Which of the following statements is true about a tough commitment?
a) It is good for competitors
b) It is bad for competitors
c) In Cournot competition, elimination of production facilities is an example of a tough
commitment
d) In Betrand competition, a commitment to increase prices is an example of a tough
commitment
e) Tough commitments are always in the best interest of a firm
Diversifying activity is most often measured by looking at which of the following?
a) Joint Ventures
b) Collaborative agreements
c) Internal Business Development
d) Strategic Alliances
e) Acquisition and merger activity
Which of the following is the weakest an example of a ‘shock”?
a) Contracting to use another firm’s proprietary process
b) Product Innovations
c) Discoveries of new sources of consumer value or market segments
d) Shifts in demand
e) Changes in public policy that enables firms to significantly shift their strategic
position in a business
What is an independent outsourcing partner often called?
a) Downstream firm
b) Financial firm
c) Partner firm
d) Market firm
e) Co-firm
Consumer surplus is measured as which of the following?
a) The excess of sales price over manufacturing cost
b) The amount a consumer pays for a good minus search costs
c) The perceived manufacturing cost by a consumer as a percentage of sales price
d) The perceived benefit of a product per unit consumed minus the product’s monetary
price
e) The loss incurred by a firm selling at a price below its manufacturing cost
What term describes a framework used in strategy based on resource heterogeneity
which posits that for a competitive advantage to be sustainable, it must be underpinned
by resource capabilities that are scarce and imperfectly mobile?
a) Persistence of profitability for the firm
b) Capability-based theory of the firm
c) Regression to the mean
d) Resource-based theory of the firm
e) Five-forces framework
What kind of economies come from reductions in average costs due to increases in
capacity utilization?
a) Short-run economies of scale
b) Short-run economies of scope
c) Long-run economies of scale
d) Long-run economies of scope
e) Fully automated economies
The process by which governance develops is known as:
a) Vertical decision making (VDM)
b) Path Dependence
c) Internal design
d) Management evolution
e) Institutional learning
By simultaneously halting air traffic and financial markets, what recent historical event
highlighted the interdependence company infrastructure?
a) 2000 Presidential Election
b) 2004 Olympics
c) Fall of Enron
d) September 11, 2001
e) Hurricane Katrina
Which of the following is not a principal/agent relationship?
a) Shareholders/Company CEO
b) Shareholders/Company employees
c) Company/Hired counsel
d) Carmaker/Auto part supplier
e) Shareholder/IRS auditors of a company
Which of the following would be the range of elasticity for a product with an “inelastic”
demand?
a) η < 1
b) η = 1
c) η > 1
d) η > 2
e) none of the above
Which of the following terms describes when firms with high scores tend to have more
than their share of luck in rankings?
a) Measurement bias
b) Process error
c) Mean regression
d) Multitasking
e) Mean reversion
What caused the market conditions facing the telephone to be uncertain until the
1880’s?
a) Patent conflicts
b) Technology problems due to unstable electricity supplies
c) Dissimilar technologies limiting interconnections between cities
d) Different state laws limiting interstate expansion
e) The high cost fo some components needed to manufacture telephones
Individuals and firms that seek to gain power by reducing dependence on other actors
while increasing the dependence of others on themselves are creating which of the
following?
a) Implicit dependence
b) Explicit dependence
c) Resource dependence
d) Formal Dependence
e) Absolute dependence
Which characteristic is present in a perfectly competitive market?
a) Firms produce identical or nearly identical products
b) Market price is beyond the control of any individual firm
c) A firm’s demand curve is perfectly horizontal at the market price
d) Firms can enter and exit the market very easily
e) all of the above
What technique did Google use to preserve its “evil-free” culture when going public
with an initial public offering in 2004?
a) Used an IPO underwriter
b) Allow clients to purchase underpriced IPO shares
c) Used a “Dutch auction”
d) Committed to sell a certain number of shares at a set price
e) Drastically underpriced its shares (by 200%)
Brokers are often referred to as which of the following?
a) Factors
b) Agents
c) Sellers
d) Matchmakers
e) Facilitators
Which of the following benefits of diversification explains the idea that corporate
diversification can provide situations where an acquiring firm determines the stock
price for firm they intend to acquire is too low?
a) Use of internal capital markets
b) Economies of scale and scope
c) Economizing on transaction costs
d) Diversifying shareholder portfolios
e) Identifying undervalued firms
Which of the following is measured by a report that assesses how a product is
produced?
