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 young customers a selection of home furnishings featuring good design,
function, and acceptable quality at low prices. Ikea is using which business-level
strategy?
a. cost leadership
b. focused cost leadership
c. differentiation
d. focused differentiation
The Cherrywood Fine Furniture Company finds itself with excess capacity in its plant
and equipment for furniture manufacturing. This excess capacity will be useful in
a. unrelated diversification.
b. related diversification projects.
c. corporate restructuring.
d. multipoint competition
When using cooperative strategies, firms most frequently develop strategic alliances
that
a. enhance the firm’s reputation in the marketplace.
b. are long-lived.
c. will reduce the firm’s political risk.
d. create a competitive advantage.
An advantage of severance packages is that they may encourage top-level managers to
accept takeover bids that are attractive to shareholders.
a. True
b. False
The main difference between the related constrained level of diversification and the
related linked level of diversification is
a. the percentage of total organizational profitability that comes from the dominant
business.
b. the level of resources and activities shared among the businesses.
c. whether the diversification is vertical or horizontal.
d. whether the diversification is value-creating or value-neutral.
In contrast to managers’ desires, shareholders usually prefer that free cash flows be
a. used to diversify the firm.
b. returned to them as dividends.
c. used to reduce corporate debt.
d. re-invested in additional corporate assets.
A firm’s specifies the work to be done and how to do it given the firm’s strategy or
strategies.
a. structure
b. controls
c. culture
d. strategy
All of the following are business-level cooperative strategic alliances EXCEPT
a. synergistic strategic alliances.
b. uncertainty reduction strategic alliances.
c. complementary strategic alliances.
d. competition response strategic alliances.
Close monitoring, formal contracts, and constant vigilance against opportunism
increase the probability of alliance success.
a. True
b. False
A firm using a(n)______ strategy generally needs to operate “below the radar” of larger
and more resource rich firms that serve the broader market.
a. cost leadership
b. differentiation
c. focused
d. integrated cost leadership/differentiation
Why have large pharmaceutical companies been forming alliances with biotechnology
companies?
a. to evade legislative restrictions on drug research in the United States
b. to develop new products and bring them to market
c. because both firms had declining profitability and needed cash infusions from other
firms
d. in order to gain absorptive capacity
The more homogeneous a top management team, the more likely those managers will
be innovative and willing to pursue strategic change.
a. True
b. False
________ is(are) critical in order for a firm to gain access to resources from partners in
a cooperative alliance.
a. Complementary strategic goals
b. Shared values
c. An entrepreneurial mind-set
d. Compatible organizational cultures
A nonequity strategic alliance exists when
a. two firms join together to create a new company.
b. two or more firms have a contractual relationship to share resources and capabilities.
c. two partners in an alliance own unequal shares in the combined entity.
d. the partners agree to sell bonds instead of stock in order to finance a new venture.
The competition within each strategic group is
a. more intense than is the competition between strategic groups.
b. less intense than is the competition between strategic groups.
c. typically very low.
d. an unknown factor in the analysis of competitive practices within a firm’s strategic
group.
A board composed primarily of outside directors will have better insights as to the firms
intended strategic initiatives, the reasons for the initiatives, and the outcomes expected
from them than will inside directors.
a. True
b. False