MANA 1301 Exam #3 Prep
An agreement between two or more firms that do not involve the creation of a separate entity with joint ownership and in which the firms stand to gain revenues and maximize profits through cooperation for a given period of time is called a(n): A) strategic alliance B) foreign acquisition C) franchise D) license
A
A fundamental consideration that must be made in business is the risk-return trade-off. In genera;, the greater the risk (loss of capital invested) entrepreneurs are willing to take, the greater the rewards (profit) they are likely to reap. T/F
True
A key output metric for some global businesses is market share, or the percentage of the business in a certain market that is captured by a product or service the organization provides. T/F
True
A major reason why growth-oriented MNEs establish operations abroad is to diversify and minimize risk so that overall corporate cash flows and earnings will be relatively stable. T/F
True
A stakeholder model of strategy formulation believes businesses exist to benefit not just their shareholders, but also all the various groups that have a meaningful stake in their operations. Such groups, for example, might include a company's employees, might include a company's employees, customers, and the community where it operates. T/F
True
Financial budgets implemented by a global business are a type of bureaucratic control. T/F
True
Global companies almost always implement long-term strategic planning. T/F
True
Hershey Corporation has expanded and extended its business by developing new products and increasing global reach but has done so in a very careful manner, avoiding undue risks and protecting its existing business operations. For this reason, it would fall into the category of an analyzer. T/F
True
Interestingly, licensing and franchising typically leads to the entry of international markets without significant capital investment abroad by the parent company. T/F
True
Many large companies have very different types of operating divisions and business units which makes it difficult to have a uniform culture throughout the organization. T/F
True
Microsoft (United States), Toyota (Japan), Lenovo (China), and Petrobas (Brazil) are just a few of the hundreds of large multinational enterprises that re based in one country but own and operate establishments in others. T/F
True
Operational plans are very short-term. T/F
True
Steven is a sales rep for a large manufacturer. His boss has given him benchmarking statistics to track and then develop his sales targets for the quarter. Steven is exercising an output control. T/F
True
The level of corruption in a country is usually a good indicator of the degree of good or poor governance in that country. T/F
True
The only profitable way for freign firms to enter trade-restricted markets is through FDI rather than through exports. T/F
True
The president of a small company makes a point to touch base with every employee each day; this is an example of an interpersonal control. T/F
True
A U.S. firm has recently expanded into a foreign market. To promote the firm's culture in the new market, executives are mentoring subordinates to prepare them to establish the subsidiary. What type of control are the executives using? a. interpersonal b. intrapersonal c. input d. bureaucratic
a
A firm has embarked on a process of understanding how it should develop its overall goals with respect to stakeholders. What process is the firm participating in? a. strategy formulation b. new venture creation c. business planning d. market development
a
A firm has operated for over 100 years. During that time, the values of the founding family have guided all aspects of the business, including the importance placed on employees being members of the family. What does this describe? a. culture b. customs c. background d. traditions
a
A firm has the following sentence posted on its website: "This company exists to serve those who do not currently have a voice in the community to ensure that they can be part of the ongoing dialogue about social justice." What is this an example of? a. mission statement b. business plan c. vision statement d. flowchart
a
A firm wants to establish itself as a market leader within two to three years by becoming known as an innovator in the consumer products industry. What type of plan does this represent? a. tactical b. equipped c. intentional d. strategic
a
A firm's CEO provides quarterly investor updates on profits. What type of control is the CEO reporting on? a. output b. input c. bureaucratic d. interpersonal
a
A firm's business model is defined by its ability to make consumer products and sell them to distributors. Each step of the business, from manufacturing to delivery, has been identified in training manuals and is available electronically, accessible by any mobile device. What is this an example of? a. explicit knowledge b. interpersonal controls c. tacit knowledge d. absorptive capacity
