MAN 4723 Exam 3

Informational control systems are concerned with which of the following? a. Is the organization doing things correctly? b. Is the organization viable? c. Is the organization doing what is right? d. Are rules and regulations being followed?

Is the organization doing what is right? In the contemporary approach, there are two different types of strategic control: informational control and behavioral control. Informational control is primarily concerned with whether the organization is doing the right things.

In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would be a consideration for the Unity of Command school of thought? a. CEO duality results in improved leadership efficiency and effectiveness. b. CEO duality leads to confusion in the decision-making process. c. CEO duality decreases the responsiveness of the leadership to shareholder needs. d. CEO duality does not provide clear focus on objectives and operations.

a. CEO duality results in improved leadership efficiency and effectiveness. CEO duality is one of the most controversial issues in corporate governance. It refers to the dual leadership structure where the CEO acts simultaneously as the chair of the board of directors. Advocates of the unity of command perspective believe when one person holds both roles, he is able to act more efficiently and effectively. CEO duality provides firms with a clear focus on both objectives and operations as well as eliminates confusion and conflict between the CEO and the chairman. Thus, it enables smoother, more effective strategic decision making. Holding dual roles as CEO/chairman creates unity across company managers and board of directors and ultimately allows the CEO to serve the shareholders even better. Having leadership focused in a single individual also enhances responsiveness and ability for the firm to secure critical resources. This perspective maintains that separating the two jobs may produce all types of undesirable consequences. CEOs may find it harder to make quick decisions. Ego-driven chief executives and chairmen may squabble over who is ultimately in charge. The shortage of first-class business talent may mean that bosses find themselves second-guessed by people who know little about the business.

The traditional approach to strategic control is sequential. Which of the following is not one of the steps in the sequence? a. Lower and middle management set strategic corporate goals. b. Performance is measured against the predetermined goal. c. Strategies are implemented. d. Strategies are formulated, and top management sets goals.

a. Lower and middle management set strategic corporate goals. The traditional approach to strategic control is sequential: (1) strategies are formulated and top management sets goals, (2) strategies are implemented, and (3) performance is measured against the predetermined goal set.

Which of the following statements about ethical organizations is true? a. There are many potential benefits of an ethical organization, but they often are indirect b. Ethical values do not shape the search for opportunities. c. Organizational ethics rarely define what a company is and what it stands for. d. Ethics provide a non-unifying framework across the organization.

a. There are many potential benefits of an ethical organization, but they often are indirect The ethical organization is characterized by a conception of ethical values and integrity as a driving force of the enterprise. Ethical values shape the search for opportunities, the design of organizational systems, and the decision-making process used by individuals and groups. They provide a common frame of reference that serves as a unifying force across different functions, lines of business, and employee groups. Organizational ethics help to define what a company is and what it stands for. There are many potential benefits of an ethical organization, but they are often indirect

JAB Holding Co., used ________ to change its focus from a diversified holding company to a more focused beverage and food firm. a. acquisitions b. logistics c. operations d. shareholder value

a. acquisitions JAB Holding Co., a Luxembourg-based holding company, has long invested in a widely diversified set of companies. In recent years, JAB has reoriented its diversification strategy and has spent over $60 billion in acquiring firms. This acquisition frenzy has also brought a more refined focus to the firm's diversification strategy; coffee, bakeries, and soft drinks. In re-orienting from a diversified holding company to a more focused beverage and food firm, JAB is creating opportunities to extract value from its acquisition of these firms.

Leaders play a key role in ________ organization culture. a. changing b. categorizing c. reporting d. Regulating

a. changing Leaders play a key role in changing, developing, and sustaining organizational culture.

Common sources of new business opportunities include ________, ________, and ________. a. current work experiences, suggestions by friends, chance event b. past work experiences, suggestions by family, potential work c. future work experiences, suggestions by friends, chance events d. current work experiences, suggestions by family, luck

a. current work experiences, suggestions by friends, chance event For new business startups, opportunities come from many sources including current or past work experiences, hobbies that grow into businesses or lead to inventions, suggestions by friends or family, or a chance event that makes an entrepreneur aware of an unmet need.

Elements of a multidomestic strategy may facilitate the competitive advantage of ________ by decreasing shipping and transportation costs inherent in local production. a. decentralization b. centralization c. uniformity d. homogeneity

a. decentralization A multidomestic strategy is one of decentralization, meaning more likelihood of local production. One benefit of this is reduced shipping and transportation costs.

Which of the following is not a reason for the rise in regional expansion? a. decrease in the number of trading blocs and free trade zones b. increase in the number of local customers c. decreasing national trade restrictions d. decreasing value of local taxes and tariffs

a. decrease in the number of trading blocs and free trade zones Another reason for regional expansion is the rise of the trading blocs and free trade zones. A number of regional agreements have been created that facilitate the growth of business within these regions by easing trade restrictions and taxes and tariffs.

Functional types of organizational structure permit a firm to ________ its coordination and control within each of the functional areas. a. enhance b. leverage c. pool d. Establish

a. enhance By bringing together specialists into functional departments, a firm is able to enhance its coordination and control within each of the functional areas.

Deciding upon the most appropriate structure when a firm has international operations depends on the a. extent of international expansion. b. strategic objectives. c. mission. d. degree of market diversity.

a. extent of international expansion. Deciding upon the most appropriate structure when a firm has international operations depends on three primary factors: the extent of international expansion, type of strategy (global, multidomestic, or transnational), and the degree of product diversity.

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with no pressure for local adaptation? a. global strategy b. international strategy c. multidomestic strategy d. transnational strategy

a. global strategy A global strategy would be the best pure choice for a company to make in its quest to compete in the global marketplace, if pressures to lower costs are high but pressures for local adaptation are low.

