Four Rivers 2, Strategic Mgmt exam prep Ch3, Business Policy Chapter 4 Practice Tests, Business Policy Chapter 5 Practice Test Questions, ch 7 strat man, Strategy Chapter 6, Strategy Chapter 7, Strategy Chapter 8, ch.8 T/F, MGT 4335 - Chapter 9, Busi...
Some core competencies may lead to _____ for the firm.
competitive advantage
Demographic analyses of changes in the age structure of the world's populations has implications for all of the following EXCEPT:
identifying expatriates.
Research suggests that executives often fail to analyze which of the following that can lead to a potential competitive disadvantage?
Their competitors' possible reactions to competitive actions taken by an executive's firm
Which of the following is NOT one of the forces that affect the ability of all firms to operate profitably within a given industry?
Barriers to entry
The likelihood that firms will enter an industry is a function of which two factors?
Barriers to entry and retaliation expected from current industry participants
When buyers view products as _____ (or products with few differentiated features or capabilities), rivalry intensifies.
Commodities
_____ is the set of data and information the firm gathers to better understand and anticipate competitors' objectives, strategies, assumptions, and capabilities.
Competitor intelligence
Customers buying General Motors (GM) automobiles are given trial packages for OnStar road assistance with the purchase of a new vehicle. As such, OnStar would be called a:
Complementor
Once scanning and monitoring identify events and trends in a general environment, _____ identifies how quickly these trends will affect the marketplace.
Forecasting
Understanding the amount of time that will be required for a new technology to reach the marketplace or how much time will elapse before changes in governmental taxation policies affect consumers' purchasing patterns is an example of:
Forecasting
A firm's competitive actions and responses are influenced by the conditions in which three parts of its external environment?
General, industry, and competitor
An analysis of which of the following environments focuses on the factors and conditions influencing profitability potential within an industry?
Industry
The _____ is the set of factors that directly influences a firm and its competitive actions and responses: the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competing firms.
Industry environment
Which of the following is characteristic of an unattractive industry?
Intense rivalry among competitors
Using smartphone access to links on social media sites, such as Facebook or Twitter, in order to collect customer purchasing behavior data is an example of:
Monitoring
A capability that has no strategic equivalent meets which criterion of sustainable competitive advantage?
Nonsubstitutable
Which of the following is NOT a part of the external environmental analysis to increase an understanding of incomplete environmental data?
Observing
Which of the following is NOT an implication of strategic groups?
Strategic groups have less threats to each firm's profitability.
People buy products from Soco Outfitters because it is a brand name they know and trust. Soco's costly-to-imitate capabilities arise from:
a historical source
Health care reform legislation continues to be a contentious issue for employers, employees, and politicians because of its increased expenses. Attitudes about health care reform make up the _____ segment of the general environment.
sociocultural
Population size, age structure, and income distribution are all elements of concern when studying which segment of the general environment?
Demographic
_____ are companies or networks of companies that sell complementary goods or services that are compatible with the focal firm's good or service.
Complementors
EdgeWise, Inc., a U.S. company, has decided to explore the possibility of offshoring in order to meet certain financial benchmarks. Which of the following activities would fall within that category?
Contracting with a company in India to provide data-entry services
Issues of income distribution would most likely be addressed in the arena of the _____ segment.
Demographic
Companies manufacturing customized products can respond quickly to customers' needs primarily in lieu of:
Developing economies of scale
Efficiently handling customers' orders and arranging for customers' payments for delivered goods are both examples of what type of value chain activity?
Distribution
When examining the Assumptions dimension for a competitor analysis, which of the following is NOT a question that is addressed?
Do we assume that the code of ethics held by our company is similar to that of our competitors and the industry?
When examining the dimension of Future Objectives for a competitor analysis, which of the following is NOT a question that is investigated?
What is our future break-even point?
When developing a Response from a competitor analysis, which of the following is NOT a question that is addressed?
What is the worst-case scenario if we take a status quo approach?
In which of the following situations have decision makers sometimes proven to be more focused and productive when seeking to find resources that have the potential to be formed into core competencies?
When the firm's total set of resources is constrained
Which of the following would NOT be included when assessing the demographic segment?
Wireless network connectivity
In order to gain insights from which to select strategies, the firm needs to match what it _____ do with what it _____ do.
can; might
A firm should analyze the internal organization to identify its strengths and weaknesses as reflected by all of the following EXCEPT:
competitors' capabilities.
Ultimately, the source of above-average returns for a firm is:
creating value for the customers.
The strategic decisions that managers make about the internal organization:
directly impact the firm's level of returns.
The greater a firm's capacity to favorably influence its industry environment, the greater its likelihood to:
earn above-average returns.
To support ethical challenges associated with competitive intelligence practices, firms should:
establish practices and take actions consistent with those practices.
When Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. merged their operations for fossil-fuel-based power systems into a joint venture, this merger was aimed at:
gaining economies of scale.
A company can earn above-average returns only when the value it creates is:
greater than the costs incurred to create that value.
Delta Air Lines offering frequent flyer miles is primarily an example of an offer:
intended to increase customer switching costs.
Strategic groups can be useful for analyzing an industry's competitive structure. Such analyses can be helpful to diagnose all of the following EXCEPT:
internal controls of firms within the group.
Limits to the formation of strategic groups include all of the following EXCEPT:
lesser threats to each firm's profitability.
All of the following are dimensions of a competitor analysis EXCEPT:
operating cash flow.
A firm that does not have the resources or capabilities required to achieve competitive superiority in each value chain activity and support function might benefit from:
outsourcing
The purchase of a value-creating activity or a support function activity from an external supplier is:
outsourcing.
When a company assumes that a core competence will be a permanent competitive advantage, that competency runs the risk of becoming a core:
rigidity.
Which part of the external environmental analysis identifies early signals of environmental changes and trends?
scanning
The response of McDonald's restaurants to specific concerns for health by purchasing only chicken that has not received antibiotics is an example of what segment of the general environment?
sociocultural
_____ are derived from incremental efficiency improvements through experience as a firm grows larger.
Economies of scale
Sometimes, established competitors have cost advantages that new entrants cannot duplicate. All of the following are cost advantages that cannot be duplicated EXCEPT:
Ethical practices
_____ is often used by firms with moderate levels of international operations who increase their internationalization by focusing on global niche markets.
Globalfocusing
The competition between firms within a strategic group is _____ the competition between a member of a strategic group and companies outside that strategic group.
Greater than
Selecting and training employees are activities for which support function in the value chain?
Human resources
34. A(n) _____ is a group of firms producing products that are close substitutes
Industry
Which of the following statements is NOT correct regarding projections about the workforce?
It is projected that there will be a higher growth rate of the female labor force relative to that of men through 2050.
In the grocery and convenience store industry, rewards cards and fuel points are examples of capabilities that are _____ but no longer _____.
valuable; rare
A set of firms emphasizing similar strategic dimensions and using a similar strategy is known as:
Strategic groups
A(n) _____ is a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness.
Opportunity
According to the text, which state has become one of the most popular destinations for relocation?
Oregon
Consumer privacy issues would most likely be addressed in the arena of the _____ segment.
Political/legal
Deregulation philosophies address concerns in which of the following segment of the general environment?
Political/legal
Issues of educational philosophies and policies would most likely be addressed in the arena of the _____ segment.
Political/legal
Which of the following is NOT a factor that can increase competitive rivalry?
Rapid industry growth
An appropriate guideline for competitor intelligence practices includes which of the following?
Respect the principles of common morality.
The part of the external environment analysis that is most likely to use software to identify potential changes for web page designers in volatile environments is
Scanning
Netflix is considered one of the best places to work, largely due to its commonsense approach to culture. Rather than monitor staff through vacation policies and annual reviews, Netflix has set clear expectations for its employees. Employees aren't judged by the hours they work; they're evaluated according to their abilities and accomplishments. Based on its culture, which of the following makes Netflix's capabilities costly to imitate?
Social complexity
Issues of workforce diversity would most likely be addressed in the arena of the _____ segment.
Sociocultural
Which of the following is NOT a high exit barrier?
Specialized assets that can be used in another business or location
Global warming and energy consumption are aspects of the _____ segment of the general environment that firms should monitor.
Sustainable physical
_____ are the one-time costs customers incur when they buy from a different supplier.
Switching costs
Which of the following statements is false regarding powerful customer buyer groups?
Switching to another product would be expensive.
Issues of product innovation would most likely be addressed in the arena of the _____ segment.
Technological
Opportunities and threats for firms across the world, created by the Internet, are most closely linked to which external segment of the general environment?
Technological
The _____ segment includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials.
Technological
Which of the following is NOT one of the five factors included in the industry environment that directly influences a firm's competitive actions and responses?
The threat of new technologies
True
. Italy has become the leader in the shoe industry because of related and supporting industries such as a well- established leather-processing industry that provides the leather needed to construct shoes and related products.
Research shows that about 20 percent of mergers and acquisitions are successful and that _____ percent are clear failures.
20
One reason managers may choose acquisitions over new product development is that an estimated 60 percent of innovations are successfully imitated within _____ years after the patents are obtained.
4
One reason managers may choose acquisitions over new product development is that an estimated _____ percent of innovations fail to achieve adequate returns.
88
RTC recently downsized by 5 percent. What short-term outcome can it expect? Reduced labor costs Lower performance Higher risk Reduced debt costs
A
False
A U.S. manufacturer of pigments for household paint that exports about 40 percent of its production to European markets will find its sales will be harmed by a weak dollar.
True
A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be minimal.
True
A firm based in a country with a national competitive advantage is not guaranteed success as it implements its chosen international business-level strategy. Instead, the actual strategic choices managers make may be the most compelling reasons for success or failure.
False
A global strategy is an international strategy through which the firm offers standardized products across country markets, with competitive strategy being dictated by offices within the host markets served.
True
A major advantage of multidomestic strategies is the ability to customize for the specific market, although this sacrifices economies of scale.
True
A major incentive for the use of international strategy by French-based Carrefour Group is the potential for large demand for goods and services from emerging markets such as China and India.
False
A multidomestic strategy is an international strategy in which a firm's home office determines the strategies business units are to use in each region.
True
A multidomestic strategy is an international strategy in which strategic and operating decisions are decentralized to the strategic business units in individual or regions.
AlphaComp sells computers to small businesses. Its strengths are in choosing the appropriate hardware and in software installation, but it is not as adept at providing customers with technical support after the sale. BetaServe specializes in all types of technical support for end users. The two companies have decided to enter into an equity strategic alliance. Which of the following ownership arrangements would be most likely?
A new company will be formed. AlphaComp will own 60 percent and BetaServe will own 40 percent.
True
A reason that firms use international strategies is to secure needed resources, especially minerals and energy.
True
A transnational strategy is an international strategy in which the firm seeks to achieve both global efficiency and local responsiveness.
True
A transnational strategy is difficult to use because of its conflicting goals.
True
Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market.
True
After a firm decides to compete internationally, it must select its strategy and choose a mode of entry into international markets.
NovoTech and RayVox think their resources and capabilities would be a good fit. What might they want to try as a "testing" process to determine how good the fit really is?
Alliance
True
Although leaders in Russia have tried to reassure potential investors about their property rights, political risks in the form of weak laws and commonplace government corruption make firms leery of investing in Russia.
False
Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods.
True
An increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S. multinational firms' international assets and earnings in other countries.
True
As an indication of the importance of economies of scale, Ford Motor Company runs a single global business developing cars and trucks that can be built and sold through the world.
False
Because of the lack of protection of intellectual property in some foreign countries, licensing arrangements are one of the best ways for a firm to protect its technology from being appropriated by potential competitors
False
Because there are still several industrial and consumer markets in which only domestic firms compete, many firms do not have to be able to compete internationally.
True
Both the size and the nature of a country's domestic demand for a particular industry's good or service are important in Porter's determinants of national advantage.
True
By choosing a region where markets are more similar, the firm may be able to better understand those markets and cater to their needs, but also achieve economies through sharing of resources.
All of the following are challenges associated with integration processes EXCEPT the need to: meld two or more unique corporate cultures. build effective working relationships. raise the funds to complete the acquisition. link different financial and control systems.
C
All of the following issues affect firms' efforts to merge on a coequal basis EXCEPT: who will lead the merged firm. how to reach an agreement about the value of each company prior to the merger. how to determine the stock price per share for the merged company. how to fuse disparate corporate cultures.
C
_____ are used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers.
Capabilities
False
Coca Cola and PepsiCo are examples of firms that have found it unnecessary to aggressively pursue international strategies because of extensive growth opportunities available in the U.S. market.
Which of the following statements about intangible resources is NOT true?
Compared to tangible resources, intangible resources are the lesser source of capabilities and, subsequently, core competencies.
Brownstone Company has a particular capability that is valuable but is not rare nor costly to imitate and is possibly substitutable. What would be the likely competitive consequences of this capability?
Competitive parity
Of the four business-level cooperative strategies, which one has the greatest possibility of creating a competitive advantage?
Complementary strategic alliances
Which of the conditions that characterizes difficult managerial decisions concerning resources, capabilities, and core competencies results from the interrelationships among conditions shaping a firm?
Complexity
What is the best way for a firm to avoid overpayment when acquiring another firm?
Conduct an effective due-diligence process
Two firms will develop a strategic alliance to combine each of their unique resources because they believe it will:
Create competitive advantage
True
Cultural differences affect location advantages in that business transactions are less difficult for a firm to complete when there is a strong match among the cultures with which the firm is involved.
Which of the following are a reputational resource?
Customers' perceptions of product quality
Pat and Lee have been asked to complete a value chain analysis. Which component of an internal analysis are they performing?
Discovering core competencies
False
Establishing a wholly-owned subsidiary provides the quickest access to a new market.
False
Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multidomestic or global strategies.
Which of the following statements about a core competence is NOT true?
Every capability is a core competence.
True
Evidence suggests that, in general, using an international cost leadership strategy when exporting to developed countries has the most positive effect on firm performance while using an international differentiation strategy with larger scale when exporting to emerging economies leads to the greatest amounts of success.
True
Export, licensing, and the strategic alliance entry modes are all appropriate for early market development.
True
Export, licensing, and the strategic alliance entry modes are also appropriate when firms want to establish a strong presence in an international market.
True
Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets.
What type of risk associated with strategic alliances is most common when firms form an international cooperative strategy?
Failure to make resources available
Which support function in the value chain involves investing in organizational functions in ways that will support the firm's efforts to produce and distribute its products in the short and long term?
Finance
The managers at NuvoTech are considering two alliance options. One is with a domestic company, and the other is located in another country. What research findings might they want to take into account when making their decision?
Firms with foreign operations have longer survival rates than domestic-only firms.
True
Fluctuation in the value of different currencies is a major economic risk associated with international diversification.
FoodWay Company operates a chain of grocery stores located in six U.S. states. At the bottom of each customer's checkout receipt is a link to an online survey that allows the customer to provide feedback on his or her shopping experience. Lee was hired by FoodWay to tabulate and analyze the data collected through the online surveys completed by customers. What type of value chain activity was Lee hired to do?
Follow-up service
True
Four types of distances are associated with the liability of foreignness: cultural, administrative, geographic, and economic.
False
Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses that can successfully compete in international markets.
Tina is new to investing. About six months ago, after doing some research into both Perio and Lewisohn, two mid-size publishing houses, she decided to purchase stock in Lewisohn. This week, the two firms announced that Perio will be acquiring Lewisohn. What might be a wise next move for Tina?
Hold on to her current position in the stock, since she can expect better returns than her original research indicated, but don't purchase any more until she gets better indicators of where the company is headed.
Perio and Lewisohn are both mid-size publishing houses targeting the K-8 educational market. Perio has decided to purchase Lewisohn. This purchase is a:
Horizontal acquisition
In a(n) _____ strategic alliance, firms share some of their resources from the same stages of the value chain for the purpose of creating a competitive advantage.
Horizontal complementary
Which of the following is a support function, rather than a value chain activity, on the value chain?
Human resources
Reasons firms use a strategic alliance - Slow Cycle
In order to enter restricted marks
True
In place of relatively stable and predictable domestic markets, firms across the globe find that they are competing in relatively unstable and unpredictable global markets.
True
In some industries, technology drives globalization because the economies of scale necessary to reduce costs cannot be met by competing in domestic markets alone.
RXL Enterprises wants to acquire NuVal, a German company, in order to overcome barriers into the European market. What problem is RXL most likely to encounter in achieving success?
Inadequate evaluation of target is a problem associated with acquisitions for the purpose of overcoming entry barriers.
True
International associations such as the European Union, the Organization of American States, and the North American Free Trade Association encourage regionalization of competition rather than globalization.
True
International diversification can help to reduce a firm's overall risk through the stabilization of returns.
True
International diversification is a strategy through which a firm expands the sale of its goods and services across borders of global regions and countries into a potentially large number of geographic locations of markets. Instead of entering one or a few markets, international diversification means that the firm enters multiple markets.
Bonita and Jay, two managers at MTS, disagree regarding the best way to manage the firm's resources. Which condition is impacting the managerial decision?
Intraorganizational conflict
_____ are effective in establishing long-term relationships and in transferring tacit knowledge between firms.
Joint Ventures
NuvoTech, a U.S. firm, just made an alliance with TreVonix, which is based in South Korea. TreVonix should be a good source of information about:
Legal Procedures
False
Location advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture.
Wallingford Company is trying to determine optimal ways to collect and distribute knowledge throughout the firm. This is an activity for which support function in the value chain?
Management information systems
When Greenwall Company uses point-of-purchase data collection to effectively and efficiently control its inventory, it does this through which functional area of the firm?
Management information systems
Which of the following are an intangible resource?
Managerial capabilities
Effective customer service is a capability within which of the following functional areas?
Marketing
True
Michael Porter's Determinants of National Advantage describe factors associated with the firm's domestic environment that contribute to its dominance in a particular global industry.
What of the following statements regarding mistakes in the decision-making process is true?
Mistakes can lead to opportunities for the firm.
True
Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge.
True
One reason why firms pursue international opportunities is to extend the product's life cycle.
Developing employees' work schedules and designing production processes are both examples of what type of value chain activity?
Operations
Ellen's Kitchen, a small, upscale grocer, has been struggling to serve its customers. Ellen's employees worked together to reorganize the layout of both the storefront and the inventory room. Now the store is easy for customers to navigate, and workers at Ellen's can easily find the correct items when they need to refill the shelves. These employees shared their expertise in which value chain activity?
Operations
NuvoTech and Rogo have entered into a cooperative strategy. The two firms want to have the flexibility to take advantage of any unexpected opportunities that may arise during the term of their alliance and to have the ability to explore additional marketplace opportunities. What management approach should NuvoTech and Rogo use?
Opportunity Maximization
Which of the following is a tangible resource?
Production equipment
Perio and Lewisohn are two mid-size publishing houses. They just announced that Perio will be acquiring Lewisohn. Josh owns stock in Perio, and he continues to believe that it is a good investment. What might be a wise next move for Josh?
Purchase more stock, since the price probably fell once the merger was announced.
Which of the following would be a capability in the functional area of research and development?
Rapid transformation of technology into new products and processes
Otis Elevator Co. has been successful in large part because of its ability to develop sophisticated elevator control solutions. This capability lies within which functional area?
Research and development
True
Research has shown that, as international diversification increases, firms' returns decrease initially but then increase quickly as firms learn to manage international expansion.
True
Research suggests that the performance of the global strategy is enhanced if it deploys in areas where regional integration across countries is occurring.
False
Research suggests that wholly owned subsidiaries and expatriate staff are inappropriate for service industries because those industries require close contact with customers, high levels of professional skills, specialized know- how, and customization.
Perio and Lewisohn are two mid-size publishing houses. They just announced that Perio will be acquiring Lewisohn. What can a current stockholder in Perio expect?
Returns that are close to zero
True
Rivals Airbus and Boeing have multiple manufacturing facilities and outsource activities partly for the purpose of developing economies of scale as a source of being able to create value for customers.
True
Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses, trade barriers, and lack of familiarity with local cultures.
False
South Korea's success in international markets is primarily a result of its abundant natural resources.
What type of network alliance is most likely used in mature industries where demand is relatively stable and predictable?
Stable alliance network
AlphaComp sells computers to small businesses. Its strengths are in choosing the appropriate hardware and in software installation, but it is not as adept at providing customers with technical support after the sale. BetaServe specializes in all types of technical support for end users. The two companies have reached an agreement in which BetaServe provides technical support for AlphaComp's customers, and BetaServe refers its customers to AlphaComp when they need to purchase new equipment. These companies formed a:
Strategic Alliance
False
Strategic alliances tend to increase the risk associated with international expansion for the U.S. partner because of the greater dependence on the foreign firm.
True
The "liability of foreignness" means that many firms need to focus more on local adaptation or risk problems such as the Walt Disney Company faced opening its theme park in France.
False
The "liability of foreignness" will have a greater negative impact on a firm using a multidomestic strategy than on a firm using a global strategy.
True
The "regionalization" environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region.
What is a global mind-set?
The ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context
True
The amount of diversification in a firm's international operations that can be managed varies from company to company and is affected by manager's abilities to deal with ambiguity and complexity.
False
The chief risks in the international environment are political and cultural.
True
The firm using a global strategy seeks to develop economies of scale as it produces the same or virtually the same products for distribution to customers throughout the world who are assumed to have similar needs.
True
The global strategy offers greater opportunities to take innovations developed at the corporate level or in one market and apply them to other markets.
True
The greenfield venture option is useful when control of proprietary technology is important in an international expansion.
True
The growing number of global competitors heightens the requirements to keep costs down and there is the desire for more specialized products to meet customer needs. These two pressures make transnational strategies increasingly necessary.
True
The high cost of transportation, expense of tariffs, and loss of control are three disadvantages of exporting.
Which of the following are two significant concerns associated with outsourcing?
The potential loss in a firm's ability to innovate and the loss of jobs within the focal firm
True
The three basic benefits of international strategies are 1) increased market size; 2) increased economies of scale and learning; and 3) development of competitive advantages through location.
False
The three corporate-level international strategies are cost leadership, differentiation, and focus.
Which of the following statements regarding intangible resources is true?
They are relatively difficult for competitors to analyze and imitate.
Evidence shows that _____ of cooperative strategies have serious problems in their first two years and that as many as _____ of them fail.
Two thirds; half
NovoTech is a company in a fast-cycle market. What type of business-level strategic alliance might it form in order to hedge against risk?
Uncertainty-reducing
Diamond Mill Company wants to determine which of its value-creating competencies should be maintained, upgraded, or developed and which should be outsourced. Diamond Mill should use which of the following tools to complete this analysis?
Value chain analysis
True
When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries.
False
When the country risk is high, firms prefer to enter with a greenfield investment rather than a joint venture.
A particular capability leads to a temporary competitive advantage and average to above-average returns. What does this indicate about that capability?
While it is valuable and rare, it is not costly to imitate and is possibly substitutable.
False
While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity.
A firm making a vertical acquisition would purchase:
a distributor of one of its products.
Which of the following statements regarding managerial succession issues is true? a. A benefit in choosing a new CEO from inside the firm is that this usually results in lower turnover among existing personnel. b. A firm will be less likely to hire a CEO from the external managerial labor market when its performance is declining. c. CEOs selected from outside the firm tend to benefit from their "feel" for what will and will not "work" in the firm. d. Firms commonly follow the preference expressed by employees to hire outsiders to succeed CEOs.
a. A benefit in choosing a new CEO from inside the firm is that this usually results in lower turnover among existing personnel.
Gilbreth Electronics is being targeted for a takeover by CSC Technologies. As a defense tactic, managers at Gilbreth have drawn up a contract specifying that CSC will not purchase additional shares of Gilbreth for a specified period of time in exchange for a fee paid by Gilbreth. Which of the following defense strategies is Gilbreth's managers employing? a. A standstill agreement b. A golden parachute c. Greenmail d. A poison pill
a. A standstill agreement
When creating value through internal innovation processes, which of the following is foundational to the firm's efforts to identify entrepreneurial opportunities? a. An entrepreneurial mind-set b. Cross-functional teams c. Effective leadership d. Shared values
a. An entrepreneurial opportunities
What type of behavior is most likely to change aspects of the firm's strategy and corresponding structure? a. Autonomous strategic b. Diversified strategic c. Induced strategic d. Related constrained
a. Autonomous strategic
When the positions of CEO and the chair of the board are held by the same person, this is known as the practice of: a. CEO duality. b. chair duality. c. CEO tenure. d. chair stewardship.
a. CEO duality.
The use of a top management team by a firm to make strategic management decisions avoids: a. CEO overconfidence. b. complex challenges. c. political/legal constraints. d. ambiguity.
a. CEO overconfidence
Which of the following is NOT an agency problem that often exists in modern corporations? a. CEOs who feel constrained by governance mechanisms are less likely to seek external advice. b. The principal and the agent have different interests and goals. c. Shareholders lack direct control of large publicly traded corporations. d. An agent makes decisions that results in pursuing goals that conflict with those of the principals.
a. CEOs who feel constrained by governance mechanisms are less likely to seek external advice.
A cross-functional product development team at a toy company is experiencing some conflict over the target date for releasing their newest product. Jenna, the marketing manager, wants the team to speed up the development process so that the toy they're developing appears on the market in time for the holiday rush. But Deepak, a toy designer with an engineering background, feels the team needs to take more time to ensure the new toy meets all safety requirements. What is the most likely outcome of this situation? a. Communication barriers b. Organizational politics c. Personal conflict d. Dissolution of the team
a. Communication barriers
Which structural form uses horizontal integration to promote interdivisional relationships? a. Cooperative b. Functional c. Strategic business unit d. Competitive
a. Cooperative
Which M-form structure/strategy combination applies extensive use of integration mechanisms? a. Cooperative structure; related constrained strategy b. SBU structure; related constrained strategy c. Competitive structure; unrelated diversification strategy d. Cooperative structure; related linked strategy
a. Cooperative structure; related constrained strategy
_____ is often vital to a firm's efforts to develop and implement internal corporate venturing activities and to commercialize the resulting innovation. a. Cross-functional integration b. Strategic change c. Diversification d. Objectivity
a. Cross-functional integration
What best describes the level of formalization in a functional structure used to implement a cost leadership strategy? a. Formalized procedures allow for emergence of a low-cost culture. b. Decision-making authority is located in a staff function to maintain a cost-reducing emphasis within each organizational function. c. Formalization is limited so that new product ideas can emerge easily and change is more readily accomplished. d. Work is divided into homogenous subgroups.
a. Formalized procedures allow for emergence of a low-cost culture.
