CCBA 469 final exam
Which of the following proves that GE's board of directors is significantly independent? A. 26 percent of the board members at GE are female. B. The CEO of GE is also the chairman of the board. C. 16 of the 17 board directors are from outside the organization. D. GE's board has five committees, each with its own chair.
16 of the 17 board directors are from outside the organization.
Postrupe Inc., a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Postrupe's board to achieve board independence? A. 1 B. 3 C. 5 D. 7
7
Which of the following types of groups is most susceptible to groupthink? A. A diverse group B. A cohesive group C. A heterogeneous group D. A decentralized group
A cohesive group
Which of the following best illustrates a non-equity alliance? A. A contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. B. An alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third company C. A collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices D. An alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Finance Inc.
A contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc.
For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country? A. A firm that manufactures cell phone batteries B. A firm that extracts and exports iron ore C. A firm that produces movies D. A firm that sells wrist watches
A firm that extracts and exports iron ore
To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets? A. A transnational strategy B. A multidomestic strategy C. A localization strategy D. A global-standardization strategy
A global-standardization strategy
Why must managers use a mechanistic structure to implement a cost-leadership strategy? A. A mechanistic structure offers a centralized structure with well-defined lines of authority. B. A mechanistic structure allows for a lower degree of specialization. C. A mechanistic structure offers continuous innovation and flexibility as well as creativity. D. A mechanistic structure allows for the CEO to delegate tasks.
A mechanistic structure offers a centralized structure with well-defined lines of authority
Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A. A multidomestic strategy B. An international strategy C. A global-standardization strategy D. A one-product strategy
A multidomestic strategy
Which of the following best illustrates an equity alliance? A. A contractual agreement that provides Ocia Pharma Inc. the exclusive rights to distribute the drugs of Marvel Pharma Inc. in the Asian market B. An alliance between GoldWing Systems Inc. and GM Computers Inc. that results in GM Wing Inc., an independent third company C. A collusion between two competitors, Torque Steels Inc. and Vizor Metals Inc., to fix prices D. A partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.
A partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.
Which of the following best defines duality in a board of directors? A. A person holds both the role of CEO and chairperson of the board. B. A person holds both the role of inside director and outside director of the board. C. A person holds both the role of director and shareholder of the company. D. A person holds the role of CEO on the boards of two companies.
A person holds both the role of CEO and chairperson of the board.
Why did W.L. Gore reorganize itself into a functional structure from a simple structure? A. A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity. B. A functional structure is more decentralized. C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. D. A functional structure has a tall hierarchical structure that relies on bottom-up communication.
A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario? A. An acquisition B. A strategic alliance C. A leveraged buyout D. A proprietorship
A strategic alliance
Which of the following statements about an organization's culture is NOT true? A. A positive culture motivates employees by appealing to high ideals. B. A strong monitoring and supervision mechanism is needed to enforce the culture. C. A positive culture encourages employees to make decisions not only with their heads but also with their hearts. D. Employees feel that they are part of a larger community by internalizing the firm's values and norms.
A strong monitoring and supervision mechanism is needed to enforce the culture.
Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Shine Enterprises Inc. most likely use? A. An international strategy B. A focused-differentiation strategy C. A multidomestic strategy D. A transnational strategy
A transnational strategy
Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost? A. A multidomestic strategy B. An international strategy C. A global-standardization strategy D. A transnational strategy
A transnational strategy
When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? A. Increasing competitive intensity B. Accessing critical complementary assets C. Procuring additional capital investments D. Reducing differentiation of product and service offerings
Accessing critical complementary assets
Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? A. Exporting B. Franchise agreement C. Acquisition D. Licensing
Acquisition
While Cisco Systems has been successful in selecting and buying both big and small technology ventures, HP had to write off some of its recent technology acquisitions. Which of the following statements best explains this scenario? A. Cisco was successful due to its unrelated diversification, whereas HP failed by pursuing a related-linked diversification strategy. B. Cisco treated the management of the larger firms it took over more like acquisitions, whereas HP treated its acquisitions as strategic alliances. C. The acquisitions were successful as the learning and experience curve effects were low. D. Acquisition and integration capabilities were not equally distributed across firms.
Acquisition and integration capabilities were not equally distributed across firms.
Which of the following is not included within the types of strategic alliances? A. Joint ventures B. Franchising C. Acquisitions D. Licensing
Acquisitions
Which of the following is true of acquisitions? A. Acquisitions can be friendly or hostile. B. Acquisitions can occur only when the involved entities are of comparable size. C. In acquisitions, two independent companies join to form a separate third entity. D. Acquisitions increase the competitive intensity in an industry.
Acquisitions can be friendly or hostile.
_____ is illustrated by a situation in which the principal cannot determine the value created by individual members of a team. A. Moral hazard B. Adverse selection C. Information asymmetry D. Shareholder capitalism
Adverse selection
Which of the following is true of W.L. Gore & Associates, which has a lattice organizational form? A. It has a high degree of centralization. B. All employees are empowered to speak to all other employees in the organization. C. Its culture has been linked to lower employee satisfaction and retention. D. The degree to which a task is divided into separate jobs is high.
All employees are empowered to speak to all other employees in the organization.
Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies? A. Organic B. Simple C. Ambidextrous D. Mechanistic
Ambidextrous
The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate? A. A merger B. A joint venture C. An acquisition D. An equity alliance
An acquisition
W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity? A. An extremely formalized organizational structure B. A highly organic organizational structure C. A low degree of centralization D. A flat organization structure
An extremely formalized organizational structure
Onico Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Onico Inc. most likely pursue? A. A multidomestic strategy B. A transnational strategy C. A global-standardization strategy D. An international strategy
An international strategy
Which of the following do NOT serve as additional external-governance mechanisms? A. Auditors B. Government regulators C. Board of directors D. Industry analysts
Board of directors
Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company? A. Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement. B. GE knew that it could create a profitable venture out of producing green products, so it rolled out the ecomagination strategy. C. Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise. D. Goldman Sachs was party to the Abacus deal despite knowing its shortcomings.
Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A. Because of the political differences between India and U.S. B. Because NAFTA prohibits Walmart from investing in countries outside North America C. Because of the large economic distance between U.S. and India D. Because Walmart's low-cost strategy has not been accepted by Indian consumers
Because of the large economic distance between U.S. and India
Which of the following is an observable feature in the globalization 3.0 stage? A. Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B. Only sales and distribution functions of a multinational enterprise are located in a few key countries. C. Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D. Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries.
Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.
Why did the American MTV network cable channel fail when pursuing a global-standardization strategy? A. Because MTV failed to understand that music videos were a commodity product B. Because the globalization hypothesis holds true for the music industry C. Because cultural distance most affects products with high linguistic content D. Because an international strategy was more suitable for the music industry
Because cultural distance most affects products with high linguistic content
Why do shareholders of public companies need to appoint a board of directors to represent their interests? A. Because of the separation of ownership and control B. Because employees of a company cannot be shareholders C. Because the board of directors itself is made up of shareholders D. Because they want tighter control over day-to-day operations of a company
Because of the separation of ownership and control
Which of the following has been a key driver for firms to expand globally during the globalization 3.0 stage? A. Benefits from lower labor costs in manufacturing and services B. Access to low-cost raw materials such as lumber and iron ore C. Low levels of economic growth in emerging economies D. Inefficient infrastructure in countries like China, which have brought down setting-up costs
Benefits from lower labor costs in manufacturing and services
Which of the following is an important internal corporate-governance mechanism? A. Shareholder capitalism B. Board of directors C. Market for corporate control D. Activist investors
Board of directors
Gamma Foods Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. RiverGem Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A. While RiverGem Inc.'s competitive advantage will lie in its high local responsiveness, Gamma Foods Inc. will lack such competencies. B. Gamma Foods Inc. will face greater pressure for cost reductions than RiverGem Inc. due to its strategy choice. C. Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries. D. While Gamma Foods Inc. will require a global matrix structure, RiverGem Inc. will require a traditional headquarters model.
Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries.
Which of the following is regarded as the most internal of control mechanisms? A. Business ethics B. Executive compensation C. The market for corporate control D. Government regulation
Business ethics
Rehman is a firm believer in Milton Friedman's view of a firm's social obligations. With which of the following statements is Rehman most likely to agree? A. Businesses can use their resources to create profit as long as they do so within the rules of the game. B. Firms should not go beyond their economic responsibility to increase profits. C. Firms should define value creation more narrowly in terms of financial performance. D. Businesses should engage in open and free competition without deception or fraud, only as long as their competitors do so.
Businesses can use their resources to create profit as long as they do so within the rules of the game.
How has the administrative and political distance between Canada, Mexico, and the United States been reduced? A. By adopting similar national cultures B. By lowering the disparities between their per capita incomes C. By establishing the North American Free Trade Agreement (NAFTA) D. By reducing their linguistic differences
By establishing the North American Free Trade Agreement (NAFTA)
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers? A. By facilitating excess capacity in the industry B. By preventing mergers from taking place C. By lowering competitive intensity in the industry overall D. By increasing the threat of entry in the industry
By lowering competitive intensity in the industry overall
How does horizontal integration within an industry affect the surviving firms? A. By increasing the threat the surviving firms will face from new entrants B. By strengthening the rivalry among existing firms C. By requiring the surviving firms to shift their focus from non-price to price competition D. By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
_____ refers to the degree to which decision making is concentrated at the top of the organization. A. Specialization B. Formalization C. Naturalization D. Centralization
Centralization
Which of the following is true of business ethics? A. Certain notions such as fairness, honesty, and reciprocity are universal norms. B. Business ethics is an agreed-upon code of conduct in business, based on laws. C. The perception of what is ethical and what is not is similar across different cultures. D. Business ethics needs to be codified into law in order to be followed.
Certain notions such as fairness, honesty, and reciprocity are universal norms.
GM entered China in 1997 through a joint venture with Shanghai Automotive Industrial Corp. (SAIC). Which of the following factors best contributes to the fact that the Chinese market already accounts for 25 percent of GM's total revenues? A. Chinese workers cost only a fraction of what U.S. workers do. B. The company operates a larger number of assembly plants in China than the U.S. C. The China operation sells more vehicles while employing twice the number of employees. D. GM's China operation has never been cost-competitive.
Chinese workers cost only a fraction of what U.S. workers do.
FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as? A. Takeover B. Buyout C. Co-opetition D. Acquisition
Co-opetition
_____ is best described as cooperation by competitors to achieve a strategic objective. A. Limited liability B. Proprietorship C. Co-opetition D. Commerce
Co-opetition
Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy? A. Products with a high value-to-weight ratios like luxury goods B. Commodity products like computer hardware C. Consumer products related to national and/or religious identity like food D. Products that carry country-specific quality associations like wine
Commodity products like computer hardware
____ is a mechanism to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully and legally. A. Corporate social responsibility B. Stakeholder impact analysis C. Corporate governance D. Shareholder capitalism
Corporate governance
Which of the following is NOT true of corporate governance in public stock companies? A. Corporate governance seeks to benefit multiple stakeholders, not just shareholders. B. Corporate governance provides rules for making decisions on corporate affairs. C. Corporate governance attempts to address the principal-agent problem. D. Corporate governance seeks to create a separation between ownership and control.
