall attractiveness.

the various measures of attractiveness are not likely to be equally important in determining overall attractiveness.

The essential requirement for different businesses to be "related" is that Multiple Choice the products of the different businesses are sold in the same types of retail stores. their value chains exhibit competitively valuable cross-business commonalities. the production methods they employ both entail economies of scale. the products of the different businesses are bought by many of the same types of buyers. the businesses have several key suppliers in common.

their value chains exhibit competitively valuable cross-business commonalities. Explanation Businesses are said to be related when their value chains exhibit competitively important cross-business commonalities.

The big issue an acquisition-minded firm must consider is whether Multiple Choice to pay a very high premium price that sends a signal to the market that the new firm has arrived. to acquire the firm at a price that cannot recapture the investment. to pay a price that builds in all the synergistic advantages to the acquired firm. to require the acquired firm's resources and management capability to sustain the ongoing struggling operation. to pay a premium price for a successful local company or to buy a struggling firm at a discount price.

to pay a premium price for a successful local company or to buy a struggling firm at a discount price. Explanation A company may opt to expand outside its domestic market for any of five major reasons: (1) to gain access to new customers; (2) to achieve lower costs through economies of scale, experience, and increased purchasing power; (3) to gain access to low-cost inputs of production; (4) to further exploit its core competencies; and (5) to gain access to resources and capabilities located in foreign markets. Companies in industries based on natural resources (e.g., oil and gas, minerals, rubber, and lumber) often find it necessary to operate in the international arena since raw-material supplies are located in different parts of the world and can be accessed more cost effectively at the source.

Which of the following rationales for pursuing unrelated diversification is likely to increase shareholder value? Multiple Choice to chance that market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses to restructure an underperforming business to enable a company to achieve rapid or continuous growth to provide benefits to managers such as high compensation and reduced unemployment risk to reduce risk by way of spreading the company's investments over a set of truly diverse industries

to restructure an underperforming business Explanation Risk reduction, rapid growth, stabilization of earnings, and managerial motives are misguided reasons for pursuing unrelated diversification to increase shareholder value.

Although ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives, Multiple Choice top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.

top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units. Explanation Top-level managers must rely on the active support of middle and lower managers to institute whatever new operating practices are needed in the various operating units to achieve proficient strategy execution. Middle and lower-level managers must ensure that frontline employees perform strategy-critical value chain activities well and produce operating results that allow companywide performance targets to be met.