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Chapters 1-7 - Practice
1. High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy:
A. global
B. multidomestic
C. transnational
D. overall cost leadership
2. Foreign direct investment includes the following form of entry strategy:
A. licensing
B. franchising
C. joint ventures
D. exporting
3. According to Michael Porter, firms that have experienced intense domestic competition are
A. unlikely to have the time or resources to compete abroad.
B. most likely to design strategies aimed primarily at the domestic market.
C. more likely to design strategies and structures that allow them to successfully compete abroad.
D. more likely to demand protection from their governments.
4. A domestic corporation considering expanding into international markets for the first time will typically
A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to
those at home.
B. consider licensing or franchising its operations.
C. consider implementing a low risk/low control strategy such as exporting.
D. form a joint venture with a reputable foreign producer.
5. High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy:
A. global
B. multidomestic
C. transnational
D. differentiation
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6. In order to realize the strongest competitive advantage, firms engaged in worldwide competition must
A. require that all of their various business units follow the same strategy regardless of location.
B. ensure that all business units follow a strategy strictly tailored to their respective locations.
C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a
multidomestic strategy in order to achieve optimal results.
D. attempt to use the strategy that was most successful in their home country.
7. The form of entry strategy into international operations that offers the lowest level of control would be
A. franchising.
B. licensing.
C. joint venture.
D. exporting
8. Microsoft decided to establish a corporate research laboratory in Cambridge, England
A. because England is an ally of the United States.
B. to access the outstanding technical and professional talent available there so that they can attain world-
class excellence in selected value-creating activities.
C. because the local language is English.
D. because the company views the United States as a risky place to expand due to the actions of the U.S.
Department of Justice.
9. ___________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries.
A. Joint ventures
B. Strategic alliances
C. Licensing agreements
D. Wholly owned subsidiaries
10. 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
A. upstream.
B. in its infrastructure.
C. downstream.
D. midstream.
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11. 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
A. governmental practices that are business-friendly.
B. local entrepreneurs that can train workers and invest in modern technology.
C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve
living conditions.
D. sound management of broader economic factors such as interest rates and inflation.
12. Which of the following is a disadvantage of a transnational strategy?
A. less ability to realize cost savings through scale economies
B. limited ability to adapt to local markets
C. unique managerial challenges in fostering knowledge transfer
D. single locations may lead to higher tariffs and transportation costs.
13. Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called
A. transfer prices.
B. dividends.
C. royalties.
D. intra-corporate inflows.
14. Optimizing the location of every activity in the value chain can yield all of the following strategic advantages except
A. performance enhancement.
B. cost reduction.
C. extending the life cycle of the product of service.
D. risk reduction.
15. Gillette's worldwide success with its Sensor razor demonstrates
A. the importance of merging global and multidomestic strategies.
B. the values of establishing joint ventures with several multinational corporations.
C. that a global marketing effort can sometimes be successful.
D. the usefulness of a multidomestic strategy.
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16. A ____________ is a business in which a multinational company owns 100 percent of the stock.
A. joint venture
B. strategic alliance
C. wholly owned subsidiary
D. franchising operation
17. Firms following a global strategy strive to offer ______________ products and services as well as locate manufacturing, R&D, and marketing activities in _____________ locations.
A. a wide variety of; several
B. a wide variety of; few
C. standardized; several
D. standardized; few
18. Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following except
A. customers' needs, interests, and tastes are becoming increasingly homogenized or similar.
B. consumers around the world are increasingly willing to trade off idiosyncratic preferences in product
features for lower price.
C. flexible manufacturing trends have allowed a decline in the minimum volume required to reach
acceptable levels of production efficiency.
D. fluctuating exchange rates.
19. All of the factors below have made India's software services industry extremely competitive on a global scale except
A. large pool of skilled workers.
B. large network of public and private educational institutions.
C. tax and antitrust legislation that protect the dominant players in the industry.
D. large, growing market and sophisticated customers.
20. Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by
A. flexibility in adjusting to local laws and customs.
B. decreased duplication of inventories which are often involved in having multiple plants producing
similar products.
C. decreased shipping and transportation costs inherent in local production.
D. economies of scale gained through centralized production of standardized products.
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21. ____________ entail the creation of a third-party legal entity, whereas __________ do not.
A. Licensing agreements, joint ventures
B. Joint ventures; strategic alliances
C. Strategic alliances; joint ventures
D. Franchising agreements; strategic alliances
22. Rivalry is intense in nations with conditions of ________ consumer demand, ___________supplier bases, and ____________ new entrant potential from related industries.
A. weak; weak; high
B. strong; strong; low
C. strong; strong; high
D. weak; weak; low
23. Many U.S. multinational companies set up maquiladora operations south of the US-Mexico border primarily
A. to sell products into the growing Mexican market.
B. as part of US government-initiated measures to discourage illegal immigration.
C. to take advantage of the lower tax rates in Mexico.
D. to take advantage of the low cost of labor.
24. The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries enable these companies to benefit from
A. higher prices in their domestic markets.
B. economies of scale.
C. optimizing the location for many activities in their value chain.
D. reducing their exposure to currency risks.
25. In Michael Porter's framework all of the following factors affect a nation's competitiveness except
A. factor conditions.
B. demand characteristics.
C. related and supported industries.
D. policies that protect the nation's domestic competitors.
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26. A major trend in international developments includes
A. greater international trade and operations.
B. a growing recognition of an international managerial perspective.
C. a large increase in international investment.
D. all of the above
27. Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy?
A. international.
B. global.
C. multidomestic.
D. transnational.
28. Appreciation of the U.S dollar will have the following impact on McDonald's:
A. lower sales abroad because foreign customers cannot afford McDonalds' products.
B. more transfer of ingredients from the U.S to branches abroad to take advantage of the higher dollar.
C. lower profits, because foreign profits will be reduced when measured in dollars.
D. no impact at all.
29. Which of the following describes the most typical order of entry into foreign markets?
A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary
B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary
C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary
D. exporting, franchising, licensing, joint venture, and wholly owned subsidiary
30. All of the following would be viewed as advantages of global diversification except
A. fewer social and political risks than domestic operations.
B. a firm not being solely dependent on the domestic market.
C. a firm with large margins at home helping subsidize its operations in other nations.
D. the potential to lower costs of operation even if the primary market is at home.
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31. Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy?
A. a global strategy
B. a transnational strategy
C. an international strategy
D. a multidomestic strategy
32. Pressures to reduce costs require that
A. a company should not trade idiosyncratic preferences in product features for higher economic returns.
B. a company must pursue what is economically beneficial to the company including maximizing
economies of scale and learning curve effects.
C. the manager should follow a multidomestic strategy to maximize the economic benefits to the
company.
D. the company needs to supplement the local foreign economy in a manner specified by the local
government.
33. Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy?
A. Consumers are willing to pay more for specific product features.
B. Customer needs and interests are becoming more dissimilar.
C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved.
D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of
global consumers.
34. Industries in which proportionally more value is added in ____________ activities are more likely to benefit from a ____________ strategy.
A. downstream; global
B. upstream; multidomestic
C. upstream; global
D. manufacturing; multidomestic
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35. All of the following are risks associated with a global strategy except:
A. a firm with only one manufacturing location must export its productsome of which may be a great
distance from the operation.