A simple structure is characterized by a. highly centralized decision making. b. high specialization of tasks. c. low formality and low creativity. d. high formality and low centralization.

a. highly centralized decision making. The simple organizational structure is the oldest, and most common, organizational form. Most organizations are very small and have a single or very narrow product line in which the owner-manager makes most of the decisions. Decision making is highly centralized and there is little specialization of tasks.

In order to fully leverage the talents of the best and brightest employees, a firm should be concerned with a. hiring, retention, and training. b. hiring, firing, and redistribution. c. rewards, training, and customer support. d. rewards, training, and customer support.

a. hiring, retention, and training. Hiring is only the first of three processes in which all successful organizations must engage to build and leverage their human capital. Firms must also develop employees to fulfill their full potential to maximize their joint contributions. Finally, the first two processes are for naught if firms cannot provide the working environment and intrinsic and extrinsic rewards to retain their best and brightest.

The form of entry strategy into international operations that offers the ________ level of control for the domestic corporation would be exporting. a. lowest b. highest c. best d. worst

a. lowest The various types of entry form a continuum ranging from exporting (low investment and risk, low control) to a wholly owned subsidiary (high investment and risk, high control).

Pandora pioneered a new way to broadcast music. This kind of breakthrough of creating ________ ways to solve old problems or meeting customer needs in a ________ new way is referred to as a pioneering new entry. a. new; unique b. incremental; differentiated c. differentiated; differentiated d. focused; focused

a. new; unique Pandora pioneered a new way to broadcast music. This kind of breakthrough of creating new ways to solve old problems or meeting customer needs in a unique new way is referred to as a pioneering new entry.

Whereas ________ innovations are often associated with a low-cost leader strategy, product innovations are frequently an important aspect of a differentiation strategy. a. process b. service c. radical d. management

a. process Process innovations are often associated with overall cost leader strategies because the aim of many process improvements is to lower the costs of operations. Product innovations are commonly associated with a differentiation strategy. Firms that differentiate by providing customers with new products or services that offer unique features or quality enhancements often engage in product innovation.

Divesting of businesses can accomplish many different objectives, except a. providing the firm with fewer resources to spend on more attractive alternatives. b. enabling managers to focus their efforts more directly on the core businesses of the firm. c. raising cash to help fund existing businesses. d. providing the firm with increased cash resources.

a. providing the firm with fewer resources to spend on more attractive alternatives. Divesting a business can accomplish many different objectives including: enabling managers to focus their efforts more directly on the core businesses of the firm, providing the firm with more resources to spend on more attractive alternatives, and raising cash to help fund existing businesses.

Opportunity recognition is the process of identifying, ________, and developing new venture opportunities. a. selecting b. categorizing c. eliminating d. brainstorming

a. selecting To determine which ideas are strong enough to become new ventures, entrepreneurs must go through a process of identifying, selecting, and developing potential opportunities. This is the process of opportunity recognition.

Strategic considerations for corporate entrepreneurship include ________ and ________. a. strengthening competitive position; obtaining above average returns b. adding to the resource base of the corporation; leveraging stakeholder commitment c. strengthening competitive position; enhancing markets d. expanding capabilities through learning; exiting markets

a. strengthening competitive position; obtaining above average returns Corporations expect a higher return from corporate venturing projects than from normal operations. But there are other important strategic considerations as well that are not financial. These include undertaking a corporate venture to strengthen the competitive position, enter into new markets, expand capabilities by learning and acquiring new knowledge, and build the base of corporation resources and experience.

Differentiation is often associated with ________ brand identify, ________ cost of advertising, and ________ innovation. a. strong; expensive; superior b. weak; inexpensive; superior c. strong; inexpensive; inferior d. strong; expensive; inferior

a. strong; expensive; superior There are several factors that make it more difficult for new ventures to be successful as differentiators. For one thing, the strategy is generally thought to be expensive to enact. Differentiation is often associated with strong brand identity, and establishing a brand is usually considered to be expensive because of the cost of advertising and promotion, paid endorsements, exceptional customer service, etc. Differentiation successes are sometimes built on superior innovation or use of technology. These are also factors where it may be challenging for young firms to excel relative to established competitors.

Industries in which proportionally more value is added in ________ activities, such as logistics, are more likely to benefit from a global strategy. a. upstream b. downstream c. marketing d. sales

a. upstream Primary activities that are downstream (e.g., marketing and sales, and service), or closer to the customer, tend to require more decentralization in order to adapt to local market conditions (a multidomestic strategy). Primary activities that are upstream (e.g., logistics and operations), or further away from the customer, tend to be centralized (a global strategy). This is because there is less need for adapting these activities to local markets and the firm can benefit from economies of scale.

Behavioral controls are aspects of strategic change that involve finding the appropriate balance and ________ among the culture, rewards, and boundaries of the firm a. alignment b. measure c. outcome d. Performance

alignment Strategic control is the process of monitoring and correcting the strategy and performance of a firm. Two central aspects of strategic control are informational control (the ability to respond effectively to environmental change) and behavioral control (the appropriate balance and alignment among the culture, rewards, and boundaries of a firm).

________ capital can be defined as the difference between the market value and book value of a firm, or a measure of its intangible assets. a. Human b. Intellectual c. Social d. Personal

b. Intellectual Many writers have defined intellectual capital as the difference between the market value and book value of a firm, a measure of the value of its intangible assets. This broad definition includes assets such as reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees.

________ barriers are conflicts arising from power relationships. a. Systemic b. Political c. Behavioral d. Entry

b. Political Political barriers refer to conflicts arising from power relationships. This can be the outcome of a myriad of symptoms such as vested interests, refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences.

