Which of the following terms best describes how a firm uses a division of labor to
organize tasks, specify how its staff performs tasks, and facilitate internal and external
information flows?
a) Organizational structure
b) Formal and informal firm arrangements
c) Firm hierarchy
d) Divisional structure
e) Firm team structure
What term describes the process of using market prices of unfinished and semi-finished
goods to estimate the incremental value-created by distinctive parts of the value chain?
a) Value-added analysis
b) Value creation analysis
c) Market value analysis
d) Value benefit drivers
e) Value cost drivers
What is the perceived benefit of a product per unit consumed minus the product’s
monetary price?
a) Value creation
b) Competitive advantage
c) Consumer surplus
d) Maximum willingness-to-pay
e) Value chain
Which of the following statements is least true regarding the views of strategy that
Nelson and Winter offer differing from Chandler?
a) Their views state that strategy and structure evolve from local interactions of the firm
with its environment rather than from top managers formulating and implementing a
comprehensive reorganization
b) Their views suggest that the relationship of the firm to the environment, as well as
the current patterns of interpersonal relationships generally referred to as the firm’s
‘structure,” are both the cumulative result of a long series of adaptations
c) Their views state that strategy and structure are examples of high level heuristics
d) Their views suggest that structure is a set of principles or guidelines for coordinating
a firm’s decisions in a manner inconsistent with its activities in the environment
e) Their views suggest that strategy is a set of principles or decision guidelines that
managers use to foster a firm’s survival and profitability
Which of the following terms best describes a phenomenon whereby a
profit-maximizing firm sticks with its current technology or product concept even
though the profit-maximizing decision for a firm starting from scratch would be to
choose a different technology or product concept?
a) The replacement effect
b) Strategic intent
c) Strategic stretch
d) Hypercompetition
e) The sunk cost effect
Which of the following is not a barrier to entry in professional sports markets?
a) Each league has rules governing the addition of new franchises
b) Potential new owners must pay current owners hundreds of millions of dollars
c) Most potential owners must offer to build new stadiums
d) Incumbent teams have rights to veto franchises in their own geographic markets
e) Because the number of potential billionaire owners has risen dramatically, the
purchase prices have dropped
What type of organizational structure is one that is comprised of a set of autonomous
divisions led by a corporate headquarters office, assisted by a corporate staff that
provides information about the internal and external business environment?
a) Unitary functional structure
b) Multidivisional structure
c) Matrix structure
d) Network structure
e) Individual structure
Which of the following best describes a tit-for-tat strategy?
a) A firm charges a fixed price to every customer
b) A firm is prepared to match whatever change in strategy a competitor makes
c) A firm offers discounts for purchasing in quantity
d) A firm requires customers to enter into long-term purchase contracts
e) None of the above
What term describes features that need to relate to each other in a precise fashion
otherwise they lose a significant portion of their economic value?
a) Design attributes
b) Critical components
c) Contract factors
d) Coordination factors
e) Relationship attributes
What was the most significant development to the evolution of business circa 1910?
a) Railroad integration
b) Telegraph communication expansion
c) Banking and accounting standard practices
d) Mass-production technology
e) Advent of steam technology in railroads and shipping
What significant transportation event brought about the first significant growth of the
Great Lakes region?
a) Harnessing of the steam engine
b) Invention of the screw propeller
c) Opening of the Erie Canal
d) Integration of railway system
e) Invention of the railway system
Which of the following is a tool a firm can use to combat agency problems?
a) Monitoring
b) Performance-Based Incentives
c) Bureaucracy
d) a, b & c
e) None of the above
Which of the following is most true regarding the strategic value of institutional logics?
a) When institutional logics are stable, they have the most strategic importance
b) Institutional logics are coveted by firms (not taken for granted)
c) If firms share an institutional logic, the logic provides a basis for relative advantage
among firms
d) Institutional logics are valuable because they raise the costs for firms adapting to
their environments
e) Competitive advantage must come on some other dimension than institutional logic
if firms share that institutional logic
Which of the following best describes an incumbent firm?
a) One that just recently entered a market
b) One that just exited a market
c) One that faces no competition in its market
d) One that is already operating in a particular market
e) None of the above
What primary agency cost problem plagued the partnership between Sony’s hardware
and software from 1998-2008 with regards to digital music?
