Chapter 12 Business Policy Final, Chapter 11 Business Policy Final, chapter 9 Business Policy Final, Chapter 10 Business Policy Final
A firm is said to be pursuing a polycentric innovation strategy when:
It draws from multiple, equally important research facilities and production to developing markets.
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP?
It enabled HP to compete head on with Cisco's videoconferencing solution.
Which of the following statements is true of an international strategy?
It enables firms to leverage their home-based core competencies in foreign markets.
What was Goldman Sachs' rebuttal to SEC's claim that it defrauded investors?
It is up to the clients to assess the risks involved in any investments.
According to the agency theory, _____
conflicts that arise in corporations should be addressed in the legal realm
In which of the following situations is pursuing an international strategy advisable?
When a firm enjoys a large domestic market, strong reputation, and brand name
When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement?
When extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
When does a merger between companies typically occur?
When two firms of comparable size join to form a combined entity
The most important yet least visable element of organizational culture is____
values
Equity alliances are less common than non-equity alliances because they:
Often require larger investments
which of the following proves that GE's board of directors in significantly independent?
16 of the 17 board directors are from outside the organization
Postrupe Inc., a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Postrupe's board to achieve board independence?
7
One of the ways to foster ethical behavior in employees is to:
create a control system that encourages desired values
which of the following foreign entry modes primarily involves producing goods in one country to sell in another?
Exporting
Which of the following types of groups is most susceptible to groupthink?
A cohesive group
Which of the following best illustrates a non-equity alliance
A contractual agreement that provides Motor Source inc. non-exclusive rights to supply component parts to Pristine Autos Inc.
To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets?
A global-standardization strategy
Why must managers use a mechanistic structure to implement a cost-leadership strategy?
A mechanistic structure offers a centralized structure with well-defined lines of authority.
Which of the following best illustrates an equity alliance?
A partnership in which RedGate Insurance Inc. has a 40% ownership claim in TwinTrust Finance Inc.
Which of the following best defines duality in a board of directors?
A person holds both the role of CEO and chairperson of the board
Why did W.L. Gore reorganize itself into a functional structure from a simple structure?
A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario?
A strategic alliance
Which of the following statements about an organization's culture is NOT true? A. A positive culture motivates employees by appealing to high ideals. B. A strong monitoring and supervision mechanism is needed to enforce the culture. C. A positive culture encourages employees to make decisions not only with their heads but also with their hearts. D. Employees feel that they are part of a larger community by internalizing the firm's values and norms.
A strong monitoring and supervision mechanism is needed to enforce the culture.
Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Shine Enterprises Inc. most likely use? A transnational strategy
A transnational strategy
Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost? A transnational strategy
A transnational strategy
Which of the following organizational structures matches best with an international strategy?
Functional
When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario?
Accessing critical complementary assets
Which of the following is one of the features of an international strategy?
It is characterized by limited local responsiveness
Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? Acquisition
Acquisition
When large, incumbent firms buy start-up companies, the transaction is generally described as a(n)
Acquisition
While Cisco Systems has been successful in selecting and buying both big and small technology ventures, HP had to write off some of its recent technology acquisitions. Which of the following statements best explains this scenario?
Acquisition and integration capabilities were not equally distributed across firms.
Which of the following is not included within the types of strategic alliances?
Acquisitions
Which of the following is true of acquisitions?
Acquisitions can be friendly or hostile.
To position itself more strongly after the 2001 bursting of the internet and tech stock bubble, Cisco Systems embarked on a(n) ______.
Acquisitions-led growth strategy
At Opnic Corp., a cross-functional team is formed to work on a project for a new client. The team consists of Darius and four other members. At most of the team's presentations to senior management, Darius takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Darius is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Darius did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Opnic Corp. is a typical consequence of _____.
Adverse selection
Johan is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A startup recruits Johan based on his stated credentials without verifying them. Two days into the job, Johan's team lead realizes that Johan does not know much of what he claimed to know during the interview. This scenario best exemplifies _____.
Adverse selection
_____ is illustrated by a situation in which the principal cannot determine the value created by individual members of a team. Adverse selection
Adverse selection
Which of the following is true of W.L. Gore & Associates, which has a lattice organizational form?
All employees are empowered to speak to all other employees in the organization
In Eli Lily's Office of Alliance Management, the _____ is a senior, corporate-level executive responsible for high-level support and oversight
Alliance champion
Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies? Ambidextrous
Ambidextrous
The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate?
An Acquisition
W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity?
An extremely formalized organizational structure
Onico Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Onico Inc. most likely pursue? An international strategy
An international strategy
Which of the following types of strategic alliances is the least common in terms of frequency?
Joint Ventures
Partner compatability and partner commitment are necessary conditions for successful alliance formation. Partner compatability captures:
Aspects of cultural fit between different firms in an alliance.
Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company?
Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.
Which of the following is an observable feature in the globalization 3.0 stage?
Based on an optimal mix of costs, skills and PESTEL factors, companies now freely locate business functions anywhere in the world.
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?
Because of the large economic distance between U.S. and India
Why do shareholders of public companies need to appoint a board of directors to represent their interests?
Because of the separation of ownership and control
Which of the following has been a key driver for firms to expand globally during the globalization 3.0 stage?
Benefits from lower labor costs in manufacturing and services
A firm pursuing a transnational strategy would believe that:
Best practices, ideas, and innovations should be diffused throughout the world.
Which of the following do NOT serve as additional external-governance mechanisms? A. Auditors B. Government regulators C. Board of directors D. Industry analysts
Board of directors
Gamma Foods Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. RiverGem Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario?
Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries.
Rehman is a firm believer in Milton Friedman's view of a firm's social obligations. With which of the following statements is Rehman most likely to agree?
Businesses can use their resources to create profit as long as they do so within the rules of the game
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?
By lowering competitive intensity in the industry overall
How does horizontal integration within an industry affect the surviving firms?
By strengthing the bargaining power of the surviving firms vis-a-vis suppliers and buyers
Don Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) ______
Joint venture
________ refers to the degree to which ties are reinforced through indirect paths within a social network.
Centralization
Which of the following is true of business ethics?
Certain notions such as fairness, honesty, and reciprocity are universal norms.
GM entered China in 1997 through a joint venture with Shanghai Automotive Industrial Corp. (SAIC). Which of the following factors best contributes to the fact that the Chinese market already accounts for 25 percent of GM's total revenues? Chinese workers cost only a fraction of what U.S. workers do.
Chinese workers cost only a fraction of what U.S. workers do.
FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as?
Co-opetition
______ is best described as cooperation by competitors to achieve a strategic objective
Co-opetition
_____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies.
Corporate Venture Capital Investments
_____ is a mechanism to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully and legally.
Corporate governance
How does W.L. Gore exemplify founder imprinting?
The four core values articulated by Bill Gore guide the company and its associates to this day.
Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan?
Equity Alliance
Which of the following statements is true of explicit knowledge?
Explicit knowledge is shared in non-equity alliance firms
Which of the following modes of entering a foreign market allows for the lowest level of control?
Exporting
Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify?
Demand conditions
Under CEO Robert Iger, Disney has followed an acquisition-led growth strategy. Which of the following was a result of this corporate strategy?
Disney compensated more easily for losses from flops.
Why does Michael Porter recommend expanding the customer base of an organization in terms of the Shared Value creation framework?
Doing so could yield significant business opportunities that could improve the standard of living of the poor.
A drawback of joint ventures is that they are characterized by:
Double reporting lines
The relationship between strategy and structure that directly impacts a firm's performance is _____.
Dynamic
The Securities and Exchange Commission (SEC) makes all financial reports filed by public companies available electronically via the _____ database.
EDGAR
Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company?
Each country unit owned by the company will tend to be highly autonomous.
Which of the following is an implication for the strategist in the context of corporate governance and a company's success?
Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage.
The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n) ______.
Equity Alliance
Which of the following perspectives best supports the Shared Value creation framework?
Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.
Which of the following terms or phrases best characterizes Zappos' organizational structure?
Extremely Flat
Which of the following statements is true of a multidomestic strategy?
Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets.
Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? Flight Stream Inc. has a flat organizational structure.
Flight Stream Inc. has a flat organizational structure.
Which of the following features helps match a cost leadership strategy to a functional structure?
Focus on economies of scale
Which of the following is an ineffective practice in alliane management?
Focusing on developing an alliance-management capability in isolation
For which of the following products is an international strategy most suitable?
For luxury goods that can be shipped across the globe
Which of the following types of organizations comparatively requires the lowest levels of investment and control?
Franchising
Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to his duties on the board, Frank is also a full-time employee as a senior manager at Spinson Locomotives Inc. Which of the following is most likely to be true of Frank?
Frank is an outside director on Lofloy's board of directors.
Frappe operates as a strategic business unit (SBU) under More or Less Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that: Frappe is led by its own CEO (or equivalent general manager).
Frappe is led by its own CEO (or equivalent general manager).
