Which of the following commitment strategies involves soft commitment postures,
strategic complements for the stage 2 tactical variables, a refrain commitment action
and an acceptance of the status quo out of fear thus waiting to follow the leader?
a) Top Dog
b) Lean and Hungry Look
c) Mad Dog
d) Puppy-Dog Ploy
e) Fat-Cat Effect
What term refers to the costs incurred by sellers when they deliver substandard, or
defective products?
a) Switching costs
b) Buyer costs
c) Reputation costs
d) Learning costs
e) Customer costs
What is a catchment area?
a) The area of a firm’s customers as defined by traditional county lines
b) The area a firm’s customers shops due to idiosyncratic reasons
c) The area a firm operates in which it has no competition
d) The area where a firms customer will go to shop in the event the firm were to raise
prices
e) The contiguous area from which a firm draws most of its customers
What term best describes a set of values, beliefs, and norms of behavior shared by a
firm’s members that influence employee preferences and behaviors?
a) Codes
b) Routines
c) Culture
d) Influence
e) Mind-sets
What type of entry exists if (1) the incumbent can keep the entrant out by employing an
entry-deterring strategy and (2) employing the entry-deterring strategy boosts the
incumbent’s profits?
a) Deterred Entry
b) Judo Entry
c) Stealth Entry
d) Accommodated Entry
e) Blockaded Entry
Which of the following is not a significant entry barrier in the commercial airframe
manufacturing market?
a) High development costs
b) Learning curve in production
c) Raw materials and labor
d) Airlines prefer to purchase from the same manufacturer
e) Airlines are reluctant to purchase from startups
How did European governments help Airbus aggressively pursue a 50% market share in
its early years of operation?
a) Subsidies
b) High-interest loans
c) Helping to ensure scope economies from military aircraft division
d) Paying in excess of cost for military aircraft
e) Guaranteeing a set level of annual aircraft purchases
Which of the following is a reason other than concentration that price-cost margins may
vary across industries?
a) Accounting practices
b) Regulation
c) Product differentiation
d) Nature of sales transactions
e) All of the above
Which of the following is a characteristic of an experience good?
a) Warranty service is included in the sales price
b) An independent evaluation certifies the product
c) The product is heavily advertised
d) Quality can be assessed only after the customer has used it for a while
e) Noen of the above
Which of the following describes when a manufacturer produces some of an input
quantity itself and purchases the remaining portion from independent firms?
a) Forward Integration
b) Tapered integration
c) Backward Integration
d) Balanced integration
e) Combined integration
The Revenue Destruction Effect in oligopolies occurs when:
a) Firms individually reduce prices to gain more customers
b) Firms intentionally reduce output quantity to raise price
c) Firms independently maximize their own profits
d) Firms agree to all sell at the same price
e) Firms all agree to specific output quantities
What is a key factor in determining how a firm resolves coordination problems?
a) Incentive based pay
b) Effective IT systems
c) Firm culture
d) Alignment of goals
e) Organizational structure
Which of the terms best describes the effect that results from supervisors giving all their
subordinates average (or above average) grading to avoid making sharp distinctions
between those subordinates when evaluating them?
a) Forced ranking system
b) Subjective assessment
c) Ratings balancing
d) Ratings compression
e) Merit ratings system
Which of the following led to overbuilding of railroads in the 1860’s and 1870’s?
a) Reduction of taxes on railroads by the federal government
b) The success of railroads in Europe
c) The availability of financing due to public optimism
d) The low cost of labor to construct railroads
e) Increases in regulated freight rates by the Interstate commerce Commission
Suppose we have two firms (Firm 1 & Firm 2) enter into a transaction where Firm 1 is
upstream of firm 2 in a vertical chain. What term best describes the organization of the
transaction where Firm 1 owns the assets of Firm 2?
a) Backward Integration
b) Forward integration
c) Nonintegration
d) Contractually unbound
e) Contractually bound
Of the following industries listed, which one is generally thought of as having the
highest search costs?
a) Consumer packaged goods
b) Electronics
c) Physician service
d) Automotive
e) Apparel
Which of the following statements is least true regarding the accumulation of power?
a) The accumulation of power is helpful when there are high agency costs in
coordinating among managers and lower-level workers
b) The accumulation of power is helpful when the firm’s environment is relatively
stable
c) The accumulation of power is harmful when there are high agency costs in
coordinating among levels of upper management
d) The accumulation of power is harmful when the firm’s environment is relatively
unstable
e) The major purpose of corporate governance is not to reign in the accumulation of
power by CEOs
Which of the following benefits of diversification explains the idea that a firm with
many business lines can reduce swings in value because it receives only a small
percentage of its revenue from any one of those business lines?
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 represents producer surplus in the value creation equation,
(B-P) + (P-C)?
a) B
b) P
c) C
d) B-P
e) P-C
Which of the following is a true argument regarding the make-or-buy decision process?
a) Firms should make an asset, rather than buy it, if that asset is a source of competitive
advantage for the firm
b) Firms should buy, rather than make, to avoid the costs of making the product
c) Firms should make, rather than buy, to avoid paying a profit margin to independent
firms
d) Firms should buy, rather than make, in general, because market firms are subject to
the discipline of the market and must be efficient and innovative to survive
e) Firms should make, rather than buy, because a vertically integrated producer will be
able to avoid paying high market prices for the input during periods of peak demand or
scarce supply
Matchmakers between manufacturers and sellers are called:
a) Agents
b) Factors
c) Brokers
d) Merchants
e) None of the Above
What is the typical “capacity use” ratio as reported by plant managers to the U.S.
Census of Manufacturers annually?
a) 40%
b) 50%
c) 60%
d) 70%
e) 80%
What force does Manne indicate constrains the actions of managers so that they stay
focused on the goals of owners?
a) Market for corporate control
b) SEC
c) Corporate board
d) Corporate governance
e) CEO
Which of the following asset specificity forms describes why glass container production
requires molds custom tailored to particular container shapes and glass making
machines?
a) Site specificity
b) Physical asset specificity
c) Dedicated assets
d) Human asset specificity
e) The fundamental transformation
When contracts are incomplete, what must be well defined and enforceable to allow for
smooth transactions to occur?
a) Contract performance measures
b) Contract roles
c) Contract costs
d) Contract triggers
e) Contract law
Products for which consumers cannot easily compare product characteristics and value
information from others are called:
a) Experience goods
b) Search goods
c) Retail goods
d) Consumer goods
e) Credence Goods
Mass production technology became accepted and widely used in what era?
a) Circa 1840
b) Circa 1860
c) Circa 1880
d) Circa 1910
e) Circa 1930
Which of the following would likely lower antitrust scrutiny?
a) Predatory pricing tactics
b) Utilizing mergers and acquisitions over alliances and joint ventures
c) Utilizing alliances and joint ventures over mergers and acquisitions
d) Incomplete contracting
e) Complete contracting
What type of structure is the Japanese keiretsu structure?
a) Unitary functional structure
b) Multidivisional structure
c) Matrix structure
d) Network structure
e) Individual structure
What term best describes the payment which must be offered to a risk-averse individual
to willingly accept a gamble?
a) Certainty equivalent
b) Risk equivalent
c) Risk premium
d) Risk preference payment
e) Certainty payment
What term best describes exchanges of goods, services, or promises on terms that take
place outside of traditional economic markets and are not enforceable in court?
a) Handshake agreement
b) Noncontractual exchange relationship
c) Internal context
d) External context
e) Exclusive dealing
Which best decribes a firm’s culture?
a) The accumulation of power is helpful when the firm’s environment is relatively stable
b) Values, beliefs, and norms of behavior shared by a firm’s members that influence
employee preferences and behaviors
c) Institutional logics are coveted by firms (not taken for granted)
d) If firms share an institutional logic, the logic provides a basis for relative advantage
among firms
e) Institutional logics are valuable because they raise the costs for firms adapting to
their environments
Which of the following statements is least true regarding institutions?
a) Institutions can involve formal regulation of firms by governmental agencies
b) Institutions can involve formal regulation of firms by nongovernmental regulatory
organizations
c) Institutions can be less formal and involve ongoing power/dependence relationships
between firms
d) Institutional arrangements may embody general patterns of values, beliefs, ad
behavioral norms that motivate and stabilize affected firms
e) None of the above