BUSINESS POLICY AND STRATEGY FINAL EXAM
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, boundary less 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