Which of the following terms best describes the situation when sources of competitive
advantage in an industry are being created and eroded at an increasingly rapid rate?
a) Leveraging resourcesb) Strategic intent
c) Strategic stretch
d) Hypercompetition
e) Global dominance
What type of organizational structure is one in which work groups may be organized by
function, geography, or customer base, but where relationships between work groups
are governed more by often-changing implicit and explicit requirements of common
tasks than by the formal lines of authority that characterize other structures?
a) Unitary functional structure
b) Multidivisional structure
c) Matrix structure
d) Network structure
e) Individual structure
Which of the following statements regarding institutions is true?
a) Institutions do not involve formal regulation of firms by governmental agencies
b) Institutions do not involve formal regulation of firms by nongovernmental regulatory
organizations
c) Institutions are more formal and involve ongoing power/dependence relationships
between firms
d) Institutional arrangements do not embody general patterns of values, beliefs, ad
behavioral norms that motivate and stabilize affected firms
e) None of the above
What does Gary Miller identify as the focus for actors around which a consensus can
form within an organization?
a) Contracts
b) Incentives
c) Formal controls
d) Norms and Social conventions (culture)
e) Exclusive deals
Which of the following best describes the consumer’s shopping problem?
a) Having enough money to purchase all necessary goods and services
b) Finding the seller that offers the highest value of B ” P
c) Determining the quality of products
d) Locating sellers that provide the required products
e) Selecting between brand products and non-brand products.
What is a benefit of the de-centralized organization coordination solution?
a) Ensures no coordination opportunities are missed
b) Makes the organization more hierarchical
c) Takes advantage of localized information
d) Improves communication
e) Always encourages collaboration
What kind of strategy is one by which a firm maintains price parity with its competitors
and profits from its benefit or cost advantage primarily through high price-cost margins,
rather than through a higher market share?
a) Pricing strategy
b) Share strategy
c) Margin strategy
d) Focus strategy
e) Generic strategy
What do the vertical boundaries of a firm refer to?
a) The activities the firm itself performs versus purchases from independent firms
b) The level of expertise of the firm’s workforce
c) The breadth of products a firm produces
d) The production output level for a firm
e) The chain of production processes from raw materials to finished good
What are influence costs?
a) Costs associated with slack effort and with the administrative controls to deter it
b) The cost of activities aimed at affecting the distribution of benefits in an organization
c) Costs related to the negotiation of external contracts
d) Costs of recruiting (“buying”) outside employees with a particular skill set
e) The costs of advertising to customers
Motivation bias and survivor bias are most common in which of the following?
a) Input based scorecards
b) Process based scorecards
c) Scorecards on horizontally differentiated products
d) Scorecards on vertically differentiated products
e) Low cost products
What happens when the process by which governance develops exhibits path
dependence?
a) Governance arrangements split decision rights and controls between two related
firms
b) Governance arrangements are optimal
c) Past circumstances could exclude certain possible governance arrangements in the
future
d) The firm will split into two entities to reduce the governance issues created
e) The governance will form effectively
Which of the following terms best describes a transfer between two or more parties or
resources, or rights to control resources, which occurs outside the terms of a market
context?
a) Power exchange
b) Social exchange
c) Authority exchange
d) Knowledge exchange
e) Formal exchanges
Economies of scale are best described as which of the following?
a) The average cost remains constant as output increases
b) The average cost increases as output increases
c) The average cost declines as output increases
d) The average costs are cheaper when a firm produces a wider variety of goods
e) The average cost curve takes the form of a U-shape
What term describes a market where a monopolist cannot raise price above long run
average cost?
a) Blockaded
b) Perfectly contestable
c) Accommodated
d) Deterred
e) Predatory
What does Chester Barnard mean when he uses the term zone of indifference?
a) The set of issues over which the powerful individual with formal authority usually
prevails
b) The set of issues over which the powerful individual with reputation usually prevails
c) The set of issues over which the powerful individual with knowledge usually prevails
d) The set of issues over which the powerful individual with influence usually prevails
e) The set of issues over which the powerful individual with image usually prevails
What term best describes the paradox which says despite the conclusion that predatory
pricing to deter entry appears irrational, many firms are commonly perceived as
slashing prices to deter entry?
