A company should pursue related diversification only to enhance the competitive
position of its core business.
The more interdependent the divisions in a multidivisional structure, the greater are the
bureaucratic costs associated with obtaining the potential benefits from a particular
strategy.
The reward system affects motivation, however, the type of organizational culture that
develops in a company is primarily affected by the founder’s values and not the reward
system.
One important advantage of being a first mover is that it guarantees success.
Transferring competencies across industries involves taking a distinctive competency
developed in one industry and implanting it in an existing business unit in another
industry.
When two or more companies are competing with each other to get their technology
adopted as a standard in an industry, and when network effects and positive feedback
loops are important, the company that wins the format war will be the one whose
strategy best exploits positive feedback loops.
In corporations, agency theory is used to explain the relationship between stockholders
and corporate managers, and between upper-level managers and the lower-level
managers they supervise.
In 2000, the best-selling Christmas item was the Razor Scooter and in 2001 it was Bratz
dolls. Today, these items are not in high demand. This represents differences in
customer tastes and preferences.
Market segmentation addresses the “what” portion of a firm’s business model.
A company can increase its growth rate by taking goods or services developed at home
and selling them internationally.
Aggressive marketing is a key factor in jump-starting demand to get potential early
adopters to bear the switching costs associated with adopting a new innovation.
In general, the more that an industry’s product is like a commodity, the lower the
intensity of any price war that may develop.
Attaining future profit growth may require investments that reduce the current rate of
profitability.
Maximizing the profitability of a company’s business model is about making the right
choices with regard to value creation through differentiation, costs, and pricing given
both the demand conditions in the company’s market and the competitive conditions in
the company’s industry.
If a company is to increase the probability of a new product’s commercial success, the
company must foster close links between
A.marketing and sales.
B.engineering and advertising.
C.quality assurance and inventory management.
D.research and development (R&D) and marketing.
E.accounting and industrial engineering.
Cool Looks, Inc. is a local fashion design company that actively solicits comments from
its customers about the quality of its clothing and the kind of merchandise they want it
to supply. Which of the following mechanisms for focusing on the customer is Cool
Looks utilizing?
A.Managing materials
B.Improving response time
C.Demonstrating leadership
D.Shaping employee attitudes
E.Knowing customer needs
When Toyota first decided to manufacture and market cars in the United States, it
entered into a ____ with General Motors.
A.strategic alliance
B.joint venture
C.global partnership
D.trade agreement
E.contingency plan
What is perhaps the most important reason why acquisitions made by a company fail?
A.The expense of the acquisition
B.The timing of the acquisition
C.Management’s unwillingness to expend the necessary effort to make the acquisition
work effectively
D.Incompetence on the part of workers in the acquired firm
E.Difficulties in coordinating manufacturing activities
When credit card companies such as Visa and Mastercard allow an individual to put one
of their own photos on their account credit card, they are utilizing
A.mass customization.
B.a flexible manufacturing system.
C.quality as reliability mantra.
D.supply-chain management.
E.a just-in-time inventory system.
Which of the following integrating mechanisms consists of one manager from each
relevant function or division assigned to a team that meets to solve a specific mutual
problem?
A.Direct contact
B.Liaison roles
C.Teams
D.Integrating roles
E.The matrix structure
Implementation of a global matrix provides a company with which of the following
advantages?
A.Decentralizes control to overseas managers
B.Provides overseas managers with considerable flexibility
C.Allows overseas managers the flexibility to manage local issues
D.Allows corporate executives to exercise control when needed
E.All of these
At its simplest level, a joint venture may be thought of as a(n)
A.merger of two companies.
B.acquisition of a smaller company by a larger company.
C.form of strategic outsourcing.
D.sign of weakness on the part of one of the companies.
E.corporate partnership.
The first group of customers to enter the market for a new product are called
A.early adopters.
B.first users.
C.innovators.
D.adventurers.
E.initial customers.
Control through organizational culture is so powerful because
A.it reduces the costs of organizational control in a large company.
B.self-control develops through the establishment of an internal system of
organizational values.
C.it results in maximum decentralization and the elimination of bureaucracy.
D.it achieves increased performance through the alignment of organizational goals with
societal expectations.
E.it achieves external control through motivated coworkers.
Edward Wrapp’s ideas about the astuteness of political power suggest that successful
strategic managers
A.are skilled organizational politicians who can build consensus and get their ideas
pushed through.
B.are unwilling to live with less than total acceptance of their programs.
C.maintain tight control over as many decisions as possible.
D.publicly commit themselves to bold strategic agendas.
E.recognize the futility of pursuing intended strategies.
Which of the following is not a criticism of boards?
A.Inside directors can use their control over information to influence outside directors.
B.The CEO nominates most board directors.
C.Outside board chairpersons are ineffective since the outside directors have no
knowledge of company operations.
D.Insiders can control the information the board receives.
E.A board with more insiders may pursue strategies consistent with the interests of
management rather than those of stockholders.
A sustained competitive advantage
A.enables a company to maintain above-average projects for a number of years.
B.cannot be maintained for more than three years.
C.is seldom possible in today’s highly competitive environment.
D.typically arises out of unforeseen economic events.
E.A and D.
Julie is the marketing manager at Mountain Productions, Inc. When Sarah, one of her
subordinates, told Julie that her father had passed away, Julie felt sympathy for Sarah
because she could relate to what she was experiencing; Julie had lost her father 6
months prior. Julie felt _______ for Sarah.
A.an availability error
B.self-awareness
C.self-regulation
D.motivation
E.empathy
In deciding on a strategy, a company in a declining industry must do all of the following
except
A.lower prices.
B.manage industry capacity.
C.evaluate its strengths relative to the remaining pockets of demand.
D.evaluate the severity of decline.
E.monitor its cash flow.
Which structure is the best for sharing information and learning across countries?
A.Global-area
B.International division
C.Global product group
D.Global matrix
E.Simple
Generally speaking, a differentiator chooses to divide its market into
A.one generic market.
B.two or three major segments.
C.niches and segments in which customers will pay premium prices.
D.as few segments as possible.
E.None of these.
A company’s stockholders provide a company with
A.emotional and intellectual support.
B.risk capital.
C.free advertising.
D.advice on new product lines.
E.a code of ethics.