Archives: Quiz

Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate. a. True b. False An entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three ways that firms implement internal innovations. a. True b. False […]

The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the board of directors is composed of sympathetic outside members and insiders who report to the CEO. a. True b. False Ikea offers […]

The longer the focus of managerial incentive compensation, the greater the top-level managers. a. earnings potential for b. risks borne by c. incentives for d. potential tax burden for It can be difficult for investors to actually observe the value […]

Both top executives and owners of the firm wish to diversify the firm to reduce risk. a. True b. False Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in […]

CaseScenario1:Compliance,Inc. Compliance, Inc., (CI) conducts clinical human and animal trials for the pharmaceutical and biotechnology industries. Revenues are split evenly between early and late drug development services. While the bulk of its business is conducted in Europe and the U.S. […]

Even for companies capable of succeeding in global markets, it is critical that they a. remain committed to and strategically competitive in their domestic market. b. introduce many new products immediately after entering a new market. c. acquire a local […]

Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls. a. True b. False The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because a. […]

The use of poison pills increases the chance that a poorly performing firm will be taken over. a. True b. False In recent years, the number of individuals who are large-block shareholders have declined and been replaced by institutional owners […]

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in a. managerial opportunism. b. white-collar crime. c. vindictive disloyalty. d. an act of courage. Which of the following is […]

Top manager participation in and overseeing the activities required for making acquisitions can divert managerial attention from other matters that are necessary for long-term competitive success. a. True b. False After a leveraged buyout, typically occur(s). a. selling of assets […]

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies’ culture was never achieved, and the two firms’ assets were not complementary. It is very likely that Magma will a. go public through an IPO. b. […]

As noted in the Chapter 7 Strategic Focus, the current Chinese cross-border strategy is to focus on buying global brands, sales networks, and goodwill in in branded products. a. True b. False Panera Bread has innovated to improve the quality […]

In a vertical complementary alliance, firms share some of their resources and capabilities from the same stage of the value chain to create a competitive advantage. a. True b. False Cross-border acquisitions are critical to U.S. firms competing internationally a. […]

Target’s brand promise “Expect More. Pay Less” and appeal to higher-income, fashion-conscious discount shoppers illustrates the strategy. a. cost leadership b. differentiation c. focused differentiation d. integrated cost leadership/differentiation In Porter’s model, a specialized factor of production would include a. […]

The CEO is the individual with primary responsibility for effective strategic leadership within an organization. a. True b. False A firm pursuing an unrelated diversification strategy will utilize a structure. a. network b. cooperative form multidivisional c. competitive form multidivisional […]

Exit barriers to a firm include all of the following EXCEPT a. generic assets. b. loyalty to employees. c. governmental concern about job loss. d. restrictive labor agreements. CaseScenario1:Compliance,Inc. Compliance, Inc., (CI) conducts clinical human and animal trials for the […]

The competitive actions and responses in _______ markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm’s operations in order to consistently provide the same positive experience for customers. […]

Research suggests that institutional activism may not have a strong direct effect on firm performance but may indirectly influence the targeted firm’s strategic decisions, including those concerned with international diversification and innovation. a. True b. False The board of directors […]

After Amazon lowered the price on Kindle e-readers, Sony eventually lowered the price on its Reader. Sony needed to do this because a. it is in the same strategic group. b. it is outside the strategic group. c. of inter-strategic […]

The industry environment directly influences the firm and its competitive actions and responses. a. True b. False The selection of an organizational structure for an internationally diversified firm should consider the international corporate-level strategy the firm is using. a. True […]

The best of the generic business strategies is the integrated cost leadership/differentiation strategy. a. True b. False The worldwide geographic area structure differs from the worldwide product divisional structure in the level of centralization of decision making. a. True b. […]

A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client’s project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this […]

GE (Chapter 6 Opening Case) is unusual in that it a. is widely diversified but competes only in manufacturing industries. b. has had an unblemished environmental record. c. is one of the few large diversified large firms that have been […]

According to Peter Drucker,the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies. There are three variations of the multidivisional structure. a. True b. False […]

Corporate governance revolves around the relationship between which two parties? a. shareholders and the board of directors b. shareholders and managers c. the board of directors and managers d. None of the these options are correct. Problems associated with acquisitions […]

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT a. lack of scientific transference. b. social complexity. c. unique historical conditions. d. causal ambiguity. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. a. True […]

