While many agency relationships work well, problems arise when agents and principals
have different goals.
Market development strategy involves finding new market segments for a company’s
products.
It can be argued that Microsoft’s near monopoly of PC operating systems helped raise
the level of industry profitability.
Benchmarking is a practice in which a company’s performance is compared against that
of competitors and the historic performance of the company itself.
Dell Computer was one of the last computer companies to implement online selling of
computers.
Market segmentation is an evolving, ongoing process that presents considerable
opportunities for strategic managers to improve their company’s business model.
Technological paradigm shifts occur when new technologies come along that
revolutionize the structure of the industry, dramatically alter the nature of competition,
and require companies to adopt new strategies to survive.
A group of firms all make tools for baking – pots, pans, measuring cups, and utensils.
This group should be referred to as a market segment.
High exit barriers are most serious as a competitive threat when industry demand is
declining.
Ethical decisions are those that are made in accordance with accepted principles of right
and wrong.
By offering a standardized product to the global marketplace and manufacturing that
product in each nation in which it does business, a multinational company can realize
substantial scale economies.
A laundromat and a pool hall together invest in a new store, where customers can wash
their clothes and play pool while waiting. This is an example of an internal new
venture.
The challenge in a fragmented industry is to figure out the best set of strategies to
overcome a fragmented market so that the competitive advantages associated with
pursuing one of the different business models can be realized.
Research evidence suggests that small-scale entry into a new business is the best way
for an internal venture to succeed.
Which of the following customer groups is not very price sensitive?
A.Early adopters
B.Early majority
C.Innovators
D.Early adopters and early majority
E.Early adopters, early majority, and innovators
A global strategy
A.involves an appropriate mix of centralization and decentralization.
B.centralizes all functions at the optimal global locations.
C.centralizes only the research and development (R&D) and marketing functions.
D.is the most complex strategy.
E.maximizes local responsiveness.
Just-in-time inventory systems
A.are used only by manufacturing firms.
B.are implemented primarily by the manufacturing function.
C.have components arrive at a manufacturing plant just in time to enter the production
process.
D.are valuable when there is a labor dispute with a key supplier.
E.always keep extra inventory on hand for emergencies.
Mobility barriers
A.prevent movement within a strategic group.
B.inhibit the movement of companies between strategic groups in an industry.
C.inhibit the movement of a company from one industry to another.
D.include exit barriers of the strategic group that a company wants to enter.
E.are low when exit barriers in the strategic group that a company is a member of are
high.
Which of the following is not a basic strategy for a first mover?
A.Develop and market the innovation itself
B.Develop and market the innovation jointly with other companies through a strategic
alliance or joint venture
C.License the innovation to others
D.Discourage development of complementary assets
E.All of these choices
Which of the following customer groups represents the leading wave or edge of the
mass market?
A.Early adopters
B.Early majority
C.Innovators
D.Late majority
E.Laggards
Which of the following factors must be considered in choosing the structure and control
systems for managing a global business?
A.How to distribute and allocate responsibility and authority between managers at
home and abroad
B.The selection of the organizational structure that groups divisions both at home and
abroad
C.The selection of the right kinds of integration and control mechanisms
D.The selection of the right kinds of organizational culture
E.All of these
If a first mover does not have complementary assets, barriers to imitation are high, and
there are several capable competitors, the first mover should
A.license the innovation to others.
B.enter into a joint venture to protect the product.
C.produce the product itself.
D.sell the technology outright to another firm.
E.wait until competitors develop an alternative product.
Which of the following is not a reason why the board of directors may act as the
guardian of stockholder interests within a company?
A.Board members are directly elected by stockholders.
B.The board is positioned at the apex of decision making within a company and is thus
in a good position to monitor strategies.
C.Board members can be held legally accountable for the actions of the company.
D.Many board members are the nominees of the company CEO.
E.The board has legal authority to hire, fire, and compensate senior executives.
Which of the following best describes an industry that consists of many small firms?
A.Mature
B.Growth
C.Fragmented
D.Declining
E.Diverse
Kodak possesses the leading imaging technology. This technology has allowed the
company to differentiate its products from those offered by rivals. Imaging is Kodak’s
A.distinctive competence.
B.resource.
C.capability.
D.value.
E.barrier to imitation.
Suppliers in an industry are most powerful when
A.there are few substitutes for the product suppliers sell.
B.switching costs are low.
C.companies in the industry can threaten to enter the suppliers’ industry.
D.substitute products are readily available.
E.all of these choices
A criticism of stock-based compensation plans is that
A.they discourage empire building.
B.they induce managers to focus on the short term.
C.managers do not like them.
D.they dilute stockholders’ equity.
E.they are publicly reported and therefore not subject to abuse.
A drawback of the functional structure is
A.that each worker must report to more than one superior.
B.the difficulty in communicating and coordinating across functions.
C.too much decentralization of decision-making authority.
D.its lack of flexibility.
E.the need to downsize before implementing this structure.
The intellectual property of an organization is a(n)
A.tangible resource.
B.tangible competence.
C.tangible capability.
D.intangible capability.
E.intangible resource.
The bargaining power of an industry’s suppliers is greater when
A.the supply industry is fragmented.
B.switching costs are high.
C.the industry buys in large quantities.
D.many substitutes are available.
E.firms in the industry can threaten backward vertical integration.
Global expansion
A.is feasible only for large companies.
B.can enable companies to increase their profitability and grow their profits more
rapidly.
C.allows domestic companies in the mature stage of the industry life cycle to maintain
profits but not to increase them.
D.requires locating facilities in foreign countries.
E.makes sense for manufacturing firms but not for service firms.
The easiest and cheapest type of diversification strategy for a company to manage is
A.related diversification.
B.unrelated diversification.
C.vertical integration.
D.horizontal diversification.
E.none of these.