Test 1 Ch 1,2,3,4,5,6

Question 1

32. (p. 5) The text addresses two perspectives of leadership as well as their implications. These two perspectives are 
A. romantic and unromantic.
B. romantic and internal control.
C. external control and unromantic.
D. romantic and external control.

Answer 1

D. romantic and external control.

Question 2

33. (p. 5) A CEO made a lot of mistakes such as committing errors in assessing the market and competitive conditions and improperly redesigning the organization into numerous business units. Such errors led to significant performance declines. According to the text, this example illustrates the \_\_\_\_\_\_\_\_\_\_ perspective of leadership. 
A. external control
B. romantic
C. internal mechanism
D. operational

Answer 2

B. romantic

Question 3

34. (p. 8) According to the text, the strategic management process entails three ongoing processes:
    A. analyses, actions, and synthesis.
    B. analyses, decisions, and actions.
    C. analyses, evaluation, and critique.
    D. analyses, synthesis, and antithesis.
    The strategic management of an organization entails three ongoing processes: analyses, decisions, and actions.

Answer 3

B. analyses, decisions, and actions.

Question 4

35. (p. 8) Management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because
    A. companies that have implemented these techniques have lost money.
    B. there is no proof that these techniques work.
    C. they cost too much money and effort to implement.
    D. every company is trying to implement them and hence it does not make a company different from others.

Answer 4

D. every company is trying to implement them and hence it does not make a company different from others.

Question 5

36. (p. 9) The “organizational versus individual rationality” perspective suggests that
    A. what is good for a functional area is always good for the organization.
    B. what is good for the organization is always good for a functional area.
    C. what is best for a functional area may not be best for the organization.
    D. the “incremental” perspective may be best for functional areas while the “rational” perspective may be best for the organization.

Answer 5

C. what is best for a functional area may not be best for the organization.

Question 6

37. (p. 9) The four key attributes of strategic management include the idea that
    A. strategy must be directed toward overall organizational goals and objectives.
    B. strategy must be focused on long-term objectives.
    C. strategy must be focused on one specific area of an organization.
    D. strategy must focus on competitor strengths.

Answer 6

A. strategy must be directed toward overall organizational goals and objectives.

Question 7

38. (p. 9) The four key attributes of strategic management include all of the following EXCEPT:
    A. including multiple stakeholder interests in decision making.
    B. incorporating both short-term and long-term perspectives.
    C. recognizing the trade-offs between effectiveness and efficiency.
    D. emphasis on the attainment of short-term objectives.

Answer 7

D. emphasis on the attainment of short-term objectives.

Question 8

39. (p. 10) "Effectiveness" is often defined as 
A. doing things right.
B. stakeholder satisfaction.
C. doing the right thing.
D. productivity enhancement.

Answer 8

C. doing the right thing.

Question 9

40. (p. 11) All of the following are ambidextrous behaviors EXCEPT:
    A. taking initiative and being alert to opportunities beyond the confines of one’s own job.
    B. being cooperative and seeking opportunities to combine one’s efforts with others.
    C. intensely focusing on one’s own responsibilities and maximizing the output of one’s department in an organization.
    D. being brokers, always looking to build internal linkages.

Answer 9

C. intensely focusing on one’s own responsibilities and maximizing the output of one’s department in an organization.

Question 10

41. (p. 12) According to Henry Mintzberg, the realized strategies of a firm
    A. are a combination of deliberate and emergent strategies.
    B. are a combination of deliberate and differentiation strategies.
    C. must be based on a company’s strategic plan.
    D. must be kept confidential for competitive reasons.

Answer 10

A. are a combination of deliberate and emergent strategies.

Question 11

42. (p. 11-12) According to Henry Mintzberg, decisions following from a firm's strategic analysis are its 
A. emergent strategy.
B. deliberate strategy.
C. intended strategy.
D. realized strategy.

Answer 11

C. intended strategy.

Question 12

43. (p. 12) \_\_\_\_\_\_\_\_\_\_ may be considered the "advance work" that must be done in order to effectively formulate and implement strategies. 
A. Goal setting
B. Corporate entrepreneurship
C. Strategy analysis
D. Organizational design

Answer 12

C. Strategy analysis

Question 13

44. (p. 14) \_\_\_\_\_\_\_\_\_\_ involves ensuring proper strategic controls and organizational designs. 
A. Corporate governance
B. Corporate-level strategy
C. Strategy implementation
D. Business-level strategy

Answer 13

C. Strategy implementation

Question 14

45. (p. 15) The three participants in corporate governance are
    A. the shareholders, board of directors, and employees.
    B. the shareholders, labor unions, and employees.
    C. the shareholders, board of directors, and management.
    D. the shareholders, banks and lending institutions, and management.

Answer 14

C. the shareholders, board of directors, and management.

Question 15

46. (p. 15) While working to prioritize and fulfill their responsibilities, members of an organization’s board of directors should
    A. represent their own interests.
    B. represent the interests of the shareholders.
    C. direct all actions of the CEO.
    D. emphasize the importance of short-term goals.

Answer 15

B. represent the interests of the shareholders.

Question 16

47. (p. 15) Members of Boards of Directors are
    A. appointed by the Securities and Exchange Commission.
    B. elected by the shareholders as their representatives.
    C. elected by the public.
    D. only allowed to serve one term of four years.

Answer 16

B. elected by the shareholders as their representatives.

Question 17

48. (p. 16) An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that
    A. interests of the stockholders are not the only interests that matter.
    B. stakeholders are second in importance to the stockholders.
    C. stakeholders and managers inevitably work at cross-purposes.
    D. all stakeholders receive financial rewards.

Answer 17

A. interests of the stockholders are not the only interests that matter.

Question 18

49. (p. 17) Stakeholders are
    A. a new way to describe stockholders.
    B. individuals, groups, and organizations who have a stake in the success of the organization.
    C. creditors who hold a lien on the assets of the organization.
    D. attorneys and their clients who sue the organization.

Answer 18

B. individuals, groups, and organizations who have a stake in the success of the organization.

Question 19

50. (p. 18) Outback Steakhouse has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of __________
    A. zero-sum relationship among stakeholders.
    B. stakeholder symbiosis.
    C. rewarding stakeholders.
    D. emphasizing financial returns.

Answer 19

B. stakeholder symbiosis.

Question 20

51. (p. 17) There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum thinking means that
    A. all parts of the organization gain at no loss.
    B. in order for someone to gain others must experience no gain or benefit.
    C. one can only gain at the expense of someone else.
    D. everyone in the organization shares gains and losses equally.

Answer 20

C. one can only gain at the expense of someone else.

Question 21

52. (p. 18) Managers should do more than just focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that
    A. stakeholders are dependent on each other for their success.
    B. stakeholders look out for their individual interests.
    C. one can only gain at the expense of someone else.
    D. all stakeholders want to maximize shareholder returns.

Answer 21

A. stakeholders are dependent on each other for their success.

Question 22

53. (p. 18) Crowdsourcing can be defined as
    A. using surveys to get supplier input.
    B. using multiple sources for a firm’s raw material inputs.
    C. tapping the latent talent of the online crowd.
    D. addressing strategic issues directly with managers and employees.

Answer 22

C. tapping the latent talent of the online crowd.

Question 23

54. (p. 21) Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is
    A. the expectation that business will strive to improve the overall welfare of society.
    B. the idea that organizations are solely responsible to local citizens.
    C. the fact that court costs could impact the financial bottom line.
    D. the idea that businesses are responsible to maintain a healthy social climate for their employees.

Answer 23

A. the expectation that business will strive to improve the overall welfare of society.

Question 24

55. (p. 23) According to the text, the “triple bottom line” approach to corporate accounting includes three components:
    A. financial, environmental, and customer.
    B. financial, organizational, and customer.
    C. financial, environmental, and social.
    D. financial, organizational, and psychological.

Answer 24

C. financial, environmental, and social.

Question 25

56. (p. 24) Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if
    A. each functional area focuses on achieving their own goals.
    B. functional areas work together to attain overall goals.
    C. goals are defined at the bottom and implemented at the top.
    D. management and employees have separate goals.

Answer 25

B. functional areas work together to attain overall goals.

Question 26

57. (p. 25) Strategy formulation and implementation is a challenging ongoing process. To be effective, it should involve 
A. the CEO and the board of directors.
B. the board of directors, CEO, and CFO.
C. line and staff managers.
D. all of these.

Answer 26

D. all of these.

Question 27

58. (p. 25) The text argues that a strategic perspective in an organization should be emphasized 
A. at the top of the organization.
B. at the middle of the organization.
C. throughout the organization.
D. from the bottom up.