B. the geographic concentration of any activity may also tend to isolate that activity from the targeted
markets.
C. concentrating an activity in a single location makes the rest of the firm dependent on that location.
D. the pressures for local adaptation may elevate the firm's cost structure.
36. The difference between a franchise and licensing contract is that
A. a franchise contract is more specific and usually longer in duration.
B. a franchise contract must include a foreign government.
C. a licensing contract covers more aspects of operations.
D. a franchise contract involves less control and less risk.
37. All of the following are limitations of a global strategy except
A. limited ability to adapt to local markets.
B. the ability to locate activities in optimal locations.
C. the concentration of activities may increase dependence on a single facility.
D. single locations may lead to higher tariffs and transportation costs.
38. As in the case of Siebel Systems, elements of a global strategy may facilitate the competitive advantage of differentiation by
A. increased freedom of individual business units to adapt to local tastes.
B. the creation of a worldwide network to achieve consistent service regardless of location.
C. flexibility in applying R&D to meet country-specific needs.
D. tailoring products to meet country-specific needs.
39. Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?
A. firms that compete in industries in which consumer preferences vary substantially in each country
B. firms in industries that are expanding very rapidly
C. firms in industries that have value added by sales and marketing departments
D. firms in industries that have much value added in research and design or manufacturing
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40. All of the following are limitations of a multidomestic strategy except
A. less ability to realize cost savings through scale economies.
B. greater difficulty in transferring knowledge across countries.
C. single locations may lead to higher tariffs and transportation costs.
D. may lead to overadaptation as conditions change.
41. _________ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures.
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Increasing market power
42. An antitakeover tactic called (a) ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it.
A. golden parachute
B. greenmail
C. poison pill
D. scorched earth
43. Antitakeover tactics include all of the following except
A. greenmail.
B. golden parachutes.
C. golden handcuffs.
D. poison pills.
44. It may be advantageous to vertically integrate when
A. lower transaction costs and improved coordination are vital and achievable through vertical integration.
B. the minimum efficient scales of two corporations are different.
C. flexibility is reduced, providing a more stationary position in the competitive environment.
D. various segregated specializations will be combined.
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45. According to the text, corporate restructuring includes
A. capital restructuring, asset restructuring, and technology restructuring.
B. global diversification, capital restructuring, and asset restructuring.
C. management restructuring, financial restructuring, and procurement restructuring.
D. capital restructuring, asset restructuring, and management restructuring.
46. Which of the following statements regarding internal development as a means of diversification is false?
A. Many companies use internal development to extend their product lines or add to their service
offerings.
B. An advantage of internal development is that it is generally faster than other means of diversification
and firms can benefit from speed in developing new products and services.
C. The firm is able to capture the wealth created without having to share the wealth with alliance partners.
D. Firms can often develop products or services at a lower cost if they rely on their own resources instead
of external funding.
47. According to Michael Porter: There's a tremendous allure to _______________. It's the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets.
A. strategic alliances and joint ventures
B. mergers and acquisitions
C. internal development
D. differentiation strategies
48. When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a
A. cow.
B. dog.
C. problem child.
D. star.
49. When management uses common production facilities or purchasing procedures to distribute different but related products, they are
A. building on core competencies.
B. sharing activities.
C. achieving process gains.
D. using portfolio analysis.
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50. All of the following are guidelines for managing strategic alliances except
A. establishing a clear understanding between partners.
B. relying primarily on a contract to make the joint venture work.
C. not shortchanging your partner.
D. working hard to ensure a collaborative relationship between partners.
51. Corporate-level strategy addresses two related issues:
A. how to compete in a given business; the application of technology.
B. what businesses to compete in; how these businesses can achieve synergy.
C. how to integrate primary activities; increase shareholder wealth.
D. how to improve a firm's infrastructure; how to maintain ethical behavior.
52. Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of
A. leveraging core competencies.
B. sharing activities.
C. vertical integration.
D. pooled negotiating power.
53. For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?
A. The competence must help the business gain strength relative to its competition.
B. The new business must be similar to existing businesses to benefit from a core competence.
C. The collection of competencies should be unique, so that they cannot be easily imitated.
D. The new business must have an established large market share.
54. The term golden parachutes refers to
A. a clause requiring that huge dividend payments be made upon takeover.
B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
C. managers of a firm involved in a hostile takeover approaching a third party about making the
acquisition.
D. pay given to executives fired because of a takeover.
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55. Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as
A. utilizing common infrastructures.
B. capitalizing on core competencies.
C. reducing corporate risk.
D. using portfolio analysis.
56. A firm should consider vertical integration when
A. the competitive situation is highly volatile.
B. customer needs are evolving.
C. the firm's suppliers willingly cooperate with the firm.
D. the firm's suppliers of raw materials are often unable to maintain quality standards.
57. An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ___________.
A. greenmail
B. a poison pill
C. a golden parachute
D. scorched earth
58. In managing a firm's portfolio, the BCG matrix would suggest that
A. dogs should be invested in to increase market share and become cash cows.
B. stars are in low growth markets and can provide excess cash to fund other opportunities.
C. question marks can represent future stars if their market share is increased.
D. cash cows require substantial cash outlays to maintain market share.
59. Options exist when the owner of the option has
A. the obligation, but not the right to engage in a transaction.
B. the right, but not the obligation to engage in a transaction.
C. the right and obligation to engage in a transaction.
D. neither the right, not the obligation to engage in a transaction.
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60. The risks of vertical integration include all of the following except
A. costs and expenses associated with increased overhead and capital expenditures.
B. lack of control over valuable assets.
C. problems associated with unbalanced capacities along the value chain.
D. additional administrative costs associated with managing a more complex set of activities.
61. McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its superwarehouses. This is an example of
A. achieving economies of scope through related diversification.
B. achieving market power through related diversification.
C. attaining the benefits of restructuring through unrelated diversification.
D. attaining the benefits of parenting through unrelated diversification.
62. 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
A. joint diversification.
B. strategic alliance.
C. divestment.
D. global integration.
63. Individual investors are dependent upon the corporation's managers to
A. diversify the stockholder's investments in order to reduce risk.
B. add value to their investments in a way that the stockholders could not accomplish on their own.
C. achieve risk reduction at a lower cost than stockholders could obtain on their own.
D. maximize short-term returns in the form of dividends.
64. Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with
A. strategic alliances.
B. divestment.
C. vertical integration.
D. horizontal integration.
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65. Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that
A. the similarity required for sharing core competencies must be in the value chain, not in the product.
B. the products use similar distribution channels.
C. the target market is the same, even if the products are very different.
D. the methods of production are the same.
66. Transaction costs include all of the following costs except
A. search costs.
B. negotiating costs.
C. monitoring costs.
D. agency costs.
67. In the Boston Consulting Group's (BCG) Growth Share Matrix, the suggested strategy for stars is to
A. milk them to finance other businesses.
B. invest large sums to gain a good market share.
C. not invest in them and to shift cash flow to other businesses.
D. maintain position and after the market growth slows use the business to provide cash flow.
68. Cooperative relationships such as _______ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.
A. joint ventures
B. mergers and acquisitions
C. strategic alliances
D. A and C
69. Real options analysis is most appropriate when
A. the total investment required is small, but the environment is uncertain.
B. the investment required can be justified by Discounted Cash Flow (DCF) techniques.
C. a small investment upfront can be followed by a series of subsequent investments.
D. there is no prospect of obtaining additional knowledge before making subsequent investments.
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70. Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?
