MGMT-485W Exam 2
human capital
"The ability to manage __________ may be the most critical of the strategic leader's skills."
Matrix
-Vertical differentiation: less -Horizontal differentiation: less -Each worker has 2 bosses; temporary teams -Costly, confusing, better coordination, creativity 1. Simple 2. Functional 3. Divisional 4. Multidivisional 5. Matrix
Functional
-Vertical differentiation: low -Horizontal differentiation: more -CEO, GMs, managers, workers -Many business functions 1. Simple 2. Functional 3. Divisional 4. Multidivisional 5. Matrix
Simple
-Vertical differentiation: lowest -Horizontal differentiation: lowest -One boss, few workers -One business function 1. Simple 2. Functional 3. Divisional 4. Multidivisional 5. Matrix
Divisional
-Vertical differentiation: more -Horizontal differentiation: even more -CEO, multiple GMs, managers, workers -Even more business functions 1. Simple 2. Functional 3. Divisional 4. Multidivisional 5. Matrix
Multidivisional
-Vertical differentiation: most -Horizontal differentiation: most -Corporate HQ staff 1. Simple 2. Functional 3. Divisional 4. Multidivisional 5. Matrix
self-dealing
A circumstance in which a manager is using company funds for his or her own personal consumption is called __________. 1. information manipulation 2. self-dealing 3. takeover constraint 4. greenmail
categorical imperative
A concept developed by the philosopher Immanuel Kant as an ethical guideline for behavior. In deciding whether an action is right or wrong, or desirable or undesirable, a person should evaluate the action in terms of what would happen if everybody else in the same situation, or category, acted the same way.
Give promotions to top performers who achieve by violating ethical principles
A firm that wants to ensure ethical behavior should NOT: 1. Use the hiring process to weed out job candidates without a strong sense of personal ethics 2. Assume that unethical job applicants will lie in interviews 3. Give promotions to top performers who achieve by violating ethical principles
Types of customers
A market structure groups employees into separate units based on: 1. Types of customers 2. Functions 3. Product lines 4. Geographic areas
less
A matrix structure has __________ horizontal differentiation.
less
A matrix structure has __________ vertical differentiation.
Related diversification
A multidivisional organization structure is especially appropriate for a firm with which strategy? 1. Combination 2. Outsourcing 3. Related diversification 4. Transnational
shares of the company's stock at a predetermined price at some point in the future.
A stock option is a right to buy: 1. shares of the company's stock at the stock's current price. 2. shares of the company's stock at half the stock's current price. 3. shares of the company's stock at a predetermined price at some point in the future. 4. bonds issued by the company.
good / doable
A successful strategy must be __________ and __________.
international
A(n) __________ strategy has centralized authority, and the corporate HQs show the host country GMs how to operate and run the business. Very centralized. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
transnational
A(n) __________ strategy is the hardest to organize, requires centralization and decentralization, has high costs, and strives for cost leadership and diffentiation. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
Principals
According to agency theory, stockholders are: 1. Principals 2. Agents 3. Either of these 4. Neither of these
Corruption
According to the text, a Chinese executive was sentenced to death by Chinese courts for: 1. Opportunistic exploitation 2. Substandard working conditions 3. Environmental degradation 4. Corruption
global standardization
Achieve economies of scale and scope in a(n) __________ strategy. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
Labor
Advanced factor endowments for a geographic area include all of the following EXCEPT: 1. Labor 2. Physical infrastructure 3. Managerial sophistication 4. Technological know-how
Standardization
All of the following are elements of organizational culutre EXCEPT: 1. Standardization 2. Values 3. Norms 4. Socialization
All of these
An accounting scandal is an example of: 1. Information manipulation 2. Ethical problems 3. Agency problems 4. All of these
Easier coordination of strategic activities
An advantage of centralization over decentralization is: 1. Easier coordination of strategic activities 2. Lower bureaucratic costs 3. Greater flexibility
Related diversification
An equitable reward system for division managers is hardest to set up in a firm with which corporate-level strategy? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
All of these
An example of on-the-job consumption is: 1. A lavish corporate headquarters building 2. A very high CEO pay package 3. A corporate jet 4. All of these
organizational ethics are embedded in corporate values of honesty and fairness along with employee responsibility