Answer 27

C. throughout the organization.

Question 28

59. (p. 25) Peter Senge, of MIT, recognized three types of leaders. \_\_\_\_\_\_\_\_\_\_ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas. 
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders

Answer 28

C. Internal networkers

Question 29

60. (p. 25) Peter Senge, of MIT, recognized three types of leaders. \_\_\_\_\_\_\_\_\_\_ champion and guide ideas, create a learning infrastructure, and establish a domain for taking action. 
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders

Answer 29

B. Executive leaders

Question 30

61. (p. 25) Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? 
A. only at the top
B. in the middle
C. throughout the organization
D. only during times of change

Answer 30

C. throughout the organization

Question 31

62. (p. 26) The hierarchy of organizational goals is in this order (least specific to most specific):
    A. vision statements, strategic objectives, mission statements.
    B. mission statements, strategic objectives, vision statements.
    C. vision statements, mission statements, strategic objectives.
    D. mission statements, vision statements, strategic objectives.

Answer 31

C. vision statements, mission statements, strategic objectives.

Question 32

63. (p. 26) Vision statements are used to create a better understanding of the organization’s overall purpose and direction. Vision statements
    A. are very specific.
    B. provide specific objectives.
    C. set organizational structure.
    D. evoke powerful and compelling mental images.

Answer 32

D. evoke powerful and compelling mental images.

Question 33

64. (p. 26) Effective vision statements include
    A. all strategic directions of the organization.
    B. a brief statement of the company’s direction.
    C. strategic posturing and future objectives
    D. financial objectives and projected figures.

Answer 33

B. a brief statement of the company’s direction.

Question 34

65. (p. 28) Examples of \_\_\_\_\_\_\_\_\_\_ include: "To be the happiest place on earth" (Disneyland), and "Restoring patients to full life" (Medtronic). 
A. vision statements
B. mission statements
C. strategic objectives
D. operational objectives

Answer 34

A. vision statements

Question 35

66. (p. 28-29) WellPoint Health Network states: "WellPoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a 
A. strategic objective.
B. vision statement.
C. vague statement of direction.
D. line manager's individual goal.

Answer 35

B. vision statement.

Question 36

67. (p. 29) In contrast to an organization’s vision, its mission should
    A. be shorter in length.
    B. encompass both the purpose of the company as well as the basis of competition.
    C. encompass all the major rules and regulations of the corporate work force.
    D. be less detailed.

Answer 36

B. encompass both the purpose of the company as well as the basis of competition.

Question 37

68. (p. 30) An organization’s mission statement and vision statement set the overall direction of the organization. Strategic objectives
    A. operationalize the mission statement.
    B. modify the mission statement.
    C. are a shorter version of the mission statement.
    D. are only clarified by the board of directors.

Answer 37

A. operationalize the mission statement.

Question 38

69. (p. 31) Successful organizations are effective in motivating people. Employees work best when
    A. they are asked to “do their best.”
    B. work requirements are vague and unclear.
    C. they are striving toward specific goals.
    D. they are guided by an abstract mission statement.

Answer 38

C. they are striving toward specific goals.

Question 39

70. (p. 30) Fortune Brands states they will "cut corporate overhead costs by $30 million a year." This is an example of a 
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.

Answer 39

B. financial strategic objective.

Question 40

71. (p. 30) "We want to be the top-ranked supplier to our customers." (PPG) This is an example of a 
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.

Answer 40

A. nonfinancial strategic objective.

Question 41

72. (p. 32) In large organizations, conflicts can arise between functional areas. In order to resolve these conflicts, strategic objectives
    A. put financial objectives above human considerations.
    B. align departments toward departmental goals.
    C. help resolve conflicts through their common purpose.
    D. cause debate and increase conflict.

Answer 41

C. help resolve conflicts through their common purpose.

Question 42

37. (p. 41) Two of the key inputs to developing forecasts discussed in the text are
    A. environmental scanning and stakeholder identification.
    B. environmental scanning and competitor intelligence.
    C. assessing internal strengths and environmental scanning.
    D. environmental scanning and a SWOT analysis.

Answer 42

B. environmental scanning and competitor intelligence.

Question 43

38. (p. 42) \_\_\_\_\_\_\_\_\_\_\_\_\_ tracks the evolution of environmental trends, sequences of events, or streams of activities. 
A. Environmental scanning
B. Environmental monitoring
C. Environmental surveying
D. Competitive intelligence

Answer 43

B. Environmental monitoring

Question 44

39. (p. 41) Scanning the general environment would identify information on
    A. substitute goods.
    B. the aging population and ethnic shifts.
    C. customer and firm bargaining power.
    D. competitive rivalry.

Answer 44

B. the aging population and ethnic shifts.

Question 45

40. (p. 42) Gathering “competitive intelligence”
    A. is good business practice.
    B. is illegal.
    C. is considered unethical.
    D. minimizes the need to obtain information in the public domain.

Answer 45

A. is good business practice.

Question 46

41. (p. 44) Environmental forecasting involves developing plausible projections about the \_\_\_\_\_\_\_\_ of environmental change. 
A. direction
B. scope
C. speed
D. all of these

Answer 46

D. all of these

Question 47

42. (p. 45) A danger of forecasting discussed in the text is that
    A. in most cases, the expense of collecting the necessary data exceeds the benefit.
    B. forecasting’s retrospective nature provides little information about the future.
    C. managers may view uncertainty as “black and white” while ignoring important “gray areas.”
    D. it can create legal problems for the firm if regulators discover the company is making forecasts.

Answer 47

C. managers may view uncertainty as “black and white” while ignoring important “gray areas.”

Question 48

43. (p. 47) The aging of the population, changes in ethnic composition, and effects of the baby boom are 
A. macroeconomic changes.
B. demographic changes.
C. global changes.
D. sociocultural changes.

Answer 48

B. demographic changes.

Question 49

44. (p. 49) Increasingly larger numbers of women entering the work force since the early 1970s is an example of
    A. demographic changes.
    B. political and legal environmental changes.
    C. sociocultural changes.
    D. technological developments.

Answer 49

C. sociocultural changes.

Question 50

45. (p. 49-50) Emerging sociocultural changes in the environment include
    A. changes in the ethnic composition.
    B. the increasing educational attainment of women in the past decade.
    C. progressively less disposable income by consumers.
    D. changes in the geographic distribution of the population.

Answer 50

B. the increasing educational attainment of women in the past decade.

Question 51

46. (p. 50) All of the following are important elements of the political/legal segment of the general environment EXCEPT
    A. the deregulation of utilities.
    B. the Americans with Disabilities Act (ADA).
    C. the increased use of Internet technology.
    D. increases in the federally mandated minimum wage.

Answer 51

C. the increased use of Internet technology.

Question 52

47. (p. 47) Which of the following would be considered part of a firm’s general environment?
    A. Decreased entry barriers.
    B. Higher unemployment rates.
    C. Increased bargaining power of the firm’s suppliers.
    D. Increased competitive intensity.

Answer 52

B. Higher unemployment rates.

Question 53

48. (p. 51) Interest-rate increases have a \_\_\_\_\_\_\_\_\_\_ impact on the residential home construction industry and a \_\_\_\_\_\_\_\_\_\_ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items. 
A. positive; negligible
B. negative; negligible
C. negative; positive
D. positive; negative

Answer 53

B. negative; negligible

Question 54

49. (p. 51) To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________).
    A. macroeconomic, sociocultural, political/legal
    B. macroeconomic, political/legal, economic
    C. macroeconomic, technological, economic
    D. macroeconomic, global, economic

Answer 54

B. macroeconomic, political/legal, economic

Question 55

50. (p. 55) Which is considered a force in the “Five-Forces” model?
    A. Increased deregulation in an industry.
    B. The threat of government intervention.
    C. Rivalry among competing firms.
    D. Recent technological innovation.

Answer 55

C. Rivalry among competing firms.

Question 56

51. (p. 60) Which of the following firms would likely pose the least competitive threat?
    A. A firm in the same industry and in the same strategic group.
    B. A firm that produces substitute goods to your product line.
    C. A competitor to your product where a high switching cost exists.
    D. A firm in the same industry and in the nearest strategic group looking to join your group.

Answer 56

C. A competitor to your product where a high switching cost exists.

Question 57

52. (p. 56) The threat of new entrants is high when there are
    A. low economies of scale.
    B. high capital requirements.
    C. high switching costs.
    D. high differentiation among competitors’ products and services.

Answer 57

A. low economies of scale.

Question 58

53. (p. 56) Product differentiation by incumbents act as an entry barrier because
    A. new entrants cannot differentiate their products.
    B. incumbents will take legal action if new entrants do not differentiate their products.
    C. new entrants will have to spend heavily to overcome existing customer loyalties.
    D. it helps a firm to derive greater economies of scale.

Answer 58

C. new entrants will have to spend heavily to overcome existing customer loyalties.

Question 59

54. (p. 56) Which of the following would be an entry barrier? 
A. large economies of scale
B. low switching costs
C. easy access to raw materials
D. low capital requirements

Answer 59

A. large economies of scale

Question 60

55. (p. 55) A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of 
A. backward integration.
B. economies of scale.
C. forward integration.
D. product differentiation.

Answer 60

A. backward integration.

Question 61

56. (p. 57) The bargaining power of the buyer is greater than that of the supplier when
    A. volume of purchase is low.
    B. threat of backward integration by buyers is low.
    C. cost savings from the supplier’s product are minimal.
    D. the buyer’s profit margin is low.

