Which of the following activities does NOT reflect short termism?
A. Decreasing spending on research and development
B. Avoiding stock repurchases made to increase earnings-per-share of a company
C. Maintaining and hiring critical employees with compensations tied to annual
company earnings
D. Taking into consideration all tangible future cash flows over intangible brand value
appreciation
E. Carrying business operations with existing technologies in all markets to cut costs
and increase profits
Answer:
Within the integrated social contracts approach, we find that a multinational company’s
code of conduct involves universal norms that must be enforced worldwide and also the
inclusion of local moral standards (traditions and cultures) by the host country, thereby
allowing for ethical diversity which entails:
A. the self-righteous company trying to operate as a standard bearer of morality
worldwide.
B. the disturbing case where a multinational’s ethical conduct is found to be no higher
than those local ethical norms, where local ethical norms permit practices generally
considered immoral.
C. the necessity to activate compromises on what is ethically permissible and what is
not.
D. much internal conflict because “first-order” ethical norms always take precedence
over local “second-order” norms.
E. a “no compromise” position in instances involving universally applicable ethical
norms on what is ethically permissible and what is not.
Answer:
Company objectives:
A. are needed only in those areas directly related to a company’s short-term and
long-term profitability.
B. need to be broken down into performance targets for each of its organizational
levelsfor separate businesses, product lines, functional departments, and individual
work units.
C. play the important role of establishing the direction in which it needs to be headed.
D. are important because they help guide managers in deciding what the company’s
strategic intent should be.
E. should be set in a manner that does not conflict with the performance targets of
lower-level organizational units.
Answer:
What a company’s top executives are saying about where the company is headed long
term and about what the company’s future product-market-customer mix will be:
A. indicates what kind of business model the company is going to have in the future.
B. constitutes the strategic vision for the company.
C. signals what the firm’s financial strategy will be.
D. serves to define the company’s present scope of operation.
E. indicates what kind of products the company will offer in the future.
Answer:
What is the hallmark of an adaptive corporate culture?
A. A shared willingness to adapt core values to fit the changing requirements of an
evolving strategy
B. A conservative strategy, prudent risk-taking, and strong peer pressures to observe
cultural norms
C. A clear willingness on the part of organizational members to accept change and take
on the challenge of introducing and executing new strategies
D. A commitment to the types of core values and ethical standards that make a company
a great place to work
E. A strong preference for performance-based compensation systemsespecially the
payment of bonuses and stock options
Answer:
Strategic objectives:
A. are more essential in achieving a company’s strategic vision than are financial
objectives.
B. relate to strengthening a company’s overall market standing and competitive
position.
C. are more difficult to achieve and harder to measure than financial objectives.
D. are generally less important than financial objectives.
E. help managers track an organization’s true progress better than financial objectives.
Answer:
An engaging and convincing strategic vision:
A. ought to put “who we were and what we are doing” in writing rather than orally so as
to leave no room for company personnel to misinterpret what the strategic vision really
is.
B. should be done in language that inspires and motivates company personnel to unite
behind executive efforts to get the company moving in the intended direction.
C. tends to be more effective when top management avoids trying to capture the
essence of the strategic vision in a catchy slogan.
D. is most efficiently and effectively done by posting the strategic vision prominently
on the company’s website and encouraging employees to read it.
E. should be explained after the company’s strategic intent, strategy, and business model
have been conveyed to company personnel.
Answer:
Effectively communicating the strategic vision down the line to lower-level managers
and employees has the value of:
A. inspiring company personnel to unite behind managerial efforts to get the company
moving in the intended direction.
B. helping company personnel understand why “making a profit” is so important.
C. making it easier for top executives to set stretch objectives.
D. helping lower-level managers and employees better understand the company’s
business model.
E. helping the management in formulating a balanced scorecard.
Answer:
A firm’s organizational structure is comprised of:
A. resource strengths and competitive capabilities that allow it to incorporate attributes
at lower costs than rivals whose products have similar attributes.
B. the formal and informal arrangement of tasks, responsibilities, lines of authority, and
reporting relationships by which the firm is administered.
C. excellent marketing and sales skills to convince buyers to pay a premium price for
the attributes/features incorporated in its product.
D. sustainable distinctive competencies to ensure cost reduction and competitiveness.
E. a number of independent functional units involved in some common undertaking,
with one unit typically in a more central role.
