MAN Final Exam

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

5

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

A broader knowledge base

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies?

A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is FALSE?

A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits?

Aligning the corporate structure with the demands of global expansion

The CEO and Chairman of the Board of Directors Alta Corp. is dismayed by a lack of effort and insights his directors provide during Board meetings. The directors are all outsiders, experienced, and run their own successful firms. The CEO/chair genuinely seeks their greater involvement. What would you recommend?

All of these options are correct. a. Requiring that the directors own stock in the company. b. Establishing a formal process to evaluate the Board's performance. c. Electing a lead director.

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?

Allocating internal capital

The Amos Ball Printing Company was established in 1866. Currently, Amos Ball V is the CEO and chairman of the board. The company has traditionally used a functional structure. Five years ago, the company branched into online publishing and small-batch printing in addition to its regular large-batch operations. Both new businesses are significantly different in technology and marketing from each other and from Ball's traditional business. Despite the hiring of experienced professionals in these new endeavors, performance continues to be poor and is affecting Ball's overall performance. Which of the following statements is TRUE?

Amos should consider adopting the multidivisional structure.

The Board of Directors for TundraPro, Inc., is searching for a new CEO. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees. The Board has decided it needs a CEO who can be a transformational leader. To this specific end, the Board needs to identify applicants who have

Both A and B are correct. a. high levels of honesty, trustworthiness, and integrity. b. high emotional intelligence.

Which of the statements about CEO duality is FALSE?

CEO duality is relatively rare in the U.S. except in large Fortune 500 firms.

The primary responsibility for effective strategic leadership of the organization rests with the:

CEO.

The Board of Directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. The Board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. Consequently, the Board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. CamCell is presently searching for a new CEO. Which of the following statements is true?

CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan.

Executive headhunters have approached Charles about taking the position of senior vice president of marketing for a well-known company. Although this company has been highly successful since 1995, Charles has heard persistent rumors of overly aggressive marketing tactics, questionable reporting of sales data, and an atmosphere of intolerance of criticism. The CEO is a powerful and charismatic individual, who built the company from a small regional firm to an international powerhouse in only a decade. The other top managers have been hand-picked by the CEO, as have a number of the members of the Board of Directors. The salary for this position is very high and includes generous stock options. It would be a major step up in Charles's career and would position him to move to CEO of another company in the future. Charles has prided himself on his high moral values and is viewed as an exceptionally ethical person by his peers. What should Charles do?

Charles should not take the job because the culture of the organization is set by the CEO and other top managers. He would have little influence on the organizational culture as one of many top managers.

Which of the following is NOT a factor that determines the amount of a manager's decision discretion?

Cohesiveness of the Board of Directors

Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many Boards of Directors have initiated?

Compensating directors with stock options rather than with fixed remuneration

Which of the following is TRUE of trends in Japan's corporate governance structure?

Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals.

____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance.

Complementary strategic goals

____ is an important influence in Japanese corporate governance structures.

Consensus

Ortiz is a manager of BRS Corp. Ortiz's division did not meet financial targets this year. Ramirez, manager of another division, has indicated that Ortiz's division incurred significant costs which resulted in Ramirez's division setting record profits for the year. As a result, performance for BRS as a whole exceeded projections. Which pairing of organizational structures for BRS and bonus for Ortiz is most plausible?

Cooperative structure; a bonus for increasing organizational performance

Which of the following is a FALSE statement about corporate governance?

Corporate governance is best achieved with a Board of Directors with strong ties to management.

____ is one of the reasons for the differences in rates of entrepreneurship among different countries.

Culture

Which of the following is NOT associated with heterogeneous top management teams?

Diminished debate among top managers

____ exist(s) when there is a need in the market that can be satisfied by new goods or services.

Entrepreneurial opportunities

____are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it.

Entrepreneurs

______ controls are objective criteria that allow corporate managers to evaluate the returns earned by individual business units.

Financial

____ provide information about the results of past actions, but do not communicate the drivers of the firm's future performance.

Financial controls

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures?

Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing.