Answer 61

D. the buyer’s profit margin is low.

Question 62

57. (p. 57) Buyer power will be greater when
    A. the products purchased are highly differentiated.
    B. there are high switching costs.
    C. the industry’s product is very important to the quality of the buyer’s end products or services.
    D. it is concentrated or purchases large volumes relative to seller sales.

Answer 62

D. it is concentrated or purchases large volumes relative to seller sales.

Question 63

58. (p. 58-59) The bargaining power of suppliers increases as
    A. more suppliers enter the market.
    B. importance of buyers to supplier group increases.
    C. switching costs for buyers decrease.
    D. threat of forward integration by suppliers increases.

Answer 63

D. threat of forward integration by suppliers increases.

Question 64

59. (p. 55) An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of 
A. threat of entry.
B. backward integration.
C. forward integration.
D. threat of substitute products.

Answer 64

C. forward integration.

Question 65

60. (p. 58-59) The bargaining power of suppliers is enhanced under the following market condition:
    A. no threat of forward integration.
    B. low differentiation of the suppliers’ products.
    C. greater availability of substitute products.
    D. dominance by a few suppliers.

Answer 65

D. dominance by a few suppliers.

Question 66

61. (p. 58-59) In Porter’s Five-Forces model, conditions under which a supplier group can be powerful include all the following EXCEPT
    A. lack of importance of the buyer to the supplier group.
    B. high differentiation by the supplier.
    C. dominance by a few suppliers.
    D. readily available substitute products.

Answer 66

D. readily available substitute products.

Question 67

62. (p. 58-59) A supplier group would be most powerful when there is/are
    A. many suppliers.
    B. few substitute products.
    C. low differentiation of products supplied.
    D. high threat of backward integration by the buyers.

Answer 67

B. few substitute products.

Question 68

63. (p. 59) Threat of substitute products comes from
    A. other companies in the same industry.
    B. foreign companies which can use cheap labor in their countries.
    C. firms in other industries that produce products or services that satisfy the same customer need.
    D. all of these.

Answer 68

C. firms in other industries that produce products or services that satisfy the same customer need.

Question 69

64. (p. 59-60) Firms would be most likely to face intense rivalry with competitors when they
    A. are in a high growth industry with low fixed costs.
    B. are in a protected market.
    C. have high fixed costs, in a slow growth industry with high exit barriers.
    D. have low exit barriers for easy transition to another industry.

Answer 69

C. have high fixed costs, in a slow growth industry with high exit barriers.

Question 70

65. (p. 59-60) The most intense rivalry results from
    A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
    B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
    C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers.
    D. a high level of differentiation.

Answer 70

A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.

Question 71

66. (p. 60) Exit barriers arise from
    A. specialized assets with no alternative use.
    B. governmental and social pressures.
    C. strategic interrelationships with other business units within the same company.
    D. all of these.

Answer 71

D. all of these.

Question 72

67. (p. 61) Because the Internet lowers barriers to entry in most industries, it
    A. decreases the threat of new entrants.
    B. increases the threat of new entrants.
    C. makes it easier to build customer loyalty.
    D. increases supplier power.

Answer 72

B. increases the threat of new entrants.

Question 73

68. (p. 63) End users are
    A. the final consumers in a distribution channel.
    B. usually the C in B2C.
    C. likely to have greater bargaining power because of the Internet.
    D. all of these.

Answer 73

D. all of these.

Question 74

69. (p. 63) Incumbent firms may enjoy increased bargaining power because the Internet
    A. focuses marketing efforts on end users.
    B. diminishes the power of many distribution channel intermediaries.
    C. increases channel conflict.
    D. has reduced the number of wholesalers and distributors.

Answer 74

B. diminishes the power of many distribution channel intermediaries.

Question 75

70. (p. 63) Supplier power has increased because of the Internet for all of the following reasons EXCEPT
    A. the growth of new Web-based businesses has created more outlets for suppliers to sell to.
    B. some suppliers have created Web-based purchasing systems that encourage switching.
    C. the process of disintermediation makes it possible for some suppliers to reach end users directly.
    D. software that links buyers to a supplier’s website has created rapid, low-cost order capabilities.

Answer 75

B. some suppliers have created Web-based purchasing systems that encourage switching.

Question 76

71. (p. 64) In general, the threat of substitutes is heightened because the Internet
    A. introduces new ways to accomplish the same task.
    B. lowers switching costs.
    C. lowers barriers to entry.
    D. increases output per unit of cost.

Answer 76

A. introduces new ways to accomplish the same task.

Question 77

72. (p. 65) How do infomediaries and consumer information websites increase the intensity of competitive rivalry?
    A. by shifting customers away from issues of price
    B. by making competitors in cyberspace seem less equally balanced
    C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over
    D. by highlighting a firm’s unique selling advantages

Answer 77

C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over

Question 78

73. (p. 67) The value net is a game-theoretic approach that
    A. extends the value chain analysis.
    B. is a way to analyze all the players in a game and analyze how their interactions affect a firm’s ability to generate and appropriate value.
    C. helps us to understand the evolution of the five forces over time.
    D. uses network analysis to understand the relationships among different companies.

Answer 78

B. is a way to analyze all the players in a game and analyze how their interactions affect a firm’s ability to generate and appropriate value.

Question 79

74. (p. 67) In the value net analysis, complementors are
    A. firms that produce substitute products.
    B. customers who compliment the company for their good products and services.
    C. firms that produce products or services that have a positive impact on the value of a firm’s products or services.
    D. firms that supply critical inputs to a company.

Answer 79

C. firms that produce products or services that have a positive impact on the value of a firm’s products or services.

Question 80

75. (p. 68) Strategic groups consist of
    A. a group of top executives who make strategies for a company.
    B. a group of firms within an industry that follow similar strategies.
    C. a group of executives drawn from different companies within an industry that makes decisions on industry standards.
    D. a group of firms within an industry that decide to collude rather than compete with each other so that they can increase their profits.

Answer 80

B. a group of firms within an industry that follow similar strategies.

Question 81

76. (p. 68-69) Which of the following statements about strategic groups is FALSE?
    A. Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same.
    B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups.
    C. Strategic groups help chart the future directions of firms’ strategies.
    D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.

Answer 81

B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups.

Question 82

35. (p. 82) Which of the following is NOT a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis?
    A. Organizational strengths may not lead to competitive advantage.
    B. SWOT’s focus on the external environment is too broad and integrative.
    C. SWOT gives a one-shot view of a moving target.
    D. SWOT overemphasizes a single dimension of strategy.

Answer 82

B. SWOT’s focus on the external environment is too broad and integrative.

Question 83

36. (p. 81, 86) In value-chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity?
    A. Purchasing key inputs.
    B. Recruiting and training employees.
    C. Repairing the product for the consumer.
    D. Monitoring the cost of producing the product through a cost accounting system.

Answer 83

C. Repairing the product for the consumer.

Question 84

37. (p. 83) Inbound logistics include 
A. machining and packaging.
B. warehousing and inventory control.
C. repair and parts supply.
D. promotion and packaging.

Answer 84

B. warehousing and inventory control.

Question 85

38. (p. 81, 84) In assessing its primary activities, an airline would examine
    A. employee training programs.
    B. baggage handling.
    C. criteria for lease versus purchase decisions.
    D. the effectiveness of its lobbying activities.

Answer 85

B. baggage handling.

Question 86

39. (p. 81, 83-85) Advertising is a \_\_\_\_\_\_\_\_\_\_ activity. Supply of replacement parts is a \_\_\_\_\_\_\_\_\_\_ activity. 
A. primary; primary
B. support; primary
C. support; secondary
D. primary; support

Answer 86

A. primary; primary

Question 87

40. (p. 83) Which of the following examples demonstrates how successful organizations manage their primary activities?
    A. By employing JIT inventory systems, Hewlett Packard has been able to cut lead time from five days to one.
    B. Motorola has revised its compensation system to reward employees who learn a variety of skills.
    C. National Steel improved its efficiency by consolidating, reducing the number of job classifications, and broadening worker responsibilities.
    D. Walmart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response time.

Answer 87

A. By employing JIT inventory systems, Hewlett Packard has been able to cut lead time from five days to one.

Question 88

41. (p. 83) Which of the following is not an advantage of Just-In-Time inventory systems?
    A. Reduced raw material storage costs.
    B. Minimized idle production facilities and workers.
    C. Reduced work-in-process inventories.
    D. Reduced dependence on suppliers.

Answer 88

D. Reduced dependence on suppliers.

Question 89

42. (p. 83) XYZ Corp. is focusing on the objective of low-cost, high quality, on-time production by minimizing idle productive facilities and workers. The XYZ Corp. is taking advantage of a \_\_\_\_\_\_\_\_\_\_ system. 
A. Last In, First Out (LIFO)
B. Just-in-time (JIT)
C. First In, First Out (FIFO)
D. Highly mechanized

Answer 89

B. Just-in-time (JIT)

Question 90

43. (p. 84) \_\_\_\_\_\_\_\_\_\_\_ is/are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. 
A. Services
B. Inbound logistics
C. Outbound logistics
D. Operations

Answer 90

C. Outbound logistics

Question 91

44. (p. 86) Customer service would include 
A. product promotion.
B. product distribution.
C. parts supply.
D. procurement of critical supplies.

