Test 2 Flashcards by Montana Parish

The trend towards worldwide markets makes it easier to predict where competitors will spring up.

False

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Because many countries are investing in countries other than their own, each country is becoming more autonomous and independent.

False

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An advantage of international expansion is that competition within foreign countries is generally very similar to that of the United States.

False

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In Michael Porter’s “diamond of national advantage,” there are four broad attributes that, as a system, constitute a nation’s competitiveness in an industry.

True

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The factor endowments of a country are inherited and cannot be created.

False

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With regard to “factor conditions,” the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed.

False

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Demanding domestic consumers tend to push firms to move ahead of companies in other countries where consumers are less demanding and more complacent.

True

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High levels of environmental awareness in Denmark have led to a decline in Denmark’s industrial competitiveness in the international marketplace

False

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Countries with a strong supplier base benefit by adding efficiency to downstream activities

True

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Typically, intense rivalry in domestic markets does not force firms to look outside their national boundaries for new markets.

False

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Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase.

True

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International expansion can extend the life cycle of a product that is in its maturity stage in a firm’s home country.

True

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An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain.

True

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The laws, and the enforcement of laws, associated with the protection of intellectual property rights, represent a significant currency and management risk to multinational firms.

False

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Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets.

True

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Offshoring takes place when a firm decides to shift an activity that they were previously performing in a domestic location to a foreign location.

True

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Two opposing pressures that managers face when they compete in foreign markets are cost reduction and adaptation to local markets.

True

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Theodore Levitt has argued that people around the world are willing to sacrifice preferences in product features, functions, and design if they are offered lower prices and high quality.

True

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Among Theodore Levitt’s assumptions that would favor a global strategy is that consumers around the world are becoming less price-sensitive.

False

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Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global.

True

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Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer).

True

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In a global strategy a firm operates all its businesses under a single common strategy regardless of location.

True

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A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product appealing to the largest number of consumers in every market.

False

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The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy.

False

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Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy.

True

A multidomestic strategy would likely include the use of high volume, centralized production facilities to maximize economies of scale.

False

A limitation of a multidomestic strategy is that it may lead to "overadaptation" as conditions change.

True

Multinational firms following a transnational strategy strive to optimize the trade-offs associated with efficiency, local adaptation, and learning.

True

A key tenet of a transnational strategy is improved adaptation to all competitive situations as well as flexibility by capitalizing on communication and knowledge flows throughout the organization.

True

According to studies by Rugman and Verbeke, most of the world's 500 firms are global, not regional or biregional.

False

A franchise generally expires after a few years whereas a license is designed to last into perpetuity.

False

Typically, joint ventures involve less control and risk than franchising

False

Typically, the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control.

False

A major trend in international developments includes A. greater international trade and operations. B. a growing recognition of an international managerial perspective. C. a large increase in international investment. D. all of these.

D. All of these

The reasons that explain why some governments make better use of the inflows from foreign investment and know-how than others include all of the following EXCEPT A. governmental practices that are business-friendly. B. local entrepreneurs that can train workers and invest in modern technology. C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions. D. sound management of broader economic factors such as interest rates and inflation.

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

Michael Porter's framework all of the following factors affect a nation's competitiveness EXCEPT A. factor conditions. B. demand characteristics. C. related and supported industries. D. policies that protect the nation's domestic competitors

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

Rivalry is intense in nations with conditions of STRONG consumer demand, STRONG supplier bases, and HIGH new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. strong; strong; high D. weak; weak; low

C. strong; strong; high

According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments.

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

All of the factors below have made India's software services industry extremely competitive on a global scale EXCEPT A. large pool of skilled workers. B. large network of public and private educational institutions. C. tax and antitrust legislation that protect the dominant players in the industry. D. large, growing market and sophisticated customers

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

All of the following would be viewed as advantages of global diversification EXCEPT A. fewer social and political risks than domestic operations. B. a firm not being solely dependent on the domestic market. C. a firm with large margins at home helping subsidize its operations in other nations. D. the potential to lower costs of operation even if the primary market is at home.

A. fewer social and political risks than domestic operations.

Optimizing the location of every activity in the value chain can yield all of the following strategic advantages EXCEPT A. performance enhancement. B. cost reduction. C. extending the life cycle of the product of service. D. risk reduction.

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

Microsoft decided to establish a corporate research laboratory in Cambridge, England A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice.

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

The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries enable these companies to benefit from A. higher prices in their domestic markets. B. economies of scale. C. optimizing the location for many activities in their value chain. D. reducing their exposure to currency risks.

B. economies of scale

Many U.S. multinational companies set up maquiladora operations south of the U.S.-Mexico border primarily A. to sell products into the growing Mexican market. B. as part of US government-initiated measures to discourage illegal immigration. C. to take advantage of the lower tax rates in Mexico. D. to take advantage of the low cost of labor.

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

Appreciation of the U.S. dollar will have the following impact on McDonald's: A. lower sales abroad because foreign customers cannot afford McDonalds' products. B. more transfer of ingredients from the U.S. to branches abroad to take advantage of the higher dollar. C. lower profits, because foreign profits will be reduced when measured in dollars. D. no impact at all.

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

__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. A. Offshoring B. A global strategy C. Outsourcing D. A transnational strategy

C. Outsourcing

Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. D. MNCs can compete with aggressive

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

Pressures to "reduce costs" require that A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government

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

Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. international B. global C. multidomestic D. transnational

A. international

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. Global B. Multidomestic C. Transnational D. Overall cost leadership

B. Multidomestic

Software Tech, Inc., a company in the computer software industry, invests heavily in R&D and product design. Thus, most of its value is added A. upstream. B. in its infrastructure. C. downstream. D. midstream.

A. upstream.

Industries in which proportionally more value is added in __________ activities are more likely to benefit from a __________ strategy. A. downstream; global B. upstream; multidomestic C. upstream; global D. manufacturing; multidomestic

C. upstream; global

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? A. Firms that compete in industries in which consumer preferences vary substantially in each country. B. Firms in industries that are expanding very rapidly. C. Firms in industries that have value added by sales and marketing departments. D. Firms in industries that have much value added in research and design or manufacturing.

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

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following EXCEPT A. customers' needs, interests, and tastes are becoming increasingly homogenized or similar. B. consumers around the world are increasingly willing to tradeoff idiosyncratic preferences in product features for lower price. C. flexible manufacturing trends have allowed a decline in the minimum volume required to reach acceptable levels of production efficiency. D. fluctuating exchange rates.

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

Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, R&D, and marketing activities in __________ locations. A. a wide variety of; several B. a wide variety of; few C. standardized; several D. standardized; few

D. standardized; few

Gillette's worldwide success with its Sensor razor demonstrates A. the importance of merging global and multidomestic strategies. B. the values of establishing joint ventures with several multinational corporations. C. that a global marketing effort can sometimes be successful. D. the usefulness of a multidomestic strategy.

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

As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by A. increased freedom of individual business units to adapt to local tastes. B. the creation of a worldwide network to achieve consistent service regardless of location. C. flexibility in applying R&D to meet country-specific needs. D. tailoring products to meet country-specific needs.

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

All of the following are risks associated with a global strategy EXCEPT A. a firm with only one manufacturing location must export its product—some of which may be a great distance from the operation. B. the geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. concentrating an activity in a single location makes the rest of the firm dependent on that location. D. the pressures for local adaptation may elevate the firm's cost structure.

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

All of the following are limitations of a global strategy EXCEPT A. limited ability to adapt to local markets. B. the ability to locate activities in optimal locations. C. the concentration of activities may increase dependence on a single facility. D. single locations may lead to higher tariffs and transportation costs.

B. the ability to locate activities in optimal locations.

Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by A. flexibility in adjusting to local laws and customs. B. decreased duplication of inventories which are often involved in having multiple plants producing similar products. C. decreased shipping and transportation costs inherent in local production. D. economies of scale gained through centralized production of standardized products.

