Describe elements of a multidomestic strategy

Question

BUSINESS POLICY AND STRATEGY ASSESSMENT:

Part 1

Question 1
The laws, and the enforcement of laws, associated with the protection of intellectual property rights, represent a significant currency and management risk to multinational firms.

• True
• False

Question 2
Software Tech, Inc., a company in the computer software industry, invests heavily in R&D and product design. Thus, most of its value is added:

• Upstream
• In its infrastructure
• Downstream
• Midstream

Question 3
Offshoring takes place when a firm decides to shift an activity that they were previously performing in a domestic location to a foreign location.

• True
• False

Question 4
Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by:

• Flexibility in adjusting to local laws and customs
• Decreased duplication of inventories which are often involved in having multiple plants producing similar products
• Decreased shipping and transportation costs inherent in local production
• Economies of scale gained through centralized production of standardized products

Question 5
Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy.

• True
• False

Question 6
The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries enable these companies to benefit from:

• Higher prices in their domestic markets
• Economies of scale
• Optimizing the location for many activities in their value chain
• Reducing their exposure to currency risks

Question 7
Appreciation of the U.S dollar will have the following impact on McDonald's:

• Lower sales abroad because foreign customers cannot afford McDonalds' products
• More transfer of ingredients from the U.S to branches abroad to take advantage of the higher dollar
• Lower profits, because foreign profits will be reduced when measured in dollars
• No impact at all

Question 8
A multidomestic strategy would likely include the use of high volume, centralized production facilities to maximize economies of scale.

• True
• False

Question 9
An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain.

• True
• False

Question 10
Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer).

• True
• False

Question 11
__________ entail the creation of a third-party legal entity, whereas __________ do not.

• Licensing agreements; joint ventures
• Joint ventures; strategic alliances
• Strategic alliances; joint ventures
• Franchising agreements; strategic alliances

Question 12
The form of entry strategy into international operations that offers the lowest level of control would be:

• Franchising
• Licensing
• Joint venture
• Exporting

Question 13
Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy?

• Consumers are willing to pay more for specific product features
• Customer needs and interests are becoming more dissimilar
• If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved
• MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers

Question 14
The reasons that explain why some governments make better use of the inflows from foreign investment and know-how than others include all of the following except:

• Governmental practices that are business-friendly
• Local entrepreneurs that can train workers and invest in modern technology
• High tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions
• Sound management of broader economic factors such as interest rates and inflation

Question 15
Because many countries are investing in countries other than their own, each country is becoming more autonomous and independent.

• True
• False

Question 16
All of the following are limitations of a global strategy except:

• Limited ability to adapt to local markets
• The ability to locate activities in optimal locations
• The concentration of activities may increase dependence on a single facility
• Single locations may lead to higher tariffs and transportation costs

Question 17
As a manager, when faced with ethical crises you should:

• Focus on issues most relevant to stockholders
• Wait for the other party to make the first move
• Take the initiative to address the problem
• Cover up as much as possible

Question 18
Emotional intelligence (EI) is one of the components of a high intelligence quotient (IQ).

• True
• False

Question 19
Proactive measures to prevent organizational ethics problems include all of the following except:

• Instituting a reward system which considers outcomes as its primary criterion
• Using leaders as role models of ethical behavior
• Issuing statements describing the organization's commitment to certain standards of behavior
• Using the organization's information systems as a control system

Question 20
Which of the following is an important characteristic of a leader?

• Goal-oriented
• Satisfied with the status quo
• Reactive
• Focused on past performance

Question 21
Leaders who fail to institute proper systems and controls that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds.

• True
• False

Question 22
All of the following constitute organizational bases of a leader's power except:

• Legitimate power
• Reward power
• Referent power
• Coercive power

Question 23
Behavioral barriers to change occur because of conflicts between departments, conflicts arising from power relationships, and refusal to share information.