Answer 91

C. parts supply.

Question 92

45. (p. 86-87) Which of the following is a support activity? 
A. Inbound logistics.
B. Operations.
C. Technology development.
D. Customer service.

Answer 92

C. Technology development.

Question 93

46. (p. 86-87) Which of the following lists consists of support activities?
    A. Human resource management, technology development, customer service, and procurement.
    B. Human resource management, customer service, marketing and sales, and operations.
    C. Human resource management, technology development, procurement, and firm infrastructure.
    D. Customer service, information systems, technology development, and procurement.

Answer 93

C. Human resource management, technology development, procurement, and firm infrastructure.

Question 94

47. (p. 88) Human resource management consists of activities involved in recruiting, hiring, training, development, and compensation of all types of personnel. It
    A. supports only individual primary activities.
    B. supports only individual support activities.
    C. supports both individual primary and support activities and the entire value chain.
    D. supports mostly support activities but does have some impact on primary activities.

Answer 94

C. supports both individual primary and support activities and the entire value chain.

Question 95

48. (p. 89) According to value-chain analysis, which of the following would be considered part of a firm's general administration? 
A. Human resource management.
B. Information systems.
C. Technology development.
D. Procurement.

Answer 95

B. Information systems.

Question 96

49. (p. 89) Although general administration is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following EXCEPT
    A. negotiating and maintaining ongoing relations with regulatory bodies.
    B. effective information systems contributing significantly to a firm’s overall cost leadership strategy.
    C. marketing expertise increasing a firm’s revenues and enabling it to enter new markets.
    D. top management providing a key role in collaborating with important customers.

Answer 96

C. marketing expertise increasing a firm’s revenues and enabling it to enter new markets.

Question 97

50. (p. 89) For firm's such as Walgreen Co. (a chain of drugstores), information systems have been a source of competitive advantage by enabling them to 
A. differentiate service.
B. automate some operations.
C. respond to consumer needs.
D. all of these.

Answer 97

D. all of these.

Question 98

51. (p. 89-90) A marketing department that promises delivery faster than the production department’s ability to produce is an example of a lack of understanding of the
    A. interrelationships among functional areas and firm strategies.
    B. need to maintain the reputation of the company.
    C. organizational culture and leadership.
    D. synergy of the business units.

Answer 98

A. interrelationships among functional areas and firm strategies.

Question 99

52. (p. 93) The resource-based view (RBV) of the firm combines two perspectives:
    A. the primary and support activities of the firm.
    B. the interrelationships among the primary activities of the firm and corporate management.
    C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment.
    D. the industry and the competitive environment.

Answer 99

C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment.

Question 100

53. (p. 93-94) The three key types of resources that are central to the resource-based view of the firm’s are
    A. tangible resources, intangible resources, and organizational structure.
    B. culture, tangible resources, intangible resources.
    C. tangible resources, intangible resources, and organizational capabilities.
    D. tangible resources, intangible resources, and top management.

Answer 100

C. tangible resources, intangible resources, and organizational capabilities.

Question 101

54. (p. 94) Examples of tangible resources (in the resource-based view of the firm) include:
    A. financial resources, human resources, and firm competencies.
    B. financial resources, physical resources, and the capacity to combine intangible resources.
    C. financial resources, physical resources, and technological resources.
    D. outstanding customer service, innovativeness of products, and reputation.

Answer 101

C. financial resources, physical resources, and technological resources.

Question 102

55. (p. 95) \_\_\_\_\_\_\_\_\_\_ are typically embedded in unique routines and practices that have evolved and accumulated over time - such as trust and effective work teams. 
A. Tangible resources
B. Intangible resources
C. Reputational resources
D. Organizational capabilities

Answer 102

B. Intangible resources

Question 103

56. (p. 95) Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their 
A. tangible resources.
B. intangible resources.
C. organizational capabilities.
D. strong primary activities.

Answer 103

C. organizational capabilities.

Question 104

57. (p. 95) \_\_\_\_\_\_\_\_\_\_ are the competencies or skills that a firm employs to transform inputs into outputs. 
A. Tangible resources
B. Intangible resources
C. Reputational resources
D. Organizational capabilities

Answer 104

D. Organizational capabilities

Question 105

58. (p. 95-96) For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? 
A. Rare.
B. Easy for competitors to substitute.
C. Valuable.
D. Difficult for competitors to imitate.

Answer 105

B. Easy for competitors to substitute.

Question 106

59. (p. 97-98) A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics:
    A. physical uniqueness, path dependency, causal ambiguity, and social complexity.
    B. psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
    C. rarity, path dependency, causal ambiguity, and social substitutability.
    D. geographic uniqueness, cause dependency, social ambiguity, and path complexity.

Answer 106

A. physical uniqueness, path dependency, causal ambiguity, and social complexity.

Question 107

60. (p. 98) A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of 
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. causal ambiguity.

Answer 107

B. path dependency.

Question 108

61. (p. 98) A variety of firm's resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon 
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. tangible resources.

Answer 108

A. social complexity.

Question 109

62. (p. 98) The following are examples of socially complex organizational phenomena EXCEPT
    A. a firm’s culture.
    B. interpersonal relations among a firm’s managers.
    C. complex physical technology.
    D. leadership and trust.

Answer 109

C. complex physical technology.

Question 110

63. (p. 100-101) A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain 
A. no competitive advantage.
B. competitive parity.
C. a temporary competitive advantage.
D. a sustainable competitive advantage.

Answer 110

C. a temporary competitive advantage.

Question 111

64. (p. 103) Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if
    A. suppliers are loyal to the firm.
    B. the cost to the firm of replacing them is high.
    C. their expertise is firm-specific.
    D. the firm’s resources are path dependent.

Answer 111

B. the cost to the firm of replacing them is high.

Question 112

65. (p. 106) Historical comparisons provide information to managers about changes in a firm’s competitive position. Historical comparisons are often misleading
    A. if the overall strategy of the firm is the same.
    B. in periods of recession or economic boom.
    C. if the firm shows constant growth.
    D. if the firm’s stock is publicly traded.

Answer 112

B. in periods of recession or economic boom.

Question 113

66. (p. 105) The best measure of a company's ability to meet imminent financial obligations is known as the 
A. current ratio.
B. total asset turnover.
C. debt ratio.
D. profit margin.

Answer 113

A. current ratio.

Question 114

67. (p. 105) Which of the following would be most difficult to assess?
    A. The liquidity position of a firm.
    B. The legitimacy and reputation of a firm.
    C. Market share growth.
    D. The efficiency with which a firm utilizes its assets.

Answer 114

B. The legitimacy and reputation of a firm.

Question 115

68. (p. 105) Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations? 
A. Leverage ratios.
B. Profitability ratios.
C. Activity ratios.
D. Liquidity ratios.

Answer 115

D. Liquidity ratios.

Question 116

69. (p. 105) Ratios that reflect whether or not a firm is efficiently using its resources are known as 
A. turnover ratios.
B. leverage ratios.
C. liquidity ratios.
D. profitability ratios.

Answer 116

A. turnover ratios.

Question 117

70. (p. 107) The "balanced scorecard" provides top managers with a \_\_\_\_\_\_\_\_\_\_ view of the business. 
A. detailed and complex
B. fast but comprehensive
C. simple and routine
D. long-term financial

Answer 117

B. fast but comprehensive

Question 118

71. (p. 108) The “balanced scorecard” developed by Kaplan and Norton helps to integrate
    A. financial analysis and a firm’s reputation.
    B. intangible resources and operational measures.
    C. financial analysis and stakeholder perspectives.
    D. short-term perspectives and strategic positioning.

Answer 118

C. financial analysis and stakeholder perspectives.

Question 119

72. (p. 108) The balanced scorecard enables managers to consider their business from all of the following perspectives EXCEPT 
A. customer perspective.
B. internal perspective.
C. innovation and learning perspective.
D. ethical perspective.

Answer 119

D. ethical perspective.

Question 120

73. (p. 109) An important implication of the “balanced scorecard” approach is that
    A. managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a “zero-sum” game in which one stakeholder will gain only at another’s loss.
    B. the key emphasis on customer satisfaction and financial goals are only a means to that end.
    C. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously.
    D. gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction.

Answer 120

C. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously.

Question 121

74. (p. 116-117) Four Internet-based activities that are enhancing firms’ capabilities to use the Internet to add value include
    A. outsourcing, problem-solving, bill-paying, and delivery.
    B. evaluating, bill-paying, customizing, and returning.
    C. search, rescue, repair, return.
    D. search, evaluation, problem-solving, and transaction.