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

All of the following are limitations of a multidomestic strategy EXCEPT A. less ability to realize cost savings through scale economies. B. greater difficulty in transferring knowledge across countries. C. single locations may lead to higher tariffs and transportation costs. D. may lead to "overadaptation" as conditions change.

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

High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy? A. global B. multidomestic C. transnational D. differentiation

C. transnational

Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. global B. transnational C. international D. multidomestic

B. transnational

Which of the following is a disadvantage of a transnational strategy? A. Less ability to realize cost savings through scale economies. B. Limited ability to adapt to local markets. C. Unique managerial challenges in fostering knowledge transfer. D. Single locations may lead to higher tariffs and transportation costs.

C. Unique managerial challenges in fostering knowledge transfer.

In order to realize the strongest competitive advantage, firms engaged in worldwide competition must A. require that all of their various business units follow the same strategy regardless of location. B. ensure that all business units follow a strategy strictly tailored to their respective locations. C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results. D. attempt to use the strategy that was most successful in their home country.

C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results.

According to studies by Rugman and Verbeke, approximately how many of the world's largest 500 firms are global, that is, they have at least 20% of their total revenues each in North America, Asia, and Europe? A. 9 B. 59 C. 79 D. 159

A. 9

Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, franchising, licensing, joint venture, and wholly owned subsidiary

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

A domestic corporation considering expanding into international markets for the first time will typically A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home. B. consider licensing or franchising its operations. C. consider implementing a low risk/low control strategy such as exporting. D. form a joint venture with a reputable foreign producer.

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

The form of entry strategy into international operations that offers the lowest level of control would be A. franchising. B. licensing. C. joint venture. D. exporting.

D. exporting

Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called A. transfer prices. B. dividends. C. royalties. D. intra-corporate inflows.

C. royalties.

The difference between a franchise and licensing contract is that A. a franchise contract is more specific and usually longer in duration. B. a franchise contract must include a foreign government. C. a licensing contract covers more aspects of operations. D. a franchise contract involves less control and less risk

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

__________ entail the creation of a third-party legal entity, whereas __________ do not. A. Licensing agreements; joint ventures B. Joint ventures; strategic alliances C. Strategic alliances; joint ventures

B. Joint ventures; strategic alliances

A __________ is a business in which a multinational company owns 100 percent of the stock. A. joint venture B. strategic alliance C. wholly owned subsidiary D. franchising operation

C. wholly owned subsidiary

__________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries

D. Wholly owned subsidiaries

Small businesses and entrepreneurial firms create the majority of new jobs in the U.S. economy.

True

Most small businesses in the U.S. are in retail trade and construction industries.

False

Opportunity recognition is the process of identifying, selecting, and developing entrepreneurial opportunities

True

Opportunity recognition involves two phases of activity: discovery and evaluation.

True

The evaluation phase of opportunity recognition includes the "Aha!" experience that often leads to new venture development

FALSE

The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends.

TRUE

The majority of entrepreneurial firms are started with financing from venture capitalists and banks.

False

Angel investors are private individuals who provide equity investments for seed capital during the early stages of a new venture.

True

As investors, venture capitalists rarely provide any help or services to entrepreneurial firms other than financing.

False

Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

True

The term "angel investors" refers to private individuals who provide seed capital to young ventures.

True

Venture capital is a form of public equity financing used to help young firms grow rapidly.

False

To obtain venture capital financing, business founders often have to give up some ownership and control of their business.

True

According to the text, venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture

True

Because of the Small Business Administration and government regulations, small businesses are rarely allowed to bid on government contracts.

False

An entry wedge, according to the text, is a type of entrepreneurial strategy firms can use to enter into business

True

Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes.

False

Adaptive new entry involves offering a radical new product or highly innovative service.

False

Rather than fighting over existing customers, firms pursuing a "blue ocean" strategy seek opportunities in uncontested markets.

True

"Blue ocean" strategies rarely provide sustainable advantages because they are easily imitated

False

Because new ventures are typically small, they usually don't have high economies of scale relative to competitors.

True

Entrepreneurial firms are often in a strong position to use combination strategies because they have the flexibility to approach situations uniquely.

True

Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers.

True

Entrepreneurial new entry is often perceived as a competitive threat because most market needs are being met, either directly or indirectly, by an existing firm

True

25 Market commonality is the extent to which rivals draw from the same types of resources.

False

Market commonality refers to the extent to which competitors are vying for the same customers in the same markets.

True

When attacked, older and larger firms tend to respond more quickly, but their responses are often more predictable.

False

Cutting prices or increasing marketing efforts are examples of tactical competitive actions.

True

In the context of competitive dynamics, tactical actions involve major commitments of distinctive and specific resources to strategic initiatives.

False

Refinements or extensions of existing strategies are often referred to as tactical actions.

True

Forbearance is a particularly aggressive type of competitive attack.

False

Co-opetition, where competitors work together behind the scenes, is a form of illegal tacit collusion.

False

In the opening case, iSold It, a firm that helped others sell products on eBay, went from one of the fastest growing franchise businesses to a firm that saw a number of its franchises close and declining sales in a matter of months. What was a major challenge iSold It faced that led to these problems? A. It did not have the financial resources to maintain the rapidly growing firm. B. The company lacked knowledgeable executives in key positions. C. Its concept was rapidly imitated by others. D. It had weak operational systems and could not maintain control of the growing network of stores

C. Its concept was rapidly imitated by others.

According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What are they? A. good ideas, a team of investors, and a business plan B. a viable opportunity, available resources, and a qualified and motivated founding team C. an opportunity, a marketing plan, and office space D. management, marketing, and money

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

Which of the following is a common source of new business opportunities? A. current or past work experiences B. suggestions by family or friends C. chance event D. all of these

D. all of these

) 36 The process of identifying, selecting, and developing new venture opportunities is known as A. innovativeness. B. bootstrapping. C. opportunity recognition. D. brainstorming

C. opportunity recognition.

Generally speaking, the opportunity recognition process consists of two phases of activity. They are A. Global Search and Recycling Profits. B. Value Creation and Affordability. C. Discovery and Evaluation. D. none of these.

C. Discovery and Evaluation.

Which of the following is NOT one of the characteristics of an entrepreneurial opportunity? A. attractive B. affordable C. achievable D. value creating

B. affordable

When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be A. value creating. B. affordable. C. achievable. D. durable.

D. durable.

Which of the following terms is used to refer to opportunities that are practical and physically possible? A. durable B. valuable C. achievable – practical and physically possible D. sustainable

C. achievable – practical and physically possible

Financing for entrepreneurial start-ups includes which of the following? A. investments by family and friends B. personal savings C. private investors D. all of these

D. all of these

Which of the following sources of entrepreneurial financing are available to ventures that have already started to conduct business and generate sales? A. bank financing B. venture capital C. public financing D. all of these

D. all of these

The majority of entrepreneurial start-ups are financed with A. bank financing. B. public financing (e.g., SBA loans). C. venture-capital financing. D. personal savings and the contributions of family and friends.

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

Private individuals who provide seed capital to young ventures are known as A. angels. B. gazelles. C. cash cows. D. rising stars

A. angels.

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

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

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

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

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by A. established corporations. B. bootstrappers. C. "lone wolf" entrepreneurs. D. all of these.

C. "lone wolf" entrepreneurs.

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

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

__________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and/or expand into new markets. A. Strategic alliances B. Bootstrappers C. "Lone wolf" entrepreneurs D. Research & development

A. Strategic alliances

The U.S. Small Business Administration supports small business through all of the following EXCEPT A. government contracting. B. underwriting loans. C. investing venture capital. D. training and counseling.