For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? a. The new business must be similar to existing businesses to benefit from a core competence. b. The competence must help the business change its market position relative to its competition. c. The collection of competencies should be unique, so that they cannot be easily imitated. d. The new business must create superior value.

b. The competence must help the business change its market position relative to its competition. For a core competence to create value and provide a viable basis for synergy among the businesses in a corporation, it must meet three criteria: the core competence must enhance competitive advantage by creating superior customer value; different businesses in the corporation must be similar in at least one important way related to the core competence; and the core competencies must be difficult for competitors to imitate or find substitutes for.

To minimize the temptation for managers to act in their own self-interest, governance mechanisms exist for implementation consideration. Which of the following is a primary means for monitoring managerial behavior? a. stakeholder activism in which participants view themselves as shareholders b. a board of directors that acts in the best interests of shareholders to create long-term value c. a board of directors that acts in the best interests of shareholders to create short-term value d. managerial incentives to align management interests with those of the board of directors

b. a board of directors that acts in the best interests of shareholders to create long-term value First, there are two primary means of monitoring the behavior of managers which include: (1) a committed and involved board of directors that acts in the best interests of the shareholders to create long-term value and (2) shareholder activism, wherein the owners view themselves as shareowners instead of shareholders and become actively engaged in the governance of the corporation. Finally, there are managerial incentives, sometimes called contract-based outcomes, which consist of reward and compensation agreements. Here the goal is to carefully craft managerial incentive packages to align the interests of management with those of the stockholders.

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following, except a. fluctuating exchange rates. b. customer needs, interests, and tastes becoming increasingly similar. c. consumers around the world increasingly willing to trade off idiosyncratic preferences in product features for lower price. d. manufacturing trends allowing a decline in the minimum volume required to reach acceptable production level efficiency.

b. customer needs, interests, and tastes becoming increasingly similar. A decentralized strategy such as that seen within the multidomestic organization, allows for greater adaptation at the local level, which would not be necessary if customers were becoming more homogenous.

As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on boundaries and constraints would be a. effective. b. dysfunctional. c. recommended. d. Ideal.

b. dysfunctional. As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on rigid strategies, rules, and regulations is dysfunctional. In this context, rules that specify behaviors that are acceptable and unacceptable are known as boundaries and constraints.

In the contemporary approach to control systems, benefits of continuous monitoring include which one of the following? a. dramatically increased time lags b. early detection of changes in the competitive environment c. reduced organizational flexibility d. increased organization response time

b. early detection of changes in the competitive environment In the contemporary approach, information control is part of an ongoing process of organizational learning that continuously updates and challenges the assumptions that underlie the strategy of the organization. The benefits of continuous monitoring include: time lags are dramatically shortened; changes in the competitive environment are detected earlier; and the ability of the organization to respond with speed and flexibility is enhanced.

Which component of emotional intelligence (EI) involves awareness of cultural and ethnic differences? a. self-awareness b. empathy c. social skills d. self-regulation

b. empathy Empathy means thoughtfully considering employee feelings, along with other factors, in the process of making intelligent decisions. Globalization typically involves cross-cultural dialogue that can easily lead to miscues. Empathetic people are attuned to the subtleties of body language; they can hear the message beneath the words being spoken. They have a deep understanding of the existence and importance of cultural and ethnic differences.

Diversification initiatives include all of the following except a. mergers and acquisitions. b. employee rewards. c. strategic alliances. d. joint ventures.

b. employee rewards.

Multidomestic strategies are driven by political and cultural imperatives requiring managers within each country to respond to local conditions. An appropriate structure for these kinds of firms and their products and market diversity increases would be a a. worldwide functional. b. geographic area division. c. worldwide product division. d. worldwide matrix division.

b. geographic area division. Multidomestic strategies are driven by political and cultural imperatives requiring managers within each country to respond to local conditions. As such, it is likely to benefit from a geographic area division structure.

A(n) ________ new entry is used by entrepreneurs who see products or business concepts that have been successful in one market niche and introduce the same product in another segment of the market. a. adaptive b. imitative c. proactive d. pioneering

b. imitative Imitators look for opportunities to capitalize on proven market successes. An imitative new entry strategy is used by entrepreneurs who see products or business concepts that have been successful in one market niche or physical locale and introduce the same basic product or service in another segment of the market.

The push for outsider dominance on boards has the benefit of including more ________ oversight of the CEO and the company strategy. a. internal b. independent c. biased d. Superficial

b. independent This push for outsider dominance on boards has a number of benefits, including more independent oversight of the CEO and the company strategy.

Products are unfamiliar to consumers in the ___________ stage of a business life cycle. a. growth b. introduction c. maturity d. decline

b. introduction In the introduction stage, products are unfamiliar to consumers. Market segments are not well defined, and product features are not clearly specified. The early development of an industry typically involves low sales growth, rapid technological change, operating losses, and the need for strong sources of cash to finance operations. Since there are few players and not much growth, competition tends to be limited.

Real options analysis is appropriate to use when ________; a ________ investment up front can be followed by subsequent investments. a. investments can be staged; larger b. investments can be staged; smaller c. decisions are complex; large d. decisions are not complex; large

b. investments can be staged; smaller ROA is appropriate to use when investments can be staged; a smaller investment up front can be followed by subsequent investments. Real options can be applied to an investment decision that gives the company the right, but not the obligation, to make follow-on investments.

Functional structures are usually found in organizations where there a. are unrelated service offerings. b. is a single or closely related product. c. is no vertical integration. d. exists a strong need to decentralize decision making.

b. is a single or closely related product. Functional structures are generally found in organizations in which there is a single or closely related product or service, high production volume, and some vertical integration.

Which of the following is not a reason that company competitive advantage can be eroded? a. rapid change in technology b. length of time a company is in business c. globalization d. actions by rivals from within and outside of the industry

b. length of time a company is in business Nothing is forever when it comes to competitive advantages. Rapid changes in technology, globalization, and actions by rivals from within and outside of the industry can quickly erode company advantages. It is becoming increasingly important to recognize that the duration of competitive advantages is declining, especially in technology intensive industries.