RSS Enterprises has a chief executive officer and a limited corporate staff, as well as managers for its production, accounting, marketing, development, and human resources departments. What type of structure does RSS use? a. Functional b. Network c. Simple d. Multidivisional
a. Functional
Which of the following types of problems are often involved in a strategic network of vertical relationships? a. Implementation b. Competition c. Management d. Cooperation
a. Implementation
Which of the following structural errors led to operational failures by JCPenney and Sears? a. Inability to switch to online sales b. Poor employee training c. Poor product selection d. Inability to implement management decisions
a. Inability to switch to online sales
_____ is the act of creating or developing a new product or process. a. Invention b. Innovation c. Implementation d. Imitation
a. Invention
What is a primary advantage of appointing an interim CEO? a. It provides the board of directors with sufficient time to conduct a thorough search to find the best candidate from the external and internal markets. b. It allows the company to "try out" the management style of the interim CEO. c. It ensures that strategy change will occur. d. It ensures that greater innovation will occur.
a. It provides the board of directors with sufficient time to conduct a thorough search to find the best candidate from the external and internal markets.
Which of the following best explains why German executives aren't dedicated to the maximization of shareholder wealth to the degree that their counterparts are in the United Kingdom and the United States? a. Private shareholders rarely have major ownership positions in German firms. b. Large institutional investors control large blocks of corporate stock in German firms. c. German boards of directors are more simply structured and less involved in monitoring and controlling managerial decisions and actions. d. The roles of CEO and chair of the board of directors are usually combined in German firms, allowing for widespread wrongdoing and rash decisions.
a. Private shareholders rarely have major ownership positions in German firms.
Which of the following need to be emphasized to achieve the cost leadership position? a. Production and process engineering b. Marketing and new product R&D c. Production and new product R&D d. Marketing and process engineering
a. Production and process engineering
Which classification of board member is defined as having some relationship with the firm, contractual or otherwise, that may create questions about their independence, but are not involved with the corporation's day-to-day activities? a.Related outsiders b. Insiders c. Unrelated outsiders d. Outsiders
a. Related outsiders
Which of the following characterizes a cooperative M-form for implementing a related constrained strategy? a. Rewards are subjective and tend to emphasize overall corporate performance in addition to divisional performance. b. Formalization is limited so that new product ideas can emerge easily, and change is more readily accomplished. c. Overall structure is organic; job roles are less structured. d. R&D is likely to be less centralized.
a. Rewards are subjective and tend to emphasize overall corporate performance in addition to divisional performance.
Which of the following statements regarding the Sarbanes-Oxley Act (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is NOT true? a. SOX is intended to align financial institutions' actions with society's interests. b. Dodd-Frank is the most sweeping set of financial regulatory reforms in the United States since the Great Depression. c. Dodd-Frank includes provisions related to the categories of consumer protection, systemic risk oversight, executive compensation, and capital requirements for banks. d. While the implementation of SOX has been controversial to some, most believe that it has led to generally positive results in terms of protecting stakeholders and shareholders' interests.
a. SOX is intended to align financial institutions' actions with society's interests.
Which of the following two parties are the focus of corporate governance? a. Shareholders and managers b. Managers and the board of directors c. The board of directors and shareholders d. The president of the corporation and the chairman of the board of directors
a. Shareholders and managers
Which structural characteristic is concerned with the type and number of jobs required to complete work? a. Specialization b. Centralization c. Unification d. Formalization
a. Specialization
Which of the following statements about the impact structure and strategy have on each other is true? a. The effect of strategy on structure is stronger than is the effect of structure on strategy. b. The effect of structure on strategy is stronger than is the effect of strategy on structure. c. The effect of structure on strategy is about the same as the effect of strategy on structure. d. Once in place, neither structure nor strategy has a noticeable effect on the other.
a. The effect of strategy on structure is stronger than is the effect of structure on strategy.
Lenox Enterprises needs to hire a new CEO. The board of directors is weighing whether to seek a candidate from the internal managerial labor market or external managerial labor market. Which of the following factors would cause them to lean towards hiring a CEO from outside? a. The need for a CEO who can engineer strategic change b. The need for a CEO with a clear understanding of the firm's personnel c. The need for a CEO who has a good "feel" for what will and will not "work" in the firm d. The need for a CEO who can identify core competencies and develop new ones.
a. The need for a CEO who can engineer strategic change
The board of directors at Eagle Mountain Sporting Goods are searching for a new CEO. One of the most important criteria they have identified is that the successful candidate has a track record of being ambicultural. What quality are they looking for? a. The successful candidate will be committed to identifying the best organizational activities to take particularly when implementing strategies, regardless of their cultural origin. b. The successful candidate will be able to conduct business in at least two different countries. c. The successful candidate will be committed to identifying at least two different strategies for the company. d. The successful candidate will have demonstrated ability to fill at least two different positions in the firm in order to support managerial succession.
a. The successful candidate will be committed to identifying the best organizational activities to take particularly when implementing strategies, regardless of their cultural origin.
_____ leadership entails motivating followers to exceed the expectations others have of them, to strengthen their capabilities through continuous training, and to place the interests of the organization above their own. a. Transformational b. Professional c. Responsible d. Emotional
a. Transformational
In which structure for implementing a multidomestic strategy is the emphasis on differentiation by local demand to fit an area or country culture? a. Worldwide geographic area b. Worldwide product c. International network d. International functional
a. Worldwide geographic area
Christina's contract with Nationwide Mutual Insurance Company is an example of: a. an agency relationship. b. managerial opportunism. c. corporate governance. d. a strategic alliance.
a. an agency relationship
Ted is one of the production managers at Agritech Industries. He feels that changes to products are disruptive to the production procedures that are currently in place. In general, therefore, Ted views innovations as threats. Ted lacks: a. an entrepreneurial mind-set. b. strategic competitiveness. c. passion for his job. d. planning skills.
a. an entrepreneurial mind-set.
Jo Duluth is the CEO of Willshire Corporation. Jo looks to hire people for research and development (R&D) who are self-confident and optimistic. She wants people who can be passionate and emotional about their ideas, as long as they are also willing to take responsibility for their projects. In other words, Jo is looking for employees who: a. are entrepreneurs. b. have strategic competitiveness. c. have management potential. d. are risk takers.
a. are entrepreneurs.
Research has shown that internationally diversified firms: a. are generally more innovative. b. often become less competitive in their domestic markets while focusing on international markets. c. face more significant challenges in achieving economies of scale. d. find it easy to apply existing knowledge and processes to new markets.
a. are generally more innovative.
The ability to _____ may be the most critical of the strategic leader's skills. a. attract and manage human capital b. apply financial management c. address the external economic environment d. organize processes within the firm
a. attract and manage human capital
Austin works at Springfield Electronics. He had an idea for an improvement to one of Springfield's products that would increase customer value. He worked hard to sell the idea first to his manager and then to others in the company. Research and development (R&D) is currently in the process of researching and testing Austin's idea, and he remains apprised of its status so he is prepared to escort it to the next phase towards productions. Austin is engaging in _____ behavior. a. autonomous strategic b. induced strategic c. vertical tactical d. horizontal tactical
a. autonomous strategic
The Dodd-Frank Act includes provisions related to all of the following categories EXCEPT: a. bankruptcy laws. b. capital requirements for banks. c. executive compensation. d. systemic risk oversight.
a. bankruptcy laws
Patents can be an important source of competitive advantage, especially for firms that: a. compete in knowledge-intensive industries. b. conduct business internationally. c. are characterized by imitation and standardization. d. conduct business exclusively with the government.
a. compete in knowledge-intensive industries.
Developing a values-based culture requires: a. constant nurturing and support. b. money. c. high-profile strategic leaders. d. a balanced scorecard.
a. constant nurturing and support.
Rapidly changing technologies, globalization, and the need to innovate in ways that satisfy global standards influence firms' decisions to innovate by: a. cooperating with other companies. b. encouraging autonomous strategic behavior. c. introducing cross-functional product development teams. d. facilitating internal innovations.
a. cooperating with other companies
JMD Electronics is a major electronics firm. It has been around for more than 50 years and continues to be a market leader. One division at JMD is devoted to identifying and pursuing innovative new ideas. This is an example of: a. corporate entrepreneurship. b. tactical entrepreneurship. c. tactical innovation. d. strategic innovation.
a. corporate entrepreneurship
DXI sells a limited run of a wide variety of products to diverse customers with unique needs. DXI most likely uses the functional structure to implement its _____ strategy. a. differentiation b. cost leadership c. integrated d. constrained
a. differentiation
In contrast to managers, shareholders may prefer that free cash flow be: a. distributed to them as dividends. b. used to reduce debt of the firm. c. reinvested in lucrative corporate assets. d. used for purposes of further diversifying the firm.
a. distributed to them as dividends
To manage her investment risk as a shareholder, Jennifer should maintain a(n) _____ portfolio by investing in several companies to _____ her overall risk. a. diversified; reduce b. large; increase c. undervalued; reduce d. international; increase
a. diversified; reduce
Leaders who understand themselves well, have strong motivation, empathize with others, and have effective interpersonal skills are said to have: a. emotional intelligence. b. people skills. c. motivational intelligence. d. responsibility.
a. emotional intelligence
An advantage of international entrepreneurship is: a. enhanced performance. b. stable foreign currencies. c. unlimited market size. d. strong infrastructures.
a. enhanced performance.
The ideal long-term strategic direction has two parts: _____ and _____. a. exporting; importing b. acquisitions; licensing c. a core ideology; an envisioned future d. implementation; accomplishments
a. exporting; importing
To be successful, entrepreneurs often need to: a. have good social skills. b. be able to work without a concrete plan. c. accept that they will more likely fail more than they will succeed. d. rely on their analytical skills more than their technical skills.
a. have good social skills
A stable strategy with innovation will result when a company has a _____ top management team and _____ CEO succession. a. heterogeneous; internal b. heterogeneous; external c. homogeneous; internal d. homogeneous; external
a. heterogeneous; internal
With _____ degrees of ownership concentration, the probability is _____ that managers' decisions will be designed to maximize shareholder value. a. high; greater b. average; lower c. low; greater d. high; lower
a. high; greater
When a firm uses cross-functional teams to integrate innovation, the organization should be built around core _____ processes that can produce and manage innovations. a. horizontal b. vertical c. autonomous d. hierarchical
a. horizontal
A _____ is an acquisition of a target company by an acquiring firm that is accomplished not by coming to an agreement with the target company's management but by going directly to the company's shareholders or fighting to replace management in order to get the acquisition approved. a. hostile takeover b. golden parachute c. capital structure change d. poison pill
a. hostile takeover
All of the following are organizational structures EXCEPT: a. independent. b. functional. c. simple. d. multidivisional.
a. independent
Roberts Technology has lost good employees over the past year. In their exit interviews, most of these employees expressed frustration over their inability to create value while doing their jobs. From a structural perspective, it is likely that Roberts has a(n): a. inflexible structure. b. flexible structure. c. tactical structure. d. non-tactical structure.
a. inflexible structure
When managers are examining the opportunities for the firm that are available in the external environment, they are looking at what the firm _____ do. a. might b. should c. will d. can
a. might
Agency costs do NOT include _____ costs. a. opportunity b. incentive c. monitoring d. enforcement
a. opportunity
Senior management at TCD Electronics has assigned a budget for its new product, the XLR950. If costs exceed this amount, the return on investment would challenge the viability of the project. That budget has been divided up amongst different organizational functions involved in all aspects of bringing the product to market, from inception to delivery. Marketing insists that it needs more money in order to thoroughly research market conditions to properly position the product for a successful introduction. Production also wants more money to assign more people to the project to ensure that it delivers on schedule. The marketer and the production manager have separately taken their cases to the senior management team. They have also approached the development and design managers on the project to see if they have any extra money in their budgets that could be reallocated. This scenario is an example of: a. organizational politics. b. intensified communication. c. vertical leveraging. d. horizontal leveraging.
a. organizational politics
Some research suggests that a firm performs better if: a. outside directors own significant equity stakes in the firm. b. the board of directors includes employees as voting members. c. the board of directors is relatively homogenous in its makeup. d. the CEO also holds the chair of the board title.
a. outside directors own significant equity stakes in the firm.
Determining how to allocate resources to different functions within a firm is a key source of: a. political activity. b. miscommunication. c. induced strategic behavior. d. autonomous strategic behavior.
a. political activity
In general, ownership concentration's influence on strategies is _____, and ownership concentration's influence on firm performance is _____. a. positive; positive b. positive; negative c. negative; positive d. negative; negative
a. positive; positive
Principals establish governance and control mechanisms to: a. prevent agents from acting opportunistically. b. force agents to seek external advice. c. ensure decisions are thoroughly researched before being implemented. d. ensure the proper documentation of all decisions.
a. prevent agents from acting opportunistically.
One of the research groups in AFT Electronics' R&D department is charged with creating new knowledge and coming up with ideas that provide significant technological changes. The goal of this group is to produce _____ innovations. a. radical b. incremental c. vertical d. horizontal
a. radical
Activist pension funds are _____ in nature, while activist hedge funds are _____. a. reactive; proactive b. assets; equity c. similar; dissimilar d. increasing; decreasing
a. reactive; proactive
Managerial employment risk is _____ with increased diversification because a firm and its upper-level managers are less vulnerable to the _____ in demand associated with a single or limited number of product lines or businesses. a. reduced; reduction b. increased; increase c. increased; reduction d. reduced; increase
a. reduced; reduction
The separation of ownership and managerial control allows shareholders to purchase stock, but the right to purchase stock and the potential to receive income from the firm's operations requires them to take a risk. This risk is that they will receive income only if the firm's _____ exceed(s) its _____. a. revenues; expenses b. assets, liabilities c. liabilities; equities d. net income; free cash flow
a. revenues; expenses
Organizational _____ serve as processes that are used to complete the work required by individual strategies. a. routines b. control c. structure d. tactics
a. routines
China's economy exhibits traits of both _____ and _____. a. socialism; market orientation b. communism; market orientation c. consensus; competition d. centralization; decentralization
a. socialism; market orientation
Companies and business units using the differentiation strategy emphasize _____ controls. a. strategic b. governmental c. financial d. tactical
a. strategic
The subjective criteria that a firm uses to verify that it is using appropriate strategies for the conditions in the external environment and the company's competitive advantages are called _____ controls. a. strategic b. tactical c. financial d. internal
a. strategic
Learning opportunities and economies of scale and scope often make internationally diversified firms: a. stronger competitors in their domestic market. b. attractive targets for a leveraged buyout. c. better able to establish franchises. d. more likely to pursue radical innovations.
a. stronger competitors in their domestic market.
As one element of the relationship between structure and strategy: a. structure flows from selection of the firm's strategy. b. structure and strategy are selected at the same time. c. structure and strategy are implemented independent of each other. d. once in place, structure is not affected by strategy.
a. structure flows from selection of the firm's strategy
Firms committed to entrepreneurship place high value on the ability to: a. take risks and succeed. b. innovate across time. c. create value through social capital. d. capture first-mover benefits.
a. take risks and succeed.
External CEO succession is considered a sign that: a. the board of directors wants change. b. employees want to continue with the status quo. c. the board of directors wants to continue the current strategy. d. employees support a highly cohesive top management team.
a. the board of directors wants change
Formalization is: a. the degree to which formal rules and procedures govern work. b. the degree to which decision-making authority is retained at higher managerial levels. c. the types of jobs required to complete work. d. the number of jobs required to complete work.
a. the degree to which formal rules ad procedures govern work
Entrepreneurial opportunities exist when: a. there is a need in the market that can be satisfied by new goods or services. b. an innovator comes up with a creative new idea. c. venture capitalists are willing to fund new businesses. d. firms devote resources to research and development (R&D).
a. there is a need in the market that can be satisfied by new goods or services.
Research shows that about 20 percent of mergers and acquisitions are successful and that _____ percent are clear failures. a.20 b.40 c.60 d.80
a.20
In cases where intellectual property rights in the emerging economy are not well protected, the number of firms in the industry is growing fast, and the need for global integration is high, which of the following entry modes are preferred? a.A joint venture or a wholly owned subsidiary b.A strategic alliance or exporting c.Licensing or acquisition d.Importing or licensing
a.A joint venture or a wholly owned subsidiary
Which of the following acquisitions would be considered the least related? a.A landscaping business and a bakery that makes croissants b.A home healthcare service provider and hospice services c.Veterinarian services and farm supplies d.Picture framing and a business that sells artist supplies
a.A landscaping business and a bakery that makes croissants
Tina is new to investing. After doing some research into both Ewing Co. and Wallingford Co., two mid-size wooden pallet manufacturers, she decided to purchase stock in Wallingford. This week, the two firms announced that Ewing will be acquiring Wallingford. As a stockholder in Wallingford, what can Tina expect? a.Above-average returns b.Returns about double what they are now c.Returns that remain fairly steady d.Returns that are close to zero
a.Above-average returns
What is suggested when two firms possess similar resources? a.Both firms have similar abilities to attack or respond. b.Only one firm will survive intense rivalry. c.One firm will have a clear advantage over the other. d.Both firms will ignore each other.
a.Both firms have similar abilities to attack or respond.
_____ strategy indicates the choices the firm has made about how it intends to compete in individual product markets. a.Business-level b.Cooperative c.Corporate-level d.Global-competition
a.Business-level
Which of the following are examples of narrow customer groups? a.Buyers with special needs and buyers located in specific geographic regions b.Buyers looking for the lowest costs and buyers interested in generics c.Buyers with passive decision making and buyers interested in non-brand names d.Buyers wanting a narrow delivery window and buyers wanting a narrow extent of offerings
a.Buyers with special needs and buyers located in specific geographic regions
Which of the following countries is considered an emerging market that may appeal to a firm that uses an international strategy and is looking to gain access to more consumers? a.China b.Canada c.Russia d.Portugal
a.China
What is the essence of a business-level strategy? a.Choosing to perform activities differently or to perform different activities than rivals b.Establishing a cost structure for the firm c.Targeting a specific group of customers d.Satisfying the needs of the firm's customers
a.Choosing to perform activities differently or to perform different activities than rivals
Historically, Cisco Systems was in the computer hardware business, focused on building the infrastructure that allows the Internet to work. Recently, however, the firm has sought out acquisitions in the software business and has focused on cloud computing, still with the mission of connecting people, processes, and data. What is the primary reason for the firm's acquisition strategy? a.Cisco Systems has recognized changing needs in its industry, so it has focused on acquiring firms with different but related and complementary capabilities. b.Cisco Systems has recognized a significant and growing decline in its industry, so it has focused on acquiring firms with different and unrelated capabilities. c.Cisco Systems has recognized changing needs in its industry, so it has focused on acquiring firms that can help it overcome barriers to entry into new markets. d.Cisco Systems has recognized changing needs in its industry, so it has focused on acquiring firms with different and unrelated capabilities.
a.Cisco Systems has recognized changing needs in its industry, so it has focused on acquiring firms with different but related and complementary capabilities.
_____ is the total set of competitive actions and responses taken by all firms competing within a market. a.Competitive dynamics b.Competitive rivalry c.Multimarket competition d.Competitive behavior
a.Competitive dynamics
RTC Innovations is planning to enter into a new market. What should RTC do first to determine what type of rivalry it will face from other companies in that market? a.Competitor analysis b.Plan of attack c.Market position d.Market dependence
a.Competitor analysis
Which of the following summarizes Michael Porter's analysis of why and how some industries within nations are more competitive relative to those industries in other nations? a.Conditions or factors in a firm's home base either hinder or support the firm's efforts to use an international business-level strategy for the purpose of establishing a competitive advantage in international markets. b.Cultural factors in the international market affect a firm's competitiveness. c.Differences in culture are always a limiting factor for competition in the international business-level strategy. d.Political and economic institutions are the primary factors in the model of international competition.
a.Conditions or factors in a firm's home base either hinder or support the firm's efforts to use an international business-level strategy for the purpose of establishing a competitive advantage in international markets.
Kevin has been charged with recommending a target company for his firm's acquisition. He found a number of potential candidates and has narrowed that list down to three. Kevin knows that the acquisition will have a higher likelihood of success if the acquired firm has resources that are complementary to his firm's core business. How can he identify the firm with the strongest complementarities? a.Conduct a due diligence of the firms. b.Examine each firm's financial health. c.Conduct negotiations with each firm. d.Create an integration plan.
a.Conduct a due diligence of the firms.
Why might first movers gain customer loyalty? a.Customers may become committed to the goods of the firm that first made them available. b.Customers may appreciate the risk that the firm took to provide the goods. c.The goods provided by the first mover tend to be superior to the imitations produced by later movers. d.The goods offered by the first mover tend to be offered at a lower cost than similar goods offered by later movers.
a.Customers may become committed to the goods of the firm that first made them available.
Which of the following can create difficulties when a firm competes by using an international strategy? a.Different cultures and institutional practices b.Firm capability advantages c.Value-added core competencies d.Increased management expertise
a.Different cultures and institutional practices
A furniture manufacturer recently completed a hostile takeover of a family-run upholstery manufacturer, and the former owners of the acquired firm have been ousted from the company. Which of the following challenges is the furniture manufacturer most likely to face in the integration process? a.Difficulty in creating synergy b.An inability to earn above-average returns c.An increased debt load d.Challenges in getting appropriate financing
a.Difficulty in creating synergy
Jinx Entertainment wants to shift its focus to developing apps for online distribution. However, Jinx found that it could not devote proper attention to this goal while still maintaining its full-length motion picture division because the requirements are so different. So it spun off the motion picture division into a new company. This is an example of what restructuring strategy? a.Downscoping b.Leveraged buyout c.Shakeout d.Downsizing
a.Downscoping
When a firm chooses to divest itself of businesses that are unrelated to the firm's core business, which restructuring strategy is it using? a.Downscoping b.Leveraged buyout c.Inclining d.Downsizing
a.Downscoping
_____ is a restructuring strategy in which the number of a firm's employees is reduced without necessarily changing the composition of businesses in the company's portfolio. a.Downsizing b.Downscoping c.Leveraged buyout d.Merger
a.Downsizing
Macy's, a national department store, sells many of the same name-brand product lines as its competitors. In recent years, its market share has declined and its differentiation strategy has failed, indicating that it has succumbed to which of the following inherent risks in this strategy? a.Failing to provide crisp and identifiable differentiation to customers in its products b.Counterfeiting c.Offering differentiated features that exceed target customers' needs d.Too much focus on cost reductions
a.Failing to provide crisp and identifiable differentiation to customers in its products
Which of the following is NOT a type of factors of production? a.Generic b.Specialized c.Basic d.Advanced
a.Generic
_____ and _____ provided incentives for U.S. firms to diversify in the 1960s and 1970s. a.Government antitrust policies; tax laws b.Mergers; acquisitions c.Free cash flows; dividends d.Capital gains taxes; divestitures
a.Government antitrust policies; tax laws
When discussing the foremost economic risks of using an international strategy, which of the following factors most likely affect the local economy and foreign investments in a country? a.Government oversight and control of economic and financial capital b.Cultural diversification c.Geographic diversification d.The global price differential of individual products
a.Government oversight and control of economic and financial capital
Which of the following tax effects created an incentive for diversification? a.In the 1960s and 1970s, dividends were taxed more heavily than were capital gains. b.Under the 1986 Tax Reform Act, the top individual ordinary income tax rate was reduced from 50 to 28 percent. c.Under the 1986 Tax Reform Act, the special capital gains tax was changed to treat capital gains as ordinary income. d.The Financial Accounting Standards Board eliminated the write-off for corporate research and development.
a.In the 1960s and 1970s, dividends were taxed more heavily than were capital gains.
What are the primary reasons for failure when firms use strategic alliances as an entry mode? a.Incompatible partners and conflict between the partners b.Differing equity positions of partners and differing cultures of partners c.Years in business and differing professional affiliations of partners d.Extreme costs and lack of positive returns to partners
a.Incompatible partners and conflict between the partners
What is the trend for the number of firms using a transnational international corporate-level strategy? a.Increasing b.Decreasing c.About the same (no increases or decreases) d.No clear trend
a.Increasing
Which of the following is NOT true of merger activity during the 1980s? a.More than 79 percent of all mergers were conglomerate in nature. b.More and larger horizontal mergers occurred than in previous decades. c.Takeovers increased to unprecedented numbers. d.Highly diversified firms became more focused.
a.More than 79 percent of all mergers were conglomerate in nature.
Why should shareholders of the acquiring firm be concerned about paying a premium for the target firm? a.Paying excessive premiums to acquire a firm can have a negative impact on the acquisition. b.The shareholders of the acquired (target) firm will likely earn below-average returns. c.The acquiring firm is likely to lose market share. d.Less than 10 percent of acquisitions are successful.
a.Paying excessive premiums to acquire a firm can have a negative impact on the acquisition.
_____ denote the probability of disruption of the operations of multinational enterprises by political forces or events whether they occur in host countries, home country, or result from changes in the international environment. a.Political risks b.Economic risks c.Counterfeit risks d.Risks against firm mission and vision
a.Political risks
What are the two things that firms can share to create operational relatedness? a.Primary or support activities b.Tangible or intangible resources c.Related or unrelated diversification d.Plans or implementations
a.Primary or support activities
Which of the following do firms in a fast-cycle market try to avoid? a.Product loyalty b.Core competencies c.Capabilities d.Imitation
a.Product loyalty
_____ is an especially critical dimension for social networking sites in that the value these firms create for users is to connect them with others. a.Reach b.Richness c.Affiliation d.Effective management
a.Reach
Which of the following is a value-neutral reason for diversification? a.Reacting to new tax laws b.Seeking market power c.Increasing managerial compensation d.Diversifying managerial employment risk
a.Reacting to new tax laws
Reeve Inc. recently downsized by 5 percent. What short-term outcome can it expect? a.Reduced labor costs b.Reduced debt costs c.Lower performance d.Higher risk
a.Reduced labor costs
Which of the following is the positive or negative attribute ascribed by one rival to another based on past competitive behavior? a.Reputation b.Dependency c.Strategies d.Tactics
a.Reputation
In which of the following market types do competitors lack the ability to imitate all of a rival's competitive advantages? a.Slow-cycle b.Standard-cycle c.Mixed-cycle d.Fast-cycle
a.Slow-cycle
Marcy opened her candle shop a month ago. One week later, an ingredient common to many candles was discovered to be unhealthy to inhale. She was surprised that only one supplier was able to make and ship new candles to her in just a week. Which of the following is a likely reason that the small NewHeart Candle Company was able to produce new candles that met Marcy's needs so quickly? a.Small companies are nimble and flexible. b.Small companies have many unused resources. c.Small companies keep a lot of finished products on hand. d.Small companies work harder to keep their customers satisfied.
a.Small companies are nimble and flexible.
Which of the following actions should a firm take before launching an attack on a competitor that has similar resources? a.Study the possible attack. b.Alert the competitor that an attack is coming. c.Choose an action that uses as few resources as possible. d.Plan to purchase the competitor's assets if it fails.
a.Study the possible attack.
Carter Inc. has begun to diversify geographically. Which of the following may be the most compelling reason for Carter's success or failure? a.The actual strategic choices managers make b.The tax rate in the country where the firm diversifies c.Whether robotics is involved in the production process d.Cultural differences between the domestic and international operations
a.The actual strategic choices managers make
Jones Company has decided to pursue an international strategy. Which of the following will NOT affect the degree of benefit the firm will capture through a location advantage? a.The firm's research and development ability b.The firm's manufacturing and distribution costs c.The nature of international customers' needs d.The influences of cultural and formal country institutions
a.The firm's research and development ability
Which of the following is believed to be the strongest determinant of whether a merger or an acquisition will be successful? a.The integration process b.The level of relatedness of the two businesses c.The ability of the firms to achieve synergy d.The type of diversification strategy chosen
a.The integration process
If interdependencies between the outsourcing firm and the suppliers become too great, what is the likely result? a.The supplier may increase the price of the good or service, harming the outsourcing firm and its ability to maintain a low-cost competitive advantage. b.The supplier may submit inferior goods, since it knows that the outsourcing firm needs them and must ship them right away. c.The supplier may omit value-added parts of its process, since it knows that the outsourced firm will work with them exclusively. d.The outsourcing firm will have little leverage at contract time, since the supplier knows that the interdependency exists.
a.The supplier may increase the price of the good or service, harming the outsourcing firm and its ability to maintain a low-cost competitive advantage.
National Airlines frequently slashes fares to gain market share and then gradually raises them to the previous rate once its market share objective is reached. What type of response can the company expect from competitors? a.There will be few, if any, responses. b.Most competitors will try to match National's prices. c.The market leader will undercut National's prices. d.Competitors will roll out other incentive plans that are unrelated to fare price.
a.There will be few, if any, responses.
Which of the following statements about firms implementing the cost leadership strategy is true? a.They often outsource various functions. b.They strive to keep their costs higher than those of competitors. c.They typically sell customized products or services. d.They are more focused on maintaining status quo than on innovation.
a.They often outsource various functions.
What is the purpose of a business-level strategy? a.To create differences between the firm's position and those of its competitors b.To establish a cost structure for the firm c.To target a specific group of customers d.To satisfy the needs of the firm's customers
a.To create differences between the firm's position and those of its competitors
Gander Software, which is based in the United States, developed a game that has been popular in the U.S. market. Which of the following incentives is encouraging Gander executives to export the game to overseas markets? a.To extend the product's life cycle b.To gain easier access to raw materials c.To realize economies of scale d.To develop a competitive advantage through location
a.To extend the product's life cycle
Why are some firms that reduced their vertical integration now beginning to reintegrate? a.To gain better control over the quality and timing of their supplies b.To reduce their responsibility in supply-chain management c.To allow focus on sales rather than manufacturing d.To delegate after-sales service to customer service specialists
a.To gain better control over the quality and timing of their supplies
Why do firms engage in competitive behavior? a.To improve their market position b.To create a better product or service c.To meet customer needs d.To satisfy stockholders
a.To improve their market position
Which of the following statements is true of managerial motives to diversify? a.Top-level executives' diversification decisions may be held in check by concerns for their reputation. b.A strong external market for managerial talent may influence managers to pursue inappropriate diversification. c.Knowing that their firms could be acquired if they are not managed successfully discourages executives from using value-creating diversification strategies. d.An external governance threat is the most effective control of managerial motives for diversification.
a.Top-level executives' diversification decisions may be held in check by concerns for their reputation.
The term "conglomerate" is most closely associated with which type of diversification strategy? a.Unrelated b.Dominant c.Related linked d.Related constrained
a.Unrelated
Vonn Industries was surprised by the actions taken by its competitor. This resulted from: a.a competitive blind spot. b.a predictive analysis. c.multimarket competition. d.market dependence.
a.a competitive blind spot.
A firm making a vertical acquisition would purchase: a.a distributor of one of its products. b.a company competing in the same industry. c.a firm in a similar industry. d.a company competing in other markets.
a.a distributor of one of its products.
Market power exists when: a.a firm is able to sell its products above the existing competitive level or reduce the costs of its primary and support activities below the competitive level, or both. b.two or more diversified firms simultaneously compete in the same product areas or geographical markets. c.a firm creates cost savings by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses. d.a company produces its own inputs or owns its own source of output distribution.
a.a firm is able to sell its products above the existing competitive level or reduce the costs of its primary and support activities below the competitive level, or both.
In an acquisition, financing is easier and less costly to obtain when the: a.acquiring firm has financial slack. b.acquired firm has financial slack. c.acquiring firm has a moderate debt position. d.acquired firm has a moderate debt position.
a.acquiring firm has financial slack.
Jeston Company and Louis Incorporated are two mid-size pharmaceutical companies. After extensive negotiations, the two firms reached an agreement in which Jeston bought controlling interest in Louis and Louis became a subsidiary business. This strategy is known as a(n): a.acquisition. b.trade. c.merger. d.takeover.
a.acquisition.
Soulful Shoe Company has long been a cost leader in the running shoes market. Over time, Soulful's competitors have learned how to imitate its strategy, threatening its cost leader position. Soulful might react by: a.adding differentiated features to its shoes that create value for customers while maintaining price. b.selling its shoes at a higher price to give a perception of higher value. c.producing distinctive shoes for customers who value differentiated features more than low cost. d.allowing counterfeiters to imitate its shoes.
a.adding differentiated features to its shoes that create value for customers while maintaining price.
Each business-level strategy can help the firm establish and exploit a particular competitive _____ as the basis for how it will create value for customers within a particular competitive _____. a.advantage; scope b.scope; advantage c.geographic area; market d.cost; activity
a.advantage; scope
The extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity is: a.awareness. b.motivation. c.ability. d.rivalry.
a.awareness.
Renee is a manager at Gyrod, a company that has successfully negotiated a number of acquisitions over the past several years. As a result, Gyrod has grown much larger than when Renee began working there nine years ago. Renee has noticed that Gyrod has been relying on more formal supervisory and behavioral rules and feels that these _____ controls are limiting her flexibility as a manager. a.bureaucratic b.organizational c.strategic d.diligent
a.bureaucratic
A _____ describes what a firm does to create, deliver, and capture value for its stakeholders. a.business model b.strategic plan c.business-level strategy d.corporate-level strategy
a.business model
A firm reaps the benefit of location advantages of an international strategy when its facilities in international locations provide easier access to all of the following EXCEPT: a.capital investments. b.lower cost labor. c.energy. d.natural resources.
a.capital investments.
All of the following are characteristics of a fast-cycle market EXCEPT: a.competitive advantages are partially sustainable. b.speed is important. c.the volatility is higher than in slow- and standard-cycle markets. d.rapid product upgrades and innovations are part of the competitive dynamics.
a.competitive advantages are partially sustainable.
Speedy Delivery offered rewards points to customers that could be accumulated to receive discounts. When Speedy saw that Delivery Dash was cutting all rates, Speedy also offered to match all Delivery Dash's prices. Speedy Delivery is engaging in: a.competitive behavior. b.market commonality. c.multimarket competition. d.competitive dynamics.
a.competitive behavior.
Acquisitions made between companies with headquarters in different countries are called _____ acquisitions. a.cross-border b.transglobal c.vertical nation d.cross-cultural
a.cross-border
Managing the business units of a geographically diverse multinational firm requires skill, not only in managing a _____ set of businesses, but also coordinating _____ points of view emerging from businesses located in countries and regions. a.decentralized; diverse b.centralized; diverse c.centralized; analogous d.decentralized; analogous
a.decentralized; diverse
Two courses of action to meet the needs of customers while reducing the workforce include: a.developing a flexible workforce by cross-training employees and paying extra attention to the best customers. b.implementing self-serve methods to compensate for lack of employees and customer loyalty programs to retain customers. c.outsourcing human resources and customer service. d.repositioning the firm in a complementary industry where customer service is minimal, thereby attracting different types of customers.
a.developing a flexible workforce by cross-training employees and paying extra attention to the best customers.
Engall's Foods makes a variety of snack crackers and is well established in the markets it serves. It would like to expand its product line to include other types of snack items but does not have the experience in making those products. Engall's is considering the acquisition of a related firm in order to: a.diversify. b.gain market share. c.avoid a takeover. d.control the value chain.
a.diversify.
All of the following are competitive risks of using the cost leadership strategy EXCEPT: a.experience can narrow customers' perceptions of the value of a product's unique features. b.the processes used by the cost leader to produce and distribute its product could become obsolete because of competitors' innovations. c.too much focus by the cost leader on cost reductions may occur at the expense of trying to understand customers' perceptions of competitive levels of differentiation. d.competitors sometimes learn how to imitate the cost leader's strategy.
a.experience can narrow customers' perceptions of the value of a product's unique features.
CSI recently acquired NetResources. Because this was a friendly acquisition, CSI can expect: a.faster and more effective integration. b.higher premiums. c.easier financing. d.a lower financing cost.
a.faster and more effective integration.
Pursuing international strategies, particularly an international diversification strategy, typically leads to growth in _____ and _____. a.firm size; complexity in operations b.consumer tastes; competition c.above-average returns; consumer demand d.consumer demand; cultural practices
a.firm size; complexity in operations
The pattern of actions and responses that make up competitive rivalry suggests all of the following EXCEPT: a.firms can act independently to achieve market success. b.firms are affected by each other's actions. c.firms are affected by each other's responses. d.marketplace success is a function of both individual strategies and the consequences of their use.
a.firms can act independently to achieve market success.
A firm that takes an initial competitive action to build or defend competitive advantages is a(n): a.first mover. b.tactical responder. c.strategic mover. d.entrepreneur.
a.first mover.
The problems of central coordination and integration are mitigated if the firm's international operations compete in: a.friendly, geographically close countries with cultures like the culture of the international firm in question. b.geographically dispersed countries with cultures different than the culture of the international firm in question. c.culturally different countries that are close geographically. d.countries with lower gross domestic products (GDPs) than that of the international firm in question.
a.friendly, geographically close countries with cultures like the culture of the international firm in question.
International corporate-level strategy focuses on the scope of a firm's operations through _____ diversification. a.geographic b.political c.economic d.social
a.geographic
NationTech and Cooper Networks are both dealers in computer hardware and software, dealing with national brands. They are similar in size, and both service small businesses and higher-end home users. NationTech is located on the East Coast in New York City, and Cooper Networks is on the West Coast in Los Angeles. Both companies order from several large computer supply companies on the Internet, and both companies perform work throughout their home states. NationTech and Cooper Networks: a.have high resource similarity. b.have high market commonality. c.are direct and mutually acknowledged competitors. d.have low resource similarity and low market commonality.
a.have high resource similarity.
In general, firms are more aware of competitors they compete against in multiple markets and who: a.have similar resources. b.are late movers. c.are second movers. d.have similar financial performance.
a.have similar resources.
Conrad Cabinets Company implements a cost leadership strategy to produce its cabinets with features that are acceptable to its customers at the lowest cost relative to that of its competitors. Conrad Cabinets' value-creating activities might include all of the following EXCEPT: a.having a specially trained unit to provide after-sales service. b.building economies of scale and efficient operations. c.using low-cost modes of transporting its products. d.offering lower prices for high sales volumes.
a.having a specially trained unit to provide after-sales service.
When firms are purchased in the same industry, this is known as: a.horizontal acquisition. b.vertical integration. c.networking the organization. d.unrelated diversification.
a.horizontal acquisition.
How firms integrate the activities they complete within each business-level strategy demonstrates: a.how they differ from one another. b.how profitable they will be. c.what their cost structure is. d.whether they will have the lowest costs.
a.how they differ from one another.
In emerging economies, a significant economic risk related to industry leaders having sufficient electrical power in national grids to meet their usage needs requirements is generally referred to as availability of: a.infrastructure. b.technology. c.monetary exchange. d.capital.
a.infrastructure.
Acquisition is often viewed as: a.less risky than internal product development. b.carrying a high risk for imitation. c.a driver for innovation. d.more risky than R&D investments.
a.less risky than internal product development.
Value-chain activities include all of the following EXCEPT: a.management information systems. b.operations. c.marketing. d.distribution.
a.management information systems.
Research suggests that having a competitive advantage in logistics creates _____ value with a _____ strategy than with a _____ strategy. a.more; cost leadership; differentiation b.less; cost leadership; differentiation c.more; differentiation; focus d.less; cost leadership; focus
a.more; cost leadership; differentiation
Powerful customers can force a cost leader to reduce its prices, but not below the level at which the cost leader's: a.next-most-efficient industry competitor can earn average returns. b.least efficient industry competitor can earn average returns. c.next-most-efficient industry competitor can earn above-average returns. d.next-most-efficient industry competitor can earn below-average returns.
a.next-most-efficient industry competitor can earn average returns.
Poole Company recently acquired Carroll Inc. The two firms did not have identical assets, but they are complementary in unique ways. This makes it possible for them to generate: a.private synergy. b.overdiversification. c.resource slack. d.due diligence.
a.private synergy.
A _____ focus allows a firm to marshal its resources to compete effectively rather than spreading its limited resources across multiple country-specific international markets. a.regional b.local c.national d.universal
a.regional
When the links between the diversified firm's businesses are rather direct—meaning they use similar sourcing, throughput, and outbound processes—it is termed a(n) _____ diversification strategy. a.related constrained b.direct c.similarly sourced d.outbound process
a.related constrained
A _____ action or response is a market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse. a.strategic b.tactical c.competitive d.first-mover
a.strategic
All of the following are governance mechanisms that may limit managerial tendencies to over diversify EXCEPT: a.surveillance equipment and technology. b.executive compensation practices. c.the board of directors. d.the market for corporate control.
a.surveillance equipment and technology.
By sharing resources and knowledge between units and network partners across country borders, firms learn how to create a.synergy. b.expertise. c.unity. d.intellectual property rights.
a.synergy.
Big Brands is a major department store chain with stores in every state. It adjusts prices aggressively to increase its revenue and take market share away from competitors. Big Brands is engaging in continuous: a.tactical actions. b.tactical responses. c.strategic actions. d.strategic responses.
a.tactical actions.
Companies in emerging markets frequently use the unrelated diversification strategy because of: a.the absence of a "soft infrastructure" in those markets. b.how profitable they will be. c.their market power. d.the shared control among business-unit managers.
a.the absence of a "soft infrastructure" in those markets.
Strategic competitiveness results only when: a.the firm satisfies a group of customers by using its competitive advantages as the basis for competing in individual product markets. b.the firm satisfies markets where supply equals demand. c.the firm needs to find new customers in order to stay in business. d.returns earned by the firm from current customers are below-average.
a.the firm satisfies a group of customers by using its competitive advantages as the basis for competing in individual product markets.
The term "synergy" is derived from the Greek word "synergos," which means working together. When used in reference to acquisitions, it is said that synergy has been created when: a.the value created by units working together exceeds the value those units could create when working independently. b.the culture of an acquiring firm is a good fit, compatible with the culture of the target firm. c.management and employees work together to achieve success. d.the products or services offered by a firm are perceived as valuable by its target market.
a.the value created by units working together exceeds the value those units could create when working independently.
From a strategic perspective, a basic need of all customers is to buy products that create _____ for them. a.value b.challenges c.questions d.encounters
a.value
Tina is new to investing. After doing some research into both Perio and Lewisohn, two mid-size publishing houses, she decided to purchase stock in Lewisohn. This week, the two firms announced that Perio will be acquiring Lewisohn. As a stockholder in Lewisohn, what can Tina expect?
above-average returns
If a firm does not have core competencies in an area required to achieve a competitive advantage, it must:
acquire the resources needed to build those competencies.
Perio and Lewisohn are two mid-size publishing houses. After extensive negotiations, the two firms reached an agreement in which that Perio bought controlling interest in Lewisohn and Lewisohn became a subsidiary business. This strategy is known as a(n):
acquisition
Rare capabilities are those that:
are not possessed by many others.
Analysis of the five forces within a given industry allows the firm to determine the industry's attractiveness in terms of the potential to earn _____ returns.
average or above-average
What is the Japanese "keiretsu"? a. The banks owning the largest shares of stock in the firm b. A group of firms tied together by cross-shareholdings c. Company unions, which are a type of governance system d. Management structures related to total quality management (TQM) systems
b. A group of firms tied together by cross-shareholdings
Which of the following is most likely to have a simple structure? a. A construction company with managers who make onsite decisions and dozens of short-term employees b. A piano teacher who has a staff assistant and 30 students c. A school run by a school board d. A security firm with a division for home security and a division for retail security
b. A piano teacher who has a staff assistant and 30 students
Which of the following is the best definition of a top management team? a. A top management team is composed of the individuals responsible for establishing global operations. b. A top management team is composed of the individuals responsible for making certain the firm uses the strategic management process, especially to select and implement strategies. c. A top management team is composed of the individuals responsible for the distribution of products or services. d. A top management team is composed of the individuals responsible for the decisions of competing.
b. A top management team is composed of the individuals responsible for making certain the firm uses the strategic management process, especially to select and implement strategies.
Which of the following is NOT a consequence of the Sarbanes-Oxley Act (SOX)? a. A decreased number of foreign firm listings resulted on U.S. stock exchanges. b. An increased number of IPOs (initial public offerings) were legislated. c. Internal auditing scrutiny in firms' financial reporting improved. d. Section 404 increased costs for firms.
b. An increased number of IPOs (initial public offerings) were legislated.
How is "strategic leader" best defined? a. A person who accepts responsibility for reshaping the firm and handling the controversies facing it b. Any individual with responsibility for the performance of human capital and/or a part of the firm (e.g., a production unit) c. Anyone who can demonstrate the productivity of those being led d. Anyone who has earned both the trust of and the credibility with the firm's stakeholders
b. Any individual with responsibility for the performance of human capital and/or a part of the firm (e.g., a production unit)
Historically, which type of firm occupied the center of the German corporate governance system? a. Utilities b. Banks c. Mining firms d. Manufacturing firms
b. Banks
What types of strategies are best supported by the functional structure? a. Business-level strategies and some corporate-level strategies with high levels of diversification b. Business-level strategies and some corporate-level strategies with low levels of diversification c. Corporate-level strategies and some business-level strategies with high levels of diversification d. Corporate-level strategies and some business-level strategies with low levels of diversification
b. Business-level strategies and some corporate-level strategies with low levels of diversification
When using the cost leadership strategy, which of the following verifies that further cuts in costs in one function won't adversely affect the productivity levels in other functions? a. Engineering department b. Centralized staff c. Operations personnel d. Manufacturing facility
b. Centralized staff
Which of the following is NOT a criterion for the financial perspective of the balanced scorecard? a. Return on equity b. Changes in turnover rates c. Return on assets d. Cash flow
b. Changes in turnover rates
Which of the following statements regarding innovation through cooperative strategies is NOT true? a. Firms are becoming increasingly dependent on cooperative strategies as a path to innovation and, ultimately, to competitive success in the global economy. b. Compared to other approaches to innovation, combining complementary assets through alliances has the potential to result more frequently in incremental innovations. c. Both entrepreneurial ventures and established firms use cooperative strategies. d. In order to foster innovation, firms may form alliances with competitors.
b. Compared to other approaches to innovation, combining complementary assets through alliances has the potential to result more frequently in incremental innovations.
Which M-form structure is characterized by complete independence among the firm's divisions that compete for corporate resources? a. Cooperative b. Competitive c. Cost leadership d. Strategic business unit (SBU)
b. Competitive
What are the three variations of the multidivisional structure? a. Simple, functional, and cooperative b. Cooperative, strategic business unit, and competitive c. Related constrained, related linked, and unrelated diversification d. Cost leadership, differentiated, and integrated
b. Cooperative, strategic business unit, and competitive
Which of the following strategies is used by Cape Rain Sheds, which uses the functional structure to manage three subgroups, based on the workers' specialized skills, formed to construct the three basic shed styles the company sells? a. Differentiation b. Cost leadership c. Integrated d. Constrained
b. Cost leadership
When creating value through internal innovation processes, which of the following is important for promoting integrated new product design ideas? a. An entrepreneurial mind-set b. Cross-functional product teams c. Effective leadership d. Shared values
b. Cross-functional product teams
Which of the following statements about diffuse ownership is true? a. As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions strengthens. b. Diffuse ownership makes it difficult for owners to effectively coordinate their actions. c. Diffuse ownership often results in increased shareholder value. d. Diffuse ownership occurs when an individual holds both the CEO and chair of the board titles.
b. Diffuse ownership makes it difficult for owners to effectively coordinate their actions.
What type of organizational structure is used to manage international cooperative strategies? a. Strategic business unit b. Distributed strategic networks c. Related constrained d. Vertical complementary
b. Distributed strategic networks
The CEO constantly talks about her dream for the company with respect to becoming the company of choice for employee assistance programs. The message is also reflected on company uniforms, marketing information, websites, and coffee mugs. What is this an example of? a. Strategy b. Envisioned future c. Organizational culture d. Core ideology
b. Envisioned future
What are the two types of combination structures that can be used by the transnational strategy? a. Multidomestic and global b. Global matrix and hybrid global c. Multidomestic and worldwide geographic area d. Transnational network and hybrid global
b. Global matrix and hybrid global
Which of the following statements about managerial discretion is true? a. Managerial discretion should not be used when making decisions related to using the strategic management process. b. How managers exercise discretion shapes an organization's culture. c. The primary factors that determine the amount of decision-making discretion a manager has are employee characteristics, organizational characteristics, and managerial characteristics. d. Research shows that, generally, managers leading firms in different industries use the same amount of managerial discretion.
b. How managers exercise discretion shapes an organization's culture.
_____, which is more critical to radical than incremental innovations, leads to creativity. a. Risk b. Imagination c. Competitive spirit d. Drive
b. Imagination
Which of the following is a criterion for the internal business processes perspective of the balanced scorecard? a. Improvements in innovation ability b. Improvements in employee morale c. Increases in employee skills d. Number of new products compared to competitors
b. Improvements in employee morale
Pipestone Industries encourages employees to suggest new ideas, experiment with different methods, and think creatively. The goal is to come up with creative ways to add value. By doing this, which dimension of an entrepreneurial orientation does Pipestone emphasize? a. Risk taking b. Innovativeness c. Proactiveness d. Competitive aggressiveness
b. Innovativeness
_____ are financial institutions, such as mutual funds and pension funds, that control large-block shareholder positions. a. Outsiders b. Institutional owners c. Insiders d. Boards of directors
b. Institutional owners
What type of experience is an increasingly critical aspect of the heterogeneity that is desirable in top management teams? a. Governmental b. International c. Wholesale d. Retail
b. International
Which of the following is the most likely scenario that will occur when the top management team is heterogeneous and a new CEO is selected from outside? a. It is likely that interorganizational conflicts will increase. b. It is likely there will be a change in strategy. c. It is unlikely the new CEO will have long tenure. d. It is unlikely that strategic change will occur.
b. It is likely there will be a change in strategy.
Which of the following is a benefit that product diversification can create for top-level managers that shareholders do not enjoy? a. It increases top-level managers' employment risk. b. It provides an opportunity for top-level managers to increase their compensation. c. It allows top-level managers the opportunity to make strategic decisions that maximize their personal welfare. d. It decreases the complexity of managing a firm.
b. It provides an opportunity for top-level managers to increase their compensation.
EMSS Services is a multinational company. Business units in each country make their own strategic and operating decisions in order to tailor specific product characteristics to the local preferences. What type of strategy does EMSS use? a. Worldwide geographic area b. Multidomestic c. Worldwide product d. Global
b. Multidomestic
What often inhibits efforts to change structure, even when performance suggests that it may be necessary? a. Organizational activity b. Organizational inertia c. Organizational disinterest d. Organizational apathy
b. Organizational inertia
Which of the following specifies the functions that must be completed so a firm can implement its strategy? a. Organizational control b. Organizational structure c. Organizational cohesiveness d. Organizational schedule
b. Organizational structure
What is a leader's style commonly influenced by? a. Educational background b. Personal ideology and experience c. Social contracts d. Ethnicity
b. Personal ideology and experience
Why do organizational changes often take place during economic downturns? a. Employees have time to make changes. b. Poor performance reveals organizational weaknesses. c. Increased profits pay for changes. d. The company focuses on its customers.
b. Poor performance reveals organizational weaknesses.
Which of the following is a means considered to improve the effectiveness of outside directors? a. Requiring that outside directors act objectively, having no ownership interest in the firm b. Requiring outside directors to own significant equity stakes in the firm as a prerequisite to holding a board seat c. Mandating that all outside directors come from government or academia rather than industry as a prerequisite for holding a board seat d. Requiring that outside directors be former executives of the firm as a prerequisite to holding a board seat
b. Requiring outside directors to own significant equity stakes in the firm as a prerequisite to holding a board seat
Which of the following statements about ownership concentration is NOT true? a. Ownership of many modern corporations is now concentrated in the hands of institutional investors rather than individual stockholders. b. Research evidence suggests that ownership concentration is associated with higher levels of firm product diversification. c. Ownership concentration as a governance mechanism has received considerable interest, because large-block shareholders are increasingly active in their demands that firms adapt effective governance mechanisms to control managerial decisions so that they will best represent owners' interests. d. Research indicates that institutional activism may not have a strong direct effect on firm performance, but it may indirectly influence a targeted firm's strategic decisions (including those concerned with social issues).
b. Research evidence suggests that ownership concentration is associated with higher levels of firm product diversification.
_____ firms are the most harmed by bribery. a. Large multinational b. Small- and medium-sized c. Small- and large-sized d. Medium- and large-sized
b. Small- and medium-sized
The director of marketing at GlobalTech learned of an opportunity to enter a new market. The existing product would work in this market with minor modifications, and he believes that the sales potential would be phenomenal. When his proposal was discussed at the senior management meeting, his colleagues examined the costs to make the modifications just for this market, including the staffing required, changes to manufacturing, and new inventory systems. What controls did senior management implement to make this decision? a. Tactical b. Strategic c. External d. Objective
b. Strategic
JHC Inc. has a heterogeneous top management team and has just hired a new CEO from outside the firm. Which of the following situations will result? a. A stable strategy b. Strategic change c. A stable strategy with innovation d. An ambiguous situation where there is potential for a change in the top management team and the strategy
b. Strategic change
_____ is change resulting from selecting and implementing a firm's strategies. a. Diversification b. Strategic change c. Strategic leadership d. Restructuring
b. Strategic change
Which of the following is a potential barrier to the effectiveness of cross-functional teams? a. Lack of passion b. Team members' independent frames of reference c. The firm's strategic orientation and horizontal structure d. Informal processes
b. Team members' independent frames of reference
Which of the following is the best description of the composition of a top management team? a. The officers listed in a firm's annual report and the board of directors b. The officers of the corporation, defined by the title of vice president and above or by service as a member of the board of directors c. The CEO and the chairperson of the board d. A heterogeneous group of advisors selected by the CEO
b. The officers of the corporation, defined by the title of vice president and above or by service as a member of the board of directors
What is entrepreneurship? a. The conditions in which new goods or services can satisfy a need in the market b. The process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control c. The act of creating or developing a new product or process d. A process used to create a commercial product from an invention
b. The process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control
On paper, the top management team at Clearbrook Corp. is the cream of the crop. It is a diverse group of individuals who have degrees from the top schools in their respective fields. They have all worked their way up through their different departments within Clearbrook and have a thorough knowledge of workings of the firm, as well as of the general climate in the industry as a whole. Working with the board of directors, the top management team understands the vision for Clearbrook. Even so, they have not been able to select a strategy that shows signs of helping Clearbrook achieve its strategic direction. What is most likely the cause of this failure? a. The top management team does not invest enough in human capital. b. The top management team is too committed to the status quo. c. The top management team places too little emphasis on a values-based culture. d. The top management team embraces risky actions.
b. The top management team is too committed to the status quo.
