Mgmt 4513 Final
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 global strategy
A transnational strategy
An international strategy
A multi-domestic strategy
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?
Overall cost leadership
Differentiation
Differentiation focus
Cost leadership focus
What are the primary tradeoffs that you need to consider when choosing an entry mode for international expansion?
Efficiency and local responsiveness
cost and degree control
Currency fluctuations and political instability
Factor costs and degree of rivalry
income of population and pricing
Firms following a global strategy strive to offer _____ products and services as well as locate, R&D, and marketing activities in _____ locations.
A wide variety of; many decentralized
A wide variety of; few centralized
Standardized; many decentralized
Standardized; few centralized
Firms with core competencies that can be exploited across international markets are able to:
Achieve synergies and produce lower costs
Be more responsive to local preferences than local firms in foreign markets.
Enhance their market image and brean loyalty among local consumers
Meet local government requirements more quickly than their international competitors.
High pressure for local adaption combined with high pressure for lower costs would suggest what type of strategy?
international
Global
C. mulit-domestic
D. transnational
Competetiveness is usually enhanced by the good implementation of diversification based on all of the following reasons except:
A. Potential to share the inventory delivery system between the old and new business
B. Potential to reduce the cost of manufacturing in the new business more than other potential acquirers
C. Potential to overcome uncertainties in the future cash flows of a mature product line with cash flows from a new product to protect value for shareholders
D. Potential to share managerial competencies in the implementation of a particular technological development across otherwise differect businesses.
E. None of the other options in this set of answers
An executive might be motivated to maximize the firm's stock price in the short-term (i.e. Year end) at all costs if his or her compensation package is dominated by:
A. salary
B. bonus
C. Stock options
D. Salary and bonus
E. Salary and stock options
Typically, the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control. True or False?
A. True
B. False
The threat of new entrants is increased if:
A. Access to distribution channels is hard to gain
B. Economies of scale in the industry are high
C. Product differentiation in the industry is low
D. Capital requirements in the industry are high
Jim decides that the time is right to start a business that markets products for the Beijing 2008 Olymipics. He plans to sell t-shirts, replica medals, Olympic athlete actions figures, books, and videotapes. The main concern, in Jim's mind, is the managers need to be able to think across all functional lines, know their customers well, and be able to change products rapidly. He does not want his managers to spend much time in meetings, and he is not really concerned with positions redundancy. In this situation, the most appropriate structure for Jim to use in his organization is:
A. virtual
B. divisional
C. functional
D. matrix
E. Virtual or functional
Assuming you are interested in earning the highest profit, which of the following industry situations would you prefer to be in?
A. There are many competitors, few large buyers, and few small suppliers
B. There are few competitors, few large buyers, and many small suppliers
C. There are few competitors, many small buyers, and few large suppliers
D. There are few competitors, many small buyers, and many small suppliers
E. There are many competitors, many small buyers, and many large suppliers
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
Suppliers are more powerful 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 in low
Is it good to have an organization primarily built on intangible assets?
A. yes, intangible assets tend to be more costly for competitors to imitate
B. no, tangible assets tend to be more costly for competitors to imitate.
C. Yes, intangible assets are more stable and long-lasting
D. no, tangible assets are more stable and long-lasting
A major reason outsourcing is being used is that:
A. It allows top managers to focus on operational details
B. Few firms possess superior capability in all primary and support activities
C. It permits unlimited access to capital resources
D. Competitors do not have access to the same external sources
Industry A is characterized by high fixed costs while industry B has low fixed costs. Which industry would tend to have a lower threat of new entrants? Higher degree of rivalry?
A. Industry A; Industry B
B. Industry B; Industry B
C. Industry A; Industry B
D. Industry A; Industry A
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 investements in a way that the stockholders could not accomplish on their own
C. Achieve risk reduction at a lower cost than stockholders could not accomplish on their own
D. Maximize the short term returns in the form of dividends
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
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 segments, low exit barriers
D. A high level of differentiation
_____ may be time-consuming, and therefore, firms may look for 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
High pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy?