A. Grid dimensions are based on external environments and internal capabilities/market positions.
B. Businesses are plotted on a 3-dimensional grid.
C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core
competences.
D. They are most helpful in helping businesses develop types of competitive advantage.
71. ___________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through _________ and __________ can provide.
A. Strategic alliances; joint ventures, internal development
B. Internal development; mergers; acquisitions
C. Strategic alliances; mergers; joint ventures
D. Mergers; internal development; strategic alliances
72. _______ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Sharing activities
73. The three primary means by which a firm can diversify are:
A. mergers and acquisitions; joint ventures and strategic alliances; internal development
B. mergers and acquisitions; differentiation; overall cost leadership
C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital.
D. mergers and acquisitions; internal development; differentiation.
74. A cash cow, referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has
A. low market growth and relatively high market share.
B. relatively low market share and low market growth.
C. relatively low market share and high market growth.
D. high market growth and relatively high market share.
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75. Vertical integration is attractive when
A. transaction costs are higher than internal administrative costs.
B. internal administrative costs are higher than transaction costs.
C. transaction costs and internal administrative costs are equal.
D. search costs are higher than monitoring costs.
76. The downsides or limitations of mergers and acquisitions include all of the following except:
A. expensive premiums that are frequently paid to acquire a business.
B. difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going
operations.
C. it is a slow means to enter new markets and acquire skills and competences.
D. there can be many cultural issues that can doom an otherwise promising acquisition.
77. Portfolio management matrices are applied to what level of strategy?
A. departmental level
B. business level
C. corporate level
D. international level
78. In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a
A. star.
B. question mark.
C. cash cow.
D. dog.
79. __________ reflect the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.
A. Primary value chain activities
B. Culture
C. Core competencies
D. Horizontal integration
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80. All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix except
A. every business cannot be accurately measured and compared on the two dimensions.
B. it views each business as a stand-alone entity and ignores the potential for synergies across businesses.
C. it takes a dynamic view of competition which can lead to overly complex analyses.
D. while easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic
prescriptions.
81. The growth market is characterized by
A. in-kind competition (from the same type of product).
B. premium pricing.
C. a growing trend to compete on the basis of price.
D. retaliation by competitors whose customers are stolen.
82. A narrow market focus is to a differentiation-based strategy as a
A. broadly-defined target market is to a cost leadership strategy.
B. growth market is to a differentiation-based strategy.
C. growth market is to a cost-based strategy.
D. technological innovation is to a cost-based strategy.
83. Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?
A. differentiation
B. overall cost leadership
C. differentiation focus
D. stuck-in-the middle
84. All of the following are potential pitfalls of a focus strategy except
A. erosion of cost advantages within the narrow segment.
B. all rivals share a common input or raw material.
C. even product and service offerings that are highly focused are subject to competition from new entrants
and from imitation.
D. focusers can become too focused to satisfy buyer needs.
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85. A firm can achieve differentiation through all of the following means except
A. improving brand image.
B. better customer service.
C. offering lower prices to frequent customers.
D. adding additional product features.
86. Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
A. overall cost leadership
B. differentiation
C. differentiation focus
D. cost leadership focus
87. In the _______ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.
A. introduction
B. growth
C. maturity
D. decline
88. The opening case of Food Lion, Inc. illustrates the point that
A. firms can differentiate their product/service offerings to such a great extent that it erodes performance.
B. firms that emphasize support activities too much will suffer performance declines.
C. firms that overemphasize overall cost leadership thoughout their value chain can experience low
performance.
D. the key to success is effective production operations.
89. One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by
A. hiring more experienced personnel.
B. repeating a process until a task becomes easier.
C. spreading out a given expense or investment over a greater volume.
D. competing in an industry a long time.
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90. The primary aim of strategic management at the business level is
A. maximizing risk-return tradeoffs through diversification.
B. achieving a low cost position.
C. maximizing differentiation of products and/or services.
D. achieving competitive advantage(s)
91. A differentiation strategy enables a business to address the five competitive forces by
A. lessening competitive rivalry by distinguishing itself.
B. having brand-loyal customers become more sensitive to prices.
C. increasing economies of scale.
D. serving a broader market segment.
92. The most likely time to pursue a harvest strategy is in a situation of
A. high growth.
B. strong competitive advantage.
C. mergers and acquisitions.
D. decline in the market life cycle.
93. A ____________ can be defined as the total profits in an industry at all points along the industry's value chain.
A. profit maximizer
B. revenue enhancer
C. profit pool
D. profit outsourcing
94. During the decline stage of the industry life cycle, _______ refers to obtaining as much profit as possible and requires that costs be decreased quickly.
A. maintaining
B. harvesting
C. exiting
D. consolidating
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95. Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?
A. by increasing a firm's margins, it avoids the need for a low cost position
B. it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable
alternatives
C. supplier power is increased because suppliers will be able to charge higher prices for their inputs
D. firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its
competitors
96. The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?
A. introduction
B. growth
C. maturity
D. decline
97. All of the following are potential pitfalls of a differentiation strategy except:
A. uniqueness that is not valuable.
B. too high a price premium.
C. all rivals share a common input or raw material.
D. perceptions of differentiation may vary between buyers and sellers.
98. In the _________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance.
A. introduction
B. growth
C. maturity
D. decline
99. Which statement regarding competitive advantages is true?
A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the
mind of the consumer.
B. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation.
C. In the long run, a business with one or more competitive advantages is probably destined to earn
normal profits.
D. attaining multiple types of competitive advantage is a recipe for failure.
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100. High product differentiation is generally accompanied by
A. higher market share.
B. decreased emphasis on competition based on price.
C. higher profit margins and lower costs.
D. significant economies of scale.
101. Piecemeal productivity improvements during a turnaround typically does not involve
A. business process reengineering.
B. increased capacity utilization.
C. benchmarking.
D. expansion of a firm's product market scope.
102. In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in?
A. introduction
B. growth
C. maturity
D. decline
103. Which of the following is a risk (or pitfall) of cost leadership?
A. cost cutting may lead to the loss of desirable features
B. attempts to stay ahead of the competition may lead to gold plating
C. cost differences increase as the market matures
D. producers are more able to withstand increases in suppliers' cost
104. In the long run, businesses without a competitive advantage are unlikely to earn more than normal profits. Normal profits are
A. what one would receive on U.S. Treasury securities.
B. profits received by corporations in the normal course of business.
C. profits one would expect to earn on investments that have a similar level of risk.
D. profits earned by a corporation on a diversified portfolio of stocks.
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105. Which of the following is most often true of mature markets?