a
A firm's marketing team is engaged in recognizing market indicators that can signal profitable opportunities. Once the team identifies these indicators, they report back to employees about these insights and collaborate on how the information can be applied to develop new products. What does this example represent? a. absorptive capacity b. explicit knowledge c. tacit knowledge d. stored capacity
a
All of the following are classified as stable, high-income economies EXCEPT for which country? a. Mexico b. Canada c. Belgium d. United States
a
All of the following are included in a typology of firms described by Miles and Snow except for which example? a. coordinators b. prospectors c. reactors d. defenders
a
Berkshire Hathaway Inc. has historically revolved around one man and his investing prowess: Warren Buffett, the "Oracle of Omaha." Which concept best describes this "personality cult"? a. Organizational culture b. Organizational change c. Social metrics d. Interpersonal controls
a
During what phase of the product life cycle do multinational enterprises (MNEs) turn to diversification and stabilizing their cash flows? a. maturity b. introduction c. decline d. growth
a
In 2021, which of the following companies was the largest in the world in terms of market value/capitalization? a. Apple b. Google c. Amazon d. Microsoft
a
Most global businesses have a concept of their general purpose that they express in a mission statement Berkshire Hathaway Inc. famously does not have a published mission statement. Which of the following are we unable to determine about Berkshire Hathaway because of this exception? a. Why the company exists and what it strives to accomplish b. The firm's operational plans c. The company's financial health d. The firm's tactical plans
a
Ownership of coal and iron ore mines (e.g., in Kazakhstan and Liberia) enables the company to keep raw material costs and profit margin under control, thereby stabilizing ArcelorMittal's cash flows and profitability. These resources are most closely related to which key economic advantage according to Dunning's eclectic theory of foreign direct investment (FDI)? a. Location-specific advantages b. Ownership advantages c. Internalization d. Governance
a
Systems of rules and regulations promoted within a global business are defined as what type of controls? a. bureaucratic b. output c. input d. interpersonal
a
The CEO of a firm recently learned that there is no consistent system that captures knowledge about various aspects of the business. Employees have been passing along information without formally codifying that data into training materials because the context is critically important to instructions and is frequently difficult to describe. What type of information has the firm been relying on? a. tacit b. working c. absorptive d. explicit
a
The Walt Disney Company has several brands in its portfolio. Some of its best-known brands include Lucasfilm, Marvel, ABC, ESPN, Disney Pixar, and Walt Disney Studios. A large percentage of its revenues comes from which market strategy? a. licensing b. joint venture c. foreign acquisition d. franchising
a
A U.S. firm has formulated its strategy in consideration of global business and social change, shareholders, consumers and customers, and other factors. What is the next decision the firm will need to make? a. how it will manage knowledge b. what typology the firm will adopt c. what actions the firm will take d. what control system to use
b
A U.S. firm started two years ago and has grown its market share as a result of its intense focus on improving the quality of its existing client work. The firm has been challenged by new competitors from abroad, but no new firms have been able to make inroads into the firm's client base because of its ongoing service initiatives at home. What Miles and Snow category does the firm fall into? a. prospectors b. defenders c. reactors d. analyzers
b
A family-owned business has three separate divisions, managed by three individuals from the family. All other employees are non-family hires. The three divisions operate individually, without the use of a standardized method of measuring output. What is the business in need of? a. to concentrate on new external investments b. an effective organizational control system c. to find and pursue new market opportunities d. to respond to strategic actions of competitors
b
A firm's strategy formulation is based on the principle that its purpose is to maximize financial returns for its owners. All decisions are made to increase profits and overall financial value. Which model of strategy formulation does this firm use? a. supplier b. shareholder c. stakeholder d. global
b