A. international
B. global
C. multi-domestic
D. transnational
Recent trends that might lead managers of multi-national corporations (MNCs) NOT to adopt a multi-domestic 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 prices.
C. Flexible manufacturing trends have allowed a decline in the minimum volume required to reach acceptable levels of productions efficiency
D. The global environment is experiencing fluctuating exchange rates
Which of the following represents a related form of diversification?
A. When a firm expands into another industry that offers a product that is consumed along with the product that it currently offers
B. When a firm expands into another industry that offers a product whose sales are likely to rise when sales of its present products show a decline
C. When a firm expands into another industry that offers a product which would share some of the value chain activities that the firm has already developed for its current products
D. When a firm expands into another industry that offers a substiture product which addresses a similar need
Firms A and B are both thinking of diversifying because their managers feel that the time is right to think about additional opportunities for revenue generation. One main difference between these two firms in their resource profiles. Firm B has an abundance of intangible resources dealing mostly with process efficiency knowledge, while firm A has highly developed financial capabilities. Based on only this information, you would expect that ______'s diversification efforts are more likely to be more related to their current lines of business than _____'s diversification efforts are.
A. Firm A; Firm B
B. Firm B; Firm A
C. Firm A; Firm A
D. Firm B; Firm B
E. Firm A; Firm B or Firm A; Firm A
Corporate-level strategy is concerned with which of the following two key issues?
A. How a firm should compete within a particular business and the specific advantages that it can develop over its key competitors in that business
B. How the mission and the goals of the firm are tied to each of the businesses that it is in
C. What businesses the firm should be in and how the corporate office should manage its group of businesses
D. How the firm should use its technology and its human resources
The differentiation strategy can be effective in controlling the power of rivalry in an industry because:
A. Customers will seek out the lowest cost products
B. Customers have no loyalty
C. Customers are loyal to brands that are differentiated in meaningful ways
D. The differentiation strategy benefits from a rivalry
E. All of these
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
Given its 1977 strategy (beginning of the case), it would make sense for Coors beer business to have been organized as a:
A. Matrix organizational structure
B. Divisional organizational structure
C. functional organizational structure
D. Global organization structure
E. Network organizational structure
When selecting activities to outsource, firms should select activities that:
A. Create value
B. Neutralize external threats
C. Are critical to their success
D. Are not core to their strategy
For capability to create a temporary competitive advantage it only needs to:
A. Be rare and create value
B. Be difficult to imitate
C. Lack real substitutes
D. Be all of these
Buyers are more powerful when:
A. There is not a threat of backward integration
B. They are not a significant purchaser of the supplier's output
C. There are no switching costs
D. The buyers' industry is fragmented
Upper limits on industry-wide prices for standard products are constrained by:
A. Expected retaliation from rivals within the industry
B. Comparative price of substitute products
C. Switching costs between products of different firms within the industry
D. The bargaining power of suppliers to the industry
Excessive focus on reduced risk might occur if an executive has been with the company for a long time and his/her pay package has been dominated by:
A. Salary
B. bonus
C. Stock options
D. benefits
The sustainability of a competitive advantage rests primarily on which issue?
A. Rareness of the capability underlying the advantage
B. The value created by the capability
C. The imitability of the capability underlying the advantage
D. The size of the advantage relative to rival firms
A divisional structure:
A. Is organized around functional area departments
B. Typically improves the performance of firms pursuing a vertical integration
C. Is usually more responsive to customer needs and competitors actions
D. Provides efficiencies in the management of organizational resources
The disadvantage to a merger or acquisition would include all of the following EXCEPT:
A. Firms frequently pay too much for the acquisition
B. Firms often find it difficult to integrate their resources and activities with those of the acquired firm
C. Firms usually find they cannot move quickly enough into new products and markets through the use of acquisition
D. Firms typically find that key elements of the culture of the acquired firm clash with key elements of their own culture
If your analysis suggests that a global strategy is optimal for firms seeking to expand into foreign markets, which type of value chain activity would you want to be and what business strategy might be appropriate in general?
