Practice test 2 questions

Question 1

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 these.

Answer 1

D. All of these

Question 2

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.

Answer 2

C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions.

Question 3

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

Answer 3

D. policies that protect the nation’s domestic competitors.

Question 4

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

Answer 4

C. strong; strong; high

Question 5

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.

Answer 5

C. more likely to design strategies and structures that allow them to successfully compete abroad.

Question 6

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

Answer 6

C. tax and antitrust legislation that protect the dominant players in the industry.

Question 7

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.

Answer 7

A. fewer social and political risks than domestic operations.

Question 8

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.

Answer 8

C. extending the life cycle of the product of service.

Question 9

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.

Answer 9

B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities.

Question 10

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.

Answer 10

B. economies of scale

Question 11

Many U.S. multinational companies set up maquiladora operations south of the U.S.-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.

Answer 11

D. to take advantage of the low cost of labor.

Question 12

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.

Answer 12

C. lower profits, because foreign profits will be reduced when measured in dollars.

Question 13

__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.

A. Offshoring
B. A global strategy
C. Outsourcing
D. A transnational strategy

Answer 13

C. Outsourcing

Question 14

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

Answer 14

D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers.

Question 15

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

Answer 15

B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects.

Question 16

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

Answer 16

A. international

Question 17

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

Answer 17

B. Multidomestic

Question 18

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.

Answer 18

A. upstream.

Question 19

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

Answer 19

C. upstream; global

Question 20

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.

Answer 20

D. Firms in industries that have much value added in research and design or manufacturing.

Question 21

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 tradeoff 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.

Answer 21

A. customers’ needs, interests, and tastes are becoming increasingly homogenized or similar.

Question 22

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

Answer 22

D. standardized; few

Question 23

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.

Answer 23

C. that a global marketing effort can sometimes be successful.

Question 24

As in the case of Siebel Systems (now part of Oracle), 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.

Answer 24

B. the creation of a worldwide network to achieve consistent service regardless of location.

Question 25

All of the following are risks associated with a global strategy EXCEPT

A. a firm with only one manufacturing location must export its product—some 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.

Answer 25

D. the pressures for local adaptation may elevate the firm’s cost structure.

Question 26

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.

Answer 26

B. the ability to locate activities in optimal locations.

Question 27

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.

Answer 27

C. decreased shipping and transportation costs inherent in local production.

Question 28

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.

Answer 28

C. single locations may lead to higher tariffs and transportation costs.

Question 29

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

Answer 29

C. transnational

Question 30

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
B. transnational
C. international
D. multidomestic

Answer 30

B. transnational

Question 31

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.

Answer 31

C. Unique managerial challenges in fostering knowledge transfer.

Question 32

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.

Answer 32

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.

Question 33

According to studies by Rugman and Verbeke, approximately how many of the world’s largest 500 firms are global, that is, they have at least 20% of their total revenues each in North America, Asia, and Europe?

A. 9
B. 59
C. 79
D. 159

Answer 33

A. 9

Question 34

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

Answer 34

B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary

Question 35

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.

Answer 35

C. consider implementing a low risk/low control strategy such as exporting.

Question 36

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.

Answer 36

D. exporting

Question 37

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.

Answer 37

C. royalties.

Question 38

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

Answer 38

A. a franchise contract is more specific and usually longer in duration.

Question 39

__________ 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

Answer 39

B. Joint ventures; strategic alliances

Question 40

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

Answer 40

C. wholly owned subsidiary

Question 41

__________ 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

Answer 41

D. Wholly owned subsidiaries

Question 42

In the opening case, iSold It, a firm that helped others sell products on eBay, went from one of the fastest growing franchise businesses to a firm that saw a number of its franchises close and declining sales in a matter of months. What was a major challenge iSold It faced that led to these problems?

A. It did not have the financial resources to maintain the rapidly growing firm.
B. The company lacked knowledgeable executives in key positions.
C. Its concept was rapidly imitated by others.
D. It had weak operational systems and could not maintain control of the growing network of stores

Answer 42

C. Its concept was rapidly imitated by others.

Question 43

According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What are they?

A. good ideas, a team of investors, and a business plan
B. a viable opportunity, available resources, and a qualified and motivated founding team
C. an opportunity, a marketing plan, and office space
D. management, marketing, and money

Answer 43

B. a viable opportunity, available resources, and a qualified and motivated founding team

Question 44

Which of the following is a common source of new business opportunities?

A. current or past work experiences
B. suggestions by family or friends
C. chance event
D. all of these

Answer 44

D. all of these

Question 45

) 36 The process of identifying, selecting, and developing new venture opportunities is known as

A. innovativeness.
B. bootstrapping.
C. opportunity recognition.
D. brainstorming

Answer 45

C. opportunity recognition.

Question 46

Generally speaking, the opportunity recognition process consists of two phases of activity. They are

A. Global Search and Recycling Profits.
B. Value Creation and Affordability.
C. Discovery and Evaluation.
D. none of these.

Answer 46

C. Discovery and Evaluation.

Question 47

Which of the following is NOT one of the characteristics of an entrepreneurial opportunity?

A. attractive
B. affordable
C. achievable
D. value creating

Answer 47

B. affordable

Question 48

When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be

A. value creating.
B. affordable.
C. achievable.
D. durable.

Answer 48

D. durable.

Question 49

Which of the following terms is used to refer to opportunities that are practical and physically possible?

A. durable
B. valuable
C. achievable – practical and physically possible
D. sustainable

Answer 49

C. achievable – practical and physically possible

Question 50

Financing for entrepreneurial start-ups includes which of the following?

A. investments by family and friends
B. personal savings
C. private investors
D. all of these

Answer 50

D. all of these

Question 51

Which of the following sources of entrepreneurial financing are available to ventures that have already started to conduct business and generate sales?

A. bank financing
B. venture capital
C. public financing
D. all of these

Answer 51

D. all of these

Question 52

The majority of entrepreneurial start-ups are financed with

A. bank financing.
B. public financing (e.g., SBA loans).
C. venture-capital financing.
D. personal savings and the contributions of family and friends.

Answer 52

D. personal savings and the contributions of family and friends.

Question 53

Private individuals who provide seed capital to young ventures are known as

A. angels.
B. gazelles.
C. cash cows.
D. rising stars

Answer 53

A. angels.

Question 54

All of the following statements about venture capital are true EXCEPT

A. entrepreneurs raise venture capital by selling shares of ownership in their business.
B. venture capital is a form of public equity financing.
C. venture capital is used to finance rapid growth or large capital expenditures.
D. venture capital groups can often provide helpful management advice.

Answer 54

B. venture capital is a form of public equity financing.

Question 55

Based on statistics reported in the text, which of the following statements is FALSE?

A. Firms that obtain venture-capital funding receive an average of over $1 million each.
B. Total investment in start-up firms averages about $80,000 in the firm’s first year.
C. Among the 100 fastest-growing new businesses identified by Entrepreneur magazine, 61 percent obtained start-up funding from personal savings.
D. Ninety percent of the companies financed with venture capital funds fail.

Answer 55

D. Ninety percent of the companies financed with venture capital funds fail.

Question 56

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by

A. established corporations.
B. bootstrappers.
C. “lone wolf” entrepreneurs.
D. all of these.

Answer 56

C. “lone wolf” entrepreneurs.

Question 57

Which of the following types of resources contribute to the success of entrepreneurial firms?

A. social capital
B. financial resources
C. human resources
D. All of these contribute to the success of entrepreneurial firms.

Answer 57

D. All of these contribute to the success of entrepreneurial firms.

Question 58

__________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and/or expand into new markets.

A. Strategic alliances
B. Bootstrappers
C. “Lone wolf” entrepreneurs
D. Research & development

Answer 58

A. Strategic alliances

Question 59

The U.S. Small Business Administration supports small business through all of the following EXCEPT

A. government contracting.
B. underwriting loans.
C. investing venture capital.
D. training and counseling.

Answer 59

C. investing venture capital.

Question 60

Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentioned by the text?