A typical college of business has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) ______ structure.
Functional
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc. ?
GD Inc and VS inc join together to form a single new company called GDVS inc.
Which of the following facts proves that GE's board is fairly diverse compared to other Fortune 500 companies?
GE's board is composed of 28 percent women, compared to less than 16 percent for the others.
Garnet Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Garnet Mobiles Inc. most likely pursue? Global-standardization strategy
Global-standardization strategy
In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy?
Globalization 3.0
Glova Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. RightMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?
Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements.
Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? Greenfield operation
Greenfield operation
Leila is a graduate student pursuing a course in international business. Presented with the case of HP's "soap opera," Leila wonders whether it was the right decision to ask the CEO of HP, Mark Hurd, to step down after he was accused of sexual harassment. Having a strong inclination toward Michael Porter's idea of value creation, Leila is most likely to conclude that: HP was right in asking Mark to step down because it has a greater obligation toward society.
HP was right in asking Mark to step down because it has a greater obligation toward society.
Charlie is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Charlie consider while choosing his strategy? He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
Which of the following is a feature of an organic organization?
High span of control
Today, Hollywood movies are banking more on foreign sales for their overall revenues. Hollywood studios have been adapting scripts to appeal to global audiences, and casting foreign actors in leading roles. Which of the following statements most accurately explains the reason for this change?
Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States.
Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?
Horizontal Integration
To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate?
How an organization accommodates strategy implementation through a flexible organizational structure
Which of the following statements is true of an equity alliance?
In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible
_____ are the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance.
Inside directors
The informational advantage that agents possess over principals is often based on the fact that:
Insiders are the first to learn about important developments before the information is released to the public
When a firm pursues a(n) ______, it sells the same product or services in both domestic and foreign markets.
International strategy
Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization? It allows a high level of integration.
It allows a high level of integration.
Which of the following is an advantage offered by a functional structure?
It allows for a higher degree of specialization and deeper domain expertise
Why does a functional structure rely on a flat organizational structure?
It allows for efficient bottom-up and top-down communication.
Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
How does taking a real-options perspective by entering strategic alliances help incumbent firms?
It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade.
Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job?
It believes that individuals who choose to stay on will fit in with the Zappos culture.
Which of the following is a disadvantage of a functional strategy?
It cannot effectively address a higher level of diversification
In which of the following ways does Zappos achieve organizational control?
It enforces that each group member's compensation depends in part on the group's overall productivity
What did Microsoft do to gain a foothold in the online search and advertising market dominated by Google?
It entered into a strategic alliance with Yahoo.
How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010?
It has access to convenience stores and a new distribution channel.
Which of the following is a disadvantage of a horizontal integration corporate strategy?
It increases the potential for legal repercussions.
Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business?
It increases the value of the focal firm's offering from a customer's perspective.
Which of the following statements is true of the organizational culture?
It is better for founder CEOs to create a relevant culture, structure, and strategy in the ealry stages
Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal?
It knew that Paulson had bundled high-risk mortgages into the collateralized debt obligation
How did Apple plan to attack Amazon's stronghold in the e-reader market?
It orchestrated a web of strategic alliances with major publishing houses.
What is the result of managers' pursuit of strategies that define value creation too narrowly in public stock companies
It reduces the trust of shareholders in the organization as a vehicle for value creation.
Which of the following is a drawback of pursuing a transnational strategy?
It requires a global matrix structure, which is difficult to implement
Zenovia Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Marva, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Zenovia Inc.? It will be able to benefit from economic arbitrage.
It will be able to benefit from economic arbitrage.
Which of the following is a feature of a multinational company pursuing a global-standardization strategy?
Its business-level strategy tends to be cost leadership
Why is the optimal organizational structure a multidivisional structure?
Its focus is on driving down costs.
Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? Its job descriptions are very descriptive.
Its job descriptions are very descriptive.
What was one of the reasons for Jerry Yang's failure at Yahoo?
Jerry's preference for obtaining consensus among his managers led to bickering and infighting
Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company?
Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.
NorthStar Inc. and The Royal Group have together established The Royal Star Group of hotels. NorthStar owns 49 percent and The Royal Group has a 51 percent share in The Royal Star Group of hotels. However, the management of The Royal Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate? Joint venture
Joint venture
_______ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary.
Learning Races
Aro Shoes Inc. and Mova Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Aro Shoes entered the strategic alliance to acquire the production system pioneered by Mova Shoes. Similarly, Mova Shoes agreed to the strategic alliance to study the designing process of Aro Shoes. However, Aro Shoes was more successful and faster than Mova Shoes in accomplishing its alliance goal. What does this scenario best illustrate? Learning races
Learning races
Mario founded Tapoz Communications Inc. in 1993. Ten years later, the company went public. Despite Mario's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify? Legal personality
Legal personality
Which of the following is a characteristic of a public stock company?