A. Sales and marketing to create a strong brand name; differentiate
B. Technological development to create new products and features; differentiation
C. Technological development to come up with more efficient processes; cost leadership
D. Service that is responsive to customer needs; focused differentiation
Everything else equal, what would commoditization of industry products tend to do to the power of buyers in an industry?
A. Increase it
B. Decrease it
C. Have no effect
A U.S. Manufacturer of pigments for household paint that exports about 40 percent of its products to European markets will find its sales will be harmed by a weak dollar?True or False
A. True
B. False
If you believed in a pure five forces model of above-average returns, which of the fallowing things is LEAST important?
A. Industry analysis
B. Competitor analysis
C. Analysis of general environment
D. Analysis of resources, capabilities, and core competencies
E. All are equally important
Capabilities are non-substitutable when:
A. There are no direct substitutions in the five forces model
B. The firm's products cannot be a substitute for others' products
C. The switching costs in the industry are high
D. There is no alternative means to achieve the same results
Which statement regarding competitive advantages is true?
A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the minds 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 competetive advantages is probably destined to earned normal profits
D. Attaining multiple types of competitive advantage is a recipe for failure
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
Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis-Ã -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.
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 or repeatable.
C. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives.
D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.
The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur.
A. True
B. False
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.
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.
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.
The Decline stage of the industry life cycle stage is inevitably followed by death.
A. True
B. False
A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.
A. True
B. False
A manufacturing business pursuing cost leadership will likely
A. Focus on a narrow market segment. q
B. Rely on experience effects to raise efficiency.
C. Use advertising to build brand image.
D. Put heavy emphasis on product engineering
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.
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.
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.
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.
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.
__________ innovations help incumbents in an industry earn higher margins by selling better products to their best customers.
A. Disruptive innovations
B. Tactical innovations
C. Sustaining innovations
D. Competitive innovations
To generate above average returns, a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers.
A. True
B. False
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.
Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders.
A. True
B. False
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.
A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.
A. True
B. False
A multi-domestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle of the road product appealing to the largest number of consumers in every market.
A. True
B. False
Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis.
A. True
A. True
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.
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.
Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multi-domestic 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.
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.
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 x
A. Social complexity
B. Path dependency
C. Physical uniqueness
D. Causal ambiguity
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.
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.
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.
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. x
C. If the firm shows constant growth
D. If the firm's stock is publicly traded
Portfolio management should be considered as the primary basis for formulating corporate-level strategies.
A. True
B. False
Firms that are successful in creating competitive advantages that are sustainable for a period of time do not have to be concerned about profits being retained (or "appropriated") by employees or managers.
A. True
B. False
Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources.
A. True
B. False
Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations.
A. True
B. False
Strategy maps help employees to see how their jobs are related to the overall objectives of the organization, but they do not help in understanding how an organization can convert its assets into tangible outcomes.
A. True
B. False
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
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.
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.
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.
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.
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.
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.
C. Market share growth. x
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.
Which of the following is NOT a disadvantage of licensing?
A. Little control over the marketing of the products
B. Licensees may develop a competitive product after the license expires
C. Decreased potential returns
D. The high costs of establishing manufacturing facilities
Corporations with multiple foreign operations that act very independently of one another are following a multi-domestic strategy.
A. True
B. False
Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.
A. True
B. False
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
Because the Internet lowers barriers to entry in most industries, it ________.
A. Decreases the threat of new entrants
B. Increases the threat of new entrants
C. Makes it easier to build customer loyalty
D. Increases supplier power
6. Which of the following is NOT an entry barrier to an industry?
A. Expected competitor retaliation
B. Economies of scale
C. Customer product loyalty
D. Bargaining power of suppliers
Organizational goals and objectives should be vague in order to allow for changes in strategy.