Who are typically assumed to be responsible for an undervalued firm's poor performance? a. The board of directors b. Top-level managers c. Institutional owners d. Shareholders
b. Top-level managers
Which of the following is a reason why it can be difficult for boards of directors to effectively assess top-level managers' decisions on a regular basis? a. Boards do not have access to information other than financial documentation. b. Typically, the effects of top-level managers' decisions are stronger on the firm's long-term performance than its short-term performance. c. Typically, boards only meet every other year. d. insider board members are reluctant to disclose issues resulting from poor decisions to all board members.
b. Typically, the effects of top-level managers' decisions are stronger on the firm's long-term performance than its short-term performance.
In which of the following situations would a heterogeneous top management team be a potential detriment to a firm? a. When an individual operates as both CEO and board chair b. When the firm operates in a volatile and uncertain environment c. When the firm looks to expand internationally d. When strategic change is needed and the firm needs to increase its innovation
b. When the firm operates in a volatile and uncertain environment
Which of the following increases human capital's ability to develop value-creating innovations? a. Constrained risk taking b. Workforce diversity c. Job sharing d. International experience
b. Workforce diversity
Innovation is: a. the act of creating or developing a new product or process. b. a process used to create a commercial product from an invention. c. the use or application of entrepreneurship within an established firm. d. the adoption of a similar innovation by different firms.
b. a process used to create a commercial product from an invention.
Because capital markets value growth, some firms use _____ as a way to rapidly extend product lines and increase revenue. a. cross-functional teams b. acquisitions c. autonomous innovation d. induced innovations
b. acquisitions
Compared to other people, entrepreneurs: a. are less able to deal with uncertainty. b. are more alert to opportunities. c. prefer hands-on learning. d. are more persistent.
b. are more alert to opportunities
Research results suggest that stock option incentives: a. are linked to poor managerial decision making and lower performance. b. can be associated with top-level managers' fraudulent behavior, such as earnings manipulation. c. are more motivating to top-level managers than salaries and bonuses. d. are a more important part of compensation packages for top-level managers pursuing an international strategy than for top-level managers leading U.S. firms.
b. can be associated with top-level managers' fraudulent behavior, such as earnings manipulation.
A person who perceives an entrepreneurial opportunity and then takes risks to develop an innovation and exploit it is known as a(n): a. risk taker. b. entrepreneur. c. inventor. d. strategic leader.
b. entrepreneur
Firms tend to use franchising as a way to: a. cut costs. b. facilitate product or market diversification. c. complete a merger. d. increase their commitment to sustainability.
b. facilitate product or market diversification
A _____ is a lump-sum payment of cash that is given to one or more top-level managers when the firm is acquired in a takeover bid. a. hostile takeover b. golden parachute c. standstill agreement d. poison pill
b. golden parachute
Dymaxa Technologies has been a leading innovative firm in the U.S market. It now wants to discover and exploit opportunities outside its domestic market, and it wants to start in Europe. Dymaxa needs to hire a top-level manager to spearhead this initiative. It should look for a person who: a. speaks several languages. b. has international experience. c. has worked in all functional areas of the business. d. has advanced degrees in marketing and management.
b. has international experience
A recent survey found that only 41 percent of family-owned firms in the United States: a. use the external managerial labor market to select CEOs. b. have established leadership contingency plans. c. select a family member from the internal managerial labor market to be CEO. d. review succession plans only when a change in management requires it.
b. have established leadership contingency plans
As compared to younger entrepreneurial ventures, larger, more established firms often: a. excel at taking entrepreneurial actions. b. have more resources to manage recognized opportunities. c. produce more radical innovations. d. have little slack.
b. have more resources to manage recognized opportunities.
A CEO that challenges employees to find ways to shorten production schedules and get approved designs to market faster is promoting _____ behavior to encourage internal corporate venturing. a. autonomous strategic b. induced strategic c. capitalistic d. franchising
b. induced strategic
For most companies, _____ is the most critical of the three types of innovative activities. a. invention b. innovation c. implementation d. imitation
b. innovation
Maylor Corporation is focused on innovation. Its R&D department has several teams that focus on developing both incremental and radical innovations. Maylor is involved in: a. internal franchising. b. internal corporate venturing. c. cooperative innovation strategies. d. internal diversification.
b. internal corporate venturing
MKP Industries has been discovering and exploiting opportunities outside its domestic market. MKP is taking part in: a. global acquisitions. b. international entrepreneurship. c. internal corporate venturing. d. franchising.
b. international entrepreneurship
As one aspect of the relationship between structure and strategy, once structure is in place: a. it cannot influence current strategic actions and choices about future strategies. b. it can influence current strategic actions and choices about future strategies. c. it can influence current strategic actions but not choices about future strategies. d. it cannot influence current strategic actions, but it can influence choices about future strategies.
b. it can influence current strategic actions and choices about future strategies.
Most corporate restructuring is designed to refocus the firm on: a. the use of acquisitions to enter other markets. b. its core businesses. c. the economy. d. hiring practices.
b. its core business
Businesswoman Marybeth Johnson just purchased an additional 2,000 shares of Western Telecomm, which means she now possesses about 7 percent of the firm's issued shares. This makes her a(n): a. angel investor. b. large-block shareholder. c. insider. d. institutional owner.
b. large-block shareholder
According to Simsek (2007), the "_____ of short tenure ... appear to exceed the advantages, while the advantages of long tenure—firm-specific human and social capital, knowledge, and power—seem to outweigh the disadvantages of _____ and maintaining the status quo." a. benefits; laxness b. liabilities; rigidity c. liabilities; poor performance d. disadvantages; flexibility
b. liabilities; rigidity
A functional structure used to implement a differentiation strategy is characterized by: a. high formalization, decentralization of decision-making authority and responsibility, and low specialization of work tasks. b. low formalization, decentralization of decision-making authority and responsibility, and low specialization of work tasks. c. low formalization, decentralization of decision-making authority and responsibility, and high specialization of work tasks. d. high formalization, centralization of decision-making authority and responsibility, and low specialization of work tasks.
b. low formalization, decentralization of decision-making authority and responsibility, and low specialization of work tasks.
The essence of entrepreneurship is to identify and exploit entrepreneurial opportunities and to: a. reward innovators. b. manage risks appropriately as they arise. c. increase market share. d. create strategic change.
b. manage risks appropriately as they arise.
Units within firms are more innovative when people have access to: a. senior management. b. new knowledge. c. financial backing. d. analyses of competitors' products.
b. new knowledge
To support the creativity needed and the continuous pursuit of new sources of differentiation and new products, jobs in a functional structure used to implement a differentiation strategy are: a. compartmentalized. b. not highly specialized. c. highly formalized. d. not highly centralized.
b. not highly specialized
Financial controls are: a. subjective criteria used to measure the firm's performance against previously established quantitative standards. b. objective criteria used to measure the firm's performance against previously established quantitative standards. c. subjective criteria that allow stakeholders to evaluate the returns earned by the industry. d. objective criteria that allow stakeholders to evaluate the returns earned by the industry.
b. objective criteria used to measure the firm's performance against previously established quantitative standards.
Some people think that responsible leadership demonstrates concern for the triple bottom line, where firms seek returns for _____, _____, and _____. a. profits; power; planet b. people, profits; planet c. performance; people; profits d. people; profits; power
b. people, profits; planet
Research suggests that for a firm to be entrepreneurial, it must: a. introduce incremental innovations into newly created markets. b. provide appropriate autonomy while simultaneously promoting cooperation. c. stress collectivism rather than individualism. d. provide a balance of autonomy and individual initiative.
b. provide appropriate autonomy while simultaneously promoting cooperation.
Entrepreneurial ventures and younger firms often are more effective at _____ than are larger established companies. a. using a strategic perspective b. recognizing opportunities c. initiating induced strategic behavior d. managing resources to exploit opportunities
b. recognizing opportunities
The M-form is used primarily to support the implementation of: a. focus strategies and business-level strategies. b. related and unrelated diversification strategies. c. business-level strategies and some corporate-level strategies with low levels of diversification. d. corporate-level strategies and some business-level strategies with high levels of diversification.
b. related and unrelated diversification strategies.
Corporate governance does NOT include: a .ensuring that top-level managers' interests are aligned with the interests of stakeholders. b. resolving conflicts among corporate employees. c. establishing and maintaining harmony between the firm's owners and its top-level managers whose interests may conflict. d. using mechanisms to determine and control the strategic direction and performance of organizations.
b. resolving conflicts among corporate employees.
When implementing internal innovations, _____ is(are) the glue that promotes cross-functional integration. a. tangible resources b. shared values c. horizontal structure d. vertical hierarchy
b. shared values
Commonly, those managing small firms own a _____ percentage of the firm, which means there is _____ separation between ownership and managerial control. a. significant; more b. significant; less c. small; more d. small; less
b. significant; less
Strategic entrepreneurship involves taking entrepreneurial actions using a(n) _____ perspective. a. tactical b. strategic c. objective d. subjective
b. strategic
Strategic leaders play an important role in determining a proper balance between _____ and _____. a. importing; exporting b. strategic controls; financial controls c. the future; the past d. international markets; domestic markets
b. strategic controls; financial controls
Corporate governance is the set of mechanisms used to manage the relationships among stakeholders and to determine and control the _____ of organizations. a. selection of products and markets b. strategic direction and performance c. revenues, expenses, and profit margins d. opportunities and threats
b. strategic direction and performance
Centralization is: a. the degree to which rules and procedures govern work. b. the degree to which decision-making authority is retained at higher managerial levels. c. the types of jobs required to complete work. d. the number of jobs required to complete work.
b. the degree to which decision-making authority is retained at higher managerial levels
The top management team's effect on decisions it makes depends on all of the following factors EXCEPT: a. how the team is managed. b. the firm's strategic direction. c. the team's expertise. d. the context in which the team makes decisions.
b. the firm's strategic direction.
All of the following are internal governance mechanisms used in the modern corporation EXCEPT: a. executive compensation. b. the market for corporate control. c. the board of directors. d. ownership concentration.
b. the market for corporate control
An individual strategic network is only as strong as its weakest: a. market. b. value-chain link. c. product. d. product-to-market link.
b. value-chain link
Bonham International is a large corporation that uses strategic entrepreneurship effectively. The main responsibility of the top-level managers who oversee Bonham's emerging brands is to a. ensure that there is sufficient capital allocated for research and development (R&D). b. verify that Bonham identifies entrepreneurial opportunities consistently. c. continue to hire the best and brightest in the field. d. remain aware of what the competition is doing.
b. verify that Bonham identifies entrepreneurial opportunities consistently.
_____ is a popular entry mode because it allows a firm to connect with an experienced partner already in the market. a.A greenfield venture b.A strategic alliance c.Licensing d.Exporting
b.A strategic alliance
Which of the following actions by a fast-food chain is an example of a tactical action? a.Making an agreement to open restaurants inside a large discount department store nationwide b.Adding more salad choices to its menu c.Launching a chain of taco restaurants d.Opening restaurants in a different state
b.Adding more salad choices to its menu
Which of the following is NOT a reason for acquisitions? a.Increased market power b.Addition of employees c.Overcoming entry barriers d.Increased diversification
b.Addition of employees
Which of the following companies simultaneously creates economies of scope through both operational and corporate relatedness? a.Procter & Gamble b.Amazon c.Virgin Group d.Honda
b.Amazon
Which of the following is NOT an incentive to diversify that comes from a firm's internal environment? a.Low performance b.Antitrust regulations c.Uncertain future cash flows d.Reduction of risk for the firm
b.Antitrust regulations
ABC Innovations and Brekan Enterprises have high market commonality. They compete in the same market segments and in the same geographic areas. Brekan is the market leader, and ABC has recently initiated a significant strategic attack to try to gain the lead. How would you expect Brekan to respond? a.As the market leader, Brekan has little to worry about in this situation and will not waste resources on a major response. b.Because of its high multimarket contact, Brekan will respond aggressively to protect its position. c.Brekan will initiate a strategic attack on the other firms in the industry to take market share away from them. d.Brekan will wait for the next cycle in the market before deciding whether to respond to the attack.
b.Because of its high multimarket contact, Brekan will respond aggressively to protect its position.
Why are the five business-level strategies considered to be generic in nature? a.Because they are not listed in any certain order b.Because they can be used in any organization competing in any industry c.Because they are risk-free d.Because they all incorporate the value chain
b.Because they can be used in any organization competing in any industry
How is successful unrelated diversification through restructuring typically accomplished, as exemplified by the Danaher Business System? a.By seeking firms that are human-resource dependent b.By focusing on mature, low-technology businesses c.By buying high-technology firms in high-growth industries d.By putting together a top management team that does not have to follow pre-established rules about how the firm's portfolio should be developed
b.By focusing on mature, low-technology businesses
Which of the following statements about a global strategy is true? a.The global strategy offers fewer opportunities to take innovations developed at the corporate level and apply them in other markets. b.Compared to a multidomestic strategy, the global strategy seeks greater levels of standardization of products across country markets. c.The global strategy is difficult to use because of its conflicting goals. d.A global strategy is most appropriate for use when the differences between the markets a firm serves and the customers in them are significant.
b.Compared to a multidomestic strategy, the global strategy seeks greater levels of standardization of products across country markets.
Every town has them—two gas stations located very close to each other that constantly change prices. Some price changes are independent of each other, but many are made in response to each other's price change. Which of the following describes this behavior? a.Competitor analysis b.Competitive rivalry c.Multimarket competition d.Competitive dynamics
b.Competitive rivalry
Which of the following is NOT a business-level strategy used by firms to establish and defend their desired strategic position against competitors? a.Cost leadership b.Delineation c.Focused cost leadership d.Focused differentiation
b.Delineation
Why does downscoping have a more positive effect on firm performance than downsizing? a.With downscoping, the composition of businesses in the company's portfolio is not changed. b.Downscoping causes firms to refocus on their core business. c.Downscoping is an intentional managerial strategy. d.Downscoping allows the firm to become more diversified.
b.Downscoping causes firms to refocus on their core business.
_____ risks include fundamental weaknesses in a country or region's economy with the potential to cause adverse effects on firms' efforts to successfully implement their international strategies. a.Political b.Economic c.Social d.Financial
b.Economic
In a money-making effort, a small private university has decided to institute consulting services using its business faculty as consultants whose services would be sold to clients. By using its faculty as consultants, what is the university trying to gain? a.Market power b.Economies of scope c.Financial economies d.Multipoint competition
b.Economies of scope
Jersey Pharmaceuticals is negotiating the acquisition of MassBioTech, but the two firms have very different opinions on the value of the target firm. How can Jersey Pharmaceuticals make sure it doesn't overpay to acquire MassBioTech? a.Keep the negotiations friendly. b.Effectively conduct the due-diligence process. c.Analyze MassBioTech's financial documents for signs of financial slack. d.Take preliminary steps to manage the integration process well.
b.Effectively conduct the due-diligence process.
Why would a firm that has excess capacity in its sales force want to pursue related diversification as an effective means of diversifying? a.Basing diversification on an intangible resource, such as a sales force, is more likely to create long-term value. b.Excess capacity of a tangible resource, such as a sales force, can be used to diversify more easily. c.Basing diversification on a tangible resource, such as a sales force, is more likely to create long-term value. d.Tangible resources, such as a sales force, are less visible to competitors and harder to imitate.
b.Excess capacity of a tangible resource, such as a sales force, can be used to diversify more easily.
What is the determinant of national advantage that refers to the inputs necessary for a firm to compete in any industry? a.Demand conditions b.Factors of production c.Related and supporting industries d.Firm strategy, structure, and rivalry
b.Factors of production
Which of the following statements regarding exporting is NOT true? a.By exporting, firms avoid the expense of establishing operations in host countries in which they have chosen to compete. b.Firms avoid marketing expenses by using exporting. c.Firms must establish some means of distributing their products when exporting. d.Firms typically form contracts with host-country firms to handle distribution of their products.
b.Firms avoid marketing expenses by using exporting.
Which product quality dimension is related to meeting operating specifications over some period of time? a.Performance b.Flexibility c.Durability d.Serviceability
b.Flexibility
_____ integration exists when a company owns its own source of output distribution. a.Backward b.Forward c.Sideways d.Horizontal
b.Forward
Which attributes of successful acquisitions are most likely to lead to lower premiums paid by the acquiring firm? a.Friendly acquisition and moderate debt position b.Friendly acquisition and effective due diligence c.Moderate debt position and effective due diligence d.Acquiring firm's financial slack and moderate debt position
b.Friendly acquisition and effective due diligence
Which of the following is a limit to the positive effects of the diversification associated with international strategies? a.Monopolies b.Increased costs of coordination between units c.Government oversight d.Poor product quality
b.Increased costs of coordination between units
Which of the following is NOT a potential problem in achieving success with acquisitions strategies? a.Inadequate evaluation of target b.Increased market power c.Large or extraordinary debt d.Too much diversification
b.Increased market power
What type of financial economy would be used to reduce risk among the firm's businesses when using an unrelated diversification strategy? a.Activity sharing b.Internal capital allocations c.Restructuring of acquired assets d.Transfer of core competencies
b.Internal capital allocations
Where corruption can be a problem, which type of market entry is preferred? a.Acquisition b.Joint venture c.Licensing d.New wholly owned subsidiary
b.Joint venture
Your firm has entered the market in several foreign countries. However, the governments in some countries will not allow your company software to collect data like it does in the United States. Which of the following explains this difference? a.Global integration b.Liability of foreignness c.Regionalization d.Scale economies
b.Liability of foreignness
The Donja Like Coneys Food Truck Company has tried to reduce tension with Snick Snack Food Trucks, Inc. by telling its own drivers not to set up in areas that overlap with Snick Snack. Which of the following could Donja be trying to address? a.Resource similarity b.Market commonality c.Fast-cycle market d.Second-mover consequences
b.Market commonality
_____ top management teams often have a greater knowledge of international markets and their idiosyncrasies. a.Well-educated b.More culturally diverse c.Younger d.More innovative
b.More culturally diverse
Which of the following is NOT an international corporate-level strategy? a.Global strategy b.Multicultural strategy c.Multidomestic strategy d.Transnational strategy
b.Multicultural strategy
Which of the following represents newly designed production and distribution methods and techniques that allow the firm to operate more efficiently? a.Supply-chain management b.Process innovations c.Outbound logistics d.Differentiation
b.Process innovations
Which of the following is critical to successful use of the differentiation strategy? a.A competitive advantage in logistics b.Product innovation c.Outsourcing d.Process innovations
b.Product innovation
Shares of Prospect, Inc. were selling for $46.50 before the firm was purchased in a leveraged buyout. What can investors expect to see happen to the firm's stock now that the leveraged buyout is complete? a.Prospect's stock will be offered on the market as an initial public offering, or IPO. b.Prospect's stock will no longer be traded publicly. c.Prospect's share price will increase to more than $50. d.Prospect's share price will drop by a minimum of 10 percent.
b.Prospect's stock will no longer be traded publicly.
Quality Construction Supply is a building materials provider headquartered in eastern Canada. The firm's leadership team has recognized that intense rivalry in the region is having a negative impact on the firm's growth and profitability. What is the primary reason behind the firm's decision to acquire a similar building materials supplier serving the northeastern United States? a.Acquiring another firm serving a different market will allow Quality Construction Supply to overcome barriers to entry in another country. b.Reducing the firm's dependence on the eastern Canadian market will reshape the firm's competitive scope. c.Acquiring another firm serving a different market will give Quality Construction Supply access to capabilities it lacks. d.Reducing the firm's dependence on the eastern Canadian market will help avoid a hostile takeover.
b.Reducing the firm's dependence on the eastern Canadian market will reshape the firm's competitive scope.
Amazon has capitalized on which dimension with customers in order to build customer-centric relationships? a.Reach b.Richness c.Affiliation d.Pricing
b.Richness
_____ is a customer dimension concerned with the depth and detail of the two-way flow of information between the firm and customers. a.Reach b.Richness c.Affiliation d.Effective managemen
b.Richness
Which of the following popular entry modes can facilitate the development of new capabilities and possibly core competencies that may contribute to the firm's strategic competitiveness? a.Acquisitions b.Strategic alliances c.Licensing d.Exporting
b.Strategic alliances
_____ defines the path that provides the direction of actions to be taken by leaders of the organization. a.Capability b.Strategy c.Competitive advantage d.Market segmentation
b.Strategy
For just $3 a month, Dollar Shave Club ships high-quality razors and blades, plus occasional sample products, to its customers. Dollar Shave Club is an example of which type of business model? a.Franchise b.Subscription c.Freemium d.Advertising
b.Subscription
Which of the following is NOT a typical risk of a differentiation strategy? a.Widely available counterfeit goods may be acceptable to customers. b.Suppliers of raw materials gouge a differentiation firm's profit margin with price increases. c.Experience with other products can narrow customers' perceptions of a product's differentiated features. d.Customers may decide the price differential between the differentiator's product and the cost leader's product is too large.
b.Suppliers of raw materials gouge a differentiation firm's profit margin with price increases.
Boston Pharmaceuticals acquired MediLab, one of its long-time service providers, several years ago because it saw the potential for synergies in the research and design of innovative new medications. The firm has been able to develop products that have given it a long-term competitive advantage in its markets. Which attribute explains this kind of success? a.The friendly nature of the acquisition b.The consistent emphasis on innovation c.Compatible management styles d.The two firms' relative debt position at the time of the acquisition
b.The consistent emphasis on innovation
In Singer Corporation, a large diversified firm, who likely has the responsibility to distribute capital to the firm's various businesses? a.The manager of each business b.The corporate headquarters office c.External investors d.Shareholders
b.The corporate headquarters office
What happens when firms pursue a level of diversification that is appropriate for their resources and core competencies and the opportunities and threats in their country's institutional and competitive environments? a.The firms become value-neutral. b.The firms can improve their strategic competitiveness. c.The firms lose adequate internal governance. d.The firms must restructure their asset bases to be in line with this level of diversification.
b.The firms can improve their strategic competitiveness.
The energy storage market is new. It was created by the need to store energy from renewable resources such as wind and sunshine. Competing companies include Tesla and Fluence. How will the competition affect the product and consumers? a.Prices will increase. b.The product will improve. c.Battery-storage products will become larger in size. d.No additional companies will be able to enter the market.
b.The product will improve.
Which of the following statements regarding acquisitions is NOT true? a.They are an increasingly popular way to enter the international market. b.They are typically without costs due to the way they are structured. c.They are not easy to successfully complete. d.They are not easy to successfully operate.
b.They are typically without costs due to the way they are structured. d.They are not easy to successfully operate.
How do smaller and newer firms generally respond when attacked by larger and established competitors? a.They respond aggressively in all areas where they compete. b.They may not respond because they have fewer resources. c.They immediately seek legal protection. d.They use the advantages of their new innovations and equipment to fight back.
b.They may not respond because they have fewer resources.
Drexel is a publisher of textbooks. Drexel is purchasing M Solutions, another textbook publisher. Both companies sell to the same outlets and universities. The content for the two companies is different, with Drexel publishing accounting textbooks and M Solutions publishing management and statistics textbooks. Which of the following statements regarding this acquisition is true? a.Research has shown that a post-acquisition decrease in performance will likely occur. b.This is a horizontal acquisition. c.This is a virtual integration example. d.Drexel is trying to build a conglomerate, as evidenced by this acquisition.
b.This is a horizontal acquisition.
Why would a firm's top-level executives continue to pursue a particular diversification strategy even if early indications are that the strategy would be value-reducing? a.To achieve economies of scope b.To increase compensation c.To deal with tax laws or antitrust regulation d.To reduce the firm's risk
b.To increase compensation
Which of the following is NOT a reason for using a leveraged buyout as a restructuring strategy? a.To correct for managerial mistakes b.To reduce debt for the new owners c.Because the firm's managers were making decisions that primarily served their own interests rather than those of shareholders d.To build firm resources and expand operations
b.To reduce debt for the new owners
Which of the following is NOT a reason why the transnational strategy is becoming increasingly necessary for competing in international markets? a.The continuing increases in the number of viable global competitors challenge firms to reduce their costs. b.Transnational strategy is easier to use than a multidomestic or global strategy. c.The increasing sophistication of markets with greater information flows pressures firms to differentiate their products in local markets. d.Differences in culture and institutional environments require firms to adapt their products and approaches to local environments.
b.Transnational strategy is easier to use than a multidomestic or global strategy.
_____ refers to the absence of direct links between businesses. a.Linkless b.Unrelated c.Unconstrained d.Low-level
b.Unrelated
_____ allows the firm to gain market power as it develops the ability to save on its operations, avoid sourcing and market costs, improve product quality, possibly protect its technology from imitation by rivals, and potentially exploit underlying capabilities in the marketplace. a.Horizontal acquisition b.Vertical integration c.Multipoint competition d.Transferred competencies
b.Vertical integration
Your firm creates trivia games focused on specific sports teams. A large gaming company has just started advertising a new line of games that you fear will cut into your market share. Which of the following is likely true about your firm's response? a.Your firm will ignore your new competitor. b.Your firm's response is likely to be swift and strong. c.Your firm's response will consist of only small tactical changes. d.Your firm's response is likely to be delayed until you can evaluate the long-term effects of your competitor's attack.
b.Your firm's response is likely to be swift and strong.
RTC made a bid to purchase ZD Consulting. ZD's reaction to the bid was positive. This suggests that: a.ZD has a moderate debt position. b.a friendly transaction will take place. c.RTC has financial slack. d.RTC has a low debt position.
b.a friendly transaction will take place.
Chuck's Chicken 'N Biscuits, a fast-food restaurant chain specializing in fried and grilled chicken, has been buying its chicken from Southern Poultry for more than a decade. Chuck's recent bid to acquire Southern Poultry should give the restaurant chain greater market power because the firm is buying: a.a distributor in a highly related industry. b.a supplier in a highly related industry. c.a supplier in an unrelated industry. d.a distributor in an unrelated industry.
b.a supplier in a highly related industry.