An integrity-based ethics program is one in which: 1. organizational ethics are embedded in corporate values of honesty and fairness along with employee responsibility 2. organizations seek to avoid legal sanctions and use the threat of detection and punishment to prevent lawbreaking 3. employees act on what is best for themselves as individuals 4. ethics are not clearly laid out for organizational employees
All of these
An organizational culture that emphasizes ethical behavior can be seen in: 1. A code of ethics 2. Values included in the mission statement 3. The behavior of leaders 4. The reward system 5. All of these
executive directors
Another term for insiders is: 1. executive directors 2. non-executive directors
non-executive directors
Another term for oustiders is: 1. executive directors 2. non-executive directors
All of these
As decision makers, managers and executives would make more ethical decisions if they had to: 1. Compare their decisions to the company's code of ethics 2. Announce each decision publicly to the affected parties 3. Reveal each decision to friends, family, and respected others 4. All of these
Transnational
Bartlett and Ghoshal are most closely associated with which strategy? 1. Global standardization 2. Localization 3. Transnational 4. International
Technological know-how
Basic factor endowments for a geographic area include all the following EXCEPT: 1. Technological know-how 2. Land 3. Capital 4. Labor
Taller than a functional structure
Because of the corporate headquarters staff, a multidivisional structure is: 1. Taller than a functional structure 2. Flatter than a functional structure 3. No different from a functional structure
Wholly owned subsidiaries
Besides exporting, which entry mode protects the firm's proprietary technology the best? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
All of these
Blockholders hold so much stock that: 1. They care very much how the company is doing 2. They lack liquidity; can't sell and move quickly 3. They can demand better information 4. All of these
horizontal information processing
Communicating sideways or within the same level of the hierarchy is an example of:
vertical information processing
Communicating up and down the chain of command is an example of:
less
Companies with large-block share holders and institutional owners have __________ diversification.
low
Cost leadership strategies have __________ interdependence of functions.
global standardization
Customers are willing to accept a standard version of the product or service in exchange for the lowest possible price in a(n) __________ strategy. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
Local responsiveness
Differences in customer tastes and preferences; in infrastructure and traditional practices; and in distribution channels create pressures for: 1. Host government demands 2. Cost reductions 3. Location economies 4. Local responsiveness
high
Differentiation strategies have __________ interdependence of functions.
wholly owned subsidiaries
Domestic company decides to do everything by itself in a foreign country 1. exporting 2. licensing 3. franchising 4. joint ventures 5. wholly owned subsidiaries
egoism
Donald believes that ethical behavior is anything that provides the maximum benefit for himself. What ethical system does Donald subscribe to? 1. egoism 2. relativism 3. capitalism 4. utilitarianism
shakeout
During which stage of the Industry Product Life Cycle do industries look to international markets to keep growing sales? 1. embryonic 2. growth 3. shakeout 4. maturity
localization/multidomestic
Each product and/or service is significantly different for each country in a(n) __________ strategy. Very decentralized. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
Unethical
Environmental degradation is: 1. Unethical 2. Always illegal 3. Both of these
All of these
Ethics are widely accepted moral principals that apply to the behavior of: 1. Individuals 2. Professionals 3. Organizations 4. All of these
a code of rules or principles to live by
Ethics are: 1. the vision of the organization 2. a code of rules or principles to live by 3. the mission of the organization 4. the laws in a given country
All of these
Ethics officers do things like: 1. Ethics training 2. Ethics auditing 3. Confidentially investigating complaints from employees 4. All of these
$1 million
Federal law set a cap of __________ on fixed salary as a corporate tax deduction.
Opportunistic exploitation
Forcing one party to change the terms of a long-term contract to favor the other party is called: 1. Information manipulation 2. Opportunistic exploitation 3. Anticompetitive behavior 4. Self-dealing
Flatter
Generally we prefer heirarchies that are: 1. Flatter 2. Taller 3. The height of the hierarchy doesn't matter
Selfish managerial motives
Hewlett-Packard's acquisition of Autonomy, as described in the closing case, illustrates a pitfall of M&A that I named but didn't lecture in the previous module. Which pitfall is it? 1. Poor coordination/integration of operations after the acquisition 2. Inability to achieve operating synergies 3. Inadequate screening of target 4. Heavy debt 5. Selfish managerial motives
Let groups know that everyone will be held responsible for outcomes
How can leaders fix "groupthink"?
