Chapter 7- Chapter 13

Front 1

An advantage of horizontal integration is that by staying in one industry, a firm can focus its resources and capabilities on competing successfully in just one area.

Back 1

True

Front 2

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain

Back 2

True

Front 3

A company seeking to form a long-term strategic alliance needs to enter the agreement with total trust in its partner to live up to its end of the agreement.

Back 3

False

Front 4

Strategic outsourcing is the decision to allow one or more of a company’s value chain activities or functions to be performed by independent companies.

Back 4

True

Front 5

Many industries have experienced increased consolidation over the last decade due to an increase in

Back 5

horizontal integration

Front 6

Which of the following is a benefit that firms should expect to gain from the use of horizontal integration?

Back 6

Better realization of economies of scale

Front 7

Antitrust regulation

Back 7

is concerned with companies' abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.

Front 8

A wealth of data suggests that most mergers and acquisitions

Back 8

create extensive value for the companies involved.

Front 9

Companies can maintain market discipline over suppliers by

Back 9

parallel sourcing

Front 10

In which of the following is a firm most likely to lose direct control over value creation activities?

Back 10

Outsourcing

Front 11

How can strategic outsourcing strengthen a company’s business model and increase its profitability?

Back 11

Essay:

Front 12

Free cash flow refers to additional funds from a government stimulus program.

Back 12

False

Front 13

Intel is an example of a company that moved from a related diversification strategy to a concentration strategy.

Back 13

False

Front 14

One way a diversified company can increase its profitability is by acquiring inefficient or poorly managed companies and then restructuring them to improve their performance.

Back 14

True

Front 15

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.

Back 15

False

Front 16

Research suggests that companies that acquire many businesses over time become expert in this process and so can generate significant value from their acquisitions

Back 16

True

Front 17

Critics of Tyco’s financial performance in the late 1990s argued that company officials were inflating the profitability of Tyco’s operating units

Back 17

True

Front 18

**The three main types of diversification strategies are

Back 18

Acquisitions, internal new ventures, and joint ventures.

Front 19

Free cash flow is defined as

Back 19

cash in excess of that required to fund investments in the company’s industry and to meet any debt commitments.

Front 20

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are ____ to their existing business activities.

Back 20

related

Front 21

General organizational competencies refer to competencies

Back 21

that transcend individual functions or business units

Front 22

When a company has cash in excess of the amount needed to maintain a competitive advantage in its core business, it will most likely pursue

Back 22

diversification

Front 23

A diversification strategy based on resource sharing

Back 23

can help a company to realize economies of scope.

Front 24

Which of the following statements concerning research and development is correct?

Back 24

Companies with a strong record of internal new venturing excel at both types of research.

Front 25

To be commercially successful, new products must be developed with ____ utmost in mind

Back 25

customer requirements

Front 26

Which of the following seems to be a major determinant of a new venture’s success?

Back 26

Large-scale entry into the target industry designed to build market share, even when such entry involves significant short-term losses

Front 27

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Back 27

Acquisitions

Front 28

Acquisitions often fail because of

Back 28

differences in corporate culture.

Front 29

What accounts for the high failure rate of all new products that reach the marketplace?

Back 29

All of these choices

Front 30

Economies of scope typically involve

Back 30

sharing resources by business units.

Front 31

The greater the number of business units in a company’s portfolio, the ____ it is for corporate managers to remain informed about the complexities of each business.

Back 31

more difficult

Front 32

What is perhaps the most important reason why acquisitions made by a company fail?

Back 32

The expense of the acquisition

Front 33

Different stakeholders supply different resources to the company and, in exchange, they expect their interests to be satisfied.

Back 33

True

Front 34

Attaining future profit growth may require investments that reduce the current rate of profitability.

Back 34

True

Front 35

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups as long as the company does so legally and in a manner consistent with societal expectations.

Back 35

True

Front 36

Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

Back 36

True

Front 37

Financial statements can be a tool of effective governance only if they provide consistent, detailed, and accurate information.

Back 37

True

Front 38

**A company’s stakeholders include which of the following?

Back 38

All of these

Front 39

Why should satisfying stockholder demands receive so much attention in many corporate mission statements?

Back 39

Stockholders are the legal owners of the company and are the providers of risk capital.