• True
• False

Question 24
All of the following are elements of the Goolsby Leadership Model except:

• Integrity
• Charisma
• Courage
• Impact

Question 25
The "top down" perspective of empowerment:

• Encourages intelligent risk-taking
• Trusts people to perform
• Encourages cooperative behavior
• Delegates responsibility

Question 26
Competitive benchmarking is a method of seeking the best examples of practices or processes that have essentially the same function regardless of industry.

• True
• False

Question 27
Manufacturing employees at Chaparral Steel are directly involved with customers and have access to the new innovative knowledge being developed in its manufacturing processes. This is an example of:

• Hierarchical control
• Knowledge management
• Enabling heroes and drones
• Employee empowerment

Question 28
A compliance-based approach to ethics management combines a concern for law with an emphasis on managerial responsibility for ethical behavior.

• True
• False

Question 29
Which component of emotional intelligence (EI) enables a manager to have a deep understanding of the existence and importance of cultural and ethnic differences?

• Self-awareness
• Empathy
• Social skills
• Self-regulation

Question 30
Internal benchmarking is discouraged in most organizations because it creates competition and internal rivalries that are counterproductive.

• True
• False

Question 31
Inspiring and motivating people with a mission or purpose is a necessary and sufficient condition for developing a learning organization.

• True
• False

Question 32
All of the following are guidelines an organization can use to promote the challenging of the status quo except:

• Establishing a "culture of dissent."
• Forcefully creating a sense of urgency
• Fostering a culture that encourages risk taking
• Creating a results-based reward system

Question 33
The three broad sets of capabilities that a leader should possess include all of the following except:

• Technical skills
• Cognitive abilities
• Calculative abilities
• Emotional intelligence

Question 34
Continuous monitoring enhances an organization's ability to respond with speed and flexibility.

• True
• False

Question 35
In emerging economies and continental Europe, principal-principal conflicts are frequent. These consist of conflicts between controlling shareholders and executives.

• True
• False

Question 36
Rules and regulations are examples of:

• Implicit controls
• Informational controls
• Cultural norms
• Boundaries and constraints

Question 37
In 2001, Cisco Systems, Inc.'s stock price fell dramatically when it inaccurately forecast new sales orders because it relied too heavily on historical sales figures. What caused this mistake?

• Its strategic control system failed to detect changes in consumer demand
• It "projected the past into the future."
• The momentum of its previous successes blinded it to the need to adapt and change
• All of the above contributed to the mistake

Question 38
The "traditional" approach to strategic control is sequential. Which of the following is not one of the steps in the sequence?

• Action plans are submitted by lower level managers
• Performance is measured against the predetermined goal
• Strategies are implemented
• Strategies are formulated and top management sets goals

Question 39
Top managers at USA Today meet every Friday to review daily operational reports and year-to-date data. This is an example of:

• Behavioral control
• Informational control
• Strategy formulation
• Strategy implementation

Question 40
In "single loop" learning, the organization's assumptions, premises, goals, and strategies are continuously monitored, tested, and reviewed.

• True
• False

Question 41
For businesses facing complex and turbulent business environments:

• Goals and objectives that are uncertain prevent opportunism
• Traditional strategic controls are usually inappropriate
• Complacency about predetermined milestones can prevent adaptability
• Detailed plans are needed to maintain order

Question 42
Intel's exemplary corporate governance practices include all of the following except:

• A mix of inside and outside directors
• All outside directors to assure objectivity in decision-making
• Board presentations and access to employees
• Formal evaluation of officers

Question 43
The Sarbanes-Oxley Act of 2002 requires that CEOs and CFOs of publicly-listed companies must reveal off-balance-sheet finances and vouch for the accuracy of information provided.

• True
• False

Question 44
The late Sam Walton, founder of Wal-Mart, used to give pep rallies at local Wal-Mart stores. What purpose did this serve?

• It was used to remind employees of Wal-Mart's rules and regulations
• It helped reinforce and sustain Wal-Mart's culture
• It demonstrated to employees the importance of articulating explicit goals and objectives
• It made Wal-Mart's reward system very explicit

Question 45
An organization's reward system is typically a weak method of motivating employees.