Answer 121

D. search, evaluation, problem-solving, and transaction.

Question 122

75. (p. 117) Internet search activities include 
A. generating action plans.
B. considering alternatives.
C. gathering information.
D. making payments and taking delivery.

Answer 122

C. gathering information.

Question 123

76. (p. 117) The value-adding activity known as problem-solving
    A. involves streamlining operations.
    B. is typically used in the context of providing unique services.
    C. refers to comparing the costs and benefits of various options.
    D. creates access to products ratings and price comparisons.

Answer 123

B. is typically used in the context of providing unique services.

Question 124

77. (p. 116-117) Unique content will not add value to an Internet website under the following condition(s):
    A. the cost of developing the content exceeds the benefits gained.
    B. visitors to the website do not value or use the content.
    C. the content is unreliable.
    D. all of these.

Answer 124

D. all of these.

Question 125

78. (p. 118) Examples of value-adding content often found on websites include all of the following except 
A. customer feedback.
B. advertising.
C. expertise.
D. entertainment programming.

Answer 125

B. advertising.

Question 126

79. (p. 119) Internet business models
    A. outline methods that online businesses use to create value.
    B. cannot be used by traditional businesses.
    C. outline specific actions a firm needs to take to be profitable.
    D. cannot be combined to create additional competitive advantages.

Answer 126

A. outline methods that online businesses use to create value.

Question 127

80. (p. 119) All of the following are examples of Internet business models EXCEPT 
A. referral-based model.
B. subscription-based model.
C. prescription-based model.
D. production-based model.

Answer 127

C. prescription-based model.

Question 128

36. (p. 125) The makeup of goods and services in the Gross Domestic Products of developed countries has changed over the last decade. More than 50% of the value of GDP of developed countries is based on 
A. clothing and apparel.
B. capital accumulation.
C. financial management.
D. knowledge.

Answer 128

D. knowledge.

Question 129

37. (p. 124-125) As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently, strategic management has moved from focusing on
    A. intangible resources to tangible resources.
    B. tangible resources to intangible resources.
    C. working capital to fixed capital.
    D. fixed capital to working capital.

Answer 129

B. tangible resources to intangible resources.

Question 130

38. (p. 125) Changes in our economy have forced firms to be more concerned with protecting their 
A. knowledge workers.
B. social capital.
C. intellectual capital.
D. all of these.

Answer 130

D. all of these.

Question 131

39. (p. 126) In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should \_\_\_\_\_\_\_\_\_\_\_ a company with mostly physical and financial assets. 
A. be equal to
B. be smaller than
C. be larger than
D. not be correlated with

Answer 131

C. be larger than

Question 132

40. (p. 126) According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by
    A. increasing retention of below average workers.
    B. attracting and retaining knowledgeable workers.
    C. decreasing labor costs.
    D. increasing the turnover of employees.

Answer 132

B. attracting and retaining knowledgeable workers.

Question 133

41. (p. 126) Which of the following firms would you expect to have the highest ratio of market value to book value? 
A. Union Pacific (railroad)
B. Google
C. International Paper
D. Nucor (steel)

Answer 133

B. Google

Question 134

42. (p. 126) Human capital includes
    A. an individual’s capabilities, knowledge, and skills.
    B. the relationships between people.
    C. the output from assembly line employees.
    D. an improved product.

Answer 134

A. an individual’s capabilities, knowledge, and skills.

Question 135

43. (p. 126) \_\_\_\_\_\_\_\_\_\_ includes creativity and problem solving ability. 
A. Physical capital
B. Human capital
C. Social capital
D. Emotional capital

Answer 135

B. Human capital

Question 136

44. (p. 126) \_\_\_\_\_\_\_\_\_\_ can be defined as the "network of relationships that individuals have throughout the organization." 
A. Human capital
B. Social capital
C. Intellectual capital
D. Tacit knowledge

Answer 136

B. Social capital

Question 137

45. (p. 127) Tacit knowledge
    A. is the same as explicit knowledge.
    B. is found mostly at the lower levels of the organization.
    C. can be codified but not reproduced.
    D. can be accessed only with the consent of the employees because it is in the minds of the employees.

Answer 137

D. can be accessed only with the consent of the employees because it is in the minds of the employees.

Question 138

46. (p. 127) New knowledge involves the continual interaction between \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_ knowledge. 
A. intellectual; pragmatic
B. theoretical; practical
C. tacit; explicit
D. detailed; tacit

Answer 138

C. tacit; explicit

Question 139

47. (p. 127) Recently, a knowledge worker's loyalty to his or her employing firm has \_\_\_\_\_\_\_\_\_\_ compared to his or her loyalty to his or her profession and colleagues. 
A. increased
B. decreased
C. remained the same
D. no correlation when

Answer 139

B. decreased

Question 140

48. (p. 127) The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving. These include all of the following EXCEPT 
A. hiring/selecting.
B. sorting/absorbing.
C. developing.
D. retaining.

Answer 140

B. sorting/absorbing.

Question 141

49. (p. 128) Managing a knowledge intensive workforce is very challenging. The best way for a firm to manage its workforce is to
    A. retain knowledge workers.
    B. attract the brightest employees.
    C. balance efforts in the attraction, selection, and retention of top talent.
    D. ensure that it pays higher salaries than its rivals.

Answer 141

C. balance efforts in the attraction, selection, and retention of top talent.

Question 142

50. (p. 129-130) Firms must compete for top talent. When attracting and selecting employees, firms must strive to select the best fit for both the employee and the firm. In an effort to reduce wasted time and effort in interviewing too many candidates while assuring a good candidate pool, a firm should
    A. run employment ads in the newspaper.
    B. use a pre-interview quiz or “bozo filter” (e.g., Cooper Software).
    C. only let lower level employees interview job candidates.
    D. refrain from hiring by referrals from present employees.

Answer 142

B. use a pre-interview quiz or “bozo filter” (e.g., Cooper Software).

Question 143

51. (p. 130) Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons:
    A. it is less expensive than the fees paid to headhunters.
    B. current employees are normally very careful in recommending someone because their credibility is on the line.
    C. it is a good test of employee loyalty.
    D. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters.

Answer 143

D. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters.

Question 144

52. (p. 130) ABC, Incorporated desires to have the most qualified people in every position throughout its organization. This is an example of a concern for 
A. developing human capital.
B. developing social networks.
C. decreasing labor intensive training.
D. leveraging organizational structure.

Answer 144

A. developing human capital.

Question 145

53. (p. 130) Developing human capital is essential to maintaining a competitive advantage in today's knowledge economy. Efforts and initiatives to develop human capital should be directed 
A. at top managers.
B. at human resource departments.
C. at the employees themselves.
D. throughout the firm at all levels.

Answer 145

D. throughout the firm at all levels.

Question 146

54. (p. 132) Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has 
A. increased.
B. decreased.
C. become less important.
D. remained the same.

Answer 146

A. increased.

Question 147

55. (p. 133) In a 360-degree evaluation and feedback system, \_\_\_\_\_\_\_\_\_\_ rate a person's skill and performance. 
A. superiors
B. direct reports
C. colleagues
D. all of these

Answer 147

D. all of these

Question 148

56. (p. 133) Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should
    A. focus on increased recruiting.
    B. decrease money spent on human capital.
    C. make their work environment less stimulating.
    D. adopt effective retention strategies.

Answer 148

D. adopt effective retention strategies.

Question 149

57. (p. 133) In order to take advantage of investment in human capital, a firm should
    A. rotate workers through functions in the company as quickly as possible.
    B. refrain from training individual employees.
    C. establish practices that will enhance employee retention.
    D. none of these.

Answer 149

C. establish practices that will enhance employee retention.

Question 150

58. (p. 133) The least effective way to retain human capital is
    A. encouraging employee identification with organizational mission and goals.
    B. requiring employees to sign agreements that prevent them from working for competitors in the future.
    C. providing employees with a challenging and stimulating work environment.
    D. providing employees with financial and nonfinancial rewards and incentives.

Answer 150

B. requiring employees to sign agreements that prevent them from working for competitors in the future.

Question 151

59. (p. 134) Generally, employees are most likely to stay with an organization if
    A. the employer provides high salaries to technology professionals.
    B. the organization’s mission and values align with the employee’s mission and values.
    C. the firm is in a high tech industry.
    D. the mission and values of the organization change often.

Answer 151

B. the organization’s mission and values align with the employee’s mission and values.

Question 152

60. (p. 135) Many successful firms use internal labor markets. The most important reason they do this is because
    A. they want to encourage job rotation.
    B. if an employee is in the same department for too long, he/she would become indispensable.
    C. they want to keep highly mobile employees motivated and challenged.
    D. an employee who moves too much can be identified as unreliable and eliminated.

Answer 152

C. they want to keep highly mobile employees motivated and challenged.

Question 153

61. (p. 136) All of the following are the benefits of diversity in a firm's workforce except: 
A. Creativity Argument.
B. Problem-Solving Argument.
C. Resource Acquisition Argument.
D. Similarity in Perspectives Argument.

