The litmus test of a company’s code of ethics is:
A. the degree to which it is connected to a company’s statement of core values.
B. the extent to which it is embraced in crafting strategy and in the day-to-day
operations of the business.
C. the extent to which a company’s approach to ethical behavior mirrors the ethical
principles for society at large.
D. based on the rules a company’s top management and board of directors make about
“what is right” and “what is wrong.”
E. determined by the ethical behaviors expected of company personnel in the course of
doing their jobs.
Answer:
Managers charged with implementing and executing strategy need to be deeply
involved in the budgeting and resource allocation process because of all the following
reasons EXCEPT:
A. too little funding deprives organizational units of the necessary resources to execute
their piece of the strategic plan while too much funding wastes organizational resources
and reduces financial performance.
B. resource allocation involves screening of requests for people, facilities and
equipment, and approving them, whether they contribute to the strategy execution effort
or not.
C. without major budget reallocations there is little chance that desired core
competencies and organizational capabilities will emerge.
D. lean, carefully managed budgets protect the company’s financial condition and
eliminate the wasteful use of cash.
E. a change in strategy nearly always calls for budget reallocations and resource
shifting.
Answer:
An alliance becomes “strategic” as opposed to just a convenient business arrangement
when it serves all of the following strategic purposes EXCEPT:
A. builds, sustains, or enhances a core competence or competitive advantage.
B. blocks a competitive threat.
C. increases the bargaining power of alliance members over suppliers or buyers.
D. opens up important new market opportunities.
E. contracts out certain value chain activities that are normally performed in-house to
outside vendors.
Answer:
For a diversified company to be a strong performer:
A. a substantial portion of its revenues and expenses must come from business units
with relatively low attractiveness scores.
B. its principal business must be in industries with a good outlook for growth and
above-average profitability.
C. its business units in high attractiveness score industries should be candidates for
divesture.
D. its business units must operate within the favorable aspects of their industry
environment.
E. its business units must have a popular image, even if the performance of their
products does not greatly satisfy buyer expectations.
Answer:
SWOT analysis is a simple but powerful tool for:
A. gauging whether a company has a cost-competitive value chain.
B. sizing up a company’s resources and capabilities, strengths and deficiencies, its
market opportunities, and the external threats to its future well-being.
C. evaluating whether a company is in the most appropriate strategic group.
D. determining a company’s competitive strength vis–vis close rivals.
E. identifying the market segments in which a company is strongly positioned and
weakly positioned.
Answer:
Unrelated businesses:
A. sell products from the different businesses to much the same types of buyers and
retail outlets.
B. have dissimilar value chains and resource requirements with no competitively
important cross-business commonalities at the value chain level.
C. perform better than just the sum of the individual businesses.
D. will always have several key suppliers in common.
E. employ production methods that create economies of scale.
Answer:
Strategic alliances are:
A. the cheapest means of developing new technologies and getting new products to
market quickly.
B. collaborative formal arrangements where two or more companies join forces and
agree to work cooperatively toward some strategically relevant objective.
C. a proven means of reducing the costs of performing value chain activities.
D. best used to insulate a company from the impact of the five competitive forces.
E. the best way to help insulate a firm from the adverse impacts of industry driving
forces.
Answer:
To use location to build competitive advantage, a company that operates transnationally
or globally must:
A. employ either an export strategy or a franchising strategy.
B. scatter its production plants across many countries in different parts of the world so
as to minimize transportation costs.
C. consider whether to concentrate each activity it performs in a few select countries or
disperse performance of the activity to many nations and consider in which countries to
locate particular activities.
D. locate production plants in those countries having suppliers that can supply all the
necessary raw materials and components so as to avoid inbound shipping costs.
E. concentrate all of its value chain activities in the one country that has the best
combination of low wage rates, low shipping costs, and low tax rates on profits.
Answer:
Perhaps the most reliable way for a company to improve its financial performance over
time is to:
A. put 100 percent emphasis on the achievement of its short-term and long-term
financial objectives.
B. recognize that the achievement of strategic objectives signals that the company is
well positioned to sustain or improve its performance.
C. substitute financial intent for strategic intent and judiciously concentrate on the
mission of making a profit.
D. not allocate any resources to the achievement of strategic objectives until it is very
clear that the company can meet or beat its stretch financial performance targets.
E. avoid use of the balanced-scorecard philosophy since achievement of financial
performance targets is obviously more important than the achievement of strategic
performance targets.
Answer:
A weaker U.S. dollar is an economically favorable exchange-rate shift for
manufacturing plants based in the United States.
A. This is a true statement.
B. No, the U.S. dollar must be stronger.
C. Yes, because it provides for a weakened foreign demand for U.S.-made goods.
D. Yes, because it makes such plants less cost competitive with foreign plants.
E. Yes, because it provides incentives of foreign companies to locate manufacturing
facilities in the U.S. to make goods for U.S. consumers.