Both of these
How do stockholders receive a return on their investment in a company? 1. Dividends 2. Stock price appreciation 3. Both of these 4. None of these
All of these
How does a company make profits grow? 1. Do business in a fast-growing industry 2. Attack competitors and take some of their market share 3. Horizontally integrate 4. Expand either internationally or by vertical integration or diversification 5. All of these
Both of these
How does a multidivisional structure reduce bureaucratic costs? 1. Using self-contained divisions to reduce the need to coordinate some value chain activities across business units 2. Using a separate corporate headquarters staff to better control divisions 3. Both of these
All of these
If CEOs revealed full information to stockholders, what would probably happen? 1. Rivals would learn the firm's strategic secrets. 2. Stockholders wouldn't have time to consume all the information. 3. The problem of information asymmetry would be solved 4. All of these
Transnational
If a firm faces high pressures for cost reductions and high pressures for local responsiveness, what multinational strategy applies? 1. Global standardization 2. Localization 3. Transnational 4. International
Global standardization
If a firm faces high pressures for cost reductions and low pressures for local responsiveness, what multinational strategy applies? (Refer to figure 8.4 if you are stuck). 1. Global standardization 2. Localization 3. Transnational 4. International
Localization
If a firm faces low pressures for cost reductions and high pressures for local responsiveness, what multinational strategy applies? 1. Global standardization 2. Localization 3. Transnational 4. International
International
If a firm faces low pressures for cost reductions and low pressures for local responsiveness, what multinational strategy applies? 1. Global standardization 2. Localization 3. Transnational 4. International
low
If cost pressures are __________, foreign customers find the product or service valuable and are willing and able to pay the price.
low
If pressures for local responsiveness are __________, foreign customers will accept a fairly worldwide version of the product or service and will not demand that it be changed to fit each country's tasts of aesthetics.
exporting
If the home country is the best location for the firm's CCs, __________ is a good choice.
deontological
Ignoring the means and focusing only on the goals violoates __________ reasoning.
2
In a matrix structure, each employee has __________ bosses.
Bosses
In a matrix structure, employees report directly to two: 1. Product lines 2. Bosses 3. Geographic areas 4. Types of customers
All of these
In a multidivisional structure each division: 1. Must meet its own profitability goals 2. Is treated like a profit center 3. Competes with other divisions for resources 4. All of these
Corporate-level strategy
In a multidivisional structure the corporate headquarters staff does mostly: 1. Business-level strategy 2. Corporate-level strategy
Both of these
In a multidivisional structure, duplication of functions (value chain activities) in each division is a(an): 1. Advantage because it reduces the need to coordinate functions across business units 2. Disadvantage because it makes the multidivisional structure expensive to operate 3. Both of these
All value chain activities necessary for the division's business-level strategy
In a multidivisional structure, how many activities of the value chain are placed in each division? 1. At least three primary activities 2. Only support activities 3. All value chain activities necessary for the division's business-level strategy 4. None
Agent
In a parent-babysitter scenario, the babysitter would be the: 1. Principal 2. Agent 3. Either of these 4. Neither of these
owners / managers
In agency theory, the principals are the __________ and the agents are the __________. 1. managers / owners 2. owners / managers 3. managers / Board of Directors 4. Board of Directors / managers
The agents
Information asymmetry is a problem in corporations. Which party has the superior information about the situation? 1. The principals 2. The agents 3. Neither--information asymmetry is not a problem
operational controls
Informational or Operational Controls? -controlling inputs (HRM recruitment) -controlling processes (rules and procedures) -controlling results (annual performance)
informational controls
Informational or Operational Controls? -strategic surveillance -premise control -implementation control -special alert control
Top managers in the company
Inside directors are: 1. Top managers in the company 2. Unnecessary on a board 3. Biased toward the principals 4. All of these
Unrelated diversification
Integrating roles are least likely to be needed in a firm with which corporate-level strategy? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
joint ventures
Legal contract between 2 or more firms from different countries 1. exporting 2. licensing 3. franchising 4. joint ventures 5. wholly owned subsidiaries
short-term
Long-Term or Short-Term? -functional, tactical, and many goals -set by middle and lower managers -negotiated with higher-up managers
long-term
Long-Term or Short-Term? -strategic and few goals -set by CEO or TMT -negotiated with stakeholders
The inducements that stockholders get in exchange for their contributions to the corporation carry more risk than the inducements that other stakeholders get in exchange for their contributions.
Look at Figure 11.1. Stockholders are different from other stakeholders because: 1. The inducements that stockholders get in exchange for their contributions to the corporation carry more risk than the inducements that other stakeholders get in exchange for their contributions. 2. Stockholders cannot be members of any other stakeholder group, but individuals can be members of multiple non-stockholder groups. For example, an employee can also be a customer; a supplier can also be a creditor.