a) Process
b) Inputs
c) Warrantees
d) Outcomes
e) Longevity
The concept of who gets to control resources, make decisions and allocate profits is
known as:
a) Matrix Management Outcome (MMO)
b) The Property Rights Theory (PRT)
c) Complete Contract Theory (CCT)
d) Total Production Model (TPM)
e) Resource Allocation Theory (RAT)
What term best describes the characteristic of a process if past circumstances could
exclude certain evolutions in the future?
a) Path dependence
b) Correlated research strategies
c) Evolutionary economics
d) Dynamic efficiency
e) Dynamic capabilities
Which of the following is not a characteristic of substitute products X and Y?
a) They have the same or similar product performance characteristics
b) They have the same or similar occasions for use
c) They are sold in the same geographic market
d) Customers are indifferent between X and Y
e) A price increase of X while keeping the Y’s price constant leads to a drop in
purchases of X and an increase in purchases of Y
Which of the following statements best describes a characteristic of geographic
specialization focus strategies?
a) Offers a variety of products and/or sells to a variety of customer groups within a
narrow geography
b) Offers an array of product varieties to a limited class of customers
c) Caters to the particular needs of the customer group served
d) Offers a limited set of products to an array of different customer groups
e) Does an especially good job satisfying a subset of the needs of the consumer groups
being served
If TC(Q)=1000Q2+100Q+10, what is the formula for AC(Q)?
a) 2000Q+100
b) 2000Q2+100Q
c) 1000Q2+100Q+10
d) 1000Q+100+10/Q
e) 100Q+10+1/Q
Under what type of strategy does a firm either offer a narrow set of varieties, serve a
narrow set of customers, or do both?
a) Generic strategy
b) Margin strategy
c) Focus strategy
d) Share strategy
e) Broad-coverage strategy
Why do price-sensitive buyers tend to harm cooperative pricing in a market?
a) They cause an increase in detection lags because competitor prices become more
difficult to monitor
b) There is a resultant decrease in the frequency of interaction between competitors
c) There is an increase in the probability of misreads
d) The is an increase in temptation to cut price, even if competitors are expected to
match
e) There is an increase in detection lags because prices of competitors are more difficult
to monitor
What is a sunk cost?
a) A cost that can be avoided if certain choices are made
b) A cost that always varies with the output of a factory
c) The average cost of operating a plant
d) The “lower envelope” of short-run average cost functions
e) A cost incurred no matter what the decision is and cannot be avoided
Which of the following statements about “flat” organizations is least true?
a) Flat organizations emphasize long-term compensation rather than current pay from
salary or bonus
b) The “prize” associated with promotion appears to be greater at flat organizations
compared to tall ones
c) In a flat organization, there are fewer direct reports to a group head than in a taller
firm
d) Delegating more decision making as in a flat organization might be attractive when
the competitive environment is hostile
e) Flat organizations tend to have more divisions than their taller firm counterparts
Price competition is increased when which of the following occurs??
a) Many sellers in the market
b) Products are differentiated
c) Firms are producing at capacity
d) Buyers have high switching costs
e) Firms purchase raw materials from the same suppliers
The biotechnology industry is seeing a broad pattern of disintegration due to the fact
that big pharma companies are less and less doing which of the following core
functions?
a) Infrastructure
b) Product innovation
c) Obtaining regulatory approval
d) Customer relationship
e) Manufacturing and communications
When is reputation a most effective entry barrier?
a) When the incumbent has incurred them and the entrant has not
b) When incumbents have long-standing relationships with suppliers and customers
c) When channels are few and hard to replicate
d) When a firm has a reputation for toughness or competes in multiple markets
e) When marginal costs are low and flooding the market causes large price reductions
Which of the following is not a component of the Value Net?
a) Suppliers
b) Customers
c) Competitors
d) Supplementors
e) Complementors
Which of the following is a method a monopolist firm might use to prevent entry into a
market?
a) Limit pricing
b) Predatory pricing
c) Capacity expansion
d) All of the above
e) None of the above
Herding is best described by which of the following??
a) The value of the compensation depends on the measured performance of the
employee?
b) Supervisors giving all their subordinates average (or above average) grading to avoid
making sharp distinctions between those subordinates when evaluating them
c) A wage payment is made to an agent that exceeds his opportunity cost of working
and discourages the agent from shirking
d) Individuals ignore their own information about the best course of action and instead
simply do what everyone else is doing
e) None of the above
Which of the following terms best describes a review system in which a supervisor
constructs a set of goals for an employee?
a) Traditional top down review system
b) 360-degree peer review system
c) Management-by-objective system
d) Subjective performance evaluation
e) Pay-for-performance