Answer:
The essential requirement for different businesses to be “related” is that:
A. their value chains exhibit competitively valuable cross-business commonalities.
B. the products of the different businesses are bought by many of the same types of
buyers.
C. the products of the different businesses are sold in the same types of retail stores.
D. the businesses have several key suppliers in common.
E. the production methods they employ both entail economies of scale.
Answer:
To create a strategy-supportive system of rewards and incentives, a company must:
A. reward people for accomplishing results, not just for dutifully performing assigned
tasks.
B. focus jobholders’ attention and energy on what to do as opposed to what to achieve.
C. demand jobholders’ 100 percent attendance since it guarantees results.
D. hold jobholders’ responsible for their function and not burden them with being
accountable.
E. incorporate negative motivational elements to assure results.
Answer:
An information technology multinational issues a public statement that the company’s
accounts had been falsified by billions of dollars over recent years to keep new
investments flowing in. Following the news, the CEO is arrested and the company’s
stock price sharply declines. Which of the following has the company incurred?
A. Only visible and internal administrative costs
B. Visible but not intangible costs
C. Visible and intangible costs
D. Internal administrative costs but not visible costs
E. Internal administrative costs but not intangible costs
Answer:
A low-cost provider’s product does NOT have to always:
A. contain enough attributes to be attractive to prospective buyers.
B. suggest strong rather than weak product differentiation.
C. signal value to buyers.
D. provide high margins per unit sold to bring in enough unit sales.
E. be valuable and appealing to a wide range of buyers.
Answer:
An automotive manufacturer sells a limited number of high-end, custom-built cars,
using technologically advanced power systems. What strategy is the manufacturer using
to gain competitive advantage?
A. A low-cost provider strategy
B. A broad differentiation strategy
C. A focused low-cost strategy
D. A focused differentiation strategy
E. A best-cost provider strategy
Answer:
Which of the following is NOT a common trait of an unhealthy company culture?
A. A politicized internal environment and empire-building managers who jealously
guard their turf
B. Hostility to change and a wariness of people who champion new ways of doing
things
C. An aversion to looking outside the company for best practices, new managerial
approaches, and innovative ideas
D. An aversion to incentive compensation and overemphasis on working in teams,
E. Overzealous pursuit of wealth and status on the part of key executives
Answer:
Which of the following statements about a high-performance culture is true?
A. Results-oriented, high-performance cultures are permeated with a spirit of
achievement and have a good track record in meeting or beating performance targets.
B. High-performance cultures often have a low regard for high ethical standards
(because some disregard for ethics is a normal part of meeting or beating performance
targets).
C. The challenge in creating a high-performance culture is to come up with a strategic
vision and strategy that wins enthusiastic support from most all company personnel.
D. In a high-performance culture, the clear and unyielding expectation is that all
company personnel will strictly follow company policies and procedures.
E. In high-performance cultures, there’s strong managerial commitment to paying big
bonuses and granting generous stock options.
Answer:
The contentions that (1) many of the same standards of what’s ethical and what’s
unethical resonate with peoples of most societies regardless of local traditions and
cultural norms and (2) to the extent there is common moral agreement about right and
wrong actions, common ethical standards can be used to judge the conduct of personnel
at companies operating in a variety of country markets and cultural circumstances, are
defining beliefs of which of the following?
A. The school of ethical relativism but not the school of ethical universalism
B. The school of ethical universalism but not the school of ethical relativism
C. Integrative social contracts theory but not the school of ethical universalism
D. The school of ethical relativism and the school of ethical universalism
E. The school of ethical relativismbut not integrative social contracts theory
Answer:
The formation of a new corporation, jointly owned by two or more companies agreeing
to share in the revenues, expenses, and control, is known as:
A. a joint venture.
B. a limited liability company.
C. a partnership.
D. sole proprietorship.
E. an S corporation.
Answer:
A company’s corporate culture is BEST defined and identified by:
A. the integration of the strategy and business model that a company has adopted.
B. the company’s shared values, ingrained attitudes, core beliefs and company traditions
that determine norms of behavior, accepted work practices of “how we do things around
here,” and styles of operating.
C. its ingrained statement of core values and its internal code of ethics.
D. its internal politics that influence the dedication to ethical conduct and accepted
work practices.
E. the formal traditions that company executives are committed to maintaining to
ensure the company strategy-supportive culture is change resistant.
Answer:
The best test of whether potential entry is a strong or weak competitive force is:
A. the strength of buyer loyalty to existing brands.
B. whether the industry’s driving forces make it harder or easier for new entrants to be
successful.
C. whether the strategies of industry members are well-matched to the industry’s key
success factors.
