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.
Changes in the characteristics of a population, such as age or race, are irrelevant to the
analysis of an industry’s macroenvironment.
For each function, a cost leader adopts output controls that allow it to monitor and
evaluate functional performance closely.
The head of the finance function at ABC International employs a larger staff than is
required for efficiency to reduce work pressures inside the department and to bring the
manager higher status. This is known as organizational slack.
Economies of scope arise when one or more of a diversified company’s business units
are able to realize cost-saving or differentiation advantages because they can more
effectively pool, share, and utilize resources or capabilities.
Research finds that the higher the number of business units in a company’s portfolio, the
easier it is for corporate managers to remain informed about the complexities of each
business.
If a company’s competitive advantage derives from its control of proprietary
technological know-how, it should either license its technology to others or pursue a
joint venture.
According to an SEC investigation, Computer Associates, one of the world’s largest
software companies, backdated contracts to boost the company’s reported revenues.
This is not prescribed as an ethical business practice.
Fortunately, the concepts vision and mission can be used interchangeably.
Rapid growth in industry demand enables companies to expand their revenues and
profits without taking market share away from competitors.
Restructuring always involves flattening the organizational hierarchy and downsizing
the work force.
All else being equal, if a company moves down the experience curve faster than its
rivals, it should realize a lower cost structure.
Span of control refers to the number of subordinates who report directly to one
supervisor.
Both innovators and early adopters enter the market while the industry is in its
embryonic stage.
Which of the following companies is the best example of an organization that formally
encourages and supports entrepreneurship?
A.Toyota
B.Smith & Wesson
C.General Motors
D.3M
E.Nestl©
To a large degree, any organization’s tasks are a function of its
A.market area.
B.labor supply.
C.supervisors.
D.strategy.
E.compensation plan.
The globalization of production has allowed firms to
A.lower their market share.
B.lower their cost structure.
C.respond to individual market segments.
D.avoid international competition.
E.all of these choices.
Competitive advantage typically leads to
A.an effective business model.
B.average profitability within an industry.
C.superior profitability.
D.making procedures routine.
E.flexibility in manufacturing.
A stereo manufacturer sells only leading-edge stereos to the upscale segment. Which of
the following structures is the most appropriate for this firm?
A.Matrix
B.Multidivisional
C.Geographic
D.Functional
E.Simple
In growth industries,
A.replacement demand is increasing rapidly.
B.technological expertise is the most important entry barrier.
C.rivalry is high.
D.distribution channels are poorly developed.
E.buyers are familiar with the industry’s product.
If a product is to be properly commercialized, there must be integration between
A.research and development (R&D) and marketing.
B.R&D and materials management.
C.marketing and materials management.
D.finance and marketing.
E.marketing and after-sales support.
Which of the following may be true for a company pursuing a strategy of unrelated
diversification rather than a strategy of related diversification?
A.The company does not have to achieve coordination between business units.
B.The company has broad organizational competencies that can be transferred.
C.The company has superior strategic management and organizational design.
D.All of these
E.None of these
As a general principle, a company should always choose the hierarchal organization
structure that has the
A.most levels of authority.
B.fewest levels of authority.
C.greatest number of people.
D.least number of people.
E.none of these
Ethics may best be thought of as
A.legal prescriptions for conduct.
B.standards of right and wrong.
C.cultural mores.
D.desirable but unattainable behaviors.
E.all of these choices.
When considering emergent strategies, it is important for a firm’s managers to
A.ensure that the chosen strategies are the result of deliberate plans.
B.ignore strategies that are not the result of a formal planning process.
C.evaluate each one carefully, using only those that show the most promise.
D.substitute emergent strategies for formal plans whenever possible.
E.develop the emergent strategies themselves.
When an industry’s products rely on a common set of features, these features are called
a
A.dominant design.
B.format war.
C.first mover.
D.public domain.
E.high-tech industry.
A stock option is a right to buy
A.shares of the company’s stock at the stock’s current price.
B.shares of the company’s stock at half the stock’s current price.
C.shares of the company’s stock at a predetermined price at some point in the future.
D.bonds issued by the company.
E.none of these choices.
When are the interests of stockholders and senior managers likely to be most closely
aligned?
A.When the board of directors is dominated by insiders
B.When managers receive most of their compensation in the form of a regular salary
C.When stockholders are weak
D.When managers receive most of their compensation in the form of stock options
E.When corporate raiders are unable to mount a takeover bid
Managers should not become complacent about efficiency-based cost advantages
because
A.neither learning effects nor economics of scale go on forever.
B.the experience curve is likely to bottom out at some point.
C.cost advantages gained from experience effects can be made obsolete by the
development of new technologies.
D.all of these.
E.none of these.
Standardization is employed to squeeze out costs in manufacturing. Standardization
may be achieved through standardization of
A.inputs.
B.work processes.
C.outputs.
D.work processes and outputs.
E.inputs, work processes, and outputs.
The ability to realize cost economies from global volume is greatest in the case of
A.products that need to be customized to local requirements.
B.commodity-type products that serve universal needs.
C.low-weight, high-value products that can be differentiated by global companies.
D.products that can be economically manufactured in small batches.
E.companies competing in industries where they face a large number of multinational
competitors.
Strategic leadership is about
A.strategy formulation.
B.strategy implementation.
C.how to effectively manage a company’s strategy and create competitive advantage.
D.establishing effective contract processes.
E.reducing a company’s operating costs.
The process of deciding how a company should create, use, and combine organizational
structure, control systems, and culture to pursue a business model successfully is
referred to as
A.organizational structuring.
B.corporate systems design.
C.organizational design.
D.departmentalization.
E.structural landscaping.