Any action that a firm takes to counter the effects of a rival's action against it is a: a.competitive action. b.competitive response. c.strategic action. d.tactical action.
b.competitive response.
Large businesses that are not related to each other and make no efforts to share activities or to transfer core competencies between or among them are typically known as: a.portfolio firms. b.conglomerates. c.concentrated firms. d.unique core competency firms.
b.conglomerates.
In the current complex competitive landscape, successful use of a business-level strategy results from the firm learning how to integrate the activities it performs in ways that: a.generate above-average dividends for stockholders. b.create superior value for customers. c.increase profit margins. d.reduce production costs.
b.create superior value for customers.
Firms using the related constrained diversification strategy share activities across businesses in order to: a.reduce risk. b.create value. c.differentiate themselves. d.obtain efficient internal capital market allocation.
b.create value.
Integration processes tend to generate uncertainty and often resistance because of _____ and _____. a.entry barriers; organizational politics b.cultural clashes; organizational politics c.too much diversification; managers overly focused on acquisitions d.cultural clashes; inability to achieve synergy
b.cultural clashes; organizational politics
Firms using the cost leadership strategy must understand that in terms of sources of differentiation accompanying the cost leader's product, the term "acceptable" is defined by the: a.firm delivering the product. b.customer receiving the product. c.firm's closest competitor. d.firm's shareholders.
b.customer receiving the product.
The extent to which a firm's revenues or profits are derived from a particular market is known as market: a.dominance. b.dependence. c.leadership. d.strategy.
b.dependence.
Research has shown that _____ and _____ are highly correlated. a.firm size; value creation b.diversification; firm size c.firm size; profitability d.profitability; executive compensation
b.diversification; firm size
Overdiversification often leads to a decision to: a.issue junk bonds. b.divest some units. c.increase the debt load. d.seek new acquisitions.
b.divest some units.
With the _____ diversification strategy, the firm generates between 70 and 95 percent of its total revenue within a single business area. a.single-business b.dominant-business c.related constrained d.related linked
b.dominant-business
The difference between downsizing and organizational decline is that: a.organizational decline is an intentional managerial strategy. b.downsizing is an intentional managerial strategy. c.downsizing changes the composition of businesses in the company's portfolio. d.downsizing leads to a loss of resources.
b.downsizing is an intentional managerial strategy.
As a driver of competitive behavior, ability refers to: a.a firm's understanding of the consequences of its competitive actions and responses. b.each firm's resources and the flexibility they provide. c.competing firms' level of market commonality and resource similarity. d.a firm's incentive to take action or to respond to a competitor's attack.
b.each firm's resources and the flexibility they provide.
Compared with related constrained firms, related linked firms share _____ resources and assets between their businesses and concentrate mainly on _____ between the businesses. a.more; efficient internal capital allocation b.fewer; transferring knowledge and core competencies c.fewer; market power d.more; tangible and intangible resources
b.fewer; transferring knowledge and core competencies
A _____ strategy is an international strategy in which a firm's home office determines the strategies that business units are to use in each country or region. a.universal b.global c.multidomestic d.transnational
b.global
The _____ strategy offers greater opportunities to take innovations developed at the corporate-level, or in one market, and apply them in other markets. a.universal b.global c.multidomestic d.transnational
b.global
A _____ is an entry mode through which a firm invests directly in another country or market by establishing a new wholly owned subsidiary. a.licensing agreement b.greenfield venture c.cross-border acquisition d.strategic alliance
b.greenfield venture
Debt holders try to improve the value of their investments by taking stakes in businesses with _____ growth and _____ prospects. a.moderate; average b.high; profitability c.operational relatedness; resource allocation d.unrelated diversification; privatization
b.high; profitability
All of the following are limitations of vertical integration EXCEPT: a.capacity balance and coordination problems from changes in demand. b.imitation of core technology by potential competitors. c.the loss of flexibility through investments in specific technologies. d.bureaucratic costs.
b.imitation of core technology by potential competitors.
The ultimate reason that firms use merger and acquisition strategies is to: a.gain market share. b.improve their ability to create value for all stakeholders. c.drive competitors out of business. d.have more control of the direction of the market.
b.improve their ability to create value for all stakeholders.
During a financial downturn, diversification _____ firm performance. a.reduces b.improves c.has no effect on d.eliminates
b.improves
Recently, insurance giant Cigna Corp. announced its offer to acquire Express Scripts, a pharmacy-benefit manager, for $54 billion, which included a 31 percent premium to Express Scripts' shareholders. On the day of the announcement, Cigna's share price dropped by 12 percent. The negative response in the stock market reflects: a.investors' automatic rejection of any offer involving a premium exceeding 25 percent. b.investors' skepticism about Cigna's ability to achieve the synergies required to justify the 31 percent premium paid for Express Scripts. c.investors' skepticism regarding the integration of two related firms within the same industry. d.investors' doubts about the accuracy of Cigna's assessment of Express Scripts' value.
b.investors' skepticism about Cigna's ability to achieve the synergies required to justify the 31 percent premium paid for Express Scripts.
New entrants to a market must be willing to accept _____ until they gain the experience required to approach the cost leader's efficiency. a.profit losses b.less than average returns c.inferior goods from suppliers d.disgruntled shareholders
b.less than average returns
If a firm wants to reduce the negative effect of an intense rivalry on financial performance, it may use acquisitions to: a.increase the number of stakeholders. b.lessen market dependencies. c.eliminate the risk of entering a new market. d.avoid a hostile takeover.
b.lessen market dependencies.
Federal Pharmacies and Bluechip are both national pharmacy chains. Fairlawn Pharmacy is a local pharmacy with six stores in its metro area. Federal is more likely to attack Fairlawn than Bluechip because they have: a.high market commonality. b.low market commonality. c.high resource similarity. d.low resource similarity.
b.low market commonality.
When selecting a business-level strategy, firms evaluate two types of potential competitive advantages: _____ or _____. a.the cost leadership strategy; the number of competitors b.lower cost than rivals; the ability to differentiate and command a premium price that exceeds the extra cost of doing so c.internal resources; the ability to command a premium price for value-added capabilities d.the industry as a whole; the core competencies of competitors
b.lower cost than rivals; the ability to differentiate and command a premium price that exceeds the extra cost of doing so
Value-creating influences that affect diversification strategy include all of the following EXCEPT: a.economies of scope. b.managerial motives to diversify. c.market power. d.financial economies.
b.managerial motives to diversify.
Caterpillar's various businesses share marketing activities because all of their equipment is sold to firms in the construction and mineral extraction industries. This is an example of: a.corporate relatedness. b.operational relatedness. c.dominant-business diversification. d.transferring core competencies.
b.operational relatedness.
The effectiveness of each of the five business-level strategies is contingent on the _____ in a firm's external environment and on the _____ derived from the firm's resource portfolio. a.strengths and weaknesses; opportunities and threats b.opportunities and threats; strengths and weaknesses c.core competencies and target market; strengths and weaknesses d.competitors and target market; opportunities and threats
b.opportunities and threats; strengths and weaknesses
Firms that are more broadly diversified compared to their competitors may have _____ performance. a.overall higher b.overall lower c.highly volatile d.failing
b.overall lower
Rocco Company is considering expanding to an overseas market, but has some concerns about the stability of the national government and the effects that any government instability may have on its investments. To deal with these concerns, Rocco should conduct a(n) _____ analysis. a.economic risk b.political risk c.SWOT d.internal
b.political risk
The _____ diversification strategy is associated with intangible resources that cannot be easily imitated. a.related constrained b.related linked c.unrelated d.unrelated constrained
b.related linked
A firm that studies customers' reactions to product innovations and then responds through imitation is most likely a(n): a.first mover. b.second mover. c.strategic responder. d.entrepreneur.
b.second mover.
Creating operational relatedness is achieved by: a.transferring core competencies. b.sharing activities. c.gaining market power. d.multipoint competition.
b.sharing activities.
The buffer provided by actual or obtainable resources not in use currently and that exceed the minimum resources needed to produce a given level of organizational output is called: a.motivation. b.slack. c.tangible resources. d.intangible resources.
b.slack.
A firm that is more likely to launch a competitive action, and to do it quickly, is one that has: a.low level of slack. b.small size. c.less flexibility. d.limited research and development.
b.small size.
Spasi, KidKorner, and Clothes4All sell a similar product: durable, comfortable children's clothing. They participate in battles for market share using incremental changes. They rely on a certain amount of loyalty to brand names. It is most likely that the children's clothing market is a _____ market. a.slow-cycle b.standard-cycle c.mixed-cycle d.fast-cycle
b.standard-cycle
The battle for market share by consumer foods' producers in _____ markets leads to intense competition. a.slow-cycle b.standard-cycle c.mixed-cycle d.fast-cycle
b.standard-cycle
A _____ action or response is a market-based move that is taken to fine-tune a strategy. a.strategic b.tactical c.competitive d.second-mover
b.tactical
Gateway Foods is a major national grocer with stores in every state. Whenever its competitors change their prices, Gateway changes its prices as well to maintain a price advantage in each market. Gateway is engaging in continuous: a.tactical actions. b.tactical responses. c.strategic actions. d.strategic responses.
b.tactical responses.
International strategy makes it possible for firms to use _____ to organize their operations into a seamless whole. a.operations research b.technologies c.marketing d.human resources
b.technologies
The value of a corporate-level strategy is ultimately determined by: a.the top management team's satisfaction with the firm's performance. b.the degree to which the businesses in the portfolio are worth more under the management of the company than they would be under any other ownership. c.the amount the businesses in the portfolio increase the firm's financial returns. d.how much money the firm earns.
b.the degree to which the businesses in the portfolio are worth more under the management of the company than they would be under any other ownership.
Lower costs result from: a.providing customers with fewer activities. b.the firm's ability to perform activities differently than rivals. c.the firm's internal resources. d.the core competencies of competitors.
b.the firm's ability to perform activities differently than rivals.
A firm that seeks to create value through corporate relatedness would use the related linked diversification strategy to: a.share primary activities. b.transfer corporate-level core competencies. c.pursue horizontal acquisitions. d.share support activities.
b.transfer corporate-level core competencies.
Estelle Incorporated is a highly diversified firm that has no relationships between its businesses. Estelle follows the _____ diversification strategy. a.no linkage b.unrelated c.unique d.null
b.unrelated
The amount of diversification in a firm's international operations that can be managed: a.is the same for all firms, regardless of their size. b.varies from company to company. c.is not affected by managers' abilities to deal with ambiguity and complexity. d.is immaterial.
b.varies from company to company.
When selecting a business-level strategy geared toward customers, the firm determines all of the following EXCEPT: a.what needs those target customers have that it will satisfy. b.when to start implementing the strategy. c.how the needs of target customers will be satisfied. d.who will be served.
b.when to start implementing the strategy.
RXL Enterprises recently acquired NuVal in order to learn and develop new capabilities. What problem is RXL most likely to encounter in achieving success?
becoming too large
Ethical practices and the judgment informing their development and use create: a. negative effects on organizational efficiency. b. radically ineffective strategic leaders. c. "social capital" in organizations. d. high training costs.
c. "social capital" in organizations.
A rule approved by the U.S. Securities and Exchange Commission (SEC) allows large shareholders (owning 1 to 5 percent of a company's stock) to nominate up to _____ percent of a company's board of directors. a. 5 b. 10 c. 25 d. 50
c. 25
Where does the principal source of financial advice and monitoring of large public firms come from in Japan? a. Stock brokerage companies b. The government c. Banks d. The boards of directors
c. Banks
Which of the following accounts for some of the difficulty that larger, more heterogeneous top management teams have in cohesively implementing strategies? a. Education level b. Capabilities c. Communication difficulties d. Competitive nature
c. Communication difficulties
In terms of divisional performance evaluation, which M-form structure/strategy combination emphasizes objective, financial criteria? a. Cooperative structure; related constrained strategy b. SBU structure; related linked strategy c. Competitive structure; unrelated diversification strategy d. Cooperative structure; unrelated diversification strategy
c. Competitive structure; unrelated diversification strategy
Which of the following statements about the effectiveness of boards of directors is NOT true? a. Research suggests that diverse boards help firms make more effective strategic decisions and perform better over time. b. One of the changes to enhance the effectiveness of the board of directors is the creation of a "lead director" role that has strong powers with regard to the board agenda and oversight of non-management board member activities. c. Evidence suggests that boards have been highly effective in monitoring and controlling top-level managers' decisions and subsequent actions. d. The performances of individual board members and entire boards are being evaluated more formally and with greater intensity than in years past.
c. Evidence suggests that boards have been highly effective in monitoring and controlling top-level managers' decisions and subsequent actions.
_____ controls are emphasized to evaluate firms using the unrelated diversification strategy. a. Strategic b. External c. Financial d. Tactical
c. Financial
Which of the following hostile takeover defense strategies involves the repurchase of the target firm's shares of stock that were obtained by the acquiring firm at a premium in exchange for an agreement that the acquirer will no longer target the company for takeover? a. Capital structure change b. Golden parachute c. Greenmail d. Poison pill
c. Golden parachute
The board of directors and Freestone Enterprises is committed to making ethical practices the core of all of the firm's decision making. What is the most effective means of ensuring that employees comply with Freestone's ethical standards? a. Having a statement on ethics in the firm's mission statement b. Acknowledging a speech on ethics made by the CEO of the company c. Having a values-based culture d. Having a written code of ethics
c. Having a values-based culture
Why is entrepreneurship considered a process of "creative destruction"? a. It discourages new products and productive methods. b. It uses a lot of resources that could be applied elsewhere. c. It replaces existing products and methods of production. d. It eliminates jobs with the creation of new efficiencies.
c. It replaces existing products and methods of production
What do many companies use to identify individuals with strategic leadership potential as well as to determine the criteria individuals should satisfy to be a candidate for the CEO position? a. Lie detectors b. Resume analysis c. Leadership-screening systems d. Vocational testing
c. Leadership-screening systems
When pursuing a cooperative strategy to innovate, which of the following is NOT one of the risks that a firm needs to be aware of? a. Conflict naturally occurs when firms try to collaborate to reach a mutual goal. b. A partner might appropriate its technology or knowledge and use it for its own benefit. c. Limitations on market size can inhibit innovation. d. Involvement in too many alliances reduces the ability to manage each of them successfully.
c. Limitations on market size can inhibit innovation.
Which of the following hostile takeover defense strategies has a positive effect on shareholder wealth? a. Greenmail b. Standstill agreement c. Litigation d. Corporate charter amendment
c. Litigation
Markham Food Services contracts with elementary schools in three states to supply meals for children. In order to increase profits, Markham uses substandard ingredients in these meals but has passed its quality investigations with the various school districts. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? a. The head of contract services for the school districts b. Employees directly involved in the wrongdoing c. Markham's board of directors d. The director of food services for Markham
c. Markham's board of directors
What type of organization may evolve in firms implementing the related constrained strategy in order to combine both functional and business product specialization? a. Functional b. Cooperative c. Matrix d. Network
c. Matrix
Which of the following is NOT one of the three levels in the strategic business unit (SBU) M-form? a. Corporate headquarters b. Strategic business units c. Operations management d. SBU divisions
c. Operations management
_____ describes a firm's ability to be a market leader rather than a follower. a. Risk taking b. Autonomy c. Proactiveness d. Competitive aggressiveness
c. Proactiveness
Lytle Company has a corporate office and four separate operating divisions, each one of which is a profit center with its own top corporate officer. Each division is a structural business unit (SBU). There is structural integration within each SBU but independence across them. What type of strategy does Lytle use? a. Cost leadership b. Related constrained c. Related linked d. Unrelated diversification
c. Related linked
Which of the following dimensions does NOT characterize a firm's entrepreneurial mind-set? a. Autonomy b. Innovativeness c. Risk adversity d. Proactiveness
c. Risk adversity
Which of the following would benefit a company that is facing a performance downturn and realizes that a major rethinking of its strategy is in order? a. Selecting a CEO with long tenure who has a strong sense of hubris b. Selecting a dual CEO/chair of the board with a homogenous top management team c. Selecting an external CEO with a heterogeneous top management team d. Selecting an internal CEO with short tenure
c. Selecting an external CEO with a heterogeneous top management team
Which of the following is one of the most important responsibilities for a board of directors as it seeks to represent the firm's stakeholders? a. Creating value for the firm b. Identifying core competencies c. Selecting the CEO d. Writing vision and mission statements
c. Selecting the CEO
Which of the following statements about the preferences of shareholders and top-level managers with regard to a firm's level of diversification is true? a. In general, shareholders prefer less focused diversification. b. Top-level managers prefer lower levels of product diversification than do shareholders. c. Shareholders seek a level of diversification that reduces the risk of the firm's total failure while simultaneously increasing its value. d. Top-level managers prefer that a firm's diversification increases their employment risk and employment opportunities.
c. Shareholders seek a level of diversification that reduces the risk of the firm's total failure while simultaneously increasing its value.
Archbold Mfg. offers a single product line in a single geographic market. Which of the following structures does the firm likely use? a. Independent b. Functional c. Simple d. Multidivisional
c. Simple
Peter recently started working at Logos, a small firm. He enjoys the informal relationships and the fact that there are not a lot of rules. However, he feels stifled because he is not allowed to make independent decisions and essentially serves as an extension of the manager's supervisory authority. What type of structure is used at Logos? a. Functional b. Network c. Simple d. Multidivisional
c. Simple
_____ is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. a. Innovation b. Determining strategic direction c. Strategic leadership d. Competitive dynamics
c. Strategic leadership
What is likely the most prominent function in headquarters for an SBU M-form structure? a. Corporate R&D b. Corporate finance c. Strategic planning d. Corporate human resources
c. Strategic planning
As part of its long-term strategy, the board at Bonsom Industries is developing a succession plan for the top management team, including the CEO. The board chair is a strong proponent of selecting the CEO from within the firm, and wants that to be part of the plan. Which of the following arguments would the chair make to support this position? a. The CEO must be positioned to enhance the firm's ability to innovate in response to market conditions. b. The CEO must be able to react in an industry that is experiencing rapid growth. c. The CEO must have a deep knowledge of the firm's core competencies and the ability to develop new ones. d. The CEO must be able to introduce strategic change at all levels of the firm's operations.
c. The CEO must have a deep knowledge of the firm's core competencies and the ability to develop new ones.
What is the governance mechanism most closely connected with deterring unethical behaviors by holding top-level managers fully accountable for developing and supporting an organizational culture in which only ethical behaviors are permitted? a. Executive compensation systems b. The market for corporate control c. The board of directors d. Ownership concentration
c. The board of directors
Which of the following statements about corporate governance in Germany is NOT true? a. Agency problems are not as prevalent in many private German firms. b. Employees, union members, and shareholders appoint members to the Aufsichtsrat (the supervisory tier of the board). c. The management board (Vorstand) is elected by the firm's employees. d. The Vorstand of a German corporation makes decisions about strategy and management.
c. The management board (Vorstand) is elected by the firm's employees.
Which of the following is an external governance mechanism that is active when a firm's internal governance mechanisms fail? a. A corporate charter b. Executive compensation c. The market for corporate control d. Capital structure
c. The market for corporate control
Which of the following statements about strategic leadership and strategic leaders is NOT true? a. leaders have substantial decision-making responsibilities they cannot delegate. b. Effective strategic leaders create and support the context or environment through which stakeholders (e.g., employees and suppliers) can perform at peak efficiency. c. The primary responsibility for effective strategic leadership rests with members of the board of directors and the top management team. d. The crux of strategic leadership is the ability to manage the firm's operations effectively and sustain high performance over time.
c. The primary responsibility for effective strategic leadership rests with members of the board of directors and the top management team.
Which of the following is NOT a benefit of effective training and development programs? a. They increase the probability that some of the firm's human capital will become effective strategic leaders. b. They contribute positively to the firm's efforts to form core competencies. c. They allow the firm to develop a values-based culture. d. They promote a firm's vision and help form an effective organizational culture.
c. They allow the firm to develop a values-based culture
Andrew, CEO of Mayfield Enterprises, is effective in promoting and nurturing innovation at Mayfield. What type of leader is Andrew? a. Social leader b. Responsible leader c. Transformational leader d. Negotiation leader
c. Transformational leader
Which of the following is one of the most effective strategic leadership styles? a. Emotional leadership b. Philanthropic leadership c. Transformational leadership d. Responsible leadership
c. Transformational leadership
Which of the following is NOT one of the groups that board of directors' members are generally classified into? a. Related outsiders b. Insiders c. Unrelated outsiders d. Outsiders
c. Unrelated outsiders
Which of the following statements regarding the use of defense tactics by the target firm during a hostile takeover is NOT true? a. Defense tactics vary in their effectiveness as a defense to takeovers. b. In general, managers' use of defense tactics is considered to be self-serving in nature. c. Using takeover defenses increases the amount of pressure managers feel to seek short-term performance gains. d. Defense tactics can have both positive and negative effects on shareholder wealth.
c. Using takeover defenses increases the amount of pressure managers feel to seek short-term performance gains.
Which of the following statements regarding managerial succession issues is NOT true? a. When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue. b. Employees commonly prefer that firms use the internal managerial labor market when selecting top management team members and the CEO. c. When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive. d. When a new CEO is selected from outside the firm and a homogeneous top management team is in place, high strategic change frequently leads to performance declines.
c. When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive.
When a sudden crisis results in the death or inability of the CEO to continue within an organization and there is no one qualified in the firm to take over, this is an example of: a. the risk inherent in CEO duality. b. managerial hubris. c. a failure of succession management. d. excessive reliance on the internal managerial labor market.
c. a failure of succession management
The separation between owners and managers creates a(n) _____ relationship. a. control b. dependent c. agency d. governance
c. agency
A firm that sells products that create value because of their relatively low cost and reasonable sources of differentiation would most likely use the functional structure to implement its _____ strategy. a. differentiation b. cost leadership c. cost leadership/differentiation d. constrained
c. cost leadership/differentiation
In recent years, the number of individuals who are large-block shareholders has: a. slightly increased. b. remained steady. c. declined. d. skyrocketed.
c. declined
Research shows that there is the possibility of a positive relationship between entrepreneurship and _____ in the world's most entrepreneurial countries. a. urban growth b. life satisfaction c. economic productivity d. income inequality
c. economic productivity
All-American Fabric & Upholstery has the chance to sell its existing outdoor home décor fabric in South America, a new market for the firm. This is an example of a(n): a. strategic alliance. b. franchise opportunity. c. entrepreneurial opportunity. d. horizontal acquisition.
c. entrepreneurial opportunity
Identifying opportunities to exploit through innovations is the _____ dimension of _____ entrepreneurship. a. strategic; strategic b. tactical; corporate c. entrepreneurship; strategic d. entrepreneurship; corporate
c. entrepreneurship; strategic
Incremental innovations are _____ and _____ in nature. a. revolutionary; nonlinear b. evolutionary; nonlinear c. evolutionary; linear d. revolutionary; linear
c. evolutionary; linear
The typical rationale for an acquisition is to: a. extend one or more product lines and increase revenue. b. eliminate the competition. c. gain ownership of a company's innovations and access to its innovative capabilities. d. become the market leader.
c. gain ownership of a company's innovations and access to its innovative capabilities.
A _____ top management team is composed of individuals with different functional backgrounds, experience, and education. a. cohesive b. comprehensive c. heterogeneous d. homogeneous
c. heterogeneous
Structural flexibility makes it possible for a firm to: a. consistently manage its daily work routines. b. return value to its investors. c. identify opportunities and pursue them. d. resist organizational decline.
c. identify opportunities and pursue them
Technotron Corporation has just introduced a new printer/scanner/photocopier onto the market. It doesn't have quite as many bells and whistles as competing products, but it retails for about $50 less. The new product was most likely created through the process of: a. invention. b. innovation. c. imitation. d. industrialization.
c. imitation
Thompson Manufacturing is looking to enhance the effectiveness of its board of directors. All of the following are ways this can be done EXCEPT: a. increasing the diversity of the backgrounds of board members. b. strengthening internal management and accounting control systems. c. increasing stock options as part of board members' compensation. d. establishing and consistently using formal processes to evaluate board members' performance.
c. increasing stock options as part of board members' compensation.
When a firm uses cross-functional teams to integrate innovation, the most important processes tend to be: a. vertical. b. horizontal. c. informal. d. formal.
c. informal
An _____ labor market consists of a firm's opportunities for managerial positions and the qualified employees within it. a. outsourced b. external managerial c. internal managerial d. agency
c. internal managerial
Effectively using executive compensation as a governance mechanism is particularly challenging for firms implementing _____ strategies. a. corporate-level b. merger and acquisition c. international d. business-level
c. international
Ownership concentration is defined by the number of _____ and the _____. a. outside directors; total percentage of the firm's shares they own b. outside directors; parties they represent c. large-block shareholders; total percentage of the firm's shares they own d. large-block shareholders; parties they represent
c. large-block shareholders; total percentage of the firm's shares they own
CEO duality occurs most commonly in _____ firms. a. U.S. b. smaller c. larger d. European
c. larger
Research suggests that firms in which families own enough equity to have influence without major control tend to: a. earn below-average returns. b. earn profits approximately equal to their competitors. c. make the best strategic decisions. d. have the most conflict between top-level managers and board members.
c. make the best strategic decisions
Strategic controls are concerned with examining the fit between what the firm _____ do and what it _____ do. a. can; should b. can; cannot c. might; can d. might; should
c. might; can
All of the following are characteristics of the cost leadership strategy EXCEPT: a. simple reporting relationships. b. centralized corporate staff. c. new product development. d. few layers in the authority structure.
c. new product development
The multifunctional parts of strategic leadership include all of the following EXCEPT: a. coping with the rapid and intense changes associated with the global economy. b. managing an entire organization rather than a functional subunit. c. outsourcing the management of human capital functions of the organization. d. managing through others.
c. outsourcing the management of human capital functions of the organization.
The Dodd-Frank Wall Street Reform and Consumer Protection Act does all of the following EXCEPT: a. provides a new framework to regulate derivatives. b. establishes new corporate governance requirements. c. prescribes significant transparency improvement on internal control associated with accounting and auditing. d. regulates credit rating agencies and securitizations.
c. prescribes significant transparency improvement on internal control associated with accounting and auditing.