A. vision
B. dedication and drive
C. commitment to excellence
D. clarifying job responsibilities

Answer 60

D. clarifying job responsibilities

Question 61

Why is vision such an important element of entrepreneurial leadership?

A. Because the entrepreneur has to envision realities that do not yet exist.
B. Because a vision statement must be part of the documentation used to obtain venture financing.
C. Because organizations cannot function without a detailed and operational vision.
D. All of these

Answer 61

A. Because the entrepreneur has to envision realities that do not yet exist.

Question 62

Which of the following is NOT a common new entry strategy according to the text?

A. imitative new entry
B. adaptive new entry
C. proactive new entry
D. pioneering new entry

Answer 62

C. proactive new entry

Question 63

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as

A. imitative new entry.
B. adaptive new entry.
C. proactive new entry.
D. pioneering new entry.

Answer 63

A. imitative new entry.

Question 64

Which of the following is NOT a key element of a blue ocean strategy?

A. Pursue low cost and differentiation advantages simultaneously.
B. Make the competition irrelevant.
C. Highlight incremental improvements to capture market share.
D. Create new demand in uncharted territory.

Answer 64

C. Highlight incremental improvements to capture market share.

Question 65

Cirque du Soleil is an example of a firm that successfully enacted a “blue ocean” strategy. Which of the following is a feature of the strategy it enacted?

A. It developed its own musical scores for its circus performances.
B. It discontinued traditional parts of the circus, such as animal acts.
C. It researched customers to learn what circus features are more in demand.
D. All of these.

Answer 65

D. All of these.

Question 66

“Doing more with less”, by holding down costs or making more efficient use of resources is one of the ways entrepreneurs achieve success. This is an example of how entrepreneurs use

A. an imitative strategy.
B. a low-cost leader strategy.
C. a differentiation strategy.
D. a combination strategy.

Answer 66

B. a low-cost leader strategy.

Question 67

Entrepreneurial firms that pursue a low-cost leadership strategy use which of the following to achieve lower costs?

A. cost-saving technology such as the Internet
B. simple organizational structures
C. rapid decision making
D. all of these

Answer 67

D. all of these

Question 68

When an industry is mature, a __________ strategy is considered to be one of the most effective approaches for a new entrant.

A. focus
B. differentiation
C. overall low-cost
D. small business

Answer 68

A. focus

Question 69

According to the text, all of the following might make it difficult for entrepreneurial firms to effectively pursue a strategy of differentiation EXCEPT

A. incumbent firms are constantly seeking opportunities to specialize in market niches.
B. differentiation strategies are often expensive to enact.
C. it may be difficult for a young firm to establish a strong brand identity.
D. implementing superior new technologies may be challenging for entrepreneurial firms.

Answer 69

A. incumbent firms are constantly seeking opportunities to specialize in market niches.

Question 70

Intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace is known as

A. competitive dynamics.
B. resource similarity.
C. threat of substitutes.
D. pioneering new entry.

Answer 70

A. competitive dynamics.

Question 71

Which of the following is NOT one of the reasons a company might launch new competitive actions?

A. to obtain first mover advantages
B. to improve market position
C. to capitalize on growing demand
D. to find new sources of raw materials

Answer 71

D. to find new sources of raw materials

Question 72

Netflix CEO Reed Hastings made this important observation about dealing with rivals:

A. “In a highly competitive marketplace, firms must be paranoid about the multitude of potential rivals.”
B. “You can afford to ignore rivals in small markets, but you can never ignore rivals in large markets, such as online video companies like YouTube.”
C. “There are tens and maybe hundreds of start-ups who think that they are going to eat Netflix’s lunch. The challenge for a management team is to figure out which are real threats and which aren’t.”
D. “Netflix’s position is so strong that I don’t worry about new entrants.”

Answer 72

C. “There are tens and maybe hundreds of start-ups who think that they are going to eat Netflix’s lunch. The challenge for a management team is to figure out which are real threats and which aren’t.”

Question 73

Aircraft makers Boeing and Airbus have a high degree of __________ because they make very similar products and have many buyers in common.

A. dynamic capabilities
B. market commonality
C. first mover advantages
D. equity funding

Answer 73

B. market commonality

Question 74

The Wall Street Journal and the New York Times have seen the intensity of their rivalry increase. One factor driving this is that the Wall Street Journal has moved from financial news reporting to general national and global news reporting and finally, to adding local New York news. The rivalry of these two news providers has increased due to

A. increased dynamic capabilities.
B. increased market commonality.
C. erosion of first mover advantages.
D. the choice of tactical over strategic actions

Answer 74

B. increased market commonality.

Question 75

Which of the following questions should a firm ask itself before responding to a competitive attack?

A. How serious is the impact of the attack?
B. What is our competitive intent—do we want to blunt the attack or enhance our competitive position with our response?
C. What resources do we have available for a response?
D. All of these.

Answer 75

D. All of these.

Question 76

Which of the below best describes the competitive tendencies of small firms?

A. Because they lack legitimacy in the marketplace, small firms tend to signal their competitive actions long before they launch those actions.
B. Small firms typically have more resources available as they undertake competitive attacks than do large firms.
C. Small firms are more nimble and can respond quickly to competitive attacks.
D. All of these.

Answer 76

C. Small firms are more nimble and can respond quickly to competitive attacks.

Question 77

Cirrus Aircraft, a leading manufacturer of small airplanes, sees a market opportunity and has decided to double its plant capacity over the next two years. What type of competitive action does this represent?

A. A tactical action because the move is an attempt to fill a gap in service.
B. A strategic action because such a large plant expansion will require a major commitment of resources.
C. A strategic action because the firm can easily reverse the action at any time, thus giving Cirrus more strategic flexibility.
D. A guerilla offensive because it is fast and will surprise its rivals.

Answer 77

B. A strategic action because such a large plant expansion will require a major commitment of resources.

Question 78

All of the following are examples of strategic actions a firm might take EXCEPT

A. acquire with competitors to reduce competition.
B. expand into neglected markets.
C. change product packaging.
D. tie up raw materials sources

Answer 78

C. change product packaging.

Question 79

The best example of a tactical action that a company might use in response to a competitive attack is to

A. acquire the competitor.
B. target the rival’s markets.
C. expand into new geographical areas.
D. offer price discounts and rebates.

Answer 79

D. offer price discounts and rebates.

Question 80

All of the below are factors that affect how a competitor will respond to a competitive attack EXCEPT

A. how dependent the competitor is on that industry or particular market segment.
B. the degree of market power and reputation of the company that initiated the attack.
C. the resources which are available for a firm to respond.
D. the stock market reaction to the initial competitive attack.

Answer 80

D. the stock market reaction to the initial competitive attack.

Question 81

Which of the following refers to a situation where a company has a high concentration of its business in a particular industry’s market?

A. competitor’s resources
B. market dependence
C. resource similarity
D. actor’s reputation

Answer 81

B. market dependence

Question 82

A firm is considering a large price cut on its leading product as a way to gain market share. One executive strongly disagrees with the price cut and states, “We are in the same marketplace as our rivals, and we do not have any competitive advantages in our cost structure. If we cut prices, our competitors will likely do the same. The end result is that we will all make less money.” These arguments are an example of

A. a strategy of forbearance.
B. a strategy of co-opetition.
C. a hardball strategy whereby competitive actions are not undertaken without a clear advantage.

Answer 82

A. a strategy of forbearance.

Question 83

The “traditional” approach to strategic control is sequential. Which of the following is not one of the steps in the sequence?

A. Action plans are submitted by lower level managers.
B. Performance is measured against the predetermined goal.
C. Strategies are implemented.
D. Strategies are formulated and top management sets goals.

Answer 83

A. Action plans are submitted by lower level managers.

Question 84

The primary drawback of “traditional” strategic control systems is

A. they are only appropriate when the environment is stable and simple.
B. goals and objectives cannot be measured with a high level of certainty.
C. they lead to complacency.
D. they lack the flexibility needed to adjust to changes in the environment.