A. Some competitors enjoy a significant operating advantage due to increasing experience effects.
B. The market supports premium pricing, which attracts additional competitors.
C. Advantages that cannot be duplicated by other competitors are difficult to achieve.
D. The magnitude of pricing differences and product differentiation is larger than in the growth stage.
106. A firm following a focus strategy
A. must focus on governmental regulations.
B. must focus on a market segment or group of segments.
C. must focus on the rising cost of inputs.
D. must avoid entering international markets.
107. Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
A. differentiation
B. overall cost leadership
C. differentiation focus
D. stuck-in-the-middle
108. Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform
A. at about the same level as firms that achieve either cost or differentiation advantages.
B. about the same as firms that are stuck-in-the-middle.
C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost
advantages.
D. higher than firms that achieve either a cost or a differentiation advantage.
109. A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage:
A. introduction
B. growth
C. maturity
D. decline
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110. Research shows that the following are all strategies used by firms engaged in successful turnarounds except
A. asset and cost surgery.
B. selective product and market pruning.
C. global expansion.
D. piecemeal productivity improvements.
111. The experience curve suggests that cutting prices is a good strategy
A. if it can induce greater demand and thereby help a firm travel down the experience curve faster.
B. in industries characterized by high economies of scale.
C. in the maturity stage of the industry life cycle.
D. in the decline stage of the industry life cycle.
112. All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy except:
A. firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle.
B. targeting too large a market that causes unit costs to increase.
C. underestimating the challenges and expenses associated with coordinating value-creating activities in
the extended value chain.
D. miscalculating sources of revenue and profit pools in the firm's industry.
113. As markets mature, firms should attempt to compete on the basis of _______.
A. quick response
B. differentiation
C. cost leadership
D. market focus
114. Which of the following statements about the introduction stage of the market life cycle is true?
A. It produces relatively large, positive cash flows.
B. Strong brand recognition seldom serves as an important switching cost.
C. Market share gains by pioneers are usually easily sustained for many years.
D. Products or services offered by pioneers may be perceived as differentiated simply because they are
new.
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115. Which of the following is considered an accurate statement for a product in the growth period of its life cycle?
A. It is difficult to gain market share in growth markets.
B. There is more price pressure in growth markets.
C. It is easier to develop technology in the growth phase.
D. Customers are brand loyal in the growth phase.
116. Which of the following descriptions of a product in the growth stage is true?
A. There are few forms of differentiation, emphasis is placed on efficiency, and there is a growing trend to
compete on the basis of price.
B. There is an emphasis on product variety, prices are declining rapidly, and although the firm may be
making a profit, cash flows may be negative.
C. There is an obsolescence of technologies, minimal capital investment is required, and consumer
demand is satiated.
D. There is a tendency to hold on to competitive advantages, pricing can be volatile, and there is an
opportunity to establish strong brand recognition.
117. As markets mature
A. costs continue to increase.
B. application for patents increase.
C. differentiation opportunities increase.
D. there is increasing emphasis on efficiency.
118. A manufacturing business pursuing cost leadership will likely
A. focus on a narrow market segment.
B. rely on experience effects to raise efficiency.
C. use advertising to build brand image.
D. put heavy emphasis on product engineering.
119. Which of these statements regarding the market life cycle is correct?
A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.
B. Trends suggested by the market life cycle model are generally not reversible nor repeatable.
C. It provides a shorthand for thinking about differences in strategic situations.
D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.
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120. The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except
A. automated and flexible manufacturing systems.
B. exploiting the profit pool concept for competitive advantage.
C. coordinating the extended value chain by way of information technology.
D. deriving benefits from highly focused and high technology markets.
121. 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.
A. introduction
B. growth
C. maturity
D. decline
122. Many Microsoft employees have left to start other companies. In general, when such employees leave, they take with them
A. social capital.
B. human capital.
C. intellectual capital.
D. all of the above.
123. Recently, in developed countries, a knowledge worker's loyalty to his or her employing firm has _____________compared to his or her loyalty to his or her profession and colleagues.
A. increased
B. decreased
C. remained the same
D. no correlation when
124. In a 360-degree evaluation and feedback system, ______________ rate a person's skill and performance.
A. superiors
B. direct reports
C. colleagues
D. all of the above
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125. The creation of knowledge assets is typically characterized by
A. high upfront costs and subsequent high variable costs.
B. high fixed costs and high variable costs.
C. low upfront costs and high variable costs.
D. high upfront costs and low variable costs.
126. Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on
A. an employee's individual abilities.
B. the relationships among a firm's employees.
C. a firm's allocation of financial resources.
D. an individual's knowledge.
127. Changes in our economy have forced firms to be more concerned with protecting their
A. knowledge workers.
B. social capital.
C. intellectual capital.
D. all of the above.
128. Developing human capital is essential to maintaining a competitive advantage in today's knowledge economy. Efforts and initiatives to develop human capital should be directed
A. at top managers.
B. at human resource departments.
C. at the employees themselves.
D. throughout the firm at all levels.
129. 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
A. increasing retention of below average workers.
B. attracting and retaining knowledgeable workers.
C. decreasing labor costs.
D. increasing the turnover of employees.
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130. Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has
A. increased.
B. decreased.
C. become less important.
D. remained the same.
131. 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
A. clothing and apparel.
B. capital accumulation.
C. financial management.
D. knowledge.
132. Human capital includes
A. an individual's capabilities, knowledge, and skills.
B. the relationships between people.
C. the output from assembly line employees.
D. an improved product.
133. Firms must compete for top talent. When attracting and selecting employees, firms must strive to select the best fit for both the employee and the firm. In an effort to reduce wasted time and effort in interviewing too many candidates while assuring a good candidate pool, a firm should
A. run employment ads in the newspaper.
B. use a pre interview quiz or bozo filter (e.g., Cooper Software).
C. only let lower level employees interview job candidates.
D. refrain from hiring by referrals of present employees.
134. Tacit knowledge
A. is the same as explicit knowledge.
B. is found mostly at the lower levels of the organization.
C. can be codified but not reproduced.
D. can be accessed only with the consent of the employees because it is in the minds of the employees.
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135. Social capital has many potential benefits. However, according to the text, some argue that social capital
A. is always beneficial to a firm.
B. may or may not be beneficial to a firm.
C. usually restricts the productivity of employees.
D. always hurts firm performance.
136. When firms invest in individual employee's abilities and skills, they are developing ____________ within the firm.
A. physical capital
B. human capital
C. trust
D. social capital
137. As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently strategic management has moved from focusing on
A. intangible resources to tangible resources.
B. tangible resources to intangible resources.
C. working capital to fixed capital.
D. fixed capital to working capital.
138. Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should
A. focus on increased recruiting.
B. decrease money spent on human capital.
C. make their work environment less stimulating.
D. adopt effective retention strategies.
139. Sharing knowledge within an organization helps to build social capital. This can be accomplished through the use of
A. email.
B. one-on-one conversations.
C. office memos.
D. all of the above.
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140. _______________ can be defined as the network of relationships that individuals have throughout the organization.
A. Human capital
B. Social capital
C. Intellectual capital
D. Tacit knowledge
141. 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
A. requiring workers to work independently of each other.
B. decreasing the interaction of departments within the firm.
C. encouraging the sharing of ideas between employees in the firm.
D. structuring the firm with rigid departmental and employee divisions.
142. Pamela Hirshman, a project manager at Young and Rubicam, was required to take over a project after the entire team left the company. She was able to reconstruct what the team had accomplished through reading emails exchanged by the previous team's members. This is an example of
A. using explicit knowledge.
B. inefficient use of information management.
C. using tacit knowledge.
D. all of the above.
143. Among the downsides of social capital is/are:
A. high social capital may breed groupthink, i.e., a tendency not to question shared beliefs.
B. socialization processes whereby individuals are socialized into the norms and values of the
organization may become expensive.