Devon works for a company that manufactures knives, and he has come up with an idea for a companion knife sharpener that could be sold in conjunction with the firm's primary products. His manager is resistant to the idea, but Devon hasn't given up yet. He's now wondering how else he could promote his idea within the firm without going over his boss's head and jeopardizing their relationship. Devon must be a(n): a. product specialist. b. innovator. c. product champion. d. investment capitalist.
c. product champion
A larger number of _____ innovations spring from autonomous strategic behavior, while a larger number of _____ innovations come from induced strategic behavior. a. strategic; tactical b. tactical; strategic c. radical; incremental d. incremental; radical
c. radical; incremental
Google's self-driving car is a(n) _____ innovation; reducing emissions and increasing gas mileage on a fuel-burning car is a(n) _____ innovation. a. constrained; diversified b. diversified; constrained c. radical; incremental d. incremental; radical
c. radical; incremental
The relationship between strategy and structure is: a. independent. b. dependent. c. reciprocal. d. neutral.
c. reciprocal
In order to successfully implement a firm's strategies, employees must be viewed as a: a. cost to minimize. b. renewable asset. c. resource to maximize. d. core ideology.
c. resource to maximize
In a _____ structure, the owner-manager makes all major decisions and monitors all activities. a. functional b. network c. simple d. multidivisional
c. simple
A firm that is able to consistently and predictably manage its daily work routines has structural: a. control. b. flexibility. c. stability. d. variance.
c. stability
When choosing a firm's strategy and structure, the strategy should be matched to a structure that provides the: a. stability to develop future advantages. b. flexibility to use current competitive advantages. c. stability to use current competitive advantages. d. reciprocity to develop future advantages.
c. stability to use current competitive advantages
YTS Enterprises manufactures large appliances. It has a network of partners that supply different parts and services on a contract basis. YTS is making use of a strategic network in which it is the: a. corporate headquarters. b. satellite company. c. strategic center firm. d. operations manager.
c. strategic center firm
A(n) _____ is a group of firms that has been formed to create value by participating in multiple cooperative arrangements. a. international alliance b. related link c. strategic network d. strategic business unit
c. strategic network
Organizational _____ specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes. a. routine b. control c. structure d. strategy
c. structure
The amount of a manager's decision-making discretion would NOT be determined by: a. the external environment. b. characteristics of the organization. c. the cohesiveness of the board of directors. d. characteristics of the manager.
c. the cohesiveness of the board of directors
In general, family-controlled businesses will outperform nonfamily-controlled businesses because they: a. have fewer large-block shareholders. b. are more risk averse. c. want to maintain the family legacy. d. have more insiders on their boards of directors.
c. want to maintain the family legacy
The decision to use either the internal or the external managerial labor market to select a firm's new CEO is based on expectations of: a. succession failure. b. compensation packages. c. what the board of directors wants the new CEO and top management team to accomplish. d. company transparency.
c. what the board of directors wants the new CEO and top management team to accomplish.
Coyle Enterprises is a small company that recently entered the lawn equipment industry. In response, its main competitor, a large and well-established company in the industry, has increased its sales presence in the market. Coyle learns of this move, but does not respond. A lack of which of the following would likely be the primary reason that Coyle does not respond? a.Awareness b.Market commonality c.Ability d.Motivation
c.Ability
What is one of the risks in using acquisitions as a means of product development and innovation? a.Firms eventually lose their ability to estimate the outcome of internal product development. b.Firms eventually lose their ability to specify how the acquisitions can be integrated into their operations. c.Acquisitions may become too much of a substitute for true internal innovation. d.Research has shown that using acquisitions as a means of product development and innovation typically results in decreased sales and lower performance.
c.Acquisitions may become too much of a substitute for true internal innovation.
_____ involves viewing the world through the customer's eyes and constantly seeking ways to create more value for the customer. a.Reach b.Richness c.Affiliation d.Demographics
c.Affiliation
Why is a differentiation strategy effective in controlling the power of product substitutes in an industry? a.Because substitute products are lower quality b.Because differentiating firms can always lower prices c.Because customers develop brand loyalty d.Because customers have low switching costs
c.Because customers develop brand loyalty
What is the "Achilles' heel" for firms that use the unrelated diversification strategy in a developed economy? a.Most conglomerates are owned by one person, and the firms typically do not survive after that person's death or retirement. b.Government regulations, particularly in Europe, tend to periodically force the dissolution of conglomerates. c.Competitors can imitate financial economies more easily than they can replicate the value gained from the economies of scope developed through operational relatedness and corporate relatedness. d.External investors have a tendency to dump conglomerate stocks during economic downturns.
c.Competitors can imitate financial economies more easily than they can replicate the value gained from the economies of scope developed through operational relatedness and corporate relatedness.
Which product quality dimension describes how well the product matches with pre-established standards? a.Performance b.Features c.Conformance d.Aesthetics
c.Conformance
Which service quality dimension refers to accessibility to customers? a.Courtesy b.Consistency c.Convenience d.Completeness
c.Convenience
Which of the following strategies helps a firm concentrate on understanding its customers and their needs with greater clarity as a foundation for innovation? a.Market segmentation strategy b.Business model strategy c.Digital strategy d.Cost leadership strategy
c.Digital strategy
Which type of restructuring strategy generally leads to more positive outcomes in both the short and long term? a.Management buyout b.Whole-firm buyout c.Downscoping d.Downsizing
c.Downscoping
In the model of competitive reality, which group of activities follows the competitor analysis activities? a.Market commonality b.Resource similarity c.Drivers of competitive behavior d.Competitive rivalry
c.Drivers of competitive behavior
What might a firm expect to happen as a result of having a dominant-business diversification strategy and managing only a very small set of businesses? a.Constant adjustments of the portfolio mix b.High levels of transfer of knowledge across businesses c.Economies of scale and efficient use of resources d.Loss of value as resources are shared and knowledge is spread
c.Economies of scale and efficient use of resources
What is a critical element for developing and managing technology-based capabilities while using strategic alliances? a.Establishing proper rollout procedures for the technology between partners b.Establishing profit performance measures between partners c.Establishing trust between partners d.Flowcharting the new technology between partners
c.Establishing trust between partners
Which of the following statements regarding the allocation of capital is true? a.External investors receive full information regarding current performance and future prospects of a business. b.Businesses seeking capital are not required to provide information to potential suppliers. c.External sources of capital have a limited ability to understand the operational dynamics within large organizations d.External shareholders have access to information and therefore receive full and complete disclosure.
c.External sources of capital have a limited ability to understand the operational dynamics within large organizations
In the model of competitive reality, what links outcomes directly back to competitor analysis? a.Market commonality b.Resource similarity c.Feedback d.Motivation
c.Feedback
_____ are cost savings realized through improved allocations of financial resources based on investments inside or outside the firm. a.Restructurings of assets b.Capital market allocations c.Financial economies d.Vertical integrations
c.Financial economies
What are three sources of flexibility that help a firm implement the integrated cost leadership/differentiation strategy successfully? a.Outsourcing, reengineering, and flexible manufacturing systems b.Flexible manufacturing systems, reengineering, and total quality management systems c.Flexible manufacturing systems, total quality management systems, and information networks d.Outsourcing, total quality management systems, and information networks
c.Flexible manufacturing systems, total quality management systems, and information networks
Delilah's Delicacies, a food truck that specializes in organic foods, sets up in "high-end" designated areas for street cuisine. What type of strategy is Delilah's implementing? a.Differentiation b.Cost leadership c.Focused differentiation d.Integrated cost leadership/differentiation
c.Focused differentiation
Which of the following is NOT one of the types of distances commonly associated with liability of foreignness? a.Economic b.Cultural c.Global d.Administrative
c.Global
Brooklyn Corp. has had to issue four profit warnings in the last six months and has seen a 28 percent drop in the price of its stock over the last two years. One of the problems in the past was that Brooklyn got too large. Some management changes have been made, some businesses have been divested, and things are starting to get back on track for the company. What can be done to prevent value-reducing diversification in the future? a.Diversification rules can be proscribed. b.Compensation mechanisms can be adopted. c.Governance mechanisms can be put in place. d.Managerial risk can be defined.
c.Governance mechanisms can be put in place.
Zed Company is considering spinning off one of its divisions into a new company. What long-term outcomes can it expect? a.Reduced debt costs b.Higher risk c.Higher performance d.Reduced labor costs
c.Higher performance
Which of the following is NOT one of the five modes of entry into international markets available to firms? a.Exporting b.Acquisitions c.Importing d.Licensing
c.Importing
Which of the following will NOT help a company pursuing vertical integration gain market power over its competitors? a.Improved product quality b.Avoidance of market costs c.Increased bureaucratic costs d.Savings on operations costs
c.Increased bureaucratic costsv
What type of strategy does a firm use to sell its goods or services outside its domestic market? a.Country strategy b.Majority strategy c.International strategy d.Public strategy
c.International strategy
Through which financing option are risky acquisitions financed with debt that provides a large potential return to lenders? a.Mutual funds b.Money market funds c.Junk bonds d.High-yield equity funds
c.Junk bonds
Which of the following is an entry mode in which an agreement is formed that allows a foreign company to purchase the right to manufacture and sell a firm's products within a host country's market? a.Strategic alliance b.Acquisition c.Licensing d.Exporting
c.Licensing
Which of the following are characteristics of licensing? a.High cost, low control b.Shared costs, shared resources, shared risks, problems of integration c.Low cost, low risk, little control, low returns d.Complex, often costly, time consuming, high risk, maximum control, potential above-average returns
c.Low cost, low risk, little control, low returns
Which of the following is NOT a barrier to transferring competencies by moving key people into new management positions as discussed in the text? a.Top-level managers may resist the transfer of these key people. b.Top-level managers from the transferring business may not want the competencies transferred to a new business to fulfill the firm's diversification objectives. c.Managerial competencies are not easily transferable to different organizational cultures. d.The people involved may not want to transfer.
c.Managerial competencies are not easily transferable to different organizational cultures.
Which of the following approaches to differentiation would present a high-end, luxury handbag and footwear designer with the best opportunity to differentiate itself from competitors? a.Responsive customer service b.Technological leadership c.Perceived prestige and status d.Rapid product innovations
c.Perceived prestige and status
Which of the following is an example of political risk? a.Debt of various countries b.Devaluation of a country's currency c.Potential nationalization of invested assets d.Uncertain prices for critical commodities
c.Potential nationalization of invested assets
Which of the following is a typical risk for a firm that uses the cost leadership strategy? a.Excessive differentiation causing the customer base to become too small b.Loss of customer loyalty c.Production and distribution processes becoming obsolete d.Inability to balance high differentiation with low price
c.Production and distribution processes becoming obsolete
Which of the following is a trend becoming prominent largely because where a firm chooses to compete can affect its strategic competitiveness? a.Global competition b.Global efficiency c.Regionalization d.Liability of foreignness
c.Regionalization
When faced with an attack by a competitor with greater resources, meaning greater ability, what should a firm do? a.Ignore it b.Make peace overtures c.Respond d.Move to a different market
c.Respond
Which of the following is generally true regarding responses to competitive action? a.Strategic actions commonly receive both strategic and tactical responses. b.Tactical actions commonly receive both tactical and strategic responses. c.Strategic actions elicit fewer total competitive responses than tactical actions. d.Strategic and tactical actions generally elicit a similar number of responses.
c.Strategic actions elicit fewer total competitive responses than tactical actions.
_____ exists when the value created by business units working together exceeds the value that those same units create working independently. a.Financial economies b.Diversification c.Synergy d.A corporate-level strategy
c.Synergy
Which of the following is determined by market commonality and resource similarity? a.Product quality b.First mover advantages c.The extent to which firms are competitors d.Customer satisfaction
c.The extent to which firms are competitors
MeadowBrook Corp. is trying to create value through financial economies. It has developed a plan that would create value by developing a portfolio of businesses that have different risk profiles. MeadowBrook is undertaking what type of diversification strategy? a.Related link b.Related constrained c.Unrelated d.Dominant-business
c.Unrelated
What type of acquisition gives a firm increased market power by giving it control of additional parts of the value chain? a.Hostile takeover b.Horizontal acquisition c.Vertical acquisition d.Related acquisition
c.Vertical acquisition
Which of the following firms would NOT likely have resource similarity? a.Coca-Cola and PepsiCo b.FedEx and United Parcel Service (UPS) c.Walmart and Ashley Homestore d.Kellogg's and Post Consumer Brands
c.Walmart and Ashley Homestore
Which of the following best describes the main concern of corporate-level strategy in managing the businesses of a diversified firm? a.Whether to integrate horizontally or vertically b.Whether the firm should invest globally or domestically c.What product markets and businesses the firm should compete in d.Whether the business portfolio should generate immediate above-average returns or whether restructuring will be required to create above-average returns
c.What product markets and businesses the firm should compete in
Coca-Cola and PepsiCo have high market commonality and resource similarity. We would expect their: a.motivation to be low. b.ability to be low. c.awareness to be high. d.dissimilarity to be high.
c.awareness to be high.
Firms operating in the same market, offering similar products, and targeting similar customers are: a.suppliers. b.customers. c.competitors. d.entrepreneurs.
c.competitors.
Firms use _____ to implement value-creating strategies. a.cost control b.targeting c.core competencies d.cross-training
c.core competencies
A company that is unable to effectively integrate the value-chain activities and support functions needed to create value when implementing the cost leadership strategy typically lacks: a.the ability to earn average returns. b.bargaining power. c.core competencies needed to use the cost leadership strategy successfully. d.the ability to successfully imitate competitors.
c.core competencies needed to use the cost leadership strategy successfully.
A _____ specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. a.competitor analysis b.competitive response c.corporate-level strategy d.competitive rivalry
c.corporate-level strategy
Vendors across the country offer sunglasses that look virtually identical to those made by Chanel, Prada, Gucci, and other luxury brands—including the trademark logos—but cost far less. These products are the result of: a.competition. b.imitation. c.counterfeiting. d.evolving consumer preferences.
c.counterfeiting.
Second movers gain an advantage by developing processes and technologies that: a.are innovative. b.gain customer commitment. c.create additional value for customers. d.show an emphasis on R&D.
c.create additional value for customers.
RXL and NuVal are two major telecommunications companies. They are in advanced talks for RXL to acquire NuVal, and RXL has hired an investment bank to exclusively complete the due-diligence process. RXL's acquisition performance will likely _____ because of this decision. a.not be affected b.increase c.decrease d.fail
c.decrease
All of the following are factors that contribute to the positive effects of international diversification EXCEPT: a.potential economies of scale and experience. b.location advantages. c.decreased market share. d.the opportunity to stabilize returns.
c.decreased market share.
The ability to simultaneously create economies of scope by sharing activities (operational relatedness) and transferring core competencies (corporate relatedness) is: a.more common among vertically integrated firms. b.more common among conglomerates. c.difficult for competitors to understand. d.fairly easy for competitors to learn how to imitate.
c.difficult for competitors to understand.
French cement supplier Lafarge acquired Swiss building material supplier Holcim. However, the newly formed Lafarge-Holcim soon discovered that their organizational cultures were very different and the two firms were not a strategic fit. This indicates a lack of _____ on the part of Lafarge. a.diversification b.resources c.due diligence d.bureaucratic controls
c.due diligence
All of the following are determinants of national advantage as identified by Michael Porter EXCEPT: a.demand conditions. b.factors of production. c.economies of scale. d.firm strategy, structure, and rivalry.
c.economies of scale.
The _____ strategy is an integrated set of actions taken to produce products that serve the needs of a particular segment of customers. a.differentiation b.cost leadership c.focus d.integrated cost leadership/differentiation
c.focus
Paying excessive acquisition premiums often causes managers to: a.be more concerned about developing innovation. b.be more likely to pursue synergy between the firms. c.focus on achieving short-term returns. d.become less risk averse.
c.focus on achieving short-term returns.
A business model is a _____ for how the firm will create, deliver, and capture value while a business-level strategy is the set of commitments and actions that yields the _____ the firm intends to follow to gain a competitive advantage by exploiting its core competencies in a specific product market. a.path; framework b.high-level strategy; path c.framework; path d.high-level strategy; map
c.framework; path
A firm uses a related acquisition to create value through: a.acquiring a supplier or distributor of its products. b.better controlling its own destiny in terms of costs and access. c.generating synergy by integrating resources and capabilities. d.acquiring a company competing in the same industry.
c.generating synergy by integrating resources and capabilities.
Prime Equity is planning a leveraged buyout of ElWays Enterprises. Prime Equity expects to see an emphasis on strategic controls in the short term, which should lead to the long-term outcome of: a.reduced debt costs. b.higher risk. c.higher performance. d.reduced labor costs.
c.higher performance.
The _____ the barriers to market entry, the _____ the probability that a firm will acquire an existing firm to overcome them. a.lower; greater b.higher; lower c.higher; greater d.more moderate; greater
c.higher; greater
In general, large international markets offer _____ potential returns and pose _____ risk for the firm choosing to invest in those markets. a.lower; less b.lower; more c.higher; less d.higher; more
c.higher; less
All of the following are fundamental issues affecting efforts to build trust between strategic alliance partners EXCEPT: a.partner interactions. b.external events. c.internal events. d.the negotiation process to arrive at an agreement.
c.internal events.
A(n) _____ strategy is a strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations or markets. a.political risk b.economic risk c.international diversification d.greenfield venture
c.international diversification
A firm is most likely to respond to actions taken by a competitor when that competitor: a.has a reputation as a price predator. b.has a reputation for complex behavior. c.is a market leader. d.is unpredictable.
c.is a market leader.
As compared to a strategic action, a tactical action: a.involves more resources. b.is difficult to implement. c.is easier to implement and reverse. d.is taken by late movers.
c.is easier to implement and reverse.
The amount of rivalry between competitors can be reduced when firms form: a.labor unions. b.cost leaders. c.joint ventures. d.entry barriers.
c.joint ventures.
Most firms introduce their _____ lines of business into regional markets first. a.most innovative b.oldest c.largest and strongest d.most culturally appropriate
c.largest and strongest
Nobles Co. recently acquired Bille Inc. The merged firm has experienced fast integration and achievement of synergy. This suggests that Nobles: a.has financial slack. b.had a low to moderate debt position. c.manages change well and is flexible and adaptable. d.has a consistent emphasis on innovation.
c.manages change well and is flexible and adaptable.
While U.S. firms use downscoping as a restructuring strategy, a.the current trend in Europe, Latin America, and Asia is to build conglomerates. b.they still use this strategy less frequently than do European companies. c.many Asian and Latin American conglomerates have also chosen to downscope. d.it is a trend that is expected to diminish with increasing globalization.
c.many Asian and Latin American conglomerates have also chosen to downscope.
Perio and Lewisohn, two mid-size publishing houses, decided to integrate their operations on a relatively coequal basis. This strategy is known as a(n): a.acquisition. b.trade. c.merger. d.takeover.
c.merger.
Firms use the integrated cost leadership/differentiation strategy because: a.global markets allow for a much broader competitive scope. b.most large firms require more than one strategy and this allows for a multi-faceted strategy. c.most consumers want to pay low prices for products with somewhat highly differentiated features. d.this strategy allows firms to adapt to changing customer perceptions, unlike the other strategies available.
c.most consumers want to pay low prices for products with somewhat highly differentiated features.
Firms use the integrated cost leadership/differentiation strategy because: a.global markets allow for a much broader competitive scope. b.most large firms require more than one strategy and this allows for a multi-faceted strategy. c.most consumers want to pay low prices for products with somewhat highly differentiated features. d.this strategy allows firms to adapt to changing customer perceptions, unlike the other strategies available.
c.most consumers want to pay low prices for products with somewhat highly differentiated features.
A _____ strategy is an international strategy in which strategic and operating decisions are decentralized to the strategic business units in individual countries or regions for the purpose of allowing each unit the opportunity to tailor products to the local market. a.global b.transnational c.multidomestic d.multidimensional
c.multidomestic
Commonly, Walgreens may be found in very close proximity to a CVS Pharmacy. Diversification of this type, where two similar businesses are simultaneously competing in the same geographic markets, is called: a.quadrant competition. b.market power. c.multipoint competition. d.multiple competition.
c.multipoint competition.
Firms seek to create value from economies of scope through two basic kinds of operational economies: a.operational relatedness and market power. b.multipoint competition and corporate relatedness. c.operational relatedness and corporate relatedness. d.vertical integration and horizontal integration.
c.operational relatedness and corporate relatedness.
Geier Inc. and Gladstone Ltd. are two mid-size furniture manufacturers. Geier wanted to grow its business and felt the best way to do this was to make a bid to purchase Gladstone and make it a subsidiary. Geier feels that Gladstone is not properly managed and is not reaching its potential. Because Geier feels that Gladstone would be worth more under its ownership, Geier is willing to pay a(n) _____ to purchase Gladstone. a.advance b.bonus c.premium d.dividend
c.premium
Wexford Commercial Packaging, a leading manufacturer of boxes, bags, and other containers, believes that acquiring Tennessee Paper, a large paper mill, will increase its ability to earn above-average returns, which is why the firm is willing to pay a(n) ________ to acquire Tennessee Paper. a.surcharge b.bonus c.premium d.acquisition fee
c.premium
When the firm's products meet or exceed customers' expectations, _____ exists. a.slack b.awareness c.quality d.motivation
c.quality
Rupert Information is a multinational publisher of newspapers, magazines, and popular fiction books. In the last few years, it has purchased a K-12 educational publisher and an online news service. Both of these purchases are: a.mergers. b.horizontal acquisitions. c.related acquisitions. d.vertical acquisitions.
c.related acquisitions.
If a firm exhibits a high level of corporate relatedness but a low level of operational relatedness, it is most likely using a(n) _____ diversification strategy. a.unrelated b.related constrained c.related linked d.dominant-business
c.related linked
Firms implementing a focus strategy: a.shift into a global market. b.target a typical customer in the industry. c.serve the needs of a particular industry segment. d.offer both differentiated and low-cost goods.
c.serve the needs of a particular industry segment.
Research has found that being a first mover is often critical to a firm's success in industries that have: a.many competitors. b.slow-cycle markets. c.short product life cycles. d.limited resources.
c.short product life cycles.
A(n) _____ diversification strategy is a corporate-level strategy wherein the firm generates 95 percent or more of its sales revenue from its core business area. a.dominant-business b.related constrained c.single-business d.unrelated
c.single-business
Homerun Sports is a large sporting goods chain with stores throughout the Midwest. It recently decided to expand by entering markets in both the south and west regions. Homerun Sports is using a: a.tactical action. b.tactical response. c.strategic action. d.strategic response.
c.strategic action.
A firm should outsource only activities where it:
cannot create value or where it is at a substantial disadvantage compared to competitors.
A firm combines individual tangible and intangible resources to create
capabilities.
Apple has combined financial resources and research laboratories with scientists, engineers, and organizational routines to excel in research and development (R&D) to provide innovation. In this scenario, R&D is a(n):
capability
RTC, Inc., has been competing with L-Cort, Inc., the leader in its industry, for years. RTC has gathered and analyzed large amounts of competitive intelligence about L-Cort and has observed as much of the firm's internal functioning and technology as it can gain access to. In spite of this, L-Cort has maintained its competitive advantage and RTC does not know why. The source of L-Cort's success is:
causally ambiguous.
In a horizontal complementary strategic alliance between buyers, each buyer is also a potential:
competitor
Because they have a stronger focus on creating value, competitive advantages created through _____ alliances tend to last longer than those created through _____ alliances.
complementary; competition-reducing
Picture This is a small business that specializes in videos and photography. It creates videos to be shown at events, as well as videos and photos of events that are then packaged in unique and creative ways. Picture This once experienced a high demand for its services and was known for its high quality, creativity, and fast delivery times. Now that more people have easy access to photo and video apps through their personal electronic devices, the demand for the services offered by Picture This has lessened and the business is earning below-average returns. This is an example of:
core competencies that have become core rigidities.
Greater flexibility in terms of efforts to diversify operations is one reason that:
corporate-level strategic alliances are more attractive than mergers.
When a firm wants to expand its operations by collaborating with one or more companies, it would use a(n) _____ cooperative strategy.
corporate-level strategy
When a firm becomes too large, it runs the risk of:
creating diseconomies of scope
Which of the following is consistent with risk aversion in an organization? a. A charismatic CEO who fosters a new vision and strategic direction b. New strategic direction that is consistent with capabilities and core competencies c. A CEO who is ambicultural d. A CEO who has been in the position for an extended period of time
d. A CEO who has been in the position for an extended period of time
Which of the following is a key risk of acquisitions? a. Conflict naturally occurs when firms try to collaborate to reach a mutual goal. b. A partner might appropriate its technology or knowledge and use it for its own benefit. c. Unstable foreign currencies can inhibit innovation. d. A firm may substitute an ability to acquire innovations for an ability to develop them internally.
d. A firm may substitute an ability to acquire innovations for an ability to develop them internally.
When a company has a homogeneous top management team and external CEO succession, which of the following situations will result? a. A stable strategy b. Strategic change c. A stable strategy with innovation d. An ambiguous situation where there is potential for a change in the top management team and the strategy
d. An ambiguous situation where there is potential for a change in the top management team and the strategy
The CEO at Wellman Industries was offered an unexpected opportunity to serve in the government. The CEO resigned on short notice, and Wellman did not have a succession plan in place. What would be Wellman's best course of action? a. Appoint a small team of executives to assume different CEO duties b. Divide the CEO duties among members of the board of directors c. Appoint an interim CEO from the external managerial labor market d. Appoint an interim CEO from inside the firm
d. Appoint an interim CEO from inside the firm
Which of the following statements regarding corporate governance is NOT true? a. Recent global emphasis on corporate governance stems mainly from the apparent failure of corporate governance mechanisms to adequately monitor and control top-level managers' decisions. b. Corporate governance involves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest. c. In modern corporations, a primary objective of corporate governance is to ensure that the interests of top-level managers are aligned with the interests of shareholders. d. At its core, corporate governance is concerned with making sure a firm and its shareholders behave in an ethical manner.
d. At its core, corporate governance is concerned with making sure a firm and its shareholders behave in an ethical manner.
Which of the following factors that affect managerial discretion is a characteristic of the organization? a. Degree to which products can be differentiated b. Nature and degree of political/legal constraints c. Tolerance for ambiguity d. Availability of resources
d. Availability of resources
Barclay Enterprises just acquired Limid Corp. What should Barclay do with regard to the top management team at Limid? a. Barclay should install a completely new slate of company executives at Limid. b. Barclay should retain about half of Limid's executives and replace the other half with executives from Bonsom. c. Barclay should let the employees of Limid decide which executives to keep or discharge. d. Barclay should retain all, or most, of Limid's executives.
d. Barclay should retain all, or most, of Limid's executives.
When virtually exclusive reliance is placed on financial controls because the board of directors is outsider-dominated, which of the following is NOT a likely result of top-level managers' actions to reach the financial goals set by the board? a. Increased diversification in the firm b. Higher levels of compensation c. Reduced investments in research and development (R&D) d. Better strategic decision making
d. Better strategic decision making
Employee stock option plans (ESOPs), recapitalization, issuance of additional debt, and share buybacks are actions associated with which of the following hostile takeover defense strategies? a. Standstill agreement b. Golden parachute c. Greenmail d. Capital structure change
d. Capital structure change
Goshen Mfg. is a multinational company. In order to be successful, it must achieve economies of scale. At the same time, Goshen needs to be able to respond to local needs. What type of structure and strategy should Goshen use? a. Worldwide geographic area structure; multidomestic strategy b. Worldwide geographic area structure; global strategy c. Multidomestic structure; transnational strategy d. Combination structure; transnational strategy
d. Combination structure; transnational strategy
Which of the following statements about incremental and radical innovations is true? a. Incremental innovations are rare because of the difficulty and risk involved in their development. b. Developing new processes is a critical part of producing incremental innovations. c. Incremental innovations tend to yield higher profit margins compared to those associated with radical innovations, largely because radical innovations have a high failure rate. d. Companies introduce to markets a larger number of incremental than radical innovations.
d. Companies introduce to markets a larger number of incremental than radical innovations.