• True
• False

Question 46
When countercultures emerge that have shared values opposite from the dominant culture of an organization:

• Organizational cohesiveness increases
• Information is shared rather than hoarded
• Individuals begin working at cross purposes
• Individuals gain insights into overarching goals and objectives

Question 47
Rule-based controls are appropriate in organizations where most of the employees are unskilled.

• True
• False

Question 48
In principal-principal conflicts (conflicts between controlling shareholders and minority shareholders), the ownership (of equity) is:

• Widely dispersed (5-20% is considered "concentrated ownership")
• Controlled almost completely by management
• Concentrated-often greater than 50% of equity is controlled by controlling shareholders
• Often held by employee stock ownership programs

Question 49
Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

• Software developer
• Stock brokerage firm
• Manufacturer of mass produced products
• High tech research facility

Question 50
Managerial opportunism can take all of the following forms except:

• Shirking
• Job-hopping
• On the job consumption
• Excessive product diversification

Question 51
For firms following a differentiation strategy, behavioral and intangible incentives are not an effective means of motivating employees.

• True
• False

Question 52
Operational decision making in a large business places excessive demands on the firm's top management.

• True
• False

Question 53
Which of the following is an advantage of a divisional type of organizational structure?

• Efficient use of managerial and technical talent
• An enhanced ability to respond quickly to changes in the external environment
• High degree of emphasis on long term performance
• Uniformity in image and quality across divisions

Question 54
According to the text, there are elements of team building that influence a team's success. These include all of the following except:

• Work. Work should be relevant and meaningful to group members
• People bonding during the "heat of the battle." Team members become more unified during a crisis
• Titles. Titles are important to a team's success
• Teams taking care of their own. Team members look after each other's best interest

Question 55
The matrix structure attempts to combine the advantages of the functional and divisional structure.

• True
• False

Question 56
An advantage of the barrier-free form of organizing is that internal cooperation and shared objectives are not required for it to work.

• True
• False

Question 57
All of the following are disadvantages of a divisional type of organizational structure except:

• It can be very expensive compared to a functional organizational structure
• There is a strong tendency for divisions to focus on short-term performance
• There can be dysfunctional competition among divisions
• There is separation of strategic and operating control

Question 58
A matrix organizational structure is characterized by:

• Dual reporting relationships
• A combination of functional and divisional organization structures
• Efficient use of resources and expertise
• All of the above

Question 59
According to the text, boundaryless organizational structures are most effective when they replace rather than complement traditional organizational structures.

• True
• False

Question 60
For firms following related diversification strategies, reward and evaluation systems should rely primarily on behavioral indicators, since the organization needs to reward and reinforce behaviors that facilitate sharing and collaboration.

• True
• False

Question 61
An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

• Functional structure
• Matrix structure
• Strategic business unit structure
• Holding company structure

Question 62
The purpose of boundaryless forms of organizing is to facilitate the widespread sharing of knowledge and information across internal and external boundaries of the organization.

• True
• False

Question 63
Complete the following sentence: "Strategic business unit (SBU) structures are best suited for corporations pursuing __________, whereas holding company structures are best suited for companies with __________ strategies."

• Product-market diversification, international
• International diversification, product-market
• Related diversification, unrelated diversification
• Unrelated diversification, related diversification

Question 64
Strategic business unit (SBU) and holding company structures result from extensive:

• Diversification
• Vertical integration
• International expansion
• Organizational flattening

Question 65
All of the following statements about simple organizational structures are true except:

• Small firms with a narrow product-market scope will adopt such a structure
• Decision making authority is highly centralized
• There is little specialization of tasks
• Creativity and individualism are rare

Question 66
Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of what type of organizational structure?

• Divisional
• Matrix
• Holding company
• Functional

Question 67
In a simple structure where the owner manager makes most of the important decisions, extensive rules and regulations are used to maintain order.

• True
• False

Question 68
Product champions are critical during the period after a new venture project has been defined but before it has gained momentum and achieved project impetus.

• True
• False

Question 69
Only about 50 percent of corporate venturing efforts reach profitability within six years of their launch.

