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Ortiz is a manager of BRS Corp. Ortiz's division did not meet financial targets this year. Ramirez, manager of another division, has indicated that Ortiz's division incurred significant costs which resulted in Ramirez's division setting record profits for the year. As a result, performance for BRS as a whole exceeded projections. Which pairing of organizational structures for BRS and bonus for Ortiz is most plausible? (A) Cooperative structure; no bonus due to failure to meet divisional target (B) Competitive structure; no bonus due to failure to meet divisional target (C) Cooperative structure; a bonus for increasing organizational performance (D) Competitive structure; a bonus for increasing organizational performance

C) Cooperative structure; a bonus for increasing organizational performance

Usually, large-block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. (A) 5 (B) 25 (C) 50 (D) 75

(A) 5

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits? (A) Aligning the corporate structure with the demands of global expansion (B) More accurate monitoring of the performance of each business (C) Dacilitating comparison between divisions (D) Stimulating managers of poorly performing divisions to look for ways of improving performance

(A) Aligning the corporate structure with the demands of global expansion

The Amos Ball Printing Company was established in 1866. Currently, Amos Ball V is the CEO and chairman of the board. The company has traditionally used a functional structure. Five years ago, the company branched into online publishing and small-batch printing in addition to its regular large-batch operations. Both new businesses are significantly different in technology and marketing from each other and from Ball's traditional business. Despite the hiring of experienced professionals in these new endeavors, performance continues to be poor and is affecting Ball's overall performance. Which of the following statements is TRUE? (A) Amos should consider adopting the multidivisional structure. (B) Mr. Ball has insufficient power to change the structure of the organization. (C) Restructuring must only be done from a position of strength, so it is necessary to wait until the company's overall performance improves before making radical changes. (D) These businesses are too disparate to coordinate within one corporate structure

(A) Amos should consider adopting the multidivisional structure.

____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. (A) Complementary strategic goals (B) Shared values (C) An entrepreneurial mind-set (D) Compatible organizational cultures

(A) Complementary strategic goals

______ is the degree to which rules and procedures govern work. (A) Formalization (B) Centralization (C) Specialization (D) Unification

(A) Formalization

____ involves internally developed incremental and novel innovations that result from deliberate efforts. (A) Internal corporate venturing (B) Autonomous strategic behaviors (C) Bottom-up strategic behaviors (D) Product championing

(A) Internal corporate venturing

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees. Which one of the following is true? (A) This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship. (B) This example shows the dysfunctional aspects of unrestricted entrepreneurialism. (C) This is an example of the lack of human capital hampering internal innovation. (D) Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.

(A) This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to: (A) align financial institutions' actions with society's interests. (B) increase the number of foreign firms listing on U.S. stock exchanges. (C) require CEOs to attest to the accuracy of their companies' financial reports. (D) increase consumer protection in pharmaceutical products.

(A) align financial institutions' actions with society's interests.

Value creation through internal innovation originates with: (A) an entrepreneurial mind-set. (B) cross-product development teams. (C) shared values and entrepreneurial leadership. (D) innovation

(A) an entrepreneurial mind-set.

The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for the past year. Now, at the end of the year, three of Transector's seven divisions have not met this rate-o- -return goal. The division managers of these three under-performing divisions have all secretly contacted executive-placement firms to investigate openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all-important at Transector. Transector probably uses the ______ structure. (A) competitive form of the multidivisional (B) SBU form of the multidivisional (C) worldwide geographic area (D) distributed strategic network

(A) competitive form of the multidivisional

The heavy use of integrative mechanisms in the ______ multidivisional organizational structure is intended to achieve _______. (A) cooperative; economies of scope (B) competitive; cost efficiencies (C) functional; sensitivity to cultural diversity (D) SBU; quick response to local customer needs

(A) cooperative; economies of scope

Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three years. It currently has a simple structure with Jared Smith, the ownermanager, making all major decisions. Jumbo is probably now experiencing or will soon experience: (A) coordination and control problems. (B) bureaucratic inefficiencies. (C) excessive competition among division managers. (D) limited communication among functional specialists

(A) coordination and control problems.

Walmart's effective strategy/structure configuration is: (A) cost leadership/functional. (B) differentiation/functional. (C) related constrained/multidivisional. (D) related linked/multidivisional.

(A) cost leadership/functional.

An agency relationship exists when one party delegates: (A) decision-making responsibility to a second party. (B) financial responsibility to employees. (C) strategy implementation actions to functional managers. (D) ownership of a company to a second party.

(A) decision-making responsibility to a second party.

