The movement of inputs and outputs through a production process is known as which
of the following?
a) Coordination
b) Input-output
c) Integration
d) Throughput
e) Systemology
What institution within a firm must fail on some level for managers to be motivated to
acquire another firm for the purposes of increasing their own compensation, shielding
themselves against risk, or gaining prominence by running a larger firm?
a) Legal department
b) Corporate board
c) Mergers and acquisitions program
d) Firm bonus schedule
e) Corporate governance
Which of the following structures best describes a small group of people where the
members of the work group are paid based on the outcome of all the workers?
a) Complex hierarchy
b) Individual
c) Self-managed team
d) Hierarchy of authority
e) Divisional
What term describes existing firms in a monopolistically competitive market?
a) Anchors
b) Primaries
c) Base
d) Incumbents
e) Pioneers
Which of the following is not a method to protect intellectual property?
a) Patents that are specific and complete
b) Complete contracts regarding IP with all suppliers
c) Non-disclosure agreements for employees
d) Limiting access to IP to a few key employees
e) Charging higher prices to limit access to IP
Which of the following terms involves the location of decision making rights and rule
making authority within a hierarchy?
a) Complex hierarchy
b) Coordination
c) Control
d) Hierarchy of authority
e) Departmentalization
Which of the following was not one of the power bases that Francis “Jack” Reith used
to push the development of the 1957 Ford Mercury?
a) He was a dynamic and charismatic leader
b) He was intelligent and effective at persuading others
c) He had a track record of success
d) He had position power
e) He threatened punishment to anyone who opposed the idea
Which of the following causes finished goods prices not to maximize the joint profits of
a manufacturer and its supplier?
a) Inefficient asset specificity
b) Lack of coordinated scope economies
c) Incomplete contracting
d) Double marginalization
e) None of the above
Which of the following management actions reflects agency problems due to the fact
that information held by the agent is hard to observe?
a) Enriching managers themselves even if shareholders do not benefit
b) Avoiding risky strategic initiatives even if shareholders view them as “reasonable”
c) Paying for services that seem excessive to the shareholders
d) Pumping up the firm’s short-run performance even if shareholders are harmed in the
long-run
e) Giving work a mediocre effort so managers do not have to work excessive hours
What is the approximate observed median learning curve slope for typical firms?
a) .6
b) .7
c) .8
d) .9
e) 0
What kind of competition is generally described as quantity competition?
a) Bertrand competition
b) Cournot competition
c) Perfect competition
d) Chamberlin competition
e) Monopolistic competition
Which of the following terms is a concept, developed by Michael Porter, which
describes the activities within firms and across firms that add value along the way to the
ultimate transacted good or service?
a) Five forces
b) Value creation
c) Value chain
d) Consumer surplus
e) Producer surplus
Which of the following practices does not contribute to the strategic fit of Southwest
Airlines?
a) No in-flight catering
b) Use of multiple types of planes
c) No use of congested airports
d) Re-engineered boarding process
e) No first class section on plane
Which of the following is not an exit barrier for firms in an industry?
a) Sunk costs
b) Labor agreements or commitments to purchase raw materials
c) Obligations to input suppliers
d) Excess capacity
e) Government restrictions
Conflicts of interest in the certifier market often can lead to which of the following?
a) Higher priced goods and services
b) Lower competition between substitute goods
c) A reduction in the number of competitive sellers
d) Certification bias
e) Less product choice for the consumer
What type of cooperation-inducing strategy is defined as one so compelling that that a
firm would expect all other firms to adopt it?
a) Backward induction
b) Focal point
c) Always aggress
d) Coordination
e) Folk
Which of the following best describes regression to the mean??
a) Quiet periods in markets are punctuated by fundamental ‘shocks” or “discontinuities”
that destroy old sources of advantage and replace them with new ones
b) The optimal allocation of society’s resources at a given point in time
c) Clusters of activities that a firm does especially well in comparison with other firms
d) A firm does exceedingly well due to good luck or exceedingly poorly due to bad
luck, but returns to normal performance following
e) None of the above
Which of the following is true with regard to the difference in production costs between
an item produced in a vertically integrated firm and an item exchanged through an arm’s
length market transaction as the level of asset specificity increases?