C. investing venture capital.

Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentioned by the text? A. vision B. dedication and drive C. commitment to excellence D. clarifying job responsibilities

D. clarifying job responsibilities

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

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

Which of the following is NOT a common new entry strategy according to the text? A. imitative new entry B. adaptive new entry C. proactive new entry D. pioneering new entry

C. proactive new entry

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as A. imitative new entry. B. adaptive new entry. C. proactive new entry. D. pioneering new entry.

A. imitative new entry.

Which of the following is NOT a key element of a blue ocean strategy? A. Pursue low cost and differentiation advantages simultaneously. B. Make the competition irrelevant. C. Highlight incremental improvements to capture market share. D. Create new demand in uncharted territory.

C. Highlight incremental improvements to capture market share.

Cirque du Soleil is an example of a firm that successfully enacted a "blue ocean" strategy. Which of the following is a feature of the strategy it enacted? A. It developed its own musical scores for its circus performances. B. It discontinued traditional parts of the circus, such as animal acts. C. It researched customers to learn what circus features are more in demand. D. All of these.

D. All of these.

"Doing more with less", by holding down costs or making more efficient use of resources is one of the ways entrepreneurs achieve success. This is an example of how entrepreneurs use A. an imitative strategy. B. a low-cost leader strategy. C. a differentiation strategy. D. a combination strategy.

B. a low-cost leader strategy.

Entrepreneurial firms that pursue a low-cost leadership strategy use which of the following to achieve lower costs? A. cost-saving technology such as the Internet B. simple organizational structures C. rapid decision making D. all of these

D. all of these

When an industry is mature, a __________ strategy is considered to be one of the most effective approaches for a new entrant. A. focus B. differentiation C. overall low-cost D. small business

A. focus

According to the text, all of the following might make it difficult for entrepreneurial firms to effectively pursue a strategy of differentiation EXCEPT A. incumbent firms are constantly seeking opportunities to specialize in market niches. B. differentiation strategies are often expensive to enact. C. it may be difficult for a young firm to establish a strong brand identity. D. implementing superior new technologies may be challenging for entrepreneurial firms.

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

Intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace is known as A. competitive dynamics. B. resource similarity. C. threat of substitutes. D. pioneering new entry.

A. competitive dynamics.

Which of the following is NOT one of the reasons a company might launch new competitive actions? A. to obtain first mover advantages B. to improve market position C. to capitalize on growing demand D. to find new sources of raw materials

D. to find new sources of raw materials

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

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

Aircraft makers Boeing and Airbus have a high degree of __________ because they make very similar products and have many buyers in common. A. dynamic capabilities B. market commonality C. first mover advantages D. equity funding

B. market commonality

The Wall Street Journal and the New York Times have seen the intensity of their rivalry increase. One factor driving this is that the Wall Street Journal has moved from financial news reporting to general national and global news reporting and finally, to adding local New York news. The rivalry of these two news providers has increased due to A. increased dynamic capabilities. B. increased market commonality. C. erosion of first mover advantages. D. the choice of tactical over strategic actions

B. increased market commonality.

Which of the following questions should a firm ask itself before responding to a competitive attack? A. How serious is the impact of the attack? B. What is our competitive intent—do we want to blunt the attack or enhance our competitive position with our response? C. What resources do we have available for a response? D. All of these.

D. All of these.

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

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

Cirrus Aircraft, a leading manufacturer of small airplanes, sees a market opportunity and has decided to double its plant capacity over the next two years. What type of competitive action does this represent? A. A tactical action because the move is an attempt to fill a gap in service. B. A strategic action because such a large plant expansion will require a major commitment of resources. C. A strategic action because the firm can easily reverse the action at any time, thus giving Cirrus more strategic flexibility. D. A guerilla offensive because it is fast and will surprise its rivals.

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

All of the following are examples of strategic actions a firm might take EXCEPT A. acquire with competitors to reduce competition. B. expand into neglected markets. C. change product packaging. D. tie up raw materials sources

C. change product packaging.

The best example of a tactical action that a company might use in response to a competitive attack is to A. acquire the competitor. B. target the rival's markets. C. expand into new geographical areas. D. offer price discounts and rebates.

D. offer price discounts and rebates.

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

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

Which of the following refers to a situation where a company has a high concentration of its business in a particular industry's market? A. competitor's resources B. market dependence C. resource similarity D. actor's reputation

B. market dependence

A firm is considering a large price cut on its leading product as a way to gain market share. One executive strongly disagrees with the price cut and states, "We are in the same marketplace as our rivals, and we do not have any competitive advantages in our cost structure. If we cut prices, our competitors will likely do the same. The end result is that we will all make less money." These arguments are an example of A. a strategy of forbearance. B. a strategy of co-opetition. C. a hardball strategy whereby competitive actions are not undertaken without a clear advantage.

A. a strategy of forbearance.

The "traditional" approach to strategic control is interactive, while the "contemporary" approach to strategic control is sequential.

False

The traditional approach to strategic control relies on feedback from performance measurement to formulate strategy.

True

For firms competing in highly unstable and turbulent industries, "traditional" strategic controls are most appropriate.

False

Sales quotas, operating budgets, and production schedules are examples of "traditional" controls.

True

In "single loop" learning, the organization's assumptions, premises, goals, and strategies are continuously monitored, tested, and reviewed.

False

"Contemporary" strategic controls involve comparing actual performance to predetermined goals

False

Informational control is primarily concerned with whether or not the organization is "doing the right things."

True

Continuous monitoring enhances an organization's ability to respond with speed and flexibility.

True

As firms downsize, a control system based on rewards and culture becomes dysfunctional.

False

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty

True

Once a strong and healthy organizational culture has been established, it becomes self-sustaining

False

The collective sum of individual behaviors of an organization's employees generally results in what is best for the organization; thus, individual rationality assures organizational rationality

False

An organization's reward system is typically a weak method of motivating employees.

False

Different functional areas within an organization often have different reward systems.

True

Rewards systems that reinforce an organization's core values and contribute to organizational cohesiveness are the least effective type.

False

For a reward system to be effective, it must be perceived as fair and equitable

True

Boundaries and constraints are just used to maintain order in an organization and have little effect on the organization's strategic priorities.

False

Short-term objectives and action plans are types of boundaries that channel the efforts of employees toward goal accomplishment.

True

Unexpected events (such as wildcat strikes or new government regulations) have little effect on short-term objectives that need to remain fixed to be effective.

False

Action plans permit a degree of autonomy for managers who sometimes must modify activities to achieve the desired outcome.

True

Boundaries and constraints, when used properly, can minimize improper and unethical conduct.

True

Rule-based controls are appropriate in organizations where most of the employees are unskilled

True

The primary participants in corporate governance, according to Monks and Minow, are (1) the shareholders, (2) board of directors, and (3) employees

False

Central to agency theory is the relationship between two primary players, the principals (stockholders) and agents (management).

True

Research has shown that executives who have large holdings of stock in their firm were more likely to have diversification strategies more consistent with shareholder interests, like increasing long-term returns.

True

One of the most critical roles of the board of directors is to create incentives that align the interests of the CEO and top executives with the interests of shareholders.

True

The risk of being acquired by hostile raiders is often referred to as the takeover constraint.

True

Auditors are appointed by the Securities and Exchange Commission to audit a company's financial statements.

False

Stock analysts generally issue more "sell" recommendations than "buy" recommendations.

False

Public companies are required by law to disclose information regarding executive compensation packages

True

The Sarbanes-Oxley Act of 2002 requires that CEOs and CFOs of publicly-listed companies must reveal off-balance-sheet finances and vouch for the accuracy of information provided.

True

The Sarbanes-Oxley Act of 2002 stipulates that executives of a firm will still be able to sell their shares in the firm when other employees cannot.