Answer 153

D. Similarity in Perspectives Argument.

Question 154

62. (p. 137) Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished through
    A. requiring workers to work independently of each other.
    B. decreasing the interaction of departments within the firm.
    C. encouraging the sharing of ideas between employees in the firm.
    D. structuring the firm with rigid departmental and employee divisions.

Answer 154

C. encouraging the sharing of ideas between employees in the firm.

Question 155

63. (p. 137) In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed 
A. the "Columbus effect."
B. the "Pied Piper effect."
C. strategically competitive hiring.
D. knowledge integration.

Answer 155

B. the “Pied Piper effect.”

Question 156

64. (p. 137) Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm’s social capital is based on
    A. an employee’s individual abilities.
    B. the relationships among a firm’s employees.
    C. a firm’s allocation of financial resources.
    D. an individual’s knowledge.

Answer 156

B. the relationships among a firm’s employees.

Question 157

65. (p. 138) Social network analysis is helpful because the configuration of group members’ social ties within and outside the group affects the extent to which members connect to individuals who do all of the following EXCEPT:
    A. convey needed resources.
    B. ensure that everyone has the same perspective on strategic and operational issues.
    C. have the opportunity to exchange information and support.
    D. have the motivation to treat each other in positive ways.

Answer 157

B. ensure that everyone has the same perspective on strategic and operational issues.

Question 158

66. (p. 140) In social network analysis \_\_\_\_\_\_\_\_\_\_ stress(es) the importance of ties connecting heterogeneous people, helping to ensure a wide range of diversity in information and perspective. 
A. closure
B. redundancy
C. bridging relationships
D. social supports

Answer 158

C. bridging relationships

Question 159

67. (p. 140) In social network analysis, high levels of \_\_\_\_\_\_\_\_\_\_ often come at a price. For example, groups can become too insular and fail to share what they have learned with people outside the group. 
A. bridging relationships
B. intellect
C. closure
D. diverse knowledge

Answer 159

C. closure

Question 160

68. (p. 142) Advantages of effective social networks for career success include all of the following EXCEPT
    A. access to private information.
    B. access to diverse skill sets.
    C. greater power.
    D. greater redundancy in knowledge sources.

Answer 160

D. greater redundancy in knowledge sources.

Question 161

69. (p. 143-144) Among the downsides of social capital is/are:
    A. high social capital may breed “groupthink,” i.e., a tendency not to question shared beliefs.
    B. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.
    C. individuals may become less willing to collaborate on joint projects.
    D. social capital may both breed “groupthink” and the socialization processes to create it (orientation, training, etc.) can be expensive.

Answer 161

D. social capital may both breed “groupthink” and the socialization processes to create it (orientation, training, etc.) can be expensive.

Question 162

70. (p. 143-144) Social capital has many potential benefits. However, according to the text, social capital
    A. is always beneficial to a firm.
    B. may or may not be beneficial to a firm.
    C. usually restricts the productivity of employees.
    D. always hurts firm performance.

Answer 162

B. may or may not be beneficial to a firm.

Question 163

71. (p. 145) The use of information technology (e.g., e-mail) has increased in recent years in many organizations. This has helped to
    A. communicate information efficiently.
    B. make more effective use of time in every situation.
    C. restrict social network growth.
    D. create smaller social networks.

Answer 163

A. communicate information efficiently.

Question 164

72. (p. 147) The creation of knowledge assets is typically characterized by
    A. high upfront costs and subsequent high variable costs.
    B. high fixed costs and high variable costs.
    C. low upfront costs and high variable costs.
    D. high upfront costs and low variable costs.

Answer 164

D. high upfront costs and low variable costs.

Question 165

73. (p. 147) Mary Stinson was required to take over a project after the entire team left the company. She was able to reconstruct what the team had accomplished through reading e-mails exchanged by the previous team’s members. This is an example of
    A. using explicit knowledge.
    B. inefficient use of information management.
    C. using tacit knowledge.
    D. all of these.

Answer 165

A. using explicit knowledge.

Question 166

74. (p. 149) The management of intellectual property involves all of the following EXCEPT
    A. patents.
    B. contracts with confidentiality and noncompete clauses.
    C. converting explicit knowledge to tacit knowledge.
    D. copyrights and trademarks.

Answer 166

C. converting explicit knowledge to tacit knowledge.

Question 167

75. (p. 151) Dynamic capabilities include all of the following EXCEPT:
    A. learning and innovating.
    B. the ability of an organization to challenge the conventional industry in its industry and market.
    C. becoming more efficient in operational processes.
    D. continuously adopting new ways of serving the evolving needs of the market.

Answer 167

C. becoming more efficient in operational processes.

Question 168

35. (p. 161) The primary aim of strategic management at the business level is
    A. maximizing risk-return tradeoffs through diversification.
    B. achieving a low cost position.
    C. maximizing differentiation of products and/or services.
    D. achieving competitive advantage(s).

Answer 168

D. achieving competitive advantage(s).

Question 169

36. (p. 164) Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? 
A. differentiation
B. overall cost leadership
C. differentiation focus
D. stuck-in-the-middle

Answer 169

B. overall cost leadership

Question 170

37. (p. 165) A manufacturing business pursuing cost leadership will likely
    A. focus on a narrow market segment.
    B. rely on experience effects to raise efficiency.
    C. use advertising to build brand image.
    D. put heavy emphasis on product engineering.

Answer 170

B. rely on experience effects to raise efficiency.

Question 171

38. (p. 165) One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by
    A. hiring more experienced personnel.
    B. repeating a process until a task becomes easier.
    C. spreading out a given expense or investment over a greater volume.
    D. competing in an industry for a long time.

Answer 171

B. repeating a process until a task becomes easier.

Question 172

39. (p. 165) The experience curve suggests that cutting prices is a good strategy
    A. if it can induce greater demand and thereby help a firm travel down the experience curve faster.
    B. in industries characterized by high economies of scale.
    C. in the maturity stage of the industry life cycle.
    D. in the decline stage of the industry life cycle.

Answer 172

A. if it can induce greater demand and thereby help a firm travel down the experience curve faster.

Question 173

40. (p. 168) Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? 
A. Overall cost leadership.
B. Differentiation.
C. Differentiation focus.
D. Cost leadership focus.

Answer 173

A. Overall cost leadership.

Question 174

41. (p. 168-169) Which of the following is a risk (or potential pitfall) of cost leadership?
    A. Cost cutting may lead to the loss of desirable features.
    B. Attempts to stay ahead of the competition may lead to gold plating.
    C. Cost differences increase as the market matures.
    D. Producers are more able to withstand increases in suppliers’ cost.

Answer 174

A. Cost cutting may lead to the loss of desirable features.

Question 175

42. (p. 169) A firm can achieve differentiation through all of the following means EXCEPT
    A. improving brand image.
    B. better customer service.
    C. offering lower prices to frequent customers.
    D. adding additional product features.

Answer 175

C. offering lower prices to frequent customers.

Question 176

43. (p. 170) Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? 
A. Differentiation.
B. Overall cost leadership.
C. Differentiation focus.
D. Stuck-in-the middle.

Answer 176

A. Differentiation.

Question 177

44. (p. 171) High product differentiation is generally accompanied by
    A. higher market share.
    B. decreased emphasis on competition based on price.
    C. higher profit margins and lower costs.
    D. significant economies of scale.

Answer 177

B. decreased emphasis on competition based on price.

Question 178

45. (p. 171) Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position vis-à-vis Porter’s five forces?
    A. By increasing a firm’s margins, it avoids the need for a low cost position.
    B. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives.
    C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs.
    D. Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors.

Answer 178

C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs.

Question 179

46. (p. 171) A differentiation strategy enables a business to address the five competitive forces by
    A. lessening competitive rivalry by distinguishing itself.
    B. having brand-loyal customers become more sensitive to prices.
    C. increasing economies of scale.
    D. serving a broader market segment.

Answer 179

A. lessening competitive rivalry by distinguishing itself.

Question 180

47. (p. 172-174) All of the following are potential pitfalls of a differentiation strategy EXCEPT:
    A. uniqueness that is not valuable.
    B. too high a price premium.
    C. all rivals share a common input or raw material.
    D. perceptions of differentiation may vary between buyers and sellers.

Answer 180

C. all rivals share a common input or raw material.

Question 181

48. (p. 174) Which statement regarding competitive advantages is true?
    A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
    B. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation.
    C. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits.
    D. Attaining multiple types of competitive advantage is a recipe for failure.

Answer 181

A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

Question 182

49. (p. 174-175) A narrow market focus is to a differentiation-based strategy as a
    A. broadly-defined target market is to a cost leadership strategy.
    B. growth market is to a differentiation-based strategy.
    C. growth market is to a cost-based strategy.
    D. technological innovation is to a cost-based strategy.

Answer 182

A. broadly-defined target market is to a cost leadership strategy.

Question 183

50. (p. 174) A firm following a focus strategy
    A. must focus on governmental regulations.
    B. must focus on a market segment or group of segments.
    C. must focus on the rising cost of inputs.
    D. must avoid entering international markets.

