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Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups irrespective to how the company does so. The personal computer industry is uniquely dependent upon a powerful supplier, Intel. Answer: TRUE […]

Control systems can help managers evaluate how efficiently they are producing goods and services. Wal-Mart is a large, complex organization. It most likely utilizes a flat organizational structure. Answer: FALSE A differentiation business model is based on pursuing a set […]

Patents typically provide the greatest barrier to imitation. In Porter’s framework, the stronger the five forces, the more limited the ability of established companies to raise prices and earn greater profits. Answer: TRUE Through efficient logistics at Gina’s Grocers, the […]

An effective governance arrangement exists when the CEO is also the chair of the board of directors. If a company generates free cash flow, that money technically belongs to shareholders. Answer: TRUE Flat structures can lead to information distortion when […]

High tech industries are often dependent on complementor industries for their mutual success. The best part of global strategic alliances is that selection of the right partner does not affect success of the alliance. Answer: FALSE The more utility a […]

By exploiting a positive feedback loop, Dolby Laboratories, became the standard for sound quality. XYZ Technologies Inc. was one of the first companies to utilize inter-office e-mail. In 1995, before many other companies, managers at XYZ Technologies Inc. saw that […]

A product’s appeal to customers’ psychological desires cannot be considered a source of differentiation. Factor endowments-the cost and quality of factors of production-are a prime determinant of the competitive advantage that certain countries have in certain industries. Answer: TRUE A […]

If a company’s profitability is higher than the industry average, it has a competitive advantage. Southwest Airlines, Sony, and Costco conduct business in two or more countries. These companies are referred to as multinational companies. Answer: TRUE A fragmented industry […]

A business model is managers’ conception of how the set of strategies their company pursues should mesh together into a congruent whole, thus enabling the company to gain a competitive advantage and achieve superior profitability and profit growth. The building […]

One advantage of a joint venture is that a company may benefit from a local partner’s knowledge of the many dimensions of a host country. In 1995, Dell Computer changed its organization structure from a market structure to a functional […]

Through stock ownership plans, stockholders receive employee benefits. Research suggests that companies that acquire many businesses over time become expert in this process and so can generate significant value from their acquisitions. Answer: TRUE Together with an analysis of the […]

One way a diversified company can increase its profitability is by acquiring inefficient or poorly managed companies and then restructuring them to improve their performance. The organizational hierarchy is flatter in a Multidivisional structure than in a product or functional […]

Divisional battles may lead to battles over transfer pricing. Government deregulation of telephone service lowered the barriers to entry and lowered industry profit margins. Answer: TRUE A union and the general public are examples of internal stakeholders. Answer: FALSE Development […]

The term information asymmetry describes the difference in personal ethics that agents and principals have. Few integrating mechanisms are needed when a company uses a global-area structure. Answer: TRUE Market penetration involves the creation of new or improved products to […]

At the heart of any company’s business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure. A joint venture occurs when two equal-sized firms agree to […]

The need for integrating mechanisms is greater when a company’s structure is more complex. Most manufacturing companies begin their global expansion by exporting. Answer: TRUE Fortunately, focusers are not vulnerable to shifting consumer tastes, because of brand loyalty that comes […]

Cypress Semiconductor utilizes a computer-based information system. Such a system would allow managers to manage what employees and teams do in this decentralized organization. Toyota’s lean production system is the basis of its competitive advantage. Answer: TRUE A company may […]

One of the factors that distinguishes organizations in the nonprofit sector from for-profit businesses is the lack of concern for strategic management. To foster the development of the matrix-in-the-mind concept and promote cooperation, companies are increasingly making use of the […]

The Cott Corporation, in the soft drink industry, is an example of how a company failed to overcome barriers to entry in an industry. Poor positioning strategy arises when a company introduces a potentially attractive new product but sales fail […]

A typical matrix organizational structure is A.flat and decentralized. B.flat and centralized. C.tall and decentralized. D.tall and centralized. E.none of these. Pursuing strategies that maximize the long-run profitability and profit growth of a company benefits which group(s) of stakeholders? A.Employees […]

The more a resource is firm-specific and difficult to imitate, the more likely a company holding that resource is said to have a distinctive competency. Strategic control systems are the primary governance mechanisms established within a company to reduce the […]

An appropriate reason to diversify is to pool the risk from several business ventures in order to create a more stable income stream. General managers bear responsibility for the overall performance of the company or for one of its major […]

Poor commercialization occurs when there is definite customer demand for a new product, but the product is not well adapted to customer needs because of factors such as poor design and poor quality. An international strategy may not be viable […]

At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined together to create a complete meal. This is an example of diversification. One assumption of agency theory is that the principals have more information […]

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary. Access to cheaper capital is an example of an economy of scale. Answer: FALSE A company searching for […]

____ can help an organization overcome inertia. A.Power struggles B.Capabilities C.Prior strategic commitments D.A crisis E.The Icarus paradox To be commercially successful, new products must be developed with ____ utmost in mind. A.manufacturing requirements B.engineering technology C.customer requirements D.sales techniques […]

If consumer tastes change and a focuser’s niche disappears, the danger for the focuser is that it might have difficulty shifting resources from its niche to another market segment. An advantage of related diversification is that it allows a company […]

Research finds that centralization of authority is never advantageous, not even in time of crisis. Strategic group analysis allows managers to focus only on what is happening in their group. Answer: FALSE Control through culture is so powerful because once […]

ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to produce profitability. Phil is an employee at Global Tech, Inc. He is considered an external stakeholder. Answer: FALSE The importance of reliability in […]

Differentiation leads to high brand loyalty, which in turn significantly increases the threat of new firms entering the industry. Honda redefined the U.S. motorcycle industry with a brilliantly conceived intended strategy. Answer: FALSE Clothing companies Aeropostale and Forever 21 compete […]

While many agency relationships work well, problems arise when agents and principals have different goals. Market development strategy involves finding new market segments for a company’s products. Answer: TRUE It can be argued that Microsoft’s near monopoly of PC operating […]

To be successful in a growth industry, it is important to remain focused on the needs of the early adopters of the new product. When a company licenses its technology it can quickly lose control over it. Answer: TRUE An […]

When companies become too tall and the chain of command too long, strategic managers tend to lose control over the hierarchy and, subsequently, their strategies. A price-cutting strategy will keep out an entrant that plans to adopt a new production […]

A company should pursue related diversification only to enhance the competitive position of its core business. The more interdependent the divisions in a multidivisional structure, the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular […]

Between 2005 and 2011, Blue Drink Company increased its net profit from $5 million to $25 million. It was able to do this by expanding its product line to include a wider variety of drink flavors as well as introducing […]

A divestment strategy’s success is often dependent upon good timing. Digital music downloads have high marginal costs. Answer: FALSE At Adam’s bicycle repair shop, the primary value chain activity of production occurs each time a customer’s bicycle is repaired. Answer: […]