Legal personality allows a firm's continuation beyond the founder of the founder's family
Ramadin is the CEO of Brownback Consulting Inc. Ramadin's efforts to persuade the board of directors to pursue a new business strategy fail. He borrows money from different sources and purchases all the outstanding shares of Brownback Consulting. What does this scenario best exemplify?
Leveraged buyout
_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge
Licensing agreements
FlyOne Airway's decision to acquire TrueGear Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate? Managerial hubris
Managerial hubris
According to Michael Porter, which of the following is a problem with many publicly traded companies?
Many publicly traded companies have defined value creation too narrowly in terms of financial performance
Which of the following is an important external corporate-governance mechanism?
Market for corporate control
Cup N Cone Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Marvin Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Marvin Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? Marvin Grey has a wide span of control.
Marvin Grey has a wide span of control.
Which of the following best exemplifies the use of input controls
McDonalds use of standard operating procedures
Which of the following real-world scenarios best exemplifies formalization?
McDonalds use of standard operating procedures across the world
Remote Inc. is a notebook manufacturing company based in Ohio. Remote's main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Remote Inc. likely to use if it has functional setup?
Mechanistic
_____ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making. Mechanistic
Mechanistic
What was Leo Apotheker's role in the downfall of HP's market value?
Mr. Apotheker was instrumental in acquiring the overvalued British software company Autonomy
Which of the following global strategies best matches with a multidivisional structure?
Multidomestic
A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions
Multidomestic strategy
Which of the following is a feature of the globalization 2.0 stage?
Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries
If the board of directors at GE decides to pursue a stakeholder strategy, should they change the ecomagination strategy?
No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues.
Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of _____.
Non-equity alliances
_____ define appropriate employee attitudes and behaviors
Norms
Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal?
Once the firm starts growing and attracting more customers she is likely to feel overloaded
Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is _____.
Organic
_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure
Organic
Which of the following types of organizations best helps match a differentiation strategy to a functional structure?
Organic Organization
_____ describes the collectively shared values and norms of an organization's members
Organizational culture
Which of the following statements is true of strategy in an organization?
Organizational structure must follow strategy in order for firms to achieve superior performance
_____ are board members who are not employees of the firm but frequently are senior executives from other firms or full-time professionals.
Outside directors
Which of the following functions did HP's board of directors fail at following the unexpected departure of Mark Hurd?
Overseeing the company's CEO succession plan
Which of the following is part of the Geert Hofstede's cultural dimensions?
Power distance
Which of the following could most likely have prevented the accounting scandals of the early 2000s and the global financial crisis?
Practicing effective corporate governance
PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma?
PureSource Pharma will lower its costs through economies of scale.
A _____ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time.
Real-options perspective
Which of the following is an unintended side-effect of a high degree of specialization in an organization?
Reduced employee satisfaction due to repitition of tasks
Which of the following scenarios best illustrates horizontal integration?
Regal Autos Inc. joins Marcus Motors Inc. one of its direct competitors
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of _____?
Related-linked diversification
All public companies listed on the U.S. stock exchanges must file a number of financial statements with the _____.
Securities and Exchange Commission (SEC)
Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance?
Segar, where people speak English and have a low standard of living
The process of allianes management begins with _____
Selecting the best possible partner
According to the perspective of shareholder capitalism, _____
Shareholders in public stock companies have the most legitimate claim on profits
Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?
Shareholders of Jamiro are responsible to the company only for the capital they have invested.
Which of the following statements best supports the seperation of ownership and control in publicly traded companies?
Shareholders own stocks but do not run the company
Which of the following statements is true of shareholders in a public stock company?
Shareholders who provide the risk capital are liable only to the capital specifically invested
Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany?
Significant differences between the U.S. personnel policies and Germany's culture
While working a night job at a call center, Neville creates an app called FastServe, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on FastServe. He creates a startup called TYOP and hires three people to help him improve FastServe and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure.
Simple
A drawback involved in using cross-border strategic alliances to enter new foreign markets is that:
Some of the firm's proprietary know-how may be appropriated by the foreign partner
Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage?
Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time
_____ describes the degree to which a task is divided into seperate jobs.
Specialization
A compensatory governance mechanism that allows executives to buy a company's stock at a predetermined price sometime in the future is called a(n) _____.