• True
• False

Question 70
In the opening case, Polaroid fell victim to the "innovator's dilemma." What does this refer to?

• Excessive borrowing in order to develop more radical innovations
• Whether to innovate radically or incrementally
• Becoming preoccupied with meeting current market needs and ignoring future innovation needs
• Conflict over how to integrate product and process innovations

Question 71
__________ produce fundamental changes that can transform a company or even revolutionize an industry; __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs.

• Technological breakthroughs; product-market breakthroughs
• New technologies; new paradigms
• Incremental innovations; radical innovations
• Radical innovations; incremental innovations

Question 72
Process innovations are often associated with a low cost leadership strategy.

• True
• False

Question 73
Two common forms of a focused approach to corporate entrepreneurship include:

• Internal collaboration and internal venturing
• Social capital and collaboration capital
• Business incubators and new venture groups
• Focus groups and business incubators

Question 74
Product champions:

• Are typically senior executives
• Are usually inventors of some sort
• Scavenge for resources and encourage others to back promising new ideas
• Are strong supporters of the status quo

Question 75
After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams:

• Often lack coordination
• Sometimes waste resources on projects with questionable feasibility
• Sometimes create inefficiencies through duplication of effort
• All of the above

Question 76
Corporate venture funding refers to special funds that are set aside to invest in the corporation's internal ventures.

• True
• False

Question 77
Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources.

• True
• False

Question 78
Incremental innovations:

• Are usually highly disruptive
• Usually represent technological breakthroughs
• Are usually small improvements in products or processes
• Nearly always can be patented

Question 79
Whereas __________ are often associated with a low cost leader strategy, __________ are frequently an important aspect of a differentiation strategy.

• Process innovations; product innovations
• Product innovations; service innovations
• Radical innovations; instrumental innovations
• Marketing innovations; management innovations

Question 80
The term "skunkworks" is used to refer to a type of in-house facility that corporations use to develop entrepreneurial ideas.

• True
• False

Question 81
For innovation team members to work enthusiastically on innovation projects, it is important to separate the performance of individual team members from the performance of the innovation itself.

• True
• False

Question 82
Sony Corporation's mission statement says, "We should always be the pioneers with our products-out front leading the market." This is an example of:

• Innovativeness
• Proactiveness
• Competitive aggressiveness
• Autonomy

Question 83
According to the text, new venture ideas must pass through two critical stages to be implemented by corporations-project definition and project impetus.

• True
• False

Question 84
Real options logic is useful when corporations consider stock options as a way to finance entrepreneurial ventures.

• True
• False

Question 85
All of the following are examples of strategic actions a firm might take except:

• Acquire competitors to reduce competition
• Expand into neglected markets
• Change product packaging
• Tie-up raw material sources

Question 86
Adaptive new entry involves offering a radical new product or highly innovative service.

• True
• False

Question 87
Generally speaking, the opportunity recognition process consists of two phases of activity. They are:

• Global Search and Recycling Profits
• Value Creation and Affordability
• Discovery and Evaluation
• None of the above

Question 88
Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

• True
• False

Question 89
Which of the following is not a key element of a blue ocean strategy?

• Pursue low cost and differentiation advantages simultaneously
• Make the competition irrelevant
• Highlight incremental improvements to capture market share
• Create new demand in uncharted territory

Question 90
Because new ventures are typically small, they usually don't have high economies of scale relative to competitors.

• True
• False

Question 91
The best example of a tactical action that a company might use in response to a competitive attack is:

• Acquire the competitor
• Target the rival's markets
• Expand into new geographical areas
• Offer price discounts and rebates

Question 92
Netflix CEO Reed Hastings made this important observation about dealing with rivals:

• "In a highly competitive marketplace, firms must be paranoid about the multitude of potential rivals."
• "You can afford to ignore rivals in small markets, but you can never ignore rivals in large markets, such as on-line video companies like YouTube."
• "There are tens and maybe hundreds of start-ups who think that they are going to eat Netflix's lunch. The challenge for a management team is to figure out which are real threats and which aren't."
• "Netflix's position is so strong that I don't worry about new entrants."