a) The cost difference increases with greater asset specificity
b) Scale-based advantages of outside suppliers are likely to be stronger with greater
asset specificity
c) The cost difference declines with greater asset specificity
d) Scope-based advantages of outside suppliers are likely to be stronger with greater
asset specificity
e) The costs are negative for all levels of asset specificity
Which of the following is not a part of the five-forces framework?
a) Supplier Power
b) Internal rivalry
c) Regulation
d) Buyer Power
e) Substitutes and Complements
By satisfying which of the following conditions can shareholders prevent management
driven acquisitions?
a) If shareholders could determine which acquisitions will lead to increased profits and
which will not
b) If shareholders could direct management to undertake only those acquisitions that
will increase shareholder value
c) If shareholders could provide management with the appropriate steps to conduct
when performing acquisitions
d) a & b
e) None of the above
What term describes when a firm is using the least-cost production process?
a) Agency efficiency
b) Matrix purchasing
c) Technical efficiency
d) Economizing
e) All of the above
Which of the following conclusions can we make about vertical integration with regard
to scale and scope economies?
a) If asset specificity is significant enough, vertical integration will be more profitable
than arm’s-length market purchases, even when production of the input is characterized
by strong scale economies or when the firm’s product market scale is small.
b) A firm gains more from vertical integration when outside market specialists are better
able to take advantage of economies of scale and scope
c) A firm with a larger share of the product market will benefit more from vertical
integration than a firm with a smaller share of the product market
d) The more a firm produces, the greater its input and this ultimately decreases the
likelihood that in-house production can take as much advantage of economies of scale
and scope as an outside market specialist
e) If a firm is considering whether to make or buy an input requiring significant
up-front setup costs, and there is a large market outside the firm for the input, then the
firm should buy the input from outside market specialists
Which of the following is a capability?
a) Patents and trademarks
b) Brand-name reputation
c) Installed base
d) Organizational culture
e) Sourcing skills
In what type of market do the actions of individual firms materially affect the overall
market?
a) Perfectly competitive
b) Monopolistically competitive
c) Oligopoly
d) Monopoly
e) Diversified
Which of the following terms best describes ability that stems from the explicit
contractual decision-making and dispute-resolution rights that a firm (or some other
source) grants to an individual?
a) Power
b) Authority
c) Culture
d) Influence
e) Contracts
What is a firm providing when it is informing customers about a product’s benefits?
a) Advertising
b) Certification
c) Distributing
d) Notice
e) Disclosure
What are economies of density as referred to in the airline industry?
a) Reducing the size of an aircraft used to increase load factor
b) Economies achieved by an airline flying from spoke to spoke in a hub-and-spoke
network
c) Economies of scope along a given route
d) Economies of scale along a given route
e) Reductions in average cost as traffic volume decreases
Which of the following would make an outcome report card difficult to produce?
a) Large sample of outcome measures
b) Small sample of outcome measures
c) Many outcomes from one product
d) Many sellers produce similar products
e) Consumers purchase high quantities of the product
Which of the follow best describes a matrix organizational structure?
a) Employees are subject to two or more sets of managers at once
b) Two or more workers or work groups depend on each other to do their work
c) Work groups may be organized by function, geography, or customer base
d) A single department is responsible for each of the basic business functions within the
firm
e) None of the above
Which of the following conclusions can we make about vertical integration with
regards to product market share and scope?
a) If asset specificity is significant enough, vertical integration will be more profitable
than arm’s-length market purchases, even when production of the input is characterized
by strong scale economies or when the firm’s product market scale is small.
b) A firm gains more from vertical integration when outside market specialists are better
able to take advantage of economies of scale and scope
c) A firm with multiple product lines will benefit more from being vertically integrated
in the production of components for those products in which it can achieve significant
market scale
d) The more a firm produces, the greater its input and this ultimately decreases the
likelihood that in-house production can take as much advantage of economies of scale
and scope as an outside market specialist
e) If a firm is considering whether to make or buy an input requiring significant
up-front setup costs, and there is a large market outside the firm for the input, then the
firm should buy the input from outside market specialists