Exam 2 Multiple Choice

Question 1

What is the narrow view of corporate governance?

Answer 1

The relationship between capital providers and top management to maximize shareholder wealth

Question 2

What is the broader view of corporate governance?

Answer 2

consideres various constituencies focusing on stakeholder wealth

Question 3

How has the role of CEO Changed to improve governance

Answer 3

grater separation between roles of CEO and board chair for better board atonomy

Question 4

What is the role of a corporate board in governance?

Answer 4

To guide strategy, oversee management, and maintain a balanced structure with insider and outsider members.

Question 5

Duty of Care in governance is what?

Answer 5

Acting prudently in decision-making

Question 6

Duty of Loyalty in governance is what?

Answer 6

Prioritizing organization’s interest

Question 7

Duty of Obedience in governance is what?

Answer 7

Upholding orgs mission

Question 8

Why is CEO-board power alignment important

Answer 8

It ensures that the CEO’s decisions align with shareholder interests and corporate strategy.

Question 9

How does effective corporate governance impact strategic management?

Answer 9

It allows CEOs to implement strategies aligned with corporate resources and organizational strengths, fostering competitive advantage.

Question 10

What is the main goal of restructuring and divestment
A) Enhance customer loyalty
B) Refocus on core activities
C) Expand employee benefits
D) Reduce market competition

Answer 10

B) Refocus on core activities

Question 11

What is the main goal of restructuring and divestment
A) Enhance customer loyalty
B) Refocus on core activities
C) Expand employee benefits
D) Reduce market competition

Answer 11

B) Refocus on core activities

Question 12

Vertical integration involves expanding operations to control which of the following?
A) Supply chain or distribution stages
B) Marketing and branding activities
C) Employee training programs
D) Customer service operations

Answer 12

A) Supply chain or distribution stages

Question 13

Economies of scope are achieved by:
A) Investing heavily in technology
B) Sharing resources across units
C) Increasing market competition
D) Reducing employee turnover

Answer 13

B) Sharing resources across units

Question 14

What is corporate strategy primarily concerned with?’
A) Maximizing shareholder returns
B) Creating value through multi-market coordination
C) Increasing brand visibility
D) Optimizing tax benefits

Answer 14

B) Creating value through multi-market coordination

Question 15

Which of the following is a limitation of the BCG Growth-Share Matrix?
A) Assumes markets change unpredictably
B) Emphasizes execution over planning
C) Assumes slow, predictable market changes
D) Focuses on quality rather than profitability

Answer 15

C) Assumes slow, predictable market changes

Question 16

In Collis & Montgomery’s framework, what role do “Resources” play?
A) They provide a unique competitive advantage.
B) They represent the company’s value statement.
C) They determine industry barriers.
D) They solely impact financial growth.

Answer 16

A) They provide a unique competitive advantage.

Question 17

What is the main purpose of the Vision element in Collis & Montgomery’s Corporate Triangle Framework?
A) To set short-term goals for the organization
B) To motivate employees by providing a sense of purpose
C) To allocate resources efficiently
D) To define the competitive strategies of each business unit

Answer 17

B) To motivate employees by providing a sense of purpose

Question 18

What are the control mechanisms

Answer 18

Outcome and behavior control

Question 19

Outcome control

Answer 19

Focus on results, suitable for stable industries.

Question 20

What is behavior control

Answer 20

Focus on actions, suitable for fast-paced industries

Question 21

What is retrenchment

Answer 21

reduction of costs or spending due to economic difficulty

Question 22

What are fill in the blanks

Answer 22

strategies that are designed to exist in current market with existing core competencies

Question 23

What are white spaces

Answer 23

the strategy of use existing core competencies to explore new markets

Question 24

What is permier plus 10

Answer 24

the competencies do we need to protect our place in market

Question 25

What are mega opportunites

Answer 25

What will it be like in 30 years

Question 26

Why do companies diversify

Answer 26

• company wants more revenue
• market expansion
• risk management
• optimizing resources
• competitive advantage
• adaptation to market

Question 27

What is business unit strategy

Answer 27

Targets competitive advantage within individual units.

Question 28

Give an example of corporate strategy v.s. business unit strategy

Answer 28

general electric, managing multiple businesses but setting distinct strategies for each

Question 29

What are the 3 tests for diversification success?

Answer 29

Attractiveness test, Cost-of-entry test, better-off test

Question 30

What is the attractiveness test

Answer 30

The industry must be inherently attractive or have the potential to become so.

Question 31

Cost of entry test

Answer 31

Entry costs must not consume future profits.

Question 32

Better off tests

Answer 32

The new unit must benefit from being part of the corporation, or vice versa.
EX: Philip Morris’s acquisition of Seven-Up failed the Better-Off Test as it couldn’t add value in an already competitive industry.

Question 33

What are the 4 corporate strategy concepts?

Answer 33

Portfolio management
restructuring
transferring skills
sharing activites

Question 34

What is portfolio management

Answer 34

Buying sound companies and managing them with autonomy
ITT used this approach, though it ultimately led to inefficiencies and divestments.
EX: ITT used this approach, though it ultimately led to inefficiencies and divestments.

Question 35

What is restructuring

Answer 35

Acquiring underperforming companies and transforming them for profitability.
EX: Hanson Trust restructured Ever Ready Batteries by focusing on cost-cutting.

Question 36

Transferring skills

Answer 36

Leveraging expertise from one unit to improve another.
Example: 3M transferring expertise in adhesives across different product lines.

Question 37

What is sharing activites

Answer 37

Using shared resources like R&D or logistics for cost-saving.
Example: Procter & Gamble uses a unified sales force for different product categories.