While the implementation of the Sarbanes-Oxley Act in 2002 has been controversial to some, most believe that it has had positive results in terms of protecting stakeholders and certain stockholder interests. a. True b. False Resources are the source of […]

Generally, a board member who is a source of information about a firm’s day-to-day activities is classified as a(n) director. a. lead independent b. inside c. related d. encumbered Strategic leadership is the ability to anticipate, envision, maintain flexibility, and […]

A leveraged buyout refers to a. a firm restructuring itself by selling off unrelated units of the company’s portfolio. b. a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. […]

CaseScenario3:Zachary,Wesley&Partners. Zachary, Wesley & Partners (ZW&P) is a leveraged buyout (LBO) firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals retain the existing management team and […]

CaseScenario2:Compliance,Inc. Compliance, Inc. (CI) conducts clinical human and animal trials for the pharmaceutical and biotechnology industries. Revenues are split evenly between early and late drug development services and the firm is a leader in the laboratory technologies needed for such […]

The cost function is: a. a means for expressing output as a function of cost b. a schedule or mathematical relationship showing the total cost of producing various quantities of output c. similar to a profit and loss statement d. […]

The social discount rate used in cost-benefit analysis is equal to a weighted average of the Treasury Bill rate and the long-term government borrowing rate. a. true b. false In cost-benefit analysis, a low discount rate tends to favor projects […]

Which of the following statements is (are) true concerning a pure competition situation? a. Its demand curve is represented by a vertical line. b. Firms must sell at or below market price. c. Marginal revenue is equal to price. d. […]

When there is multicollinearity in an estimated regression equation, a. the coefficients are likely to be small. b. the t’“statistics are likely to be small even though the R2is large. c. the coefficient of determination is likely to be small. […]

To escape adverse selection and elicit high quality experience goods buyers can a. offer price premiums to new firms in the market b. seek out unbranded goods c. buy from generic storefronts that have leased temporary space d. secure warranties […]

Capital expenditures: a. are easily reversible b. are forms of operating expenditures c. Affect long-run future profitability d. Involve only money, not machinery e. none of the above The ____ is equal to the some of the squares of the […]

If the value of the U.S. dollar rises from 1.0 per dollar to 1.3 per dollar, a. imports of automobiles from Germany will decline b. American inflation will increase c. German exports of all traded goods will decline d. American […]

The ____ method assumes that the cash flows over the life of the project are reinvested at the ____. a. net present value; computed internal rate of return b. internal rate of return; firm’s cost of capital c. net present […]

In the purely competitive case, marginal revenue (MR) is equal to: a. cost b. profit c. price d. total revenue e. none of the above The British Automobile Company is introducing a brand new model called the “London Special.” Using […]

Generally, investors expect that projects with high expected net present values also will be projects with a. low risk b. high risk c. certain cash flows d. short lives e. none of the above In regression analysis, the existence of […]

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem. a. Opportunity costs b. Marginal costs c. Relevant costs d. Sunk costs e. None of the above The form of economics most […]

The concept of market structure refers to three main characteristics of buyers and sellers in a particular market. These include ____. a. the degree of seller and buyer concentration in the market b. the degree of actual or imagined differentiation […]

Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds? a. U.S. Government bonds b. municipal bonds c. common stock d. commercial paper e. none […]

An incentive-compatible revelation mechanism is a. self-enforcing b. always multi-period c. too complicated to influence decisions d. prevalent in vertically integrated businesses e. not adopted by franchise businesses The demand curve facing the firm in ____ is the same as […]

Emco Company has an assembly line of fixed size A. Total output is a function of the number of workers (crew size) as shown in the following schedule: Determine the following schedules: (a) marginal productivity of labor (b) average productivity […]

The profit-maximizing monopolist, faced with a negative-sloping demand curve, will always produce: a. at an output greater than the output where average costs are minimized b. at an output short of that output where average costs are minimized c. at […]

The production superintendent of the Holloway Company has proposed that the firm purchase a new $40,000 grinding machine for use in the plant. The machine is expected to generate $10,000 per year in pre-tax cash savings (labor and spoilage) for […]

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is: a. highly price elastic b. price inelastic c. unitarily elastic d. an inferior good e. none of the […]

The coefficient of determination measures the proportion of the variation in the independent variable that is “explained” by the regression line. a. true b. false In the electric power industry, residential customers have relatively ____ demand for electricity compared with […]