A. True
B. False
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
5. An industry is defined as:
A. A group of firms producing the same item.
B. Firms producing items that sell through the same distribution channels.
C. Firms that have the same seven digit standard industrial code.
D. A group of firms producing products that are close substitutes.
The bargaining power of suppliers is enhanced under the following market condition:
A. No threat of forward integration
B. Low differentiation of the supplier products
C. Greater availability of substitute products
D. Dominance by a few suppliers
Industries characterized by high economies of scale typically attract fewer new entrants.
A. True
B. False
10. Upper limits on the prices a firm can charge are impacted by:
A. Expected retaliation from competitors.
B. The cost of substitute products.
C. Variable costs of production.
D. Customers' high switching costs
If you believed in a pure five forces model of above-average returns, which of the following things is LEAST important?
Industry analysis
Competitor analysis
Analysis of general environment
Analysis of resources, capabilities, and core competencies
All are equally important
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
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.
Some excellent examples of mission statements are: "To be the happiest place on Earth" (Disney) and "restoring patients to full life" (Medtronic)
A. True
B. False
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
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statement is most likely to be true?
The cost of the marble will be expensive because of the bargaining power of the supplier.
The cost of the marble will be moderate because of the bargaining power of the buyer,
The cost of the marble will be moderate because of economies of scale.
The cost of the marble will be expensive because of the high
Larger numbers of women entering the work force since the early 1970s is an example of ______.
A. Demographic changes
B. Political and legal environmental changes
C. Sociocultural changes
D. Technological developments
Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers.
A. True
B. False
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.
34. 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.
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.
Corporate governance involves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest.
True
False
Executive compensation, ownership concentration, and the matrix organizational structure are all examples of governance mechanisms.
True
False
The separation between owners and managers creates the potential for owners and managers to have conflicting interests.
True
False
The primary role of the board of directors is to monitor and control top-level executives to protect owners' interests
True
False
Stock options attempt to align managers' and owners' interests by tying managerial pay and firm performance together.
True
False
To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business-level strategy
True
False
Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.
True
False
The functional structure is most appropriate for larger firms implementing a strategy that includes high levels of diversification
True
False
The finance and R&D functions are emphasized in the differentiation strategy's functional structure.
True
False
Internal competition for corporate resources is effective for companies with an unrelated diversification strategy, but dysfunctional for companies with a related strategy
True
False
A primary objective of corporate governance is to:
A. Determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits.
B. Ensure that the interests of top-level managers are aligned with the interests of shareholders.
C. Lobby legislators to pass laws that are aligned with the organization's interests.
D.resolve conflicts among corporate employees
77. The separation between firm ownership and management creates a(n) relationship.
A. governance
B. control
C. agency
D. dependent
Firm size and executive compensation are:
A. Positively related
B. Negatively related
C. neutral
D. both
In contrast to managers' desires, shareholders usually prefer that free cash flows be
A. Used to diversify the firm.
B. Returned to them as dividends.
C. Used to reduce corporate debt.
D. re-invested in additional corporate assets.
108. Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT
A. bonuses.
B. long-term incentives such as stock options.
C. salary.
D. Penalties for inadequate firm performance.
Coors' position as the most profitable brewer (per barrel) in 1977, was based primarily on its differentiation and mystique.
A. True
B. False
Coors' annual report for 1985 states that: "Rarely in Adolph Coors Company's 113-year history has there been a year with as many success stories as 1985." Which of the following facts would not support that statement?
The price of the stock at the end of 1985 was $21.25
Was Coors successful from 1977 to 1985? Why?
A. yes
B. No, it's per barrel net income had deteriorated dramatically against that of other industry players
Suppose that you are an analyst reviewing the Coors business in 1977. Which of the following would you identify as a bigger risk to Coors' performance?
Dependance on insufficient total production capacity by all players in the west region
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