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.
A fragmented industry is composed of a large number of small and medium-sized
companies.
Firms pursuing related diversification typically rely more on output control than on
culture control.
Toyota is perhaps the most well-known adopter of the Six Sigma program.
Competition for resources is one of the drawbacks of the multidivisional structure.
Digitalization has made it more difficult to protect some intellectual property rights.
Product proliferation refers to the strategy of filling the niches by catering to the needs
of customers in all market segments.
When a firm’s managers are very concerned about the possibility of losing control of
proprietary know-how, which entry mode should the firm avoid?
A.Acquisition
B.Internal new venture
C.Joint venture
D.Divestiture
E.Merger
At the law offices of Hughes & Hughes, employees are encouraged to recycle cups used
at the water cooler and turn off office lights when not in use. John Hughes, the owner
and manager of the firm, leads by example and often completes his paperwork using
natural light. John utilizes which of the following characteristics of good business
leaders?
A.Vision
B.Commitment
C.Eloquence
D.Articulation of the business model
E.Emotional intelligence
Agency theory would not be useful in understanding the relationship between
A.a CEO and his or her top management team.
B.top-level executives and middle managers.
C.managers at the same organizational level.
D.stockholders and the CEO.
E.lower-level managers and the workers they supervise.
Reasons why a firm might benefit from the creation of a separate new-venture division
include all of the following except
A.better protection of the division’s autonomy.
B.less scrutiny from top managers.
C.removal from day-to-day pressures of the firm.
D.ease in developing a culture that fosters innovation.
E.development of a science-based business model.
Which of the following is not a characteristic of fragmented industries?
A.A large number of small competitors
B.Low economies of scale
C.Many custom-made or specialty firms
D.High barriers to entry
E.Low consolidation
Free cash flow is defined as
A.money in a company’s bank account.
B.government funds given to a company for meeting Environmental Protection Agency
(EPA) regulations.
C.additional funds donated by stockholders.
D.cash in excess of that required to fund investments in the company’s industry and to
meet any debt commitments.
E.money borrowed by the company that requires no interest payments.
Which of the following is not a necessity for leveraging the skills of global
subsidiaries?
A.The firm must have incentives for local managers to share knowledge and ideas.
B.The firm’s managers must be aware that competencies can develop anywhere.
C.The firm must be pursuing a strategy of differentiation.
D.The firm’s managers must help to transfer competencies around the company.
E.The firm must offer incentives that encourage employees to take necessary risks.
Companies that are innovative and able to deal with environmental change with new
strategies and structures probably have
A.weak cultures.
B.strong functional cultures.
C.adaptive cultures.
D.prescriptive cultures.
E.matrix structures.
Which of the following is not a reason for the failure of an acquisition to generate the
gains originally expected of it?
A.Poor postacquisition integration
B.Overestimation of the potential gains to be derived from synergy
C.The high cost of making acquisitions
D.Lack of preacquisition screening
E.Overestimation of the potential costs of realizing synergies
To expand its global sales, U.S.-based Miller Brewing Company purchased a firm that
processes grains in Brazil. Miller plans to manage the new business by allowing it to
continue as before, with little integration into the rest of the firm. Based on this
information, which entry mode is Miller using in Brazil?
A.Acquisition
B.Internal new venture
C.Joint venture
D.Divestiture
E.Merger