Answer 84

D. they lack the flexibility needed to adjust to changes in the environment.

Question 85

For businesses facing complex and turbulent business environments

A. goals and objectives that are uncertain prevent opportunism.
B. traditional strategic controls are usually inappropriate.
C. complacency about predetermined milestones can prevent adaptability.
D. detailed plans are needed to maintain order

Answer 85

B. traditional strategic controls are usually inappropriate

Question 86

Contemporary approaches to strategic control rely primarily on

A. feedback controls.
B. single-loop learning.
C. double-loop learning.
D. comparative learning.

Answer 86

C. double-loop learning.

Question 87

Informational control systems ask

A. Is the organization “doing things right”?
B. Is the organization “doing the right things”?
C. Are rules and regulations being followed as information is processed?
D. Is the organization’s environment a necessary and sufficient condition for success?

Answer 87

B. Is the organization “doing the right things”?

Question 88

The benefits of continuous monitoring include

A. enhancing the organization’s ability to respond with speed and flexibility.
B. replacing the time-consuming process of organizational learning.
C. dramatically altering the organization’s response to its competitive environment.
D. all of these.

Answer 88

A. enhancing the organization’s ability to respond with speed and flexibility.

Question 89

Which of the following is NOT one of the characteristics of a contemporary control system?

A. It is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans.
B. It must focus on constantly changing information that is strategically important.
C. It circumvents the need for face-to-face meetings among superiors, subordinates, and peers.
D. It generates information that is important enough to demand regular and frequent attention.

Answer 89

C. It circumvents the need for face-to-face meetings among superiors, subordinates, and peers.

Question 90

Top managers at ABC Company meet every Friday to review daily operational reports and year-to-date data. This is an example of

A. behavioral control.
B. informational control.
C. strategy formulation.
D. strategy implementation

Answer 90

B. informational control.

Question 91

Complete the following sentence: “As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on __________ is dysfunctional.”

A. boundaries and constraints
B. culture and rewards
C. organizational loyalty
D. innovation and risk taking

Answer 91

A. boundaries and constraints

Question 92

All of the following are examples of how organizational culture exerts behavioral control EXCEPT

A. culture helps maintain control by creating behavioral norms.
B. culture generates unwritten standards of acceptable behavior.
C. culture encourages individual identification with the organization and its objectives.
D. culture sets explicit boundaries.

Answer 92

D. culture sets explicit boundaries.

Question 93

The late Sam Walton, founder of Walmart, used to give pep rallies at local Walmart stores. What purpose did this serve?
A. It was used to remind employees of Walmart’s rules and regulations.

B. It helped reinforce and sustain Walmart’s culture.
C. It demonstrated to employees the importance of articulating explicit goals and objectives.
D. It made Walmart’s reward system very explicit.

Answer 93

B. It helped reinforce and sustain Walmart’s culture.

Question 94

Which of the following is NOT one of the characteristics of reward and incentive systems?

A. They represent a poor means of influencing an organization’s culture.
B. They focus efforts on high-priority tasks.
C. They motivate high levels of individual and collective task performance.
D. They represent an effective control mechanism.

Answer 94

A. They represent a poor means of influencing an organization’s culture.

Question 95

Complete the following sentence: “Individual rationality __________ organizational rationality.”

A. is a good indicator of
B. will ensure
C. is often the opposite of
D. does not always guarantee

Answer 95

D. does not always guarantee

Question 96

When subcultures emerge that have shared values opposite from the dominant culture of an organization

A. organizational cohesiveness increases.
B. information is shared rather than hoarded.
C. individuals begin working at cross purposes.
D. individuals gain insights into overarching goals and objectives

Answer 96

C. individuals begin working at cross purposes

Question 97

All of the following are characteristics of effective reward and incentive systems EXCEPT

A. performance measures are clear and highly visible.
B. the structure is fixed to assure employees of consistency.
C. the compensation system is perceived as fair and equitable.
D. objectives are well understood, and broadly accepted.

Answer 97

B. the structure is fixed to assure employees of consistency.

Question 98

The causes of counterproductive behavior in organizations include

A. lack of a clear understanding of organizational goals and objectives.
B. motivated self-interest.
C. outright malfeasance.
D. all of these.

Answer 98

D. all of these.

Question 99

Effective boundaries and constraints

A. tend to inhibit efficiency and effectiveness.
B. distract employees who are trying to focus on organizational priorities.
C. minimize improper and unethical conduct.
D. tend to limit organizational growth.

Answer 99

C. minimize improper and unethical conduct.

Question 100

Effective short-term objectives have all of the following priorities EXCEPT

A. an emphasis on “do your best” goals.
B. being achievable yet challenging.
C. providing a specific time horizon for their attainment.
D. being specific and measurable

Answer 100

A. an emphasis on “do your best” goals.

Question 101

Which of the following statements about action plans is TRUE?

A. Action plans, though specific, should permit a degree of autonomy to managers and not be constrained by budgets.
B. Action plans must be specific so that managers will have a clear understanding of the resource requirements necessary to implement the plan.
C. Action plans should not be constrained by a time frame in order to allow for modification.
D. Although managers must be held accountable for implementing action plans, this accountability often erodes the managers’ motivation to implement the plan on a timely basis.

Answer 101

B. Action plans must be specific so that managers will have a clear understanding of the resource requirements necessary to implement the plan.

Question 102

Rules and regulations are examples of

A. implicit controls.
B. informational controls.
C. cultural norms.
D. boundaries and constraints.

Answer 102

D. boundaries and constraints.

Question 103

Cadbury Schweppes has a policy that all payments, no matter how unusual, are recorded in the company’s books. This rule is

A. overly cumbersome.
B. aimed at encouraging managers to make better budgetary decisions.
C. directed at protecting client confidentiality.
D. designed to minimize improper and unethical conduct.

Answer 103

D. designed to minimize improper and unethical conduct.

Question 104

Which of the following approaches to behavioral strategic control should be utilized least in an organization in which there is a great need for innovation and a high degree of autonomy?

A. culture
B. rewards
C. boundaries
D. all of these are equally important

Answer 104

C. boundaries

Question 105

Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by

A. posting written statements of the organization’s goals and objectives.
B. discouraging the formation of subcultures that isolate work groups.
C. designing effective reward systems.
D. encouraging employees to see themselves as free agents.

Answer 105

C. designing effective reward systems.

Question 106

Rule-based controls are most appropriate in organizations with all of the following characteristics EXCEPT

A. environments are stable and predictable.
B. employees are highly skilled and independent.
C. consistency in product and service.
D. the risk of malfeasance is extremely high.

Answer 106

B. employees are highly skilled and independent.

Question 107

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

A. software developer
B. stock brokerage firm
C. manufacturer of mass produced products
D. high tech research facility

Answer 107

C. manufacturer of mass produced products

Question 108

Most organizations with strong cultures and a sound system of rewards and incentives can eventually internalize boundaries rather than use explicit rules and regulations. Which of the following is not a technique for moving in that direction?

A. Hire people that identify with the organization’s dominant values.
B. Develop managerial role models.
C. Minimize training and indoctrination.
D. Align reward systems with organizational goals and objectives.

Answer 108

C. Minimize training and indoctrination.

Question 109

The primary participants in corporate governance are all of the following EXCEPT

A. the shareholders.
B. key stakeholders such as financial institutions.
C. the management (led by the chief executive officer).
D. the board of directors.

Answer 109

B. key stakeholders such as financial institutions.

Question 110

Intel’s exemplary corporate governance practices include all of the following EXCEPT

A. a mix of inside and outside directors.
B. all outside directors to assure objectivity in decision-making.
C. board presentations and access to employees.
D. formal evaluation of officers.