Corporate governance seeks to create a separation between ownership and control.
____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies. A. Corporate venture capital investments B. Greenfield ventures C. Joint ventures D. Loan sharks
Corporate venture capital investments
Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify? A. Factor conditions B. Complementor availability C. Competitive intensity D. Demand conditions
Demand conditions
Under CEO Robert Iger, Disney has followed an acquisition-led growth strategy. Which of the following was a result of this corporate strategy? A. Disney attempted full integration with the subsidiaries it acquired after its merger with Pixar. B. Disney's revenue streams from its various activities became less predictable. C. Disney became a less diversified company. D. Disney compensated more easily for losses from flops.
Disney compensated more easily for losses from flops.
Why does Michael Porter recommend expanding the customer base of an organization in terms of the Shared Value creation framework? A. Doing so could yield significant business opportunities that could improve the standard of living of the poor. B. Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. C. Doing so could be the only way to meet stockholder expectations in a highly competitive market. D. Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.
Doing so could yield significant business opportunities that could improve the standard of living of the poor.
The Securities and Exchange Commission (SEC) makes all financial reports filed by public companies available electronically via the _____ database. A. GAAP B. JASON C. EDGAR D. PARMER
EDGAR
Food Works Inc. is a multinational fast food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company? A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets. B. Each country unit owned by the company will tend to be highly autonomous. C. Majority of the value creation for the company will take place in its home country. D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.
Each country unit owned by the company will tend to be highly autonomous.
Which of the following is an implication for the strategist in the context of corporate governance and a company's success? A. Very few and specific corporate governance mechanisms can be effective in addressing the principal-agent problem. B. Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage. C. Leading by ethical example often has a less strong effect on employee behavior than words. D. A firm that restricts its responsiveness to stockholders (and no other stakeholders) and keeps them committed to its vision will be successful.
Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage
Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan? A. Equity alliance B. Non-equity alliance C. Greenfield venture D. Joint venture
Equity alliance
Which of the following statements is true of explicit knowledge? A. Explicit knowledge is about knowing how to do a certain task. B. Explicit knowledge is knowledge that cannot be codified. C. Explicit knowledge is shared in non-equity alliance firms. D. Equity knowledge is acquired only through actively participating in a process.
Explicit knowledge is shared in non-equity alliance firms.
Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A. Greenfield operations B. Brownfield operations C. Exporting D. Crowdsourcing
Exporting
Which of the following modes of entering a foreign market allows for the lowest level of control? A. Greenfield ventures B. Exporting C. Joint ventures D. Acquisitions
Exporting
Which of the following perspectives best supports the Shared Value creation framework? A. Markets are more often than not defined by societal needs rather than economic needs. B. Failing to create value for society almost always reflects on the bottom line. C. A firm's competitive advantage depends on pitting economic and societal needs in a trade-off. D. Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.
Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.
Which of the following terms or phrases best characterizes Zappos' organizational structure? A. Centralized B. Mechanistic C. Extremely tall D. Extremely flat
Extremely flat
Which of the following statements is true of a multidomestic strategy? A. Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets. B. The multidomestic strategy is one of the main strategies companies pursued in the Globalization 1.0 stage. C. Companies pursuing a multidomestic strategy generally follow a cost-leadership strategy at the business level. D. The multidomestic strategy effectively protects firms from the risk of intellectual property appropriation.
Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets.
Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? A. Flight Stream Inc. is a mechanistic organization. B. Flight Stream Inc. has a flat organizational structure. C. Flight Stream Inc. has a high degree of centralization. D. Flight Stream's organizational culture is governed by codified rules.
Flight Stream Inc. has a flat organizational structure.
Which of the following features helps match a cost leadership strategy to a functional structure? A. Decentralization B. Process and product innovations C. Flexibility and mutual adjustment D. Focus on economies of scale
Focus on economies of scale
Which of the following is an ineffective practice in alliance management? A. Coordinating a firm's portfolio of alliances B. Establishing knowledge-sharing routines between alliance partners C. Developing relational capabilities to manage mergers and acquisitions D. Focusing on developing an alliance-management capability in isolation
Focusing on developing an alliance-management capability in isolation
For which of the following types of industries is a multidomestic strategy most common? A. Machine-tool industries B. Genetic industries C. Food industries D. Capital goods industries
Food industries
For which of the following products is an international strategy most suitable? A. For luxury goods that can be shipped across the globe B. For products with low value-to-weight ratios such as steel C. For food products that are specific to certain cultures D. For products with high linguistic content
For luxury goods that can be shipped across the globe
Which of the following types of organizations comparatively requires the lowest levels of investment and control? A. Joint ventures B. Franchising C. Acquisition D. Greenfield operations
Franchising
Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to his duties on the board, Frank is also a full-time employee as a senior manager at Spinson Locomotives Inc. Which of the following is most likely to be true of Frank? A. Frank is a part-time employee at Lofloy Greens. B. Frank cannot serve as a director on Spinson Locomotives' board. C. Frank is an outside director on Lofloy's board of directors. D. Frank is a stockholder of Lofloy Greens.
Frank is an outside director on Lofloy's board of directors.
Frappe operates as a strategic business unit (SBU) under More or Less Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that: A. Frappe does not have its own profit-and-loss responsibility. B. Frappe is dependent on the other SBUs in More or Less Inc. C. Frappe has a matrix organizational structure. D. Frappe is led by its own CEO (or equivalent general manager).
Frappe is led by its own CEO (or equivalent general manager).
Which of the following organizational structures matches best with an international strategy? A. Simple B. Matrix C. Multidivisional D. Functional
Functional
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.? A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase. B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately. C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
Which of the following facts proves that GE's board is fairly diverse compared to other Fortune 500 companies? A. GE's board is composed of 94 percent outside directors, compared to less than 70 percent for the others. B. GE's board is chaired by its CEO while other companies have outside directors. C. GE's board is composed of 28 percent women, compared to less than 16 percent for the others. D. GE's board has five committees, each with its own chair, compared with less than three for the others.
GE's board is composed of 28 percent women, compared to less than 16 percent for the others.
Garnet Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Garnet Mobiles Inc. most likely pursue? A. International strategy B. Multidomestic strategy C. Global-standardization strategy D. Localization strategy
Global-standardization strategy
In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy? A. Globalization 1.0 B. Globalization 2.0 C. Globalization 3.0 D. Globalization 4.0
Globalization 3.0
Glova Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. RightMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A. Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements. B. Glova Inc. will pursue a differentiation strategy at the business level, whereas RightMart Inc. will pursue a cost-leadership strategy at the business level. C. Glova Inc. will be better protected from exchange rate fluctuations when compared to RightMart Inc. D. Glova Inc. will not be able to leverage its home-based core competencies in foreign markets as much as RightMart Inc.
Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements.
Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? A. Greenfield operation B. Export C. Joint venture D. Acquisition
Greenfield operation
Leila is a graduate student pursuing a course in international business. Presented with the case of HP's "soap opera," Leila wonders whether it was the right decision to ask the CEO of HP, Mark Hurd, to step down after he was accused of sexual harassment. Having a strong inclination toward Michael Porter's idea of value creation, Leila is most likely to conclude that: A. HP was wrong in asking Mark to step down because it did not consider the profit dip that would affect its shareholders. B. HP was right in asking Mark to step down because it has a greater obligation toward society. C. HP was wrong in asking Mark Hurd to step down because he was responsible for an almost 90 percent appreciation of the company's stock. D. HP was right in asking Mark Hurd to step down because agents, unlike principals, are disposable.
HP was right in asking Mark to step down because it has a greater obligation toward society.
Charlie is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Charlie consider while choosing his strategy? A. He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance. B. He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. C. He should remember that he has only one framework at his disposal to make global strategy decisions. D. He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign entry modes.
He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
Which of the following is a feature of an organic organization? A. High degree of specialization B. Rigid division of labor C. Clear lines of authority D. High span of control
High span of control
Today, Hollywood movies are banking more on foreign sales for their overall revenues. Hollywood studios have been adapting scripts to appeal to global audiences, and casting foreign actors in leading roles. Which of the following statements most accurately explains the reason for this change? A. The purchasing power of the U.S. audience has reduced drastically. B. Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States. C. Hollywood actors and actresses are no longer willing to participate in domestic productions since there is no money in this industry. D. The movie industries of other countries are not doing so well.
Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States.
Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A. Backward integration B. Forward integration C. Horizontal integration D. Vertical integration
Horizontal integration
To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate? A. How an organization accommodates strategy implementation through a flexible organizational structure B. How strategy implementation has an effect on resource allocation and power distribution C. How an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure D. How an organization optimizes its organizational structure to the current situation
How an organization accommodates strategy implementation through a flexible organizational structure
Which of the following statements is true of an equity alliance? A. An equity alliance is based on contractual agreements rather than partial ownership. B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible. C. In an equity alliance, a standalone organization is created that is jointly owned by two or more parent companies. D. An equity alliance creates weaker ties between the alliance partners when compared to a non-equity alliance.
In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible.
____ are the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance. A. Investors B. Outside directors C. Inside directors D. Auditors
Inside directors
What best describes transferability of investor ownership in a public stock company? A. Investors can give out company stocks as a gift. B. Investors are allowed to trade shares of stocks. C. Investors are allowed to participate in strategy formulation. D. Investors can be hired as employees.
Investors are allowed to trade shares of stocks.
Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy? A. It allows a cost leader to upgrade core competencies in manufacturing and logistics. B. It enables a cost leader to build products that are different from its competitors' offerings. C. It enables a cost leader to increase costs above that of its competitors. D. It allows a cost leader to operate in a decentralized organizational structure.
It allows a cost leader to upgrade core competencies in manufacturing and logistics.
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? A. It allows a high level of integration. B. It helps contain the core competencies within a strategic business unit (SBU). C. It leads to competition between SBUs. D. It helps evaluate each SBU as a standalone profit-and-loss center.
It allows a high level of integration.
Which of the following is an advantage offered by a functional structure? A. It allows for an efficient top-down communication chain and thus relies on a relatively tall structure. B. It facilitates a lower division of labor, which is linked to higher productivity. C. It allows for a higher degree of specialization and deeper domain expertise. D. It facilitates a lower level of specialization.
It allows for a higher degree of specialization and deeper domain expertise.
Why does a functional structure rely on a flat organizational structure? A. The work in the organization is centrally coordinated by the CEO. B. It allows for a higher degree of specialization and domain expertise. C. It allows for efficient bottom-up and top-down communication. D. It allows for the implementation of a differentiation strategy.