franchising
Market transaction, legal contract to use a firm's brand name or trademark in exchange for fees; FOR SERVICES 1. exporting 2. licensing 3. franchising 4. joint ventures 5. wholly owned subsidiaries
exporting
Market transaction, legal contract, easiest and carries lowest risks 1. exporting 2. licensing 3. franchising 4. joint ventures 5. wholly owned subsidiaries
licensing
Market transaction, legal transaction to make and distribute a firm's product in exchange for royalties; FOR GOODS 1. exporting 2. licensing 3. franchising 4. joint ventures 5. wholly owned subsidiaries
teleological reasoning
Moral argument is placed in a results-oriented or consequentialist terms where the consequences of an act determines its morality. If good outweighs the bad, it is the right thing to do. 1. telelogical reasoning 2. deontological reasoning
deontological reasoning
Moral argument that states the results don't matter. An action is ethical if the decision maker's intentions are good or right or fair or just. 1. telelogical reasoning 2. deontological reasoning
All of these
Moral courage is important for: 1. Executives 2. All levels of managers 3. Employees 4. Individuals 5. All of these
weak
Organizations with a cost leadership strategy typically have __________ organizational culture.
strong
Organizations with a differentiation strategy typically have __________ organizational culture.
strong
Organizations with a global strategy typically have __________ organizational culture.
weak
Organizations with a multidomestic strategy typically have __________ organizational culture.
strong
Organizations with a related diversification strategy typically have __________ organizational culture.
medium to strong
Organizations with a transnational strategy typically have __________ organizational culture.
medium
Organizations with a vertical integration strategy typically have __________ organizational culture.
medium
Organizations with an international strategy typically have __________ organizational culture.
weak
Organizations with an unrelated diversification strategy typically have __________ organizational culture.
Not employed full-time by the company
Outside directors are: 1. Not employed full-time by the company 2. Unnecessary on a board 3. Biased toward the agents 4. All of these
All of these
Principals put governance mechanisms in place to: 1. Control agents 2. Monitor the behavior of agents 3. Align incentives between principals and agents 4. All of these
global standardization
Production processes and value chains are split up across countries with the cheapest and most favorable locations in a(n) __________ strategy. 1. international 2. localization/multidomestic 3. global standardization 4. transnational
internal succession
Promotes continuity, morale, firm-specific knowledge. 1. internal succession 2. external succession
heterogenous team
Promotes innovation and strategic change. 1. heterogeneous team 2. homogeneous team
external succession
Promotes new ideas, board oversight. 1. internal succession 2. external succession
homogeneous team
Promotes teamwork and cohesiveness. 1. heterogeneous team 2. homogeneous team
implementation control
Purpose: assess early stages of strategy rollout Nature: structured, monitor milestones 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
special alert control
Purpose: crisis management Nature: structured, centralized 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
strategic surveillance
Purpose: detect potential O+T for firm Nature: general, unfocused 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
premise control
Purpose: monitor assumptions of a strategic plan Nature: very structured 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
Both of these
Pursuit of profitability and profit growth often leads to corporate behavior that is: 1. Illegal 2. Unethical 3. Both of these 4. None of these
Reengineering
Redesigning business processes to improve performance is called: 1. Strategy implementation 2. Eliminating bureaucratic costs 3. Restructuring 4. Reengineering
Strategic control systems
Refer to Figure 12.1. Which element of the figure provides incentives for employees and feedback about performance? 1. Organizational culture 2. Organizational design 3. Organizational structure 4. Strategic control systems
marketing
Regardless of the MNC strategy, __________ takes on the look of the host country.
high
Related diversification strategies have __________ interdependence of functions.
quantitative
Rewards for cost leadership strategies are __________ based.
qualitative
Rewards for differentiation strategies are __________ based.
qualitative
Rewards for related diversification strategies are __________ based.
quantitative
Rewards for unrelated diversification strategies are __________ based.
quantitative and qualitative
Rewards for vertical integration strategies are __________ based.
Both of these
Self-dealing is: 1. An ethical problem 2. An agency problem 3. Both of these 4. None of these
financial
Setting unrealistic __________ goals is the driver of many ethical transgressions on the part of subordinates.
All of these
Strong corporate governance is supposed to: 1. Make corporations more ethical 2. Suppress self-dealing 3. Minimize information manipulation 4. All of these
McKinsey 7-S Framework
Structure, Strategy, Systems, Style, Staff, Skills, Superordinate goals
TRUE
T/F: A functional organization structure is conducive to building a strong, cohesive organizational culture.
TRUE
T/F: Acconting shenanigans led to the Sarbanes-Oxley Act of 2002.
FALSE (everyone looks to the CEO for leadership)
T/F: CEOs can delegate business ethics and corporate social responsibility to others.
TRUE
T/F: Companies use global expansion to increase profitability and profit growth.
TRUE
T/F: Global expansion increases the size of the market for a firm's goods or services.