Answer 110

B. all outside directors to assure objectivity in decision-making.

Question 111

CEO duality refers to a situation in which

A. the CEO formulates and implements strategies.
B. the CEO serves as both the CEO and the chair of the board of directors.
C. the CEO is responsible for acting as CEO and serving on the compensation committee.
D. the CEO is responsible for acting as CEO and Chief Operating Officer (COO).

Answer 111

B. the CEO serves as both the CEO and the chair of the board of directors.

Question 112

External governance control mechanisms include all of the following EXCEPT

A. auditors.
B. analysts.
C. competitors.
D. the market for corporate control.

Answer 112

C. competitors.

Question 113

If the market value of a firm becomes less than its book value,

A. it becomes an attractive takeover target.
B. the firm will be delisted by the stock exchange.
C. the Securities and Exchange Commission will not allow it to declare dividends until the market value once again exceeds the book value.
D. the firm will be unable to service its debt.

Answer 113

A. it becomes an attractive takeover target.

Question 114

By takeover constraint, we mean

A. constraints placed by the firm on raiders who want to takeover the firm.
B. legal constraints that limit the ability of the raiders to acquire a firm.
C. provisions in the charter of a company that prevents it from attempting a takeover of other companies.
D. the risk of being acquired by a hostile raider.

Answer 114

D. the risk of being acquired by a hostile raider.

Question 115

It is generally argued that the takeover constraint

A. deters management from engaging in opportunistic behavior.
B. deters management from considering acquiring other companies.
C. deters management from declaring dividends.
D. deters management from increasing a firm’s level of borrowing.

Answer 115

A. deters management from engaging in opportunistic behavior.

Question 116

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors EXCEPT

A. the desire to get future auditing contracts from the company.
B. the desire to get consulting work from the company because most audit firms also do consulting work.
C. the fact that auditors are appointed by the firm.
D. the failure of U.S. audit firms to hire technically qualified professionals.

Answer 116

D. the failure of U.S. audit firms to hire technically qualified professionals.

Question 117

The reasons analyst recommendations are often more optimistic than warranted by an objective analysis of a firm’s prospects include all of the following EXCEPT

A. many analysts fail to grasp the gravity of the problems facing a company.
B. “sell” recommendations generate lower commissions than buy recommendations.
C. the firms for which analysts work may have lucrative investment banking relationships with the firm.
D. analysts are often pressured by their superiors to overlook negative information or tone down their criticisms of the firms they analyze.

Answer 117

B. “sell” recommendations generate lower commissions than buy recommendations.

Question 118

All of the following are types of information that a firm is required to disclose EXCEPT

A. quarterly and annual filings of financial information.
B. stock trading by insiders.
C. details of new products under development.
D. details of executive compensation packages

Answer 118

C. details of new products under development.

Question 119

In emerging economies and continental Europe, firms often can be characterized by all of the following EXCEPT

A. concentrated ownership.
B. low family ownership and control.
C. business group structures.
D. weak legal protection for minority shareholders

Answer 119

B. low family ownership and control.

Question 120

In principal-principal conflicts (conflicts between controlling shareholders and minority shareholders), the ownership (of equity) is

A. widely dispersed (5-20% is considered “concentrated ownership”).
B. controlled almost completely by management.
C. concentrated; often greater than 50% of equity is controlled by controlling shareholders.
D. often held by employee stock ownership programs.

Answer 120

C. concentrated; often greater than 50% of equity is controlled by controlling shareholders

Question 121

Conditions for principal-principal (PP) conflicts (conflicts between controlling shareholders and minority shareholders) to occur include all of the following EXCEPT

A. a dominant owner or group of owners who have interests that are distinct from minority shareholders.
B. legislation that protects the interests of minority shareholders.
C. a motivation for the controlling shareholders to exercise their dominant position to their advantage.
D. few formal (such as legislation or regulatory bodies) or informal constraints that discourage or prevent the controlling shareholders from exploiting their advantageous positions.

Answer 121

B. legislation that protects the interests of minority shareholders.

Question 122

Expropriation of minority shareholders means that

A. minority shareholders must sell their shares upon demand.
B. minority shareholders cannot own shares in foreign firms.
C. minority shareholders do not receive dividends.
D. minority shareholders are adversely affected by the actions of controlling shareholders.

Answer 122

D. minority shareholders are adversely affected by the actions of controlling shareholders.

Question 123

Generally speaking, discussions of the relationship between strategy and structure strongly imply that

A. strategy follows structure.
B. structure follows strategy.
C. strategy can effectively be formulated without considering structural elements.
D. structure typically has a very small influence on a firm’s strategy.

Answer 123

B. structure follows strategy.

Question 124

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a

A. divisional structure.
B. functional structure.
C. product-market structure.
D. geographic structure.

Answer 124

B. functional structure

Question 125

When an organization with a functional structure diversifies into related product-markets, it generally

A. maintains its functional structure.
B. develops a divisional structure.
C. develops a matrix structure.
D. develops a worldwide product-division structure

Answer 125

B. develops a divisional structure.

Question 126

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n)

A. divisional structure.
B. functional structure.
C. matrix structure.
D. international structure.

Answer 126

A. divisional structure.

Question 127

All of the following statements about simple organizational structures are true EXCEPT which?

A. Small firms with a narrow product-market scope will adopt such a structure.
B. Decision making authority is highly centralized.
C. There is little specialization of tasks.
D. Creativity and individualism are rare.

Answer 127

D. Creativity and individualism are rare.

Question 128

A simple structure is characterized by

A. high specialization and low centralization.
B. low specialization and high centralization.
C. low formality and low creativity.
D. high formality and low centralization.

Answer 128

B. low specialization and high centralization.

Question 129

Functional structures are usually found in organizations where there is

A. high volume production.
B. unrelated product lines or service offerings.
C. very little vertical integration.
D. a strong need to decentralize decision making.

Answer 129

A. high volume production.

Question 130

At ABC Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a

A. simple structure.
B. functional structure.
C. divisional structure.
D. matrix structure.

Answer 130

B. functional structure.

Question 131

Which of the following is an advantage of a functional type of organizational structure?

A. Decentralized decision-
making enhances an organization-wide perspective across functions.
B. It facilitates the development of general management talent.
C. Pooling of specialists enhances coordination and control.
D. It is easy to establish uniform performance standards.

Answer 131

C. Pooling of specialists enhances coordination and control.

Question 132

Which of the following is a disadvantage of a functional type of organizational structure?
A. Differences in functional orientation may impede communication and coordination.

B. Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas.
C. Decision making is centralized at the top of the organization.
D. Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths.

Answer 132

A. Differences in functional orientation may impede communication and coordination.

Question 133

A divisional structure

A. is organized around functional area departments.
B. typically improves the performance of firms pursuing a strategy of vertical integration.
C. facilitates the development of general managers.
D. enhances centralized decision making.

Answer 133

C. facilitates the development of general managers.

Question 134

Which of the following is an advantage of a divisional type of organizational structure?

A. Efficient use of managerial and technical talent.
B. An enhanced ability to respond quickly to changes in the external environment.
C. High degree of emphasis on long-term performance.
D. Uniformity in image and quality across divisions.

Answer 134

B. An enhanced ability to respond quickly to changes in the external environment.

Question 135

All of the following are disadvantages of a divisional type of organizational structure EXCEPT

A. it can be very expensive compared to a functional organizational structure.
B. there is a strong tendency for divisions to focus on short-term performance.
C. there can be dysfunctional competition among divisions.
D. there is separation of strategic and operating control

Answer 135

D. there is separation of strategic and operating control.

Question 136

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

A. Functional structure
B. Matrix structure
C. Strategic business unit structure
D. Holding company structure

Answer 136

C. Strategic business unit structure

Question 137

All of the following are advantages of a strategic business unit (SBU) type of organizational structure EXCEPT
A. divisions with similar products, markets, or technologies are formed into homogeneous groups that can achieve synergies.
B. divisional executives can respond quickly to market changes and opportunities.
C. planning and control by the corporate office is more manageable.
D. the corporate office is more removed from the individual divisions.