Stock option
What does strategy implementation often require changes within an organization?
Strategy implementation transforms strategy into actions and business models
GE's board has only one inside director, Jeffrey Immelt, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE?
The CEO possesses invaluable inside information that can help chair the board effectively.
A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment?
The VRIO framework
Which of the following is a major issue at the forefront of CEO compensation in recent years?
The absolute size of the CEO pay package compared with the pay of the average employee
The downside of equity alliances is:
The amount of investment that can be involved.
A bank, YPC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical?
The bank knows that the customer will be unable to pay the loan if the interest rate rises
How did Apple's e-book business model affect Amazon?
The bargaining power of suppliers, the content providers, increased from Amazon's perspective.
After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company?
The company's exposure to exchange rate fluctuations will reduce.
How has China been affected by its one-child-per-family policy and appreciation of its currency?
The country's advantage in low-cost manufacturing has reduced.
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012
The desire to gain a new capability
In a non-equity alliance, which of the following types of information would firms most likely share?
The documented information about the material composition of a product
Which of the following statements best supports the view that GE's ecomagination strategy is in line with the Shared Value creation framework?
The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage
In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems?
The expectation that the agent will act in the principal's best interest
Which of the following is a benefit of a multinational enterprise (MNEs) pursuing a global-standardization strategy?
The firm reaps significant economies of scale and location economies
What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?
The firm's culture can turn from a core competency into a core rigidity
Which of the following statements is true about the use of functional structures with various business strategies? The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
The conflict in a principal-agent relationship arises when:
The goals of the principals and agents are not aligned with each other
Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones?
The huge demand for high-quality wireless services in Finland
Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that:
The largest but poorest socioeconomic group can yield significant business opportunities
What does the relational view of competitive advantage propose?
The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.
Which of the following statements best describes local responsiveness?
The need to tailor product and service offering to fit native consumer preferences and host-country requirements
What helps notions such as fairness, honesty, and reciprocity to be codified into law?
The notions are universal norms.
The success of the Pixar-Disney strategic alliance demonstrated that:
The two entities' conplementary assets matched
Which of the following is a result of horizontal integration in terms of Porter's five forces model?
There is a reduction of excess capacity in the market
The administrative and political distance between two trading countries reduces when:
There is a well-functioning capital market in the host country
Disney's "Wedding Banned," a romantic comedy about a divorced couple trying to prevent their daughter from getting married, was axed in the advanced production stage despite several marquee stars (Robin Williams, Anna Faris, and Diane Keaton). Which of the following statements best explains why this happened? There were perceptions that this movie would not succeed outside of the American market.
There were perceptions that this movie would not succeed outside of the American market.
How will an increase in coordinated economic and political integration between countries affect the world economy?
There will be gains in social welfare and living standards across the globe
Why are controls like budgets and operating procedures that McDonalds implements known as input controls
They are considered before employees make any decisions
What are poison pills?
They are defensive provisions that kick in should a buyer reach a certain level of share ownership.
Which of the following is an advantage of non-equity alliances?
They are flexible and easy to initiate and terminate
Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy?
They are highly affected by exchange rate fluctuations
Which of the following statements is true of strategic Alliances?
They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles
Which of the following is NOT true about the members of the board of directors in a public stock company?
They are not responsible to shareholders.
Which of the following did management at Zappos do to reduce the level of formalization in their organization?
They avoided asking their customer service reps in call centers to follow a detailed script.
Which of the following is a disadvantage of equity alliances?
They can entail significant investments
Which of the following is an advantage of joint ventures?
They create strong ties, trust, and commitment between the partners
In a public stock company, senior executives, such as the CEO, face agency problems when:
They delegate authority of strategic business units to general managers
Which of the following is true of the codes of conduct of an organization?
They detail how the organization expects an employee to behave and to represent the company in business dealings
Which of the following statements is true of joint ventures?
They enable the exchange of both tacit and explicit knowledge
Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because:
They offer the same products or services in all their stores throughout the world
Which of the following is an advantage of equity alliances when compared to non-equity alliances?
They produce stronger ties between partners
Which of the following is most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?
They reduce a firm's exposure to loss of reputation
In the New United Motor Manufacturing Inc (NUMMI) joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)?
To learn how to implement its lean manufacturing program with an American work force
With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota?
To learn the lean manufacturing system pioneered by Toyota
Which of the following is true of the process of organizing for competitive advantage?
To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.
Why did Yahoo enter into a strategic alliance with Microsoft?