Question 93
"Blue ocean" strategies rarely provide sustainable advantages because they are easily imitated.

• True
• False

Question 94
Market commonality is the extent to which rivals draw from the same types of resources.

• True
• False

Question 95
Forbearance is a particularly aggressive type of competitive attack.

• True
• False

Question 96
In the context of competitive dynamics, tactical actions involve major commitments of distinctive and specific resources to strategic initiatives.

• True
• False

Question 97
In the opening case, ESPN's cell phone enterprise failed even though it was designed to appeal to sports fanatics and was backed by a $40 million ad campaign. What happened?

• It misread how easy it would be to leverage its brand
• Compared to other providers, it had no buyer incentives and poor customer service
• Its costs were significantly higher than other cell phone providers because it had to lease network access
• All of the above happened

Question 98
Which of the following questions should a firm ask itself before responding to a competitive attack?

• How serious is the impact of the attack?
• What is our competitive intent-do we want to blunt the attack or enhance our competitive position with our response?
• What resources do we have available for a response?
• All of the above

Question 99
Equity financing for entrepreneurial start-ups includes which of the following?

• Investments by family and friends
• Personal savings
• Private investors
• All of the above

Question 100
Which of the following types of resources contribute to the success of entrepreneurial firms?

• Social capital
• Financial resources
• Human resources
• All of the above contribute to the success of entrepreneurial firms

Part 2

Question 1
In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.

• Introduction
• Growth
• Maturity
• Decline

Question 2
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by:

• Hiring more experienced personnel
• Repeating a process until a task becomes easier
• Spreading out a given expense or investment over a greater volume
• Competing in an industry a long time

Question 3
In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.

• Introduction
• Growth
• Maturity
• Decline

Question 4
One of the reasons the Internet is eroding sustainable competitive advantages is:

• Incumbent firms are entering market segments that they previously considered to be too small
• Nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage
• Differentiators have been able to preserve the unique advantages that have always been the hallmark of their success
• Firms are ignoring opportunities to offer high-end services in niche markets

Question 5
The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except:

• Automated and flexible manufacturing systems
• Exploiting the profit pool concept for competitive advantage
• Coordinating the "extended" value chain by way of information technology
• Deriving benefits from highly focused and high technology markets

Question 6
A differentiation strategy enables a business to address the five competitive forces by:

• Lessening competitive rivalry by distinguishing itself
• Having brand-loyal customers become more sensitive to prices
• Increasing economies of scale
• Serving a broader market segment

Question 7
During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development or other investments, while hoping that competitors will exit the market.

• True
• False

Question 8
Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform:

• At about the same level as firms that achieve either cost or differentiation advantages
• About the same as firms that are "stuck-in-the-middle."
• Lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages
• Higher than firms that achieve either a cost or a differentiation advantage

Question 9
One potential pitfall of a differentiation strategy is that a brand's identification in the marketplace may become diluted through excessive product line extensions.

• True
• False

Question 10
The primary aim of strategic management at the business level is:

• Maximizing risk-return tradeoffs through diversification
• Achieving a low cost position
• Maximizing differentiation of products and/or services
• Achieving competitive advantage(s)

Question 11
An important advantage of first movers or "pioneers" in a market is that they may establish brand recognition that may later serve as an important switching cost.

• True
• False

Question 12
A firm following a focus strategy:

• Must focus on governmental regulations
• Must focus on a market segment or group of segments
• Must focus on the rising cost of inputs
• Must avoid entering international markets

Question 13
Piecemeal productivity improvements during a turnaround typically does not involve:

• Business process reengineering
• Increased capacity utilization
• Benchmarking
• Expansion of a firm's product market scope

Question 14
During the growth stage of the market life cycle, customers are very likely to establish brand loyalty.

• True
• False

Question 15
One way the Internet and digital technologies are creating opportunities for firms with differentiation strategies is by enabling mass customization.

• True
• False

Question 16
Research shows that the following are all strategies used by firms engaged in successful turnarounds except:

• Asset and cost surgery
• Selective product and market pruning
• Global expansion
• Piecemeal productivity improvements

Question 17
To generate above average returns, a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers.

