Archives

According to Peter Drucker,the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies. There are three variations of the multidivisional structure. a. True b. False […]

Research suggests that institutional activism may not have a strong direct effect on firm performance but may indirectly influence the targeted firm’s strategic decisions, including those concerned with international diversification and innovation. a. True b. False The board of directors […]

While the implementation of the Sarbanes-Oxley Act in 2002 has been controversial to some, most believe that it has had positive results in terms of protecting stakeholders and certain stockholder interests. a. True b. False Resources are the source of […]

The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the board of directors is composed of sympathetic outside members and insiders who report to the CEO. a. True b. False Ikea offers […]

The best of the generic business strategies is the integrated cost leadership/differentiation strategy. a. True b. False The worldwide geographic area structure differs from the worldwide product divisional structure in the level of centralization of decision making. a. True b. […]

Corporate governance mechanisms are designed to ensure that top managers make strategic decisions that best serve the interests of the entire group of stakeholders. a. True b. False According to the five forces model, an attractive industry would have all […]

Target’s brand promise “Expect More. Pay Less” and appeal to higher-income, fashion-conscious discount shoppers illustrates the strategy. a. cost leadership b. differentiation c. focused differentiation d. integrated cost leadership/differentiation In Porter’s model, a specialized factor of production would include a. […]

Even for companies capable of succeeding in global markets, it is critical that they a. remain committed to and strategically competitive in their domestic market. b. introduce many new products immediately after entering a new market. c. acquire a local […]

Scandals at Enron, WorldCom, and HealthSouth illustrate the negative effects of poor ethical behavior on a firm’s efforts to satisfy stakeholders. a. True b. False Profit pools allow strategic leaders to predict the outcomes of their decisions before taking efforts […]

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies’ culture was never achieved, and the two firms’ assets were not complementary. It is very likely that Magma will a. go public through an IPO. b. […]

As noted in the Chapter 7 Strategic Focus, the current Chinese cross-border strategy is to focus on buying global brands, sales networks, and goodwill in in branded products. a. True b. False Panera Bread has innovated to improve the quality […]

GE (Chapter 6 Opening Case) is unusual in that it a. is widely diversified but competes only in manufacturing industries. b. has had an unblemished environmental record. c. is one of the few large diversified large firms that have been […]

All of the following were results of Citigroup’s acquisition strategy EXCEPT (Chapter 7 Strategic Focus) a. overly diversified. b. a much smaller, though global, business financial service firm. c. too large. d. lacking in synergy. Michael Porter’s Determinants of National […]

The cooperative form is an M-form structure in which horizontal integration is used to bring about interdivisional cooperation. a. True b. False Effective use of the generic business strategies allows the firm to favorably position itself relative to the five […]

61. In order to cope with hypercompetition, firms need to develop through continuous learning. a. competitive resilience b. strategic flexibility c. strategic power d. competitive dominance 62. All of the following are assumptions of the industrial organization (I/O) model EXCEPT […]

105. PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision a. should be based solely on the results of profit-pool mapping. b. has ethical implications […]

True / False 1. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy. a. True b. False 2. Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has […]

REFERENCES: LEARNING OBJECTIVES: NOTES: 296 STMA.HITT.13.Comprehension – Comprehension AACSB: Business Knowledge & Analytical Skills | Management: Leadership Principles | Dierdorff & Rubin: Managing administration & control | Bloom: Comprehension ANSWER: True POINTS: 1 DIFFICULTY: Easy True / False 1. Corporate […]

61. Foreign investors are playing a relatively minor role in the governance of firms in many countries. a. True b. False 62. Large German firms must include employees, union members, and shareholders in the formal governance structure. a. True b. […]

115. The market for corporate control serves as a means of governance when a. the firm is overpriced in the market. b. internal controls have failed. c. the corporation has greatly exceeded performance expectations. d. the top management team’s interests […]

62. controls are objective criteria that allow corporate managers to evaluate the returns earned by individual business units. a. Strategic b. Managerial c. Financial d. Environmental 63. Alfred Chandler found that firms grow in a predictable pattern and that the […]

114. Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate–of–return […]

True / False 1. As shown in the Chapter 11 Opening Case, Borders was able to structure its operations in ways that allowed it to manage the different businesses in each country and market effectively. a. True b. False 2. […]

Case Scenario 3: Zachary, Wesley & Partners. Zachary, Wesley & Partners (ZW&P) is a leveraged buyout (LBO) firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals […]

True / False 1. Financial controls provide feedback about the outcomes of the firm’s past actions and predictions about the results of the firm’s future actions. a. True b. False 2. Effectively managing the firm’s resource portfolio (financial, human, social, […]

100. The ability to attract and manage may be the most important skill a strategic leader must have. a. human capital b. financial resources c. responses to competitors’ actions d. investment strategies 101. capital increases cooperation among individuals inside and […]

True / False 1. An organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit through innovations. a. True b. False 2. Most large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal […]

62. If the firm’s current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital. b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack. 63. Knowledge must […]

100. The firm’s culture promotes unity of purpose for cross-functional work teams through a. a collectivist structure. b. an entrepreneurial mind-set. c. shared values. d. resource allocation. 101. Independent frames of reference and organizational politics are the two primary barriers […]

108. According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT a. low barriers to entry. b. suppliers and buyers with little bargaining power. c. a moderate degree of rivalry among competitors. d. […]

Comprehension ANSWER: c POINTS: 1 DIFFICULTY: Medium REFERENCES: 46–47 LEARNING OBJECTIVES: STMA.HITT.13.Comprehension – Comprehension NOTES: AACSB: Business Knowledge & Analytical Skills | Management: Legal Responsibilities | Dierdorff & Rubin: Managing the task environment | Bloom: 60. The economic environment refers […]

True / False 1. The external environment facing business stays relatively constant over time. a. True b. False 2. Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment. a. True b. False ANSWER: […]

109. A major U.S. manufacturer of children’s toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms […]

61. Judgment is the capacity for making a successful decision when a. there are multiple decision criteria. b. no obviously correct model or rule is available. c. cognitive biases create barriers to rationality. d. there are contradictions between the firm‘s […]

True / False 1. Technology is a critical resource for helping organizations learn how to continually innovate. a. True b. False 2. Firms should seek to continually develop new core competencies because all core competencies guarantee above- average profit. a. […]

True / False 1. A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in specific product markets. a. True b. False 2. Every firm uses all […]

61. A company using a narrow target market in its business strategy is a. following a cost leadership business strategy. b. focusing on a broad array of geographic markets. c. limiting the group of customer segments served. d. decreasing the […]

104. Three sources of flexibility in completing primary and support activities are particularly useful for firms using the integrated strategy. These are a. Flexible Manufacturing Systems, Reengineering, and Total Quality Management. b. Outsourcing, Reengineering, and Flexible Manufacturing Systems. c. Outsourcing, […]

63. First movers are a. entrepreneurs who lead in the establishment of new industries. b. firms that are first to exit a declining industry. c. firms that take an initial competitive action. d. individuals who move frequently as employment opportunities […]

True / False 1. Firms operating in the same market, offering similar products and targeting similar customers are competitors. a. True b. False 2. Competitive rivalry is the contest to be the first mover in an international market. a. True […]

97. The competitive actions and responses in markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm’s operations in order to consistently provide the same positive experience for customers. […]

True / False 1. In the Chapter 6 Opening Case, GE achieved growth and diversification through mergers and acquisitions. a. True b. False 2. GE (discussed in the Chapter 6 Opening Case) is an example of a firm that used […]

114. A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT a. corporate headquarters can allocate capital according to more specific criteria than is […]

61. Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies. a. True b. False Multiple Choice 62. GE (Chapter 6 Opening Case) is unusual in that it a. is […]

63. Downscoping represents a reduction in the number of a firm’s employees and sometimes in the number of its operating units, but it may or may not represent a change in the composition of businesses in the corporation’s portfolio. a. […]

True / False 1. Restructuring strategies are commonly used to correct or deal with the results of ineffective mergers and acquisitions. a. True b. False 2. The recent financial crisis made it difficult for firms to complete “megadeals” and the […]

120. When managers become overly focused on making acquisitions, it is a. because the skills of top executives are better used in making acquisitions than they are in daily organization operations. b. because of the thrill of selecting, chasing, and […]

112. The problems associated with exporting include a. merging corporate cultures. b. a partner’s incompatibility. c. difficulty in negotiating relationships. d. high transportation costs and the expense of tariffs. 113. Which of the following is NOT a disadvantage associated with […]

True / False 1. In place of relatively stable and predictable domestic markets, firms across the globe find that they are competing in relatively unstable and unpredictable global markets. a. True b. False 2. After a firm decides to compete […]

61. An increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S. multinational firms’ international assets and earnings in other countries. a. True b. False 62. […]

True / False 1. A cooperative strategy is a means by which firms work together to achieve a shared objective. a. True b. False 2. According to the Chapter 9 Opening Case, in addition to their corporate-level alliance, Renault and […]

110. Stable alliance networks will most often a. be used to enhance a firm’s internal operations. b. appear in mature industries where demand is relatively constant and predictable. c. emerge in industries with short product life cycles. d. emerge in […]

63. Hewlett-Packard licenses some of its intellectual property through strategic alliances. Which of the following is correct about this relationship? a. This is a joint venture because in licensing arrangements, a new company is created. b. This is an equity […]

Firms that continually change their strategic context and strategies because of the continuous changes in the current competitive landscape are in danger of losing sight of their main competitive strengths. a. True b. False In the United States, the fundamental […]

The centralized structure used by Borders (Chapter 11 Opening Case) did not provide information from local stores that might have been useful in changing its technology strategy more quickly than it did. This example illustrates the effect of structure on […]

Corporate governance revolves around the relationship between which two parties? a. shareholders and the board of directors b. shareholders and managers c. the board of directors and managers d. None of the these options are correct. Problems associated with acquisitions […]

Creating customer value is the source of the firm’s potential to earn above-average returns. a. True b. False Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT a. relying on […]