The integrated cost leadership/differentiation strategy is difficult to implement mostly because: (A) different primary and support activities are emphasized when using cost leadership and differentiation strategies. (B) this strategic approach demands more flexibility than most firms can manage. (C) the dual reporting relationships required for this strategy slow organizational decision making. (D) the cost leadership strategy requires less structured job roles than does the differentiation strategy

(A) different primary and support activities are emphasized when using cost leadership and differentiation strategies.

Implementing the multi-domestic strategy requires decentralization to: (A) facilitate the tailoring of products to the demand in local markets. (B) develop economies of scale. (C) achieve economies of scope. (D) reduce bureaucracy and speed up decision making.

(A) facilitate the tailoring of products to the demand in local markets.

When used effectively, cross-functional teams will often bring about: (A) faster product development processes. (B) an increased need for additional information. (C) conflicting information about the business environment. (D) future cooperative alliances.

(A) faster product development processes.

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because: (A) firms must be flexible while retaining a degree of stability. (B) managers are never able to obtain all the information necessary to make the best selection. (C) the structure of a firm should not duplicate the structures of its competitors. (D) the environment changes too rapidly for corporations to maintain a consistent corporate structure

(A) firms must be flexible while retaining a degree of stability.

A virtually exclusive reliance on financial controls may occur when outsider-dominated Boards exist. This may lead to all of the following EXCEPT: (A) high executive turnover. (B) increased diversification of the firm. (C) excessive management compensation. (D) reduction in R&D expenditure.

(A) high executive turnover.

The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the Board of Directors with a proposal for: (A) increased diversification of Sierra Infusion. (B) the addition of outside directors to the Board. (C) increased shareholder participation in decision making. (D) greater concentration on Sierra's core industry.

(A) increased diversification of Sierra Infusion.

Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of: (A) incremental innovation. (B) invention. (C) imitation. (D) the use of social capital.

(A) incremental innovation.

A successful ____ innovation will be less risky but less profitable than a successful ____ innovation. (A) incremental; novel (B) novel; incremental (C) alliance-generated; acquisition-generated (D) acquisition-generated; alliance-generated

(A) incremental; novel

In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT: (A) integration. (B) performance appraisal. (C) resource allocation. (D) long-range planning.

(A) integration.

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with which Toyota has contracts for services. This results in the suppliers and Toyota (the strategic center firm) being more: (A) interdependent. (B) competitive with one another. (C) creative. (D) complementary.

(A) interdependent.

Blixin Concrete Products, an established firm, is seeking a technologically advanced partner for a strategic alliance. If the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably: (A) investment capital. (B) management expertise. (C) research and development competencies. (D) social networks.

(A) investment capital.

One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process: (A) is encouraged through a bottom-up or top-down process. (B) is encouraged by a product champion or an entrepreneur external to the organization. (C) relies on internal structure or existing strategy to encourage innovation. (D) is in a large or small organization.

(A) is encouraged through a bottom-up or top-down process.

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to: (A) make the partners' true loyalties and intentions unclear. (B) make the role of the strategic center firms more critical to alliance success. (C) distribute the alliances along several segments of the airline industry value chain. (D) be most effective when the alliances are with airlines headquartered in different nations.

(A) make the partners' true loyalties and intentions unclear.

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control. (A) opportunities; resources (B) opportunities; core competencies (C) threats; resources (D) threats; core competencies

(A) opportunities; resources

The idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of: (A) product champions. (B) joint ventures. (C) strategic leadership. (D) cross-functional teams.

(A) product champions.

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to: (A) reduce transaction costs. (B) increase negotiating leverage with suppliers. (C) become less dependent on its suppliers. (D) move toward horizontal alliances with its suppliers.

(A) reduce transaction costs.

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the ______ structure. (A) simple (B) functional (C) matrix (D) network

(A) simple

In most cases, the focus strategy is best managed using a ______ structure. (A) simple (B) functional (C) multidivisional (D) vertical

(A) simple

Organizational structure: (A) specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes. (B) specifies the firm's informal reporting relationships, procedures, controls, and authority and decision-making processes. (C) specifies the firm's formal value proposition, the markets it will serve, and how the firm will provide value in those markets. (D) specifies the firm's control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes.

(A) specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes.

A firm's ______ specifies the work to be done and how to do it given the firm's strategy or strategies. (A) structure (B) controls (C) culture (D) strategy

(A) structure

To be successful, an autonomous process for developing new products relies on: (A) the diffusion of tacit knowledge. (B) the acquisition of innovative firms. (C) strategic alliances with other firms. (D) internal corporate venturing.

(A) the diffusion of tacit knowledge.

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that: (A) the receiving party has adequate absorptive capacity to learn. (B) the communication process be highly intensive. (C) the knowledge be broken into the smallest comprehensible units. (D) training consultants be involved in every step of transference.

(A) the receiving party has adequate absorptive capacity to learn.

IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering its costs as well as understanding customer needs, especially younger ones. IKEA's international strategy is best described as ______, and the appropriate organizational structure to implement this strategy is the ______ structure. (A) transnational; combination (B) global; worldwide product divisional (C) multi-domestic; worldwide geographic area (D) competitive; strategic business unit multidivisional

(A) transnational; combination

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to: (A) use them without reducing cooperation among divisional managers. (B) transfer capital between units. (C) maintain an arms-length relationship between headquarters and the divisions. (D) identify which objective criteria to monitor

(A) use them without reducing cooperation among divisional managers.

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies? (A) A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. (B) A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. (C) An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination. (D) A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

(B) A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.

____ is the degree to which decision-making authority is retained at higher managerial levels. (A) Formalization (B) Centralization (C) Specialization (D) Unification

(B) Centralization

Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. Which of the following statements is most likely to be TRUE? (A) Agency costs at Amos Ball are high. (B) If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO. (C) At Amos Ball, the opportunity for managerial opportunism is high. (D) The functions of risk-bearing and decision making are separate at Amos Ball

(B) If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO.

Which of the following is NOT a variation of the multidivisional structure? (A) Competitive form (B) Regional form (C) Cooperative form (D) Strategic business unit form

(B) Regional form

Corporate governance revolves around the relationship between which two parties? (A) Shareholders and the Board of Directors (B) Shareholders and managers (C) The Board of Directors and managers (D) None of the the above

(B) Shareholders and managers

Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year. Which scenario is the MOST likely? (A) The poorest-performing division will get the highest capital allocation so that it can fix its problems and achieve the rate-of-return goal next year. (B) The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year. (C) The average-performing divisions which met the rate-of-return goals will receive the highest allocation because their performance exactly matched corporate requirements. (D) All divisions will receive the same capital allocation for the next year because this organizational structure rewards divisional managers based on achievement of strategic goals.

(B) The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year.

Why have large pharmaceutical companies been forming alliances with biotechnology companies? (A) To evade legislative restrictions on drug research in the United States (B) To develop new products and bring them to market (C) Because both firms had declining profitability and needed cash infusions from other firms (D) In order to gain absorptive capacity

(B) To develop new products and bring them to market

Research suggests that _________ is needed to encourage entrepreneurial behavior. (A) individualism rather than collectivism (B) a balance between individualism and cooperative behavior (C) collectivism rather than individualism (D) limited autonomy and incentives

(B) a balance between individualism and cooperative behavior

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect: (A) immediate wealth creation. (B) a long wait for an uncertain payoff. (C) a long wait for a high probability payoff. (D) a large payoff in the short term with rapidly decreasing wealth generation in the longer run

(B) a long wait for an uncertain payoff.

Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, he has been displaying a tendency toward personal extravagance at the firm's expense. In order to limit Mr. Leagreet's power, the Board of Directors plans to: (A) elect an insider as the lead director. (B) appoint another individual as chairperson of the Board of Directors. (C) require Mr. Leagreet to personally certify the firm's financial reports. (D) reduce the size of the stock option package provided to Mr. Leagreet.

(B) appoint another individual as chairperson of the Board of Directors.

Successfully implementing a cost leadership strategy requires: (A) freedom from constraining rules. (B) centralization of authority. (C) communication between functional silos. (D) sharing of competencies among divisions.

(B) centralization of authority.

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the ______ structure. (A) matrix (B) competitive multidivisional (C) hybrid combination (D) horizontal complementary strategic alliance

(B) competitive multidivisional

The fewest integrative devices are used in the ______ structure. (A) simple (B) competitive multidivisional (C) SBU (D) network

(B) competitive multidivisional

Because it replaces existing products and methods of production, entrepreneurship is a process of: (A) harnessing the human potential. (B) creative destruction. (C) creation of opportunity. (D) exploitation of innovation

(B) creative destruction.

Successful implementation of the differentiation strategy requires a structure that: (A) has specialized jobs. (B) decentralizes decision making. (C) focuses on the finance function. (D) is dominated by the operations function.

(B) decentralizes decision making.

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions: (A) increases. (B) decreases. (C) remains constant. (D) is eliminated.

(B) decreases.

In an SBU structure, ______ is/are evaluated using strategic controls, whereas ______ is/are evaluated using financial controls. (A) each SBU; divisions within the SBUs (B) divisions within the SBUs; each SBU (C) managers of the SBUs; headquarters staff (D) headquarters staff; managers of the SBUs

(B) divisions within the SBUs; each SBU

Corporate governance is important to nations because: (A) shareholders want large stock returns. (B) firms seek to invest in nations with national governance standards that are acceptable to them. (C) company Boards have lobbied for strong governance. (D) the United States requires that other nations adopt its governance practices.

(B) firms seek to invest in nations with national governance standards that are acceptable to them.

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. (A) unsubstantial profits (B) free cash flows (C) marginal profits (D) frozen assets

(B) free cash flows

Leslie is a newly graduated certified public accountant with a specialty in corporate tax. She wishes to join an organization (not an accounting firm) that will allow her to concentrate on corporate tax and become deeply proficient in this area. Leslie should look for a position in a firm with a ______ structure. (A) simple (B) functional (C) multidivisional (D) network

(B) functional

The ______ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy. (A) simple (B) functional (C) multidivisional (D) strategic business unit

(B) functional

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2 years. To maximize the chances of success it is critical that the new executive: (A) be of Hispanic descent. (B) have international experience. (C) possess an advanced degree in animal science. (D) have a background in managing agribusiness firms

(B) have international experience.

In the implementation of internal innovations, formal and informal processes are best supported through ____ organizational structures. (A) vertical (B) horizontal (C) functionally oriented (D) multidivisional

(B) horizontal

A multidomestic strategy would be associated with: (A) high levels of coordination. (B) informal coordination among units. (C) many integrative mechanisms. (D) interdependent divisions.

(B) informal coordination among units.

Generally, a Board member who is a source of information about a firm's day-to-day activities is classified as a(n) ____ director. (A) lead independent (B) inside (C) related (D) encumbered

(B) inside

GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that: (A) this innovation will resist competitors' attempts to imitate it. (B) its investors will react positively to the introduction of the new product because of the potential for higher returns. (C) its investors will react negatively because of the risk and cost entailed in introducing a new product. (D) this will be recognized in the industry as a radical innovation.

(B) its investors will react positively to the introduction of the new product because of the potential for higher returns.

Firms seeking to compete on the basis of cost leadership particularly need support from the ______ and ______ functions. (A) finance; accounting (B) manufacturing; process R&D (C) product R&D; marketing (D) management information; finance

(B) manufacturing; process R&D

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS: (A) increases shareholder value significantly. (B) may not have a direct effect on firm performance. (C) is so aggressive that Boards of Directors have become overly cautious. (D) has weakened the effect of other governance mechanisms.

(B) may not have a direct effect on firm performance.

Research shows that internationally diversified firms tend to be ____ than domestic-only firms. (A) less profitable (B) more innovative (C) less technologically advanced (D) more likely to have an individualistic culture

(B) more innovative

Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos' brother. This company probably uses the ______ strategy. (A) network (B) multi-domestic (C) global (D) transnational

(B) multi-domestic

The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation. (A) incremental; novel (B) novel; incremental (C) concentric; novel (D) novel; concentric

(B) novel; incremental

Through the work of cross-functional teams, product development stages are grouped into ____ processes. (A) short-term and long-term (B) parallel or overlapping (C) serially ordered (D) complementary

(B) parallel or overlapping

In contrast to managers' desires, shareholders usually prefer that free cash flows be: (A) used to diversify the firm. (B) returned to them as dividends. (C) used to reduce corporate debt. (D) re-invested in additional corporate assets.

(B) returned to them as dividends.

Compared to managers, shareholders prefer: (A) safer strategies with greater diversification for the firm. (B) riskier strategies with more focused diversification for the firm. (C) safer strategies with more focused diversification for the firm. (D) riskier strategies with greater diversification for the firm.

(B) riskier strategies with more focused diversification for the firm.

Successfully creating innovations through internal means requires: (A) a highly individualistic culture. (B) significant spending on R&D. (C) acquisitions of innovative firms. (D) venture capital.

(B) significant spending on R&D.

Typically, an organization using a simple structure would be: (A) large. (B) small. (C) of any size if the firm is privately held. (D) a family-owned-and-managed firm of any size.

(B) small.

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the ______ organizational structure. (A) network (B) strategic business unit multidivisional (C) functional (D) matrix

(B) strategic business unit multidivisional

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchises are creating the greatest possible value. This is an example of a(n): (A) worldwide product divisional structure. (B) strategic network. (C) SBU multidivisional structure. (D) simple structure.

(B) strategic network.

A negative effect of acquiring other firms for the purpose of innovation is: (A) innovations cannot be transferred between organizations. (B) the effect it can have on the firm's own ability to produce innovations. (C) innovations may not actually be present in the firm after the purchase is completed. (D) the acquired firm's employees usually leave.

(B) the effect it can have on the firm's own ability to produce innovations.