C. individuals may become less willing to collaborate on joint projects.
D. a and b
144. Cinergy, a Cincinnati-based electric, and energy services company, desires to have the most qualified people in every position throughout its organization. This is an example of a concern for
A. developing human capital.
B. developing social networks.
C. decreasing labor intensive training.
D. leveraging organizational structure.
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145. Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons because
A. it is less expensive than the fees paid to headhunters.
B. current employees are normally very careful in recommending someone because their credibility is on
the line.
C. it is a good test of employee loyalty.
D. A and B above.
146. The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving. These include all of the following except
A. hiring/selecting.
B. sorting/absorbing.
C. developing.
D. retaining.
147. Bruce Strong, CEO of Context Integration invested half a million dollars in a software package to help his consultants share their ideas. After the program was unveiled few people were motivated to use it. This may have been caused by
A. consultants not seeing value in the software.
B. consultants being protective of their ideas.
C. the software not being a part of the company's culture.
D. all of the above.
148. New knowledge involves the continual interaction between ________________ and ___________ knowledge.
A. intellectual; pragmatic
B. theoretical; practical
C. tacit; explicit
D. detailed; tacit
149. ____________ includes creativity and problem solving ability.
A. Physical capital
B. Human capital
C. Social capital
D. Emotional capital
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150. The cascade approach is used by managers as a tool for
A. developing human capital.
B. attracting intellectual capital.
C. attracting and developing social capital.
D. retaining production workers.
151. 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
A. the Columbus effect.
B. the Pied Piper effect.
C. strategically competitive hiring.
D. the tech exit effect.
152. Managing a knowledge intensive workforce is very challenging. The best way for a firm to manage their workforce is to
A. retain knowledge workers.
B. attract the brightest employees.
C. balance efforts in the attraction, selection, and retention of top talent.
D. weed out less effective employees.
153. In order to take advantage of investment in human capital a firm should
A. rotate workers through functions in the company as quickly as possible.
B. refrain from training individual employees.
C. establish practices that will enhance employee retention.
D. none of the above.
154. Many successful firms use internal labor markets. The most important reason they do this is because
A. they want to encourage job rotation.
B. if an employee is in the same department for too long, he/she would become indispensable.
C. they want to keep highly mobile employees motivated and challenged.
D. an employee who moves too much can be identified as unreliable and eliminated.
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155. Generally, employees are most likely to stay with an organization if
A. the employer provides high salaries to technology professionals.
B. the organization's mission and values align with the employee's mission and values.
C. the firm is in a high tech industry.
D. the mission and values of the organization change often.
156. 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.
A. be equal to
B. be smaller than
C. be larger than
D. not be correlated with
157. The use of information technology (e.g., email) has increased in recent years in many organizations. This has helped to
A. increase social capital.
B. make more effective use of time in every situation.
C. restrict social network growth.
D. create smaller social networks.
158. According to Alan Davidson, an industrial psychologist, the single best predictor of an employee's future behavior is
A. past behavior.
B. the individual's IQ.
C. academic accomplishments.
D. standardized test scores.
159. Xerox is a company that is known for its inability to leverage human capital. One example of this is the relatively short tenure of CEO Rich Thoman. One of the main reasons he was fired is that
A. he did not have inside connections like other board members and executives had.
B. he did not have the skills required for the job.
C. Xerox became known for being too loosely organized.
D. Xerox diversified into too many unrelated businesses.
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160. According to the textbook, many firms try to protect their human capital and diversify the ownership of their vital knowledge by all of the following means except
A. emphasizing teamwork.
B. by developing learning programs.
C. by recruiting talented individuals from the best research institutions.
D. by shackling employees with golden handcuffs.
161. The least effective way to retain human capital is
A. encouraging employee identification with organizational mission and goals.
B. requiring employees to sign agreements that prevent them from working for competitors in the future.
C. providing employees with a challenging and stimulating work environment.
D. providing employees with financial and nonfinancial rewards and incentives.
162. Inbound logistics include
A. machining and packaging.
B. warehousing and inventory control.
C. repair and parts supply.
D. promotion and packaging.
163. Which of the following would be most difficult to assess?
A. the liquidity position of a firm
B. the legitimacy and reputation of a firm
C. market share growth
D. the efficiency with which a firm utilizes its assets
164. The balanced scorecard enables managers to consider their business from all of the following perspectives except
A. customer perspective.
B. internal perspective.
C. innovation and learning perspective.
D. ethical perspective.
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165. The following are examples of socially complex organizational phenomena except
A. a firm's culture.
B. interpersonal relations among a firm's managers.
C. complex physical technology.
D. reputation with suppliers and customers.
166. For firms such as Walgreen Co. (a chain of drugstores), information systems have been a source of competitive advantage by enabling them to
A. differentiate service.
B. automate some operations.
C. respond to consumer needs.
D. all of the above.
167. How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?
A. Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry.
B. Compare the firm's financial ratios over the most recent one-year period.
C. Compare the financial ratios of all firms in the country's industrysome of whom serve very diverse
market segments and have specialized accordingly.
D. Compare the financial ratios of firms in the company's strategic group.
168. Customer service would include
A. product promotion.
B. product distribution.
C. parts supply.
D. procurement of critical supplies.
169. Which of the following lists consists of support activities:
A. human resource management, technology development, customer service, and procurement
B. human resource management, customer service, marketing and sales, and operations
C. human resource management, information systems, procurement, and firm infrastructure
D. customer service, information systems, technology development, and procurement
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170. ___________ are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling.
A. Services
B. Inbound logistics
C. Outbound logistics
D. Operations
171. An important implication of the balanced scorecard approach is that:
A. 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.
B. the key emphasis on customer satisfaction and financial goals are only a means to that end.
C. managers should not look at their job as primarily balancing stakeholder demands; increasing
satisfaction among multiple stakeholders can be achieved simultaneously.
D. gains in financial performance and customer satisfaction must often come at a cost of employee
satisfaction.
172. Ratios that reflect whether or not a firm is efficiently using its resources are known as
A. activity ratios.
B. leverage ratios.
C. liquidity ratios.
D. profitability ratios.
173. A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain
A. no competitive advantage.
B. competitive parity.
C. a temporary competitive advantage.
D. a sustainable competitive advantage.
174. In assessing its primary activities, an airline would examine
A. employee training programs.
B. baggage handling.
C. criteria for lease versus purchase decisions.
D. the effectiveness of its lobbying activities.
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175. Which of the following is not a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis?
A. Organizational strengths may not lead to competitive advantage
B. SWOT's focus on the external environment is too broad and integrative
C. SWOT gives a one-shot view of a moving target
D. SWOT overemphasizes a single dimension of strategy
176. Examples of tangible resources (in the resource-based view of the firm) include:
A. financial resources, human resources, and firm competencies.
B. financial resources, physical resources, and the capacity to combine intangible resources.
C. financial resources, physical resources, and technological resources.
D. outstanding customer service, innovativeness of products, and reputation.
177. XYZ Corp. is focusing on the objective of low-cost, high quality, on-time production by minimizing idle productive facilities and workers. The XYZ Corp. is taking advantage of a ____________ system.