Answer:
In a weighted competitive strength assessment, the sum of importance weights should
add up to:
A. 100%.
B. 1.00.
C. 10.
D. 100.
E. 1000.
Answer:
Which of the following statements about a company’s culture is NOT true?
A. The more new employees a company is hiring the more important it becomes to
screen job applicants every bit as much for how well their values, beliefs, and
personalities match up with the culture as for their technical skills and experience.
B. The longer people stay at an organization, the more that they come to embrace and
mirror the corporate culturetheir values and beliefs tend to be molded by mentors,
fellow workers, company training programs, and the reward structure.
C. A company’s culture, once established, tends to remain stable and entrenched over
time.
D. Typically, key elements of the culture originate with a founder or certain strong
leaders who articulated them as a set of business principles, company policies,
operating approaches, and ways of dealing with employees, customers, vendors,
shareholders, and local communities where the company has operations.
E. Company cultures can be perpetuated by the telling and retelling of company
legends, by regular ceremonies honoring members who display desired cultural
behaviors, and by visibly rewarding those who display cultural norms and penalizing
those who don’t.
Answer:
A drink manufacturer finds setting up a plant to make its own bottle caps expensive and
technically difficult. Which of the following will be most helpful in solving the
manufacturer’s problem?
A. Outsourcing
B. Achieving economies of scale
C. Lowering input costs
D. Increasing bargaining power
E. Going for a vertical integration with a distributor
Answer:
Which of the following does NOT define an unethical and greed-driven culture?
A. Company managers and staff have little regard for ethical standards.
B. Company executives are driven by greed and ego gratification.
C. Executives exude an “ends-justify-the-means” mentality in pursuing overambitious
operating and financial targets.
D. Companies adopt accounting principles that make their financial performance appear
better than it really is.
E. Frontline employees display high-performance behaviors and a passion for making
the company successful.
Answer:
Which of the following is NOT an accurate description of the task of crafting a
company’s strategy?
A. In most companies, crafting strategy is a team effort, involving managers and often
key employees at many organization levels.
B. Ultimate responsibility for leading the strategy-making task rests with the chief
executive officer.
C. The task of crafting strategy is best done by a company’s chief strategic planning
officer, who should report directly to the company’s CEO and board of directors.
D. It is the responsibility and duty of a company’s board of directors to ensure that new
strategy proposals can be defended as superior to alternatives and, ultimately, to
approve or disapprove of the strategy formulated and proposed by the company’s
management.
E. In most of today’s companies, every company manager has a strategy-making role,
ranging from major to minor, for his or her area of responsibility.
Answer:
Pursuing continuous quality improvement as a uniqueness factor is sound because it:
A. can create differentiation even if little tangible differentiation exists otherwise.
B. bestows the first-mover-in-the-market advantage on companies practicing it.
C. can often reduce product defects and improve economy of use.
D. always provides a competitive advantage.
E. provides wider product variety and selection through product versioning.
Answer:
A company that is already diversified may choose to broaden its business scope by
building positions in new related or unrelated businesses because of all of the following
EXCEPT:
A. it has resources or capabilities that are eminently transferable to other related or
complementary businesses.
B. the company’s growth is sluggish and it wants the sales and profit boost that a new
business can provide.
C. management wants to lessen the company’s vulnerability to seasonal or recessionary
influences or to threats from emerging new technologies, legislative regulations, and
new product innovations that alter buyer preferences and resource requirements.
D. it wants to make new acquisitions to strengthen or complement some of its present
businesses, market positioning, and competitive capabilities.
E. its top management wants to increase its compensation.
Answer:
Which of the following questions can be used to distinguish a winning strategy from a
mediocre or losing strategy?
A. How good is the company’s business model?
B. Is the company a technology leader?
C. Does the company have low prices in comparison to rivals?
D. Is the company putting too little emphasis on behaving in an ethical and socially
responsible manner?
E. How well does the strategy fit the company’s situation?
Answer:
The paramount aim in building a management team should be to:
A. select people who are committed to decentralizing decision making and empowering
employees.
B. assemble a critical mass of talented managers who can function as agents of change,
work well together as a team, and produce organizational results that are dramatically
better than what one or two star managers acting individually can achieve.