False

In emerging economies and continental Europe, principal-principal conflicts are frequent. These consist of conflicts between controlling shareholders and executives.

False

Principal-principal (PP) conflicts frequently result in expropriation, which is defined as activities to enrich minority shareholders to assure their support

False

The "traditional" approach to strategic control is sequential. Which of the following is not one of the steps in the sequence? A. Action plans are submitted by lower level managers. B. Performance is measured against the predetermined goal. C. Strategies are implemented. D. Strategies are formulated and top management sets goals.

A. Action plans are submitted by lower level managers.

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

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

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

B. traditional strategic controls are usually inappropriate

Contemporary approaches to strategic control rely primarily on A. feedback controls. B. single-loop learning. C. double-loop learning. D. comparative learning.

C. double-loop learning.

Informational control systems ask A. Is the organization "doing things right"? B. Is the organization "doing the right things"? C. Are rules and regulations being followed as information is processed? D. Is the organization's environment a necessary and sufficient condition for success?

B. Is the organization "doing the right things"?

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

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

Which of the following is NOT one of the characteristics of a contemporary control system? A. It is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans. B. It must focus on constantly changing information that is strategically important. C. It circumvents the need for face-to-face meetings among superiors, subordinates, and peers. D. It generates information that is important enough to demand regular and frequent attention.

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

Top managers at ABC Company meet every Friday to review daily operational reports and year-to-date data. This is an example of A. behavioral control. B. informational control. C. strategy formulation. D. strategy implementation

B. informational control.

Complete the following sentence: "As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on __________ is dysfunctional." A. boundaries and constraints B. culture and rewards C. organizational loyalty D. innovation and risk taking

A. boundaries and constraints

All of the following are examples of how organizational culture exerts behavioral control EXCEPT A. culture helps maintain control by creating behavioral norms. B. culture generates unwritten standards of acceptable behavior. C. culture encourages individual identification with the organization and its objectives. D. culture sets explicit boundaries.

D. culture sets explicit boundaries.

The late Sam Walton, founder of Walmart, used to give pep rallies at local Walmart stores. What purpose did this serve? A. It was used to remind employees of Walmart's rules and regulations. B. It helped reinforce and sustain Walmart's culture. C. It demonstrated to employees the importance of articulating explicit goals and objectives. D. It made Walmart's reward system very explicit.

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

Which of the following is NOT one of the characteristics of reward and incentive systems? A. They represent a poor means of influencing an organization's culture. B. They focus efforts on high-priority tasks. C. They motivate high levels of individual and collective task performance. D. They represent an effective control mechanism.

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

Complete the following sentence: "Individual rationality __________ organizational rationality." A. is a good indicator of B. will ensure C. is often the opposite of D. does not always guarantee

D. does not always guarantee

When subcultures emerge that have shared values opposite from the dominant culture of an organization A. organizational cohesiveness increases. B. information is shared rather than hoarded. C. individuals begin working at cross purposes. D. individuals gain insights into overarching goals and objectives

C. individuals begin working at cross purposes

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

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

The causes of counterproductive behavior in organizations include A. lack of a clear understanding of organizational goals and objectives. B. motivated self-interest. C. outright malfeasance. D. all of these.

D. all of these.

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

C. minimize improper and unethical conduct.

Effective short-term objectives have all of the following priorities EXCEPT A. an emphasis on "do your best" goals. B. being achievable yet challenging. C. providing a specific time horizon for their attainment. D. being specific and measurable

A. an emphasis on "do your best" goals.

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

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

Rules and regulations are examples of A. implicit controls. B. informational controls. C. cultural norms. D. boundaries and constraints.

D. boundaries and constraints.

Cadbury Schweppes has a policy that all payments, no matter how unusual, are recorded in the company's books. This rule is A. overly cumbersome. B. aimed at encouraging managers to make better budgetary decisions. C. directed at protecting client confidentiality. D. designed to minimize improper and unethical conduct.

D. designed to minimize improper and unethical conduct.

Which of the following approaches to behavioral strategic control should be utilized least in an organization in which there is a great need for innovation and a high degree of autonomy? A. culture B. rewards C. boundaries D. all of these are equally important

C. boundaries

Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by A. posting written statements of the organization's goals and objectives. B. discouraging the formation of subcultures that isolate work groups. C. designing effective reward systems. D. encouraging employees to see themselves as free agents.

C. designing effective reward systems.

Rule-based controls are most appropriate in organizations with all of the following characteristics EXCEPT A. environments are stable and predictable. B. employees are highly skilled and independent. C. consistency in product and service. D. the risk of malfeasance is extremely high.

B. employees are highly skilled and independent.

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company? A. software developer B. stock brokerage firm C. manufacturer of mass produced products D. high tech research facility

C. manufacturer of mass produced products

Most organizations with strong cultures and a sound system of rewards and incentives can eventually internalize boundaries rather than use explicit rules and regulations. Which of the following is not a technique for moving in that direction? A. Hire people that identify with the organization's dominant values. B. Develop managerial role models. C. Minimize training and indoctrination. D. Align reward systems with organizational goals and objectives.

C. Minimize training and indoctrination.

The primary participants in corporate governance are all of the following EXCEPT A. the shareholders. B. key stakeholders such as financial institutions. C. the management (led by the chief executive officer). D. the board of directors.

B. key stakeholders such as financial institutions.

Intel's exemplary corporate governance practices include all of the following EXCEPT A. a mix of inside and outside directors. B. all outside directors to assure objectivity in decision-making. C. board presentations and access to employees. D. formal evaluation of officers.

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

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

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

External governance control mechanisms include all of the following EXCEPT A. auditors. B. analysts. C. competitors. D. the market for corporate control.

C. competitors.

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

A. it becomes an attractive takeover target.

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

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

It is generally argued that the takeover constraint A. deters management from engaging in opportunistic behavior. B. deters management from considering acquiring other companies. C. deters management from declaring dividends. D. deters management from increasing a firm's level of borrowing.

A. deters management from engaging in opportunistic behavior.

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors EXCEPT A. the desire to get future auditing contracts from the company. B. the desire to get consulting work from the company because most audit firms also do consulting work. C. the fact that auditors are appointed by the firm. D. the failure of U.S. audit firms to hire technically qualified professionals.

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

The reasons analyst recommendations are often more optimistic than warranted by an objective analysis of a firm's prospects include all of the following EXCEPT A. many analysts fail to grasp the gravity of the problems facing a company. B. "sell" recommendations generate lower commissions than buy recommendations. C. the firms for which analysts work may have lucrative investment banking relationships with the firm. D. analysts are often pressured by their superiors to overlook negative information or tone down their criticisms of the firms they analyze.

B. "sell" recommendations generate lower commissions than buy recommendations.

All of the following are types of information that a firm is required to disclose EXCEPT A. quarterly and annual filings of financial information. B. stock trading by insiders. C. details of new products under development. D. details of executive compensation packages

C. details of new products under development.

In emerging economies and continental Europe, firms often can be characterized by all of the following EXCEPT A. concentrated ownership. B. low family ownership and control. C. business group structures. D. weak legal protection for minority shareholders

B. low family ownership and control.

In principal-principal conflicts (conflicts between controlling shareholders and minority shareholders), the ownership (of equity) is A. widely dispersed (5-20% is considered "concentrated ownership"). B. controlled almost completely by management. C. concentrated; often greater than 50% of equity is controlled by controlling shareholders. D. often held by employee stock ownership programs.

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

Conditions for principal-principal (PP) conflicts (conflicts between controlling shareholders and minority shareholders) to occur include all of the following EXCEPT A. a dominant owner or group of owners who have interests that are distinct from minority shareholders. B. legislation that protects the interests of minority shareholders. C. a motivation for the controlling shareholders to exercise their dominant position to their advantage. D. few formal (such as legislation or regulatory bodies) or informal constraints that discourage or prevent the controlling shareholders from exploiting their advantageous positions.