TRUE
T/F: Global expansion lowers costs through economies of scale, more productive use of PP&E, and greater bargaining power over suppliers.
TRUE
T/F: In a functional organization structure, the head of each business function (R&D, marketing, materials management, etc.) reports to the CEO.
FALSE
T/F: Insiders are compensated for being on a board.
TRUE
T/F: It's important for rewards to be linked to strategic control systems.
TRUE
T/F: Location economies refer to the economic benefits of performing a value chain activity in the best geographic location.
TRUE
T/F: Members of the board of directors are elected by stockholders
TRUE
T/F: Most blockholders are institutional investors.
TRUE
T/F: Most institutional investors are not blockholders.
TRUE
T/F: Organizational culture acts as a control.
TRUE
T/F: Outsiders are compensated for being on a board.
FALSE
T/F: Stock options are not the reason for inflated executive pay packages; thus, stock options are not controversial.
FALSE
T/F: There's no such thing as governance mechanisms inside a company.
comparative advantage
The Dominican Republic has a _________ _________ over New England in growing bananas.
no material relationship
The SEC requires a majority of directors to be independent, that is, having ________________________ with the listed company.
Stock-based compensation
The best way to motivate the CEO to behave in the stockholders' best interest is: 1. The board of directors 2. Stock-based compensation 3. Financial statements and audits 4. The takeover constraint
related diversification
The corporate-level strategy that creates the highest shareholder value is __________.
The CEO
The dominant member of a corporate board is usually: 1. The CEO 2. The main outside director 3. The board secretary
immoral
The goal of __________ decision making in business is profitability at any price.
operational
The main purpose of _________ controls is to make sure things get done right.
informational
The main purpose of __________ controls is to make sure the right things get done.
Product-team structure
The most recent innovation in organizational structures is the: 1. Product-team structure 2. Geographic structure 3. Functional structure 4. Matrix structure
shareholders
The purpose of governance controls, in America, is to make sure that executives of publicly-owned corporations diligently pursue whose interests? 1. stakeholders 2. stockholders 3. shareholders
Hard to balance
The relationship between profitability and profit growth is: 1. Linear 2. Simple 3. Hard to balance
All of these
The takeover constraint is: 1. What can happen if a firm's market value falls too low 2. Associated with corporate raiders 3. The risk of being taken over by another company 4. All of these
top managers should articulate and model ethical behaviors
To make sure ethical issues are considered in business decisions: 1. companies should eliminate the principal-agent approach 2. companies should have a no-layoff policy 3. top managers should articulate and model ethical behaviors 4. top managers should generously grant stock options
low
Unrelated diversification strategies have __________ interdependence of functions.
Substandard working conditions
Use of sweatshop labor illustrates: 1. Opportunistic exploitation 2. Substandard working conditions 3. Environmental degradation 4. Corruption
medium
Vertical integration strategies have __________ interdependence of functions.
1. cheaper resources 2. expand new markets 3. competitive rivalry
What are the 3 motivations to internationalize?
joint ventures and wholly owned subsidiaries
What are the only 2 foreign entry modes that Multinational Companies are concerned with?
Both of these
What is a stock option? 1. The right to purchase stock at a certain point in the future for a set price 2. The most common pay-for-performance compensation 3. Both of these 4. None of these
firm size
What is the best predictor of CEO compensation?
Exporting
What is the first entry mode for most manufacturers seeking global expansion? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
a stock grant conveys immediate ownership of the stock, whereas a stock option provides merely the right to buy the stock at a certain price at some point in the future
What's the difference between a stock grant and a stock option?
more
When individuals feel personally responsible, they make __________ ethical decisions.
strategic business units
When it comes to multidivisional structures, __________ suits only related diversification. 1. standard multidivisional structure 2. strategic business units 3. holding company
holding company
When it comes to multidivisional structures, __________ suits only unrelated diversification. 1. standard multidivisional structure 2. strategic business units 3. holding company
standard multidivisional structure
When it comes to multidivisional structures, __________ suits vertical integration or related diversification. 1. standard multidivisional structure 2. strategic business units 3. holding company
less
When no one feels personally responsible for an action, we see _________ ethical decisions.