A. Last In, First Out (LIFO)
B. Just-In-Time (JIT)
C. First In, First Out (FIFO)
D. Highly mechanized
178. Advertising is a ______activity. Supply of replacement parts is a _________activity.
A. primary:primary
B. support:primary
C. support:secondary
D. primary:support
179. According to value chain analysis, which of the following would be considered part of a firm's infrastructure?
A. human resource management
B. information systems
C. technology development
D. procurement
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180. The best measure of a company's ability to meet imminent financial obligations is known as the
A. current ratio.
B. total asset turnover.
C. debt ratio.
D. profit margin.
181. Managers will be able to obtain a proportionately high level of profits they generate (relative to the firm) if
A. suppliers are loyal to the firm.
B. the cost to the firm of replacing them is high.
C. their expertise is firm-specific.
D. the firm's resources are path dependent.
182. The three key types of resources that are central to the resource-based view of the firm are:
A. tangible resources, intangible resources, and organizational structure.
B. culture, tangible resources, intangible resources.
C. tangible resources, intangible resources, and organizational capabilities.
D. tangible resources, intangible resources, and top management.
183. A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the
A. interrelationships among functional areas and firm strategies.
B. need to maintain the reputation of the company.
C. organizational culture and leadership.
D. synergy of the business units.
184. Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading
A. if the overall strategy of the firm is the same.
B. in periods of recession or economic boom.
C. if the firm shows constant growth.
D. if the firm's stock is publicly traded.
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185. The balanced scorecard provides top managers with a _____________ view of the business
A. detailed and complex
B. fast but comprehensive
C. simple and routine
D. long-term financial
186. A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics.
A. physical uniqueness, path dependency, causal ambiguity, and social complexity.
B. psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
C. rarity, path dependency, causal ambiguity, and social substitutability.
D. geographic uniqueness, cause dependency, social ambiguity, and path complexity.
187. Which of the following is not an advantage of Just-In-Time inventory systems?
A. reduced raw material storage costs
B. minimized idle production facilities and workers
C. reduced work-in-process inventories
D. reduced dependence on suppliers
188. The balanced scorecard developed by Kaplan and Norton helps to integrate
A. financial analysis and a firm's reputation.
B. intangible resources and operational measures.
C. financial analysis and stakeholder perspectives.
D. short-term perspectives and strategic positioning.
189. ______________ are the competencies or skills that a firm employs to transform inputs into outputs.
A. tangible resources
B. intangible resources
C. reputational resources
D. organizational capabilities
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190. A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. causal ambiguity.
191. Although firm infrastructure is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following except:
A. negotiating and maintaining ongoing relations with regulatory bodies.
B. effective information systems contributing significantly to a firm's overall cost leadership strategy.
C. marketing expertise increasing a firm's revenues and enabling it to enter new markets.
D. top management providing a key role in collaborating with important customers.
192. Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It
A. supports only individual primary activities.
B. supports only individual support activities.
C. supports both individual primary and support activities and the entire value chain.
D. supports mostly support activities but does have some impact on primary activities.
193. Which of the following is a support activity?
A. inbound logistics
B. operations
C. technology development
D. customer service
194. The resource-based view (RBV) of the firm combines two perspectives:
A. the primary and support activities of the firm.
B. the interrelationships among the primary activities of the firm and corporate management.
C. the internal analysis of the firm as well as the external analysis of the industry and competitive
environment.
D. the industry and the competitive environment.
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195. Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their
A. tangible resources.
B. intangible resources.
C. organizational capabilities.
D. strong primary activities.
196. For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes:
A. rare
B. easy for competitors to substitute
C. valuable
D. difficult for competitors to imitate
197. For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes.
A. rare, valuable, mobile, nonsubstitutable.
B. rare, inimitable, physically unique, nonsubstitutable.
C. rare, valuable, inimitable, nonsubstitutable.
D. rare, valuable, physically unique, causally ambiguous.
198. Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?
A. leverage ratios
B. profitability ratios
C. activity ratios
D. liquidity ratios
199. In order to increase their competitiveness, organizations must continually analyze their strategy and their competitive environments. According to the text, strategy analysis includes
A. assessing intellectual capital as well as analyzing the internal and external environment.
B. formulating Internet and international-level strategy.
C. strategic leadership and fostering entrepreneurship.
D. strategy implementation and strategic controls.
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200. According to the text, organizational control is an important managerial activity. Two types of control addressed are
A. informational and substantial.
B. substantial and behavioral.
C. substantial and total.
D. informational and behavioral.
201. The advance work in the strategic management process consists of
A. strategy implementation.
B. strategy formulation.
C. strategy analysis.
D. strategic posturing.
202. Successful organizations are effective in motivating people. Employees work best when
A. they are asked to do their best.
B. work requirements are vague and unclear.
C. they are striving toward specific goals.
D. they are guided by an abstract mission statement.
203. Effective vision statements include
A. all strategic directions of the organization.
B. a brief statement of the company's direction.
C. strategic posturing and future objectives
D. financial objectives and projected figures.
204. The organizational versus individual rationality perspective suggests that
A. what is good for a functional area is always good for the organization.
B. what is good for the organization is always good for a functional area.
C. what is best for a functional area may not be best for the organization.
D. the incremental perspective may be best for functional areas while the rational perspective may be best
for the organization.
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205. The general environment of the firm includes all of the following segments except
A. demographic.
B. technological.
C. close competitors.
D. economic.
206. Effective leaders must engage in many different activities. According to the text, these activities include
A. setting a direction and designing the organization.
B. developing an organization that is committed to excellence.
C. developing an organization that is committed to ethical behavior.
D. all of the above.
207. In contrast to an organization's vision, its mission should
A. be shorter in length.
B. encompass both the purpose of the company as well as the basis of competition.
C. encompass all the major rules and regulations of the corporate work force.
D. be less detailed.
208. Effectiveness is often defined as
A. doing things right.
B. stakeholder satisfaction.
C. doing the right thing.
D. productivity enhancement.
209. Managers should do more than just focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that
A. stakeholders are dependent on each other for their success.
B. stakeholders look out for their individual interests.
C. one can only gain at the expense of someone else.
D. all stakeholders want to maximize shareholder returns.
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210. A CEO made a lot of mistakes such as committing errors in assessing the market and competitive conditions and improperly redesigning the organization into numerous business units. Such errors led to performance declines. According to the text, this example illustrates the _________________ perspective of leadership.