Answer 137

D. the corporate office is more removed from the individual divisions

Question 138

Important advantages of a holding company structure include

A. savings in personnel and overhead expenses associated with a small corporate office.
B. a high level of awareness at the corporate office of issues facing individual divisions.
C. a high level of control of division executives by executives at the corporate level.
D. gaining synergistic benefits across businesses.

Answer 138

A. savings in personnel and overhead expenses associated with a small corporate office.

Question 139

Strategic business unit (SBU) and holding company structures result from extensive 
A. diversification.
B. vertical integration.
C. international expansion.
D. organizational flattening

Answer 139

A. diversification.

Question 140

Complete the following sentence: “Strategic business unit (SBU) structures are best suited for corporations pursuing __________, whereas holding company structures are best suited for companies with __________ strategies.”

A. product-market diversification; international
B. international diversification; product-market
C. related diversification; unrelated diversification
D. unrelated diversification; related diversification

Answer 140

C. related diversification; unrelated diversification

Question 141

A matrix organizational structure is characterized by

A. dual reporting relationships.
B. a combination of functional and divisional organization structures.
C. efficient use of resources and expertise.
D. all of these.

Answer 141

D. all of these.

Question 142

Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of what type of organizational structure? 
A. divisional
B. matrix
C. holding company
D. functional

Answer 142

B. matrix

Question 143

Which of the following is considered to be an advantage of a matrix structure?

A. the layering of matrices
B. increased clarity in reporting relationships
C. increased responsiveness to the market
D. fewer power struggles and reduced conflict

Answer 143

C. increased responsiveness to the market

Question 144

If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is

A. worldwide functional.
B. worldwide product division.
C. worldwide matrix.
D. international division.

Answer 144

C. worldwide matrix.

Question 145

If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is

A. worldwide functional.
B. worldwide product division.
C. worldwide matrix.
D. international division.

Answer 145

B. worldwide product division.

Question 146

The relationship between strategy and structure can be best described as

A. strategy determines structure but structure does not determine strategy.
B. structure determines strategy but strategy does not determine structure.
C. strategy and structure influence each other.
D. a third force determines both strategy and structure.

Answer 146

C. strategy and structure influence each other.

Question 147

In firms with overall low cost strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 147

A. low; financial

Question 148

In firms with differentiation strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 148

D. high; behavioral

Question 149

In firms with related diversification strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 149

D. high; behavioral

Question 150

In firms with unrelated diversification strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 150

A. low; financial

Question 151

Which of the following is not a boundaryless organizational design?

A. virtual
B. modular
C. matrix
D. barrier-free

Answer 151

C. matrix

Question 152

Which of the following is NOT an advantage of teams?

A. Because teams interact so closely, coordination and integration becomes unnecessary.
B. Teams substitute peer-based control for hierarchical control of work.
C. Because of sharing, teams often develop more creative solutions.
D. Teams permit the absorption of administrative tasks previously performed by specialists.

Answer 152

A. Because teams interact so closely, coordination and integration becomes unnecessary. B

Question 153

According to the text, there are elements of team building that influence a team’s success. These include all of the following EXCEPT

A. work. Work should be relevant and meaningful to group members.
B. people bonding during the “heat of the battle.” Team members become more unified during a crisis.
C. titles. Titles are important to a team’s success.
D. teams taking care of their own. Team members look after each other’s best interest.

Answer 153

C. titles. Titles are important to a team’s success.

Question 154

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be
A. the combined technical skills of the members.
B. similarities in the way team members solve problems.
C. the way team members treat each other.
D. similarities in the age and experience of team members.

Answer 154

C. the way team members treat each other.

Question 155

Which of the following is NOT a disadvantage of the barrier-free form of organization?
A. Lack of strong leadership can lead to coordination problems.
B. Democratic process can be time-consuming and difficult to manage.
C. Additional integration issues result is a slower response to market changes.
D. If trust among employees is not sufficiently high, organizational performance may suffer.

Answer 155

C. Additional integration issues result is a slower response to market changes

Question 156

What type of organization is defined as “a central hub surrounded by networks of outside suppliers and specialists”?

A. matrix
B. virtual
C. modular
D. barrier-free

Answer 156

C. modular

Question 157

What is the name of the practice that many modular organizations use to grow?

A. operational effectiveness
B. outsourcing
C. strategic leveraging
D. strategic enabling

Answer 157

B. outsourcing

Question 158

What advantages does outsourcing provide an organization?
A. accessing best in class goods and services
B. enabling rapid expansion with relatively low capital investment
C. focusing scarce resources on core competencies
D. all of these

Answer 158

D. all of these

Question 159

Which of the following is NOT a strategic risk of outsourcing?

A. loss of critical skills
B. loss of cross-functional skills
C. loss of control over a supplier
D. loss of non-vital functions

Answer 159

D. loss of non-vital functions

Question 160

Nike is a company that makes use of the concept of “product expatriates.” Product expatriates are
A. managers from the home country sent abroad to oversee the marketing of a company’s products.
B. managers from suppliers who come to work at a company’s headquarters.
C. managers of the company sent abroad to work at the plants of its suppliers.
D. local nationals hired by the company in the countries from which it sources products.

Answer 160

C. managers of the company sent abroad to work at the plants of its suppliers.

Question 161

The phrase that best defines a virtual organization is

A. a dot.com company.
B. a type of modular structure.
C. an organization that uses information technology to integrate different functions.
D. a continually evolving network of independent companies.

Answer 161

D. a continually evolving network of independent companies.

Question 162

Lockheed Martin uses a coalition of three entities, its own company, academia, and government, to achieve its goals. This is an example of a

A. matrix organization.
B. modular organization.
C. virtual organization.
D. divisional structure.

Answer 162

C. virtual organization.

Question 163

Complete the following sentence: “Virtual organizations __________ whereas modular organizations __________.”

A. are usually permanent; are usually temporary
B. accept interdependent destinies; pursue collective strategies
C. pursue collective strategies; forfeit strategic control
D. give up part of their strategic control; retain full strategic control

Answer 163

D. give up part of their strategic control; retain full strategic control

Question 164

Which of the following is not a disadvantage of virtual structures?

A. difficulty in individual and organizational knowledge sharing
B. potential loss of operational control among partners
C. loss of strategic control over emerging technology
D. difficulty in determining where one company ends and another begins due to close interdependencies

Answer 164

A. difficulty in individual and organizational knowledge sharing

Question 165

Technical Computer Graphics uses small project teams and forms alliances with its teams, customers, and suppliers to accomplish projects. This is an example of

A. combining forms of boundaryless organizations.
B. outsourcing.
C. horizontal systems and processes.
D. democratic management control.

Answer 165

A. combining forms of boundaryless organizations.

Question 166

Organizations generally tend to become internally focused when faced with

A. resource scarcity.
B. declining performance.
C. external pressures.
D. all of these.

Answer 166

D. all of these.

Question 167

Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all of the following EXCEPT
A. horizontal organization structures.
B. horizontal systems and processes.
C. horizontal diversification.
D. communications and information technologies.

Answer 167

C. horizontal diversification.

Question 168

Effective ambidextrous organizations have alignment, which means that

A. employees are rewarded according to both profit and sales growth.
B. managers are focused on growth opportunities.
C. there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.
D. divisional-level goals are consistent with overall corporate goals.

Answer 168

c. there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.

Question 169

According to the study by O’Reilly and Tushman, effective ambidextrous structures had all of the following attributes EXCEPT
A. a clear and compelling vision.
B. managerial efforts were highly focused on revenue enhancement.
C. cross-fertilization among business units.
D. established units were shielded from the distractions of launching new businesses.

Answer 169

B. managerial efforts were highly focused on revenue enhancement.

Question 170

Which of the following is an important characteristic of a leader? 
A. goal-oriented
B. satisfied with the status quo
C. reactive
D. focused on past performance

Answer 170

A. goal-oriented

Question 171

All of the following statements about leadership are true EXCEPT
A. leadership is focused on the creation and implementation of a creative vision.
B. leadership is the process of transforming organizations from what they are to what the leader would have them become.
C. leaders support the status quo and seek control mechanisms to maintain it.
D. effective implementation of strategy is essential for successful leadership.

Answer 171

C. leaders support the status quo and seek control mechanisms to maintain it.

Question 172

According to the text, effective leadership is like a three-legged stool consisting of all of the following EXCEPT
A. dedication to maintaining the status quo.
B. nurturing a culture dedicated to excellence and ethical behavior.
C. determining a direction.
D. designing the organization.

Answer 172

A. dedication to maintaining the status quo.

Question 173

The leader’s role in developing a strategic vision provides many benefits including
A. a clear future direction.
B. a framework for their organization’s mission and goals.
C. enhanced employee communication and commitment.
D. all of these

Answer 173

D. all of these.

Question 174

Poor organizational design by leaders can result in all of the following EXCEPT

A. insufficient mechanisms that integrate and coordinate activities across the firm.
B. inadequate accountability among managers and employees.
C. inappropriate budgeting and control systems.
D. teams, systems, and organizational processes that facilitate implementation.

Answer 174

D. teams, systems, and organizational processes that facilitate implementation.

Question 175

XYZ’s CEO scrapped the company’s commission-based reward system because it was rewarding employees for inappropriate behavior. This is an example of

A. setting a direction.
B. designing the organization.
C. unethical behavior.
D. failure to maintain the status quo

Answer 175

B. designing the organization

Question 176

Leaders play a key role in developing and sustaining an organization’s

A. status quo.
B. culture.
C. reporting relationships.
D. rules and regulations

Answer 176

B. culture.

Question 177

The process by which people reconcile opposing thoughts to identify creative solutions that provide them with more options and new alternatives is known as

A. designing the organization.
B. conservative thinking.
C. ethical planning.
D. integrative thinking

Answer 177

D. integrative thinking

Question 178

All of the following stages are part of the integrative thinking and deciding process EXCEPT

A. causality.
B. conservation.
C. architecture.
D. salience.

Answer 178

B. conservation.

Question 179

In the integrative thinking and deciding process, making a mental map of the causal relationships between the elements of a decision to evaluate how the elements relate to one another is known as

A. architecture.
B. causality.
C. visualization.
D. multidimensionality

Answer 179

B. causality.

Question 180

Barriers in which the design of the organization’s structure, information processing, and reporting relationships, impede the proper flow and evaluation of information are known as

A. systemic barriers.
B. behavioral barriers.
C. political barriers.
D. barriers to entry

Answer 180

A. systemic barriers.

Question 181

Barriers associated with a manager’s tendency to look at issues from a biased or limited perspective are known as

A. systemic barriers.
B. behavioral barriers.
C. political barriers.
D. barriers to exit.

Answer 181

B. behavioral barriers.

Question 182

Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change?

A. systemic barriers
B. political barriers
C. behavioral barriers
D. all of these

Answer 182

B. political barriers

Question 183

Which of the following explains why organizations are prone to inertia and slow to change?

A. personal time constraints
B. political barriers
C. vested interests in the status quo
D. all of these

Answer 183

D. all of these

Question 184

All of the following constitute organizational bases of a leader’s power EXCEPT

A. legitimate power.
B. reward power.
C. referent power.
D. coercive power

Answer 184

C. referent power

Question 185

Expert power

A. is derived from organizationally conferred decision-making authority.
B. arises from a manager’s access, control, and distribution of information that is not freely available to everyone in an organization.
C. is derived from referent power.
D. is derived from the leader’s capability and knowledge in a particular field.

Answer 185

D. is derived from the leader’s capability and knowledge in a particular field.

Question 186

Coercive power is

A. the power exercised by use of fear of punishment for errors of omission or commission by employees.
B. the power of persuasion exercised by a charismatic leader to get compliance from reluctant subordinates.
C. is the type that arises from a manager’s access, control, and distribution of information that is not freely available to everyone in an organization.
D. the ability of the leader or manager to confer rewards for positive behaviors or outcomes.

Answer 186

A. the power exercised by use of fear of punishment for errors of omission or commission by employees.

Question 187

The source of referent power is

A. a subordinate’s identification with the leader.
B. a leader’s identification with the subordinates.
C. derived from the fact that the manager can potentially act as a reference when the employee applies for another job.
D. derived from the manager’s ability to provide effective incentives to employees.

Answer 187

A. a subordinate’s identification with the leader.

Question 188

The three broad sets of capabilities that a leader should possess include all of the following EXCEPT

A. technical skills.
B. cognitive abilities.
C. calculative abilities.
D. emotional intelligence.

Answer 188

C. calculative abilities.

Question 189

All of the following are components of Emotional Intelligence (EI) EXCEPT

A. self-awareness.
B. self-regulation.
C. self-promotion.
D. empathy.

Answer 189

C. self-promotion.

Question 190

Which component of Emotional Intelligence (EI) enables a manager to have a deep understanding of the existence and importance of cultural and ethnic differences?

A. self-awareness
B. empathy
C. social skills
D. self-regulation

Answer 190

B. empathy

Question 191

The following two components of Emotional Intelligence (EI) deal with a person's ability to manage relationships with others: 
A. motivation and self-awareness.
B. self-regulation and empathy.
C. empathy and social skill.
D. motivation and empathy.

Answer 191

C. empathy and social skill.

Question 192

Complete the following sentence. The days when a company’s leader __________ are gone; today, all employees need to be involved in __________.
A. learned for the organization; learning and adapting
B. managed from the top; self-management
C. delegated authority; assuming responsibility and control
D. was held in high regard; holding leaders accountable for their actions

Answer 192

A. learned for the organization; learning and adapting

Question 193

What happens to organizations that get caught up in day-to-day work activities?

A. They fail to think objectively about themselves and their business.
B. They fail to refresh their strategies or reengineer their work processes.
C. They fail to ask probing questions about their basic assumptions.
D. All of these

Answer 193

D. All of these.

Question 194

Which of the following is not a characteristic of a successful learning organization?

A. They create a proactive, creative approach to the unknown.
B. They actively solicit the involvement of employees at all levels.
C. They regularly engage in activities to reinforce the status quo.
D. They enable everyone to use their intelligence and apply their imagination

Answer 194

C. They regularly engage in activities to reinforce the status quo.

Question 195

Complete the following sentence. “Inspiring and motivating people with a mission or purpose is a __________ for developing an organization that can learn and adapt.”

A. necessary and sufficient condition
B. necessary, but not a sufficient condition
C. goal, but not a necessary condition
D. goal and a required pre-condition

Answer 195

B. necessary, but not a sufficient condition

Question 196

In order to create an environment where employees can achieve their potential as they move the organization towards its goals, the manager’s role needs to be that of

A. resource allocator.
B. resource controller.
C. a flexible resource.
D. an advocator of the status quo

Answer 196

C. a flexible resource.

Question 197

The “top-down” perspective of empowerment

A. encourages intelligent risk taking.
B. trusts people to perform.
C. encourages cooperative behavior.
D. delegates responsibility.

Answer 197

D. delegates responsibility.

Question 198

The “bottom-up” perspective of empowerment

A. clarifies the organization’s values and mission.
B. builds teams to encourage cooperative behavior.
C. communicates specific plans.
D. encourages employees to “ask permission rather than forgiveness.”

Answer 198

B. builds teams to encourage cooperative behavior.

Question 199

The empowerment perspective that involves trusting people to “do the right thing,” take intelligent risks, and act with a sense of ownership is known as

A. the leadership perspective.
B. the top-down approach.
C. the bottom-up approach.
D. the risk-taking model.

Answer 199

C. the bottom-up approach.

Question 200

An empowerment perspective that delegates responsibility, focuses on accountability, and relies on clearly specified rewards to motivate is known as

A. the leadership perspective.
B. the top-down approach.
C. the bottom-up approach.
D. the accounting model.

Answer 200

B. the top-down approach.

Question 201

Manufacturing employees at Chaparral Steel are directly involved with customers and have access to the new innovative knowledge being developed in its manufacturing processes. This is an example of

A. hierarchical control.
B. knowledge management.
C. enabling heroes and drones.
D. employee empowerment.

Answer 201

D. employee empowerment.

Question 202

Which of the following is NOT one of the three core activities in the “open book” management system pioneered by Jack Stack?