______ is the degree to which rules and procedures govern work.

Formalization

Exploiting and maintaining core competencies is part of the key strategic leadership action "Effectively Managing the Firm's Resource Portfolio." Which of the following is most important for developing and using core competencies?

High-quality human capital

Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. Which of the following statements is most likely to be TRUE?

If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO.

Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy?

Integration

Which of the following factors most encourages stability in a firm's strategy?

Internal CEO succession and a homogeneous top management team

____ involves internally developed incremental and novel innovations that result from deliberate efforts.

Internal corporate venturing

Which of the following is NOT a benefit to the firm using the internal labor market to select a new CEO?

Internal hiring results in an increased level of innovation.

James Abercrombie has a thriving consulting firm specializing in training Boards of Directors in decision-making skills. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing Boards to develop more cohesiveness. Mr. Abercrombie is considering expanding his consulting practice overseas. Which of the following statements is most likely to be TRUE?

Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level.

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

Multidivisional

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

Need for knowledge-sharing among specialists

Which of the following statements is TRUE regarding effective organizational cultures?

Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mind-set?

Reactivity

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

Regional form

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

SBU form

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?

SBU form with related-linked strategy

Corporate governance revolves around the relationship between which two parties?

Shareholders and managers

____ capital increases cooperation among individuals inside and outside the firm.

Social

Which of the following is TRUE?

Strategy has a more important influence on structure than structure has on strategy.

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?

Sustaining an Effective Organizational Culture.

Agricultural Chemicals, Inc., was the target of a hostile takeover 6 months ago. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Which of the following is most likely to be TRUE?

The CEO and top executives should not consider their jobs secure.

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal?

The CEO/chairperson of the Board has been suspected of opportunistic behavior.

Which of the following statements is about corporate governance in Germany is FALSE?

The Vorstand is elected by the firm's employees.

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

The compensation committee may not have comprehensive firm performance data.

Sony previously selected Sir Howard Stringer as CEO. Sir Howard was not Japanese and he was not a Sony employee before his selection. Which of the following statements is FALSE?

The decision-making process on Sony's top management team will be smoother and faster with the addition of Sir Howard.

International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing?

The director of food service for IFS

Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year. Which scenario is the MOST likely?

The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year.

Which of the following is NOT an internal governance mechanism?

The market for corporate control

Which of the following is FALSE about corporate governance in China?

The state still uses direct and/or indirect controls to influence the strategies employed by most firms.

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees. Which one of the following is true?

This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

Why have large pharmaceutical companies been forming alliances with biotechnology companies?

To develop new products and bring them to market

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

Training and development programs.

Research suggests that _________ is needed to encourage entrepreneurial behavior.

a balance between individualism and cooperative behavior

Which of the following is true? For firms to be entrepreneurial, they require a culture with:

a balance of individualism and collectivism.

Omicron Artificial Intelligence is able to respond quickly to competitors' actions and to opportunities in the marketplace. This is an example of:

a core competency.

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT:

a direct effect on firm performance.

The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization qualified to step into the former CEO's shoes. This is an example of:

a failure of succession management.

Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to 3 years' salary because DictionAry has been bought in a hostile takeover by its main competitor. Ambrose received:

a golden parachute.

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect:

a long wait for an uncertain payoff.

An example of the external labor market is the situation where:

a new vice president of marketing is hired from a competitor.

A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called:

a poison pill.

Japanese keiretsu are:

a system of cross-shareholding among firms.

Research shows that ____________ is the most effective means of ensuring that employees comply with the firm's ethical requirements.

a value-based culture

The interests of multinational corporations' shareholders may be best served when there is:

a variety of compensation plans for executives of foreign subsidiaries.

The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the Board of Directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. The CEO's behavior may be indication of:

a weak Board of Directors.

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT:

adherence to the firm's traditional core values.

Faced with declining enrollment and increased competition from not-for-profit organizations offering inexpensive art courses for new hobbyists, the for-profit Delta Academy of Art has steadfastly stayed true to its mission of offering high-quality classical art instruction for both beginners and advanced artists at high tuition. Delta has been noted for the excellence of its artistic training for decades. This is an example of:

adhesion to the status quo.

The separation between firm ownership and management creates a(n) ____ relationship.

agency

Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to:

align financial institutions' actions with society's interests.