It allows for efficient bottom-up and top-down communication
Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? A. It allows the firm to create incentives to foster process innovation in order to drive down cost. B. It allows the firm to reduce its cost below that of competitors while offering acceptable value. C. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. D. It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.
It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
How does taking a real-options perspective by entering strategic alliances help incumbent firms? A. It helps the incumbent firms gain the confidence of the partnering company by making credible commitments. B. It helps the incumbent firms reduce the value gap they create through their product and service offerings. C. It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade. D. It reduces the incumbent firms' cost of acquisition by enabling them to make the entire investment decision in the beginning itself.
It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade.
Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job? A. It is confident that employees will be impressed with the company's creativity and will stay on for a longer term. B. It does not believe that a firm's culture can flow from its values when they are linked to the company's reward system. C. It believes that individuals who choose to stay on will fit in with the Zappos culture. D. It is certain that a firm's culture flows only from founder imprinting.
It believes that individuals who choose to stay on will fit in with the Zappos culture.
Which of the following is a disadvantage of a functional strategy? A. It frequently lacks the tools required to pursue a cost-leadership strategy. B. It does not facilitate rich communication between members of the same department. C. It cannot effectively address a higher level of diversification. D. It does not allow organizations to be flexible or innovative.
It cannot effectively address a higher level of diversification.
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP? A. It helped HP pursue a taper integration strategy. B. It enabled HP to compete head on with Cisco's videoconferencing solution. C. It resulted in depreciation of HP's shareholder value. D. It failed because HP lacked the expertise in selecting and integrating technology acquisitions.
It enabled HP to compete head on with Cisco's videoconferencing solution.
Which of the following statements is true of an international strategy? A. It enables firms to leverage their home-based core competencies in foreign markets. B. It is advantageous when firms face high pressures for both local responsiveness and cost reductions. C. It relies on joint ventures to reap economies of scale by accessing a larger market. D. It effectively protects a firm from exchange rate fluctuations.
It enables firms to leverage their home-based core competencies in foreign markets.
In which of the following ways does Zappos achieve organizational control? A. It continually changes the organizational values that guide its employees. B. It refrains from monitoring its employees' calls. C. It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience. D. It enforces that each group member's compensation depends in part on the group's overall productivity.
It enforces that each group member's compensation depends in part on the group's overall productivity.
What did Microsoft do to gain a foothold in the online search and advertising market dominated by Google? A. It acquired Yahoo. B. It entered into a strategic alliance with Yahoo. C. It sold part of its equity to Yahoo. D. It outsourced its non-core business activities to Yahoo.
It entered into a strategic alliance with Yahoo.
Which of the following is a benefit of the transnational strategy? A. It facilitates global learning and harnesses economies of location. B. It completely eliminates a firm's risk of intellectual property expropriation. C. It helps to create a matrix global structure, which is cost effective and easy to implement. D. It helps a firm pursue a cost-leadership strategy by minimizing the need for local responsiveness.
It facilitates global learning and harnesses economies of location.
How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010? A. Its main strategic focus is now on the domestic market. B. It opens a market for it that is growing slowly but has high profit margins. C. It has access to convenience stores and a new distribution channel. D. It automatically gains monopoly in the chocolate-manufacturing industry.
It has access to convenience stores and a new distribution channel.
Which of the following is a disadvantage of a horizontal integration corporate strategy? A. It increases competitive intensity within an industry. B. It increases the potential for legal repercussions. C. It increases the costs associated with increasing value. D. It increases the threat of new entrants in an industry.
It increases the potential for legal repercussions.
Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business? A. It weakens the national competitive advantage enjoyed by the focal firm. B. It improves the factor conditions in the focal firm's domestic market. C. It increases the value of the focal firm's offering from a customer's perspective. D. It reduces the economic contribution created by the focal firm.
It increases the value of the focal firm's offering from a customer's perspective.
Which of the following statements best describes groupthink? A. It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure. B. It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies. C. It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.
It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions
Which of the following statements is true of organizational culture? A. Changes in culture are too frequent to have any impact on strategic implementation. B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. C. It is always better to focus on output control and performance than on organizational culture. D. According to research, more than 50 percent of firms change culture successfully.
It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.
Which of the following is one of the features of an international strategy? A. It is characterized by limited local responsiveness. B. It is one of the newest types of global strategies. C. It is characterized by cost-leadership as a preferred business strategy. D. It is often used successfully by firms with relatively small domestic markets.
It is characterized by limited local responsiveness.
What was Goldman Sachs' rebuttal to SEC's claim that it defrauded investors? A. It is up to the clients to assess the risks involved in any investments. B. Fabrice Tourre was responsible for putting the deal together, and it was the lapse of an individual, not the entire firm. C. John Paulson did not reveal his intentions behind creating Abacus. D. Goldman Sachs' itself lost $100 million in the deal.
It is up to the clients to assess the risks involved in any investments.
Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal? A. It was given a "triple A" rating for Abacus. B. It made no effort to ascertain the stability of the real estate market. C. It knew that Paulson had bundled high-risk mortgages into the collateralized debt obligation. D. It lost $100 million in the Abacus fiasco.
It knew that Paulson had bundled high-risk mortgages into the collateralized debt obligation.
How did Apple plan to attack Amazon's stronghold in the e-reader market? A. It orchestrated a web of strategic alliances with major publishing houses. B. It directly imitated Amazon's Kindle product technology. C. It acquired startup publishing houses prior to launching its iPad product. D. It sold e-books at prices lesser than that of Amazon.
It orchestrated a web of strategic alliances with major publishing houses.
What most likely happens when a firm optimizes its organizational structure to its current situation? A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B. It achieves superior performance. C. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. D. It transforms strategy into actions and business models.
It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur.
What is the result of managers' pursuit of strategies that define value creation too narrowly in public stock companies? A. It gives the managers greater control of the performance of the organization in the long term. B. It reduces the trust of shareholders in the organization as a vehicle for value creation. C. It helps companies increase firm profits by creating shared value. D. It enables companies to create social value by addressing society's needs but prevents them from creating economic value for shareholders.
It reduces the trust of shareholders in the organization as a vehicle for value creation.
Which of the following is true of a functional structure? A. It offers a lower degree of specialization than a simple structure. B. It relies on a relatively flat organizational structure. C. It offers decentralized management. D. It relies on bottom-up communication rather than top-down communication.
It relies on a relatively flat organizational structure.
Which of the following is a drawback of pursuing a transnational strategy? A. It creates bottlenecks for global learning. B. It exposes a firm to diseconomies of scale and location. C. It requires a global matrix structure, which is difficult to implement. D. It involves locating all key business activities in the home country headquarters.
It requires a global matrix structure, which is difficult to implement.
Zenovia Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Marva, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Zenovia Inc.? A. It will be able to benefit from economic arbitrage. B. It will be able to successfully leverage its competitive advantage from economies of standardization. C. It will be able to replicate its existing business model easily. D. It will be able to easily sell products for which demand varies by income.
It will be able to benefit from economic arbitrage.
Which of the following is a feature of a multinational company pursuing a global-standardization strategy? A. Its key business functions are located at the home country headquarters. B. Its business-level strategy tends to be cost leadership. C. Its competitive advantage lies in its high local responsiveness. D. Its core competency lies in its strong product differentiation.
Its business-level strategy tends to be cost leadership.
Why is the optimal organizational structure a multidivisional structure? A. Its focus is on driving down costs. B. Its focus is on producing differentiated products. C. Its focus is on retaining activities within a single geographic area. D. Its focus is on establishing a flat hierarchy operated in a decentralized fashion.
Its focus is on driving down costs.
Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? A. It frequently ranks among the top 500 companies to work for. B. Its communication lines are bottom-up and well defined. C. Its decision power is spread across the organization. D. Its job descriptions are very descriptive.
Its job descriptions are very descriptive.
What was one of the reasons for Jerry Yang's failure at Yahoo? A. Jerry made many necessary changes to the company's organizational structure. B. Jerry established a successful organizational structure and culture, but could not assert control. C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting. D. Jerry focused most strategic changes on improving user experience and increasing advertising revenues.
Jerry's preference for obtaining consensus among his managers led to bickering and infighting.
Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company? A. Rosa can legally sell shares of Hoptin in the stock market. B. John is a shareholder of Hoptin but does not have any managerial duties. C. Kevin, an employee at Hoptin, is not responsible for any losses that Hoptin incurs. D. Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.
Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.
NorthStar Inc. and The Royal Group have together established The Royal Star Group of hotels. NorthStar owns 49 percent and The Royal Group has a 51 percent share in The Royal Star Group of hotels. However, the management of The Royal Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate? A. Sole Proprietorship B. Non-equity alliance C. Equity alliance D. Joint venture
Joint venture
Which of the following types of strategic alliances is the least common in terms of frequency? A. Mergers B. Acquisitions C. Equity alliances D. Joint ventures
Joint ventures
Aro Shoes Inc. and Mova Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Aro Shoes entered the strategic alliance to acquire the production system pioneered by Mova Shoes. Similarly, Mova Shoes agreed to the strategic alliance to study the designing process of Aro Shoes. However, Aro Shoes was more successful and faster than Mova Shoes in accomplishing its alliance goal. What does this scenario best illustrate? A. Network effects B. Economies of scope C. Learning races D. Time compression diseconomies
Learning races
_____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary. A. Learning races B. Learning networks C. Learning effects D. Learning matrices
Learning races
Mario founded Tapoz Communications Inc. in 1993. Ten years later, the company went public. Despite Mario's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify? A. Transferability of investor ownership B. Legal personality C. Limited liability for investors D. Separation of legal ownership and management control
Legal personality
Which of the following is a characteristic of a public stock company? A. Shareholders who provide risk capital are liable for all losses incurred by the company. B. Investor ownership cannot be transferred easily between investors. C. Legal personality allows a firm's continuation beyond the founder or the founder's family. D. In publicly traded companies, professional managers are the legal owners of the company.
Legal personality allows a firm's continuation beyond the founder or the founder's family.
Ramadin is the CEO of Brownback Consulting Inc. Ramadin's efforts to persuade the board of directors to pursue a new business strategy fail. He borrows money from different sources and purchases all the outstanding shares of Brownback Consulting. What does this scenario best exemplify? A. Buy back B. Merger C. Leveraged buyout D. Initial public offering
Leveraged buyout
_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge. A. Cartels B. Licensing agreements C. Equity alliances D. Acquisitions
Licensing agreements
FlyOne Airway's decision to acquire TrueGear Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate? A. Managerial empathy B. Managerial feasibility C. Managerial hubris D. Managerial capitalism
Managerial hubris
According to Michael Porter, which of the following is a problem with many publicly traded companies? A. Shareholders of publicly traded companies do not have a legitimate claim on profits. B. Many publicly traded companies have defined value creation too narrowly in terms of financial performance. C. There is no transferability of stock ownership in publicly traded companies. D. The legal owners of publicly traded companies also make management decisions for the company.
Many publicly traded companies have defined value creation too narrowly in terms of financial performance.
Which of the following occurrences was NOT an event that facilitated HP's sordid "soap opera"? A. Patricia Dunn, then chairman of the board, launched a covert investigation where she conducted surveillance on HP's board members, selected employees, and some journalists. B. Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company. C. Jodie Fisher, an independent contractor, worked as a hostess at HP-sponsored events and personally ensured that Mr. Hurd spent time with the most important clients. D. Leo Apotheker, who came to HP after being let go from SAP, proposed a new corporate strategy for HP.
Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company.
Which of the following is an important external corporate-governance mechanism? A. Shareholder capitalism B. Board of directors C. Market for corporate control D. Executive compensation
Market for corporate control
___ define appropriate employee attitudes and behaviors. A. Values B. Artifacts C. Appraisals D. Norms
Norms
Cup N Cone Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Marvin Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Marvin Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? A. Marvin Grey has a wide span of control. B. Cup N Cone Inc. has a tall hierarchical structure. C. Marvin Grey is underworked. D. Cup N Cone Inc. is a mechanistic organization.
Marvin Grey has a wide span of control.
Which of the following best exemplifies the use of input controls? A. McDonald's use of standard operating procedures B. GM's use of the multidivisional strategy C. Zappos' use of monitoring-free customer service calls D. Southwest Airline's use of employee friendliness
McDonald's use of standard operating procedures
Which of the following real-world scenarios best exemplifies formalization? A. Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B. McDonald's use of standard operating procedures across the world C. W.L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses D. Yahoo's decision to fire its CEO after incurring huge losses
McDonald's use of standard operating procedures across the world
Remote Inc. is a notebook manufacturing company based in Ohio. Remote's main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Remote Inc. likely to use if it has functional setup? A. Organic B. Simple C. Matrix D. Mechanistic
Mechanistic
_____ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making. A. Organic B. Virtual C. Mechanistic D. Flat
Mechanistic
What was Leo Apotheker's role in the downfall of HP's market value? A. Mr. Apotheker leaked sensitive internal information to an online magazine. B. Mr. Apotheker was involved in a sexual harassment lawsuit with Jodie Fisher, an independent contractor. C. Mr. Apotheker appointed Meg Whitman as the interim head of HP. D. Mr. Apotheker was instrumental in acquiring the overvalued British software company Autonomy.
Mr. Apotheker was instrumental in acquiring the overvalued British software company Autonomy.
Kolt Inc., a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Kolt Inc. use? A. Basic B. Simple C. Multidivisional D. Functional
Multidivisional
Which of the following global strategies best matches with a multidivisional structure? A. International B. Multidomestic C. Global-standardization D. Transnational
Multidomestic
McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast food chain pursuing? A. Multidomestic strategy B. Focused differentiation strategy C. Global-standardization strategy D. International strategy
Multidomestic strategy
Which of the following is a feature of the globalization 2.0 stage? A. Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B. Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C. Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. D. Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
If the board of directors at GE decides to pursue a stakeholder strategy, should they change the ecomagination strategy? A. Yes, they should change the strategy because it provides benefits to the society. B. No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues. C. No, they should not change the strategy because the change would necessitate making tough ethical decisions. D. Yes, they should change the strategy because creating value for society is against the principles of stakeholder strategy.
No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues.
Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal? A. Once the firm starts growing and attracting more customers she is likely to feel overloaded. B. Hiring more employees will result in loss of intellectual property. C. People are highly unlikely to buy clothes from a store run by a fashion design student. D. The online admiration of her designs will not translate into sales.
Once the firm starts growing and attracting more customers she is likely to feel overloaded.
_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure. A. Mechanistic B. Centralized C. Organic D. Top-down
Organic
Which of the following types of organizations best helps match a differentiation strategy to a functional structure? A. Ambidextrous organization B. Mechanistic organization C. Organic organization D. Rigid organization
Organic organization
____ describes the collectively shared values and norms of an organization's members. A. Competitive advantage B. Organizational structure C. Organizational culture D. Core competency
Organizational culture
Which of the following statements is true of strategy in an organization? A. Strategy implementation is considered unsuccessful if it requires changes within an organization. B. To implement a strategy successfully, an organization's structure must be rigid. C. Strategy implementation does not affect resource allocation and power distribution within an organization. D. Organizational structure must follow strategy in order for firms to achieve superior performance.
Organizational structure must follow strategy in order for firms to achieve superior performance.
___ are board members who are not employees of the firm but frequently are senior executives from other firms or full-time professionals. A. Inside directors B. Outside directors C. CEOs D. Auditors
Outside directors
Which of the following is part of Geert Hofstede's cultural dimensions? A. Locus of control B. Self-efficacy C. Span of control D. Power distance
Power distance
Which of the following could most likely have prevented the accounting scandals of the early 2000s and the global financial crisis? A. Adopting a narrow shareholder perspective B. Separating economic interests and social needs C. Practicing effective corporate governance D. Adopting the principles of shareholder capitalism
Practicing effective corporate governance
For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? A. Product differentiation B. Superior customer service C. Local responsiveness D. Price
Price
PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma? A. PureSource Pharma will lower its costs through economies of scale. B. PureSource Pharma will diminish its economic value creation. C. PureSource Pharma will increase its cost of distribution. D. PureSource Pharma will reduce the size of its sales force.
PureSource Pharma will lower its costs through economies of scale.
Which of the following acts in the Goldman Sachs-Galleon Group insider trading scandal is an egregious exploitation of information asymmetry? A. Galleon Group's decision to trust Rajat Gupta's information as accurate B. Rajaratnam receiving information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs C. Warren Buffet's decision to inject a huge amount of money into Goldman Sachs based on its financial reports D. Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs
Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs
Which of the following is an unintended side-effect of a high degree of specialization in an organization? A. Decreased trade-off between breadth and depth of knowledge B. Decreased opportunities for the division of labor C. Reduced employee satisfaction due to repetition of tasks D. Reduced productivity
Reduced employee satisfaction due to repetition of tasks
Which of the following scenarios best illustrates horizontal integration? A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market. B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor. C. Regal Autos Inc. sets up its own distribution channel and retail stores. D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
All public companies listed on the U.S. stock exchanges must file a number of financial statements with the _____. A. GovernanceMetrics International (GMI) B. Securities and Exchange Commission (SEC) C. EDGAR database D. Wall Street Journal
Securities and Exchange Commission (SEC)
Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance? A. Olax, which has the same wealth and per capita income as Zeda B. Jordax, which has a very profitable economy and where people speak Jordaxian C. Segar, where people speak English and have a low standard of living D. Terra, which is located close to Zeda and is easily accessible by road
Segar, where people speak English and have a low standard of living
Who appoints the board of directors in a public stock company? A. Auditors B. Shareholders C. Employees D. CEOs
Shareholders
Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability? A. Employees of Jamiro are legally permitted to invest their capital in the company's stock. B. Employees of Jamiro are also the owners of the company. C. Shareholders of Jamiro are responsible to the company only for the capital they have invested. D. Shareholders of Jamiro are not permitted to trade their company stock at the New York Stock Exchange (NYSE).
Shareholders of Jamiro are responsible to the company only for the capital they have invested.
Which of the following statements best supports the separation of ownership and control in publicly traded companies? A. Shareholders are liable only for the capital they invest and not for their personal wealth. B. Shareholders can freely trade the company stocks. C. Shareholders own stocks but do not run the company. D. Managers control the company but may also have stock ownership.
Shareholders own stocks but do not run the company.
What does "limited liability for investors" imply in a public stock company? A. Shareholders are liable for their invested capital and personal wealth and not for any other investments made. B. Shareholders who provide the risk capital are liable only to the capital specifically invested. C. Shareholders are liable for all the decisions made by the board of directors of the company. D. Shareholders have financial but not legal responsibilities toward the public stock company.
Shareholders who provide the risk capital are liable only to the capital specifically invested.
Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? A. Inability to implement its trademark focused-differentiation strategy in the German market B. Significant differences between its U.S. personnel policies and Germany's culture C. Germany's unfamiliarity with retail discount powerhouses D. Metro's hostile takeover of Walmart in Germany
Significant differences between its U.S. personnel policies and Germany's culture
Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage? A. W.L. Gore & Associates organizes its employees into project-based teams. B. Apple develops high-tech products that are preferred by consumers across the world. C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. D. GM offers compensation if its products do not meet a consumer's expectations.
Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.
_____ describes the degree to which a task is divided into separate jobs. A. Hierarchy B. Formalization C. Centralization D. Specialization
Specialization
Why does strategy implementation often require changes within an organization? A. Strategy implementation is less important than strategy formulation. B. Strategy implementation transforms strategy into actions and business models. C. Strategy always follows structure. D. Strategy implementation does not affect resource allocation and power distribution within an organization.
Strategy implementation transforms strategy into actions and business models.
GE's board has only one inside director, Jeffrey Immelt, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE? A. The CEO is likely to be more responsible because he is setting his own performance targets. B. The CEO might be able to influence the board through setting the meeting agendas. C. The CEO possesses invaluable inside information that can help chair the board effectively. D. The CEO will suggest board appointees who are friendly toward him or her.
The CEO possesses invaluable inside information that can help chair the board effectively.
A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment? A. The core competence matrix B. The Boston Consulting Group (BCG) matrix C. The transaction-cost economics model D. The VRIO framework
The VRIO framework
Which of the following is a major issue at the forefront of CEO compensation in recent years? A. A comparison of the performance of the organization before and after the CEO's tenure B. The performance of the CEO as an employee versus the performance as a board member C. The absolute size of the CEO pay package compared with the pay of the average employee D. A comparison of the compensation of senior management hired during and before the CEO's tenure
The absolute size of the CEO pay package compared with the pay of the average employee
In Eli Lilly's Office of Alliance Management, who is responsible for providing the technical expertise and knowledge needed for the specific technical area and the day-to-day management of the alliance? A. The alliance champion B. The alliance leader C. The alliance manager D. The alliance boss
The alliance leader
In Eli Lilly's Office of Alliance Management, who is responsible for providing alliance training and development? A. The alliance champion B. The alliance leader C. The alliance manager D. The alliance boss
The alliance manager
A bank, YPC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical? A. The bank knows that the customer will be unable to pay the loan if the interest rate rises. B. The bank is not aware of the investments made by the customer. C. The bank has the financial statements of the customer, but it is not aware of each source of income. D. The bank is depending on the customer to pay back the loan before term completion.
The bank knows that the customer will be unable to pay the loan if the interest rate rises.
How did Apple's e-book business model affect Amazon? A. Amazon had to further reduce the prices of its e-books. B. The bargaining power of suppliers, the content providers, increased from Amazon's perspective. C. The industry structure changed from oligopoly to monopoly. D. Amazon acquired the power to set the sales prices of e-books directly for the end consumers.
The bargaining power of suppliers, the content providers, increased from Amazon's perspective.
After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company? A. The company's operations will become more cost efficient. B. The company's exposure to exchange rate fluctuations will reduce. C. The company will be able to reap greater benefits from economies of scale. D. The company will be exposed to a lower risk of intellectual property appropriation.
The company's exposure to exchange rate fluctuations will reduce.
How has China been affected by its one-child-per-family policy and appreciation of its currency? A. The purchasing power of its workforce has reduced. B. The value added to production has reduced. C. The standard of living within the economy has lowered. D. The country's advantage in low-cost manufacturing has reduced.
The country's advantage in low-cost manufacturing has reduced.
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012? A. The desire to gain a new capability B. The need to enter a new geographical market C. The need to reduce its level of horizontal integration D. The desire to pursue an unrelated diversification strategy
The desire to gain a new capability
In a non-equity alliance, which of the following types of information would firms most likely share? A. A manager's knowledge related to solving non-routine problems B. A top-level manager's experience related to making strategic decisions C. The documented information about the material composition of a product D. The employees' entrepreneurial skills
The documented information about the material composition of a product
Which of the following statements best supports the view that GE's ecomagination strategy is in line with the Shared Value creation framework? A. The ecomagination strategy is the brainchild of the founder of the company. B. The ecomagination strategy helps GE spend more on research and development than other similar companies. C. The ecomagination strategy generated $3 billion in revenues for GE during 2012. D. The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage.
The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage.
In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems? A. The expectation that the agent will follow the country's laws and regulations B. The expectation that the agent will go above and beyond the call of duty C. The expectation that the agent will reconnect economic and social needs D. The expectation that the agent will act in the principal's best interest
The expectation that the agent will act in the principal's best interest
Which of the following is a benefit of a multinational enterprise (MNE) pursuing a global-standardization strategy? A. The firm customizes products and services to better suit local requirements. B. The firm reaps significant economies of scale and location economies. C. The firm follows a differentiation strategy at the business level. D. The firm has all its key business functions located in the home country.
The firm reaps significant economies of scale and location economies.
What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change? A. The firm's original core competency can turn from a liability into an asset. B. The firm's organizational inertia can turn into its core rigidity. C. The firm's competitive parity can turn into its competitive advantage. D. The firm's culture can turn from a core competency into a core rigidity.
The firm's culture can turn from a core competency into a core rigidity.
How does W.L. Gore exemplify founder imprinting? A. Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list. B. W. L. Gore & Associates is organized in a formal and centralized manner. C. The compensation of Gore associates is decided through a peer review system. D. The four core values articulated by Bill Gore guide the company and its associates to this day.
The four core values articulated by Bill Gore guide the company and its associates to this day.
Which of the following statements is true about the use of functional structures with various business strategies? A. The goal of a differentiation strategy is to create competitive parity. B. The goal of a cost-leadership strategy is to create competitive parity. C. The goal of a differentiation strategy is to create a competitive advantage by controlling costs. D. A cost-leadership strategy can be effectively implemented with the help of an organic structure.
The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones? A. The competitive intensity in the cell phone industry of Finland B. The huge demand for high-quality wireless services in Finland C. The abundance of natural resources in Finland D. The related and supporting industries present in Finland
The huge demand for high-quality wireless services in Finland
What does the relational view of competitive advantage propose? A. A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate. B. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. C. Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing. D. A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price.
The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.
Which of the following statements best describes local responsiveness? A. The process of producing goods in one country and selling them in another B. The need to tailor product and service offerings to fit native consumer preferences and host-country requirements C. The belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous D. The additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances
The need to tailor product and service offerings to fit native consumer preferences and host-country requirements
Which of the following real-world events would act as the most likely deterrent against adopting a purely stakeholder strategy approach to business? A. The nonsustainable debt levels incurred by sovereign governments to fund social programs B. The financial crisis in Europe brought about by money lenders seeking to make quick money C. The collapse of the economy in the U.S. brought about by the housing crisis D. The rise of GDP in countries that do not believe in Milton Friedman's philosophy
The nonsustainable debt levels incurred by sovereign governments to fund social programs
What helps notions such as fairness, honesty, and reciprocity to be codified into law? A. The notions are synonymous with law. B. The notions differ to some degree in different cultures around the globe. C. The notions are universal norms. D. The notions are characteristics inherited by each person irrespective of the culture.
The notions are universal norms.
Which of the following scenarios best exemplifies a leveraged buyout of a telecommunications firm, Telbok Inc.? A. The owner of another company buys all the outstanding shares of Telbok. B. A private equity firm, Rainbow Inc., buys a large amount of shares of Telbok. C. Telbok sells all its shares and declares bankruptcy. D. Telbok buys back a large amount of its own shares from the stock market.
The owner of another company buys all the outstanding shares of Telbok.
Which of the following is the source of the principal-agent problem in publicly traded companies? A. The law of legal personality B. The separation of ownership and control C. Limited liability for investors D. Transferability of investor ownership
The separation of ownership and control
Which of the following is a drawback of pursuing a multidomestic strategy? A. The strategy allows for the lowest possible local responsiveness. B. The strategy lowers the differentiation of a firm's product and service offerings. C. The strategy exposes a firm to greater exchange rate fluctuation when compared to an international strategy. D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.
The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.
Which of the following factors is the most important determinant of economic distance? A. The wealth and per capita income of consumers B. The ethnicity and religion of consumers C. The presence of legal institutions in a country D. The topography of a country
The wealth and per capita income of consumers
Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos? A. Their culture reflects complex relationships with their employees, customers, and suppliers. B. They produce products that cannot be copied easily because of their complex designs. C. The employees in the organization themselves are unaware of the factors contributing to their organizational culture. D. It is not commercially viable for other companies to implement the same culture.
Their culture reflects complex relationships with their employees, customers, and suppliers.
Which of the following is a result of horizontal integration in terms of Porter's five forces model? A. The industry structure becomes less consolidated. B. There is a reduction of excess capacity in the market. C. The industry structure becomes potentially less profitable. D. There is an increase in rivalry among existing firms.
There is a reduction of excess capacity in the market.
Disney's "Wedding Banned," a romantic comedy about a divorced couple trying to prevent their daughter from getting married, was axed in the advanced production stage despite several marquee stars (Robin Williams, Anna Faris, and Diane Keaton). Which of the following statements best explains why this happened? A. The purchasing power of the U.S. audience had reduced drastically. B. There was a feeling that the movie was against traditional American values regarding marriage. C. The movie was a copy of an already existing French movie. D. There were perceptions that this movie would not succeed outside of the American market.
There were perceptions that this movie would not succeed outside of the American market.
How will an increase in coordinated economic and political integration between countries affect the world economy? A. The world's market economies will become self-sufficient and independent. B. There will be gains in social welfare and living standards across the globe. C. The cost of labor will further decline in emerging economies. D. There will be a movement away from global-collaboration networks among multinational enterprises (MNEs).
There will be gains in social welfare and living standards across the globe.
Why are controls like budgets and operating procedures that McDonald's implements known as input controls? A. They are independent of an organization's culture. B. They are implemented by corporate headquarters. C. They are considered before employees make any decisions. D. They are ad-hoc and not codified.
They are considered before employees make any decisions.
What are poison pills? A. They are used by shareholders to prevent the founder of a company from taking the company private through a leveraged buyout. B. They are unspecified conditions in the contract between stakeholders in an organization. C. They are used by companies in a bid to perform a hostile takeover of competing firms. D. 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.
Which of the following is an advantage of non-equity alliances? A. They produce strong ties between alliance partners as they are permanent in nature. B. They are flexible and easy to initiate and terminate. C. They facilitate the sharing of tacit knowledge between the alliance partners. D. They are based on ownership rather than contracts.
They are flexible and easy to initiate and terminate.
Which of the following statements is true of shareholders in a public stock company? A. They directly supervise and coordinate the manufacture of products and delivery of services. B. They are granted a charter of incorporation by the state and legally own company stock. C. They are the centerpiece of corporate governance. D. They are appointed by a board of directors to oversee the company's management.
They are granted a charter of incorporation by the state and legally own company stock.
Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy? A. They cannot leverage their home-based core competencies in foreign markets. B. They are highly affected by exchange rate fluctuations. C. They have to be highly responsive to local needs and preferences. D. They cannot reap the benefits of economies of scale due to their highly customized products.
They are highly affected by exchange rate fluctuations.
Which of the following statements is true of strategic alliances? A. They are always focused on joining the same value chain activities. B. They enable firms to achieve goals faster, but at higher costs. C. They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. D. They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.
They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.
Which of the following is NOT true about the members of the board of directors in a public stock company? A. They represent the shareholders' interests. B. They may hire and fire top management. C. They oversee the firm's operations. D. They are not responsible to shareholders.
They are not responsible to shareholders.
Which of the following did management at Zappos do to reduce the level of formalization in their organization? A. They avoided asking their customer service reps in call centers to follow a detailed script. B. They increased their reliance on drop-shipment orders. C. They established top-down management as their primary strategy. D. They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.
They avoided asking their customer service reps in call centers to follow a detailed script.
Which of the following is a disadvantage of equity alliances? A. They are reflective of weaker ties between firms. B. They do not permit the exchange of explicit knowledge. C. They can bring about a lack of commitment. D. They can entail significant investments.
They can entail significant investments.
Which of the following is an advantage of joint ventures? A. They create strong ties, trust, and commitment between the partners. B. They are based on contractual agreements rather than partial ownership. C. They require the lowest amount of investment relative to the other alliance types. D. They can be easily initiated and terminated.
They create strong ties, trust, and commitment between the partners.
Which of the following is true of the codes of conduct of an organization? A. They detail how the organization expects an employee to behave and to represent the company in business dealings. B. They are a reiteration of the laws pertaining to business dealings in a corporate environment. C. They are a guide to determine what is lawful and what is unlawful. D. They help the board of directors and the CEO implement shareholder capitalism.
They detail how the organization expects an employee to behave and to represent the company in business dealings.
Which of the following statements is true of joint ventures? A. They enable the exchange of both tacit and explicit knowledge. B. They reduce the possibilities of trust and commitment. C. They are characterized by single reporting lines. D. They cannot entail long negotiations.
They enable the exchange of both tacit and explicit knowledge.
Which of the following is a drawback of joint ventures? A. They produce weak ties, trust, and commitment between the partners. B. They are based on contractual agreements rather than partial ownership. C. They do not enable the transfer and sharing of tacit knowledge. D. They necessitate the sharing of rewards between the partners.
They necessitate the sharing of rewards between the partners.
Which of the following is an advantage of equity alliances when compared to non-equity alliances? A. They are more flexible and easy to initiate and terminate. B. They require smaller capital investments. C. They produce stronger ties between partners. D. They are based on contracts rather than ownership.
They produce stronger ties between partners.
Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A. They are easy to initiate and terminate. B. They require low amounts of investments in terms of capital. C. They reduce a firm's exposure to loss of reputation. D. They are based on contracts rather than ownership.
They reduce a firm's exposure to loss of reputation.
Which of the following best explains why a board of directors may grant stock options as part of a compensation package? A. To reduce the transferability of stocks between stockholders B. To bring about a separation of CEO/chair duality C. To align incentives between shareholders and management D. To change the liability of shareholders from limited to unlimited
To align incentives between shareholders and management
In the New United Motor Manufacturing, Inc. (NUMMI) joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)? A. To access GM's completely new production system B. To learn and implement the just-in-time inventory system pioneered by GM C. To learn how to implement its lean manufacturing program with an American work force D. To access GM's distribution system and marketing expertise
To learn how to implement its lean manufacturing program with an American work force
With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota? A. To transfer its knowledge of a completely new production system B. To learn the lean manufacturing system pioneered by Toyota C. To better understand the American work force D. To get access to Toyota's distribution system and marketing expertise
To learn the lean manufacturing system pioneered by Toyota
Which of the following is true of the process of organizing for competitive advantage? A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. B. Strategy formulation and strategy implementation are independent activities. C. Organizing for competitive advantage is a static and not a dynamic process. D. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.
To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.
Why did Yahoo enter into a strategic alliance with Microsoft? A. To pursue an unrelated diversification strategy B. To overcome its competitive disadvantage in comparison to Google C. To invest its excess cash flow in Microsoft's superior technology D. To share its continuously updated search technology with Microsoft
To overcome its competitive disadvantage in comparison to Google
Which of the following is NOT a reason why firms enter alliances? A. To replace competitive advantage with competitive parity B. To strengthen competitive position C. To enter new markets, either in terms of geography or products and services D. To learn new capabilities
To replace competitive advantage with competitive parity
European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy? A. To take advantage of the high labor costs in the southern United States B. To take advantage of the high cost of living in the southern United States C. To take advantage of the low impact of globalization in the United States D. To take advantage of lower taxes in the southern United States
To take advantage of lower taxes in the southern United States
Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario? A. While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. B. Torque Inc. focuses more on cost reductions when compared to Marc Works Inc. C. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. D. Torque Inc. is exposed to greater risks of exchange rate fluctuations.
Torque Inc. focuses more on cost reductions when compared to Marc Works Inc.
Roman owns shares in a company called Copnay Telecom Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Roman wants to proactively cut his losses and therefore sells his shares. Jeremy, a trading enthusiast, buys shares in Copnay Telecom because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify? A. Separation of legal ownership and management control B. Legal personality C. Limited liability for investors D. Transferability of investor ownership
Transferability of investor ownership
Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally? A. International strategy B. Global-standardization strategy C. Transnational strategy D. Focused-differentiation strategy
Transnational strategy
One Stop Inc., a supermarket chain, is implementing a multidomestic strategy. Solar Com Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? A. One Stop Inc. will focus more on cost-reduction than Solar Com Inc. B. One Stop Inc. will have its business functions spread across the world; Solar Com Inc.'s business functions will be highly centralized. C. Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level. D. Unlike Solar Com Inc., One Stop Inc. will be able to reap significant economies of scale and location economies.
Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level.
Which of the following is true of the board of directors in a public stock company? A. Votes at shareholder meetings determine whose representatives are appointed to the board of directors. B. Because shareholders generally have uniform interests, the composition of the board is generally a unanimous decision. C. The board of directors acts as a facilitator to convey interests of the stockholders to the management without any real authority. D. The functions of the board of directors are limited to ensuring the hiring and firing of CEOs.
Votes at shareholder meetings determine whose representatives are appointed to the board of directors.
Which of the following statements about W.L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner? A. W.L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses. B. W.L. Gore & Associates prefers e-mail communication to face-to-face communication. C. W.L. Gore & Associates is characterized by a vertical organizational form. D. W.L. Gore & Associates refers to its employees as associates rather than employees.
W.L. Gore & Associates refers to its employees as associates rather than employees.
W.L. Gore has four product divisions: electronic products, industrial products, medical products, and fabrics division. It also has manufacturing facilities in U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe. Based on this information, which of the following statements is most accurate? A. W.L. Gore is pursuing a cost-leadership strategy. B. W.L. Gore is using a multidivisional structure. C. W.L. Gore is using a simple structure. D. W.L. Gore is pursuing an integration strategy.
W.L. Gore is using a multidivisional structure.
Which of the following statements is true with regard to international trade between countries? A. Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B. Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C. Wealthy countries engage in relatively more cross-border trade than poorer ones. D. Political integrations decrease the expected trade intensity between two countries.
Wealthy countries engage in relatively more cross-border trade than poorer ones.
In which of the following situations is pursuing an international strategy advisable? A. When a firm manufactures products related to national and religious identity B. When a firm operates in an industry where the pressure to keep the costs low is extremely high C. When a firm wants to be perceived as a domestic company by the host country consumers D. When a firm enjoys a large domestic market, strong reputation, and brand name
When a firm enjoys a large domestic market, strong reputation, and brand name
When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement? A. When the resource in question is highly tradable B. Before the strategist has considered borrowing the necessary resources through integrated strategic alliances C. After it has been established that the firm's internal resources are sufficient to build D. When extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
When extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
When does a merger between companies typically occur? A. When two firms of comparable size join to form a combined entity B. When large, incumbent firms buy startup companies C. When a target firm does not want to be acquired D. When two or more firms enter a temporary vertical strategic alliance
When two firms of comparable size join to form a combined entity
Saul is a manager at Holden Apparels Inc. and is friends with the company's CEO. This privilege gives Saul the information that Holden Apparels is in the midst of talks to take over a leading rival. Saul buys stocks of Holden with the expectation that its stocks will appreciate. But the deal falls through and the stocks of Holden depreciate in the following months. Are Saul's actions unethical? Why? A. Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome. B. Yes, because it is illegal and unethical for Saul to possess any kind of insider information. C. No, because Saul did not ask the CEO to disclose such information to him. D. No, because Saul did not make any profits from trading stocks using this information.
Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.
W.L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has: A. a formalized structure. B. a decentralized structure. C. organizational inertia. D. a top-down management style.
a decentralized structure.
Fervana Autos Inc., a large automobile company, made an initial small investment in a startup company that was developing a solar-powered car. This gave Fervana Autos controlling interests in the startup company. However, Fervana Autos had no obligations to make continued investments in the experiments of the startup company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Fervana Autos would have the right to buyout the startup company. This approach to strategic alliance is referred to as _____. A. a break-even analysis B. a real-options perspective C. credible commitment D. transaction cost economics
a real-options perspective
When large, incumbent firms buy startup companies, the transaction is generally described as a(n) _____. A. joint venture B. partnership C. acquisition D. alliance
acquisition
To position itself more strongly after the 2001 bursting of the Internet and tech stock bubble, Cisco Systems embarked on a(n) _____. A. harvest strategy B. acquisitions-led growth strategy C. unrelated diversification strategy D. exit strategy
acquisitions-led growth strategy
At Opnic Corp., a cross-functional team is formed to work on a project for a new client. The team consists of Darius and four other members. At most of the team's presentations to senior management, Darius takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Darius is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Darius did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Opnic Corp. is a typical consequence of _____. A. moral hazard B. adverse selection C. shared value creation D. corporate governance
adverse selection
Johan is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A startup recruits Johan based on his stated credentials without verifying them. Two days into the job, Johan's team lead realizes that Johan does not know much of what he claimed to know during the interview. This scenario best exemplifies _____. A. moral hazard B. adverse selection C. shared value creation D. corporate governance
adverse selection
In publicly-traded companies, individuals who are delegated to perform duties on behalf of company owners are known as _____. A. principals B. shareholders C. agents D. clients
agents
In Eli Lilly's Office of Alliance Management, the _____ is a senior, corporate-level executive responsible for high-level support and oversight. A. alliance manager B. alliance leader C. alliance regulator D. alliance champion
alliance champion
Gannett Company integrated certain important functions of USA Today.com with USA Today, while keeping other functions independent. To support this integration, the president of USA Today shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance. This scenario best exemplifies a(n) _____. A. multidivisional structure B. organic organization C. simple structure D. ambidextrous organization
ambidextrous organization
Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures: A. aspects of cultural fit between different firms in an alliance. B. features of the financial health of the different alliance partners. C. the readiness to accept short-term sacrifices to ensure long-term awards. D. the willingness to make available necessary resources.
aspects of cultural fit between different firms in an alliance.
A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it: A. is pursued in response to low pressure for local responsiveness and low pressure for cost reduction. B. attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost. C. attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company. D. operates on the assumptions made in the globalization hypothesis in order to lower costs.
attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.
A firm pursuing a transnational strategy would believe that: A. key business functions should be located in its home country headquarters. B. local responsiveness is more important than cost reductions for competitive advantage. C. best practices, ideas, and innovations should be diffused throughout the world. D. the majority of the value creation should take place in the home country.
best practices, ideas, and innovations should be diffused throughout the world.
The _____ is the centerpiece of corporate governance and is composed of inside and outside members. A. institutional investors group B. board of directors C. group of shareholders D. scientific advisory board
board of directors
When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because: A. the local partner can better protect its proprietary know-how. B. building downstream complementary assets can be expensive and time-consuming. C. the strategic alliance will reduce the differentiation of its product and service offerings. D. the value gap created by the firm can be easily lowered in an alliance.
building downstream complementary assets can be expensive and time-consuming.
Neville and Andre are customer care employees at JPN Care. In between calls, Neville and Andre spend time on Facebook and YouTube. The relaxed guidelines at JPN allow them to do that. However, sometimes, they knowingly avoid answering calls or keep customers on hold, while they check their social networking accounts. Such behavior: A. is neither unlawful nor unethical; hence, Neville and Andre cannot be reprimanded. B. typically exemplifies the agency problem of adverse selection. C. goes against the principles of shareholder capitalism. D. can be stopped by implementing performance incentives and strict control mechanisms.
can be stopped by implementing performance incentives and strict control mechanisms.
Elc Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, Television and Computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as _____. A. competition B. co-opetition C. exploitation D. exploration
co-opetition
According to the agency theory, _____. A. conflicts that arise in corporations should be addressed in the legal realm B. corporations are more than a set of contracts between parties C. companies should focus on generating profits for stockholders D. principals and agents have interchangeable roles
conflicts that arise in corporations should be addressed in the legal realm
When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to: A. borrow via a contractual agreement. B. pursue internal development. C. enter into a licensing agreement. D. consider an outright acquisition.
consider an outright acquisition.
GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies _____. A. decentralization B. founder imprinting C. groupthink D. core rigidity
core rigidity
One of the ways to foster ethical behavior in employees is to: A. avoid codifying organizational culture. B. create a control system that encourages desired values. C. view clients as counter parties to transactions. D. align the vision statement of the organization with its informal culture.
create a control system that encourages desired values.
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high _____. A. political distance B. geographic distance C. administrative distance D. cultural distance
cultural distance
The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally. A. death-of-distance hypothesis B. local responsiveness hypothesis C. real option framework D. dynamic capabilities framework
death-of-distance hypothesis
A drawback of joint ventures is that they are characterized by: A. involuntary mergers. B. double reporting lines. C. contractual agreements rather than ownership. D. weak ties between alliance partners.
double reporting lines.
The relationship between strategy and structure that directly impacts a firm's performance is _____. A. dynamic B. independent C. static D. unpredictable
dynamic
A(n) _____ is best described as a partnership in which at least one partner takes partial ownership in the other partner. A. acquisition B. non-equity alliance C. joint venture D. equity alliance
equity alliance
The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n) _____. A. acquisition B. joint venture C. non-equity alliance D. equity alliance
equity alliance
Rast Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies _____. A. exploration B. exploitation C. co-opetition D. competition
exploitation
During the period of globalization 1.0, the mode of entry into foreign markets primarily involved: A. exporting goods. B. making foreign direct investments. C. making foreign institutional investments. D. licensing production and distribution.
exporting goods.
A firm following a multidomestic strategy: A. is highly efficient. B. lacks local responsiveness. C. faces a greater risk of intellectual property (IP) appropriation. D. requires exposing explicit knowledge because products are manufactured locally.
faces a greater risk of intellectual property (IP) appropriation.
Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to: A. imitate the actions of its competitors like Apple and Facebook. B. solve its principal-agent problems. C. fill gaps in its competency lineup. D. expand through unrelated diversification.
fill gaps in its competency lineup.
McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of _____. A. formalization B. specialization C. decentralization D. hierarchy
formalization
A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) _____ structure. A. simple B. M-form C. matrix D. functional
functional
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. A. global matrix B. multidivisional C. functional D. simple
global matrix
Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) _____. A. international strategy B. multidomestic strategy C. global-standardization strategy D. localization strategy
global-standardization strategy
Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the: A. globalization hypothesis. B. upper echelons theory. C. real options perspective. D. global scaling theory.
globalization hypothesis.
A functional structure is recommended when a firm: A. has a broad focus in terms of its product/service offerings. B. has a low level of diversification. C. has a low degree of specialization. D. diversifies into different product lines and geographies.
has a low level of diversification.
In a strategic alliance, the firm that learns faster: A. has the tendency to lose its competitive advantage. B. has the incentive to reduce its knowledge sharing. C. has the tendency to move up a learning curve. D. has the incentive to invest further in the alliance.
has the incentive to reduce its knowledge sharing.
The global-standardization strategy arises out of the combination of: A. high pressure for cost reductions and low pressure for local responsiveness. B. high pressure for local responsiveness and low pressure for cost reductions. C. low pressure for both local responsiveness and cost reductions. D. high pressure for both local responsiveness and cost reductions.
high pressure for cost reductions and low pressure for local responsiveness.
A greater cultural distance between two trading countries: A. increases linguistic similarities between the two countries. B. increases the liability of foreignness. C. reduces the uncertainty of doing business. D. reduces the transaction costs associated with business.
increases the liability of foreignness.
The board of directors of a public stock company consists of: A. managers appointed by the owners of a company to run its day-to-day operations. B. individuals who formally represent the firm's shareholders and oversee the work of executives. C. the legal owners of a publicly traded company that was purchased in a leveraged buyout. D. employees of a company who belong to the senior management and directly report to the CEO of the firm.
individuals who formally represent the firm's shareholders and oversee the work of executives.
The risk of employee opportunism on behalf of agents in a public stock company is exacerbated by _____. A. stakeholder strategy B. information asymmetry C. corporate governance D. groupthink
information asymmetry
Adverse selection in a public stock company occurs when: A. information asymmetry increases the likelihood of selecting inferior alternatives. B. a firm's work tasks, incentives, and employment contracts minimize opportunism by agents. C. a principal is not aware of the context from which information from an agent is derived. D. an agent manipulates information to benefit stockholders.
information asymmetry increases the likelihood of selecting inferior alternatives.
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.
informational advantage of the lower-level employees.
Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through _____. A. output controls B. input controls C. multidivisional strategy D. centralization
input controls
The informational advantage that agents possess over principals is often based on the fact that: A. the information is extremely secure and protected from exposure to anyone outside the company. B. public stock companies are characterized by information symmetry. C. insiders are the first to learn about important developments before the information is released to the public. D. agents are legally permitted to freely trade the information in exchange for benefits, unlike principals.
insiders are the first to learn about important developments before the information is released to the public.
Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas. A. threat of new entrants B. liability of foreignness C. loss of reputation D. intellectual property exposure
intellectual property exposure
When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets. A. domestic strategy B. international strategy C. differentiation strategy D. localization strategy
international strategy
Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly developed economies. One way firms are grappling with this issue is by: A. introducing results-only-work-environments to tap intrinsic motivations. B. refining the budgeting process to encourage more department collaboration. C. updating standard operating procedures to allow more process flexibility. D. using output controls only when the goal is to ensure a predictable outcome.
introducing results-only-work-environments to tap intrinsic motivations.
United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country: A. is a world leader in the pharmaceutical industry. B. has nationalized the pharmaceutical industry. C. has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry. D. is a potential foreign market for multinational pharmaceutical companies to sell their products.
is a world leader in the pharmaceutical industry.
Hashim is a board member at Kluster Motors Inc. He is also a senior executive of the firm. On the other hand, the board is chaired by Compton Smith, the CEO of Jensen Electronics. According to this scenario, Hashim _____. A. cannot serve on the board of any other organization B. is more likely than Compton to take care of stockholder interests C. is an inside director of Kluster Motors D. can use information from board meetings to trade stocks of Kluster Motors
is an inside director of Kluster Motors
Serena is the CEO of Pedalo Inc., a publicly traded company. The shareholders want Serena on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Serena: A. is a board member of a major client. B. is more likely than other board members to take care of the stockholders. C. is also the CEO of other companies. D. is likely to provide the board with valuable inside information.
is likely to provide the board with valuable inside information.
McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's: A. is organic in nature. B. is mechanistic in nature. C. has an informal structure. D. has a decentralized structure.
is mechanistic in nature.
A firm is said to be pursuing a polycentric innovation strategy when: A. its research facility is situated in the headquarters and all other business activities are located around the world. B. it draws from multiple, equally important research facilities located throughout the world. C. it restricts its innovation to Western economies and production to developing markets. D. its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.
it draws from multiple, equally important research facilities located throughout the world.
Organizational culture can be the basis of a firm's competitive advantage if _____. A. it is valuable, rare, and difficult to imitate B. it is trademarked and copyright protected C. it converts the organization's core competency into its core rigidity D. it changes the organization's inertia into its core rigidity
it is valuable, rare, and difficult to imitate
Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because: A. it overestimates its need to protect its intellectual property. B. it underestimates its liability of foreignness when entering the Zevar market. C. it underestimates its dwindling reputation before it enters the Zevar market. D. it overestimates the geographic and cultural distance between Pelo and Zevar.
it underestimates its liability of foreignness when entering the Zevar market.
The day-to-day operations of a publicly traded company are conducted by: A. people who own the company, such as shareholders. B. its managers and lower-level employees. C. people who finance the company, such as investors. D. the CEO and the board of directors.
its managers and lower-level employees.
Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) _____. A. equity alliance B. sole proprietorship C. non-equity alliance D. joint venture
joint venture
New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first _____ in the U.S. automobile industry. A. joint venture B. non-equity alliance C. hostile takeover D. equity alliance
joint venture
Wave Motors Inc., a Kempa-based automobile company, has entered into a partnership with Sphere Autos Inc. headquartered in United Cadvia. The parent companies, together, have established a standalone firm called Genuine Autos Inc. This arrangement best exemplifies a _____. A. joint venture B. partnership C. non-equity alliance D. proprietorship
joint venture
When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) _____. A. non-equity alliance B. equity alliance C. proprietorship D. joint venture
joint venture
GearOne Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, GearOne Autos Inc. is reaping the benefits of _____. A. economies of scope B. location economies C. resource immobility D. resource ambiguity
location economies
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations onsite while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of _____. A. location economies B. economies of scope C. learning races D. network effects
location economies
United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of: A. food processed in Fernsland. B. movies and TV shows produced in United Nerumbia. C. iron ore extracted in Fernsland. D. luxury items manufactured in United Nerumbia.
luxury items manufactured in United Nerumbia.
In Eli Lilly's Office of Alliance Management, the alliance champion is primarily responsible for: A. making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy. B. providing technical expertise and knowledge needed for the specific technical area in an alliance. C. providing alliance training and development, as well as diagnostic tools. D. serving as an alliance process resource and business integrator between the two alliance partners.
making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy.
For a multinational enterprise (MNE), applying the globalization hypothesis would mean: A. being highly responsive to the heterogeneous needs and preferences of consumers globally, without focusing on cost reduction. B. customizing each product sold by an enterprise to differentiate it from its competitors. C. manufacturing products on international platforms and slightly modifying them to meet local tastes and standards. D. pursuing a focused differentiation strategy instead of a cost-leadership strategy to gain a competitive advantage.
manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.
An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure. A. functional B. multidivisional C. matrix D. simple
matrix
A trend observed during the globalization 3.0 stage involves: A. countries around the globe becoming more self-sufficient and independent. B. multinational companies organizing as global-collaboration networks. C. privately-owned firms getting nationalized. D. world's market economies becoming less integrated.
multinational companies organizing as global-collaboration networks.
In principal-agent relationships, _____ describes the difficulty of principals to ascertain whether agents have really put forth their best efforts. A. the agency problem B. adverse selection C. on-the-job consumption D. moral hazard
moral hazard
Rajat Gupta's role in providing inside information to Galleon Group for the benefit of Galleon Group's stockholders and Rajat Gupta himself is an example of _____. A. shareholder capitalism B. adverse selection C. shared value creation D. moral hazard
moral hazard
When a firm diversifies into different product lines and geographies, a _____ structure is preferred. A. simple B. functional C. multidivisional D. network
multidivisional
A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. A. international strategy B. transnational strategy C. global standardization strategy D. multidomestic strategy
multidomestic strategy
Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a _____. A. non-profit organization B. nationalized firm C. sole proprietorship D. multinational enterprise
multinational enterprise
Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry. A. capital gain B. trade surplus C. national competitive advantage D. liability of foreignness
national competitive advantage
A(n) _____ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances, that connect different parts of the industry value chain. A. equity alliance B. joint venture C. non-equity alliance D. greenfield venture
non-equity alliance
Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n) _____. A. joint venture B. acquisition C. non-equity alliance D. greenfield venture
non-equity alliance
Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of _____. A. cartel arrangements B. non-equity alliances C. joint ventures D. equity alliances
non-equity alliances
Ethics is: A. not synonymous with law. B. impossible to codify into law. C. always universal and cannot differ between cultures. D. the minimum acceptable standard in business practice.
not synonymous with law.
Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and _____. A. eventually gives way to core rigidity B. obeys the VRIO principles C. does not demonstrate causal ambiguity D. displays an absence of social complexity
obeys the VRIO principles
India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because: A. it has emerged as a manufacturing powerhouse. B. of an efficient infrastructure and high labor costs. C. it has an abundance of uneducated workers who are highly trainable. D. of an abundance of well-educated, English-speaking young people.
of an abundance of well-educated, English-speaking young people.
Equity alliances are less common than non-equity alliances because they: A. depend on contractual agreements. B. produce weaker ties between partners. C. fail to facilitate the transfer of tacit knowledge. D. often require larger investments.
often require larger investments.
Travis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe. This is an example of _____. A. corporate governance B. on-the-job consumption C. adverse selection D. shared value creation
on-the-job consumption
An organization is characterized as having a flexible division of labor, distributed decision-making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature. A. specialized B. organic C. mechanistic D. formalized
organic
Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is _____. A. formalized B. mechanistic C. centralized D. organic
organic
If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization. A. organic B. mechanistic C. integrated D. centralized
organic
To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly _____. A. formalized B. specialized C. organic D. mechanistic
organic
Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____. A. simple organization B. organic organization C. mechanistic organization D. integrated organization
organic organization
Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos. A. organizational structure B. organizational culture C. organizational strategy D. organizational controls
organizational culture
Adidas acquired Reebok primarily to _____. A. overcome its competitive disadvantage against Nike B. get access to the superior technology of Reebok C. overcome its principal-agent problems D. pursue an unrelated diversification strategy
overcome its competitive disadvantage against Nike
The main reason behind Google's decision to acquire the Israeli startup company Waze for $1 billion was to: A. preempt its competitors from buying Waze. B. share its capabilities with Waze. C. support startup companies with venture capital. D. gain access to technology that is alien to it.
preempt its competitors from buying Waze.
An individual who is part owner of a company and hires another individual to act on his or her behalf is referred to as a(n) _____. A. agent B. manager C. employee D. principal
principal
Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n) _____. A. shareholder capitalism scenario B. inside director-outside director conflict C. fiduciary responsibility oversight D. principal-agent problem
principal-agent problem
The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of: A. time compression diseconomies. B. experience-curve effects. C. principal-agent problems. D. resource ambiguity.
principal-agent problems.
Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that: A. have a tall hierarchical structure. B. pursue a differentiation strategy at the business level. C. have a high degree of specialization and centralization. D. focus on standardizing operating procedures.
pursue a differentiation strategy at the business level.
A _____ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time. A. cost-leadership approach B. break-even analysis C. market risk framework D. real-options perspective
real-options perspective
Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to: A. reduce its geographical distance from the other countries. B. increase its administrative distance from the other countries. C. increase its economic distance from the other countries. D. reduce its cultural distance from the other countries.
reduce its cultural distance from the other countries.
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of _____. A. related-linked diversification B. cost-leadership C. unrelated diversification D. hostile takeovers
related-linked diversification
The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. A. real-options perspective B. stakeholder strategy C. relational view of competitive advantage D. non-differentiation strategy
relational view of competitive advantage
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
selecting the best possible partner
Creating economic value for shareholders while also creating social value is known as creating _____. A. a social market economy B. shareholder capitalism C. shared value D. stakeholder strategy
shared value
Florian just graduated from law school and wants to start his own law firm. It is best for Florian to use a _____ organizational structure. A. functional B. simple C. mechanistic D. matrix
simple
Employees learn about an organization's culture through the process of _____. A. socialization B. exploitation C. co-opetition D. acculturation
socialization
According to the perspective of shareholder capitalism, _____. A. shareholders in public stock companies are restricted from buying shares of two competing companies B. shareholders in public stock companies have the most legitimate claim on profits C. shareholders in public stock companies have significant decision-making power D. shareholders in public stock companies have unlimited financial liability
shareholders in public stock companies have the most legitimate claim on profits
While working a night job at a call center, Neville creates an app called FastServe, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on FastServe. He creates a startup called TYOP and hires three people to help him improve FastServe and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure. A. simple B. matrix C. mechanistic D. functional
simple
A high degree of formalization in an organization is most likely to _____. A. improve customer service B. slow down decision-making C. produce inconsistent results D. increase creativity and innovation
slow down decision-making
A compensatory governance mechanism that allows executives to buy a company's stock at a predetermined price sometime in the future is called a(n) _____. A. stock option B. commission C. stock exchange D. bonus
stock option
A _____ is best described as a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services. A. proprietorship B. cooperative C. strategic alliance D. leveraged buyout
strategic alliance
A firm's _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed. A. norm B. culture C. structure D. control
structure
Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n): A. organic organizational structure. B. decentralized organizational structure. C. tall hierarchical structure. D. flat hierarchical structure.
tall hierarchical structure
The MBA oath first developed at Harvard and now signed by students at over 300 business schools is modeled after _____. A. Level-5 leadership B. the Sarbanes-Oxley pledge C. the Hippocratic oath in medicine D. Goldman Sach's code
the Hippocratic oath in medicine
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because: A. the U.S. population was growing slowly and becoming more health conscious. B. its strategic position in the U.S. market was well protected through high entry barriers. C. this would help the company gain access to large cocoa plantations in China. D. Hershey's main strategic focus was on product and market diversification and not on the domestic market.
the U.S. population was growing slowly and becoming more health conscious.
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with: A. differences in climates and time zones. B. the absence of a trading bloc. C. physical remoteness. D. the lack of connective ethnic and social networks.
the absence of a trading bloc.
The downside of equity alliances is: A. the weaker ties and reduced trust between partners. B. the amount of investment that can be involved. C. that the alliances cannot be abandoned if not promising. D. that they are not useful stepping stones toward full integration of the partner firms.
the amount of investment that can be involved.
Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to: A. the lean manufacturing process pioneered by tesla. B. the entrepreneurial spirit in tesla. C. the safety measures followed in tesla, recorded in its user manuals. D. the product information documented in tesla's database.
the entrepreneurial spirit in tesla.
The conflict in a principal-agent relationship arises when: A. the company has more outside directors than inside directors. B. the strategy adopted by the company's agents tries to emulate the mission statement created by the principals. C. stockholders and agents are involved in the day-to-day operations of the company. D. the goals of the principals and agents are not aligned with each other.
the goals of the principals and agents are not aligned with each other.
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because: A. the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive. B. the surviving firms will need to be protected against the increasing bargaining power of the suppliers. C. the horizontal integration activity has the potential to reduce competitive intensity in an industry. D. the surviving firms will need protection against the relaxed entry barriers.
the horizontal integration activity has the potential to reduce competitive intensity in an industry
Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that: A. managers need to keep economic needs and societal needs disconnected from each other. B. a firm should expand its internal value chain to include nontraditional partners. C. businesses should focus on creating regional clusters such as Silicon Valley in the U.S. D. the largest but poorest socioeconomic group can yield significant business opportunities.
the largest but poorest socioeconomic group can yield significant business opportunities.
Organizational design is: A. the process of creating, implementing, and modifying the structure of an organization. B. primarily focused on replacing a firm's competitive advantage with competitive parity. C. a process that always functions independently of strategy formulation. D. primarily focused on formulating effective strategies, not implementing them.
the process of creating, implementing, and modifying the structure of an organization.
In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates _____. A. the real-options perspective B. co-opetition C. explicit knowledge D. the stakeholder strategy
the real-options perspective
John Hammergren, the CEO of McKesson, received an annual compensation of $50 million. The compensation was closely tied to the performance of McKesson's stock, which appreciated considerably during his tenure. This situation best exemplifies _____. A. the strong relationship between executive compensation and company performance B. the public's perception of a company's stock value based on executive compensation figures C. the avoidance of control mechanisms to guide performance D. the inversely proportional relationship between CEO compensation and the pay of the average employee
the strong relationship between executive compensation and company performance
The success of the Pixar-Disney strategic alliance demonstrated that: A. Disney was in desperate need of Pixar's graphic display systems. B. the two entities' complementary assets matched. C. it was easier for the alliance partners to reduce the value gap created. D. the companies were effectively managing an unrelated diversification strategy.
the two entities' complementary assets matched.
The administrative and political distance between two trading countries reduces when: A. there are FDI restrictions in the host country. B. there is no independent central bank in the host country. C. there are tariffs and trade quotas in the host country. D. there is a well-functioning capital market in the host country.
there is a well-functioning capital market in the host country.
In a public stock company, senior executives, such as the CEO, face agency problems when: A. they delegate authority of strategic business units to general managers. B. they decide to get involved in the day-to-day operations of a company. C. the board of directors possesses more information about the company than they do. D. the firm designs work tasks, incentives, and employments that minimize opportunism.
they delegate authority of strategic business units to general managers.
Outside directors are more likely to watch out for the interests of shareholders of their firm because: A. they are more likely to benefit from using inside information to trade stocks. B. they do not have the safety of serving on the boards of other firms. C. they are part-time employees of the firm. D. they have more independence than inside directors.
they have more independence than inside directors.
Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because: A. they pursue a cost-leadership strategy in their respective industries. B. they are highly responsive to the local needs and preferences of customers in the host countries. C. they offer the same products or services in all their stores throughout the world. D. they attempt to combine benefits of localization and standardization strategies simultaneously.
they offer the same products or services in all their stores throughout the world.
Poison pills have become rare because: A. leveraged buyouts can effectively skirt the measures put in place by poison pills. B. the market for corporate control is dead. C. federal laws prevent hostile takeovers. D. they retard an effective function of equity markets.
they retard an effective function of equity markets.
A company that is using extrinsic motivation as an output control mechanism will most likely: A. organize training sessions for employees. B. cut budgets during recessions. C. implement a peer review system. D. threaten to lay off employees if they do not achieve targets.
threaten to lay off employees if they do not achieve targets.
Zappos established its unique organizational culture: A. through explicitly stated values that are connected to its reward system. B. through input control systems that mandated adherence to organizational values. C. by closely monitoring employees calls with customers. D. by giving employees gift cards to shop at Zappos and Amazon.
through explicitly stated values that are connected to its reward system.
A(n) _____ arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A. transnational strategy B. multidomestic strategy C. international strategy D. global-standardization strategy
transnational strategy
The most important yet least visible element of organizational culture is _____. A. values B. norms C. laws D. artifacts
values
As a result of globalization, the: A. economies around the world are becoming more independent. B. cultural distance between countries is increasing. C. cost of doing business around the world is increasing. D. world's market economies are becoming more integrated.
world's market economies are becoming more integrated.