a) High infrastructure costs
b) Contract disputes
c) High transaction costs
d) Overlapping distribution channels
e) Manager/worker slacking
At what point can a firm achieve a profit maximizing quantity?
a) MR>MC
b) MC=D
c) MR<MC
d) MR=D
e) MR=MC
Which of the following is an example of informal regulations with respect to a firm’s
social context?
a) Contracting
b) Employment practices
c) Pricing
d) Entry-deterring behaviors
e) Cultural norms
Which of the following in the late 19th century was predicted by the firm-size
hypothesis?
a) Forward integration was most likely to occur for products that require specialized
investments in human capital
b) Increases in the size of manufacturing firms led to independent wholesale and
marketing agents losing scale/scope cost advantages and in turn led to manufacturers
forward integrating into marketing and distribution
c) Forward integration was most likely to occur for products that do not require
specialized investments in equipment and facilities
d) For industries with small manufacturers, marketing relied on specialized assets
e) For industries with small manufacturers, distribution relied on specialized assets
What is the source from which a person derives legitimate or formal power?
a) Due to status
b) Possession of specialized knowledge
c) Ability to punish
d) Ability to grant rewards
e) Position within a hierarchy
What type of organizational structure is one in which employees are subject to two or
more sets of managers at once?
a) Unitary functional structure
b) Multidivisional structure
c) Matrix structure
d) Network structure
e) Individual structure
What variant of the multidivisional structure whose units cross national boundaries do
Kogut and Zander argue is superior at transferring specific types of knowledge across
national boundaries?
a) Subsidiary
b) Holding Company
c) Conglomerate
d) Partnership
e) Multinational corporation
Which of the following processes is most representative of a less integrated firm on the
“buy” end of the make-or-buy continuum?
a) Arm’s length market transactions
b) Long-term contracts
c) Strategic alliances and joint ventures
d) Parent/subsidiary relationships
e) Perform activity internally
Which of the following is an example of a principal/agent relationship?
a) Company salesperson/Customer
b) Company CEO/Company Vice President
c) Company/Hired counsel
d) Company/Company competitor
e) Shareholder/IRS auditors of a company
Which of the following practices can help firms facilitate cooperative pricing?
a) Price leadership
b) Advance announcement of price changes
c) Price following
d) Most favored customer clauses
e) Uniform delivered prices
Which of the following structures best describes a small group of people where a
collection of individuals work together to set and pursue common objectives?
a) Complex hierarchy
b) Individually
c) Self-managed team
d) Hierarchy of authority
e) Divisional
What concept developed by Brandenburger and Nalebuff as a counterpart to Porter’s
five-forces consists of suppliers, customers, competitors and complementors?
a) McKinsey 7-S Framework
b) Value net
c) BCG Market Share Matrix
d) 6 C’s of Marketing
e) 4 P’s of Marketing
Which of the following is the most likely substitute for commercial aircraft travel
between Chicago and Tokyo?
a) Bicycle
b) Teleconferencing
c) Automobile
d) Commuter train
e) Walking
Which of the following trends or methods has since helped reduce the pricing rivalry
that had intensified by the late 1990s?
a) Patients began accepting MCOs with “narrow networks” and MCOs had the upper
hand in negotiating with hospitals for inclusion in networks
b) Hospitals removed brand identities
c) Hospitals dropped “centers of excellence” from their hospitals
d) Hospitals consolidating away from related products
e) Hospitals consolidated (conducted mergers)
Which of the following is not a way teams “collude” within professional sports
markets?
a) Agreeing on ticket prices
b) Agreeing on rules and schedules
c) Employing the same pool of referees
d) Sharing national broadcast revenues
e) Agreeing on rookie drafts
Which of the following is a characteristic of economies of scale?
a) The average cost declines as output increases
b) The average cost increases as output increases
c) The average cost remains constant 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
Relative performance is best described as which of the following??
a) The excess of a firm’s revenue over its costs
b) How a firm performs based on a comparison to another firm in its peer set within an
industry
c) The average compensation of employees compared to the average at other firms
d) The percentage of output attributed to fixed versus variable costs
e) How a firm compares in number employees to another frim in its peer set within an
industry
Which of the following is not a factor that could intensify internal rivalry in the
Chicago hospital market?
a) Relatively large number of hospitals
b) Considerable variation in production costs
c) Relatively small number of doctors
d) Excess capacity
e) Aging baby boomers increasing demand for admissions