Output control
When the general manager of a division gets a bonus if the division's quarterly OPM exceeds 8%, this is a form of: 1. Standardization 2. Personal control 3. Output control 4. Behavior control
joint ventures and wholly owned subsidiaries
Which 2 foreign entry modes require foreign direct investment (FDI)?
exporting, licensing, and franchising
Which 3 foreign entry modes are market transaction?
increase coordination potential
Which coordination approach? improving vertical and horizontal information processing, adding managers, letting employees make decisions 1. basic management techniques 2. increase coordination potential 3. reduce the need for coordination
basic management techniques
Which coordination approach? managerial hierarchy, standarization of rules and policies, works best with a simple structure 1. basic management techniques 2. increase coordination potential 3. reduce the need for coordination
reduce the need for coordination
Which coordination approach? set up independent units, use up slack resources, multidivisional structure 1. basic management techniques 2. increase coordination potential 3. reduce the need for coordination
Unrelated diversification
Which corporate-level strategy is the easiest and cheapest to manage? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
Related diversification
Which corporate-level strategy needs the strongest organizational culture as a control? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
Related diversification
Which corporate-level strategy requires the least financial controls? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
Related diversification
Which corporate-level strategy requires the most integration between divisions? 1. Vertical integration 2. Related diversification 3. Unrelated diversification
Organizational structure
Which element of the figure involves grouping tasks, functions, and divisions; allocating authority and responsibility; and integration and integrating mechanisms? 1. Organizational culture 2. Organizational design 3. Organizational structure 4. Strategic control systems
Franchising
Which entry mode allows a foreign company to use a trademark? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
Wholly owned subsidiaries
Which entry mode has the highest overall costs? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
Exporting
Which entry mode has the highest transportation costs? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
Licensing
Which entry mode involves royalty payments? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
Joint ventures with local firms
Which entry mode provides the deepest knowledge about the foreign country? 1. Exporting 2. Licensing 3. Franchising 4. Joint ventures 5. Wholly owned subsidiaries
Microsoft's bundling of Internet Explorer to Windows
Which illustrates anticompetitive behavior? 1. Nike's use of sweatshop labor 2. Tobacco companies' suppression of research linking smoking to cancer 3. Microsoft's bundling of Internet Explorer to Windows 4. None of these
Teams
Which integrating mechanism is most complex? 1. Direct contact 2. Liaison roles 3. Teams 4. Tie - all are equally complex
Both of these
Which is true? 1. Stockholders have to place some trust in agents. 2. Some agents are not trustworthy. 3. Both of these
amoral
Which kind of decision maker would look for loopholes that would allow them to do what they want to do? 1. moral 2. immoral 3. amoral
liaison role
Which lateral relations? a person is designated in each unit as the official person for coordinating with other units at the same level of the organization 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
integrator role
Which lateral relations? expensive, full-time role, attends to coordination of two units, not a member of either unit 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
managerial linking role
Which lateral relations? expensive, has more authority than the managers of the units being coordinated 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
matrix structure
Which lateral relations? highest bureaucratic costs, most coordination required; only used if necessary 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
team
Which lateral relations? permanent, used for heavy coordination, more expensive 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
direct contact
Which lateral relations? simplest, fastest, cheapest; individuals involved communicate and coordinate their activities 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
task force
Which lateral relations? temporary, individuals from different deparments meet regularly and at designated time until an assignment is complete; disbanded upon completion 1. direct contact 2. liaison role 3. task force 4. team 5. integrator role 6. managerial linking role 7. matrix structure
holding company
Which multidivisional structure? a company whose primary business is owning a controlling share of stock in other companies 1. standard multidivisional structure 2. strategic business units 3. holding company
strategic business units
Which multidivisional structure? goals are mixed between subjective and objective, and based on corporation, SBU, and divisional performance 1. standard multidivisional structure 2. strategic business units 3. holding company
holding company
Which multidivisional structure? goals are objective, quantifiable, and based on division's performance 1. standard multidivisional structure 2. strategic business units 3. holding company
strategic business units
Which multidivisional structure? groups of divisions with similar products, markets, technology, and/or geographic territories 1. standard multidivisional structure 2. strategic business units 3. holding company
standard multidivisional structure