To overcome its competitive disadvantage in comparison to Google
Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario?
Torque Inc. focuses more on cost reductions when compared to Marc Works Inc.
Roman owns shares in a company called Copnay Telecom Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Roman wants to proactively cut his losses and therefore sells his shares. Jeremy, a trading enthusiast, buys shares in Copnay Telecom because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify?
Transferability of investor ownership
Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally?
Transnational Strategy
A(n) ______ arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions
Transnational strategy
One Stop Inc., a supermarket chain, is implementing a multidomestic strategy. Solar Com Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other?
Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level.
Which of the following is true of the board of directors in a public stock company?
Votes at shareholder meetings determine whose representatives are appointed to the board of directors.
Which of the following statements about W.L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner?
W.L. Gore & Associates refers to its employees as associates rather than employees.
W.L. Gore has four product divisions: electronic products, industrial products, medical products, and fabrics division. It also has manufacturing facilities in U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe. Based on this information, which of the following statements is most accurate? W.L. Gore is using a multidivisional structure.
W.L. Gore is using a multidivisional structure.
Which of the following statements is true with regard to international trade between countries?
Wealthy countries engage in relatively more cross-border trade than poorer ones.
As a result of globalization, the:
World's market economies are becoming more integrated
Saul is a manager at Holden Apparels Inc. and is friends with the company's CEO. This privilege gives Saul the information that Holden Apparels is in the midst of talks to take over a leading rival. Saul buys stocks of Holden with the expectation that its stocks will appreciate. But the deal falls through and the stocks of Holden depreciate in the following months. Are Saul's actions unethical? Why?
Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.
W.L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has: a decentralized structure.
a decentralized structure.
For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country?
a firm that extracts and exports iron ore
Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement?
a multidomestic strategy
Fervana Autos Inc., a large automobile company, made an initial small investment in a startup company that was developing a solar-powered car. This gave Fervana Autos controlling interests in the startup company. However, Fervana Autos had no obligations to make continued investments in the experiments of the startup company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Fervana Autos would have the right to buyout the startup company. This approach to strategic alliance is referred to as _____.
a real-options perspective
In publicly-traded companies, individuals who are delegated to perform duties on behalf of company owners are known as _____
agents
Gannett Company integrated certain important functions of USA Today.com with USA Today, while keeping other functions independent. To support this integration, the president of USA Today shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance. This scenario best exemplifies a(n) _____. ambidextrous organization
ambidextrous organization
A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it:
attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.
Why did the American MTV network cable channel fail when pursuing a global-standardization strategy?
because cultural distance most affects products with high linguistic content
Which of the following is an important internal corporate-governance mechanism?
board of directors
the _____ is the centerpiece of corporate governance and is composed of inside and outside members.
board of directors
When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because:
building downstream complementary assets can be expensive and time-consuming.
How has the administrative and political distance between Canada, Mexico, and the United States been reduced?
by establishing the North American Free Trade Agreement (NAFTA)
The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally
death-of-distance hypothesis
Neville and Andre are customer care employees at JPN Care. In between calls, Neville and Andre spend time on Facebook and YouTube. The relaxed guidelines at JPN allow them to do that. However, sometimes, they knowingly avoid answering calls or keep customers on hold, while they check their social networking accounts. Such behavior:
can be stopped by implementing performance incentives and strict control mechanisms.
Elc Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, Television and Computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as _____. co-opetition
co-opetition
Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy?
commodity products like computer hardware
When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to consider an outright acquisition.
consider an outright acquisition.
GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies _____. core rigidity
core rigidity
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ______.cultural distance
cultural distance
a(n)____ is best described as a partnership which at least one partner takes partial ownership in the other partner
equity alliance
Rast Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies _____. exploitation
exploitation
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved
exporting goods.
a firm following a multidomestic strategy
faces a greater risk of intellectual property (IP) appropriation.
Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to:
fill gaps in its competency lineup.
for which of the following types of industries is a multidomestic strategy most common?
food industries
A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure. global matrix
global matrix
Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) _____.
global-standardization strategy
Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the
globalization hypothesis.
