Capstone GR 2
The three phases of Alliance Management:
1. Partner selection and alliance formation 2. Alliance design and governance 3. Post-formation alliance management
A primary advantage of organizing economic activity within firms is the A) ability to coordinate highly complex tasks to allow for specialized division of labor. B) low administrative costs because of reduced bureaucracy. C) eradication of the principal-agent problem. D) high-powered incentive to work as salaried employees for an existing firm.
A
Ontomedia Inc. is a large multinational conglomerate. As a single business unit, the company's stock price is estimated to be $200. However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. What is Ontomedia experiencing in this scenario? A) diversification discount B) learning-curve effects C) experience-curve effects D) economies of scale
A
The process of alliance management begins with A) selecting the best possible partner. B) choosing an appropriate governance mechanism. C) designing the alliance. D) creating resource combinations that obey the VRIO criteria.
A
Which of the following is not true about the decline stage of an industry life cycle? A) Firms that consolidate by purchasing their rivals will find themselves at a disadvantage. B) There is generally excess industry capacity during the decline stage. C) The last consumer segment called "laggards" will finally enter the market. D) Inefficient firms will usually exit the industry.
A
While working a night job at a call center, John creates an app called iFood, 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 iFood. He creates a start-up called JohnBuilt1 and hires three people to help him improve iFood and maintain the servers that run it. In this scenario, JohnBuilt1 most likely has a ________ structure. A) simple B) matrix C) mechanistic D) functional
A
Innovation that targets new markets with existing technologies is known as disruptive innovation. ⊚ true⊚ false
False
Industry value chain (vertical integration)
In what stages of the industry value chain should the company participate?
Why do firms grow (5 reasons)
Increase profits/shareholder returns Lower costs (economies of scale) Increase market power Reduce risk Motivate management CEO pay often correlates with firm size
Four types of innovation emerge:
Incremental Architectural Disruptive Radical
Billy is the CEO of Billy's Kicks, a soccer ball retailer. He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores. In order to do this, Billy will need to engage in ________, which is a corporate level strategy. A) forward vertical integration B) backward vertical integration C) horizontal integration D) differentiation
B
Jennifer is the CEO of JustFixIt Inc., a firm that merges technology with commercial hardware. She has been struggling with the decision to allocate her resources for the development of a new system or go to the market and search for an already established system. The Board of Directors for JustFixIt Inc. suggested that enter a contractual agreement with a partner. This scenario best illustrates the concept of A) buy-sell-or-trade framework. B) build-borrow-or-buy framework. C) the horizontal and vertical integration frameworks. D) the strategic alliance framework.
B
Tom is the inventor of a personal fitness tracking device, and he is in the process of hiring employees after receiving investment funding. When considering how to structure his company, he should A) emulate the structure of the leading firm in the industry. B) first establish a strategy and let that be him guide. C) choose the structure that will give him the most control. D) ask employees what structure they are most comfortable with.
B
Which of the following scenarios best exemplifies a platform business? A) Jill purchases electronic parts from a variety of vendors and assembles them into inexpensive MP3 players that he sells to consumers. B) Samantha operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy. C) Tony operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture. D) Allison founded a bike-based transportation company that offers environmentally-friendly rides to customers within a 25-mile radius.
B
Aperture Science is a publicly traded manufacturer of home electronics. Based on what you have read, which of these actions would be wisest for Aperture Science's board of directors to take to be sure that the company's new CEO is as motivated as possible? A) Encourage the CEO to take all of her compensations in stock options, which will motivate her to keep the stock price high. B) Offer the largest bonus possible to prevent the CEO from leaving to go a rival firm. C) Link the CEO's pay to her performance but avoid high-powered incentives that may cause reckless behavior. D) Encourage her to emulate Warren Buffett and to take a lower salary than she might command elsewhere.
C
Los Pollos Hermanos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. The firm's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's? A) Los Pollos Hermanos has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. B) Los Pollos Hermanos has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. C) Los Pollos Hermanos has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. D) Los Pollos Hermanos has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.
C
Sonron Auto Corporation generates 85 percent of its annual revenues by manufacturing luxury cars. The company derives 15 percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes Sonron Auto Corporation? A) a conglomerate B) a subsidiary C) a dominant-business firm D) a single-business firm
C
The root cause of the principal-agent problem between senior executives and lower-level employees can be explained by the A) informational advantage of the lower-level employees. B) higher number of lower-level employees than senior executives. C) knowledge of employees regarding day-to-day tasks. D) operational expertise of lower-level employees in concentrated areas of a particular field.
C
Johnathan owns shares in a company called Delos Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Johnathan wants to proactively cut his losses and therefore sells his shares. Mary, a trading enthusiast, buys shares in Delos Inc. Industries because she 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? A) separation of legal ownership and management control B) legal personality C) limited liability for investors D) transferability of investor ownership
D
The four-step innovation process ends with A) idea generation. B) invention. C) idea testing. D) imitation.
D
Corporate Strategy
The decisions & actions taken to gain & sustain competitive advantage in several industries & markets simultaneously
3 Dimensions of Corporate Governance
Vertical Integration Diversification Geographic Scope
Products and services (diversification)
What range of products and services should the company offer?
Geographic Scope
Where should the company compete geographically in terms of regional, national, or international markets?
Moderate levels of diversification =
higher firm performance
High and low levels of diversification =
lower performance
Coroporate Strategy: Addresses WHERE to compete along three dimensions:
Industry value chain (vertical integration) Products and services (diversification) Geographic Scope