• True
• False

Question 18
According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by:

• Increasing retention of below average workers
• Attracting and retaining knowledgeable workers
• Decreasing labor costs
• Increasing the turnover of employees

Question 19
In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor.

• True
• False

Question 20
Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should:

• Focus on increased recruiting
• Decrease money spent on human capital
• Make their work environment less stimulating
• Adopt effective retention strategies

Question 21
Technical skills are a necessary and sufficient condition for hiring an employee.

• True
• False

Question 22
Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished through:

• Requiring workers to work independently of each other
• Decreasing the interaction of departments within the firm
• Encouraging the sharing of ideas between employees in the firm
• Structuring the firm with rigid departmental and employee divisions

Question 23
The makeup of goods and services in the Gross Domestic Products of developed countries has changed over the last decade. More than 50% of the value of GDP of developed countries is based on:

• Clothing and apparel
• Capital accumulation
• Financial management
• Knowledge

Question 24
Among the downsides of social capital is/are:

• High social capital may breed "groupthink," i.e., a tendency not to question shared beliefs
• Socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive
• Individuals may become less willing to collaborate on joint projects
• A and B

Question 25
Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has:

• Increased
• Decreased
• Become less important
• Remained the same

Question 26
Generally, employees are most likely to stay with an organization if:

• The employer provides high salaries to technology professionals
• The organization's mission and values align with the employee's mission and values
• The firm is in a high tech industry
• The mission and values of the organization change often

Question 27
360-degree evaluation systems are not useful due to the need to integrate large amounts of feedback.

• True
• False

Question 28
In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed:

• The "Columbus effect."
• The "Pied Piper effect."
• Strategically competitive hiring
• Knowledge integration

Question 29
As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently, strategic management has moved from focusing on:

• Intangible resources to tangible resources
• Tangible resources to intangible resources
• Working capital to fixed capital
• Fixed capital to working capital

Question 30
The management of intellectual property involves all of the following except:

• Patents
• Contracts with confidentiality and noncompete clauses
• Converting explicit knowledge to tacit knowledge
• Copyrights and trademarks

Question 31
Explicit knowledge is generally known to everyone in the firm and is not a critical concern of management.

• True
• False

Question 32
In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets.

• Be equal to
• Be smaller than
• Be larger than
• Not be correlated with

Question 33
Companies have found that referrals from their own employees are generally an ineffective approach to recruiting top talent.

• True
• False

Question 34
In today's economy, reliance on the three traditional financial statements: income statement, balance sheet, and statement of cash flow, has increased.

• True
• False

Question 35
There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators.

• True
• False

Question 36
Environmental forecasting involves developing plausible projections about the ________ of environmental change.

• Direction
• Scope
• Speed
• All of the above

Question 37
Competitor Intelligence gathering is no different than spying.

• True
• False

Question 38
The most intense rivalry results from:

• Numerous equally balanced competitors, slow industry growth, high fixed or storage costs
• Few competitors, slow industry growth, lack of differentiation, high fixed or storage costs
• Numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers
• A high level of differentiation

Question 39
The threat of new entrants is high when there are:

• Low economies of scale
• High capital requirements
• High switching costs
• High differentiation among competitors' products and services

Question 40
Strategic groups consist of:

• A group of top executives who make strategies for a company
• A group of firms within an industry that follow similar strategies
• A group of executives drawn from different companies within an industry that makes decisions on industry standards
• A group of firms within an industry that decide to collude rather than compete with each other so that they can increase their profits

Question 41
The strategic groups in the world-wide automobile industry have been very stable and unchanging in recent years.

• True
• False

Question 42
The aging of the population, changes in ethnic composition, and effects of the baby boom are:

• Macroeconomic changes
• Demographic changes
• Global changes
• Sociocultural changes

Question 43
Interest rate increases have a __________ impact on the residential home construction industry and a __________ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items.