Answer 183

B. must focus on a market segment or group of segments.

Question 184

51. (p. 175-176) All of the following are potential pitfalls of a focus strategy EXCEPT
    A. erosion of cost advantages within the narrow segment.
    B. all rivals share a common input or raw material.
    C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation.
    D. focusers can become too focused to satisfy buyer needs.

Answer 184

B. all rivals share a common input or raw material.

Question 185

52. (p. 163) Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform
    A. at about the same level as firms that achieve either cost or differentiation advantages.
    B. about the same as firms that are “stuck-in-the-middle.”
    C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
    D. higher than firms that achieve either a cost or a differentiation advantage.

Answer 185

D. higher than firms that achieve either a cost or a differentiation advantage.

Question 186

53. (p. 176-178) The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following EXCEPT
    A. automated and flexible manufacturing systems.
    B. exploiting the profit pool concept for competitive advantage.
    C. coordinating the “extended” value chain by way of information technology.
    D. deriving benefits from highly focused and high technology markets.

Answer 186

D. deriving benefits from highly focused and high technology markets.

Question 187

54. (p. 177) A \_\_\_\_\_\_\_\_\_\_ can be defined as the total profits in an industry at all points along the industry's value chain. 
A. profit maximizer
B. revenue enhancer
C. profit pool
D. profit outsourcing

Answer 187

C. profit pool

Question 188

55. (p. 178-179) All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT:
    A. firms that fail to attain both strategies may end up with neither and become “stuck-in-the-middle.”
    B. targeting too large a market that causes unit costs to increase.
    C. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain.
    D. miscalculating sources of revenue and profit pools in the firm’s industry.

Answer 188

B. targeting too large a market that causes unit costs to increase.

Question 189

56. (p. 183) Which of the following is NOT one of the ways the Internet is lowering transaction costs?
    A. eliminating supply chain intermediaries
    B. evaluating employee performance
    C. minimizing office expenses
    D. reducing business travel

Answer 189

B. evaluating employee performance

Question 190

57. (p. 183) Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of 
A. electronic data interchange.
B. knowledge management.
C. collaborative design.
D. mass customization.

Answer 190

D. mass customization.

Question 191

58. (p. 183) Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? 
A. celebrity endorsements
B. prestige packaging
C. exceptional service
D. mass customization

Answer 191

D. mass customization

Question 192

59. (p. 184) Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to
    A. respond quickly to customer requests.
    B. provide more services and features.
    C. access markets less expensively.
    D. access niche markets in a highly specialized fashion.

Answer 192

D. access niche markets in a highly specialized fashion.

Question 193

60. (p. 185) One of the reasons the Internet is eroding sustainable competitive advantages is
    A. incumbent firms are entering market segments that they previously considered to be too small.
    B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.
    C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success.
    D. firms are ignoring opportunities to offer high-end services in niche markets.

Answer 193

B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.

Question 194

61. (p. 187) Which of these statements regarding the industry life cycle is correct?
    A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.
    B. Trends suggested by the market life cycle model are generally not reversible or repeatable.
    C. It has important implications for a firm’s generic strategies, functional areas, value-creating activities, and overall objectives.
    D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.

Answer 194

C. It has important implications for a firm’s generic strategies, functional areas, value-creating activities, and overall objectives.

Question 195

62. (p. 187) Which of the following statements about the introduction stage of the market life cycle is TRUE?
    A. It produces relatively large, positive cash flows.
    B. Strong brand recognition seldom serves as an important switching cost.
    C. Market share gains by pioneers are usually easily sustained for many years.
    D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.

Answer 195

D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.

Question 196

63. (p. 187) In the \_\_\_\_\_\_\_\_\_\_ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. 
A. introduction
B. growth
C. maturity
D. decline

Answer 196

A. introduction

Question 197

64. (p. 189) The growth stage of the industry life cycle is characterized by
    A. “in-kind” competition (from the same type of product).
    B. premium pricing.
    C. a growing trend to compete on the basis of price.
    D. retaliation by competitors whose customers are stolen.

Answer 197

A. “in-kind” competition (from the same type of product).

Question 198

65. (p. 188) In the \_\_\_\_\_\_\_\_\_\_ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. 
A. introduction
B. growth
C. maturity
D. decline

Answer 198

C. maturity

Question 199

66. (p. 189) In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? 
A. introduction
B. growth
C. maturity
D. decline

Answer 199

C. maturity

Question 200

67. (p. 189) A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? 
A. introduction
B. growth
C. maturity
D. decline

Answer 200

C. maturity

Question 201

68. (p. 189) As markets mature,
    A. costs continue to increase.
    B. application for patents increase.
    C. differentiation opportunities increase.
    D. there is increasing emphasis on efficiency.

Answer 201

D. there is increasing emphasis on efficiency.

Question 202

69. (p. 189) The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? 
A. introduction
B. growth
C. maturity
D. decline

Answer 202

C. maturity

Question 203

70. (p. 189) Which of the following is most often true of mature markets?
    A. Some competitors enjoy a significant operating advantage due to increasing experience effects.
    B. The market supports premium pricing, which attracts additional competitors.
    C. Advantages that cannot be duplicated by other competitors are difficult to achieve.
    D. The magnitude of pricing differences and product differentiation is larger than in the growth stage.

Answer 203

C. Advantages that cannot be duplicated by other competitors are difficult to achieve.

Question 204

71. (p. 191) In the \_\_\_\_\_\_\_\_\_\_ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. 
A. introduction
B. growth
C. maturity
D. decline

Answer 204

D. decline

Question 205

72. (p. 191) The most likely time to pursue a harvest strategy is in a situation of 
A. high growth.
B. strong competitive advantage.
C. mergers and acquisitions.
D. decline in the market life cycle.

Answer 205

D. decline in the market life cycle.

Question 206

73. (p. 192) During the decline stage of the industry life cycle, \_\_\_\_\_\_\_\_\_\_ refers to obtaining as much profit as possible and requires that costs be decreased quickly. 
A. maintaining
B. harvesting
C. exiting
D. consolidating

Answer 206

B. harvesting

Question 207

74. (p. 193) Research shows that the following are all strategies used by firms engaged in successful turnarounds EXCEPT 
A. asset and cost surgery.
B. selective product and market pruning.
C. global expansion.
D. piecemeal productivity improvements.

Answer 207

C. global expansion.

Question 208

75. (p. 193) Piecemeal productivity improvements during a turnaround typically does NOT involve
    A. business process reengineering.
    B. increased capacity utilization.
    C. benchmarking.
    D. expansion of a firm’s product market scope.

Answer 208

D. expansion of a firm’s product market scope.

Question 209

31. (p. 201) Corporate-level strategy addresses two related issues:
    A. how to compete in a given business; the application of technology.
    B. what businesses to compete in; how these businesses can achieve synergy.
    C. how to integrate primary activities; increase shareholder wealth.
    D. how to improve a firm’s infrastructure; how to maintain ethical behavior.

Answer 209

B. what businesses to compete in; how these businesses can achieve synergy.

Question 210

32. (p. 204) Individual investors are dependent upon the corporation’s managers to
    A. diversify the stockholder’s investments in order to reduce risk.
    B. add value to their investments in a way that the stockholders could not accomplish on their own.
    C. achieve risk reduction at a lower cost than stockholders could obtain on their own.
    D. maximize short-term returns in the form of dividends.

Answer 210

B. add value to their investments in a way that the stockholders could not accomplish on their own.

Question 211

33. (p. 205) McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of
    A. achieving economies of scope through related diversification.
    B. achieving market power through related diversification.
    C. attaining the benefits of restructuring through unrelated diversification.
    D. attaining the benefits of parenting through unrelated diversification.

Answer 211

A. achieving economies of scope through related diversification.

Question 212

34. (p. 206) Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as 
A. utilizing common infrastructures.
B. capitalizing on core competencies.
C. reducing corporate risk.
D. using portfolio analysis.

Answer 212

B. capitalizing on core competencies.

Question 213

35. (p. 205) The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. This is an example of
    A. achieving economies of scope through related diversification.
    B. achieving market power through related diversification.
    C. attaining the benefits of horizontal integration.
    D. attaining the benefits of parenting through unrelated diversification.

Answer 213

D. attaining the benefits of parenting through unrelated diversification.

Question 214

36. (p. 206) \_\_\_\_\_\_\_\_\_\_ reflect(s) the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services. 
A. Primary value chain activities
B. Culture
C. Core competencies
D. Horizontal integration

Answer 214

C. Core competencies

Question 215

37. (p. 206-207) For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?
    A. The competence must help the business gain strength relative to its competition.
    B. The new business must be similar to existing businesses to benefit from a core competence.
    C. The collection of competencies should be unique, so that they cannot be easily imitated.
    D. The new business must have an established large market share.

Answer 215

D. The new business must have an established large market share.

Question 216

38. (p. 207) Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that
    A. the similarity required for sharing core competencies must be in the value chain, not in the product.
    B. the products use similar distribution channels.
    C. the target market is the same, even if the products are very different.
    D. the methods of production are the same.