Both top executives and owners of the firm wish to diversify the firm to reduce risk. a. True b. False Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in […]

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT a. lack of scientific transference. b. social complexity. c. unique historical conditions. d. causal ambiguity. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. a. True […]

Both _______ and ________ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions Compared […]

After Amazon lowered the price on Kindle e-readers, Sony eventually lowered the price on its Reader. Sony needed to do this because a. it is in the same strategic group. b. it is outside the strategic group. c. of inter-strategic […]

The longer the focus of managerial incentive compensation, the greater the top-level managers. a. earnings potential for b. risks borne by c. incentives for d. potential tax burden for It can be difficult for investors to actually observe the value […]

In a vertical complementary alliance, firms share some of their resources and capabilities from the same stage of the value chain to create a competitive advantage. a. True b. False Cross-border acquisitions are critical to U.S. firms competing internationally a. […]

CaseScenario3:Bunnywac. Bunnywac is a global producer and seller of batteries for consumer electronics products (radios, flashlights, toys, etc.), and competes primarily with its larger rivals by providing battery products equal in performance at a lower price. The worldwide battery industry […]

The CEO is the individual with primary responsibility for effective strategic leadership within an organization. a. True b. False A firm pursuing an unrelated diversification strategy will utilize a structure. a. network b. cooperative form multidivisional c. competitive form multidivisional […]

Exit barriers to a firm include all of the following EXCEPT a. generic assets. b. loyalty to employees. c. governmental concern about job loss. d. restrictive labor agreements. CaseScenario1:Compliance,Inc. Compliance, Inc., (CI) conducts clinical human and animal trials for the […]

The risk for firms that follow the unrelated diversification strategy in developed economies is that a. external investors tend to dump the stocks of conglomerates during economic downturns. b. conglomerates are typically owned by one powerful entrepreneur and do not […]

The industry environment directly influences the firm and its competitive actions and responses. a. True b. False The selection of an organizational structure for an internationally diversified firm should consider the international corporate-level strategy the firm is using. a. True […]

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier […]

Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls. a. True b. False The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because a. […]

Top manager participation in and overseeing the activities required for making acquisitions can divert managerial attention from other matters that are necessary for long-term competitive success. a. True b. False After a leveraged buyout, typically occur(s). a. selling of assets […]

Generally, a board member who is a source of information about a firm’s day-to-day activities is classified as a(n) director. a. lead independent b. inside c. related d. encumbered Strategic leadership is the ability to anticipate, envision, maintain flexibility, and […]

The competitive actions and responses in _______ markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm’s operations in order to consistently provide the same positive experience for customers. […]

_______ is an example of a capability that is based in the functional area of distribution. a. Effective use of logistics management techniques b. Effective control of inventories through point-of-purchase data collection c. Effective organizational structure d. Product and design […]

A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client’s project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this […]

CaseScenario3:Zachary,Wesley&Partners. Zachary, Wesley & Partners (ZW&P) is a leveraged buyout (LBO) firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals retain the existing management team and […]

The use of poison pills increases the chance that a poorly performing firm will be taken over. a. True b. False In recent years, the number of individuals who are large-block shareholders have declined and been replaced by institutional owners […]

CaseScenario1:Compliance,Inc. Compliance, Inc., (CI) conducts clinical human and animal trials for the pharmaceutical and biotechnology industries. Revenues are split evenly between early and late drug development services. While the bulk of its business is conducted in Europe and the U.S. […]

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in a. managerial opportunism. b. white-collar crime. c. vindictive disloyalty. d. an act of courage. Which of the following is […]

CaseScenario2:Compliance,Inc. Compliance, Inc. (CI) conducts clinical human and animal trials for the pharmaceutical and biotechnology industries. Revenues are split evenly between early and late drug development services and the firm is a leader in the laboratory technologies needed for such […]

A company pursuing the differentiation or focused differentiation strategy would tend to a. build economies of scale and efficient operations. b. develop and maintain cost-effective MIS operations. c. develop flexible systems that allow rapid response to customers’ changing needs. d. […]

P&G’s acquisition of Gillette reshaped its competitive scope by giving P&G a stronger presence in some products for whom men are the target market. a. True b. False One of the potential problems associated with acquisitions is that the additional […]

The profit pool is the a. pool of assets that is distributed to investors. b. total profits earned in an industry along all points of the value chain. c. profits that are accrued when a firm earns above-average returns. d. […]

In general, cross-border alliances are more _______ and _______ than domestic alliances, especially in emerging markets. a. uncertainty reducing; diversifying b. complex; risky c. highly leveraged; tightly monitored d. flexible; trust-based In an SBU structure, _______ is/are evaluated using strategic […]

A leveraged buyout refers to a. a firm restructuring itself by selling off unrelated units of the company’s portfolio. b. a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. […]

Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate. a. True b. False An entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three ways that firms implement internal innovations. a. True b. False […]

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees’ behavior? a. Effectively Managing the Firm’s Resource Portfolio. b. Determining Strategic Direction. c. Regulating and Controlling Employees. d. […]