A. external control
B. romantic
C. internal mechanism
D. operational
211. According to Henry Mintzberg, the realized strategies of a firm
A. are a combination of deliberate and emergent strategies.
B. are a combination of deliberate and differentiation strategies.
C. must be based a company's strategic plan.
D. must be kept confidential for competitive reasons.
212. There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum thinking means that
A. all parts of the organization gain at no loss.
B. in order for someone to gain others must experience no gain or benefit.
C. one can only gain at the expense of someone else.
D. everyone in the organization shares gains and losses equally.
213. While working to prioritize and fulfill their responsibilities, members of an organization's board of directors should
A. represent their own interests.
B. represent the interests of the shareholders.
C. direct all actions of the CEO.
D. emphasize the importance of short-term goals.
214. An organization's mission statement and vision statement set the overall direction of the organization. Strategic objectives
A. operationalize the mission statement.
B. modify the mission statement.
C. are a shorter version of the mission statement.
D. are only clarified by the board of directors.
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215. 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.
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders
216. Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is
A. the expectation that business will strive to improve the overall welfare of society.
B. the idea that organizations are solely responsible to local citizens.
C. the fact that court costs could impact the financial bottom line.
D. the idea that businesses are responsible to maintain a healthy social climate for their employees.
217. Strategy formulation and implementation is a challenging on-going process. To be effective, it should involve
A. the CEO and the board of directors.
B. the board of directors, CEO, and CFO.
C. line and staff managers.
D. all of the above.
218. Sears has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of ________________.
A. zero-sum relationship among stakeholders.
B. stakeholder symbiosis.
C. rewarding stakeholders.
D. emphasizing financial returns.
219. Stakeholders are
A. a new way to describe stockholders.
B. individuals, groups, and organizations who have a stake in the success of the organization.
C. creditors who hold a lien on the assets of the organization.
D. attorneys and their clients who sue the organization.
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220. Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements
A. are very specific.
B. provide specific objectives.
C. set organizational structure.
D. evoke powerful and compelling mental images.
221. Fortune Brands states they will cut corporate costs by $30 million a year. This is an example of a
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.
222. Wellpoint Health Networks states: Wellpoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future. This is an example of a
A. strategic objective.
B. vision statement.
C. vague statement of direction.
D. line manager's individual goal.
223. Examples of _____________ include: to be the happiest place on earth(Disney), and restoring patients to full life (Medtronics).
A. vision statements.
B. mission statements.
C. strategic objectives.
D. operational objectives.
224. According to the text, the strategic management process entails three ongoing processes:
A. analysis, actions, and synthesis.
B. analysis, decisions, and actions.
C. analysis, evaluation, and critique.
D. analysis, synthesis, and antithesis.
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225. The four key attributes of strategic management include all of the following except
A. including multiple stakeholder interests in decision making.
B. incorporating both short-term and long-term perspectives.
C. recognizing the trade-offs between effectiveness and efficiency.
D. emphasis on the attainment of short-term objectives.
226. In large organizations, conflicts can arise between functional areas. In order to resolve these conflicts, strategic objectives
A. put financial objectives above human considerations.
B. align departments toward departmental goals.
C. help resolve conflicts through their common purpose.
D. cause debate and increase conflict.
227. Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization?
A. only at the top
B. in the middle
C. throughout the organization
D. only during times of change
228. Firms must be concerned with many types of capital. In the broader sense, these could include
A. ecological capital.
B. material capital.
C. human and social capital.
D. all of the above.
229. According to Michael Porter, management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because
A. companies that have implemented these techniques have lost money.
B. there is no proof that these techniques work.
C. they cost too much money and effort to implement.
D. every company is trying to implement them and hence it does not make a company different from
others.
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230. As our world increases in complexity, the global environment is increasingly competitive and challenging. The key to effective globalization is
A. managing the flow of goods.
B. more people speaking more languages.
C. managing the flow of capital, people, and information.
D. governmental regulations.
231. An organization is responsible to many different entities. In order to meet the demands of these groups organizations must participate in stakeholder management. Stakeholder management means that
A. interests of the stockholders are not the only interests that matter.
B. stakeholders are second in importance to the stockholders.
C. stakeholders and managers inevitably work at cross-purposes.
D. all stakeholders receive financial rewards.
232. The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives.
B. strategy must be focused on long-term objectives.
C. strategy must be focused on one specific area of an organization.
D. strategy must focus on competitor strengths.
233. The text addresses two perspectives of leadership as well as their implications. These two perspectives are
A. romantic and unromantic.
B. romantic and internal control.
C. external control and unromantic.
D. romantic and external control.
234. Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if
A. each functional area focuses on achieving their own goals.
B. functional areas work together to attain overall goals.
C. goals are defined at the bottom and implemented at the top.
D. management and employees have separate goals.
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235. According to the text, the triple bottom line approach to corporate accounting includes which three components
A. financial, environmental, and customer.
B. financial, organizational, and customer.
C. financial, environmental, and social.
D. financial, organizational, and psychological.
236. The hierarchy of organizational goals is in this order (least specific to most specific):
A. vision statements, strategic objectives, mission statements.
B. mission statements, strategic objectives, vision statements.
C. vision statements, mission statements, strategic objectives.
D. mission statements, vision statements, strategic objectives.
237. The text argues that a strategic perspective in an organization should be emphasized
A. at the top of the organization.
B. at the middle of the organization.
C. throughout the organization.
D. from the bottom up.
238. Members of Boards of Directors are
A. appointed by the Securities and Exchange Commission.
B. elected by the shareholders as their representatives.
C. elected by the public.
D. only allowed to serve one term of four years.
239. As firms work to become more efficient and effective in the global business environment, they are forced to continually innovate. Innovation in an organization
A. will always increase a firm's performance.
B. may enhance or destroy a firm's capabilities.
C. should not be pursued by industry leaders.
D. happens only incrementally.
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240. According to a study by Harvard University and the Federal Reserve, information technology is responsible for _____ of the rapid productivity gains in recent years.
A. less than 10 percent
B. approximately 25 percent
C. almost half
D. nearly seventy-five percent
241. A danger of forecasting discussed in the text is that
A. in most cases, the expense of collecting the necessary data exceeds the benefit.
B. forecasting's retrospective nature provides little information about the future.
C. managers may view uncertainty as black and white while ignoring important gray areas.
D. it can create legal problems for the firm if regulators discover the company is making forecasts.
242. A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of
A. backward integration.
B. economies of scale.
C. forward integration.
D. product differentiation.
243. An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of
A. threat of entry.
B. backward integration.
C. forward integration.
D. threat of substitute products.
244. The bargaining power of suppliers increases as
A. more suppliers enter the market.
B. importance of buyers to supplier group increases.
C. switching costs for buyers decrease.
D. threat of forward integration by suppliers increases.
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245. Emerging sociocultural changes in the environment include
A. changes in the ethnic composition.
B. the increasing educational attainment of women in the past decade.
C. progressively less disposable income by consumers.
D. changes in the geographic distribution of the population.
246. Gathering competitive intelligence
A. is good business practice.
B. is illegal.
C. is considered unethical.
D. minimizes the need to obtain information in the public domain.
247. The aging of the population of the United States
A. is a myth.
B. increases demand for products geared to retirees.
C. is an important sociocultural trend.
D. is an important trend in the political and legal environment.
248. The aging of the population, changes in ethnic composition, and effects of the baby boom are
A. macroeconomic changes.
B. demographic changes.
C. global changes.
D. sociocultural changes.
249. Two key inputs to developing forecasts discussed in the text are
A. environmental scanning and stakeholder identification.
B. environmental scanning and competitor intelligence.
C. assessing internal strengths and environmental scanning.
D. environmental scanning and a SWOT analysis.
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250. Strategic groups consist of
A. a group of top executives who make strategies for a company.
B. a group of firms within an industry that follow similar strategies.
C. a group of executives drawn from different companies within an industry that makes decisions on
industry standards.