A funcitonal structure is recommended when a firm:
has a low level of diversification
In the strategic alliance, the firm that learns faster:
has the incentive to reduce its knowledge sharing
The global-standardization strategy arises out of the combination of:
high pressure for cost reductions and low pressure for cost reductions
A greater cultural distance between two trading countries:
increases the liability of foreinness
The board of directors of a public stock company consists of:
individuals who formally represent the firm's shareholders and oversee the work of executives
the risk of employee opprtunism on behalf of agents in a public stock company is exacerbated by ________
information asymmetry
Adverse selection in a public stock company occurs when:
information asymmetry increases the likelihood of selecting inferior alternatives
Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through _____. input controls
input controls
Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas. intellectual property exposure
intellectual property exposure
Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly developed economies. One way firms are grappling with this issue is by: introducing results-only-work-environments to tap intrinsic motivations.
introducing results-only-work-environments to tap intrinsic motivations.
What best describes transferabilitiy of investor ownership in a public stock company?
investors are allowed to trade shares of stock
United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country: is a world leader in the pharmaceutical industry.
is a world leader in the pharmaceutical industry
Hashim is a board member at Kluster Motors Inc. He is also a senior executive of the firm. On the other hand, the board is chaired by Compton Smith, the CEO of Jensen Electronics. According to this scenario, Hashim _____.
is an inside director of Kluster Motors
Serena is the CEO of Pedalo Inc., a publicly traded company. The shareholders want Serena on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Serena:
is likely to provide the board with valuable inside information.
McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's: is mechanistic in nature.
is mechanistic in nature.
which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?
it allows a cost leader to upgrade core competencies in manufacturing and logistics
Which of the following is a benefit of the transnational strategy?
it facilitates global learning and harnesses economics of location
Which of the following statements best describes groupthink?
it is a situation in which opinioins coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions
Which of the following statements is NOT true of tacit knowledge? A. It is concerned with knowing how to do a certain task. B. It is knowledge that cannot be easily codified. C. It is regularly shared between partners in a non-equity alliance. D. It is acquired only through actively participating in the process.
it is regularly shared between partners in a non-equity alliance
Organizational culture can be the basis of a firm's copetitive advantage if _____
it is valuable, rare, and difficult to imitate
What most likely happens when a firm optimizes its organizational structure to its current situation?
it plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur
Which of the following is true of a functional structure?
it relies on a relatively flat organizational structure
Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because: it underestimates its liability of foreignness when entering the Zevar market.
it underestimates its liability of foreignness when entering the Zevar market.
The day-to-day operations of a publicly traded company are conducted by:
its managers and lower-level employees
New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first _____ in the U.S. automobile industry
joint venture
Wave Motors Inc., a Kempa-based automobile company, has entered into a partnership with Sphere Autos Inc. headquartered in United Cadvia. The parent companies, together, have established a standalone firm called Genuine Autos Inc. This arrangement best exemplifies a _____.
joint venture
When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) _____. joint venture
joint venture
GearOne Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, GearOne Autos Inc. is reaping the benefits of _____.
location economies
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations onsite while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of _____. location economies
location economies
United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of:
luxury items manufactured in United Nerumbia.
In Eli Lilly's Office of Alliance Management, the alliance champion is primarily responsible for:
making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy
For a multinational enterprise (MNE), applying the globalization hypothesis would mean
manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.
An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure.
matrix
Walmart is an example of a(n) _____ organization mechanistic
mechanistic
In principal-agent relationships, _____ describes the difficulty of principals to ascertain whether agents have really put forth their best efforts. moral hazard
moral hazard
Rajat Gupta's role in providing inside information to Galleon Group for the benefit of Galleon Group's stockholders and Rajat Gupta himself is an example of _____.
moral hazard
Kolt Inc., a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Kolt Inc. use?
multidivisional
When a firm diversifies into different product lines and geographies, a _____ structure is preferred.
multidivisional
McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast-food chain pursuing?
multidomestic strategy
A trend observed during the globalization 3.0 stage involves:
multinational companies organizing as global-collaboration networks.
Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a _____. multinational enterprise
multinational enterprise
Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry.
national competitive advantage
A(n)______ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances, that connect different parts of the industry value chain.
non-equity alliance
Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n) _____.
non-equity alliance
Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and _____. obeys the VRIO principles
obeys the VRIO principles
India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because
of an abundance of well-educated, English-speaking young people.
Travis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe. This is an example of _____.
on-the-job consumption
An organization is characterized as having a flexible division of labor, distributed decision-making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature. organic
organic
If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization. organic
organic
To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly _____.
organic
Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____. organic organization
organic organization
A _____ is best described as a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services.
strategic alliance
In Eli Lily's Office of Alliance Management, who is responsible for providing alliance training and development?
the alliance manager
Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos.
organizational culture
Adisas acquired Reebok primarily to _____.
overcome its competitive disadvantage against Nike
The main reason behind Google's decision to acquire the Israeli startup company Waze for $1 billion was to:
preempt its competitors from buying Waze.