Front 40

In applying agency theory to problems of corporate management, the principals are the

Back 40

stockholders

Front 41

Members of the board of directors are supposed to be agents for

Back 41

stockholders

Front 42

A takeover constraint

Back 42

limits the extent to which managers pursue strategies that are inconsistent with shareholder interest

Front 43

Business ethics is concerned with

Back 43

teaching people the difference between right and wrong.

Front 44

Sarbanes-Oxley, federal legislation enacted in 2002, requires

Back 44

CEOs and CFOs to endorse their company’s financial statements

Front 45

The purpose of organizational structure is to provide managers with specific feedback on how well an organization and its members are performing and building competitive advantage.

Back 45

False

Front 46

Effective organizational design can simultaneously allow a company to obtain a competitive advantage and achieve above-average profitability.

Back 46

True

Front 47

Organizational structure contributes to the implementation process by providing the framework of tasks and roles that reduces transaction difficulties and allows employees to think and behave in ways that allow a company to achieve superior performance.

Back 47

False

Front 48

For each function, a cost leader adopts output controls that allow it to monitor and evaluate functional performance closely.

Back 48

True

Front 49

In manufacturing, functional strategy usually centers on improving efficiency and quality

Back 49

True

Front 50

Restructuring always involves flattening the organizational hierarchy and downsizing the work force.

Back 50

True

Front 51

Which of the following integrating mechanisms consists of one manager from each relevant function or division assigned to a team that meets to solve a specific mutual problem?

Back 51

Teams

Front 52

Standardization is a form of

Back 52

behavior control

Front 53

Which form of control would you be most likely to find in a voluntary or charity organization?

Back 53

Control through norms and values

Front 54

As new, small firms grow and mature, which structure are they likely to choose?

Back 54

Functional

Front 55

As a general principle, a company should always choose the hierarchal organization structure that has the

Back 55

fewest levels of authority

Front 56

A drawback of the functional structure is

Back 56

the difficulty in communicating and coordinating across functions.

Front 57

Restructuring is

Back 57

a radical readjustment of the organization’s staffing and hierarchy

Front 58

In a successful company, the purpose of a control system is to

Back 58

A and B
a. provide managers with a set of incentives to motivate employees to work toward company goals.
b. provide managers with specific feedback on how well the organization and its members are performing.

Front 59

An organization that has an adaptive culture is an organization that is

Back 59

innovative

Front 60

Describe what is meant by the terms restructuring, and re-engineering, and discuss when and why they would be used.

Back 60

**Essay pg 414

Front 61

In a multidivisional structure, corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates

Back 61

True

Front 62

Competition for resources is one of the drawbacks of the multidivisional structure

Back 62

True

Front 63

The more interdependent the divisions in a multidivisional structure, the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular strategy

Back 63

True

Front 64

Vertical integration is a less expensive strategy to manage than is unrelated diversification.

Back 64

False

Front 65

Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.

Back 65

True

Front 66

A joint venture can be dangerous to a company if its partner is acquired by a competitor

Back 66

True

Front 67

A major impact of information technology (IT) on strategic implementation has been its effects on a company's ability to pursue strategic outsourcing to strengthen its business model

Back 67

True

Front 68

The two main innovations in a multidivisional structure (over a functional or product structure) are

Back 68

the organization of business units or companies in each industry in which it competes into one or more divisions and the creation of corporate-level positions to oversee the activities of divisional managers.

Front 69

Which structure has been adopted by most large, complex U.S. companies?

Back 69

Multidivisional

Front 70

The wasteful duplication of functional resources is most likely to arise with a

Back 70

multidivisional structure

Front 71

A company pursuing unrelated diversification

Back 71

has a low need for integration among divisions.

Front 72

A localization strategy

Back 72

is oriented toward local responsiveness.

Front 73

In general, the choice of structure and control systems for managing a global business is a function of which of the following factors?

Back 73

All of these choices

Front 74

Implementation of a global matrix provides a company with which of the following advantages?

Back 74

All of these choices

Front 75

The set of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product is called a(n)

Back 75

network structure

Front 76

When the decision has been made to enter a new industry, which entry mode is most commonly used and what issues must managers address with this mode of entry?

Back 76

**Essay pg 266