D. whether there are any vacant spaces on the industry’s strategic group map.
E. to ask if the industry’s growth and profit prospects are strongly attractive to potential
entry candidates.
Answer:
Which of the following is NOT a reliable measure of how well a company’s current
strategy is working?
A. Whether the company’s sales are growing faster, slower, or about the same pace as
the industry as a whole, thus resulting in a rising, falling, or stable market share
B. Whether it has a larger number of competitive assets than competitive liabilities and
whether it has a superior quality product
C. The firm’s image and reputation with its customers
D. Whether its profit margins are rising or falling and how large its margins are relative
to those of its rivals
E. Evidence of improvement in internal processes such as defect rate, order fulfillment,
delivery times, days of inventory, and employee productivity
Answer:
Buyer bargaining power is stronger when:
A. winning the business of certain high-profile customers offers a seller important
market exposure or prestige.
B. the extent and importance of collaborative partnerships and alliances between
particular sellers and buyers is credible.
C. buyers cannot integrate backward into the product market of sellers.
D. sellers’ products are differentiated, making it easy and inexpensive for buyers to
switch to competing brands.
E. the industry’s products are standardized or undifferentiated.
Answer:
Which of the following is NOT something a company should consider in crafting an
environmental sustainability strategy?
A. Actions to protect the environment that will guard against the ultimate endangerment
of the planet
B. Actions to maintain ecological support systems for future generations
C. Actions to provide for the longevity of natural resources
D. Actions to couple environmental degradation and economic growth
E. Actions to contain the adverse effects of greenhouse gases
Answer:
Competitive pressures associated with the threat of entry are greater in all of the
following situations, EXCEPT when:
A. incumbent firms are willing to strongly contest the entry of newcomers with moves
designed to make entry unprofitable.
B. a large pool of potential entrants exists, some of which have the capabilities to
overcome high entry barriers.
C. entry barriers are relatively low and buyer demand for the product is growing
rapidly, and newcomers can expect to earn attractive profits without inviting a strong
reaction from incumbents.
D. existing industry members are looking to expand their market reach by entering
product segments or geographic areas where they currently do not have a presence.
E. customers have low brand preferences and low degrees of loyalty to seller.
Answer:
A company’s mission statement typically addresses which of the following questions?
A. Who are we and what do we do?
B. What objectives and level of performance do we want to achieve?
C. Where are we going and what should our strategy be?
D. What approach should we take to achieve sustainable competitive advantage?
E. What business model should we employ to achieve our objectives and our vision?
Answer:
One of the steps of driving-forces analysis is to identify which:
A. strategy changes a company may need to make to prepare for the impacts of the
driving forces.
B. strategic group is the most powerful.
C. industry member is likely to become (or remain) the industry leader and why.
D. key success factors are most likely to help their company gain a competitive
advantage.
E. of the five competitive forces will be the strongest driver of industry change.
Answer:
Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan
signs a supply contract with the tire multinational. In which of the following ways is
Renault-Nissan likely to gain from the pact?
A. Different styles of management, organization, and strategy
B. Knowledge sharing within same value chain system
C. Availability of natural resources at low cost
D. Growth potential and large size of the market
E. Government policies in the host country
Answer:
A company’s strategy stands a better chance of succeeding when:
A. it is developed through a collaborative process involving all managers and staff from
all levels of the organization.
B. managers employ conservative strategic moves based on past experience and form
an underlying basis of control.
C. it is predicated on competitive moves aimed at appealing to buyers in ways that set
the company apart from rivals.
D. managers copy the strategic moves of successful companies in its industry.
E. managers focus on meeting or beating shareholder expectations.
Answer:
A company attempting to be successful with a broad differentiation strategy has to:
A. study buyer needs and behavior carefully to learn what buyers consider important,
what they think has value, and what they are willing to pay for.
B. incorporate more differentiating features into its product/service than rivals.
C. concentrate its differentiating efforts on marketing and advertising (where almost all
differentiating features are created).
D. over-differentiate so that product quality, features, or service levels exceed the needs
of most buyers
E. concentrate on offering advanced features, whether or not they have value to the
customers, to create unique products
Answer:
Companies that compete internationally can pursue competitive advantage in world
markets(or offset domestic disadvantages) by:
A. using a differentiation-based competitive strategy in those country markets with
superior resources.
B. choosing not to compete in countries with high tariffs and high taxes (which then
have to be passed along to buyers in the form of higher prices), thus keeping costs and
prices lower than rivals.
C. using an export strategy to circumvent the risks of adverse exchange rate
fluctuations.
D. locating value chain activities in whatever nations prove most advantageous in a
manner that uses location to lower costs or achieve greater product differentiation,
allow for the transfer of competitively valuable competencies and capabilities from one
country to another, and allow for cross-border coordination.
E. employing a multidomestic strategy instead of a global strategy.
Answer: