Final

Question 1

Portfolio techniques attempt to help managers “balance” the flow of cash resources among their various businesses while also identifying their basic strategic purpose within the overall portfolio. Managers using the Boston Consulting Group (BCG) matrix plotted each of the company’s businesses according to market growth rate and relative competitive position. How is the market growth rate defined?

Utilizing the BCG Growth-Share Matrix, when a multi-business entity is in a rapidly growing market while maintaining a large market share, this is considered to be which of the following?

BCG Growth-Matrix defines a cash cow as businesses with a high market share in a low-growth market or industry. Why are they defined as such?

Answer 1

The projected rate of growth for the market being served by a particular business.

Star

Mature market with

Strong competitive positions, minimal reinvestment requirements and generally generate cash in excess of their needs. Don’t have to add investment.

Question 2

Utilizing the BCG Growth-Share Matrix, when a business whose high growth rate give them considerable appeal but whose low market share makes their profit potential uncertain is best defined as which of the following dimensions?

BCG’s latest matrix offering utilizes the idea that it was the nature of competitive advantage in an industry that determined the strategies available to a company’s business, which in turn determined the structure of the industry. Which of BCG’s strategic environments matrix applies to the pharmaceutical industry?

Although the portfolio approach provides simplified priorities, simple prescriptions and help convey large amounts of information, there are limitations. Which of the following are limitations of the portfolio approach?

Answer 2

Problem Child

Specialization

• It does not address how value is being created across business units- It needs to be self sufficienct and ignored capital raised in capital markets
• It typically failed to compare the competitive advantage a business received from being owned by a particular company with the costs of owning it

Question 3

When the synergy approach is conceptualized, leveraging core competencies is essential for establishing a competitive advantage. Various elements are critical in meaningful shared opportunities. Which of the following represent such shared elements?

When assessing firms core competencies, what should be considered?

The most compelling reason companies should diversify can be found in situations where:

Answer 3

Shared opportunities must be a significant portion of value chain in the business involved and Business involved must truly have shared needs, (need for the same activity) or there is no basis for synergy in the first place.

• Each core competency should provide a relevant competitive advantage to the intended businesses
• Businesses in the portfolio should be related in ways that make the company’s core competencies beneficial
• Any combination of competencies must be unique or difficult to recreate

key value-building skills – can be leveraged with other products or into markets that are not a part of where they were created.

Question 4

Which is true in regards to the parenting opportunities framework?

Short-term objectives are measurable outcomes achievable or intended to be achieved in one year or less. How can short-term objectives help implement strategy?

What are some qualities of effective short-term objectives?

Answer 4

• The parenting framework perspective sees multi-business companies as creating value by influencing—or parenting—their businesses
• The best parent companies create more value than any of their rivals do or would if they owned the same businesses
• To add value, a parent must improve its businesses

Operationalize long term objectives, helps raise issues and potential conflicts, assist strategy of limitation.

Priority, better when stated, link between short and long term should resemble cascades.

Question 5

The key routine activities that must be undertaken in each functional area – marketing, finance, operations and HR – to provide support for the business’s products and services is best defined as:

What is the difference between business strategies and functional tactics?

When a firm acquires an activity, service, or product necessary to provide a company’s products or services from outside the people or operations controlled by that acquiring company is best defined as:

Answer 5

Functional tactics.

• Functional tactics are more specific than business strategies.
• Functional tactics identify activities to be undertaken now or in the immediate future.
• Functional tactics involves different people who participate in strategy development at the functional and business levels

Outsourcing.

Question 6

When would a firm desire to enact an outsourcing strategy?

Policies communicate guidelines to decisions. They are designed to control decisions while defining allowable discretion within which operational personnel can execute business activities. In which ways is this accomplished?

Company shareholders typically believe that the goal of a bonus compensation plan is to motivate executives and key employees to achieve maximization of shareholder wealth. In which ways can this be accomplished?

Answer 6

• The firm’s business strategy activities are considered to be cost-leadership.
• Firm determines that activities in the value chain are deemed to be non-valuable to which a consumer will not pay for the activity.
• Differentiation
• Policies establish indirect control over independent action
• Policies promote uniform handling of similar activities
• Policies reduce uncertainty in repetitive and day-to-day decision making

Stock options, Golden Parachutes, Cash bonuses

Question 7

A bonus plan that is designed to provide benefits of direct executive stock ownership that prevents an executive from selling the shares for a specified time is called?

When contemplating a bonus structure, what should be considered?

In the smallest business enterprise, a simple structure usually prevails. Which best describes a simple organizational structure?

Answer 7

Restricted stock.

Matching bonus plans to corporate goals.

Where there is an owner and a few employees and where the arrangement of tasks, responsibilities, and communication is highly informal and accomplished through direct supervision.

Question 8

What are some benefits of a simple organizational structure?

ABC Company has 15 to 25 people, to which different individuals focus on different functions within the business to become better organized and efficient and to achieve control and coordination. What type of organizational structure most resembles this type of ideal?

When a firm diversifies its products/services and covers a broad geographic area, a functional structure rapidly becomes inadequate. What type of structure should be perused to handle such complexities?

Answer 8

• The structure maximizes the owner’s control.
• It allows a rapid response to product/market shifts.
• It allows the ability to accommodate unique customer demands without major coordination difficulties.

Functional organizational structure

Divisional

Question 9

Berkshire Hathaway owns a wide variety of unrelated businesses in full or in part. Essentially, at the corporate level, it provides financial support and manages each of these businesses or divisions through financial goals and annual review of performance, investment needs and so forth, but has very little direct managerial involvement. The corporate office acts simply as which of the following?

Which of the following are efforts to improve the traditional organizational structure?

ABC Company determined that their payroll department has incurred substantial costs to which can be mitigated by contracting with a payroll company. A firm can enhance its competitive advantage by doing what with those activities?

Answer 9

Holding

Downsize and self manage, - Redefine the role of corporate headquarters from control to support and coordination

Outsource

Question 10

Dell uses outsourced manufactures and assemblers to provide parts and to assemble its computers. It also uses outsourced customer service providers in different parts of the world to provide most of its customer service and support activities. Because Dell utilizes multiple suppliers to construct their PCs, what type of organization does Dell have?

FedEx planes carry USPS next-day letters and USPS delivers FedEx ground packages – all to which allows them to challenge their common rival, UPS. As neither has an ownership interest, this is an example of which of the following?

Leaders help their company embrace change by setting forth a clear sense of where they want to lead the company and what results they expect to achieve. They do this by concentrating simultaneously and very clearly on vision and performance issues. This is an example of what type of intent?

Answer 10

Modular

Strategic Alliance

Strategic

Question 11

An articulation of a simple criterion or characterization of what the leader sees the company must become to establish and sustain global leadership refers to as what?

What should a leader do to help build an organization?

When assumptions become shared assumptions through internalization among an organization’s individual members, those shared internalized beliefs and values shape the content and account for the strength of which of the following?

Answer 11

Leaders Vision

Education and leadership development, perseverance, principles

Organizational Culture

Question 12

It is critical to recognize that the culture of an organization and particularly the link between the leader and the cultures’ very nature is directly tied to the behavior, actions, decisions and norms that a leader personifies. What type of leadership standards plays a role in this situation?

When a firm attempts to shape the organizational culture, which of the following should be considered?

What should be done to manage the strategy-culture relationship?

Answer 12

ethics

• High motivated sense of commitment, rewards and structures, accept risk and cope with complexity.
• Link to mission
• Maximize synergy
• Manage around the culture

Question 13

Leaders should have the competencies and the ability to do which of the following?

The required competencies of business leaders should have which of the following?

Which of the following are sources of power and influence leaders have or use?

Answer 13

• Ability to build confidence and enthusiasm, cooperate, deliver results, form networks, influence others, and use information
• Business literacy, creativity, cross-cultural effect, empathy, flexibility, proactivity, problem solving, relation building, teamwork, vision

Organizational, Punitive, Peer influence, referrent influence, information power, reward power

Question 14

Strategic controls are necessary to steer the firm through environmental and a firm’s internal situations. They must provide the basis for adapting the firm’s strategic actions and directions in response to such changes. Which of the following are basic types of strategic controls?

The systematic recognition and analysis of assumptions upon which a strategic plan is based, in order to determine if those assumptions remain valid in changing circumstances in light of new information, pertains to which strategic control?

Which is true about establishing strategic control?

Answer 14

• Premise control
• Strategic Surveillance
• Special Alert Control
• Implementation Control

Premise control

Concerned with tracing a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments. Steering control.

Question 15

ABC Company has designed a system that monitors a broad range of events inside and outside the firm that may affect the course of its strategy. This type of strategic control is known as what?

Kellogg Foods chose to cancel Michael Phelps contract with their cereals due to the sudden release of a photo of Michael smoking marijuana. This sudden trigger and intense reassessment of the firm’s strategy is an example of which type of strategic control?

As firms continually evolve, assessments on whether the overall strategy should be changed in light of the results associated with the incremental actions that occur. What type of strategic control does this represent?

Answer 15

Strategic Surveillance

Special Alert

Implementation

Question 16

Which are two basic types of implementation controls?

Which is true about the balance scorecard?

The balance scorecard suggests that one views the organization from four perspectives and to develop metrics, collect data, and analyze the data accordingly. Which of the following are perspectives that need to be considered?

Answer 16

Monitoring strategic thrusts or projects and milestone reviews.

Management system that enables companies to Clarify strategies and give feedback and go into action.

how well firm is creating value, core competencies, satisfied with firms customers.

Question 17

Which is accurate about the use of a balance scorecard?

What is the main difference between invention and innovation?

Apple’s iPod, iPhone and then iPad were three successive innovations. Such innovations is referred to as

Answer 17

Internal processes and external outcomes, TQM, Shareholders interest in return on capital.

• Invention is the creation of new products or processes through the development of new knowledge or from new combinations of existing knowledge
• Innovation is the initial commercialization of invention by producing and selling a new product, service, or process

Product Innovation

Question 18

When companies seek to increase the payoff from innovation investments by making simple changes or adjustments in existing products, services or processes is referred to as:

When a firm seeks to always find slight improvements or refinements in a company’s products so lower costs can be achieved, higher quality and speed can be recognized or more rapid response to customer can be accomplished is an example of:

Incremental innovation via continuous improvement programs is viewed by most proponents as virtually a new organizational culture and way of thinking. Which of the following elements lead to meaningful incremental innovation?

Answer 18

Incremental

Continuous Improvement

• Define quality and customer value
• Develop a customer orientation
• Focus on the company’s business processes

Question 19

Netflix’s use of competitor Amazon.com’s cloud capacity as its largest customer to stream movies, which caused the demise of or significantly reduced key industry participants is an example of:

When an individual has high management skills and high creativity/innovativeness is considered to be:

Growth-oriented business entrepreneurs are able to achieve success from effectively managing three elements central to the entrepreneurial process in creating and sustaining new ventures. Which of the following are elements of central to the entrepreneurial process?

Answer 19

Breakthrough

Entrepreneur

• Vision of a Profitable Opportunity
• Entrepreneurial Teams
• Available Resources

Question 20

A vital ingredient for any business venture is to obtain capital necessary to acquire equipment, facilities, people and capabilities to pursue the targeted opportunity. New ventures do this in which of the following ways?

Debt financing is generally obtained from a commercial bank to pay for capital purchases. Equity financing is defined as

Equity financing is usually obtained from which of the following sources?

Answer 20

Debt Financing and Equity Financing

provides capital to the venture in exchange for an ownership position

friendly sources, informal venture investors, or professional venture capitalists, Angel investors