Ownership concentration is determined by both: (A) the number of stockholders and the parties they represent. (B) the number of stockholders and total percentage of shares they own. (C) the number of outside directors and the parties they represent. (D) the number of outside directors and total percentage of shares they own.

(B) the number of stockholders and total percentage of shares they own.

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of: (A) the use of autonomous strategic behavior. (B) the use of induced strategic behavior. (C) development of novel innovations. (D) innovation through acquisitions

(B) the use of induced strategic behavior.

Induced strategic behavior as a form of internal innovation is a(n) ____ process. (A) bottom-up (B) top-down (C) free-flowing (D) external

(B) top-down

The need for the organization to combine local responsiveness and efficiency is most critical in a ______ strategy. (A) multi-domestic (B) transnational (C) global (D) focus

(B) transnational

. Charles is a customer service representative for a home improvement store. He has creative ideas about how to increase customer satisfaction. Charles's talents will be most likely to be used in a firm that: (A) uses the induced strategic behavior form of internal corporate venturing. (B) uses the autonomous strategic behavior form of internal corporate venturing. (C) makes significant investment in research and development. (D) focuses on an acquisition strategy for gaining innovative ideas.

(B) uses the autonomous strategic behavior form of internal corporate venturing.

It is easiest to identify the company that functions as the strategic center firm in: (A) horizontal complementary strategic alliances. (B) vertical complementary strategic alliances. (C) corporate-level cooperative partnerships. (D) international cooperative partnerships.

(B) vertical complementary strategic alliances.

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? (A) Strategic outsourcing (B) Encouraging friendly rivalry among network members (C) Allocating internal capital (D) Supporting development of new core competencies

____ is one of the reasons for the differences in rates of entrepreneurship among different countries. (A) Climate (B) Competitiveness (C) Culture (D) Constitution

____ exist(s) when there is a need in the market that can be satisfied by new goods or services. (A) Potentiality (B) Market readiness (C) Entrepreneurial opportunities (D) Critical core competencies

____are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it. (A) Leaders (B) Innovators (C) Entrepreneurs (D) Transformative leaders

______ controls are objective criteria that allow corporate managers to evaluate the returns earned by individual business units. (A) Strategic (B) Managerial (C) Financial (D) Environmental

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure? (A) Increasing diversification (B) Coordination and control issues (C) Need for knowledge-sharing among specialists (D) Greater amounts of data and information to process

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance? (A) Functional (B) Cooperative M-Form (C) SBU form (D) Competitive M-Form

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy? (A) Competitive form with related-constrained strategy (B) Cooperative form with unrelated strategy (C) SBU form with related-linked strategy (D) Competitive form with related-linked strategy

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal? (A) ATP has been the initiator of several hostile takeovers in the last 2 years. (B) The Board has been successful in reducing the percentage of CEO pay that is composed of stock options. (C) The CEO/chairperson of the Board has been suspected of opportunistic behavior. (D) The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules.

Which of the following is true? For firms to be entrepreneurial, they require a culture with: (A) an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. (B) an exceptionally high level of collectivism. (C) a balance of individualism and collectivism. (D) an exceptionally high level of individualism.

The separation between firm ownership and management creates a(n) ____ relationship. (A) governance (B) control (C) agency (D) dependent

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies: (A) intellectual capital. (B) institutional capital. (C) alignment of complementary assets. (D) technological capital.

All of the following are consequences of the Sarbanes-Oxley Act EXCEPT: (A) a decrease in foreign firms listing on U.S. stock exchanges. (B) internal auditing scrutiny has improved and there is greater trust in financial reporting. (C) an increased number of IPOs (initial public offerings) are expected. (D) Section 404 creates excessive costs for firms.

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of: (A) imitation of a competitor's product. (B) a novel innovation. (C) an incremental innovation. (D) a(n) innovation created through a cooperative strategy.

Induced strategic behavior is a process that fosters product innovations that: (A) are likely to change a firm's strategic intent and mission. (B) will lead to greater financial returns. (C) are aligned closely with current strategy and structure. (D) will come to market in a short period of time.

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules: (A) use integrative mechanisms to share core competencies. (B) compete with one another in Olympia's internal capital markets. (C) are not necessarily related to one another in terms of products or markets. (D) are network member firms while Olympia is the strategic center firm.