Instant rewards reinforce desired behavior. Annual raises are ________ effective in reinforcing behavior because there is too much time between the behavior and the reward. a. more b. less c. as d. never

b. less Research suggests that compensation is most effective in motivating behavior when the reward comes immediately after the desired behavior. Instant rewards reinforce the desired behavior, while annual raises are less effective in reinforcing behavior because there is too much time between the behavior and the reward.

External governance control mechanisms include ________ and ________. a. public activists; competitors b. market for corporate control; governmental regulatory bodies c. analysts; accountants d. media; competitors

b. market for corporate control; governmental regulatory bodies External governance control mechanisms include the market for corporate control, auditors, governmental regulatory bodies, banks and analysts, media, and public activists.

Emphasis on process design is high during the __________ stage of the industry life cycle. a. introduction b. maturity c. growth d. decline

b. maturity In the maturity stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.

The ________ organization becomes a central hub surrounded by networks of outside suppliers and specialists, and parts can be added or taken. a. virtual b. modular c. barrier-free d. bounded

b. modular The modular organization becomes a central hub surrounded by networks of outside suppliers and specialists and parts can be added or taken away. Both manufacturing and service units may be modular.

Business incubators support fledgling start-ups and are often used to pursue specific entrepreneurial ventures developed by a. strategic partners. b. new venture groups. c. product champions. d. lower-level managers.

b. new venture groups. Business incubators are designed to hatch new businesses. They are a type of corporate new venture group with a somewhat more specialized purpose, to support and nurture fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses.

If primary value-chain activities involve effective management of inbound logistics and support activities include increased efforts in technology development, this is representative of which type of competitive advantage? a. differentiation b. overall cost leadership c. stuck-in-the-middle d. differentiation focus

b. overall cost leadership Examples of overall cost leadership within primary value-chain activities may involve the effective layout of receiving dock operations (inbound logistics) and support value-chain activities may include expertise in process engineering (technology development).If a firm achieves above-average returns despite intense rivalry, it is likely to be using __________ strategy.If a firm achieves above-average returns despite intense rivalry, it is likely to be using __________ strategy.If a firm achieves above-average returns despite intense rivalry, it is likely to be using __________ strategy.

When launching a new venture, finding a way to begin doing business must quickly generate cash flow, build credibility, attract good employees, and ________ the liability of newness. a. embrace b. overcome c. adapt to d. reward

b. overcome One of the most challenging aspects of launching a new venture is finding a way to begin doing business that quickly generates cash flow, builds credibility, attracts good employees, and overcomes the liability of newness. The idea of an entry strategy or entry wedge describes several approaches that firms may take to get a foothold in a market.

Intense rivalry involving actions and responses among ________ competitors vying for the same customers in a marketplace is known as ________. a. different; resource similarity b. similar; competitive dynamics c. similar; threat of substitutes d. diverse; pioneering new entry

b. similar; competitive dynamics Competitive dynamics is the term for an intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace.

Rivalry is intense in nations with conditions of ________ supplier bases, ________ consumer demand, and ________ new entrant potential from related industries. a. weak; weak; high b. strong; strong; high c. strong; strong; low d. weak; weak; low

b. strong; strong; high Rivalry is particularly intense in nations with conditions of strong consumer demand, strong supplier bases, and high new entrant potential from related industries. This competitive rivalry increases the efficiency with which firms develop, market, and distribute products and services within the home country.

The downsides or limitations of mergers and acquisitions include all the following except a. difficulties exist in integrating the activities and resources of the acquired firm into ongoing operations. b. there can be many cultural issues that can doom an otherwise promising acquisition. c. premiums that are paid to acquire a business are too small.

b. there can be many cultural issues that can doom an otherwise promising acquisition. There are several limitations of mergers and acquisitions including difficulties integrating the acquirer and target firms, cultural differences between the two firms, competing firms imitating the advantages or copying the synergies that result from the merger or acquisition, and manager egos getting in the way of sound business decisions. However, paying too little for an acquisition is never a downside for an acquisition. In contrast, firms often pay too much, too high a premium, in order acquire another firm.

Initiatives to develop human capital should be directed __________ to maintain a competitive advantage in the current knowledge economy. a. at the employees themselves b. throughout the firm at all levels c. at human resource departments d. at top managers

b. throughout the firm at all levels It is not enough to hire top level talent and expect that the skills and capabilities of those employees remain current throughout the duration of their employment. Rather, training and development must take place at all levels of the organization.

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a ________ or ________ in order to compete in the global marketplace. a. global strategy; multidomestic strategy b. transnational strategy; global strategy c. international strategy; multidomestic strategy d. international strategy; transnational strategy

b. transnational strategy; global strategy The two opposing pressures result in four different basic strategies that companies can use to compete in the global marketplace: international, global, multidomestic, and transnational. The strategy that a firm selects depends on the degree of pressure that it is facing for cost reductions and the importance of adapting to local markets. When firms are faced with high pressures to lower costs, the global strategy and the transnational strategy would be most appropriate.

Which of the following is not a risk associated with a global strategy? a. A firm with only one manufacturing location must export its product, sometimes at great distance from the operation. b. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. c. A firm with only one manufacturing location must import its product.Correct d. Concentrating an activity in a single location makes the rest of the firm dependent on that location.

c. A firm with only one manufacturing location must import its product. Some risks associated with a global strategy include: if a firm has only one manufacturing facility, it must export its output to other markets, some of which may be a great distance from the operation; the geographic concentration of any activity may also tend to isolate that activity from the targeted markets; concentrating an activity in a single location also makes the rest of the firm dependent on that location.