According to Dunning's Eclectic Theory of Foreign Direct Investment, what is a reason a firm would choose the FDI route (i.e., Greenfield, wholly owned subsidiary) instead of licensing or franchising? a. concern the government may nationalize its facilities b. concern the firm's proprietary technology will be misappropriated c. concern the market is too small to sustain growth d. concern the product will not be well-received by consumers
b
All of the following were top sectors for greenfield investment in 2020 EXCEPT for which sector? a. renewable energy b. coal, oil, and gas c. digital infrastructure services d. electric vehicles
b
An energy firm has achieved the highest market share in three of its five markets in Europe, Asia, and Africa. To do this, the firm has focused on continued exploration of natural energy sources and uses for postconsumer use plastics. What type of strategy implementation does this firm represent? a. defenders b. prospectors c. analyzers d. reactors
b
Economies of scale in production, minimizing factor input cost, and reacting to exchange rate movements are all ways a multinational enterprise (MNE) can do what? a. acquire other companies b. cut costs c. generate revenue d. explore joint ventures
b
Financial profits represent which type of control and measurement used by global businesses? a. input b. output c. interpersonal d. bureaucratic
b
In 2020, the data analytics software company SAS joined forces with Microsoft Azure to create a response system for natural disasters, including flooding from hurricanes. SAS has resources in IoT analytics, and Microsoft Azur can develop the tools to integrate the data into various industries. What type of market strategy did they use? a. franchising b. joint venture c. acquisition d. licensing
b
One- to three-year plans formulated for implementing strategic goals are defined as what type of plans? a. equipped b. tactical c. intentional d. strategic
b
Organizations that implement basic market strategies of concentrating upon existing operations and maintaining their home turf are called by what name? a. analyzers b. defenders c. prospectors d. reactors
b
Six sigma initiatives seek to limit defects or problems to what level? a. 1.8 per million b. 3.4 per million c. 7.5 per million d. 10.2 per million
b
The personality of a given organization and its shared norms and values refer to which element? a. customs b. culture c. traditions d. background
b
What is a relatively low-risk operation that involves penetrating foreign markets or importing merchandise at competitive prices for domestic consumption called? a. joint venture b. an export-import business c. franchising d. licensing
b
What is the potential financial loss that entrepreneurs are willing to take in a business called? a. threat analysis b. risk profile c. money management analysis d. SWOT analysis
b
What is the practice in which a company or individual provides the foreign partner with the technology to manufacture and sell products or services in a target country for an annual fee called? a. a foreign acquisition b. licensing c. franchising d. a joint venture
b
What type of foreign market entry strategy do companies like McDonald's, 7-Eleven, and Century 21 Real Estate favor? a. joint venture b. franchising c. foreign acquisition d. licensing
b
Which country has been the world's largest recipient of foreign direct investment (FDI) capital? a. China b. United States c. Germany d. Canada
b
Which of the following factors accelerated the rise in multinational enterprises (MNEs) seen in the 20th century? a. the increase in regional trade agreements b. the establishment of various international organizations and the creation of "international rules of the game" c. the establishment of the European Union d. the Great Depression
b
A rental car firm wants to be considered the best value in the metro Los Angeles area. It has a plan to offer a loyalty program to its customers who have rented at least once in the last six months. What type of plan does this represent? a. financial b. tactical c. promotional d. operational
d
According to Miles and Snow, which type of organizations use a basic strategic implementation that involves extending their success through global expansion and finding new market opportunities? a. analyzers b. reactors c. defenders d. prospectors
d
According to Raymond E. Miles and Charles C. Snow in their book Organizational Strategy, Structure and Process, businesses engage in strategy implementation on a longer-term basis in one of four ways. Historically, Berkshire Hathaway's business model has been one of buying insurance companies such as Geico. But recently, Berkshire Hathaway has been moving away from buying insurance companies with great "floats" and instead buying major industrial-type businesses. Based on this, how would Miles and Snow characterize the firm of Berkshire Hathaway?
