FINAL

_____ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure

Organizational inertia

What are poison pills?

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

Which of the following statements is true of shareholders in a public stock company?

They are granted a charter of incorporation by the state and legally own company stock

In a non-equity alliance, which of the following types of information would firms most likely share?

the documented information about the material composition of a product

A differentiation strategy works best when a

firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

Which of the following is an advantage offered by a functional structure?

It allows for a higher degree of specialization and deeper domain expertise

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?

They reduce a firm's exposure to loss of reputation.

Product features, customer service, and compliments are all examples of important

Value drivers

___ is best described as a firms ownership of its production of needed inputs or of the channels by which it distributes its outputs

Vertical integration

The board of directors of a public stock company consists of

individuals who formally represent the firm's shareholders and oversee the work of executives

a new product often has a high price when it is launched because of a

large investment in designing a product while producing small quantities.

_____ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale.

minimum efficient scale

Ethics is

not synonymous with law

A high degree of formalization in an organization is most likely to

slow down decision making

Which of the following is the source of the principal-agent problem in publicly traded companies?

the separation of ownership and control

Assume that the market for print book publishing has entered maturity stage. Which of the following would most likely exist during this stage?

A few large publishers

which of the following descriptions best exemplifies adverse selection?

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

How is an equity allowance different from a joint venture?

An equity allowance involves taking ownership in a partner, a joint venture involves 2 or more entities owning a firm

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

Differentiator is able to create a significant difference between perceived value and current market prices

Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company?

Based on a tip-off 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 is an observable feature in the Globalization 3.0 stage?

Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

The 4 step innovation process ends with

Imitation

Cheetah, a web development firm, wants to implement an organic structure to foster innovation and attract the most talented creative minds. Which of the following features will make it difficult to do so?

Dedicated to cost-leadership business strategy

When Japanese carmakers entered the existing US automobile market by 1st offering small fuel-efficient cars, & then leveraging their low-cost & high0quality advantages into high0end luxury segments, they were engaging in

Disruptive innovation

___ is best described as decreases in cost per unit as output increases

Economies of scale

which of the following perspectives best supports the shared value creation framework?

Externalities such as pollution, wasted energy, and costly accidents actually create internal costs

Tina is the inventor of a person fitness tracing device and she is in the process of hiring employees after receiving investment funding. When considering how to structure her company she should

First establish a strategy and let that be her guide

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it:

Gains market value from other firms

_____ are the board members who are part of a company's senior management team

Inside directors

while KFC focuses on international markets, its competitor, Chick-fil-A, focuses on the domestic US market. What is the reason behind this strategic difference?

KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company

Which of the following is an accurate statement about learning effects?

Learning effects occur over the time as output accumulates

there are many reasons why firms need to grow. which of the following reasons is strongly influenced by economies of scale?

Lowering costs

which is the main reason that most mergers and acquisitions negatively affect shareholder value?

Promised synergies never take place

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage?

Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time

The key objective of firms during the growth phase is to

Stake out a strong strategic position not easily imitated by rivals

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

The cost of searching for a contract manufacturer

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?

The firm's culture can turn from a core competency into a core rigidity

Which of the following is a common result of a hostile takeover of a company?

The new owner sells the company in pieces

Which of the following best describes a strategic trade-off?

The tension between value creation and the pressure to keep costs in check

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?

While the industry for cell phones with holographic keyboards will focus more on product innovation, the table industry will focus more on process innovation

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 firm that extracts and exports iron ore

A primary advantage of organizing economic activity within firms is the:

ability to coordinate highly complex tasks to allow for specialized division of labor.

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?

an aquisition

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?

because of the large economic distance between U.S. and India

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

building downstream complementary assets can be expensive and time-consuming

which quadrant in the core competence-market-matric is the hardest to pursue?

building new core competencies to create and compete in markets of the future

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should

divest the strategic business unit.

A company that uses a differentiation strategy can achieve a competitive advantage as long as its

economic value created is greater than that of its competitors.

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's

is mechanistic in nature

a firms business strategy can lead to a competitive advantage if it allows the firm to

perform different activities than its rivals.

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?

principal-agent problem

Which of the following is an unintended side effect of a high degree of specialization in an organization?

reduced employee satisfaction due to repetition of tasks

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources, it can be concluded that the firm is using _____.

related-constrained diversification

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.

strategic alliance

a drawback of short-term contracting as an alternative to making a component in-house is that

the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality.

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

the value and the cost position of the firm relative to its competitors

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because

they offer the same products or services in all their stores throughout the world.

A company that is using extrinsic motivation as an output control mechanism will most likely

threaten to lay off employees if they do not achieve targets.

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?

to take advantage of lower taxes in the southern United States

Frederica, the CFO at a moped manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors?

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

Vijay is a firm believer in Milton Friedman's view of a firm's social obligations. With which of the following statements is Vijay most likely to agree?

Businesses can use their resources to create profit as long as they do so within the rules of the game.

Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Beach Grub adopted in this scenario?

Differentiation

Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards?

Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly

a factor favoring the success of disruptive innovation is that

Incumbent firms are slow to change

Which of the following statements best describes groupthink?

It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions

how is a cost-leader protected from threats from powerful suppliers?

It is more able to absorb price increases through accepting lower profit margins

Why does strategy implementation often require changes within an organization?

Strategy implementation transforms strategy into actions and business models

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

The first mover will be able to reduce costs through economies of scale.

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

The framework does not explain everything about changes in industries.

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

There is a reduction of excess capacity in the market

How will an increase in coordinated economic and political integration between countries affect the world economy?

There will be gains in social welfare and living standards across the globe

Which of the following accurately describes an organic organization?

a flexible organization that fosters fast decision making and high employee motivation

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 global-standardization strategy

when firms innovate by leveraging existing technologies into new markets they are said to be involved in

architectural innovations

One of the ways to foster ethical behavior in employees is to

create a control system that encourages desired values.

In Michael Porter's diamond framework, _____ describe a country's endowments in terms of natural, human, and other resources.

factor conditions

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

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

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video sharing social media site, for $1 billion in 2012?

the desire to gain a new capability

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

the horizontal integration activity has the potential to reduce competitive intensity in an industry

Which of the following best explains why a board of directors may grant stock options as part of a compensation package?

to align incentives between shareholders and management