________ is when there are circumstances in which the best competitive reaction is no reaction at all. a. Collusion b. Fast track c. Forbearance d. Co-opetition

c. Forbearance There may be many circumstances in which the best reaction is no reaction at all. This is known as forbearance-refraining from reacting at all as well as holding back from initiating an attack. The decision of whether a firm should respond or show forbearance is not always clear.

What happens when subcultures emerge that have shared values opposite from the dominant culture of an organization? a. Organizational cohesiveness tends to increase. b. Information is likely to be shared more easily. c. Individuals lose sight of overall goals and begin working at cross-purposes. d. Individuals gain a better understanding of the overall goals of the organization.

c. Individuals lose sight of overall goals and begin working at cross-purposes. Subcultures within organizations may reflect differences among functional areas, products, services, and divisions. To the extent that reward systems reinforce such behavioral norms, attitudes, and belief systems, cohesiveness is reduced; important information is hoarded rather than shared, individuals begin working at cross-purposes, and they lose sight of overall goals.

Which of the following is not a motivation for a company to pursue international expansion? a. It wishes to increase the size of the potential markets for its products and services. b. It wishes to take advantage of arbitrage opportunities in order to increase profit. c. It wishes to decrease foreign market penetration by developing products for the home market. d. It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk.

c. It wishes to decrease foreign market penetration by developing products for the home market. There are many motivations for a company to pursue international expansion. The most obvious one is to increase the size of potential markets for its products and services. A second reason is that the company can take advantage of arbitrage opportunities. A third reason is that a company wishes to enhance the growth rate of a product that is in its maturity state in the home country. A fourth reason is that the company wishes to benefit from optimizing the physical location for every activity in its value chain. A fifth reason is that possibilities exist for reverse innovation, whereby a company develops new products for emerging markets that have adequate functionality at a low cost and then often are introduced to the home country after successfully penetrating the emerging market.

For businesses facing complex and turbulent business environments, which of the following is true? a. Goals and objectives that are uncertain prevent opportunism. b. Complacency about predetermined milestones can prevent adaptability. c. Traditional strategic controls are not very effective. d. Detailed plans are needed to maintain order.

c. Traditional strategic controls are not very effective. Traditional control systems are most appropriate when the environment is stable and relatively simple, goals and objectives can be measured with a high level of certainty, and there is little need for complex measures of performance.

An entrepreneurial startup can be successful, if three ingredients are critical. What are they? a. good ideas, a team of investors, and a business plan b. management, marketing, and money c. a viable opportunity, available resources, and a qualified and motivated founding teamCorrect d. an opportunity, a marketing plan, and office space

c. a viable opportunity, available resources, and a qualified and motivated founding teamCorrect Beyond merely identifying a venture concept, the opportunity recognition process also involves organizing the key people and resources that are needed to go forward. The three factors that are needed, therefore, to successfully proceed are opportunity, resources, and entrepreneur(s).

A company might launch new competitive actions to improve market position, ________ on growing demand, ________ productive capacity, provide an innovative new solution, or obtain first mover advantages. a. concentrate; expand b. concentrate; reduce c. capitalize; expand d. capitalize; reduce

c. capitalize; expand There are several reasons why companies launch new competitive actions, including to improve market position, capitalize on growing demand, expand production capacity, provide an innovative new solution, or obtain first mover advantages.

Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce other non-related products. This skillset is a/an a. economy of scope. b. strategic resource. c. core competency. d. shared activity.

c. core competency. Core competencies reflect the collective learning in organizations, which is how to coordinate diverse production skills, integrate multiple streams of technologies, and market diverse products and services. In some circumstances, a core competence can create value and provide a viable basis for synergy among the businesses in a corporation. Casio, a giant electronic products producer, synthesizes its abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. These are the same skills it applies to design and production of its miniature card calculators, digital cameras, pocket electronic dictionaries, and other small electronics.

Josh Silverman brought change to Etsy by reorienting the company focus. He changed the stakeholder priority to that of the ________; he ________ the projects the firm focused on. a. merchant; increased b. external grounds; increased c. customer; narrowed d. customer; doubled

c. customer; narrowed Silverman has initiated a dramatic turnaround in the firm. He reoriented the company focus in two key ways. First, he changed how the firm prioritized its stakeholders. Silverman switched it around and made customers the primary stakeholder the firm would focus on. Second, he narrowed down the projects the firm focused on. He saw that the firm had stretched itself way too thin by chasing after low revenue initiatives.

Added insight and cultural sensitivity, and heterogeneity in decision making and problem solving are some of the arguments supporting ________ in the workplace. a. role playing b. brainstorming c. diversity d. social network analysis

c. diversity Sound management of diverse workforces can improve organization effectiveness in many ways. For multinational firms, the insight and cultural sensitivity that members with roots in other countries bring to marketing efforts will be very useful. A similar rationale applies to subpopulations within domestic operations. Heterogeneity in decision-making and problem-solving groups typically produces better decisions because of a wider range of perspectives as well as more thorough analysis.

A strategy of related diversification requires a need to reorganize around product lines or geographic markets. This is likely to result in a ________ structure. a. functional b. matrix c. divisional d. worldwide

c. divisional A firm with a functional structure may see its initial markets mature, so it looks beyond its present products and markets for possible expansion. A strategy of related diversification requires a need to reorganize around product lines or geographic markets. This leads to a divisional structure.

One of the ways entrepreneurs achieve success is by using resources more ________. This is an example of how entrepreneurs use ________ strategy. a. effectively; an imitative b. wisely; a combination c. efficiently; a low-cost leader d. reasonably; a differentiation

c. efficiently; a low-cost leader One of the ways entrepreneurial firms achieve success is by doing more with less. By holding down costs or making more efficient use of resources than larger competitors, new ventures are often able to offer lower prices and still be profitable. Thus, under the right circumstances, a low-cost leader strategy is a viable alternative for some new ventures.