Which multidivisional structure? heavy coordination, cooperative sharing, rewards are subjective, necessity for tight links among divisions 1. standard multidivisional structure 2. strategic business units 3. holding company
standard multidivisional structure
Which multidivisional structure? major goals are subjective, strategic, and based on corporation's performance; minor goals are objective, financial, and based on division's performance 1. standard multidivisional structure 2. strategic business units 3. holding company
holding company
Which multidivisional structure? small but important corporate HQ staff, instead of businesses and divisions they have a portfolio of investments, divisions are cash cows, no coordination between divisions 1. standard multidivisional structure 2. strategic business units 3. holding company
strategic business units
Which multidivisional structure? tallest structure, adds layer of management, high degree of coordination required inside SBUs, low degree of coordination required across SBUs 1. standard multidivisional structure 2. strategic business units 3. holding company
International
Which multinational strategy is appropriate when environmental pressures are easiest? 1. Global standardization 2. Localization 3. Transnational 4. International
Transnational
Which multinational strategy looks the most like a combination business-level strategy, seeking both cost and differentiation advantages? 1. Global standardization 2. Localization 3. Transnational 4. International
Global standardization
Which multinational strategy looks the most like a cost leadership business-level strategy (described in Module 4)? 1. Global standardization 2. Localization 3. Transnational 4. International
Localization
Which multinational strategy looks the most like a differentiation business-level strategy (described in Module 4) with different product offerings for different countries? 1. Global standardization 2. Localization 3. Transnational 4. International
Localization
Which multinational strategy relies on customization of the product/service to national tastes, traditions, and preferences? 1. Global standardization 2. Localization 3. Transnational 4. International
Global standardization
Which multinational strategy relies on economies of scale, location economies, and standardized products/services? 1. Global standardization 2. Localization 3. Transnational 4. International
Transnational
Which multinational strategy requires a firm to (1) drive down costs, (2) respond to local preferences, and (3) transfer CCs and DCs across countries? 1. Global standardization 2. Localization 3. Transnational 4. International
Transnational
Which multinational strategy works best with a global matrix structure? 1. Global standardization 2. Localization 3. Transnational 4. International
Localization
Which multinational strategy works best with a worldwide area structure? 1. Global standardization 2. Localization 3. Transnational 4. International
Both of these
Which multinational strategy works best with a worldwide product divisional structure? 1. Global standardization 2. International 3. Both of these
The volume of world merchandise trade
Which of the following have risen in the last 50 years? 1. The volume of world merchandise trade 2. Regulations preventing foreign companies from doing business in most countries 3. Average tariffs in advanced nations 4. Barriers to international trade and investment
Develop targets for divisional managers
Which of the following is NOT a responsibility of the Board of Directors? 1. Minimize opportunism on the part of executives 2. Develop targets for divisional managers 3. Monitor corporate strategy decisions and ensure that they are consistent with stockholder interests 4. Hire, fire, and compensate the CEO
Self-dealing
Which of the following is NOT a root cause of unethical behavior? 1. Lack of a personal ethical code that values integrity 2. An organizational culture that emphasizes profits regardless of the costs 3. Self-dealing 4. Unethical leadership
Stock-based compensation schemes for executives can align management and stockholder interests
Which of the following statements is true in the context of stock-based compensation? 1. Critics deny that stock-based compensations motivate managers to improve company performance 2. Stock options usually result in information asymmetry 3. Granting more stock options results in an increase in stockholder equity 4. Stock-based compensation schemes for executives can align management and stockholder interests
An international division
Which organization structure do firms typically adopt when they first expand internationally? 1. An international division 2. A worldwide area structure 3. Worldwide product divisions 4. A global matrix
Both of these
Which stakeholders have mixed feelings about a firm's profitability and profit growth? 1. Suppliers 2. Customers 3. Both of these 4. None of these
All of these
Which stakeholders want profitability and profit growth at a firm? 1. Employees 2. Creditors 3. Stockholders 4. All of these
Multidivisional
Which structure keeps the business-level strategy close to the customer, has high bureaucratic costs, and is hard to achieve economies of scope?
superordinate goals and shared values
Which wheel of the McKinsey 7-S Framework is the organizational culture?
The founder
Who has the greatest imprint on an organization's culture? 1. Managers at every level of hte hierarchy 2. The founder 3. The product champion 4. Functional-level managers mostly
greed
Why would smart bankers take on too much risk? Why would unqualified borrowers be given big mortgages? Why would the credit ratings agencies vouch for junk financial instruments? Why would Wall Street trade complicated securities that they didn't understand?