Answer 216

A. the similarity required for sharing core competencies must be in the value chain, not in the product.

Question 217

39. (p. 208) When management uses common production facilities or purchasing procedures to distribute different but related products, they are 
A. building on core competencies.
B. sharing activities.
C. achieving process gains.
D. using portfolio analysis.

Answer 217

B. sharing activities.

Question 218

40. (p. 210) Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of 
A. leveraging core competencies.
B. sharing activities.
C. vertical integration.
D. pooled negotiating power.

Answer 218

C. vertical integration.

Question 219

41. (p. 212) The risks of vertical integration include all of the following EXCEPT
    A. costs and expenses associated with increased overhead and capital expenditures.
    B. lack of control over valuable assets.
    C. problems associated with unbalanced capacities along the value chain.
    D. additional administrative costs associated with managing a more complex set of activities.

Answer 219

B. lack of control over valuable assets.

Question 220

42. (p. 212) Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with 
A. strategic alliances.
B. divestment.
C. vertical integration.
D. horizontal integration.

Answer 220

C. vertical integration.

Question 221

43. (p. 213) A firm should consider vertical integration when
    A. the competitive situation is highly volatile.
    B. customer needs are evolving.
    C. the firm’s suppliers willingly cooperate with the firm.
    D. the firm’s suppliers of raw materials are often unable to maintain quality standards.

Answer 221

D. the firm’s suppliers of raw materials are often unable to maintain quality standards.

Question 222

44. (p. 214) It may be advantageous to vertically integrate when
    A. lower transaction costs and improved coordination are vital and achievable through vertical integration.
    B. the minimum efficient scales of two corporations are different.
    C. flexibility is reduced, providing a more stationary position in the competitive environment.
    D. various segregated specializations will be combined.

Answer 222

A. lower transaction costs and improved coordination are vital and achievable through vertical integration.

Question 223

45. (p. 213) Transaction costs include all of the following costs EXCEPT 
A. search costs.
B. negotiating costs.
C. monitoring costs.
D. agency costs.

Answer 223

D. agency costs.

Question 224

46. (p. 214) Vertical integration is attractive when
    A. transaction costs are higher than internal administrative costs.
    B. internal administrative costs are higher than transaction costs.
    C. transaction costs and internal administrative costs are equal.
    D. search costs are higher than monitoring costs.

Answer 224

A. transaction costs are higher than internal administrative costs.

Question 225

47. (p. 214-215) \_\_\_\_\_\_\_\_\_\_ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. 
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Increasing market power

Answer 225

acquisitions, divestures, and new ventures.

A. Parenting

Question 226

48. (p. 215) \_\_\_\_\_\_\_\_\_\_ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. 
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Sharing activities

Answer 226

B. Restructuring

Question 227

49. (p. 215) According to the text, corporate restructuring includes
    A. capital restructuring, asset restructuring, and technology restructuring.
    B. global diversification, capital restructuring, and asset restructuring.
    C. management restructuring, financial restructuring, and procurement restructuring.
    D. capital restructuring, asset restructuring, and management restructuring.

Answer 227

D. capital restructuring, asset restructuring, and management restructuring.

Question 228

50. (p. 216) Portfolio management matrices are applied to what level of strategy? 
A. Departmental level
B. Business level
C. Corporate level
D. International level

Answer 228

C. Corporate level

Question 229

51. (p. 217) When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a 
A. cow.
B. dog.
C. problem child.
D. star.

Answer 229

D. star.

Question 230

52. (p. 217) In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a 
A. star.
B. question mark.
C. cash cow.
D. dog.

Answer 230

B. question mark.

Question 231

53. (p. 219) Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?
    A. Grid dimensions are based on external environments and internal capabilities/market positions.
    B. Businesses are plotted on a 3-dimensional grid.
    C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core competences.
    D. They are most helpful in helping businesses develop types of competitive advantage.

Answer 231

A. Grid dimensions are based on external environments and internal capabilities/market positions.

Question 232

54. (p. 217) A “cash cow,” referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has
    A. low market growth and relatively high market share.
    B. relatively low market share and low market growth.
    C. relatively low market share and high market growth.
    D. high market growth and relatively high market share.

Answer 232

A. low market growth and relatively high market share.

Question 233

55. (p. 217) In managing a firm’s portfolio, the BCG matrix would suggest that
    A. “dogs” should be invested in to increase market share and become cash cows.
    B. “stars” are in low growth markets and can provide excess cash to fund other opportunities.
    C. “question marks” can represent future “stars” if their market share is increased.
    D. “cash cows” require substantial cash outlays to maintain market share.

Answer 233

C. “question marks” can represent future “stars” if their market share is increased.

Question 234

56. (p. 217) In the Boston Consulting Group’s (BCG) Growth Share Matrix, the suggested strategy for “stars” is to
    A. milk them to finance other businesses.
    B. invest large sums to gain a good market share.
    C. not invest in them and to shift cash flow to other businesses.
    D. maintain position and after the market growth slows use the business to provide cash flow.

Answer 234

D. maintain position and after the market growth slows use the business to provide cash flow.

Question 235

57. (p. 218) All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT
    A. every business cannot be accurately measured and compared on the two dimensions.
    B. it views each business as a stand-alone entity and ignores the potential for synergies across businesses.
    C. it takes a dynamic view of competition which can lead to overly complex analyses.
    D. while easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.

Answer 235

C. it takes a dynamic view of competition which can lead to overly complex analyses.

Question 236

58. (p. 220) The three primary means by which a firm can diversify are:
    A. mergers and acquisitions; joint ventures and strategic alliances; internal development.
    B. mergers and acquisitions; differentiation; overall cost leadership.
    C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital.
    D. mergers and acquisitions; internal development; differentiation.

Answer 236

A. mergers and acquisitions; joint ventures and strategic alliances; internal development.

Question 237

59. (p. 223-224) The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:
    A. expensive premiums that are frequently paid to acquire a business.
    B. difficulties in integrating the activities and resources of the acquired firm into a corporation’s on-going operations.
    C. it is a slow means to enter new markets and acquire skills and competences.
    D. there can be many cultural issues that can doom an otherwise promising acquisition.

Answer 237

C. it is a slow means to enter new markets and acquire skills and competences.

Question 238

60. (p. 225) Divesting businesses can accomplish many different objectives, including
    A. enabling managers to focus their efforts more directly on the firm’s core businesses.
    B. providing the firm with more resources to spend on more attractive alternatives.
    C. raising cash to help fund existing businesses.
    D. all of these.

Answer 238

D. all of these.

Question 239

61. (p. 227) A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of 
A. joint diversification.
B. strategic alliance.
C. divestment.
D. global integration.

Answer 239

B. strategic alliance.

Question 240

62. (p. 226) Cooperative relationships such as __________ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.
    A. joint ventures
    B. mergers and acquisitions
    C. strategic alliances
    D. both joint ventures and strategic alliances

Answer 240

D. both joint ventures and strategic alliances

Question 241

63. (p. 228) All of the following are guidelines for managing strategic alliances EXCEPT
    A. establishing a clear understanding between partners.
    B. relying primarily on a contract to make the joint venture work.
    C. not shortchanging your partner.
    D. working hard to ensure a collaborative relationship between partners.

Answer 241

B. relying primarily on a contract to make the joint venture work.

Question 242

64. (p. 228) Which of the following statements regarding internal development as a means of diversification is FALSE?
    A. Many companies use internal development to extend their product lines or add to their service offerings.
    B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
    C. The firm is able to capture the wealth created without having to “share the wealth” with alliance partners.
    D. Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

Answer 242

B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.

Question 243

65. (p. 228) __________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.
    A. Strategic alliances; joint ventures; internal development
    B. Internal development; mergers; acquisitions
    C. Strategic alliances; mergers; joint ventures
    D. Mergers; internal development; strategic alliances

Answer 243

B. Internal development; mergers; acquisitions

Question 244

66. (p. 229) According to Michael Porter: “There’s a tremendous allure to __________. It’s the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets.”
    A. strategic alliances and joint ventures
    B. mergers and acquisitions
    C. internal development
    D. differentiation strategies

Answer 244

B. mergers and acquisitions

Question 245

67. (p. 232) An antitakeover tactic called (a) \_\_\_\_\_\_\_\_\_\_ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. 
A. golden parachute
B. greenmail
C. poison pill
D. scorched earth

Answer 245

B. greenmail

Question 246

68. (p. 232) An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called 
A. greenmail.
B. a poison pill.
C. a golden parachute.
D. scorched earth.

Answer 246

B. a poison pill.

Question 247

69. (p. 232) The term “golden parachutes” refers to
    A. a clause requiring that huge dividend payments be made upon takeover.
    B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
    C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition.
    D. pay given to executives fired because of a takeover.

Answer 247

D. pay given to executives fired because of a takeover.

Question 248

70. (p. 232) Antitakeover tactics include all of the following EXCEPT 
A. greenmail.
B. golden parachutes.
C. golden handcuffs.
D. poison pills.

Answer 248

C. golden handcuffs.