Engineering drawings, software code, and patents are examples of a. socially complex processes. b. tacit knowledge. c. explicit knowledge. d diversification processes.

c. explicit knowledge. Explicit knowledge is codified, documented, easily reproduced, and widely distributed, such as engineering drawings, software code, and patents.

In addition to ________ the right markets for the corporate entrepreneurship efforts of the firm, the firm also needs to decide how it will ________ its corporate entrepreneurship efforts. a. bribing; pay for b. bribing; arrange c. identifying; organize for d. identifying; minimize

c. identifying; organize for In addition to identifying the right markets for the corporate entrepreneurship efforts of the firm, the firm also needs to decide how it will organize for its corporate entrepreneurship efforts.

Many leaders have difficulty implementing their vision and strategies. Such problems may stem from a variety of issues in the design of the organization such as a. sufficient mechanisms that integrate and coordinate activities across the firm. b. adequate accountability among managers and employees. c. inappropriate budgeting and control systems. d. teams, systems, and organizational processes that facilitate implementation.

c. inappropriate budgeting and control systems. Many leaders have difficulty implementing their vision and strategies. Such problems may stem from a variety of issues in the design of the organization such as: a lack of understanding of responsibility and accountability among managers, reward systems that do not motivate individuals (or collectives such as groups and divisions) toward desired organizational goals, inadequate or inappropriate budgeting and control systems, or insufficient mechanisms to integrate activities across the organization.

When an organization with a simple structure ________ its sales revenue and volume of outputs, it typically moves to a functional structure. a. distributes b. decreases c. increases d. Depletes

c. increases A new firm with a simple structure typically increases its sales revenue and volume of outputs over time. It may also engage in some vertical integration to secure sources of supply (backward integration) as well as channels of distribution (forward integration). The simple-structure firm then implements a functional structure to concentrate efforts on both increasing efficiency and enhancing its operations and products.

Airbus decided to build production capacity in China by manufacturing airplanes and working with many Chinese suppliers. What is the biggest risk the company faces with this decision? a. lower international sales b. increased competition c. intellectual property theft d. local strikes

c. intellectual property theft Building production capacity in locations outside of Europe may also threaten intellectual property rights protection, an issue typically raised when investing in China. Airbus does not partner directly with the China state-run aerospace company Commercial Aircraft Corporation of China (Comac) to minimize the risks of unwanted technology transfers to an emerging competitor in the global aerospace industry. However, Airbus does manufacturer airplanes in China and works with many Chinese suppliers. Merely investing and operating in China may lead to knowledge transfers that can help the Communist Party's goal of supplying 10 percent of the Chinese airplane market with Chinese planes by 2025.

Multinational firms are constantly faced with the dilemma of choosing between ________ and ________. a. local adaptation; local integration b. global adaptation; local integration c. local adaptation; global integration d. global adaptation; global integration

c. local adaptation; global integration Some governments make better use of inflows of foreign investment and know-how than others. Explanations include the need of governments to have track records of business-friendly policies to attract multinationals and local entrepreneurs to train workers, invest in modern technology, and nurture local suppliers and managers. Also, it means carefully managing the broader economic factors in an economy, such as interest rates, inflation, and unemployment.

Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds? a. cost surgery b. asset reduction c. market expansion d. piecemeal productivity improvements

c. market expansion A study of 260 mature businesses in need of a turnaround identified three strategies used by successful companies: asset and cost surgery, selective product and market pruning, and piecemeal productivity improvements.

Coca-Cola launched 500 drinks around the world, some of which are truly unique. The Indian Coke subsidiary launched a chunky mango juice. This is an example of a ________ strategy. a. national b. downstream c. multidomestic d. upstream

c. multidomestic A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy. When companies enter foreign markets, they often face distinctly different consumer tastes. One of the ways multinational company Coca-Cola adapted its product offerings to foreign markets was to have international subsidiaries launch more local flavors such as the chunky mango juice offered by the Indian subsidiary of Coca-Cola.

These kinds of companies create value through management expertise in areas such as budgeting, planning, procurement, and human resource management. a. restructured b. leveraged c. parent d. competition

c. parent Parent companies create value through management expertise. They improve plans and budgets and provide especially competent central functions such as legal, financial, human resource management, and procurement. They also help subsidiaries make wise choices in their own acquisitions, divestitures, and new internal development decisions.

Product innovation refers to efforts to create designs and applications of technology to develop new products, while ________ innovation refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations a. radical b. breakthrough c. process d. service

c. process Product innovation refers to efforts to create product designs and applications of technology to develop new products for end users. Process innovation, by contrast, is typically associated with improving the efficiency of an organizational process, especially manufacturing systems and operations.

BCG authors Stalk and Lachenauer published a book in which they listed competitive strategy for winning against incumbent rivals. These included devastate profit sanctuaries of rivals; ________ competitor costs; plagiarize with pride; ________ the competition; and unleash massive and overwhelming force. a. increase; disguise b. lower; excite c. raise; deceive d. lower; eliminate

c. raise; deceive But competitive attacks come from many sources besides new entrants. Some of the most intense competition is among incumbent rivals intent on gaining strategic advantages. Winners in business play rough and don't apologize for it, according to Boston Consulting Group authors George Stalk, Jr. and Rob Lachenauer in their book Hardball: Are You Playing to Play or Playing to Win? Their five strategies are: devastate profit sanctuaries of rivals, plagiarize with pride, deceive the competition, unleash massive and overwhelming force, and raise costs of competitors.

