BUS 498 7-12 Final

Which of the following best illustrates a dominant-business firm?

89bio Inc. is a luxury brand that derives 90 percent of its revenues from its apparel line and 10 percent of its revenues from its premium furniture business unit.

Which of the following statements about patents is not true?

A patent over a product translates into a permanent monopoly position

Which of the following statements is true?

A platform business exists to help make matches among users and facilitate the exchange of goods, services or social currency.

Which of the following examples would most likely limit a firm's growth?

A social entrepreneur makes conservation of the environment the primary goal of his firm.

Which of the following best illustrates a strategic alliance?

All Pharma Inc. teaming up with a research company to invent and market breakthrough vaccines

What happens in the third phase of alliance management?

Alliance partners make relation-specific investments.

________ is best described as the changes in an industry value chain that involve moving ownership of activities upstream to the originating (inputs) point of the value chain.

Backward vertical integration

Which of the following is an advantage of using licensing or franchising as a foreign entry mode?

Either one requires low capital investments.

_______ is best described as the process by which people undertake economic risk to innovate—to create new products, processes, and sometimes new organizations.

Entrepreneurship

Why was Yahoo's CEO, Jerry Yang, forced out in 2008?

He failed to implement necessary strategic changes after Yahoo lost its competitive advantage.

In terms of the key features of organic organizations, which of the following firms is most likely to have an organic structure?

Icebox, a software development firm, which focuses on building innovative products

_________ seek to define and direct employee behavior through a set of codified rules and standard procedures.

Input controls

________ is best described as the process of transformation of an idea into a new product or process, or the modification and recombination of existing ones.

Invention

Which of the following exemplifies the organic nature of W. L. Gore's organizational structure?

It has no formal chain of command or standard operating procedures.

Which of the following best indicates that W. L. Gore & Associates has an informal and decentralized organizational structure?

It prefers face-to-face communication over email and does not have an organizational chart.

Relaxicab Inc. is a 100-year-old, multinational enterprise (MNE). Which of the following activities would the company most likely have been involved in during the stage of Globalization 2.0?

It would have increased its local responsiveness to country-specific circumstances by duplicating business functions overseas.

Which of the following is a shortcoming of the matrix structure?

Its implementation is difficult due to significant organizational complexity and increased administrative costs.

Which of the following statements is true of local responsiveness?

Local responsiveness generally entails higher costs.

Why is strategy implementation referred to as the "graveyard of strategy"?

Managers often fail to implement a chosen strategy successfully despite extensive analysis of business environments.

Why do firms' strategies often follow their structures instead of the other way around?

Managers tend to consider strategies that do not change existing organizational structures.

Which of the following best illustrates horizontal integration?

Rich Industries Inc. acquires its competitor, Keenbean Electronics Inc., to gain access to its core competencies.

Which of the following statements is true of the real-options perspective?

The approach allows the incumbent firm to obtain additional information at predetermined stages.

Which of the following is a feature of Logitech as a global collaboration network?

The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7.

How are the early majority and late majority different in their attitudes toward technology?

The early majority is confident in their ability to master the new technology; the late majority is not.

While the industry for 5G compatible devices is in the introduction stage, the industry for 3G compatible devices are in the maturity stage. What does this imply?

The market for 3G compatible devices has reached its maximum size, whereas the market for 5G compatible devices is still small in size.

Which of the following statements is true of the growth stage in the industry life cycle?

The prices begin to fall during this stage when compared to the introduction stage.

Which of the following statements is typically true of early adopters?

They appreciate new technology that can add value to their personal and professional lives.

Which of the following is a disadvantage faced by first movers in an industry?

They will have to find distribution channels and complementary assets.

Which of the following is the best example of a platform business?

Uber ride-hailing services

While the industry for tablet computers is in the growth stage, the laptop industry is in its shakeout stage. What does this imply?

While the market demand for tablets will be high, the demand for laptops will be limited.

In developed countries, the industry for thumb drives is in the maturity stage, and the industry for floppy disks is in the decline stage. What does this imply?

While the thumb drive industry has reached its maximum market size, the market size for floppy disks is small and contracting.

Which of the following best illustrates backward vertical integration?

a chocolate manufacturing company setting up its own cocoa plantations

The management at Fast Autos Inc. and All Start Automobiles Inc. realized that by combining the two entities, the stakeholders of both the companies would benefit. Their core competencies would act as complementary assets to each other. Consequently, All Start Automobiles joined with FastAutos to form a combined entity called Just All Start Inc. Which of the following does this scenario best illustrate?

a merger

Swiss-based Nestlé, the largest food company in the world, is well known for customizing its product offerings to suit local preferences, tastes, and requirements. Which of the following strategies does the company pursue?

a multidomestic strategy

In order to rejuvenate its floundering product lineup, Disney

acquired Pixar.

The purchase or takeover of one company by another is a(n)

acquisition.

Trek Inc., a large conglomerate, took over a small startup company that had made some breakthrough innovations in the field of telecommunications. This purchase would help Trek to gain access to the startup company's superior technology and human capital. This transaction is an example of a(n)

acquisition.