• Positive; negligible
• Negative; negligible
• Negative; positive
• Positive; negative

Question 44
Firms would be most likely to face intense rivalry with competitors when they:

• Are in a high growth industry with low fixed costs
• Are in a protected market
• Have high fixed costs, in a slow growth industry with high exit barriers
• Have low exit barriers for easy transition to another industry

Question 45
An end user's switching costs are potentially much higher because of the Internet.

• True
• False

Question 46
Increasingly larger numbers of women entering the work force since the early 1970s is an example of:

• Demographic changes
• Political and legal environmental changes
• Sociocultural changes
• Technological developments

Question 47
Porter's Five Forces model helps to determine both the nature of competition in an industry and the industry's profit potential.

• True
• False

Question 48
Threat of substitute products comes from:

• Other companies in the same industry
• Foreign companies which can use cheap labor in their countries
• Firms in other industries that produce products or services that satisfy the same customer need
• All of the above

Question 49
The Internet and digital technologies suppress the bargaining power of buyers by providing them with more information to make buying decisions.

• True
• False

Question 50
The more attractive the price/performance ratio of substitute products, the more tightly it constrains an industry's ability to charge high prices.

• True
• False

Question 51
Fortune Brands states they will "cut corporate costs by $30 million a year." This is an example of a:

• Nonfinancial strategic objective
• Financial strategic objective
• Vision statement
• Mission statement

Question 52
Decisions by Boards of Directors are always consistent with shareholder interests.

• True
• False

Question 53
The three primary participants in corporate governance are: (1) the shareholders; (2) management (led by the chief executive officer); and, (3) employees.

• True
• False

Question 54
According to the text, a mission statement is an overarching statement that is massively inspiring, long-term, and only discusses the purpose of the company.

• True
• False

Question 55
Strategy formulation and implementation is a challenging on-going process. To be effective, it should involve:

• The CEO and the board of directors
• The board of directors, CEO, and CFO
• Line and staff managers
• All of the above

Question 56
The four key attributes of strategic management include the idea that:

• Strategy must be directed toward overall organizational goals and objectives
• Strategy must be focused on long-term objectives
• Strategy must be focused on one specific area of an organization
• Strategy must focus on competitor strengths

Question 57
"We want to be the top-ranked supplier by our customers." (PPG) This is an example of a:

• Nonfinancial strategic objective
• Financial strategic objective
• Vision statement
• Mission statement

Question 58
Organizational goals and objectives should be vague in order to allow for changes in strategy.

• True
• False

Question 59
Strategic objectives are more specific than vision statements.

• True
• False

Question 60
Members of Boards of Directors are:

• Appointed by the Securities and Exchange Commission
• Elected by the shareholders as their representatives
• Elected by the public
• Only allowed to serve one term of four years

Question 61
According to Michael Porter, management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because:

• Companies that have implemented these techniques have lost money
• There is no proof that these techniques work
• They cost too much money and effort to implement
• Every company is trying to implement them and hence it does not make a company different from others

Question 62
Peter Senge, of M.I.T., recognized three types of leaders. __________ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas.

• Local line leaders
• Executive leaders
• Internal networkers
• Shop floor leaders

Question 63
In large organizations, conflicts can arise between functional areas. In order to resolve these conflicts, strategic objectives:

• Put financial objectives above human considerations
  Align departments toward departmental goals
  Help resolve conflicts through their common purpose
  Cause debate and increase conflict

Question 64
According to the text, formulating strategy includes taking into consideration strategy at the business, international, and corporate levels. In addition managers must formulate effective entrepreneurial initiatives.

• True
• False

Question 65
A mission statement encompasses both the purpose of the company as well as the basis of competition and competitive advantage.

• True
• False

Question 66
Social responsibility is the idea that organizations are not only accountable to stockholders but also to the community-at-large.

• True
• False

Question 67
The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting.

• True
• False

Question 68
Whenever an organization diversifies, it represents investing a stockholder's funds in a way in which the individual investor is unable.

• True
• False

Question 69
Antitakeover tactics include all of the following except:

• Greenmail
• Golden parachutes
• Golden handcuffs
• Poison pills

Question 70
One of the risks of vertical integration is that there may be problems associated with unbalanced capacities or unfilled demands along a firm's value chain.