Primary participants in corporate governance are ________, ________, and ________. a. management; stakeholders; community b. employees; management; board of directors c. shareholders; management; board of directors d. CEO; outside stakeholders; board of directors

c. shareholders; management; board of directors The primary participants in corporate governance are: the shareholders, the management (led by the CEO), and the board of directors.

The strategy that a firm chooses dictates such structural elements as the division of tasks, the need for integration of activities, and authority relationships within the organization. This implies that a. strategy can effectively be formulated without considering structural elements. b. structure typically has a very small influence on the strategy of a firm. c. structure follows strategy. d. strategy follows structure.

c. structure follows strategy. Often the relationship between strategy and structure strongly implies that structure follows strategy. The strategy that a firm chooses (e.g., related diversification) dictates such structural elements as the division of tasks, the need for integration of activities, and authority relationships within the organization.

As a manager, when faced with ethical crises you should a. focus on issues most relevant to stockholders only. b. wait for the other party to make the first move. c. take the initiative to address the problem. d. cover up as much as possible.

c. take the initiative to address the problem. Ethical leaders must take personal, ethical responsibility for their actions and decision making. Leaders who exhibit high ethical standards become role models for others and raise the overall level of ethical behavior of the organization.

Managers use __________ for developing human capital. a. the cascade approach b. the trickle-down approach c. training d. the synchronized method

c. training In addition to using training to develop human capital, firms must encourage widespread involvement, monitor and track employee development, and evaluate human capital.

Honda used to develop all technology in house but could no longer keep pace with changing technologies and the cost of developing new technologies. It chose to ________ to develop new technologies. a. use mergers b. hire more technical staff in house c. use strategic alliances d. change physical locations

c. use strategic alliances Strategy Spotlight 6.4 presents the case of Honda, a firm that used to develop all technology in house and is now leveraging multiple alliances to develop key technologies. Thus, changes in the environment and the rapid pace of technological change have led Honda to abandon its long-held desire of internally developing key technologies. Instead, Honda now relies on a range of partners to bring key advanced technologies that Honda needs to design and sell the autos of tomorrow.

Which of the following is an example of how organizational culture exerts behavioral control? a. Culture discourages individual identification with the organization by creating a framework of shared values. b. Culture sets a framework of shared values that discourages individual identification with the organization objectives. c. Culture sets explicit boundaries that discourage individual identification with the organization objectives. d. Culture sets implicit boundaries that encourage individual identification with the organization objectives.

d. Culture sets implicit boundaries that encourage individual identification with the organization objectives. Organizational culture is a system of shared values (what is important) and beliefs (how things work) that shape the people of a company, organizational structures, and control systems to produce behavioral norms (the way we do things around here). Culture sets implicit boundaries, unwritten standards of behavior, in dress, ethical matters, and the way an organization conducts its business. By creating a framework of shared values, culture encourages individual identification with the organization and its objectives.

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy? a. Consumers are willing to pay more for specific product features. b. Customer needs and interests are becoming more dissimilar. c. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. d. Multinational companies can successfully compete globally by aggressively pricing products and sacrificing features.

d. Multinational companies can successfully compete globally by aggressively pricing products and sacrificing features. Levitt advocated strategies that favored global products and brands. This approach rested on three key assumptions: customer needs and interests are becoming increasingly homogeneous worldwide; people around the world are willing to sacrifice preferences in product features, functions, design, and the like for lower prices at high quality; substantial economies of scale in production and marketing can be achieved through supplying global markets.

If a company is using a cost leadership strategy, which of the following potential pitfalls is not a characteristic of that strategy? a. Too much focus on one value-chain activity can lead to greater loss. b. Cost advantages erode when pricing information is readily available. c. A lack of parity on differentiation is evident. d. The strategy is not easily imitated.

d. The strategy is not easily imitated. Potential pitfalls of overall cost leadership strategy include too much focus on one or a few value-chain activities; all rivals share a common input of raw material; the strategy is imitated too easily; a lack of parity on differentiation; and erosion of cost advantages when the pricing information available to customers increases.

Which of the following is a reason for merger and acquisition failures? a. The acquiring company pays too low a price for the common stock of the target company. b. The acquired company assets are integrated into the acquiring company business lines. c. The acquisition leads to value creation. d. Top executives act in their best interests rather than those of the shareholders.

d. Top executives act in their best interests rather than those of the shareholders. Research shows that the vast majority of acquisitions result in value destruction rather than value creation. Many large multinational firms have also failed to effectively integrate their acquisitions, paid too high a premium for the common stock of the target company, or were unable to understand how the assets of the acquired firm would fit with their own lines of business. At times, top executives may not have acted in the best interests of shareholders. The motive for the acquisition may have been to enhance the power and prestige of the executive rather than to improve shareholder returns.

Disney now intends to compete with its former distributors, Netflix and Amazon, by becoming a ________ diversified, ________ integrated media player. a. vertically; vertically b. vertically; focused c. narrowly; focused d. broadly; vertically

d. broadly; vertically Disney is using a major acquisition and related actions to take on the new media challenge posed by Netflix, Amazon, and other streaming services. In taking charge of its own distribution and by purchasing 21st Century Fox, Disney is taking bold actions to become a broadly diversified, vertically integrated media player.

Contemporary approaches to strategic control rely primarily on ________ learning. a. controlled b. single-loop c. comparative learning d. double-loop

d. double-loop In the contemporary approach, information control is part of an ongoing process of organizational learning that continuously updates and challenges the assumptions that underlie the strategy of the organization. In such double-loop learning, the assumptions, premises, goals, and strategies of the organization are continuously monitored, tested, and reviewed.

Whereas product champions are willing to violate procedures and operate outside normal channels, ________ gather hard data and develop a strong case for why a project should be killed. a. entrepreneurial leaders b. financial managers c. marketing managers d. exit champions

d. exit champions Product champions are often thought to be willing to violate procedures and operate outside normal channels. Exit champions reduce ambiguity by gathering hard data and developing a strong case for why a project should be killed.

