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Research shows that the vast majority of acquisitions results in value creation rather than value destruction. It is not necessary for a core competence to be difficult to imitate or to be nonsubstitutable. Answer: FALSE For a core competence to […]

Forbearance is a particularly aggressive type of competitive attack. The primary participants in corporate governance, according to Monks and Minow, are the shareholders, board of directors, and employees. Answer: FALSE Robert Monks and Nell Minow, two leading scholars in corporate […]

In integrity-based ethics programs, organizational ethics is seen as the responsibility of the employees. When the U.S. currency appreciates against other currencies, it becomes more expensive for American companies that have branch operations overseas, when they declare foreign profits in […]

Historical comparisons are most appropriate during periods of recession or economic boom. There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators. Answer: FALSE Economic indicators are associated with equity markets. When stock […]

Expanding the global presence of a firm does not automatically increase its scale of operations. In value-chain analysis, finance and accounting are considered part of the general administration of a firm. Answer: TRUE General administration consists of a number of […]

The concept of shared value redefines the purpose of the corporation as creating shared value in order to create a more even distribution of the profits to all employees, not just top level executives. The organizational reward system is typically […]

In single loop learning, the assumptions, premises, goals, and strategies of the organization are continuously monitored, tested, and reviewed. Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers. Answer: TRUE Competitive […]

In a simple structure where the owner manager makes most of the important decisions, extensive rules and regulations are used to maintain order. In emerging economies and continental Europe, principal-principal conflicts are frequent. These consist of conflicts between controlling shareholders […]

The Millennial generation expects employers to provide incentives to attract and retain them. A company that does this will have a competitive advantage. The power of suppliers will be enhanced if they are able to maintain a credible threat of […]

As markets mature the magnitude of differentiation and cost leadership advantages among competitors decrease. Leaders are not expected to accept personal responsibility for ethical behavior in an organization, because ethics is a matter of individual choice. Answer: FALSE Managers and […]

The Michael Porter Diamond of National Advantage is a framework that explains why countries foster successful multinational corporations based on factor endowments and demand conditions only. Firms that compete on overall cost leadership are vulnerable if there is an increase […]

Effective leadership can play a large role in fostering corporate entrepreneurship. Corporate entrepreneurship can have a very positive impact on the bottom line of a firm. Central to agency theory is the relationship between two primary players, the principals (stockholders) […]

Behavioral barriers to change occur because of conflicts between departments, conflicts arising from power relationships, and refusal to share information. From the individual perspective, social networks deliver three unique advantages: private information, access to diverse skill sets, and power. Answer: […]

A strategy of related diversification requires a need to reorganize around product lines and geographic markets. This leads to a divisional structure. According to the transaction cost perspective in analyzing vertical integration, every market transaction involves some transaction cost. Answer: […]

Core competencies do not create value in a business. Choosing which new entry strategy is best depends on competitive financial and marketplace considerations with the greatest opportunities most likely to be in existing markets, rather than in new markets. Answer: […]

There are many advantages of an ethical organization, but it generally has little to do with employee commitment and motivation to excel. Support activities provide support for primary activities, but not each other. Answer: FALSE Support activities (procurement, technology development, […]

To successfully empower employees to achieve organizational goals, leaders must perform the tasks of resource allocation and power brokering. Product innovations are commonly associated with a differentiation strategy. Answer: TRUE Product innovations tend to be more common during the earlier […]

International expansion can extend the life cycle of a product that is in its maturity stage in the company home country. The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the […]

Emotional intelligence (EI) is generally a better predictor of life success than intelligence quotient (IQ). According to the textbook, strategic management does not consist of the analyses that an organization undertakes in order to create and sustain competitive advantages. Answer: […]

The risk of being acquired by hostile raiders is often referred to as the takeover constraint. Countries with a strong supplier base benefit by adding efficiency to downstream activities. Answer: TRUE Related and supporting industries enable firms to manage inputs […]

Ethical crises are bad for organization reputation, but they rarely have any financial consequences. The laws and the enforcement of laws associated with the protection of intellectual property rights, represent a significant currency and management risk to multinational firms. Answer: […]

Path dependency has no impact on the inimitability of resources. Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization. Answer: TRUE Organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes […]