A. Information is generated daily that reflects the work performance and production costs of each employee.
B. The information is aggregated once a week and shared with employees at every level.
C. Information about customer expectations and feedback is distributed monthly.
D. Extensive training in how to use and interpret the numbers is provided to all employees.

Answer 202

C. Information about customer expectations and feedback is distributed monthly.

Question 203

At Whole Foods, the “no secrets” management philosophy allows employees access to most of the company’s operating and financial data. This is an example of

A. information sharing.
B. employee advocacy.
C. bottom-up empowerment.
D. internal benchmarking.

Answer 203

A. information sharing.

Question 204

Internal benchmarking at Whole Foods

A. is used by teams to compete against other teams in their stores.
B. is used by teams which compete against their own goals for sales, growth, and productivity.
C. is used by teams to compete against similar teams at different stores and regions.
D. all of these.

Answer 204

D. all of these

Question 205

Functional benchmarking
A. is not very useful for organizations with a divisional organizational structure.

B. endeavors to determine best practices regardless of industry.
C. restricts the search for best practices to competitors.
D. is useful when researching industry-specific standards.

Answer 205

B. endeavors to determine best practices regardless of industry.

Question 206

All of the following are guidelines an organization can use to promote the challenging of the status quo EXCEPT

A. establishing a “culture of dissent.”
B. forcefully creating a sense of urgency.
C. fostering a culture that encourages risk taking.
D. creating a results-based reward system.

Answer 206

D. creating a results-based reward system.

Question 207

Companies that cultivate cultures of experimentation and curiosity make sure that \_\_\_\_\_\_\_\_\_\_ is not, in essence, to be avoided at all costs. 
A. experimentation
B. failure
C. authority
D. risk taking

Answer 207

B. failure

Question 208

Which of the following statements about ethics is FALSE?

A. Ethics may be defined as a system of right and wrong.
B. Ethics assists individuals in deciding when an act is moral or immoral.
C. Ethics is NOT concerned with whether or not an act is socially desirable.
D. Business ethics is the application of ethical standards to commercial enterprises.

Answer 208

C. Ethics is NOT concerned with whether or not an act is socially desirable.

Question 209

As a manager, when faced with ethical crises you should

A. focus on issues most relevant to stockholders.
B. wait for the other party to make the first move.
C. take the initiative to address the problem.
D. cover up as much as possible.

Answer 209

C. take the initiative to address the problem.

Question 210

All of the following statements about ethical organizations are true EXCEPT

A. the potential benefits of an ethical organization are few but direct.
B. ethical values shape the search for opportunities.
C. organizational ethics define what a company is and what it stands for.
D. ethics provide a common frame of reference that serves as a unifying force.

Answer 210

A. the potential benefits of an ethical organization are few but direct.

Question 211

Proactive measures to prevent organizational ethics problems include all of the following EXCEPT

A. instituting a reward system which considers outcomes as its primary criterion.
B. using leaders as role models of ethical behavior.
C. issuing statements describing the organization’s commitment to certain standards of behavior.
D. using the organization’s information systems as a control system.

Answer 211

A. instituting a reward system which considers outcomes as its primary criterion.

Question 212

Which of the following statements would least likely be found in a corporate
credo?

A. Maximize financial benefits for stakeholders.
B. Provide secure and stable employment for employees.
C. Establish an environment that enhances professional growth.
D. Support community organizations and projects.

Answer 212

A. Maximize financial benefits for stakeholders.

Question 213

__________ refers to efforts to create designs and applications of technology to develop new products, while __________ refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations.

A. Radical innovation; incremental innovation
B. Breakthrough innovation; instrumental innovation
C. Product innovation; process innovation
D. Product innovation; service innovation

Answer 213

C. Product innovation; process innovation

Question 214

Whereas __________ are often associated with a low cost leader strategy, __________ are frequently an important aspect of a differentiation strategy.

A. process innovations; product innovations
B. product innovations; service innovations
C. radical innovations; instrumental innovations
D. marketing innovations; management innovations

Answer 214

A. process innovations; product innovations

Question 215

Incremental innovations
A. are usually highly disruptive.
B. usually represent technological breakthroughs.
C. are usually small improvements in products and processes.
D. nearly always can be patented

Answer 215

C. are usually small improvements in products and processes.

Question 216

Radical innovations
A. often result in quick profits.
B. often represent technological breakthroughs.
C. usually apply to products and processes simultaneously.
D. usually cannot be patented.

Answer 216

B. often represent technological breakthroughs.

Question 217

__________ produce fundamental changes that can transform a company or even revolutionize an industry, while __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs.

A. Technological breakthroughs; product-market breakthroughs
B. New technologies; new paradigms
C. Incremental innovations; radical innovations
D. Radical innovations; incremental innovations

Answer 217

D. Radical innovations; incremental innovations

Question 218

Innovations that extend sales in an existing market, usually by enabling new products or services to be sold at higher margins are known as

A. radical innovations.
B. disruptive innovations.
C. technology innovations.
D. sustaining innovations.

Answer 218

D. sustaining innovations.

Question 219

All of the following are characteristics of a disruptive innovation EXCEPT

A. It is usually more sophisticated technologically.
B. It appeals to less demanding customers.
C. It is typically a less expensive solution for meeting a need.
D. It usually takes root in a new market or the low-end of an existing market.

Answer 219

A. It is usually more sophisticated technologically.

Question 220

All of the following are dilemmas faced by corporations trying to manage the innovation process EXCEPT

A. launching incremental rather than “preemptive” innovations.
B. emphasizing marketing over management innovations.
C. preferring experience over initiative.
D. choosing internal rather than external staffing.

Answer 220

B. emphasizing marketing over management innovations.

Question 221

The innovation dilemma known as building capabilities versus collaborating refers to

A. developing innovation skills internally versus partnering with qualified outsiders.
B. building innovative products in-house versus outsourcing.
C. building credibility by launching products ahead of potential collaboration partners.
D. all of these

Answer 221

A. developing innovation skills internally versus partnering with qualified outsiders.

Question 222

The innovation dilemma known as seeds versus weeds refers to

A. choosing to pursue radical rather than incremental innovations.
B. choosing to pursue product rather than process innovations.
C. promoting organizational stars onto innovation teams rather than involving all employees in innovation efforts.
D. none of these.

Answer 222

D. none of these.

Question 223

Creative intelligence involves the ability to see patterns in data, integrating data, and making insights. The four patterns of actions that help build creative intelligence are

A. observing, experimenting, cataloging, and networking.
B. questioning, observing, integrating, and networking.
C. questioning, observing, experimenting, and networking.
D. observing, experimenting, cataloging, and integrating.

Answer 223

C. questioning, observing, experimenting, and networking.

Question 224

Individuals with highly innovative DNA traits have the ability to connect seemingly unrelated questions, problems, and ideas from different fields, allowing them the opportunity to creatively see opportunities others miss. In the text, this is referred to as

A. associating.
B. integrating.
C. visioning.
D. allocating.

Answer 224

A. associating.

Question 225

In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an example of

A. focusing on process rather than product innovation.
B. defining its innovation efforts within the context of its “strategic envelope.”
C. radical innovation.
D. public relations, since plastics are not biodegradable

Answer 225

B. defining its innovation efforts within the context of its “strategic envelope.”

Question 226

The advantages of collaborating with strategic partners in order to innovate include

A. obtaining skills and new knowledge from outside sources.
B. making firms identify their own strengths and weaknesses.
C. managers clarifying what an innovation project requires to be successful and who will accomplish it.
D. all of these

Answer 226

D. all of these.

Question 227

The W. L. Gore organization, a highly innovative company, uses several approaches and “rules of thumb” to encourage innovation. Which of the following is NOT one of them?