B. legislation that protects the interests of minority shareholders.

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

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

In a simple structure where the owner manager makes most of the important decisions, extensive rules and regulations are used to maintain order.

False

A small firm with a simple structure often fosters creativity and individualism because of its informal atmosphere.

True

A simple organizational structure may lead to problems such as unclear boundaries of authority and few career advancement options.

True

As firms grow, owner managers often need to hire functional specialists to handle the increased information-processing burden

True

To enhance integration and control of related product market activities, the functional structure minimizes centralization.

False

One disadvantage of a functional structure is that differences in functional orientation may impede organization coordination and communication.

True

Operational decision making in a large business places excessive demands on the firm's top management.

True

A major disadvantage of adopting a divisional structure is the tendency for managers to focus on short-term objectives.

True

A major disadvantage of a divisional structure is that when divisions are separated to manage individual product-markets, there is a separation of strategic and operational control.

False

The strategic business unit (SBU) and holding company structure are variants of the functional form of structure.

False

The strategic business unit (SBU) structure is also referred to as the conglomerate structure.

False

One major advantage of the holding company form of organization structure is that it minimizes the duplication of functional activities between product lines.

False

The matrix structure attempts to combine the advantages of the functional and product-oriented structure.

True

A matrix organization is organized strictly along product lines

False

A major disadvantage of the matrix structure is that it duplicates the use of specialized personnel, equipment, and facilities.

False

A worldwide product division structure is used when global strategies require that each division be responsible for overall efficiency and performance.

True

A global startup typically benefits from lower communication, coordination, and transportation costs

False

A firm's structure typically has almost no effect on its strategy.

False

For firms that compete on the basis of cost leadership, incentives tend to be primarily based on explicit financial targets.

True

For firms following a differentiation strategy, behavioral and intangible incentives are not an effective means of motivating employees.

False

For firms following related diversification strategies, reward and evaluation systems should rely primarily on behavioral indicators, since the organization needs to reward and reinforce behaviors that facilitate sharing and collaboration

True

According to the text, boundaryless organizational structures are most effective when they replace rather than complement traditional organizational structures

False

The purpose of boundaryless forms of organizing is to facilitate the widespread sharing of knowledge and information across internal and external boundaries of the organization.

True

In a barrier-free organization, differences in skills, authority, and talent disappear.

False

An advantage of the barrier-free form of organizing is that internal cooperation and shared objectives are not required for it to work

False

According to the text, the factor that most distinguishes a "superior" team from a "good" team is talent.

False

Because the modular form of organizing involves outsourcing vital functions, modular firms often forfeit full strategic control

False

Modular companies can achieve rapid growth because they don't require large investments in fixed assets

True

Outsourcing relieves companies of the requirement to maintain skill levels needed to manufacture essential components.

True

One of the risks of outsourcing is a loss of cross-functional skills.

True

The virtual type of organization is a network of independent companies linked together to share skills, costs, and access to one another's markets.

True

The virtual organization is characterized by participating firms which pursue a collective strategy that enables them to cope with environmental uncertainty through cooperative efforts.

True

Managing virtual structures requires new and difficult-to-acquire managerial skills.

True

Horizontal organization structures facilitate resource sharing and help create a sense of common purpose

True

One of the advantages of boundaryless structures is that they can be implemented without upgrading the skills of workers and managers

False

Firms must create ambidextrous organizations primarily to help manage operations in multiple countries

False

It is challenging to become an ambidextrous organization and get the proper balance of "alignment" and "adaptability."

True

Generally speaking, discussions of the relationship between strategy and structure strongly imply that A. strategy follows structure. B. structure follows strategy. C. strategy can effectively be formulated without considering structural elements. D. structure typically has a very small influence on a firm's strategy.

B. structure follows strategy.

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a A. divisional structure. B. functional structure. C. product-market structure. D. geographic structure.

B. functional structure

When an organization with a functional structure diversifies into related product-markets, it generally A. maintains its functional structure. B. develops a divisional structure. C. develops a matrix structure. D. develops a worldwide product-division structure

B. develops a divisional structure.

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n) A. divisional structure. B. functional structure. C. matrix structure. D. international structure.

A. divisional structure.

All of the following statements about simple organizational structures are true EXCEPT which? A. Small firms with a narrow product-market scope will adopt such a structure. B. Decision making authority is highly centralized. C. There is little specialization of tasks. D. Creativity and individualism are rare.

D. Creativity and individualism are rare.

A simple structure is characterized by A. high specialization and low centralization. B. low specialization and high centralization. C. low formality and low creativity. D. high formality and low centralization.

B. low specialization and high centralization.

Functional structures are usually found in organizations where there is A. high volume production. B. unrelated product lines or service offerings. C. very little vertical integration. D. a strong need to decentralize decision making.

A. high volume production.

At ABC Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a A. simple structure. B. functional structure. C. divisional structure. D. matrix structure.

B. functional structure.

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

C. Pooling of specialists enhances coordination and control.

Which of the following is a disadvantage of a functional type of organizational structure? A. Differences in functional orientation may impede communication and coordination. B. Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas. C. Decision making is centralized at the top of the organization. D. Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths.

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

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

C. facilitates the development of general managers.

Which of the following is an advantage of a divisional type of organizational structure? A. Efficient use of managerial and technical talent. B. An enhanced ability to respond quickly to changes in the external environment. C. High degree of emphasis on long-term performance. D. Uniformity in image and quality across divisions.

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

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

D. there is separation of strategic and operating control.

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure? A. Functional structure B. Matrix structure C. Strategic business unit structure D. Holding company structure

C. Strategic business unit structure

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

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

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

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

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

A. diversification.

Complete the following sentence: "Strategic business unit (SBU) structures are best suited for corporations pursuing __________, whereas holding company structures are best suited for companies with __________ strategies." A. product-market diversification; international B. international diversification; product-market C. related diversification; unrelated diversification D. unrelated diversification; related diversification

C. related diversification; unrelated diversification

A matrix organizational structure is characterized by A. dual reporting relationships. B. a combination of functional and divisional organization structures. C. efficient use of resources and expertise. D. all of these.

D. all of these.

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

B. matrix

Which of the following is considered to be an advantage of a matrix structure? A. the layering of matrices B. increased clarity in reporting relationships C. increased responsiveness to the market D. fewer power struggles and reduced conflict

C. increased responsiveness to the market

If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is A. worldwide functional. B. worldwide product division. C. worldwide matrix. D. international division.

C. worldwide matrix.

If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is A. worldwide functional. B. worldwide product division. C. worldwide matrix. D. international division.

B. worldwide product division.

The relationship between strategy and structure can be best described as A. strategy determines structure but structure does not determine strategy. B. structure determines strategy but strategy does not determine structure. C. strategy and structure influence each other. D. a third force determines both strategy and structure.

C. strategy and structure influence each other.

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

A. low; financial

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

D. high; behavioral

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

D. high; behavioral

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

A. low; financial

Which of the following is not a boundaryless organizational design? A. virtual B. modular C. matrix D. barrier-free

C. matrix

Which of the following is NOT an advantage of teams? A. Because teams interact so closely, coordination and integration becomes unnecessary. B. Teams substitute peer-based control for hierarchical control of work. C. Because of sharing, teams often develop more creative solutions. D. Teams permit the absorption of administrative tasks previously performed by specialists.

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

According to the text, there are elements of team building that influence a team's success. These include all of the following EXCEPT A. work. Work should be relevant and meaningful to group members. B. people bonding during the "heat of the battle." Team members become more unified during a crisis. C. titles. Titles are important to a team's success. D. teams taking care of their own. Team members look after each other's best interest.