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies:

alignment of complementary assets.

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in:

an act of courage.

Value creation through internal innovation originates with:

an entrepreneurial mind-set.

All of the following are consequences of the Sarbanes-Oxley Act EXCEPT:

an increased number of IPOs (initial public offerings) are expected.

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of:

an incremental innovation.

Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, he has been displaying a tendency toward personal extravagance at the firm's expense. In order to limit Mr. Leagreet's power, the Board of Directors plans to:

appoint another individual as chairperson of the Board of Directors.

Induced strategic behavior is a process that fosters product innovations that:

are aligned closely with current strategy and structure.

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules:

are not necessarily related to one another in terms of products or markets.

The ____ is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.

balanced scorecard

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

banks

In Japan, the principal source of the active monitoring of large companies comes from:

banks.

Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas.

bottom-up

Successfully implementing a cost leadership strategy requires:

centralization of authority.

Innovation creates a(n):

commercial product.

One disadvantage of the functional structure is that:

communication and coordination are difficult among organizational functions.

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

competitive

In the ______ structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets

competitive

The top management team at Ingenuity, Inc., has assigned a team of scientists to a multi-year project to investigate the viability of growing large amounts of fur from cloned cells of minks and foxes to produce no-kill fur products for coats and other clothing items. This idea would satisfy all the dimensions of the entrepreneurial orientation EXCEPT:

competitive autonomy.

A firm pursuing an unrelated diversification strategy will utilize a ______ structure.

competitive form multidivisional

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

competitive form of the multidivisional

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the ______ structure.

competitive form of the multidivisional

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the ______ structure.

competitive multidivisional

The fewest integrative devices are used in the ______ structure.

competitive multidivisional

Structural stability affects the organization's ability to:

consistently and predictably manage its daily work routines.

Strategic control focuses on the ________ of strategic actions, whereas financial controls focus on the _____ of strategic actions.

content; outcomes

The ______ structure is best for implementing the related-constrained diversification strategy.

cooperative form of the multidivisional

The most centralized and most costly form of the multidivisional structure is the:

cooperative.

The heavy use of integrative mechanisms in the ______ multidivisional organizational structure is intended to achieve _______.

cooperative; economies of scope

Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three years. It currently has a simple structure with Jared Smith, the owner-manager, making all major decisions. Jumbo is probably now experiencing or will soon experience:

coordination and control problems.

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to:

coordination and control problems.

The firm of Bergeron has existed for hundreds of years, having made exquisite clocks and watches. In its advertising it refers to clocks the firm made for such past royalty as Marie Antoinette and the Czars of Russia. Employees are constantly reminded of the firm's rich history and its long tradition of excellence of design and execution. Bergeron is motivating its employees through its:

core ideology.

All of the following are external environmental sources that affect managerial discretion EXCEPT:

corporate culture.

The use or application of entrepreneurship within an established firm is called:

corporate entrepreneurship.

Walmart's effective strategy/structure configuration is:

cost leadership/functional.

Firms needing to change their strategies should:

create more heterogeneous top management teams.

According to Peter Drucker,the primary goal of innovation is to:

create wealth.

Because it replaces existing products and methods of production, entrepreneurship is a process of:

creative destruction.

Successful implementation of the differentiation strategy requires a structure that:

decentralizes decision making.

An agency relationship exists when one party delegates:

decision-making responsibility to a second party.

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions:

decreases.

In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT:

decreasing communications between network members to reduce communication costs.

All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT:

defense tactics make the costs of a takeover lower.

The BEST multidivisional structure to use:

depends on the degree of diversification.

Two key strategic leadership actions include:

determining strategic direction and establishing balanced organizational controls.

The goal of investing in human capital is to:

develop a workforce capable of continuous learning.

A heterogeneous top management team is composed of individuals with:

different functional backgrounds, experience, and education.

The integrated cost leadership/differentiation strategy is difficult to implement mostly because:

different primary and support activities are emphasized when using cost leadership and differentiation strategies.

Managerial actions that support development of an ethical organizational culture include all of the following EXCEPT:

disciplining whistle-blowers.