C. choose managers experienced in controlling costs and flattening the organization
structure.
D. select people who have similar management styles, leadership approaches, business
philosophies, and personalities.
E. choose managers who believe in having a strong corporate culture and deeply
ingrained core values.
Answer:
The school of ethical relativism holds that:
A. what constitutes ethical or unethical conduct should be determined by the religious
convictions of each society or each culture within a country.
B. when there are cross-country or cross-cultural differences in what is deemed ethical
or unethical in business situations, it is appropriate for local moral standards to take
precedence over what the ethical standards may be elsewhere.
C. concepts of right and wrong are always governed by business norms in each country,
culture, or society.
D. concepts of right and wrong are always a function of each individual’s own set of
values, beliefs, and ethical convictions.
E. concepts of right and wrong as they apply to business behavior are always absolute
and usually more stringent than universal ethical principles.
Answer:
First-mover disadvantages (or late-mover advantages) rarely ever arise when:
A. the costs of pioneering are much higher than being a follower and only negligible
learning/experience curve benefits accrue to the pioneer.
B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with
next-generation products of their own.
C. the pioneer’s products are somewhat primitive and do not live up to buyer
expectations, allowing clever followers to win disenchanted buyers with
better-performing products.
D. the marketplace is skeptical about the benefits of a new technology or product being
pioneered by a first-mover.
E. the market response is strong and the pioneer gains a monopoly position that enables
it to recover its investment.
Answer:
Which of the following would increase the likelihood of ethical lapses as well as poor
long-term company performance?
A. Dramatic cuts in research and development expenditures in years when low earnings
are reported by the company
B. Increases in research and development expenditures in years when low earnings are
reported by the company
C. Executive commitment to implementing strategic suggestions from the board of
directors
D. Attracting investors who think the company’s industry will grow
E. Hiring and maintaining a skilled and diverse workforce
Answer:
The transaction costs of completing a business agreement or deal of some sort, over and
above the price of the deal, can include all of the following EXCEPT:
A. the costs of searching for an attractive target.
B. the costs of evaluating its worth.
C. bargaining costs.
D. the costs of completing the transaction.
E. the premium cost.
Answer:
What does a competitive strength score above 5 tell us about a diversified company’s
position in the market?
A. That its business units are all fairly strong market contenders in their respective
industries
B. That its business units are all fairly weak market contenders in their respective
industries
C. That the company will not likely perform well
D. That a company’s competitive strength score does not relate to the market position of
that business
E. That the company will likely fail
Answer:
In a strong-culture company:
A. values and behavioral norms are like crabgrassdeeply rooted and hard to weed out.
B. there is wide support for high ethical standards among both managers and
employees.
C. a company has more strategy flexibility because it can change its strategy and be
confident that the culture will welcome the strategy changes and be an ally in
implementing whatever changes are called for.
D. there is little room for employee empowerment, because independent-thinking
empowered employees may well make decisions or engage in actions that weaken the
culture.
E. management insists that official policies and procedures be followed religiously.
Answer:
A strongly implanted corporate culture has a powerful influence on behavior because of
all of the following EXCEPT:
A. most corporate personnel have acknowledged and accepted the cultural traditions.
B. management expectations and co-worker peer pressure cause employees to conform.
C. over time people who do not like the culture tend to leave.
D. over time achieving low-workforce-turnover is a catalyst for conformity and
acceptance.
E. a strong leader can use coercion and the threat of punishment to enforce norms.
Answer:
Which of the following is a condition that makes an internal startup strategy appealing
over an acquisition?
A. When an internal startup is more costly.
B. When an internal startup affects the supply-demand balance by increasing production
capacity
C. When an internal startup is unable to gain distribution access advantages
D. When an internal startup has the necessary scale and resource strengths to compete
with rivals
E. When an internal startup lacks the experience in establishing new subsidiaries
Answer:
One strategic fit based approach to related diversification would be to:
A. diversify into new industries that present opportunities to transfer specialized
expertise, technological know-how, or other valuable resources and capabilities from
one business’s value chain to another’s.
B. diversify into foreign markets where the firm has unrelated businesses.
C. acquire rival firms that have broader product lines so as to give the company access
to a wider range of buyer groups.