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

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

C. the way team members treat each other.

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

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

What type of organization is defined as "a central hub surrounded by networks of outside suppliers and specialists"? A. matrix B. virtual C. modular D. barrier-free

C. modular

What is the name of the practice that many modular organizations use to grow? A. operational effectiveness B. outsourcing C. strategic leveraging D. strategic enabling

B. outsourcing

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

D. all of these

Which of the following is NOT a strategic risk of outsourcing? A. loss of critical skills B. loss of cross-functional skills C. loss of control over a supplier D. loss of non-vital functions

D. loss of non-vital functions

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

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

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

D. a continually evolving network of independent companies.

Lockheed Martin uses a coalition of three entities, its own company, academia, and government, to achieve its goals. This is an example of a A. matrix organization. B. modular organization. C. virtual organization. D. divisional structure.

C. virtual organization.

Complete the following sentence: "Virtual organizations __________ whereas modular organizations __________." A. are usually permanent; are usually temporary B. accept interdependent destinies; pursue collective strategies C. pursue collective strategies; forfeit strategic control D. give up part of their strategic control; retain full strategic control

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

Which of the following is not a disadvantage of virtual structures? A. difficulty in individual and organizational knowledge sharing B. potential loss of operational control among partners C. loss of strategic control over emerging technology D. difficulty in determining where one company ends and another begins due to close interdependencies

A. difficulty in individual and organizational knowledge sharing

Technical Computer Graphics uses small project teams and forms alliances with its teams, customers, and suppliers to accomplish projects. This is an example of A. combining forms of boundaryless organizations. B. outsourcing. C. horizontal systems and processes. D. democratic management control.

A. combining forms of boundaryless organizations.

Organizations generally tend to become internally focused when faced with A. resource scarcity. B. declining performance. C. external pressures. D. all of these.

D. all of these.

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

C. horizontal diversification.

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

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

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

B. managerial efforts were highly focused on revenue enhancement.

Three key interdependent strategic leadership activities are: designing the organization; determining its direction; and, nurturing a culture dedicated to excellence and ethical behavior.

True

Setting a direction is the leadership activity that involves developing a strategic vision of what the organization could become.

True

Designing the organization is the leadership activity that involves building structures, teams, systems, and processes that facilitate the implementation of a leader's vision.

True

Leaders play an important role in sustaining an organization's culture, but they are powerless to change it.

False

Leaders are not expected to accept personal responsibility for ethical behavior in an organization because ethics is a matter of individual choice.

False

Conventional decision making involves considering two conflicting ideas simultaneously without dismissing one of the ideas or becoming discouraged about reconciling them.

False

Integrative thinking is the process by which people reconcile opposing thoughts to identify creative solutions that provide them with more options and new alternatives

True

The tendency of many individuals to throw "good money at bad decisions" despite negative performance feedback is referred to as "escalation."

True

Systemic barriers to change refer to elements of an organization's design, structure, and reporting relationships that impede the flow of information.

True

Behavioral barriers to change occur because of conflicts between departments, conflicts arising from power relationships, and refusal to share information

False

The two broad bases of a leader's power are organizational and hierarchical.

False

"Referent power" refers to a manager's identification with his or her employees.

False

"Coercive power" is the power exercised by use of fear of punishment for errors of either omission or commission by employees.

True

Emotional Intelligence (EI) is one of the components of a high Intelligence Quotient (IQ).

False

Emotional Intelligence (EI) is generally a better predictor of life success than Intelligence Quotient (IQ).

True

Empathy, one of the components of Emotional Intelligence (EI), refers to one's proficiency in managing relationships and building networks.

False

Organizational learning works best when an organization's leaders gather information and teach it to employees who are like their students.

False

Successful learning organizations have a proactive, creative approach to the unknown

True

A key function of the leaders in a learning organization is to generate an organization-wide commitment to the status quo.

False

Inspiring and motivating people with a mission or purpose is a necessary and sufficient condition for developing a learning organization.

False

To successfully empower employees to achieve organizational goals, leaders must perform the tasks of resource allocation and power brokering.

False

In the "top-down" approach to empowerment, leaders clarify the mission, delegate responsibility, and hold people accountable for results

True

The "top-down" view of empowerment is concerned with risk taking, change, and "doing the right thing."

False

The trend among many organizations is toward forms of empowerment that rely on trust, team building, and the expertise of employees at all levels.

True

The phrase "Lead, follow, or get out of the way" is indicative of the bottom-up approach to empowerment

False

) "Open book" management is a technique for gathering and disseminating internal information so that all employees can be involved in decision making and management.

True

) Internal benchmarking is discouraged in most organizations because it creates competition and internal rivalries that are counterproductive

False

In order to gather information from informal sources, successful executives must be good listeners.

True

Competitive benchmarking is a method of seeking the best examples of practices or processes that have essentially the same function regardless of industry.

False

Establishing a culture of dissent can be an effective means of questioning the status quo.

True

Although many organizations encourage creativity and risk taking, few successful companies tolerate failure

False

Leaders who fail to institute proper systems and controls that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds.

True

Ethical crises are bad for an organization's reputation but they rarely have any financial consequences

False

There are many advantages of an ethical organization, but it generally has little to do with employee commitment and motivation to excel.

False

A compliance-based approach to ethics management combines a concern for law with an emphasis on managerial responsibility for ethical behavior.

False

) Corporate codes of conduct provide norms and expectations for employees to not commit unethical acts.

True

An effective way to instill ethical behavior in an organization is to distribute rewards strictly on the basis of outcomes.

False

Inappropriate reward systems seldom cause individuals at all levels throughout an organization to commit unethical acts since people are either unethical or ethical in their behavior.

False

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

A. goal-oriented

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

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

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

A. dedication to maintaining the status quo.

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

D. all of these.

Poor organizational design by leaders can result in all of the following EXCEPT A. insufficient mechanisms that integrate and coordinate activities across the firm. B. inadequate accountability among managers and employees. C. inappropriate budgeting and control systems. D. teams, systems, and organizational processes that facilitate implementation.

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

XYZ's CEO scrapped the company's commission-based reward system because it was rewarding employees for inappropriate behavior. This is an example of A. setting a direction. B. designing the organization. C. unethical behavior. D. failure to maintain the status quo

B. designing the organization

Leaders play a key role in developing and sustaining an organization's A. status quo. B. culture. C. reporting relationships. D. rules and regulations

B. culture.

The process by which people reconcile opposing thoughts to identify creative solutions that provide them with more options and new alternatives is known as A. designing the organization. B. conservative thinking. C. ethical planning. D. integrative thinking

D. integrative thinking

All of the following stages are part of the integrative thinking and deciding process EXCEPT A. causality. B. conservation. C. architecture. D. salience.

B. conservation.

In the integrative thinking and deciding process, making a mental map of the causal relationships between the elements of a decision to evaluate how the elements relate to one another is known as A. architecture. B. causality. C. visualization. D. multidimensionality

B. causality.

Barriers in which the design of the organization's structure, information processing, and reporting relationships, impede the proper flow and evaluation of information are known as A. systemic barriers. B. behavioral barriers. C. political barriers. D. barriers to entry

A. systemic barriers.

Barriers associated with a manager's tendency to look at issues from a biased or limited perspective are known as A. systemic barriers. B. behavioral barriers. C. political barriers. D. barriers to exit.

B. behavioral barriers.

Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change? A. systemic barriers B. political barriers C. behavioral barriers D. all of these

B. political barriers

Which of the following explains why organizations are prone to inertia and slow to change? A. personal time constraints B. political barriers C. vested interests in the status quo D. all of these

D. all of these

All of the following constitute organizational bases of a leader's power EXCEPT A. legitimate power. B. reward power. C. referent power. D. coercive power

C. referent power

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

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

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

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

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

A. a subordinate's identification with the leader.

The three broad sets of capabilities that a leader should possess include all of the following EXCEPT A. technical skills. B. cognitive abilities. C. calculative abilities. D. emotional intelligence.