Which of the following is created by properly matching Niederman Company's strategy and structure? a. Executive agreement b. External stability c. Customer satisfaction d. Competitive advantage
d. Competitive advantage
Which of the following concepts is an important influence in Japanese corporate governance? a. Individualism b. Competition c. Innovation d. Consensus
d. Consensus
Which of the following differences increases the challenge of managing international networks? a. Number of employees b. Industry c. Age of company d. Countries' regulatory environment
d. Countries' regulatory environment
When creating value through internal innovation processes, what is the ultimate goal, or desired end result, of successful innovations? a. Making new discoveries b. Being first to market c. Increasing core competencies d. Creating value
d. Creating value
_____ is where a large number of shareholders with small holdings and few, if any, large-block shareholders exist, producing weak monitoring of managers' decisions. a. Institutional ownership b. Excessive appropriation c. Ownership concentration d. Diffuse ownership
d. Diffuse ownership
Caroline Inc. has not made any structural changes since the company was established in 1976. It is steadily losing its market share and may need to consider closing the company. Which of the following changes in organizational structural could save the company? a. Replace the CEO with an individual familiar with the company's competitors. b. Create a marketing campaign to attract new customers. c. Present a summary of the company's status to the shareholders. d. Establish a new board to manage the company's business decisions.
d. Establish a new board to manage the company's business decisions
_____ is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentives such as stock awards and options. a. Managerial opportunism b. Management specialization c. Ownership concentration d. Executive compensation
d. Executive compensation
Which of the following statements regarding balanced scorecards is NOT true? a. The underlying premise of the balanced scorecard is that firms jeopardize their future performance when financial controls are emphasized at the expense of strategic controls. b. The balanced scorecard is most appropriate when evaluating business-level strategies. c. Balanced scorecard research shows that decisions balancing short-term goals with long-term goals generally lead to higher performance. d. Four perspectives are integrated to form the balanced scorecard: financial, customer, learning and growth, and marketing.
d. Four perspectives are integrated to form the balanced scorecard: financial, customer, learning and growth, and marketing.
Which of the following is NOT a perspective addressed by the balanced scorecard? a. Financial b. Customer c. Internal business processes d. Human resources
d. Human resources
_____ usually leads to product standardization. a. Invention b. Innovation c. Implementation d. Imitation
d. Imitation
Modern Office Equipment manufactures office supplies. Based on feedback from the firm's own salespeople, the in-house designers realized it would be useful to add one of the firm's small calculators to the clip portion of one of its clipboards. What kind of innovation is this? a. External b. Internal c. Radical d. Incremental
d. Incremental
Which of the following significantly affects the success of the cooperative multidivisional structure? a. Coordination b. Rewards for employees c. Research d. Information processing
d. Information processing
_____ brings something new into being while _____ brings something new into use. a. Innovation; imitation b. Innovation; invention c. Imitation; innovation d. Invention; innovation
d. Invention; innovation
_____ typically own at least 5 percent of a company's issued shares. a. Related outsiders b. Angel investors c. Insiders d. Large-block shareholders
d. Large-block shareholders
A firm has decided to encourage its employees to be more entrepreneurial and innovative by forming cross-functional product teams. Which of the following is the best way to incentivize these teams? a. Hold a contest for a prize b. Promise them pay increases c. Offer cash bonuses d. Let them choose their own incentives
d. Let them choose their own incentives
Which of the following characteristics is NOT associated with heterogeneous top management teams? a. Innovation and strategic change b. Stronger firm performance c. Better decisions d. Limited debate among top managers
d. Limited debate among top managers
Which of the following statements about incentives is NOT true? a. Annual bonuses may provide incentives to pursue short-run objectives at the expense of the firm's long-term interests. b. Long-term incentives tie a manager's overall wealth to the firm in a way that is inflexible. c. Long-term, performance-based incentives may reduce the temptation to underinvest in the short run. d. Long-term incentives decrease executive exposure to risks associated with uncontrollable events.
d. Long-term incentives decrease executive exposure to risks associated with uncontrollable events.
_____ includes the threat of job loss, loss of compensation, and loss of managerial reputation. a. Corporate governance b. Agency relationship c. Managerial opportunism d. Managerial employment risk
d. Managerial employment risk
Which of the following is associated with a more heterogeneous top management team? a. A less diverse team membership b. Less innovative team decisions c. A more cohesive team d. More difficulty in the implementation of strategies
d. More difficulty in the implementation of strategies
EBI has a corporate office and four separate operating divisions, each one of which is a profit center with its own top corporate officer. What type of structure does EBI use? a. Functional b. Network c. Simple d. Multidivisional
d. Multidivisional
What structure did business historian Alfred Chandler consider an innovative response to coordination and control problems? a. Functional b. Network c. Simple d. Multidivisional
d. Multidivisional
Which of the following CEOs would have the most influence on board decisions? a. One with long tenure as a member of the top management team and short tenure as the CEO b. One who promotes the heterogeneity of the top management team c. One who was brought in from outside the firm and its industry specifically to be the CEO d. One with long tenure as the CEO and as a member of the top management team
d. One with long tenure as the CEO and as a member of the top management team
_____ is an example of self-serving and opportunistic managerial behavior. a. Maximizing shareholder wealth b. Related-constraint diversification c. Shareholder optimal diversification d. Overdiversification
d. Overdiversification
A.D. Industries has been aggressively buying up stock in B.C. Enterprises, and the firm now possesses close to 20 percent of B.C.'s shares. The other B.C. shareholders are concerned that A.D. is getting ready for a hostile takeover, which will result in the termination of B.C.'s CEO and other executives. Which of the following managerial defense strategies would allow B.C.'s shareholders to block A.D. by diluting its existing stake in B.C.? a. Standstill agreement b. Litigation c. Corporate charter amendment d. Poison pill
d. Poison pill
Company XYZ is being targeted for a hostile takeover by Company ABC. Which of the following defense strategies that Company XYZ could employ would likely be the most successful? a. Corporate charter amendment b. Capital structure change c. Golden parachute d. Poison pill
d. Poison pill
Which of the following statements regarding the market for corporate control is true? a. Activist pension funds identify firms whose performance could be improved and then invest in them. b. For top-level managers, board acceptance of the acquiring firm's offer usually leads to job loss because the acquiring firm wants new leadership; if the offer is refused, however, the job loss risk is minimal. c. Research shows that most institutional investors support the use of hostile takeover defense strategies. d. Research suggests that the market for corporate control is an imperfect governance mechanism due to the fact that investors sometimes use the market for corporate control to take an ownership position in firms that are performing well.
d. Research suggests that the market for corporate control is an imperfect governance mechanism due to the fact that investors sometimes use the market for corporate control to take an ownership position in firms that are performing well.
According to Chandler, what drives the firm to attempt implementation of a different strategy? a. Increased cost creates inefficiency. b. More competition leads to reduced flexibility. c. Economic upswings provide new opportunities. d. Sales growth creates coordination and control problems.
d. Sales growth creates coordination and control problems
_____ involves relationships inside and outside the firm that help in efforts to accomplish tasks that create value for stakeholders. a. The balanced scorecard b. Strategic leadership c. Human capital d. Social capital
d. Social capital
In a 2017 ranking of the world's 10 most entrepreneurial countries, the most entrepreneurial was: a. the United States. b. Germany. c. India. d. Switzerland.
d. Switzerland.
When examining firm performance factors, which of the following may explain a CEO's constrained breadth of knowledge base? a. The level of social capital in the firm b. The CEO's relationship with the board of directors c. Whether the CEO is also the chair of the board of directors d. The CEO's long tenure with the firm
d. The CEO's long tenure with the firm
Which of the following is NOT a factor that affects shareholders' preferences for a diversified position? a. The intensity of rivalry among competitors in the firm's primary industry b. The firm's perceived expertise in the new business and its effects on other firm strategies c. The top management team's experience with implementing diversification strategies d. The magnitude of executive compensation as compared to mid-level management compensation
d. The magnitude of executive compensation as compared to mid-level management compensation
Which of the following statements about corporate governance in China is NOT true? a. The state still relies on direct and/or indirect controls to influence the strategies employed by most firms. b. Corporate governance in China may be tilting toward the Western model. c. Firms with higher state ownership tend to have lower market value and more volatility across time. d. There has been a gradual increase in the equity held in state-owned enterprises while the number and percentage of private firms has declined.
d. There has been a gradual increase in the equity held in state-owned enterprises while the number and percentage of private firms has declined.
Ewing Inc. is a multinational company. In order to be successful, Ewing must achieve economies of scale. Therefore, strategy is dictated from the home office, and the products are standardized across country markets. What type of structure and strategy does Ewing use? a. Worldwide geographic area structure; multidomestic strategy b. Worldwide geographic area structure; global strategy c. Worldwide product structure; multidomestic strategy d. Worldwide product structure; global strategy
d. Worldwide product structure; global strategy
An individual holding the dual roles of CEO and board chair who facilitates efforts to make decisions and take actions that are in stakeholders' interests is: a. establishing balanced organizational controls. b. acting as the guardian of the firm's assets. c. exhibiting an entrepreneurial mind-set. d. acting as the steward of the firm's assets.
d. acting as the steward of the firm's assets.
Induced strategic behavior: a. leads to greater financial returns. b. does not result in true innovation. c. requires a product champion to see it through. d. allows management to determine the type and amount of innovation desired.
d. allows management to determine the type and amount of innovation desired.
Emphasizing financial controls often produces decisions that: a. incorporate moderate and acceptable levels of risk. b. have high levels of risk. c. are more long term and profit maximizing. d. are more short term and risk averse.
d. are more short term and risk averse.
Autonomous strategic behavior is a(n) _____ process, while induced strategic behavior is a(n) _____ process. a. integrated; diversified b. diversified; integrated c. top-down; bottom-up d. bottom-up; top-down
d. bottom-up; top-down
When managers are examining the firm's internal organization in the form of its resources, capabilities, and core competencies, they are looking at what the firm _____ do. a. might b. should c. will d. can
d. can
Pierce Brewing Company wants to pursue a cooperative strategy to innovate and is seeking a partner firm. In general terms, Pierce's ideal partner firm would have a. sufficient liquid capital to fund research and development (R&D). b. a leadership position in the market. c. a large number of other cooperative arrangements. d. complementary skills and compatible strategic goals.
d. complementary skills and compatible strategic goals.
Organizational _____ guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable. a. structures b. tactics c. levels d. controls
d. controls
When using financial controls, firms evaluate their current performance against all of the following EXCEPT: a. previous outcomes. b. competitors' performance. c. industry averages. d. customer satisfaction
d. customer satisfaction
Firms with strong social capital are able to: a. sustain an effective organizational culture. b. increase their risk taking. c. develop a workforce capable of continuous learning. d. develop or have access to multiple capabilities.
d. develop or have access to multiple capabilities.
In order to facilitate cross-functional integration, a strategic leader should: a. ensure incentives for individual initiative. b. set financial goals for each product development team to meet. c. use a vertical hierarchical organizational structure. d. ensure a high-quality communication system.
d. ensure a high-quality communication system.
In the majority of cases, _____ are the principal means by which the market for corporate control is activated. a. capital structure changes b. poison pills c. standstill agreements d. hostile takeovers
d. hostile takeovers
Entrepreneurial opportunities exist because of competitive _____ in markets and among the factors of production used to produce them, or because they were independently developed by entrepreneurs. a. alliances b. advantages c. rivalry d. imperfections
d. imperfections
Ford Motor Company is planning to expand its line of SUVs from seven to thirteen models, primarily through incremental innovations. At the same time, the company is also pursuing radical innovations in the form of hybrids and electric vehicles. Collectively, these efforts are known as the firm's: a. autonomous strategic behavior. b. innovation strategy. c. dual innovation approach. d. innovation portfolio.
d. innovation portfolio.
A widely accepted view is that a board of directors with a significant percentage of _____ provides relatively _____ monitoring and control of managerial decisions. a. outsiders; weak b. related outsiders; strong c. related outsiders; weak d. insiders; weak
d. insiders; weak
In general, research on CEO duality and its effect on firm performance: a. indicates noticeably worse performance for CEO duality firms than those without it. b. indicates better performance for CEO duality firms than those without it. c. indicates the same performance for CEO duality firms than those without it. d. is inconclusive.
d. is inconclusive
In general, firms tend to emphasize strategic controls when assessing their performance relative to the _____ perspective of the balanced scorecard and financial controls when assessing performance in terms of the _____ perspective. a. customer; internal business processes b. internal business processes; financial c. learning and growth; financial d. learning and growth; financial
d. learning and growth; financial
Learning requires a link between _____ and _____. a. internal stimuli; external stimuli b. motivation; a capacity to understand c. motivation; internal rewards d. new knowledge; existing knowledge
d. new knowledge; existing knowledge
If sufficient financial capital is available, firms lacking success with internal innovation efforts are more likely to acquire companies that: a. are undervalued by the market. b. are poorly managed. c. allocate a majority of their profits to investing in research and development (R&D). d. possess strong technological capabilities.
d. possess strong technological capabilities.
A positive outcome of stretch goals is their ability to: a. communicate the context of the internal and external managerial labor markets. b. communicate a firm's mission. c. stretch people thin within the organization—to obtain maximum output. d. provoke breakthrough thinking—thinking that often leads to innovation.
d. provoke breakthrough thinking—thinking that often leads to innovation.
The communication that makes it possible to share innovation-related knowledge throughout the firm stems from: a. cross-functional teams. b. induced strategic behavior. c. autonomous strategic behavior. d. shared values and leadership practices.
d. shared values and leadership practices.
A corporation-wide emphasis on sharing among business units results in an emphasis on _____ controls, while _____ controls are emphasized for strategies in which activities or capabilities are not shared. a. financial; tactical b. tactical; strategic c. financial; strategic d. strategic; financial
d. strategic; financial
Firms use _____ criteria to determine the success of an invention, whereas they use _____ criteria to determine the success of an innovation. a. economic; commercial b. technical; economic c. commercial; financial d. technical; commercial
d. technical; commercial
One risk of participating in a number of horizontal complementary alliances as a business-level cooperative strategy is: a. domination by a strategic central firm. b. too much interdependence. c. loyalty to the alliance over the firm's interests. d. the possibility of explicit collusion among partnering firms.
d. the possibility of explicit collusion among partnering firms.
In order to increase effectiveness in a strategic network: a. the member firms are encouraged to compete with each other. b. the member firms seek ways to increase the core competencies of the strategic center firm. c. the strategic center firm limits each member's efforts to develop core competencies to boost their dependence on it. d. the strategic center firm seeks ways to support each member's efforts to develop core competencies.
d. the strategic center firm seeks ways to support each member's efforts to develop core competencies.
Corporate entrepreneurship is the: a. application of a strategic perspective to an entrepreneurial action. b. condition in which new goods or services can satisfy a need in the market. c. opportunity seeking and exploitation of innovations in new start-up enterprises. d. use or application of entrepreneurship within an established firm.
d. use or application of entrepreneurship within an established firm.
One reason managers may choose acquisitions over new product development is that an estimated _____ percent of innovations fail to achieve adequate returns. a.58 b.68 c.78 d.88
d.88
Which of the following is required to take advantage of international research and development (R&D) investments? a.Training personnel b.Specialized equipment c.Outsourcing d.A strong R&D system already in place
d.A strong R&D system already in place
Of the five entry modes, which is often the quickest means for firms to enter international markets? a.Licensing b.Strategic alliance c.Exporting d.Acquisition
d.Acquisition
Which of the following statements about a flexible manufacturing system (FMS) is NOT true? a.Used properly, an FMS allows the firm to increase its effectiveness in responding to changes in its customers' needs, while retaining low-cost advantages and consistent product quality. b.An FMS is a computer-controlled process that allows firms to produce a variety of products in moderate, flexible quantities with a minimum of manual intervention. c.The goal of an FMS is to eliminate the "low cost versus product variety" trade-off that is inherent in traditional manufacturing technologies. d.An FMS allows a manufacturer to connect with its suppliers, distributors, and customers, which enables it to satisfy customer expectations in terms of product quality and delivery speed.
d.An FMS allows a manufacturer to connect with its suppliers, distributors, and customers, which enables it to satisfy customer expectations in terms of product quality and delivery speed.
Why is it difficult for high-technology firms and service-based companies to restructure assets and sell them profitably? a.Both have few intangible assets. b.Both rely on financial economies. c.For both, the demand for their products is highly sensitive to economic downturns. d.Both have few tangible assets.
d.Both have few tangible assets.
When semiconductor producer Qualcomm's value declined due to regulatory challenges, its leading competitor, Broadcom, attempted to purchase the firm. Qualcomm's board viewed this move as an attempt at a hostile takeover. What can we determine about the nature of the offer based on this description? a.The offer implied that Broadcom's leadership and management were superior to Qualcomm's. b.The offer must have required a reduction in Qualcomm's workforce. c.Qualcomm and Broadcom had differing views on the value of the firm. d.Broadcom's bid was unsolicited.
d.Broadcom's bid was unsolicited.
Which of the following is an example of a value-creating activity associated with the cost leadership strategy? a.Providing accurate and timely delivery of goods to customers b.Ensuring the receipt of high-quality supplies c.Investing in an effective promotion and advertising program d.Building economies of scale and efficient operations
d.Building economies of scale and efficient operations
Which of the following actions by a fast-food chain is an example of a strategic action? a.Switching to a different brand of coffee b.Offering new menu items for a limited time promotion c.Distributing money-saving coupons d.Changing to vegetarian cuisine
d.Changing to vegetarian cuisine
Which of the following is NOT an inbound logistic? a.Materials handling b.Warehousing c.Inventory control d.Collecting products
d.Collecting products
Sarah often meets with clients over lunch. She is hesitant to schedule these lunch meetings at Green Café. While the food is excellent, sometimes the service is fast, but other times it can take up to two hours for a simple meal. Green Café is vulnerable to attack from competitors because it suffers from poor service quality in which dimension? a.Serviceability b.Courtesy c.Accuracy d.Consistency
d.Consistency
Which of the following enhances a firm's ability to reduce costs while, hopefully, increasing the value of its products for customers? a.Raw materials from international sources b.Employee training materials c.Easy access to critical supplies d.Continual process improvements
d.Continual process improvements
Which of the following is a risk of a focus strategy? a.Industry-wide competitors use their resources to serve a wider range of customers' needs than the focuser has been serving. b.Focused competitors use their resources to serve a wider range of customer needs. c.Core competencies of a competitor attract a more broadly defined segment. d.Core competencies of a competitor are used to focus on an even more narrowly defined segment, thereby skimming off the most desired customers.
d.Core competencies of a competitor are used to focus on an even more narrowly defined segment, thereby skimming off the most desired customers.
Which of the following terms exemplifies complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise? a.Market power b.Multipoint competition c.Economies of scope d.Corporate-level core competencies
d.Corporate-level core competencies
Which of the following is NOT an expected outcome of a management buyout? a.Improved performance b.Downscoping c.Increased strategic focus d.Downsizing
d.Downsizing
Which type of restructuring strategy is of more tactical than strategic value? a.Management buyout b.Leveraged buyout c.Downscoping d.Downsizing
d.Downsizing
Which of the following statements regarding incentives to use international strategy is NOT true? a.Key supplies of raw materials (especially minerals and energy) are critical to firms' efforts in some industries to manufacture their products. b.In industries where labor costs account for a significant portion of a company's expenses, firms may choose to establish facilities in other countries to gain access to less expensive labor. c.As nations industrialize, the demand for some products and commodities appears to become more similar. d.Engaging in an international strategy has the potential to help a firm shorten the life cycle of its products.
d.Engaging in an international strategy has the potential to help a firm shorten the life cycle of its products.
In what type of market do firms abandon their products and move on in response to market needs? a.Slow-cycle b.Standard-cycle c.Mixed-cycle d.Fast-cycle
d.Fast-cycle
What value-creating reason for diversification is associated with an unrelated diversification strategy? a.Market power b.Economies of scope c.Uncertain future cash flows d.Financial economies
d.Financial economies
What is the determinant of national advantage that fosters the growth of certain industries and varies greatly from nation to nation? a.Demand conditions b.Factors of production c.Related and supporting industries d.Firm strategy, structure, and rivalry
d.Firm strategy, structure, and rivalry
The small town of Grace has only two florists, and they are located across the street from each other. Which of the following descriptions applies to them? a.Low market commonality and low resource similarity b.Low market commonality and high resource similarity c.High market commonality and low resource similarity d.High market commonality and high resource similarity
d.High market commonality and high resource similarity
Which of the following is NOT a basic benefit of using an international strategy? a.Increased market size b.Economies of scale and learning c.Location advantages d.Improved communications
d.Improved communications
Which of the following is NOT a reason that technology drives globalization? a.In emerging markets, the increasingly rapid adoption of technologies such as the Internet and mobile applications permits greater integration of trade, capital, culture, and labor. b.Technologies are the foundation for efforts to bind together disparate markets and operations across the world. c.Increases in global communications facilitate the ability of people in different countries to visualize and model lifestyles in other cultures. d.In industries where labor costs account for a significant portion of a company's expenses, firms may choose to establish facilities in other countries.
d.In industries where labor costs account for a significant portion of a company's expenses, firms may choose to establish facilities in other countries.
Starla Mfg. has pioneered "cheap chic" pens that resemble Mont Blanc pens and offers them at relatively low prices. To expand its products into more businesses to be used as advertising promotions, Starla uses sophisticated designers and effective means of managing costs. These are all characteristics of which business-level strategy? a.Differentiation b.Cost leadership c.Focus d.Integrated cost leadership/differentiation
d.Integrated cost leadership/differentiation
Which of the following is true regarding late movers? a.No response is better than a late response. b.The success of late movers tends to be similar to that of second movers. c.Late movers tend to be more successful than first movers because they've had time to study the impact of the action. d.Late movers can be successful if they develop a unique way to enter the market and compete.
d.Late movers can be successful if they develop a unique way to enter the market and compete.
_____ is a set of costs associated with various issues firms face when entering foreign markets, including unfamiliar operating environments; economic, administrative, and cultural differences; and the challenges of coordination over distances. a.Global competition b.Global efficiency c.Regionalization d.Liability of foreignness
d.Liability of foreignness
_____ is a process used to cluster customers with similar needs into individual and identifiable groups. a.Business-level strategy b.Consumer marketing c.Total quality management (TQM) d.Market segmentation
d.Market segmentation
A furniture manufacturer is considering acquiring an upholstery fabric manufacturer. Among the hundreds of items under review in the due-diligence process, which of the following is NOT something that executives, bankers, and other stakeholders are concerned about? a.Tax consequences of the transaction b.Cultural fit between the two firms c.Financing for the intended transaction d.Marketing strategies to be implemented after the acquisition
d.Marketing strategies to be implemented after the acquisition
Your firm is expanding to overseas markets. While most executives agree that they should use the transnational strategy, Melissa argues that it isn't needed. Which of the following would she most likely use to support her argument? a.Local flexibility is too difficult to maintain when using the transnational strategy. b.Integrating domestic and overseas markets isn't necessary. c.Political entanglements can cause trouble in both domestic and overseas markets. d.Most multinational firms try to compete at the regional level rather than at the country level.
d.Most multinational firms try to compete at the regional level rather than at the country level.
Which of the five business-level strategies is considered to be superior to the others? a.Cost leadership b.Differentiation c.Integrated cost leadership/differentiation d.None of the strategies is superior to the others.
d.None of the strategies is superior to the others.
Which of the following should be used to measure the organizational size of a firm when studying competitors? a.Number of divisions b.Number of products c.Number of offices d.Number of employees
d.Number of employees
Which of the following is the basis for each international strategy that a firm uses to achieve strategic competitiveness in the form of improved performance and enhanced innovation? a.Cultural customization b.Employment law differences c.Pressure to use local sources d.One or more core competencies
d.One or more core competencies
Airbnb is an online service that connects property owners who have rooms to rent with travelers who want to stay in accommodations other than traditional hotels and motels. Airbnb is an example of which type of business model? a.Franchise b.Subscription c.Advertising d.Peer-to-peer
d.Peer-to-peer
Firms' relationships with customers are characterized by which of the following three dimensions? a.Connection, concern, and interaction b.Customized products, service, and pricing c.Facilitation, growth, and connection d.Reach, richness, and affiliation
d.Reach, richness, and affiliation
Which of the following is NOT a reason that firms are willing to accept the challenge of managing different consumer tastes and practices linked to cultural values or traditions in different markets? a.The potential to enhance the firms' size b.The potential to enhance the firms' performance c.Limited growth opportunities in their domestic market d.Reduced taxes and tariffs
d.Reduced taxes and tariffs
Which of the following statements regarding resource dissimilarity is NOT true? a.Resource dissimilarity influences the competitive actions and responses firms choose to take. b.The firm with a resource disadvantage may take longer to respond to the acting firm's competitive action. c.Resource dissimilarity can make it difficult for smaller firms to respond effectively to a larger firm's competitive actions or responses. d.Resource dissimilarity provides an advantage to smaller, local firms when competing against larger, national firms.
d.Resource dissimilarity provides an advantage to smaller, local firms when competing against larger, national firms.
Mulberry Inc. and Persimmon Company are two mid-size canned fruit manufacturers. They just announced that Mulberry will be acquiring Persimmon. What can a current stockholder in Mulberry expect? a.Above-average returns b.Returns about double what they are now c.Returns that remain fairly steady d.Returns that are close to zero
d.Returns that are close to zero
TamBoats makes small, personal submarines. Another firm created an innovative tool that can be stored in a small space. Which of the following can TamBoats use to quickly develop its own tool with similar characteristics? a.Review its own products. b.Establish a competitive advantage. c.Research. d.Reverse engineer the product.
d.Reverse engineer the product.