d
All of the following are concerns related to foreign direct investment (FDI) EXCEPT for which one? a. exploitation of human rights b. sacrificing environmental quality c. exploitation of natural resources d. new technology accessibility
d
Export-import businesses have what type of risk and return? a. low risk and high return b. high risk and low return c. high risk and high return d. low risk and low return
d
Global businesses typically define their overall goals in what item? a. vision statement b. flowchart c. business plan d. mission statement
d
Many times, organizational change in a business is most effective when pushed from which level of management? a. bottom management b. line managers c. middle management d. top management
d
Miles and Snow developed a typology describing how global (and other) businesses engage in what practice on a longer-term basis? a. market development b. business planning c. new venture creation d. strategy implementation
d
The United States attracts sizeable foreign direct investment (FDI) from abroad. The following are reasons why it is an attractive destination for FDI EXCEPT for which factor? a. strong physical infrastructure b. well-educated workforce c. large current account deficit in the balance of payment d. open and flexible economic system
c
Toyota Motor Company has frequently sent hundreds of workers hired at a plant it is opening in a new country to Japan for months of training in the special "Toyota way" of auto manufacturing. Today, though, "Zoom" and other Internet-based training tools make such an expensive approach to knowledge transfer less necessary. What is this an example of? a. explicit knowledge b. tacit knowledge c. absorptive capacity d. interpersonal controls
c
What term describes how countries exercise accountability and how efficiently they deliver basic social and infrastructure services? a. bureaucracy b. transparency c. governance d. corporate social responsibility (CSR)
c
Which type of control refers to the percentage of the business in a certain market that is captured by a product or service the organization provides? a. productivity b. growth c. market share d. quality
c
According to the text, which of the following entry strategies has the highest degree of risk? A) Licensing B) Wholly-owned foreign subsidiary C)Foreign acquisition D) Joint venture
B
Coca-Cola has built 43 bottling plants and two concentrate manufacturing plants with three separate partners in China since 1979. This is an example of a(n): A)license B) international joint venture C) foreign acquisition D) strategic alliance
B
The ultimate objective of most joint ventures is: A) acquiring other companies B) making a brand name C) developing a sustainable environment D) using joint production and sales distribution networks to increase revenue.
D
Which of the following is true about franchising? A) In franchising, the parent firm assumes relatively less risk than with licensing. B) Franchisees receive trade analysis along with market expansion training. C) In franchising, the parent firm assumes a lot more risk than with licensing. D) The parent company's objective is to make sure that when a customer visits a franchise in any country, the quality of the products and services provided are unique.
D
Strategic alliances are primarily aimed at enhancing goodwill. T/F
False
Target Corporation is often accused of being a defender in terms of its market strategies and strategic implementation. T/F
False
What are firms that are headquartered in one country, but own and control manufacturing services, R&D facilities, or other business entities on foreign soil called? a. multinational enterprise b. strategic alliance c. foreign acquisition d. subsidiary
a
What are new facilities built and operated overseas that require large investments of capital because these new establishments are tailored to the exact needs of the home country firm called? a. wholly owned subsidiary b. multinational enterprise c. strategic alliance d. foreign acquisition
a
What constitutes a good investment climate? a. government policies that enable businesses to invest profitably, create jobs, respect the environment, contribute to economic growth, and reduce poverty and income inequality b. government policies that protect large corporations and allow for profit maximization, greater business protections, and fewer regulations c. government policies that allow businesses to invest profitably and do what they need to do to continue growing d. government policies that allow for higher CEO pay, lower minimum wage requirements, fewer industry regulations, and lower taxes for corporations
a
What is a sign of weak governance in a country? a. the level of public corruption b. the number of political parties c. the political ideology followed d. terms of service for public officials
a
What is the objective for firms investing abroad in a free enterprise system? a. maximization of shareholder wealth b. promotion of social welfare c. obtaining a monopoly position in the market d. market saturation
a
Which advantage relates to the economic, political, and social systems of a particular country? a. locational, or country-specific b. internalization c. environmental d. ownership, or firm-specific
a
Which country ranked the highest in Transparency International's corruption perception index (CPI) for 2020? a. Denmark b. United States c. Germany d. China
a
Which type of advantage refers to the mode of entry abroad? a. internalization b. environmental c. ownership, or firm-specific d. locational, or country-specific
a
A U.S. manufacturer recently adopted a new quality system to compete with a new market entrant from Asia. The manufacturer's quality system requires that it consistently limit defects to 3.4 per million. What type of output control is the firm using? a. market share b. productivity c. six sigma d. growth