C. calculative abilities.

All of the following are components of Emotional Intelligence (EI) EXCEPT A. self-awareness. B. self-regulation. C. self-promotion. D. empathy.

C. self-promotion.

Which component of Emotional Intelligence (EI) enables a manager to have a deep understanding of the existence and importance of cultural and ethnic differences? A. self-awareness B. empathy C. social skills D. self-regulation

B. empathy

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

C. empathy and social skill.

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

A. learned for the organization; learning and adapting

What happens to organizations that get caught up in day-to-day work activities? A. They fail to think objectively about themselves and their business. B. They fail to refresh their strategies or reengineer their work processes. C. They fail to ask probing questions about their basic assumptions. D. All of these

D. All of these.

Which of the following is not a characteristic of a successful learning organization? A. They create a proactive, creative approach to the unknown. B. They actively solicit the involvement of employees at all levels. C. They regularly engage in activities to reinforce the status quo. D. They enable everyone to use their intelligence and apply their imagination

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

Complete the following sentence. "Inspiring and motivating people with a mission or purpose is a __________ for developing an organization that can learn and adapt." A. necessary and sufficient condition B. necessary, but not a sufficient condition C. goal, but not a necessary condition D. goal and a required pre-condition

B. necessary, but not a sufficient condition

In order to create an environment where employees can achieve their potential as they move the organization towards its goals, the manager's role needs to be that of A. resource allocator. B. resource controller. C. a flexible resource. D. an advocator of the status quo

C. a flexible resource.

The "top-down" perspective of empowerment A. encourages intelligent risk taking. B. trusts people to perform. C. encourages cooperative behavior. D. delegates responsibility.

D. delegates responsibility.

The "bottom-up" perspective of empowerment A. clarifies the organization's values and mission. B. builds teams to encourage cooperative behavior. C. communicates specific plans. D. encourages employees to "ask permission rather than forgiveness."

B. builds teams to encourage cooperative behavior.

The empowerment perspective that involves trusting people to "do the right thing," take intelligent risks, and act with a sense of ownership is known as A. the leadership perspective. B. the top-down approach. C. the bottom-up approach. D. the risk-taking model.

C. the bottom-up approach.

An empowerment perspective that delegates responsibility, focuses on accountability, and relies on clearly specified rewards to motivate is known as A. the leadership perspective. B. the top-down approach. C. the bottom-up approach. D. the accounting model.

B. the top-down approach.

Manufacturing employees at Chaparral Steel are directly involved with customers and have access to the new innovative knowledge being developed in its manufacturing processes. This is an example of A. hierarchical control. B. knowledge management. C. enabling heroes and drones. D. employee empowerment.

D. employee empowerment.

Which of the following is NOT one of the three core activities in the "open book" management system pioneered by Jack Stack? A. Information is generated daily that reflects the work performance and production costs of each employee. B. The information is aggregated once a week and shared with employees at every level. C. Information about customer expectations and feedback is distributed monthly. D. Extensive training in how to use and interpret the numbers is provided to all employees.

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

At Whole Foods, the "no secrets" management philosophy allows employees access to most of the company's operating and financial data. This is an example of A. information sharing. B. employee advocacy. C. bottom-up empowerment. D. internal benchmarking.

A. information sharing.

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

D. all of these

Functional benchmarking A. is not very useful for organizations with a divisional organizational structure. B. endeavors to determine best practices regardless of industry. C. restricts the search for best practices to competitors. D. is useful when researching industry-specific standards.

B. endeavors to determine best practices regardless of industry.

All of the following are guidelines an organization can use to promote the challenging of the status quo EXCEPT A. establishing a "culture of dissent." B. forcefully creating a sense of urgency. C. fostering a culture that encourages risk taking. D. creating a results-based reward system.

D. creating a results-based reward system.

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

B. failure

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

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

As a manager, when faced with ethical crises you should A. focus on issues most relevant to stockholders. B. wait for the other party to make the first move. C. take the initiative to address the problem. D. cover up as much as possible.

C. take the initiative to address the problem.

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

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

Proactive measures to prevent organizational ethics problems include all of the following EXCEPT A. instituting a reward system which considers outcomes as its primary criterion. B. using leaders as role models of ethical behavior. C. issuing statements describing the organization's commitment to certain standards of behavior. D. using the organization's information systems as a control system.

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

Which of the following statements would least likely be found in a corporate credo? A. Maximize financial benefits for stakeholders. B. Provide secure and stable employment for employees. C. Establish an environment that enhances professional growth. D. Support community organizations and projects.

A. Maximize financial benefits for stakeholders.

The term "innovation" refers primarily to an invention that uses the latest technologies.

False

Radical innovations are evolutionary applications of novel ideas within existing paradigms

False

As an industry matures, there are greater opportunities for change and so innovations tend to be more radical.

False

Process innovations are often associated with a low cost leadership strategy.

True

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs

True

Research indicates that leaders of innovative firms spend 50 percent more time on discovery activities than the leaders of less innovative firms.

True

The term "strategic envelope" refers to the scope of a firm's innovation efforts.

True

Radical innovation often involves open-ended experimentation which can be very time consuming.

True

For innovation team members to work enthusiastically on innovation projects, it is important to separate the performance of individual team members from the performance of the innovation itself

True

A firm's innovation efforts rarely benefit from partnering with non-business entities such as universities and government agencies.

False

Strategic renewal and the pursuit of new venture opportunities are the two primary aims of corporate entrepreneurship.

True

Corporate entrepreneurship is sometimes called "intrapreneurship."

True

Corporate venturing that is focused permeates all parts of the organization and involves every member of the organization

False

Firms using a focused approach to corporate entrepreneurship typically separate corporate venturing activities from ongoing operations of the firm

True

Business incubators are designed to support fledgling entrepreneurial ventures until they can operate as stand-alone businesses.

True

Corporate business incubators often provide physical space and business services to internal ventures, but not funding.

False

Dispersed approaches to corporate entrepreneurship are often found in organizations with a strong spirit of entrepreneurship. TRUE

True

Product champions are the employees who identify new product ideas or services

False

According to the text, new venture ideas must pass through two critical stages to be implemented by corporations—project definition and project impetus

True

Product champions are critical during the period after a new venture project has been defined but before it has gained momentum and achieved project impetus

True

Only about 50 percent of corporate venturing efforts reach profitability within six years of their launch.

True

The strategic goals of corporate entrepreneurship are often just as important as the financial goals.

True

Exit champions are often reluctant to gather hard data about a venture because it might kill the project

False

Real options logic is useful when corporations consider stock options as a way to finance entrepreneurial ventures

False

Corporate ventures that use real options logic in decision making tend to keep total investment low in order to minimize the downside risk of a project.

True

Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources.

False

One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to "game the system."

True

The term "skunkworks" is used to refer to a type of in-house facility that corporations use to develop entrepreneurial ideas

False

First movers in an industry often capture above-average profits, but usually find it difficult to maintain early market share gains

False

Competitive aggressiveness is a response to threats whereas proactiveness is a response to opportunities.

True

Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies

True

__________ refers to efforts to create designs and applications of technology to develop new products, while __________ refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations. A. Radical innovation; incremental innovation B. Breakthrough innovation; instrumental innovation C. Product innovation; process innovation D. Product innovation; service innovation

C. Product innovation; process innovation

Whereas __________ are often associated with a low cost leader strategy, __________ are frequently an important aspect of a differentiation strategy. A. process innovations; product innovations B. product innovations; service innovations C. radical innovations; instrumental innovations D. marketing innovations; management innovations

A. process innovations; product innovations

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

C. are usually small improvements in products and processes.

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

B. often represent technological breakthroughs.

__________ produce fundamental changes that can transform a company or even revolutionize an industry, while __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs. A. Technological breakthroughs; product-market breakthroughs B. New technologies; new paradigms C. Incremental innovations; radical innovations D. Radical innovations; incremental innovations

D. Radical innovations; incremental innovations

Innovations that extend sales in an existing market, usually by enabling new products or services to be sold at higher margins are known as A. radical innovations. B. disruptive innovations. C. technology innovations. D. sustaining innovations.