D. a group of firms within an industry that decide to collude rather than compete with each other so that
they can increase their profits.
251. _____________ tracks the evolution of environmental trends, sequences of events, or streams of activities.
A. Environmental scanning
B. Environmental monitoring
C. Environmental surveying
D. Competitive intelligence
252. Which of the following would be considered part of a firm's general environment?
A. decreased entry barriers
B. increased trade deficit
C. increased bargaining power of the firm's suppliers
D. increased competitive intensity
253. The most intense rivalry results from
A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
C. numerous equally balanced competitors, manufacturing capacity increases only in large increments,
low exit barriers.
D. a high level of differentiation.
254. Buyer power will be greater when
A. the products purchased are highly differentiated.
B. there are high switching costs.
C. the industry's product is very important to the quality of the buyer's end products or services.
D. it is concentrated or purchases large volumes relative to seller sales.
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255. Scanning the general environment would identify information on
A. substitute goods.
B. the aging population and ethnic shifts.
C. customer and firm bargaining power.
D. competitive rivalry.
256. Product differentiation by incumbents act as an entry barrier because
A. new entrants cannot differentiate their products.
B. incumbents will take legal action if new entrants do not differentiate their products.
C. new entrants will have to spend heavily to overcome existing customer loyalties.
D. it helps a firm to derive greater economies of scale.
257. Delayed marriages, fewer people in relevant age groups, and rising interest rates dampening demand for houses illustrates
A. that more than one segment of the general environment may affect an industry.
B. that the global environment is not as powerful an influence as thought.
C. that macroeconomic forces dominate the general environment.
D. that the competitive environment often has a strong influence on the general environment.
258. Which is considered a force in the Five Forces model?
A. increased deregulation in an industry
B. the threat of government intervention
C. rivalry among competing firms
D. recent technological innovation
259. Which of the following statements about strategic groups is false?
A. two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same.
B. strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from
attacks by other groups.
C. strategic groups help chart the future directions of firms' strategies.
D. strategic groups are helpful in thinking through the implications of each industry trend for the group as
a whole.
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260. Which of the following would be an entry barrier?
A. large economies of scale
B. low switching costs
C. easy access to raw materials
D. low capital requirements
261. All of the following are important elements of the political/legal segment of the general environment except
A. the deregulation of utilities.
B. The Americans with Disabilities Act (ADA).
C. the increased use of Internet technology.
D. increases in the federally mandated minimum wage.
262. To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (_______) has led to greater demand for protectionist measures, such as trade barriers and quotas (______). These measures lead to higher prices for U.S. consumers and fuel inflation (________).
A. macroeconomic, sociocultural, political/legal
B. macroeconomic, political/legal, macroeconomic
C. macroeconomic, technological, macroeconomic
D. macroeconomic, global, macroeconomic
263. The general and competitive environments
A. are independent and dynamic over time.
B. tend to be interrelated and dynamic over time.
C. have similar impact on organizations of different industries.
D. are independent and static over time.
264. Firms would be most likely to face intense rivalry with competitors when they
A. are in a high growth industry with low fixed costs.
B. are in a protected market.
C. have high fixed costs, in a slow growth industry with high exit barriers.
D. have low exit barriers for easy transition to another industry.
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265. Which of the following is an example of the interrelationship between the general and competitive environments?
A. A decline in a nation's educational standards results in a decline in the nation's productivity.
B. A country's technological inferiority results in its enactment of strong trade barriers against
importation.
C. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic
beverages industry.
D. Greater awareness of the environment results in environmental legislation.
266. Which of the following best demonstrates the interrelationships among different segments of the general environment?
A. A new technology results in the development of a substitute product for your firm's product.
B. Government deregulation results in different firms being able to offer the same product as your firm.
C. The recession results in several of your competitors cutting prices and intensifying rivalry.
D. Increased concern for the environment results in legislation that impacts your current packaging.
267. The bargaining power of the buyer is greater than that of the supplier when
A. volume of purchase is low.
B. threat of backward integration by buyers is low.
C. cost savings from the supplier's product are minimal.
D. the buyer's profit margin is low.
268. In the value-net analysis, complementors are
A. firms that produce substitute products.
B. customers who compliment the company for their good products and services.
C. firms that produce products or services that have a positive impact on the value of a firm's products or
services.
D. firms that supply critical inputs to a company.
269. The bargaining power of suppliers is enhanced under the following market condition:
A. no threat of forward integration
B. low differentiation of the suppliers' products
C. greater availability of substitute products
D. dominance by a few suppliers
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270. In Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except
A. lack of importance of the buyer to the supplier group.
B. high differentiation by the supplier.
C. dominance by a few suppliers.
D. readily available substitute products.
271. A supplier group would be most powerful when there is/are
A. many suppliers.
B. few substitute products.
C. low differentiation of products supplied.
D. high threat of backward integration by the buyers.
272. Threat of substitute products comes from
A. other companies in the same industry.
B. foreign companies which can use cheap labor in their countries.
C. firms in other industries that produce products or services that satisfy the same customer need.
D. all of the above.
273. 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.
A. positive; negligible
B. negative; negligible
C. negative; positive
D. positive; negative
274. Exit barriers arise from
A. specialized assets with no alternative use.
B. governmental and social pressures.
C. strategic interrelationships with other business units within the same company.
D. all of the above.
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275. The threat of new entrants is high when there are
A. low economies of scale.
B. high capital requirements.
C. high switching costs.
D. high differentiation among competitors' products and services.
276. Environmental forecasting involves developing plausible projections about the ________ of environmental change.
A. direction
B. scope
C. speed
D. all of the above
277. Increasingly larger numbers of women entering the work force since the early 1970's is an example of
A. demographic changes.
B. political and legal environmental changes.
C. sociocultural changes.
D. technological developments.
278. The value net is a game-theoretic approach that
A. extends the value chain analysis.
B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to
generate and appropriate value.
C. helps us to understand the evolution of the five forces over time.
D. uses network analysis to understand the relationships among different companies.
279. Which of the following firms would likely pose the least competitive threat?
A. a firm in the same industry and in the same strategic group
B. a firm that produces substitute goods to your product line
C. a competitor to your product where a high switching cost exists
D. a firm in the same industry and in the nearest strategic group looking to join your group
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280. In value chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity?
A. purchasing key inputs
B. recruiting and training employees
C. repairing the product for the consumer
D. monitoring the cost of producing the product through a cost accounting system
281. 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
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. tangible resources.
282. Which of the following examples demonstrates how successful organizations manage their primary activities?
A. By employing JIT inventory systems, Hewlett Packard has been able to cut lead time from five days to
one.
B. Motorola has revised its compensation system to reward employees who learn a variety of skills.
C. National Steel improved its efficiency by consolidating, reducing the number of job classifications, and
broadening worker responsibilities.
D. Wal-Mart implemented a sophisticated information system that resulted in reduced inventory carrying
costs and shortened customer response times.
