385 Final

Question 1

ownership

Answer 1

basis of the modern corporation

Question 2

managrial control

Answer 2

modern public corporation form leads to efficient specialization of tasks

Question 3

agency relationships

Answer 3

shareholders (owners) hire managers (decision makers) which creates an agency relationship

Question 4

product diversification as agency problem

Answer 4

increased size and relationship of size to managerial compnsation

Question 5

agency costs

Answer 5

sum of incentive costs, monitoring costs, enforcement costs, and individual financial losses

Question 6

Governance mechanisms

Answer 6

principals may engage in monitoring behavior

boards of directors have fiduciary duty to shareholders

Question 7

ownership concentration

Answer 7

relative amounts of stock owned by individual shareholders of institutional investors

Question 8

board of directors

Answer 8

individuals responsible for representing a firm’s owners by monitoring top level managers

Question 9

enhancing efectiveness of board of directors

Answer 9

more diversity
stronger internal management
more formal processes to evaluate performance

Question 10

executive compensation

Answer 10

use of salary bonuses and longterm incentives to align managers and stakeholders interests

Question 11

market for corporate control

Answer 11

lacks precision of internal governance mechanisms

Question 12

managerial defense tactics

Answer 12

increase the cost of mounting a takeover

Question 13

organizational structure

Answer 13

specifies the formal reporting relationships, procedures, controls and authority and decision making process

Question 14

organizational control

Answer 14

guides the use of strategy

Question 15

strategic controls

Answer 15

what the firm might do and what the firm can do

Question 16

financial controls

Answer 16

accounting based measures (ROI and ROA) and market based measure (EVA)

Question 17

functional structure

Answer 17

A functional organization is a common type of organizational structure in which the organization is divided into smaller groups based on specialized functional areas, such as IT, finance, or marketing

Question 18

simple structure

Answer 18

Simple structure is a basic organizational design structure with low departmentalization, little work specialization, wide spans of control, centralized authority (typically the owner has most of the power) and little formalization or rules that govern operation.

Question 19

multidivisional structure

Answer 19

In the multidivisional structure, each division typically contains only a partial set of value chain activities.

Question 20

strategic leadership

Answer 20

multi-functional work involving working through others

Question 21

role of top level managers

Answer 21

often use discretion when making strategic decisions and implementing strategies

Question 22

top management teams

Answer 22

composed of the key managers who are responsible for selecting and implementing the firm’s strategies

Question 23

managerial succession

Answer 23

organizations select managers and strategic leaders from internal and external managerial labor markets

Question 24

organizational culture

Answer 24

complex set of ideologies, symbols and core values shared through the firm that influences the way business is conducted

Question 25

changing a firms organizational culture is more important than maintaining it T or F

Answer 25

T