D. sustaining innovations.

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

A. It is usually more sophisticated technologically.

All of the following are dilemmas faced by corporations trying to manage the innovation process EXCEPT A. launching incremental rather than "preemptive" innovations. B. emphasizing marketing over management innovations. C. preferring experience over initiative. D. choosing internal rather than external staffing.

B. emphasizing marketing over management innovations.

The innovation dilemma known as building capabilities versus collaborating refers to A. developing innovation skills internally versus partnering with qualified outsiders. B. building innovative products in-house versus outsourcing. C. building credibility by launching products ahead of potential collaboration partners. D. all of these

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

The innovation dilemma known as seeds versus weeds refers to A. choosing to pursue radical rather than incremental innovations. B. choosing to pursue product rather than process innovations. C. promoting organizational stars onto innovation teams rather than involving all employees in innovation efforts. D. none of these.

D. none of these.

Creative intelligence involves the ability to see patterns in data, integrating data, and making insights. The four patterns of actions that help build creative intelligence are A. observing, experimenting, cataloging, and networking. B. questioning, observing, integrating, and networking. C. questioning, observing, experimenting, and networking. D. observing, experimenting, cataloging, and integrating.

C. questioning, observing, experimenting, and networking.

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

A. associating.

In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an example of A. focusing on process rather than product innovation. B. defining its innovation efforts within the context of its "strategic envelope." C. radical innovation. D. public relations, since plastics are not biodegradable

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

The advantages of collaborating with strategic partners in order to innovate include A. obtaining skills and new knowledge from outside sources. B. making firms identify their own strengths and weaknesses. C. managers clarifying what an innovation project requires to be successful and who will accomplish it. D. all of these

D. all of these.

The W. L. Gore organization, a highly innovative company, uses several approaches and "rules of thumb" to encourage innovation. Which of the following is NOT one of them? A. It requests that all risk-taking activities have a financial pay-off within one year. B. It celebrates failure rather than condemning it. C. It promotes person-to-person communications rather than e-mails. D. It uses small teams to promote creativity and autonomy.

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

In a typical corporation, which of the following impact how the people within the corporation recognize entrepreneurial opportunities? A. structural features that guide and constrain action B. corporate culture C. organizational systems that foster learning and manage rewards D. all of these

D. all of these

Two common forms of a focused approach to corporate entrepreneurship include A. internal collaboration and internal venturing. B. social capital and collaboration capital. C. business incubators and new venture groups. D. focus groups and business incubators.

C. business incubators and new venture groups.

According to the text, __________, which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by __________. A. collaboration partners; strategic partners B. business incubators; new venture groups C. product champions; corporate venture capitalists D. lower-level managers; upper-level managers

B. business incubators; new venture groups

Corporate business incubators typically provide some or all of the following functions EXCEPT A. physical space. B. mentoring. C. funding. D. student interns.

D. student interns

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

D. all of these occur

Common features of a dispersed approach to corporate entrepreneurship include all of the following EXCEPT A. semi-autonomous new venture groups. B. use of product champions. C. a top-down approach to supporting entrepreneurial behavior. D. an entrepreneurial culture.

A. semi-autonomous new venture groups.

In corporations with a strong entrepreneurial culture, the willingness and ability to change A. is imposed from the top-down. B. is considered a core capability. C. often leads to instability. D. often worries stakeholders such as suppliers and creditors.

B. is considered a core capability.

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

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

Project __________ involves justifying whether an opportunity is attractive in the marketplace; project __________ involves evaluating the strategic and economic impact of a new venture. A. impetus; definition B. definition; impetus C. reward; development D. development; focus

B. definition; impetus

On average, approximately what percentage of corporate ventures reaches profitability within six years? A. 80 percent. B. 65 percent. C. 50 percent. D. 35 percent.

C. 50 percent.

Financial reasons for undertaking internal corporate venturing include A. strengthening competitive position. B. obtaining above average returns. C. adding to the corporation's resource base. D. all of these

B. obtaining above average returns.

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

D. all of these

All of the following are questions that should be answered when evaluating the performance of corporate venturing efforts EXCEPT which of these? A. Is the venture attracting external venture funding? B. Is the venture considered to be a market success? C. Does the venture add to the worth of the firm internally? D. Does the value proposition offered by the venture insulate it from competitive attack?

A. Is the venture attracting external venture funding?

A manager whose role is to question the viability of corporate venture projects is A. product champion. B. exit champion. C. rising star. D. mentor.

B. exit champion

Whereas __________ are willing to violate procedures and operate outside normal channels, __________ gather hard data and develop a strong case for why a project should be killed. A. senior managers; entrepreneurial leaders B. strategic managers; financial managers C. exit champions; product champions D. product champions; exit champions

D. product champions; exit champions

Options exist when the owner of the option has A. the obligation, but not the right to engage in a transaction. B. the right, but not the obligation to engage in a transaction. C. the right and obligation to engage in a transaction. D. neither the right, nor the obligation to engage in a transaction.

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

Real options analysis is most appropriate when A. the total investment required is small, but the environment is uncertain. B. the investment required can be justified by Discounted Cash Flow (DCF) techniques. C. a small investment up front can be followed by a series of subsequent investments. D. there is no prospect of obtaining additional knowledge before making subsequent investments.

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

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to "game the system" and "back-solve" a formula to get a proposal approved. This can give rise to A. managerial conceit. B. the illusion of control. C. escalation of commitment. D. agency problems.

D. agency problems.

Which of the following is NOT one of the dimensions of entrepreneurial orientation? A. proactiveness B. risk taking C. autonomy D. opportunism

D. opportunism

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

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

After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams A. often lack coordination. B. sometimes waste resources on projects with questionable feasibility. C. sometimes create inefficiencies through duplication of effort. D. all of these.

D. all of these.

Which of the following dimensions of entrepreneurial orientation is described as "a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities"? A. proactiveness B. risk taking C. autonomy D. competitive aggressiveness

A. proactiveness

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

According to the text, which of the following is NOT one of the methods companies can use to enhance their competitive position via innovativeness? A. fostering creativity and experimentation B. investing in new technology, R&D, and continuous improvement C. copying the business practices or techniques of successful competitors D. departing from existing technologies to develop products and practices that go beyond the current state of the art

C. copying the business practices or techniques of successful competitors

The benefits gained by firms that are the first to enter new markets, establish brand identity, and/or adopt new technologies are known as A. competitive aggressiveness. B. technological capabilities. C. first mover advantages. D. breakthrough innovations.

C. first mover advantages.

Sony Corporation's mission statement says, "We should always be the pioneers with our products, out front leading the market." This is an example of A. innovativeness. B. proactiveness. C. competitive aggressiveness. D. autonomy.

B. proactiveness.

According to the text, firms that want to enhance their entrepreneurial position by being competitively aggressive should A. enter markets with drastically lower prices. B. foster creativity and experimentation. C. continuously seek out new products or services. D. research risk factors to minimize uncertainty.

A. enter markets with drastically lower prices.

All of the following are types of risks that executives must address EXCEPT A. business risk taking. B. financial risk taking. C. personal risk taking. D. product-market risk taking

D. product-market risk taking.

Which kind of risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow? A. business risk taking B. financial risk taking C. personal risk taking D. technological risk taking

B. financial risk taking