Which of the following foreign entry modes requires the highest level of investment in terms of capital and other resources and allows for a high level of control?

acquisitions

Which of the following is an example of related-constrained diversification?

an automobile company that manufactures petrol cars expanding into the diesel car industry

Janet is a marketing and sales employee at 4-Ever-Foods Inc. She has invented a new way to process and pack the company's food products that would avoid the usage of chemical preservatives. Which of the following terms best describes Janet?

an intrapreneur

Highly diversified firms experience a diversification discount in the stock market because they

are unable to create additional value.

The rationale behind related diversification is to

benefit from economies of scale and scope.

The local real estate companies in a city have joined together and arranged a "Property Fair." The sponsors will equally share the expenses of the event. Although many companies compete against each other, they have joined together because the medium will help the companies market themselves through a dedicated forum at an extremely low cost. This arrangement is best referred to as

co-opetition.

Which of the following is a benefit of a high degree of formalization in an organization?

consistent results

The strategic foundations of the globalization hypothesis are based primarily on

cost reduction.

Inkwell is a pen manufacturing company based in Massachusetts. Inkwell's main area of operation is Massachusetts, and it has a stronghold over the market. It employs a robust production system, which helps it sell pens at exceptionally low prices. In this scenario, which of the following strategies is Inkwell most likely using?

cost-leadership strategy

A strategic alliance has the potential to help a firm gain and sustain a competitive advantage when it joins resources and knowledge that are

difficult to imitate.

Japanese carmakers first introduced small fuel-efficient cars and then leveraged their low-cost and high-quality advantages into high-end luxury segments, dominated by brands such as Lexus, Infiniti, and Acura. This initiative best illustrates a(n)

disruptive innovation.

Strategic business units (SBUs) in a company that uses an unrelated-diversification strategy are in direct competition with each other because

each SBU is evaluated as a standalone, profit-and-loss center.

Stuart bought his laptop and smartphone when these products had just entered their respective growth stages. More than the technological sophistication of these products, it was the idea that these products would allow him to multitask and work when traveling that drove him to make his purchase decision. Which of the following customer segments does Stuart best represent?

early adopters

According to Porter's diamond of national competitive advantage, factor conditions are best described as a country's

endowments in terms of natural, human, and other resources.

When Pluralsight Products planned to start its operations in Amerigo, an emerging nation, it realized that it would have to set up its own distribution channels. This would be a risky and expensive strategic move. The company had an option of hiring a small supply chain management company, Elastic Logistics, to reach its ultimate customers. However, this would require Elastic Logistics to make huge investments, which would be of no use to it if Pluralsight Products decided to exit the market. Thus, to gain Elastic Logistics' confidence, Gilded Products purchased 40 percent of the stock of Elastic Logistics. What does this scenario best illustrate?

equity alliance

Prestige Worldwide Inc. owns coffee plantations in Brazil. The company trades its coffee produce directly with coffee merchants in foreign markets who later resell and distribute it throughout their country. In this scenario, Prestige Worldwide's activities best illustrate

exporting.

A tightly coupled system of strategy and structure is prone to break apart when

external and internal shifts put pressure on the system.

Rekall Autos Inc., an automobile company based in the country of Springfield, made a capital investment of $400,000 to set up production units and distribution channels in the country of Uganda from where it plans to access the Uganda market. Such investments are best known as

foreign direct investments.

Zscaler started as an original equipment manufacturing firm (OEM) for brand-name mobile device companies. Later, it started offering a lineup of innovative and high-performance smartphones by acquiring BuildIt, a San Francisco-based design firm. This strategic move of Zscaler is known as

forward vertical integration.

Sam Walton was responsible for Walmart's cost-leadership strategy that continues to guide the company to this day. His influence on the organization's culture is best described as

founder imprinting.

One disadvantage of a functional structure is that it

frequently lacks effective communication channels across departments.

In order to implement a cost-leadership strategy effectively, a _________ structure is preferred in a firm.

functional and mechanistic

Tyrell Corporation is an electronics company based in the country of Palmia. The company has manufacturing facilities in four other countries where labor costs are low. It also has its research centers in three other countries because these countries offer best-of-class capabilities. However, Tyrell Corporation does not offer much product differentiation, which means that price is the main competitive weapon. In this scenario, Tyrell Corporation most likely implements a __________ strategy.

global-standardization

"A process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs" is the definition of

globalization.

In a typical industry life cycle, an industry immediately moves to the ________ after the introduction stage.

growth stage

Firms enter strategic alliances to

have a positive effect on economic value creation.

An inverted U-shaped relationship between the type of diversification and overall firm performance indicates that

high and low levels of diversification are generally associated with lower overall performance.

Which of the following is a characteristic of a mechanistic organization?

high degree of specialization

To secure a strong strategic position in fast-growing emerging markets, which of the following corporate strategies did Kraft Foods primarily pursue by acquiring Cadbury?

horizontal integration

The process of merging with a competitor at the same stage of the value chain is best described as

horizontal integration.