Innovation creates a(n): (A) opportunity for a new product or process. (B) new product or process. (C) commercial product. (D) idea for potential exploitation

In the ______ multidivisional structure there is complete independence among the firm's divisions. (A) cooperative (B) matrix (C) competitive (D) SBU

In the ______ structure hierarchy, the headquarters relies on strategic controls to set rate-o- -return targets and financial controls to monitor divisional performance relative to those targets. (A) functional (B) cooperative (C) competitive (D) SBU

A firm pursuing an unrelated diversification strategy will utilize a ______ structure. (A) network (B) cooperative form multidivisional (C) competitive form multidivisional (D) functional

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the ______ structure. (A) combination-matrix (B) cooperative form of the multidivisional (C) competitive form of the multidivisional (D) strategic business unit multidivisional

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to: (A) an emerging professional management philosophy. (B) the increasing demand by consumers for both high quality and low prices. (C) coordination and control problems. (D) a shift toward the global economy.

According to Peter Drucker,the primary goal of innovation is to: (A) promote social well-being. (B) increase the number of jobs. (C) create wealth. (D) support national economies.

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT: (A) centralization of some organizational functions for the sake of coordination. (B) frequent, direct contact between division managers. (C) division managers' rewards based on division financial performance. (D) temporary teams or task forces formed around specific projects.

Institutional owners are: (A) shareholders in the large institutional firms listed on the New York Stock Exchange. (B) banks and other lending institutions that have provided major financing to the firm. (C) financial institutions such as mutual funds and pension funds that control large-block shareholder positions. (D) prevented by the Sarbanes-Oxley Act from owning more than 50 percent of the stock of any one firm

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have: (A) social capital. (B) entrepreneurial capabilities. (C) high absorptive capacity to learn. (D) intellectual slack.

Products developed through ______ are often offered at lower prices without as many features as products developed through ______. (A) innovation; imitation (B) imitation; invention (C) imitation; innovation (D) innovation; invention

The three types of innovative activity include all of the following EXCEPT: (A) invention. (B) imitation. (C) implementation. (D) innovation.

A major barrier to the use of cross-functional teams is: (A) excessive individualism of creative people. (B) lack of communication skills of technical people. (C) independent frames of reference of team members. (D) lack of social capital by team members.

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in: (A) entrepreneurial incubation. (B) creative destruction. (C) internal corporate venturing. (D) cooperative innovation strategies

Innovations that involve significant technological breakthroughs and create new knowledge: (A) build incrementally on the firm's existing technologies and knowledge. (B) are the most common type of innovation. (C) involve substantial uncertainty and risk. (D) typically have clear market opportunities

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that: (A) it is difficult to achieve economies of scale. (B) the firm must develop centers to offer after-sales service to customers. (C) it is difficult to respond effectively to local market needs and preferences. (D) achieving economies of scale with this strategy/structure combination is nearly impossible.

Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control. (A) small; small (B) small; large (C) large; small (D) large; large

The New York Stock Exchange requires that the audit committee be: (A) available to comment to external analysts. (B) headed by outside directors. (C) liable for any illegal actions by the top management team. (D) made up of CPAs with auditing experience.

Managerial employment risk is the: (A) risk that managers will behave opportunistically. (B) risk undertaken by managers to earn stock options. (C) managers' risk of job loss, loss of compensation, and/or loss of reputation. (D) risk managers will not find a new top management position if they should be dismissed.

Some experts consider the ______ structure to be one of the 20th century's most significant organizational innovations because of its value to diversified firms. (A) network (B) cooperative (C) multidivisional (D) functional

A worldwide geographic area structure is an organizational form in which: (A) multiple alliances across the globe link complementary businesses. (B) standardized products are offered across country markets. (C) national interests dominate and management adapts to local or cultural differences. (D) responsiveness to local demand is combined with economies of scale.

The main risk in a strategic alliance is that: (A) the alliance will not result in a successful innovation. (B) critical employees will be hired away by the strategic partner. (C) one partner will use the other partner's knowledge and use it to enhance its own competitive abilities. (D) the partners will lose control over their internal processes.

Agency costs reflect all of the following EXCEPT ____ costs. (A) monitoring (B) enforcement (C) opportunity (D) incentive

The competition for resources among those representing different organizational functions within a firm often leads to: (A) erosion of social capital. (B) heightened communication. (C) organizational politics. (D) empowerment of organizational members.

The level of entrepreneurial activity in a nation is ____ the nation's level of economic development. (A) negatively related to (B) independent of (C) positively related to (D) weakly related to

Entrepreneurs tend to have all the following characteristics EXCEPT: (A) willing to take responsibility for projects. (B) passion. (C) preference for certainly about projects. (D) optimism.

Firms seeking to differentiate particularly need support from the ______ and ______ functions. (A) finance; accounting (B) engineering; operations (C) product R&D; marketing (D) management information; finance

Functional structures work best for firms for all of the following strategies EXCEPT: (A) cost leadership strategy. (B) differentiation strategy. (C) related constrained diversification strategy. (D) single or dominant business corporate strategy

The firm's culture promotes unity of purpose for cross-functional work teams through: (A) a collectivist structure. (B) an entrepreneurial mind-set. (C) shared values. (D) resource allocation.