D. acquire companies in forward distribution channels (wholesalers and/or retailers).
E. expand into foreign markets where the firm currently does no business.
Answer:
Which of the following is an example of a cross-border alliance?
A. Facebook took over WhatsApp for $19 billion in February 2014.
B. Hyundai Motor Company plans to open a new manufacturing plant in the Czech
Republic.
C. The insurance company Geicois a wholly owned subsidiary of Berkshire Hathaway.
D. Renault-Nissan sells more than one in ten cars worldwide.
E. Carrefour, a French grocery chain, established a new wholly-owned venture in
Poland.
Answer:
How does a company’s unethical behavior risk doing direct damage to a company’s
creditors?
A. It could result in diminished business reputation.
B. It could lead to default on loans due to potential business fallout.
C. It could result in lower stock prices and lower returns.
D. It could lead to shunning by customers
E. It could make recruiting and retaining talented employees difficult.
Answer:
In which of the following instances are industry members NOT subject to stronger
competitive pressures from substitute products?
A. The costs to buyers of switching over to the substitutes are low.
B. Buyers are dubious about using substitutes.
C. The quality and performance of the substitutes is well-matched to what buyers need
to meet their requirements.
D. Buyer brand loyalty is weak.
E. Substitutes are readily available at competitive prices.
Answer:
Which of the following is NOT generally on a company’s menu of actions to consider in
crafting a strategy of social responsibility?
A. Actions to ensure that the company’s strategy is ethical and that ethical principles
will be observed in operating the business
B. Making charitable contributions, donating money and the time of company personnel
to community service endeavors, supporting various worthy organizational causes
C. Actions to look out exclusively for the best interests of its owners, the shareholders
D. Actions to protect or enhance the environment (apart from what is required by
governmental authorities)
E. Actions to create a work environment that enhances employee well-being and makes
the company a great place to work
Answer:
Managers can deliberately set challenging performance targets at levels high enough to
promote outstanding company performance by establishing:
A. stretch objectives which challenge the organization to deliver stretch gains in
performance.
B. mainstay objectives that although are easily attainable, and the company is obligated
to meet, they are designed to spur motivation in the workforce.
C. financial objectives that drive standardization of cost-efficiency and unify stringent
operating specifications.
D. a specifically detailed and integrated model of operating policies, practices, and
procedures.
E. why the company does certain things in trying to please its customers.
Answer:
Which of the following is NOT one of the pitfalls of a low-cost provider strategy?
A. Overly aggressive price-cutting
B. Setting the industry’s price ceiling to capture volume gains and achieve economies of
scale
C. Relying on an approach to reduce costs that can be easily copied
D. Becoming too fixated on cost reduction
E. Having the basis for the firm’s cost advantage undermined by cost-saving
technological breakthroughs that can be readily adopted by rival firms
Answer:
Identify and briefly discuss the key reasons why a company may consider expanding
outside its domestic market.
Answer:
Discuss control mechanisms that managers can use to monitor the performance of
empowered employees.
Answer:
Under what circumstances might an already diversified company choose to pursue
corporate restructuring?
Answer:
Identify five factors that tend to intensify competitive rivalry among an industry’s
member firms.
Answer:
Why are well-conceived CSR strategies and sustainable business practices considered
in the best long-term interest of shareholders?
Answer:
A beauty products giant that manufactures quality makeup products observes a lot of its
hits by college students on its makeup tutorials. It opens another sub-brand that
provides low-priced makeup services to college partygoers. Which of the five generic
strategies has the company used?
Answer:
What are the distinctive features of a focused low-cost strategy? How does it differ
from a low-cost leadership strategy?
Answer:
Explain why a weighted competitive strength assessment is important.
Answer:
List and briefly discuss at least three obligations of a company’s board of directors in
corporate governance and the strategy-making, strategy-executing process.
Answer:
Explain in detail what a company’s business model entails.
Answer:
The use of incentives and rewards is the single most powerful tool at management’s
disposal to win strong employee commitment to carrying out the strategic plan. True or
false? Explain.
Answer:
What circumstances call for use of a multidomestic strategy for competing in
international markets?
Answer:
It is often said that benchmarking is the backbone of the process of identifying,
studying, and implementing best practices. Explain the role of benchmarking.
Answer:
What is the connection between a company’s strategy and its quest for sustainable
competitive advantage?
Answer: