MGT 449- Exam 3 quizzes

Frederica, the chief financial officer at a moped manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors? - "It will be much more difficult to protect our intellectual property if we build factories overseas." - "Keeping our factories in Canada means facing up to the liability of foreignness." - "As the rest of the world globalizes, we will lead the way in strengthening our home nation." - "Canada's wages and benefits are so low compared with the rest of the world that it makes the most sense to build factories here."

"It will be much more difficult to protect our intellectual property if we build factories overseas."

Which of the following descriptions best exemplifies adverse selection? - An employee spends time on social networking sites during work hours. - A manager cannot ascertain the contributions of individual team members in team production. - An interview candidate lists his qualifications in chronological order. - A research scientist uses the organization's resources to conduct personal research.

A manager cannot ascertain the contributions of individual team members in team production.

An open innovation model reduces a firm's absorptive capacity. - True - False

False

It is up to shareholders to make certain that the financial statements that their firms release are correct and not misleading. - True - False

False

Most businesses around the world are more than 50 percent globalized, meaning that more than half their revenues are from outside the home country. - True - False

False

When deciding whether to build, borrow, or buy as a means of growth, firms no longer need to consider the need for physical closeness to their resource partners. - True - False

False

Which of the following best illustrates a merger between the two companies HQ Inc. and AV Inc.? - HQ Inc. outsources a few of its business activities to AV Inc. for competitive advantage. - HQ Inc. and AV Inc. join together to form a single new company called HQAV Inc. - HQ Inc. purchases AV Inc. for $80 billion despite AV Inc. being against the purchase. - HQ Inc. and AV Inc. join together to form a third new entity, while they also operate separately.

HQ Inc. and AV Inc. join together to form a single new company called HQAV Inc.

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 helps evaluate each SBU as a stand-alone profit-and-loss center. - It allows a high level of integration. - It leads to competition between SBUs. - It helps contain the core competencies within a strategic business unit (SBU).

It allows a high level of integration.

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? - It allows the firm to create incentives to foster process innovation in order to drive down cost. - It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. - It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics. - It allows the firm to reduce its cost below that of competitors while offering acceptable value.

It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.

Juno LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Juno's owners or managers to take? - Enter multiple learning races within strategic alliances. - Quickly build downstream complementary assets. - Seek an alliance with a company or companies that will complete the value chain. - Pursue managerial hubris at all levels of development.

Seek an alliance with a company or companies that will complete the value chain.

Angie owns and runs Archana, a private start-up company with a current value of $1.3 billion. Archana is interested in going public to fund future growth. Which action should Angie take before Archana's initial public offering? - She and senior managers should write down their code of ethics. - She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist. - Angie should not embark on an IPO until Archana's value is higher. - Angie should come up with a business plan for what Archana will do once it is no longer publicly traded.

She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.

What are poison pills? - They are unspecified conditions in the contract between stakeholders in an organization. - Shareholders use them to prevent the founder of a company from taking the company private through a leveraged buyout. - Companies use them in a bid to perform a hostile takeover of competing firms. - They are defensive provisions that kick in should a buyer reach a certain level of share ownership.

They are defensive provisions that kick in should a buyer reach a certain level of share ownership.

According to Michael Porter, which of the following is a problem with many publicly traded companies? - Publicly traded companies have no legal standing and are not responsible for their debts. - There is no transferability of stock ownership in publicly traded companies. - Shareholders of publicly traded companies do not have a legitimate claim on profits. - They have defined value creation too narrowly in terms of financial performance.

They have defined value creation too narrowly in terms of financial performance.

Administrative and political distances, such as the presence or absence of colonial ties, are part of the CAGE distance framework. - True - False

True

If a privately held company has a history of legal and ethical problems, those problems can prevent a successful initial public offering (IPO) from taking place. - True - False

True

If two large movie-theater chains decide to merge, the result is likely a horizontal integration that creates a more favorable industry structure by decreasing competition. - True - False

True

Organizational design involves establishing a firm's structure, culture, and control mechanisms. - True - False

True

Vassar Systems 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 that may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Vassar Systems? - exporting - acquisition - licensing - franchise agreement

acquisition

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 - the local partner can better protect its proprietary know-how. - the value gap created by the firm can be easily lowered in an alliance. - building downstream complementary assets can be expensive and time-consuming. - the strategic alliance will reduce the differentiation of its product and service offerings.

building downstream complementary assets can be expensive and time-consuming.

David and Fred are customer care employees at JPN Care. In between calls, David and Fred 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. - is neither unlawful nor unethical; hence, David and Fred cannot be reprimanded. - demonstrates the dangers of information asymmetry. - typically exemplifies the agency problem of adverse selection.

can be stopped by implementing performance incentives and strict control mechanisms.

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

conflicts that arise in corporations should be addressed in the legal realm.

Which of the following entry modes was used extensively in Globalization 1.0 stage? - strategic alliances - acquisitions - exports - greenfield operations

exports

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 - multidivisional - functional - simple

global matrix

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

has a low level of diversification.

Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies - often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation. - have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events. - have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events. - do not focus enough on increasing firm profits, thereby contributing to low value creation

have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

Sanibel Autos Inc. merged with its competitor Vroom Autos Inc. This allowed Sanibel Autos to use its technological competencies along with Vroom Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What type of integration does this scenario best illustrate? - perfect - horizontal - supply-chain - technological

horizontal

Downshift 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, Downshift Autos Inc. is reaping the benefits of - resource immobility. - economies of scope. - resource ambiguity. - location economies.

location economies.

When a firm diversifies into different product lines and geographies, a ________ structure is preferred. - multidivisional - functional - network - simple

multidivisional

A trend observed during the Globalization 3.0 stage involves - world's market economies becoming less integrated. - privately owned firms getting nationalized. - countries around the globe becoming more self-sufficient and independent. - multinational companies organizing as global-collaboration networks.

multinational companies organizing as global-collaboration networks.

What causes the winner's curse? - underpaying for an acquisition - buying a firm with principal-agent problems - buying a firm with a competitive disadvantage - overpaying for an acquisition

overpaying for an acquisition

Planet Resource 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 it serves. Planet Resource is most likely doing this to - increase its administrative distance from the other countries. - increase its economic distance from the other countries. - reduce its geographical distance from the other countries. - reduce its cultural distance from the other countries.

reduce its cultural distance from the other countries.

Which of the following characteristics of a public stock company deals with principals and agents? - legal personality - transferability of investor ownership - limited liability of investors - separation of legal ownership and management control

separation of legal ownership and management control

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

similar to those that need to be developed and superior to those of competitors in the targeted area.

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

slow down decision making.

Employees learn about an organization's culture through the process of - acculturation. - exploitation. - co-opetition. - socialization.

socialization.

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that - all potential business risks in the new market will have to be faced alone by the foreign firm. - the foreign firm will need to make larger investments when compared to entering the new market on its own. - the shareholder value of the foreign partner will decline drastically. - some of the firm's proprietary know-how may be appropriated by the foreign partner.

some of the firm's proprietary know-how may be appropriated by the foreign partner.

Jen works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store? - flat structure - decentralize structure - centralized structure - tall structure

tall structure

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion? - the desire to gain a new capability - the need to enter a new geographical market - the need to reduce its level of horizontal integration - the desire to pursue an unrelated diversification strategy

the desire to gain a new capability

Which of the following factors is the most important determinant of economic distance? - the wealth and per capita income of consumers - the topography of a country - the ethnicity and religion of consumers - the presence of legal institutions in a country

the wealth and per capita income of consumers

European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used this strategy? - to take advantage of the high labor costs in the southern United States - to take advantage of the high cost of living in the southern United States - to take advantage of the low impact of globalization in the United States - to take advantage of lower taxes in the southern United States

to take advantage of lower taxes in the southern United States