Which of the following is NOT an incentive of using an international strategy? a.Extension a product's life cycle b.Easier access to raw materials c.Opportunities to integrate operations on a global scale d.Shared costs, risks, and resources
d.Shared costs, risks, and resources
Crates for You, Inc., provides inexpensive crates to canneries providing canned goods to institutional units, such as schools and prisons. The company has always competed on a cost leadership basis. Most of its products are purchased by a few institutions, so it is fairly dependent on these institutions for selling its product. The next most-efficient competitor compared to Crates for You is The Box Company, which earns average returns. Crates for You earns above-average returns. The institutional budgets are being squeezed, and these institutions are putting pressure on Crates for You to reduce its prices. If Crates for You reduces its prices below those of The Box Company's, it is likely that: a.both Crates for You and The Box Company will devise additional ways to become more efficient in their production processes. b.Crates for You will be unable to absorb the lower cost and will go out of business. c.both Crates for You and The Box Company will go out of business, leaving the customers with fewer alternative sources of crates for canned goods. d.The Box Company will go out of business, and Crates for You will gain higher power over its customers.
d.The Box Company will go out of business, and Crates for You will gain higher power over its customers.
Why will a firm often pay a premium to acquire a target? a.The acquiring firm expects the acquisition to provide a boost to its share price. b.The acquiring firm expects the acquisition to provide better than average returns to its shareholders. c.The acquiring firm wants to eliminate competition. d.The acquiring firm has difficulty determining the worth of a target firm.
d.The acquiring firm has difficulty determining the worth of a target firm.
_____ is an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors. a.A broad market segment b.The focus strategy c.The differentiation strategy d.The cost leadership strategy
d.The cost leadership strategy
Which of the following statements about determining which customer needs to satisfy is NOT true? a.In a general sense, needs are related to a product's benefits and features. b.Customers prefer to buy customized products. c.The most effective firms strive continuously to anticipate changes in customers' needs. d.The generalized forms of value that products provide are either high cost with acceptable features or similar features with acceptable cost.
d.The generalized forms of value that products provide are either high cost with acceptable features or similar features with acceptable cost.
Which of the following statements about focus strategies is true? a.They are subject to more failure than industry-wide strategies. b.They can avoid global risk by focusing on pointed national or regional markets. c.They are protected from risks associated with industry-wide strategies due to a position focus. d.They are faced with more risks than are industry-wide strategies.
d.They are faced with more risks than are industry-wide strategies.
Which of the following is NOT a reason why firms initiate competitive actions and responses in standard-cycle markets? a.To seek large market shares b.To gain customer loyalty through brand names c.To control the firm's operations carefully d.To sustain a competitive advantage over longer periods
d.To sustain a competitive advantage over longer periods
_____ are expenses incurred when firms use acquisition strategies to create synergy. a.Economies of scale b.Premiums c.Diseconomies of scope d.Transaction costs
d.Transaction costs
Burns Co. is implementing an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness. Burns is using which of the following international strategies? a.Universal b.Global c.Multidomestic d.Transnational
d.Transnational
Which of the following is a situation where activity sharing is risky due to ties among a firm's businesses that create links between outcomes? a.When a careful company coordination (such as that in Procter & Gamble) allows for sharing of division sales activities for most of its products sold through retail outlets b.When a strong corporate headquarters office facilitates activity sharing c.When sharing activities to create economies of scope, which leads to increases in performance and higher returns to shareholders d.When demand for one business's product is reduced and sufficient revenues are not generated to cover the fixed costs required to operate the shared facilities
d.When demand for one business's product is reduced and sufficient revenues are not generated to cover the fixed costs required to operate the shared facilities
A firm developed a system for nurse practitioners to organize their notes taken during routine office assessments of patients. The same firm recently acquired a firm specializing in physician assistants to record patient evaluations. The firm is hoping to: a.implement vertical integration. b.acquire specialized talent from the physician assistants' firm. c.achieve financial economies through an unrelated acquisition. d.achieve economies of scope.
d.achieve economies of scope.
As a strategy, downsizing will be far more effective when managers: a.realign the composition of businesses in the company's portfolio. b.eliminate businesses that are unrelated to the firm's core business. c.take the firm private. d.consistently use human resource practices that ensure procedural justice and fairness in decisions.
d.consistently use human resource practices that ensure procedural justice and fairness in decisions.
A _____ allows a firm from one country to acquire a stake in or purchase all of a firm located in another country. a.new wholly owned subsidiary b.greenfield venture c.strategic alliance d.cross-border acquisition
d.cross-border acquisition
Newburg, a U.S. company, is looking to grow its business. Research has indicated that the European market would be ideal for its products, but Newburg has had difficulty getting its products into that market. Newburg would be best served if it considers a(n): a.vertical acquisition of its main supplier. b.horizontal acquisition of its main U.S. competitor. c.acquisition of a highly related firm to aid in marketing. d.cross-border acquisition of a European distributor.
d.cross-border acquisition of a European distributor.
The owner of an upscale, online children's clothing boutique would most likely use _____ factors as the basis for segmenting her customers. a.consumption b.geographic c.psychological d.demographic
d.demographic
When using the unrelated diversification corporate-level strategy, firms: a.seek both operational relatedness and corporate relatedness. b.seek operational relatedness but not corporate relatedness. c.seek corporate relatedness but not operational relatedness. d.do not seek either operational relatedness or corporate relatedness.
d.do not seek either operational relatedness or corporate relatedness.
When there are significant operational and/or strategic relationships between the acquiring and the acquired firm, _____ can be an appropriate restructuring strategy. a.downscoping b.leveraged buyout c.reclining d.downsizing
d.downsizing
A firm uses horizontal acquisition to achieve greater market power by: a.controlling additional parts of the value chain. b.better controlling its own destiny in terms of costs and access. c.generating synergy through integration of resources and capabilities. d.exploiting cost-based and revenue-based synergies.
d.exploiting cost-based and revenue-based synergies.
Your small company makes a product that your European cousins believe will be popular in their country. You have no foreign manufacturing expertise, but you can manufacture the product here in your firm's domestic facility and ship it to your cousins in Europe, whose firm will market and distribute the product for you. This is an example of: a.a greenfield venture. b.a strategic alliance. c.licensing. d.exporting.
d.exporting.
With complementary assets, the acquiring firm can: a.lower the financing cost. b.focus on cash flow. c.avoid integrating the two firms' operations. d.focus on its core business.
d.focus on its core business.
Borderless demand for globally branded products develops from: a.more restrictive trade barriers. b.the adoption of additional tariffs. c.the adoption of dissimilar capital market structures. d.growing similarities in lifestyle in developed nations.
d.growing similarities in lifestyle in developed nations.
First movers in a fast-cycle market tend to have: a.lower survival rates than second movers. b.lower survival rates than late movers. c.less organizational slack than second and late movers. d.higher revenues than second movers.
d.higher revenues than second movers.
Ocean's Bounty and Santino's Seafoods are similarly sized seafood distributors serving the restaurant market on the West Coast. Santino's has decided to purchase Ocean's Bounty, which means this is a: a.merger. b.related acquisition. c.vertical acquisition. d.horizontal acquisition.
d.horizontal acquisition.
All of the following issues affect firms' efforts to merge on a coequal basis EXCEPT: a.who will lead the merged firm. b.how to fuse disparate corporate cultures. c.how to reach an agreement about the value of each company prior to the merger. d.how to determine the stock price per share for the merged company.
d.how to determine the stock price per share for the merged company.
Superior integration of business-level strategy activities _____ the likelihood of being able to gain an advantage over competitors and to earn _____ returns. a.increases; minimal to average b.decreases; average c.decreases; below-average d.increases; above-average
d.increases; above-average
If the cost leader in the computer printer market is losing market share to its nearest rival competitor, which produces very similar products in a similar way, the cost leader should respond by: a.lowering its prices even more. b.exiting the market. c.shifting to a differentiation strategy. d.increasing the value of its products.
d.increasing the value of its products.
A total quality management (TQM) system is particularly valuable for firms using the _____ strategy. a.focused differentiation b.cost leadership c.focused cost leadership d.integrated cost leadership/differentiation
d.integrated cost leadership/differentiation
Firms failing to perform the value-chain activities and support functions in an optimum manner when implementing the _____ strategy become "stuck in the middle." a.cost leadership b.focus c.differentiation d.integrated cost leadership/differentiation
d.integrated cost leadership/differentiation
A product substitute becomes a concern for the cost leader when a.increased margins of competitors are above the cost leader. b.there is no differentiation strategy available. c.the cost leader has no flexibility to reduce the price of its goods. d.its features and characteristics, in terms of cost and differentiation, are potentially attractive to the firm's customers
d.its features and characteristics, in terms of cost and differentiation, are potentially attractive to the firm's customers
All of the following are factors that influence the degree of rivalry between competitors EXCEPT: a.a firm's dependence on a particular market. b.prior competitive interactions between firms. c.resources possessed by rivals. d.less flexibility than competitors when faced with product substitutes.
d.less flexibility than competitors when faced with product substitutes.
As their loyalty to a brand increases, customers become: a.more aware of imitation efforts by rivals. b.less accepting of price increases. c.more aware of price decreases. d.less sensitive to price increases.
d.less sensitive to price increases.
The key to Southwest Airlines Co.'s success has been its ability to maintain _____ costs across time while providing customers with _____ levels of differentiation. a.average; acceptable b.below-average; below-average c.high; acceptable d.low; acceptable
d.low; acceptable
JKL Inc. recently acquired Mumford Company. Because the merged firm has been able to maintain a moderate debt position, it can expect: a.financial slack. b.lower premiums. c.a high probability of synergy. d.lower risk.
d.lower risk.
Because managers must be involved in searching for viable acquisition candidates, completing due diligence, preparing for negotiations, and managing the integration process: a.companies acquire a larger debt load. b.managers favor diversification for their companies. c.companies are unable to achieve synergy. d.managers can become overly focused on acquisitions.
d.managers can become overly focused on acquisitions.
A multidomestic strategy focuses on competition within each country because: a.the focus is on national products without customization. b.decisions are centralized for individual countries to tailor products to the national market. c.the firm's need for local responsiveness is low while its need for global integration is high. d.market needs are thought to be segmented by country boundaries.
d.market needs are thought to be segmented by country boundaries.
Red Company and Green Company are both diversified firms simultaneously competing in the same geographical markets. These companies are engaging in: a.market power. b.backward integration. c.economies of scope. d.multipoint competition.
d.multipoint competition.
Sully's Creamery uses farm-fresh cream from its local farm to make all of its ice cream. It has several shops in the metro area. It is _____ with national ice cream chains such as Baskin-Robbins. a.a direct competitor b.a direct, but not mutually acknowledged, competitor c.a mutually acknowledged competitor d.not a direct and mutually acknowledged competitor
d.not a direct and mutually acknowledged competitor
All of the following are challenges associated with integration processes EXCEPT the need to: a.meld two or more unique corporate cultures. b.link different financial and information control systems. c.build effective working relationships. d.raise the funds to complete the acquisition.
d.raise the funds to complete the acquisition.
Julie's Juicery has a reputation for high-quality juices made from fresh ingredients, including fruits from its own farms, using a closely guarded recipe. Management at Julie's Juicery most likely: a.considers itself in a fast-cycle market and is constantly watching out for imitators. b.prides itself on having a large market share in this niche with a sustainable competitive advantage. c.has concerns that it does not have the resources needed to compete with others in its market. d.realizes it is in a slow-cycle market in which the focus is on protecting unique competencies rather than gaining market share.
d.realizes it is in a slow-cycle market in which the focus is on protecting unique competencies rather than gaining market share.
The outcomes a firm achieves by using a global strategy become more desirable when the strategy is used in areas in which _____ integration among countries is occurring. a.geopolitical b.multinational c.national d.regional
d.regional
Acme Drug Company has three major groups (prescription drugs, over-the-counter drugs, and hospital IV drugs). These groups share resources and activities. Based on this information, Acme is using a(n) _____ diversification strategy. a.unrelated b.dominant-business c.related linked d.related constrained
d.related constrained
The diversified company with a portfolio of businesses that have only a few links between them is using the _____ diversification strategy. a.mixed link b.minimal link c.unrelated d.related linked
d.related linked
Xander Company is high in both operational relatedness and corporate relatedness. Xander is most likely using a(n) _____ diversification strategy. a.unrelated b.related constrained c.single-business d.related linked
d.related linked
Sully's Creamery has a reputation for high-quality soft-serve ice cream made from farm-fresh ingredients, including milk and cream from its own dairy farms. It has successfully operated a number of ice cream parlors within a 25-mile radius of its farm. Recently, Sully's opened two shops in Springdale, a metropolitan area over 100 miles away. Sully's research indicates that most soft-serve shops in Springdale have only one location. Sully can expect the Springdale soft-serve shops to: a.respond aggressively because of low resource similarity. b.ignore Sully's entrance into the market because of high market commonality. c.offer no competitive response because of low market commonality. d.respond forcefully because of high market dependence.
d.respond forcefully because of high market dependence.
Redtail Grocers is a major national chain, while Sam's Supermarkets is a local grocer with five stores in its metro area. Redtail recently created a new type of value for customers in small retail markets such as the one in which Sam's operates. Because of their resource dissimilarity, Redtail was able to launch this massive competitive attack, and Sam's most likely: a.responded aggressively. b.did not respond at all. c.responded quickly to parts of the attack. d.responded after a long delay.
d.responded after a long delay.
All of the following are value-creating reasons for diversification EXCEPT: a.market power. b.financial economies. c.economies of scope. d.risk reduction for the firm.
d.risk reduction for the firm.
Little Tikes is a large children's clothing chain with stores throughout the Midwest. It recently decided to expand by entering markets in both the south and west regions. Young Outfitters and Kids Connection are two smaller children's clothing chains with stores in several southern states. They decided to merge so that they would have greater resources to fend off the attack by Little Tikes. Young Outfitters and Kids Connection have engaged in a: a.tactical action. b.tactical response. c.strategic action. d.strategic response.
d.strategic response.
Samuel Ltd. and Grayson Company are two mid-size toy manufacturers. Management at Grayson was pleased with the size and strength of the company. However, Samuel wanted to grow its business and felt the best way to do this was to make a bid to purchase Grayson and make it a subsidiary. This strategy is known as a: a.raid. b.buyout. c.merger. d.takeover.
d.takeover.
Due diligence to evaluate the relative health of an acquisition target would include all of the following EXCEPT: a.financial health. b.cultural fit. c.value of human resources. d.target's willingness to be acquired.
d.target's willingness to be acquired.
All of the following are reasons a firm is likely to respond to a competitor's action EXCEPT: a.the firm's market position becomes harder to defend. b.the action damages the firm's ability to use its core competencies to create or maintain an advantage. c.the action leads to better use of the competitor's capabilities to develop a stronger competitive advantage or an improvement in its market position. d.the actions were taken by a company with a reputation for risky, complex, and unpredictable competitive behavior.
d.the actions were taken by a company with a reputation for risky, complex, and unpredictable competitive behavior.
Fred's Fitness, a new entrant in the fitness equipment market, has decided to implement a differentiation strategy. In order for the strategy to be effective in helping Fred's earn above-average returns, the firm must have a thorough understanding of all of the following EXCEPT: a.the value its target customers seek. b.the relative importance that its customers attach to the satisfaction of different needs. c.the features for which its customers are willing to pay a premium. d.the continuous efforts it must make to reduce costs to levels that are lower than those of its competitors.
d.the continuous efforts it must make to reduce costs to levels that are lower than those of its competitors.
The use of multidomestic strategies usually expands the firm's local market share because: a.multidomestic strategies minimize a firm's competitive response to the idiosyncratic requirements of each market. b.multidomestic strategies result in greater knowledge sharing for the corporation. c.multidomestic strategies are cheaper. d.the firm focuses its attention to the local clientele's needs.
d.the firm focuses its attention to the local clientele's needs.
China has been an attractive market for foreign retailers for all the following reasons EXCEPT: a.its large population. b.the growing economic capabilities of Chinese citizens. c.the opening of the Chinese market to foreign firms. d.the lack of access to online retailing.
d.the lack of access to online retailing.
Market commonality is concerned with: a.the characteristics that are shared by different markets. b.the industry in which firms compete against each other. c.the total number of firms that compete in a market. d.the number of markets in which firms compete against each other.
d.the number of markets in which firms compete against each other.
The decision about which entry mode to use is primarily the result of all of the following factors EXCEPT: a.the industry's competitive conditions. b.the country's situation and government policies. c.the firm's unique set of resources, capabilities, and core competencies. d.the product characteristics.
d.the product characteristics.
If the level of diversification is more constrained, that generally indicates a.there are fewer linkages between the businesses owned by the firm. b.fewer opportunities exist for economies of scope. c.there is a higher proportion of the total firm revenue resulting from the dominant business. d.there are more linkages among the businesses owned by an organization.
d.there are more linkages among the businesses owned by an organization.
All of the following are ways that firms develop and use total quality management (TQM) systems EXCEPT: a.to increase customer satisfaction. b.to cut costs. c.to reduce the amount of time required to introduce innovative products to the marketplace. d.to achieve competitive advantage.
d.to achieve competitive advantage.
Denny's Dairy makes and sells high-quality ice cream using fresh milk and cream. It has an ice cream stand at its farm and also sells bulk ice cream at area ice cream shops. Denny's recently decided to purchase the local chain of ice cream shops. This purchase is a: a.merger. b.horizontal acquisition. c.takeover. d.vertical acquisition.
d.vertical acquisition.
Jennie's Jams produces jams and jellies. It owns fruit-growing operations. This is an example of a business that is: a.in multipoint competition. b.horizontally integrated. c.totally integrated. d.vertically integrated.
d.vertically integrated.
A product proliferation strategy represents a form of _____ diversification. a.value-reducing b.unrelated c.growth-income d.within-industry
d.within-industry
NanaTech specializes in the sale and support of computers to the home user. CSINetworks services corporate clients, providing Internet access, setting up company intranets, and filling all their hardware and software needs. NanaTech and CSINetworks: a.have high resource similarity. b.have an intense rivalry. c.are direct and mutually acknowledged competitors. d.would not likely be engaged in competitive rivalry.
d.would not likely be engaged in competitive rivalry.
Because it is _____ for companies to develop products that differ from their current lines for markets in which they lack experience, _____ are used to diversify firms.
difficult; acquisitions
In hostile takeovers, situations in which common disagreements such as those having to do with operational methods strongly increase the:
difficulty associated with creating synergy.
When a company becomes so large that there is not enough economic benefit to outweigh the costs of managing the more complex organization, it has created
diseconomies of scope
Overdiversification often leads to a decision to:
divest some units
Jinx Entertainment wants to focus on developing properties for Internet distribution. Because the requirements are so different, Jinx found that it could not pay proper attention to this goal while still maintaining its full-length motion picture division. So it spun off the motion pictures into a new company. This is an example of what restructuring strategy?
downscoping
When a firm chooses to divest itself of businesses that are unrelated to the firm's core business, it has which restructuring strategy?
downscoping
When there are significant operational and/or strategic relationships between the acquiring and the acquired firm, _____ can be an appropriate restructuring strategy.
downsizing
Which type of restructuring strategy is of more tactical than strategic value?
downsizing
The difference between downsizing and organizational decline is that:
downsizing is an intentional managerial strategy
A potential acquirer evaluates a target firm for acquisition through a process known as:
due diligence
Apple and IBM compete in an industry that has frequent product innovations. They collaborate with each other, as well as with a host of other firms, to achieve their objectives. These arrangements are most likely:
dynamic alliance networks.
Companies can learn to compete primarily on the basis of firm-specific differences when they:
emphasize core competencies when selecting and implementing strategies.
An advantage to bureaucratic controls in large companies is that they:
ensure consistency
One reason firms form dynamic alliance networks is to:
explore new ideas that may develop new markets
With complementary assets, the acquiring firm can:
focus on its core business
The managers at NuvoTech are considering several alliance options. Because the regulatory hurdles are much lower for their industry in South Korea, they are most likely going to make an alliance with a company from that country. In this situation, one of the key factors driving NuvoTech's consideration of a cross-border alliance is:
foreign government economic policies.
Franchising is a particularly attractive strategy in _____ industries where a large number of small and medium-sized firms compete as rivals.
fragmented
When a core competency becomes a core rigidity, it can:
generate inertia.
Firms use a related acquisition to create value through:
generating synergy by integrating resources and capabilities.
The _____ the barriers to market entry, the _____ the probability that a firm will acquire an existing firm to overcome them.
higher, greater
Capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's:
human capital.
Most acquisitions that are designed to achieve greater market power entail buying a competitor, a supplier, a distributor, or a business:
in a highly related industry
By outsourcing, a firm can:
increase the probability of developing core competencies and achieving a competitive advantage.
Knowledge, trust, and skills are all _____ resources.
intangible, human
The research regarding the stock prices and rates of returns for acquiring and acquired companies indicate that:
investors are skeptical about the acquirer's ability to justify the premium to purchase the acquired firm.
An individual who takes an intelligent risk when making a decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete is exercising:
judgment.
In what financing option are risky acquisitions financed with debt that provides a large potential return to lenders?
junk bonds
Acquisition is often viewed as:
less risky than internal product development.
If a firm wants to reduce the negative effect of an intense rivalry on financial performance, it may use acquisitions to:
lessen market dependencies
CSI recently acquired NetResources. The merged firm has experienced fast integration and achievement of synergy. This suggests that the acquiring firm:
manages change well and is flexible and adaptable
While U.S. firms use downscoping as a restructuring strategy,
many Asian and Latin American conglomerates have also chosen to downscope.
Perio and Lewisohn, two mid-size publishing houses, decided to integrate their operations on a relatively coequal basis. This strategy is known as a(n):
merger
A strategy in which several firms agree to form multiple partnerships to achieve shared objectives is a:
network cooperative strategy.
Outsourcing is concerned with how components, finished goods, or services will be:
obtained.
Outsourcing allows a firm to nurture a smaller number of capabilities, which:
prevents the firm from becoming overextended.
A firm develops a competitive advantage through an acquisition strategy only when a transaction generates _____ synergy.
private
Reduction of company's dependence on specific products or markets is typically done to:
reshape the firm's competitive scope.
The source of capabilities is:
resources.
When firms have strong positive relationships with suppliers and customers, they are said to have:
social capital.
Mariah makes successful decisions regarding her firm's resources and their management. Mariah is a(n):
strategic leader.
The main competitive advantage of a particular major U.S. technology firm is sourcing and procurement of raw materials. This company is facing increasing competition on price and is strongly considering outsourcing as a means of reducing costs. The LAST function this firm should consider outsourcing is:
supply-chain management.
In the value chain, finance is a(n):
support function.
A _____ competitive advantage exists only when competitors are unable to duplicate the benefits of a firm's strategy or when they lack the resources to attempt imitation.
sustainable
Firms that share some of their resources in order to create economies of scope have entered into a:
synergistic strategic alliance.
The best thing to do when faced with a failure is to:
take corrective actions.
Due-diligence to evaluate the relative health of an acquisition target would include all of the following EXCEPT: financial health. value of human resources. target's willingness to be acquired. cultural fit.
target's willingness to be acquired.
A competitive advantage's sustainability is a function of all of the following factors EXCEPT:
the amount of tangible and intangible resources that a firm has.
Because corporate-level strategies commonly are broader in scope and more complex than business level strategies:
they are relatively more challenging and costly to use.
Reasons firms use a strategic alliance - Standard Cycle
to help gain market power
Reasons firms use a strategic alliance - Fast Cycle
to move quickly from one competitive advantage to another
RTX Power Tools has seen sales decline on its gas-powered tools. The market seems to be shifting to tools using rechargeable batteries, but it is not clear if that market segment has staying power. The RTX managers are making decisions under conditions of:
uncertainty.
The more _____ a resource is, the more valuable that resource is to creating capabilities.
unobservable
By pursuing an opportunity to create a marketplace through which businesses could introduce their goods and services to customers who would be able to experience them at a discounted price, Groupon made use of a _____ capability.
valuable
A product's performance characteristics and its attributes for which customers are willing to pay are used to measure:
value.
Rupert Information is a multinational publisher of newspapers, magazines, and popular fiction books. In the last few years, it has purchased a K-12 educational publisher and an online news service. These purchases are all:
vertical acquisition
Sully's Dairy makes and sells high-quality ice cream using fresh milk and cream. It has an ice cream stand at its farm and also sells bulk ice cream that is sold at area ice cream shops. Sully's recently decided to purchase the local chain of ice cream shops. This purchase is a:
vertical acquisition
What type of acquisition gives a firm increased market power by giving it control of additional parts of the value chain?
vertical acquisition
In a(n) _____ strategic alliance, firms share some of their resources from different stages of the value chain for the purpose of creating a competitive advantage.
vertical complementary
The informal economy is an expanded collection of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state. As such, which segment includes the informal economy?
Global
What is more important than accurately assessing trends in the general environment of a firm?
Accurately interpreting trends
The competition model is characterized by _____ forces
Five
Within the United States, governmental decisions and policies regarding antitrust issues, such as disallowing proposed mergers that would create a firm that is too dominant within an industry, is the responsibility of the:
Antitrust Division of the Justice Department or the Federal Trade Commission.
While the U.S. labor force between 2010 and 2050 is expected to drop, showing slow growth in the Caucasian members, which member segment is expected to double in size during the period?
Asian
Which of the following practices would NOT be considered unethical?
Attending trade fairs to obtain competitors' brochures
The _____ segment is concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution.
Demographic
Which of the following is NOT one of the primary categories of tangible resources?
Innovation
Access to distribution is _____ a barrier for products that can be sold on the Internet.
Less of
Supplies To Schools (STS) is a nonprofit that provides free school supplies to schools in the metro area. STS was struggling to get the word out about its existence and couldn't build a customer base. Several volunteers worked together to design an eye-catching logo and crisp, clear brochures that were sent to all area schools. They also built a user-friendly website. These volunteers shared their expertise in which value chain activity?
Marketing
A(n) _____ is a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness.
Threat
One criterion to determine if a capability is a core competence and a source of competitive advantage is if it allows the firm to perform:
a value-creating activity that competitors cannot perform.
The part of the external environmental analysis that determines the timing and importance of environmental changes and trends for firms' strategies and their management is:
assessing
New entrants can threaten the market share of existing competitors in all of the following ways EXCEPT:
by increasing returns for competing firms.
To combat the perception of uniqueness, new entrants frequently offer products at _____ prices, which may result in _____ profits.
lower; lower
The _____ established the relationships between parties, the _____ the switching costs.
more; greater
Membership in a particular strategic group defines the essential characteristics of the firm's strategy. All of the following are essential characteristics EXCEPT:
product skew numbers.
Brandford, Inc., was started by three childhood friends. Everyone they have hired has fit with the personalities of the three owners. In its 20 years of operation, no one has quit or been fired, and friends or relatives of employees are often hired when the company needs to grow. The friendship and camaraderie among employees at all levels of Brandford has given it capabilities that would be costly to imitate because of:
social complexity.
An attractive industry has all of the following EXCEPT:
suppliers and buyers with strong bargaining power.
When a company like Walmart announces that its goal is to produce zero waste and to use 100 percent renewable energy to power its operations, it is referring to positive practices in its _____ segment.
sustainable physical environment
The firm's capacity to borrow and its ability to generate funds internally are _____ resources.
tangible, financial