• True
• False

Question 71
An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

• Golden parachute
• Greenmail
• Poison pill
• Scorched earth

Question 72
When management uses common production facilities or purchasing procedures to distribute different but related products, they are:

• Building on core competencies
• Sharing activities
• Achieving process gains
• Using portfolio analysis

Question 73
Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that:

• The similarity required for sharing core competencies must be in the value chain, not in the product
• The products use similar distribution channels
• The target market is the same, even if the products are very different
• The methods of production are the same

Question 74
Among the disadvantages of acquisitions are the expensive premiums that are frequently paid to acquire a business.

• True
• False

Question 75
The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.

• True
• False

Question 76
Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements.

• True
• False

Question 77
A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification.

• True
• False

Question 78
Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.

• True
• False

Question 79
__________ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures.

• Parenting
• Restructuring
• Leveraging core competencies
• Increasing market power

Question 80
Market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation.

• True
• False

Question 81
It may be advantageous to vertically integrate when:

• Lower transaction costs and improved coordination are vital and achievable through vertical integration
• The minimum efficient scales of two corporations are different
• Flexibility is reduced, providing a more stationary position in the competitive environment
• Various segregated specializations will be combined

Question 82
Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

• True
• False

Question 83
A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of:

• Joint diversification
• Strategic alliance
• Divestment
• Global integration

Question 84
Value chain analysis can only be applied to manufacturing operations.

• True
• False

Question 85
Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It:

• Supports only individual primary activities
• Supports only individual support activities
• Supports both individual primary and support activities and the entire value chain
• Supports mostly support activities but does have some impact on primary activities

Question 86
Products and services that are difficult to imitate help firms sustain their profitability.

• True
• False

Question 87
A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon:

• Social complexity
• Path dependency
• Physical uniqueness
• Tangible resources

Question 88
An important implication of the "balanced scorecard" approach is that:

• Managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss
• The key emphasis on customer satisfaction and financial goals are only a means to that end
• Managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously
• Gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction

Question 89
Information systems can create advantages that deter entry by competitors into an industry.

• True
• False

Question 90
Business models can be defined as methods companies use to create value and earn profits in a competitive environment.

• True
• False

Question 91
Inbound logistics include:

• Machining and packaging
• Warehousing and inventory control
• Repair and parts supply
• Promotion and packaging

Question 92
Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses.

• True
• False

Question 93
Four Internet-based activities that are enhancing firms' capabilities to use the Internet to add value include:

• Outsourcing, problem-solving, bill-paying, and delivery
• Evaluating, bill-paying, customizing, and returning
• Search, rescue, repair, return
• Search, evaluation, problem-solving, and transaction

Question 94
Which of the following is a support activity?

• Inbound logistics
• Operations
• Technology development
• Customer service

Question 95
A commission-based business model, when applied to the Internet, is similar to the broadcast television model in which viewers watch shows produced with revenues from commission fees.

• True
• False

Question 96
Which of the following lists consists of support activities?

• Human resource management, technology development, customer service, and procurement
• Human resource management, customer service, marketing and sales, and operations
• Human resource management, information systems, procurement, and firm infrastructure
• Customer service, information systems, technology development, and procurement

Question 97
How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?

• Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry
• Compare the firm's financial ratios over the most recent one-year period
• Compare the financial ratios of all firms in the country's industry-some of whom serve very diverse market segments and have specialized accordingly
• Compare the financial ratios of firms in the company's strategic group

Question 98
Performing a value chain analysis provides a complete assessment of the firm's strengths and weaknesses.

• True
• False

Question 99
Customer service would include:

• Product promotion
  Product distribution
  Parts supply
  Procurement of critical supplies

Question 100
The three key types of resources that are central to the resource-based view of the firm are:

• Tangible resources, intangible resources, and organizational structure
• Culture, tangible resources, intangible resources
• Tangible resources, intangible resources, and organizational capabilities
• Tangible resources, intangible resources, and top management .