For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? price
price
An individual who is part owner of a company and hires another individual to act on his or her behalf is referred to as a(n) ______
principal
Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n) _____.
principal-agent problem
The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of:
principal-agent problems.
Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that: pursue a differentiation strategy at the business level.
pursue a differentiation strategy at the business level.
Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to:
reduce its cultural distance from the other countries
The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. relational view of competitive advantage
relational view of competitive advantage
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with
the absence of a trading bloc.
Creating economic value for shareholders while also creating social value is known as creating _____.
shared value
Who appoints the board of directors in a public stock company?
shareholders
Florian just graduated from law school and wants to start his own law firm. It is best for Florian to use a _____ organizational structure. simple
simple
A high degree of formalization in an organization is most likely to _____
slow down decision-making
Employees learn about an organization's culture through the process of ______
socialization.
A firm's _______ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed
structure
Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n): tall hierarchical structure.
tall hierarchical structure.
The MBA oath first developed at Harvard and now signed by students at over 300 business schools is modeled after _____.
the Hippocratic oath in medicine
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because:
the U.S. population was growing slowly and becoming more health conscious.
Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to:
the entrepreneurial spirit in tesla.
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because:
the horizontal integration activity has the potential to reduce competitive intensity in an industry.
Organizational design is:
the process of creating, implementing, and modifying the structure of an organization.
In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates _____.
the real-options perspective
Which of the following is a drawback of pursuing a multidomestic strategy?
the strategy is costly and inefficient because it requires the duplication of key business functions across several countries
John Hammergren, the CEO of McKesson, received an annual compensation of $50 million. The compensation was closely tied to the performance of McKesson's stock, which appreciated considerably during his tenure. This situation best exemplifies _____.
the strong relationship between executive compensation and company performance
Which of the following factors is the most important determinant of economic distance?
the wealth and per capita income of consumers
Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos?
their culture reflects complex relationships with their employees, customers, and suppliers
Outside directors are more likely to watch out for the interests of shareholders of their firm because
they have more independence than inside directors.
Which of the following is a drawback of joint ventures?
they necessitate the sharing of rewards between the partners
Poison pills have become rare because
they retard an effective function of equity markets.
A company that is using extrinsic motivation as an output contol mechanism will most likely:
threaten to lay off employees if they do not achieve targets
Zappos established its unique organizational culture"
through explicitly stated values that are connected to its reward system.
Which of the following is NOT a reason why firms enter alliances? a. to replace competitive advantage with competitive parity b. to strengthen competitve position c. to enter new markets, either in terms of geography or products and services d. to learn new capabilities
to replace competitive advantage with competitive parity
European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy?
to take advantage of lower taxes in the southern United States
Which of the following is regarded as the most internal of control mechanisms?
Business ethics
Which of the following is NOT true of corporate governance in public stock companies? A. Corporate governance seeks to benefit multiple stakeholders, not just shareholders. B. Corporate governance provides rules for making decisions on corporate affairs. C. Corporate governance attempts to address the principal-agent problem. D. Corporate governance seeks to create a separation between ownership and control.
Corporate governance seeks to create a separation between ownership and control.
Which of the following occurrences was NOT an event that facilitated HP's sordid "soap opera"? A. Patricia Dunn, then chairman of the board, launched a covert investigation where she conducted surveillance on HP's board members, selected employees, and some journalists. B. Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company. C. Jodie Fisher, an independent contractor, worked as a hostess at HP-sponsored events and personally ensured that Mr. Hurd spent time with the most important clients. D. Leo Apotheker, who came to HP after being let go from SAP, proposed a new corporate strategy for HP.
Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company.
Ethics is:
Not synonymous with law
Which of the following acts in the Goldman Sachs-Galleon Group insider trading scandal is an egregious exploitation of information asymmetry?
Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs
Which of the following real-world events would act as the most likely deterrent against adopting a purely stakeholder strategy approach to business?
The nonsustainable debt levels incurred by sovereign governments to fund social programs
Which of the following scenarios best exemplifies a leveraged buyout of a telecommunications firm, Telbok inc,
The owner of another company buys all of the outstanding shars of Telbok
Which of the following is the source of the principal-agent problem in publicly traded companies?
The separation of ownership and control
Which of the following best explains why a board of directors may grant stock options as part of a compensation package?
To align incentives between shareholders and management
The root cause of the principal-agent problem between senior executives and lower-level employees can be explained by the:
informational advantage of the lower-level employees.