a) Cloud paradox
b) Credit paradox
c) Entry paradox
d) Chain-store paradox
e) Pricing paradox
What type of performance measurement based process was used to determine Jack
Welch’s successor, Jeffrey Immelt, as CEO of GE?
a) Ratings compression
b) Merit ratings system
c) 360-degree peer review system
d) Promotion tournament
e) Management-by-objective system
Which of the following is a dimension along which departmentalization can occur?
a) Tasks
b) Inputs
c) Outputs
d) Geography
e) All of the above
Given the following payoff diagram:
How much can firm 1 improve its outcome by committing to a strategy thus
transforming the simultaneous move game to a sequential move game?
a) 5
b) 10
c) 15
d) 20
e) 20
What term describes when a firm is using the least-cost production process?
a) Agency efficiency
b) Technical efficiency
c) Lean compliant
d) Economizing
e) Six sigma compliant
Which of the following conditions does not tend to heat up price competition?
a) Many sellers in the market
b) Products are differentiated/buyers have high switching costs
c) Some firms have excess capacity
d) The industry is stagnant or declining
e) There are large/infrequent sales orders
Suppose a factory is producing 100 units and the price of each unit is $10. If raising the
price to $12 per unit results in a drop in sales of 12 units, what is the price elasticity of
demand, η?
a) 6
b) .6
c) 67
d) .8
e) .17
Which of the following is generally a way that LBOs can help a firm realize its
potential value?
a) The synergies created allow for cost savings
b) The transaction reduces the disparity between a firm’s actual and potential share price
c) The acquisition reduces the likelihood of competition in the industry
d) The transaction requires debt repayment with future free cash flow leaving
management no discretion over the investment of these funds
e) The buyout gives an opportunity to adjust the management structure and makeup
Strong contract law aids the most in which of the following?
a) Incomplete contracts
b) Complete contracts
c) Negotiated contracts
d) Dual contracts
e) None of the above
Which of the following would not be a characteristic of a good with an elastic demand?
a) The product lacks unique features that differentiate it from competing products
b) The product is a high percentage of a consumer’s total expenditures
c) The good is an input used to make a product that is sensitive to changes in price
d) There are many substitutes available for the good
e) The product has high switching costs
Which of the following is not a benefit that Toys “R” Us gained through its alliance
with McDonald’s Japan?
a) Political know-how
b) Site-selection expertise
c) Changes to Japan’s Large-Scale Retail Store Law requiring MITI approval
d) Business Connections
e) Significant growth on all three major islands
Which of following factors should be considered when assessing complements and
substitutes?
a) Availability of close substitutes and/or complements
b) Price-value characteristics of substitutes/complements
c) Price elasticity of industry demand
d) All of the above
e) None of the above
Which of the following is not a reason for customer survey bias in quality measures?
a) Different customers may use different measurement criteria
b) Customers may have an incentive to inflate ratings to influence the average score
c) Customers often lie in consumer surveys
d) Customers are reluctant to leave negative feedback
e) Consumer feedback is unverifiable.
Which of the following statements is true regarding the relationship between average
and marginal cost functions?
a) When average cost is a decreasing function of output, marginal cost is greater than
average cost.
b) When average cost neither increases or decreases (because it is constant or at a
minimum point), marginal cost is equal to average cost
c) The average cost function is always smaller than the marginal cost function
d) The average cost function is always greater than the marginal cost function
e) When average cost is an increasing function of output, marginal cost is less than
average cost
Which of the following is a statistical process in which raw outcome measures are
adjusted for factors that are beyond the control of the seller?
a) Risk adjustment
b) Mean reversion
c) Score adjustment
d) Noise limiting
e) Outcome adjustment
Which of the following factors requires the least consideration when assessing supplier
power relative to the upstream industry in which it buys raw materials?
a) Number of competitors in downstream market
b) Purchase volume of raw materials
c) Availability of substitute inputs
d) Number of upstream suppliers
e) Ability of suppliers to price discriminate
Which of the following is measured by a report card that assesses product performance?
a) Process
b) Inputs
c) Warrantees
d) Outcomes
e) Longevity