c
A nonprofit literacy organization holds a fundraiser to provide resources for 1,000 children per year. What are those who donate to this organization to support the literacy in their community called? a. shareholders b. friends c. stakeholders d. activists
c
A nonprofit organization has strict policies about fundraising and how the money is recorded and used for projects. These policies are part of a larger system of rules and regulations promoted by an international fundraising association. Which type of controls does this organization use? a. input b. output c. bureaucratic d. interpersonal
c
A start-up firm is experiencing intense competition from new market entrants. To maintain its market share, the firm will need to change the way its designs and delivers its products to customers. Who should initiate this change to effectively redirect the firm's strategy? a. bottom management b. line managers c. top management d. middle management
c
All of the following are BRIC nations EXCEPT for which one? a. China b. Brazil c. Iraq d. Russia
c
Coordinating strategy formulation and implementation may sound relatively easy in theory, but in practice it is usually not very easy at all. In the real world, impediments to coordination of strategic implementation abound, even for successful firms such as Berkshire Hathaway. One area where coordination challenges can exist is that of knowledge management. Which concept describes the ability of an organization such as Berkshire Hathaway to recognize, assimilate, and apply new knowledge? a. Tacit knowledge b. Explicit knowledge c. Absorptive capacity d. Output controls
c
Historically, U.S. multinational enterprises (MNEs) have dominated the Global 100 list in terms of market capitalization. However, recently, what trend in MNEs from these markets has been seen? a. frontier markets b. industrial markets c. emerging markets d. developed markets
c
In comparison to emerging economies like the BRIC nations, how are the growth rates in stable, high-income economies? a. higher than emerging economies b. about the same in both types of economies c. lower than emerging economies d. economies are too different to draw conclusions about growth rates
c
In the banking industry, an efficiency ratio (i.e., how little expense or overhead is needed to produce a given amount of income) is a closely monitored metric. What type of output control does this refer to? a. quality b. market share c. productivity d. growth
c
Knowledge that is informal in nature and difficult to communicate is referred to as what type of knowledge? a. working b. explicit c. tacit d. absorptive
c
Multinational enterprises (MNEs) are firms such as ArcelorMittal that are headquartered in one country, but own and control manufacturing, services, R&D (research and development) facilities, or other business entities on foreign soil. By generating profits from many different countries, ArcelorMittal is engaging in which risk minimizing strategy? a. Economies of scale b. Correlation of returns c. Diversification d. Product life cycle theory
c
Very short-term plans formulated for implementing strategic goals are defined as what type of plans? a. tactical b. strategic c. equipped d. operational
d
What is the term for the ability of organizations to recognize, assimilate, and apply new knowledge? a. stored capacity b. explicit knowledge c. tacit knowledge d. absorptive capacity
d
When firms decide to go international, a wide range of opportunities may be available depending upon their risk profile—the potential financial loss they are willing to take. ArcelorMittal came to existence through a series of cross-border mergers followed by a hostile takeover, leading to the world's largest steel company. Where do foreign acquisitions such as those undertaken by Arcelor (prior to their takeover by Mittal Steel) fall on the risk-return spectrum? a. High Risk—Low Return b. Low Risk—Low Return c. Low Risk—High Return d. High Risk—High Return
d
Where there are clashes within a given organization's culture, or even if there are threats to this culture in the future, such a culture will generally not work in what way? a. to respond to strategic actions of competitors b. to find and pursue new market opportunities c. to concentrate on existing home operations d. to have an effective organizational control system
d
Which model of strategy formulation believes businesses exist to benefit not just their shareholders but also the various groups that have a meaningful stake in their operations? a. global b. shareholder c. environmental d. stakeholder
d
Which model of strategy formulation operates from the basic premise that the key strategic purpose of a business is to maximize financial returns for its owners? a. global b. supplier c. stakeholder d. shareholder
d
Which multinational enterprise (MNE) came under harsh criticism for paying below-minimum wages, child labor violations, and appalling conditions like a sweatshop in its production facilities in Indonesia, Cambodia, and Pakistan? a. Boeing b. Shell Oil c. Coca Cola d. Nike
d
Which type of controls involve executives engaging in personal contact with subordinates as a way of managing an organization? a. input b. bureaucratic c. intrapersonal d. interpersonal
d
While the mature European and North American markets form the basis of revenues for ArcelorMittal, future growth is more likely in such emerging markets as China, India, and Brazil where the company is making significant new investments. This strategy for future growth relates to which revenue minimizing strategy? a. Entering trade-restricted sectors b. Entering countries with monopolistic market structures c. Entering stable, high-income markets d. Entering high-growth markets
d