A. It requests that all risk-taking activities have a financial pay-off within one year.
B. It celebrates failure rather than condemning it.
C. It promotes person-to-person communications rather than e-mails.
D. It uses small teams to promote creativity and autonomy.

Answer 227

A. It requests that all risk-taking activities have a financial pay-off within one year.

Question 228

In a typical corporation, which of the following impact how the people within the corporation recognize entrepreneurial opportunities?

A. structural features that guide and constrain action
B. corporate culture
C. organizational systems that foster learning and manage rewards
D. all of these

Answer 228

D. all of these

Question 229

Two common forms of a focused approach to corporate entrepreneurship include

A. internal collaboration and internal venturing.
B. social capital and collaboration capital.
C. business incubators and new venture groups.
D. focus groups and business incubators.

Answer 229

C. business incubators and new venture groups.

Question 230

According to the text, __________, which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by __________.

A. collaboration partners; strategic partners
B. business incubators; new venture groups
C. product champions; corporate venture capitalists
D. lower-level managers; upper-level managers

Answer 230

B. business incubators; new venture groups

Question 231

Corporate business incubators typically provide some or all of the following functions EXCEPT

A. physical space.
B. mentoring.
C. funding.
D. student interns.

Answer 231

D. student interns

Question 232

A culture of entrepreneurship is one in which

A. the search for venture opportunities permeates every part of the organization.
B. every value chain activity is viewed as a source of entrepreneurial value creation.
C. employees at every level are attuned to opportunities to help create new businesses.
D. all of these occur.

Answer 232

D. all of these occur

Question 233

Common features of a dispersed approach to corporate entrepreneurship include all of the following EXCEPT

A. semi-autonomous new venture groups.
B. use of product champions.
C. a top-down approach to supporting entrepreneurial behavior.
D. an entrepreneurial culture.

Answer 233

A. semi-autonomous new venture groups.

Question 234

In corporations with a strong entrepreneurial culture, the willingness and ability to change

A. is imposed from the top-down.
B. is considered a core capability.
C. often leads to instability.
D. often worries stakeholders such as suppliers and creditors.

Answer 234

B. is considered a core capability.

Question 235

Product champions

A. are typically senior executives.
B. are usually inventors of some sort.
C. scavenge for resources and encourage others to back promising new ideas.
D. are strong supporters of the status quo.

Answer 235

C. scavenge for resources and encourage others to back promising new ideas.

Question 236

Project __________ involves justifying whether an opportunity is attractive in the marketplace; project __________ involves evaluating the strategic and economic impact of a new venture.

A. impetus; definition
B. definition; impetus
C. reward; development
D. development; focus

Answer 236

B. definition; impetus

Question 237

On average, approximately what percentage of corporate ventures reaches profitability within six years?

A. 80 percent.
B. 65 percent.
C. 50 percent.
D. 35 percent.

Answer 237

C. 50 percent.

Question 238

Financial reasons for undertaking internal corporate venturing include

A. strengthening competitive position.
B. obtaining above average returns.
C. adding to the corporation’s resource base.
D. all of these

Answer 238

B. obtaining above average returns.

Question 239

Strategic reasons for undertaking a corporate venture include which of the following?
A. entering into new markets
B. expanding capabilities by acquiring new knowledge
C. building the corporation’s base of resources
D. all of these

Answer 239

D. all of these

Question 240

All of the following are questions that should be answered when evaluating the performance of corporate venturing efforts EXCEPT which of these?

A. Is the venture attracting external venture funding?
B. Is the venture considered to be a market success?
C. Does the venture add to the worth of the firm internally?
D. Does the value proposition offered by the venture insulate it from competitive attack?

Answer 240

A. Is the venture attracting external venture funding?

Question 241

A manager whose role is to question the viability of corporate venture projects is

A. product champion.
B. exit champion.
C. rising star.
D. mentor.

Answer 241

B. exit champion

Question 242

Whereas __________ are willing to violate procedures and operate outside normal channels, __________ gather hard data and develop a strong case for why a project should be killed.

A. senior managers; entrepreneurial leaders
B. strategic managers; financial managers
C. exit champions; product champions
D. product champions; exit champions

Answer 242

D. product champions; exit champions

Question 243

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, nor the obligation to engage in a transaction.

Answer 243

B. the right, but not the obligation to engage in a transaction.

Question 244

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 up front can be followed by a series of subsequent investments.
D. there is no prospect of obtaining additional knowledge before making subsequent investments.

Answer 244

C. a small investment up front can be followed by a series of subsequent investments.

Question 245

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to “game the system” and “back-solve” a formula to get a proposal approved. This can give rise to

A. managerial conceit.
B. the illusion of control.
C. escalation of commitment.
D. agency problems.

Answer 245

D. agency problems.

Question 246

Which of the following is NOT one of the dimensions of entrepreneurial orientation?

A. proactiveness
B. risk taking
C. autonomy
D. opportunism

Answer 246

D. opportunism

Question 247

Which of the following statements about skunkworks is FALSE?

A. They are independent work units.
B. They are used to encourage creative thinking and brainstorming.
C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.
D. They help managers set aside their usual routines and practices.

Answer 247

C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.

Question 248

After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams

A. often lack coordination.
B. sometimes waste resources on projects with questionable feasibility.
C. sometimes create inefficiencies through duplication of effort.
D. all of these.

Answer 248

D. all of these.

Question 249

Which of the following dimensions of entrepreneurial orientation is described as “a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities”?

A. proactiveness
B. risk taking
C. autonomy
D. competitive aggressiveness

Answer 249

A. proactiveness

Question 250

All of the following statements about innovativeness are true EXCEPT which of these?

A. It refers to making decisions and taking risks without certain knowledge of probable outcomes.
B. It refers to a firm’s efforts to find new opportunities and novel solutions.
C. It involves creativity and experimentation.
D. It is aimed at developing new products, services, and processes.

Answer 250

All of the following statements about innovativeness are true EXCEPT which of these?
A. It refers to making decisions and taking risks without certain knowledge of probable outcomes.
B. It refers to a firm’s efforts to find new opportunities and novel solutions.
C. It involves creativity and experimentation.
D. It is aimed at developing new products, services, and processes.

Question 251

According to the text, which of the following is NOT one of the methods companies can use to enhance their competitive position via innovativeness?

A. fostering creativity and experimentation
B. investing in new technology, R&D, and continuous improvement
C. copying the business practices or techniques of successful competitors
D. departing from existing technologies to develop products and practices that go beyond the current state of the art

Answer 251

C. copying the business practices or techniques of successful competitors

Question 252

The benefits gained by firms that are the first to enter new markets, establish brand identity, and/or adopt new technologies are known as

A. competitive aggressiveness.
B. technological capabilities.
C. first mover advantages.
D. breakthrough innovations.

Answer 252

C. first mover advantages.

Question 253

Sony Corporation’s mission statement says, “We should always be the pioneers with our products, out front leading the market.” This is an example of

A. innovativeness.
B. proactiveness.
C. competitive aggressiveness.
D. autonomy.

Answer 253

B. proactiveness.

Question 254

According to the text, firms that want to enhance their entrepreneurial position by being competitively aggressive should

A. enter markets with drastically lower prices.
B. foster creativity and experimentation.
C. continuously seek out new products or services.
D. research risk factors to minimize uncertainty.

Answer 254

A. enter markets with drastically lower prices.

Question 255

All of the following are types of risks that executives must address EXCEPT

A. business risk taking.
B. financial risk taking.
C. personal risk taking.
D. product-market risk taking

Answer 255

D. product-market risk taking.

Question 256

Which kind of risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow?

A. business risk taking
B. financial risk taking
C. personal risk taking
D. technological risk taking

Answer 256

B. financial risk taking