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT:

division managers' rewards based on division financial performance.

In an SBU structure, ______ is/are evaluated using strategic controls, whereas ______ is/are evaluated using financial controls.

divisions within the SBUs; each SBU

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

entrepreneurial

The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm's motto, the title of its Web newsletter, and even on the company t-shirts and mugs. This is an example of the firm's:

envisioned future.

Strategic controls allow corporate-level managers to:

examine the fit between what the firm might do and what it can do.

Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n):

external CEO with a heterogeneous top management team.

Implementing the multi-domestic strategy requires decentralization to:

facilitate the tailoring of products to the demand in local markets.

When used effectively, cross-functional teams will often bring about:

faster product development processes.

Institutional owners are:

financial institutions such as mutual funds and pension funds that control large-block shareholder positions.

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because:

firms must be flexible while retaining a degree of stability.

Corporate governance is important to nations because:

firms seek to invest in nations with national governance standards that are acceptable to them.

A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in:

formality of structure.

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk.

free cash flows

Leslie is a newly graduated certified public accountant with a specialty in corporate tax. She wishes to join an organization (not an accounting firm) that will allow her to concentrate on corporate tax and become deeply proficient in this area. Leslie should look for a position in a firm with a ______ structure.

functional

The ______ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy.

functional

In the implementation of internal innovations, formal and informal processes are best supported through ____ organizational structures.

functionally oriented

The repurchase at a premium of the target firm's shares that were acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the company for takeover is called:

greenmail.

The cooperative multidivisional firm:

has a structure requiring heavy use of horizontal integrative devices.

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

have a highly centralized, functional structure.

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2 years. To maximize the chances of success it is critical that the new executive:

have international experience.

The New York Stock Exchange requires that the audit committee be:

headed by outside directors.

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have:

high absorptive capacity to learn.

A virtually exclusive reliance on financial controls may occur when outsider-dominated Boards exist. This may lead to all of the following EXCEPT:

high executive turnover.

Billy Kroghmen is the son of a very prominent Fortune 500 CEO. Billy has had troubles. He failed out of multiple colleges, universities, and correspondence schools. He finally received his undergraduate degree from a university with only a post office box for an address. He then enrolled in the school's combined graduate accounting and law school programs, graduating with honor with degrees in both areas. After graduation, he twice failed both the CPA and bar exams, managing to set record low scores on the ethics portions of both. Despite these academic setbacks, Billy's career now seems to be thriving. He has been appointed to a number of "blue ribbon" government committees, is on the Board of Directors of two corporations and one prestigious not-for-profit organization. In at least one instance, a donor credited Billy with the idea for making a large contribution to the not-for-profit. Widespread speculation is that his career advancement is based largely on social relationships through friends and family. We would classify Billy as ____ on ____ capital, and ____ on ____ capital.

high; social; low; human

Managers in the United States receive ____ compensation than managers in the rest of the world.

higher

Normally, the more involved a Board of Directors is in shaping the firm's strategic direction, the:

higher the corporation's performance is.

A CEO's breadth of knowledge base is constrained by:

his or her long tenure with the firm.

The ability to attract and manage ____ may be the most important skill a strategic leader must have.

human capital

The effective development and management of the firm's ____ may be its only sustainable competitive advantage.

human capital

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the ______ organizational structure.

hybrid combination

New entrepreneurial firms are better than larger established firms at:

identifying entrepreneurial opportunities.

Products developed through ______ are often offered at lower prices without as many features as products developed through ______.

imitation; innovation

The three types of innovative activity include all of the following EXCEPT:

implementation. (invention, imitation, innovation)

The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the Board of Directors with a proposal for:

increased diversification of Sierra Infusion.

Criteria for reevaluating internal business processes using the balanced scorecard include all of the following EXCEPT:

increases in employee skills.

Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of:

incremental innovation.

A successful ____ innovation will be less risky but less profitable than a successful ____ innovation.

incremental; novel

A major barrier to the use of cross-functional teams is:

independent frames of reference of team members.

A multidomestic strategy would be associated with:

informal coordination among units.

Generally, a Board member who is a source of information about a firm's day-to-day activities is classified as a(n) ____ director.

inside

In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT:

integration.

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with which Toyota has contracts for services. This results in the suppliers and Toyota (the strategic center firm) being more:

interdependent.

The three structural characteristics that differ among organizational structures include all of the following EXCEPT:

intermediation.

The market for corporate control serves as a means of governance when:

internal controls have failed.

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in:

internal corporate venturing.

Blixin Concrete Products, an established firm, is seeking a technologically advanced partner for a strategic alliance. If the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably:

investment capital.

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek ____ while more established companies may need _____.

investment capital; new technological knowledge

Innovations that involve significant technological breakthroughs and create new knowledge:

involve substantial uncertainty and risk.

One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process:

is encouraged through a bottom-up or top-down process.

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that:

it is difficult to respond effectively to local market needs and preferences.

GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that:

its investors will react positively to the introduction of the new product because of the potential for higher returns.

The top management team is composed of the:

key individuals who are responsible for selecting and implementing a firm's strategy.

Human capital refers to:

knowledge and skills of the firm's work force.

Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control.

large; small

In the balanced scorecard framework, ____ controls are used to assess the organization's success in creating a climate that supports change and innovation.

learning and growth

The number of patents held by an organization is a rough guide to the:

level of innovation in a firm.

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to:

make the partners' true loyalties and intentions unclear.

Managerial employment risk is the:

managers' risk of job loss, loss of compensation, and/or loss of reputation.

Firms seeking to compete on the basis of cost leadership particularly need support from the ______ and ______ functions.

manufacturing; process R&D

The ______ structure is an organizational structure that combines both functional specialization and business product or project specialization.

matrix

In the United States, the fundamental goal of business is to:

maximize shareholder wealth.

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS:

may not have a direct effect on firm performance.

The more heterogeneous the top management team, the:

more difficult it will be for the team to implement strategies.

Research shows that internationally diversified firms tend to be ____ than domestic-only firms.

more innovative

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

multi-domestic

Some experts consider the ______ structure to be one of the 20th century's most significant organizational innovations because of its value to diversified firms.

multidivisional

A worldwide geographic area structure is an organizational form in which:

national interests dominate and management adapts to local or cultural differences.

The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation.

novel; incremental

The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are:

often performing above their industry averages.

The main risk in a strategic alliance is that:

one partner will use the other partner's knowledge and use it to enhance its own competitive abilities.

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control.

opportunities; resources

Agency costs reflect all of the following EXCEPT ____ costs.

opportunity

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions?

organizational politics

The competition for resources among those representing different organizational functions within a firm often leads to:

organizational politics.

Research suggests that Boards of Directors perform better if:

outside directors own significant equity in the organization.

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they:

overemphasize financial controls and neglect strategic controls.

Through the work of cross-functional teams, product development stages are grouped into ____ processes.

parallel or overlapping

Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After 6 months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is:

passion for his invention.

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

penalties for inadequate firm performance.

If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers.

poorly performing firms

The level of entrepreneurial activity in a nation is ____ the nation's level of economic development.

positively related to

The primary disadvantage of the multi-domestic strategy and worldwide geographic area structure relates to limited:

potential for global efficiency.

Entrepreneurs tend to have all the following characteristics EXCEPT:

preference for certainly about projects.

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because:

private shareholders and large institutional investors rarely have large ownership positions in firms.

Firms seeking to differentiate particularly need support from the ______ and ______ functions.

product R&D; marketing

The idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of:

product champions.

Competitive aggressiveness describes a firm's:

propensity to take actions that allow it to outperform rivals consistently and substantially.

A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, whereas owners wish to diversify the firm to ____.

reduce their employment risk; increase the company's value

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

reduce transaction costs.

Functional structures work best for firms for all of the following strategies EXCEPT:

related constrained diversification strategy.

Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT:

relying on the fundamental goodness of individuals.

One means that is considered to improve the effectiveness of outside directors is:

requiring outside directors to own significant equity stakes in the firm.

Corporate governance is all of the following EXCEPT:

resolve conflicts among corporate employees.

To successfully implement a firm's strategy, the workforce must be viewed as a:

resource to be maximized.

All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT:

retirement accounts.

In contrast to managers' desires, shareholders usually prefer that free cash flows be:

returned to them as dividends.

Compared to managers, shareholders prefer:

riskier strategies with more focused diversification for the firm.

The longer the focus of managerial incentive compensation, the greater the ____ top-level managers.

risks borne by

The Board of Directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. Consequently, the Board is:

setting the option strike price substantially higher than the current stock price.

The firm's culture promotes unity of purpose for cross-functional work teams through:

shared values.

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the:

shareholder.

In the United States, a firm's key stakeholder(s) is(are) the:

shareholders.

Successfully creating innovations through internal means requires:

significant spending on R&D.

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the ______ structure.

simple

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

simple

Typically, an organization using a simple structure would be:

small.

Organizational structure:

specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes.

Determining the strategic direction of a firm involves:

specifying the vision and the strategy to achieve that vision over time.

Internal corporate venturing does NOT involve:

strategic alliances. Does involve: - autonomous strategic behavior. - induced strategic behavior. - product champions.

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the ______ organizational structure.

strategic business unit multidivisional

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchises are creating the greatest possible value. This is an example of a(n):

strategic network.

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n):

strategic network.

The risks of international entrepreneurship include all the following EXCEPT:

strong "buy-domestic" programs.

A firm's ______ specifies the work to be done and how to do it given the firm's strategy or strategies.

structure

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so:

suggests that the firm's previous choices were not the best ones.

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-to-moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of:

taking advantage of a need in the marketplace.

The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation.

technological

Monitoring by shareholders is usually accomplished through:

the Board of Directors.

The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is:

the Board of Directors.

The CEO of Icon Image Associates wishes to radically change the corporate culture of the firm. She knows that she must convince others at Icon Image of the necessity for the culture change and gain their active support. The CEO knows that the key players in energizing the culture change and fostering alignment with the new strategic vision are:

the CEO, top managers, and middle managers.

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

the ability of specialists to develop deep expertise.

To be successful, an autonomous process for developing new products relies on:

the diffusion of tacit knowledge.

A negative effect of acquiring other firms for the purpose of innovation is:

the effect it can have on the firm's own ability to produce innovations.

Ownership concentration is determined by both:

the number of stockholders and total percentage of shares they own.

Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____.

the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

Organizational controls provide:

the parameters within which strategies are to be implemented.

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that:

the receiving party has adequate absorptive capacity to learn.

CEO duality refers to:

the situation where the CEO is also chairperson of the Board of Directors.

Boards of Directors are now becoming more involved in:

the strategic decision-making process.

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of:

the use of induced strategic behavior.

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands. Christina does not believe that the CEO can act as a steward. Christina will probably be most concerned if:

there is CEO duality.

A characteristic of the manager that may affect managerial discretion is his/her:

tolerance for ambiguity.

An organization's ____ is composed of the key individuals who are responsible for selecting and implementing the firm's strategies.

top management team

Induced strategic behavior as a form of internal innovation is a(n) ____ process.

top-down

The most effective leadership style is ____ leadership.

transformational

The need for the organization to combine local responsiveness and efficiency is most critical in a ______ strategy.

transnational

IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering its costs as well as understanding customer needs, especially younger ones. IKEA's international strategy is best described as ______, and the appropriate organizational structure to implement this strategy is the ______ structure.

transnational; combination

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

unlikely that the current strategy will change.

Financial controls are most important in the ______ strategy.

unrelated diversified

Typically, a successful firm pursuing a differentiation strategy will:

use cross-functional development teams.

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to:

use them without reducing cooperation among divisional managers.

Charles is a customer service representative for a home improvement store. He has creative ideas about how to increase customer satisfaction. Charles's talents will be most likely to be used in a firm that:

uses the autonomous strategic behavior form of internal corporate venturing.

It is easiest to identify the company that functions as the strategic center firm in:

vertical complementary strategic alliances.

Firms develop innovations in all the following ways EXCEPT:

via divestiture of low-performing units.

A CEO gains power from all of the following circumstances EXCEPT:

when tenure of the top management team is shorter than the tenure of the Board