The Office of the United States Trade Representative placed Canada on a priority watch list of countries that fail to effectively enforce ________ rights due to counterfeiting. This is an example of potential risks of ________. a. intellectual property; nationalism b. national; international expansion c. international; international expansion d. intellectual property; international expansion

d. intellectual property; international expansion When a company expands its international operations, it does so to increase its profits or revenues. As with any other investment, however, there are also potential risks. In 2018, the Office of the United States Trade Representative (USTR) placed Canada, along with China, India, and Russia, on a priority watch list of countries that fail to effectively enforce intellectual property rights. Likewise, the U.S. Chamber of Commerce ranks Canada intellectual property rights regime closer to economies such as Mexico and Malaysia than to the United States and the European Union.

Platform businesses need to master all of the following except a. draw in users. b. create easy and informative customer interfaces. c. sequence the growth of the business. d. limit the use of data analytics in creating services.

d. limit the use of data analytics in creating services In order to succeed, platform businesses need to master drawing in users, creating easy and informative customer interfaces, sequencing the growth of the business, and facilitate the best connections between suppliers and customers using data analytics.

Corporate restructuring includes capital and asset restructuring as well as a. technology restructuring. b. procurement restructuring. c. global diversification. d. management restructuring.

d. management restructuring. Restructuring can involve changes in assets, capital structure, or management.

Atlas Door created its competitive advantages in the marketplace by doing all of the following except a. building just-in-time factories. b. reducing the time to receive and process an order. c. tightly controlling logistics so that it always shipped only fully complete orders. d. not emphasizing a differentiation strategy.

d. not emphasizing a differentiation strategy. Atlas Door created its competitive advantages in the marketplace by building just-in-time factories, reducing the time to receive and process an order, and by controlling logistics so that it always shipped only fully complete orders to construction sites.

If a firm achieves above-average returns despite intense rivalry, it is likely to be using __________ strategy. a. differentiation b. cost leadership focus c. differentiation focus d. overall cost leadership

d. overall cost leadership An overall low-cost position enables a firm to achieve above-average returns despite strong competition. It protects a firm against rivalry from competitors, because lower costs allow a firm to earn returns even if its competitors eroded their profits through intense rivalry. It protects firms against powerful buyers, who can only drive down prices to the level of the next most efficient producer. A low-cost position provides more flexibility to cope with supplier demands for input cost increases.

Human capital does not include the ________ of an individual. a. capabilities b. knowledge c. skills d. physical attributes

d. physical attributes Human capital is the individual capabilities, knowledge, skills, and experience of the company employees and managers. This knowledge is relevant to the task at hand, as well as the capacity to add to this reservoir of knowledge, skills, and experience through learning.

Companies use the tactic of ________ to give shareholders certain rights in the event of a takeover by another firm. a. greenmail b. golden parachute c. scorched earth d. poison pill

d. poison pill Poison pills are an antitakeover tactic used by a company to give shareholders certain rights in the event of a takeover by another firm. They are also known as shareholder rights plans.

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision? a. performance enhancement b. cost reduction c. political risk reduction d. political risk enhancement

d. political risk enhancement Optimizing the location for every activity in the value chain can yield one or more of three strategic advantages: performance enhancement, cost reduction, and risk reduction.

Innovative team firms should have managers who provide ________, ________, and perspective to the team. a. finances; awareness b. support; finances c. authority; structure d. support; guidance

d. support; guidance While teams should operate as independent entities, they should still work with managers on an ongoing basis. The manager should be there to provide support, guidance, and perspective to the team. An experienced manager can help facilitate communication with the rest of the organization, help the team see how their actions fit into the larger strategic goals of the organization, and can serve as a problem-solving expert.

New knowledge involves the continual interaction between ________ and ________ knowledge. a. intellectual, pragmatic b. detailed, tacit c. theoretical, practical d. tacit, explicit

d. tacit, explicit New knowledge is constantly created through the continual interaction of explicit and tacit knowledge. Consider two software engineers working together on a computer code. The computer code is the explicit knowledge.

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be a. the combined technical skills of the members. b. similarities in the age and experience of team members. c. similarities in the way team members solve problems. d. the degree to which they believed in one another and created an atmosphere of encouragement.

d. the degree to which they believed in one another and created an atmosphere of encouragement. The key difference between good teams and truly superior teams was the way members treated each other, the degree to which they believed in one another and created an atmosphere of encouragement rather than competition. Vision, talent, and motivation could carry a team only so far.

The industry life cycle is important because a. of its ability to serve as a short-run forecasting device. b. it points out the need to maintain a differentiation advantage and a low-cost advantage simultaneously. c. trends suggested by the market life cycle model are generally not reversible or repeatable. d. the emphasis on various generic strategies varies over the course of an industry life cycle.

d. the emphasis on various generic strategies varies over the course of an industry life cycle. Industry life cycles are important because the emphasis on various generic strategies, functional areas, value-creating activities, and overall objectives varies over the course of an industry life cycle.

Amazon is an example of a company that used the differentiation strategy to enter the market. The differentiation features included a. minimal customer service. b. traditional back office logistics. c. traditional delivery logistics. d. using a one-click online ordering system to make ordering simpler.

d. using a one-click online ordering system to make ordering simpler. As a bookseller, Amazon founder Jeff Bezos set out to use Internet technology to revolutionize the way books are sold. Bezos was not doing anything that had not been done before. But the two key differentiating features of doing it on the Internet and offering extraordinary customer service have made Amazon a differentiated success.

A profit pool can be defined as the total profits in an industry at all points along the industry ________ chain. a. supply b. market c. seller d. value

d. value A profit pool is defined as the total profits in an industry at all points along the industry value chain.