The starting point of the build-borrow-or-buy framework is management's

identification of a strategic resource gap that will impede future growth.

Firms often consolidate industries through horizontal mergers and acquisitions to

increase their market power.

Lillian, a real estate agent, is selling a moderately priced house in a subdivision. She knows from her uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a process that creates a very strong odor that permeates the surrounding neighborhood. A buyer, who is unaware of the type of factory under construction, makes an offer on one of the houses Lillian is selling, and within a short time, the deal goes through. What does this scenario best illustrate?

information asymmetries

The Bluth Company is a condominium-building company that is based in the country of Veritas. It sells high-priced homes to consumers in Veritas as well as to consumers in other countries. It has extremely high brand loyalty. The industry it operates in is characterized by low pressure for local responsiveness and low pressure for cost reductions. In this scenario, The Bluth Company most likely pursues a(n) _________ strategy.

international

In the third step of the innovation process, a(n)

invention is commercialized by entrepreneurs.

A nonequity alliance is the most common type of strategic alliance because

it is easy to initiate and terminate.

A large conglomerate is deciding on the range of new products and services it can offer to its customers to further expand its operations. This decision determines the firm's

level of diversification

North Carolina National Bank (NCNB) used its unique core competency of identifying, appraising, and integrating acquisition targets to be rebranded as Bank of America, one of the largest banks in the United States. This is an example of a firm

leveraging existing core competencies to improve current market position.

The additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances, are best described as a(n)

liability of foreignness.

"A form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary" is the definition of

managerial hubris.

Which of the following is instrumental in creating a tightly coupled system of strategy and structure in an organization?

managers that achieve a mastery of the firm's current environment

Since W. L. Gore's core competency is innovation, a(n) ________ would most likely be detrimental to its efforts.

mechanistic structure

"The process of joining two independent companies with their consent to form a combined entity on a permanent basis" is the definition of a

merger.

A disadvantage associated with obtaining goods and services externally includes

nontrivial search costs to be borne by the firm.

The best explanation of why Gulf airlines are giving U.S. legacy carriers stiff competition is that the Gulf carriers

offer better service for lower costs than do the U.S. legacy carriers.

Over time, 3M has relied on the results-only-work-environment (ROWE) framework and has morphed into a highly science-driven innovation company. At 3M, employees are encouraged to spend 15 percent of their time on projects of their own choosing. If any of these projects look promising, 3M provides financing through an internal venture-capital fund and other resources to further develop their commercial potential. This real-world scenario best illustrates

output controls.

If a pharmaceutical company develops a first-of-its-kind vaccine to prevent HIV/AIDS and thus creates a whole new market for the product (non-infected civilians), it would be a(n) _________ innovation.

radical

Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by offering its Kindle line of tablet computers and Echo line of digital assistants. This is an example of

related-linked diversification.

Companies from wealthy countries tend to trade with other rich countries rather than poor countries because they can

replicate their existing business model more easily.

Redwood Corp. follows a business model in which the performance of the company is not only based on how much profits were generated, but also on how the community in general benefited from its operations. Thus, the company under its "Plant a Life" campaign promises to plant a tree with every customer purchase. Which of the following terms best describes the performance valuation model of Redwood Corp.?

social entrepreneurship

LMP Automotive Holdings Inc., a large multinational conglomerate, has hired an external consultant to process and audit its payroll. This allows the company to focus on manufacturing and marketing activities rather than developing and maintaining its own human resource management systems. Which of the following alternatives to vertical integration has LMP Automotive Holdings Inc. adopted?

strategic outsourcing

According to the CAGE distance framework, cultural distance most affects industries or products

that are related to national and/or religious identity.

Which of the following factors best helps capture administrative and political distances?

the absence or presence of weak legal and financial institutions

The executives of Anaplan Inc., a large conglomerate, are making decisions on the stages of the industry value chain the firm must participate in, the range of products and services it should offer, and the global markets it should compete in. What are the executives primarily determining?

the boundaries of the firm

Which of the following is an example of internal transaction costs?

the costs pertaining to setting up a shop floor

According to the CAGE distance framework, what does cultural distance represent?

the cultural disparity between an internationally expanding firm's home country and its targeted host country

Which of the following factors has led to a shift toward open innovation?

the exponential growth of venture capital

Which of the following is an example of explicit knowledge?

the findings of a research published in a scientific journal

Which of the following strongly affects the cultural distance between two countries?

the languages spoken in each country

According to the crossing-the-chasm framework, a firm's transition between the different parts of the industry life cycle is difficult because

there is a big gulf separating the early adopters from customer segments that make up the mass market.

Which of the following is one of the reasons that firms make acquisitions?

to gain access to a new capability or competency

Which of the following was one of the primary reasons why Adidas acquired Reebok?

to overcome a competitive disadvantage

Which of the following best illustrates human-asset specificity?

training employees on how to operate a customized furnace