Internal corporate venturing does NOT involve: (A) autonomous strategic behavior. (B) induced strategic behavior. (C) strategic alliances. (D) product champions.

The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation. (A) time (B) customer (C) technological (D) interpersonal

Financial controls are most important in the ______ strategy. (A) single business (B) related constrained (C) unrelated diversified (D) vertical complementary

Typically, a successful firm pursuing a differentiation strategy will: (A) have a very hierarchical structure. (B) require a structure that is very formal. (C) use cross-functional development teams. (D) develop free-standing business units

Which of the following is a FALSE statement about corporate governance? (A) Governance is used to establish order between parties whose interests may be in conflict. (B) Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. (C) Corporate governance mechanisms can be in conflict with one another. (D) Corporate governance is best achieved with a Board of Directors with strong ties to management.

(D) Corporate governance is best achieved with a Board of Directors with strong ties to management.

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures? (A) Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture and centralized strategic-planning activities. (B) Firms pursuing an unrelated diversification strategy should use an SBU structure with a small corporate staff, emphasize the R&D function, and integrate divisions to achieve synergies. (C) Firms pursuing a related linked strategy should use an SBU structure, emphasize interdependence among divisions, and manage the strategic planning function from the central office. (D) Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing.

(D) Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing.

Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy? (A) Centralization (B) Specialization (C) Formalization (D) Integration

(D) Integration

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory? (A) Functional (B) Simple (C) Vertically integrated (D) Multidivisional

(D) Multidivisional

Which of the following is TRUE? (A) Organizations tend to change structure too frequently, which erodes their competitive advantage. (B) Large organizations can retain a simple structure as long as they have a focus strategy. (C) Flexibility in structure is more important than stability. (D) Strategy has a more important influence on structure than structure has on strategy

(D) Strategy has a more important influence on structure than structure has on strategy

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT: (A) making CEOs more accountable for their performance. (B) challenges to the decisions of Boards. (C) focusing attention on ineffective Boards of Directors. (D) a direct effect on firm performance.

(D) a direct effect on firm performance.

Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas. (A) top-down (B) horizontal (C) integrated (D) bottom-up

(D) bottom-up

One disadvantage of the functional structure is that: (A) career paths and professional development are limited. (B) dual reporting relationships blur lines of authority. (C) the CEO cannot coordinate and control the efforts of functional-level employees. (D) communication and coordination are difficult among organizational functions.

(D) communication and coordination are difficult among organizational functions.

Structural stability affects the organization's ability to: (A) resist organizational inertia. (B) cope with uncertainty about cause-and-effect relationships in the global economy. (C) develop new competitive advantages. (D) consistently and predictably manage its daily work routines

(D) consistently and predictably manage its daily work routines

The ______ structure is best for implementing the related-constrained diversification strategy. (A) functional (B) competitive form of the multidivisional (C) SBU form of the multidivisional (D) cooperative form of the multidivisional

(D) cooperative form of the multidivisional

The most centralized and most costly form of the multidivisional structure is the: (A) integrated. (B) competitive. (C) SBU. (D) cooperative.

(D) cooperative.

The use or application of entrepreneurship within an established firm is called: (A) corporate emergence. (B) transformational leadership. (C) exceptional R&D. (D) corporate entrepreneurship

(D) corporate entrepreneurship

In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT: (A) reducing its transaction costs by promoting longer-term contracts with subcontractors. (B) enabling engineers in upstream companies to have better communication with those companies with which it has contracts for services. (C) encouraging subcontractors to modernize their facilities and providing them with technical and financial assistance to do so. (D) decreasing communications between network members to reduce communication costs.

(D) decreasing communications between network members to reduce communication costs.

The BEST multidivisional structure to use: (A) is the competitive form. (B) is the SBU form. (C) is the cooperative form. (D) depends on the degree of diversification

(D) depends on the degree of diversification

Strategic controls allow corporate-level managers to: (A) evaluate business-level performance on objective criteria. (B) concentrate on day-to-day corporate operations. (C) assess performance of employees and managers in each business unit. (D) examine the fit between what the firm might do and what it can do.

(D) examine the fit between what the firm might do and what it can do.

A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in: (A) interpersonal orientation. (B) time orientation. (C) goal orientation. (D) formality of structure.

(D) formality of structure.

The cooperative multidivisional firm: (A) establishes profit centers based on products or markets. (B) has a flat organizational structure which broadens jobs and empowers workers. (C) has a structure organized around both functional specialization and business projects. (D) has a structure requiring heavy use of horizontal integrative devices.

(D) has a structure requiring heavy use of horizontal integrative devices.

Agatha Adams founded Insurance Specialists to process medical claims for physicians' practices. She plans to compete on the basis of cost, offering the lowest processing cost per claim in her market area. Ms. Adams' company should: (A) be the strategic center firm in a network structure. (B) have a specialized multidivisional structure. (C) develop alliances with firms with complementary competencies. (D) have a highly centralized, functional structure.

(D) have a highly centralized, functional structure.

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the ______ organizational structure. (A) horizontal complementary strategic alliance (B) competitive multidivisional (C) strategic business unit multidivisional (D) hybrid combination

(D) hybrid combination

New entrepreneurial firms are better than larger established firms at: (A) implementing innovations. (B) gaining competitive advantage. (C) making alliances. (D) identifying entrepreneurial opportunities.

(D) identifying entrepreneurial opportunities.

The three structural characteristics that differ among organizational structures include all of the following EXCEPT: (A) centralization. (B) formalization. (C) specialization. (D) intermediation.

(D) intermediation.

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-t- -moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of: (A) taking advantage of a need in the marketplace. (B) creative destruction of existing services for pet boarding. (C) institutionalized entrepreneurship. (D) internal corporate venturing

(D) internal corporate venturing

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek ____ while more established companies may need _____. (A) distribution channels; tacit knowledge (B) deep technological expertise; distribution channels (C) social capital; technical capital (D) investment capital; new technological knowledge

(D) investment capital; new technological knowledge

The number of patents held by an organization is a rough guide to the: (A) effective use of organizational politics. (B) future success of an initial public offering. (C) amount of venture capital a firm will be able to attract. (D) level of innovation in a firm

(D) level of innovation in a firm

The ______ structure is an organizational structure that combines both functional specialization and business product or project specialization. (A) functional (B) worldwide geographic area (C) network (D) matrix

(D) matrix

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? (A) dissension within the top management team (B) informal organizational processes within the firm (C) the firm's strategic orientation (D) organizational politics

(D) organizational politics

Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After 6 months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is: (A) the ability to identify opportunities. (B) a corporate sponsor. (C) financial slack. (D) passion for his invention.

(D) passion for his invention

The primary disadvantage of the multi-domestic strategy and worldwide geographic area structure relates to limited: (A) centralization. (B) coordination across divisions. (C) ability to meet local market needs. (D) potential for global efficiency.

(D) potential for global efficiency.

A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, whereas owners wish to diversify the firm to ____. (A) generate free cash flows; reduce the risk of total firm failure (B) increase the price of the firm's stock; increase the dividends paid out from free cash flows (C) reduce the risk of total firm failure; reduce their total portfolio risk (D) reduce their employment risk; increase the company's value

(D) reduce their employment risk; increase the company's value

All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT: (A) consumer protection. (B) CEO compensation. (C) regulation of derivatives. (D) retirement accounts.

(D) retirement accounts.

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n): (A) worldwide product divisional structure. (B) functional structure. (C) SBU multidivisional structure. (D) strategic network

(D) strategic network

The risks of international entrepreneurship include all the following EXCEPT: (A) unstable foreign currencies. (B) problems with market efficiencies. (C) limitations on market size. (D) strong "buy-domestic" programs.

(D) strong "buy-domestic" programs.

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so: (A) indicates to competitors that the firm is vulnerable to a hostile takeover. (B) will only lead to inefficiencies. (C) requires that the firm undertake a multi-year restructuring period that will delay retirement. (D) suggests that the firm's previous choices were not the best ones

(D) suggests that the firm's previous choices were not the best ones

Monitoring by shareholders is usually accomplished through: (A) management consultants. (B) government auditors. (C) the firm's top managers. (D) the Board of Directors.

(D) the Board of Directors.

The benefits of a simple structure include all of the following EXCEPT: (A) ease of coordination within the organization. (B) the lack of a need for sophisticated information systems. (C) active involvement by the owner-manager. (D) the ability of specialists to develop deep expertise.

(D) the ability of specialists to develop deep expertise.

Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. (A) greater experience in a wider range of industries; lessening of managerial employment risk (B) the manager frequently invests in the acquired firm, which allows him or her extensive profits; the manager can frequently buy excess assets divested by the acquired firm (C) the manager's supervisory needs are lowered; the manager is allowed greater time to oversee a wider range of activities (D) the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

(D) the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

Firms develop innovations in all the following ways EXCEPT: (A) through autonomous or induced strategic behavior. (B) by acquiring other companies. (C) through cooperative strategies. (D) via divestiture of low-performing units.

MAN4720

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