According to author Jeffrey Pfeffer, the advantages of teams are that employees control themselves, develop more creative solutions to problems, and permit the absorption of administrative tasks previously performed by specialists. The virtual type of organization is a network of […]

In considering the business from the internal business perspective using the balanced scorecard, periodic financial statements are used to indicate the consequences of improved quality, response time, productivity, and innovative products. These consequences include improved sales. An advantage of international […]

Some excellent examples of mission statements are: To be the happiest place on earth (Disneyland) and Restoring patients to full life (Medtronic). Research has shown that executives who have large holdings of stock in their firm were more likely to […]

Warby Parker makes eyeglasses. It keeps costs low through several means and has a social mission. This is an example of a firm that uses a combination strategy. A strength of the balanced scorecard is that it is very easy […]

According to the text, effective e-teams identify group members with a proper balance of technical and interpersonal skills. A major disadvantage of a divisional structure is that when divisions are separated to manage individual product markets, there is a separation […]

The Internet has provided a small subset of companies with greater tools for managing costs. Social responsibility is the idea that organizations are not only accountable to stockholders but also to the community-at-large. Answer: TRUE Social responsibility is the expectation […]

A firm can attain an overall cost leadership position by using automated technology to reduce scrappage rates. Product champions are critical during the period after a new venture project has been defined but before it has gained momentum and achieved […]

A primary benefit of the balanced scorecard is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the innovation and improvement activities of the organization. Although changes in the general environment may often adversely or […]

Environmental scanning and competitor intelligence provide important inputs for forecasting activities. Decisions by boards of directors are always consistent with shareholder interests. Answer: FALSE The board of directors (BOD) are the elected representatives of the shareholders charged with ensuring that […]

Knowledge workers are more loyal to their companies than traditional workers. Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate […]

Entrepreneurial firms are often in a strong position to use combination strategies, because they have the flexibility to approach situations uniquely. In a global strategy a firm operates all of its businesses under a single common strategy, regardless of location. […]

One of the criteria for a core competence is that the different businesses in the corporation must be similar in at least one important way related to the core competence. Founders using a pioneering new entry strategy look for opportunities […]

Because the modular form of organizing involves outsourcing vital functions, modular firms often forfeit full strategic control. Focus, by itself, often constitutes a competitive advantage. Answer: FALSE A focus strategy is based on the choice of a narrow competitive scope […]

Systemic barriers to change refer to elements of organization design, structure, and reporting relationships that impede the flow of information. Managing virtual structures requires new and difficult-to-acquire managerial skills. Answer: TRUE One of the negatives associated with the virtual organization […]

The trend towards worldwide markets makes it easier to predict where competitors will spring up. First movers in an industry often capture above-average profits, but usually find it difficult to maintain early market share gains. Answer: FALSE First movers have […]

Theodore Levitt, a marketing strategist, argued that people around the world are willing to sacrifice preferences in product features, functions, and design for lower prices and high quality. Buyer power tends to be higher if suppliers provide undifferentiated or standard […]

Procter and Gamble used communities of practice and human resource practices to help it achieve effective collaboration and integration across its different business units. This effort resulted in the successful development of the Crest Whitestrips product and is an example […]

The Sarbanes-Oxley Act of 2002 stipulates that executives of a firm will still be able to sell their shares in the firm when other employees cannot. The success of an adaptive new entrant can be limited, if the value proposition […]

A franchise generally expires after a few years, whereas a license is designed to last into perpetuity. Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis. Answer: TRUE Service is a […]

Corporate ventures that use real options logic in decision making tend to keep total investment low in order to minimize the downside risk of a project. The difference between the market value and book value of a firm is its […]

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders. Competitive benchmarking is a method of seeking the best examples of […]

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures. Products and services that are difficult to imitate help firms sustain their profitability. Answer: TRUE […]

Intellectual property rights are easier to define and protect than property rights for physical assets (e.g., plant and equipment). Sales quotas, operating budgets, and production schedules are examples of traditional controls. Answer: TRUE Traditional control systems include sales quotas, operating […]

In technology intensive industries, the duration of competitive advantages is declining. Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global. Answer: TRUE All firms must balance the need to lower costs (where highly standardized […]

Leaders play an important role in sustaining organization culture, but they are powerless to change it. Organizational goals and objectives should be vague in order to allow for changes in strategy. Answer: FALSE Specific is one criterion for strategic objectives. […]