Information asymmetry
__________ is a situation where an agent has more knowledge about resources he or she is managing than the principal has. 1. Self-dealing 2. Greenmail 3. Information asymmetry 4. On-the-job consumption
golden parachute
a very large severance package for the CEO and/or the top management team; can induce poor-performing executives to leave
utilitarianism
an ethical form of reasoning the goal of society should be to bring about the greatest happiness for the greatest number of people
Information Asymmetry
an imbalance of relevant information such that one party has superior knowledge about what is going on
bonus
an incentive to improve short-term performance; a conditional payment determined by meeting certain pre-determined performance targets
ethics ombudsperson
an official given the responsibility of corporate conscience who hears and investigates ethics complaints and informs top management of potential ethics issues
Product Team Structure
an organizational structure in which employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his or her direct subordinates
matrix structure
an organizational structure in which managers try to achieve tight coordination between functions, particularly R&D, production, and marketing
egoism
an unethical form of reasoning that is self-centered, fixated on greed
white knights
another investor who could acquire the target firm instead of the corporate raider; typically pay more and treat management/employees better after the acquisition
amoral
assume ethics does not apply to MGMT decisions, unaware 1. moral 2. immoral 3. amoral
organizational culture
assumptions, beliefs, and shared values that dictate what is normal behavior for everyone who works in a company
transnational
combination of cost leadership and differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
comparator
compares current performance to standard 1. sensor 2. comparator 3. regulator
moral
conform to ethical and professional standards 1. moral 2. immoral 3. amoral
global standardization
cost leadership 1. international 2. localization/multidomestic 3. global standardization 4. transnational
immoral
deliberately contrary to accepted ethical principles 1. moral 2. immoral 3. amoral
sensor
detects current performance 1. sensor 2. comparator 3. regulator
localization/multidomestic
differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
implementation control
establishing and monitoring milestones that must be met if a strategy rollout is to be successful 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
institutional owners
financial institutions such as mutual funds and pension funds that control large-block shareholder positions
operational controls
forms of controls based on pre-set objectives, specific performance targets, measuring performance, negative feedback loops, meant to achieve continuous progress
strategic surveillance
general alertness for any opportunity or threat from the external environment that could affect the internal workings of the firm; more informal 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
comparative advantage
getting access to low-cost factor markets like land, labor, and capital
transnational
high cost pressures, high pressures for geographic differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
global standardization
high cost pressures, low pressures for geographic differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
Board Busyness
holding three or more corporate directorships
poison pill
if one shareholder buys enough stock, other shareholders have the right to buy additional shares at a deep discount; discourages corporate raiders because it dilutes their ownership stake
Related Outsiders
individuals not involved with the firm's day-to-day operations, but who have a relationship with the company
localization/multidomestic
low cost pressures, high pressures for geographic differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
international
low cost pressures, low pressures for geographic differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
regulator
makes appropriate corrections 1. sensor 2. comparator 3. regulator
special alert control
management actions undertaken to thoroughly, and often very rapidly, reconsider a firm's strategy because of a sudden, unexpected event 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
negative feedback loop
measures a performance against a standard; if not up to standard, its goal is to narrow the gap between the performance and the standard
international
not cost leadership or differentiation 1. international 2. localization/multidomestic 3. global standardization 4. transnational
staggered board elections
only allowing directors to serve 3-year terms, so that only 1/3 of the directors are up for election each year; can slow down a potential takeover because corporate raiders cannot change all the board members in a single year
Related Outsiders
prior executives of the firm, family, close associates, friends of insiders, representatives from a firm's largest supplier or buyer, founders or former executives of companies acquired by the firm...these are all examples of:
values
priorities that have considerable importance and meaning to the members of a culture 1. assumptions 2. values 3. norms
Corporate Governance
refers to the processes and mechanisms by which companies are directed and controlled at the top
stock options
rights to buy a certain number of shares of stock at a specified price
norms
standards of behavior 1. assumptions 2. values 3. norms
stock grants
stock given to employee as compensation/part of compensation
self-dealing
taking advantage of an executive position to serve self-interest above the interest of shareholders
integration
the coordination of the separate parts of an organization after division of labor (differentiation)
universalism
the ethical form stating that all people should uphold certain values that society needs to function
horizontal differentiation
the formal division of the organization into subunits
vertical differentiation
the location of decision-making responsibilities within a structure, referring to centralization or decentralization, and also the number of layers in a hierarchy, referring to whether an organizational structure is tall or flat
informational controls
the most complex control processes; done at the highest levels by CEO or TMT; largely subjective
strike price
the price at which the stock or commodity underlying a call option (such as a warrant) or a put option can be purchased (called) or sold (put) during a specified period
socialization
the process by which people learn customs and values of their culture
takeover constraint
the risk of being acquired by another company
premise control
the systematic recognition and analysis of assumptions upon which a strategic plan is based, to determine if those assumptions remain valid in changing circumstances and in light of new information; more formal 1. strategic surveillance 2. premise control 3. implementation control 4. special alert control
greenmail
to prevent a takeover, the target company buys back its own stock from a corporate raider at a substantial premium; in exchange the raider agrees not to acquire the company for a period of time
large-block shareholders (blockholder)
typically own at least 5 percent of a company's issued shares; have enough clout to force companies to make changes; can be any legal entity
assumptions
underlying beliefs that members of a culture take for granted 1. assumptions 2. values 3. norms
underwater
when the stock price is higher than the market price at the future time when the option can be used