Mqm 385 Exam 3

Front 1

A major goal of most publicly held companies is the maximization of stockholder wealth.

Back 1

True

Front 2

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

Back 2

True

Front 3

Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.

Back 3

True

Front 4

An effective governance arrangement exists when the CEO is also the chair of the board of directors

Back 4

False

Front 5

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 5

False

Front 6

Organizational design has little effect on organizational culture

Back 6

False

Front 7

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 7

True

Front 8

In the multidivisional structure, each division typically contains only a partial set of value chain activities.

Back 8

True

Front 9

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary

Back 9

True

Front 10

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

Back 10

False

Front 11

1. A company's stakeholders include which of the following?

a. Stockholders

b. Creditors

c. Employees

d. Customers

e. All of these choices

Back 11

E. All of these choices

Front 12

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

a. Stockholders are the most powerful stakeholder group that a company has to satisfy.

b. Stockholders are the legal owners of the company and are the providers of risk capital. c. Stockholders have been successful in blackmailing companies to get their interest satisfied before those of other claimants.

d. Typically, stockholders have the most invested in the company's continued survival. e. Managers feel obliged to pay lip service to stockholder demands.

Back 12

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

Front 13

3. Confronted with agency problems, which of the following is not one of the challenges for principals?

a. Shape the behavior of agents so that they act in accordance with the goals set by principals

b. Reduce the information asymmetry between agents and principals

c. Develop mechanisms for removing agents who do not act in accordance with the goals of principals3

d. Develop mechanisms for removing agents who mislead principals

e. All of these choices

Back 13

E. All of these choices

Front 14

Flat organizational structures are characterized by

a. few levels of management and a relatively narrow span of control.

b. few levels of management and a relatively wide span of control.

c. many levels of management and a relatively narrow span of control.

d. many levels of management and a relatively wide span of control.

e. none of these choices

Back 14

B. Few levels of management and a relatively wide span of control

Front 15

Which of the following is not one of the company levels where strategic control systems measure performance?

a. Board of directors

b. Corporate

c. Divisional

d. Functional

e. Individual

Back 15

A. Board of Directors

Front 16

Which of the following is required by a restructuring?

a. Eliminating business units

b. Rethinking business processes

c. Creating more business units

d. Flattening the organizational hierarchy

e. Broadening the span of control

Back 16

D. Flattening the organizational hierarchy

Front 17

7. A camera manufacturer that has separate divisions for making personal cameras, movie cameras, and film acquired a small film developer and a car battery supplier. Which of the following structures is most appropriate for this firm?

a. Functional

b. Matrix

c. Geographic

d. Multidivisional

e. Product team

Back 17

D. Multidivisional

Front 18

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

a. Multidivisional

b. Product

c. Product team

d. Market

e. Functional

Back 18

A. Multidivisional

Front 19

A company pursuing unrelated diversification

a. relies more on output controls than on bureaucratic controls.

b. needs to create an internal transfer pricing scheme.

c. has a low need for integration among divisions.

d. should have a product team structure.

e. should use a centralized decision-making process.

Back 19

C. Has a low need for integration among divisions

Front 20

Which of the following strategies can companies use as they begin to market their products and establish production facilities overseas?

a. Localization

b. International

c. Global

d. Transnational

e. All of these choices

Back 20

E. All of these choices

Front 21

Principles of agency theory

Back 21

One group relies on another to make decisions and take actions on their behalf. There is opportunity for mutual gain, but agents may act in their own best interests. Agents have more access to information of a situation, so the principal cannot fully monitor actions of agents and must trust the agent.

Front 22

Ways to deal with agency problems

Back 22

align the two parties goals to create more mutual gain and reduce one sided gain. reduce information asymmetry to the extent possible by overseeing or monitoring the principals actions closely

Front 23

Organizational Structure

Back 23

assigns employees to specific value creation tasks and roles and specifies how these tasks and roles are to be linked together in a way that increases efficiency, quality, innovation, and responsiveness to customer competencies that build competitive advantage.

Front 24

Three Building blocks of organizational structure

Back 24

Grouping tasks, functions and division

Allocating authority and responsibility

Integration and integrating mechanisms

Front 25

Grouping tasks, functions and divisions

Back 25

As companies grow, they may need to revisit structure so that these groupings are done to help create distinctive competencies

Front 26

Allocating authority and responsibility

Back 26

as companies address authority and responsibility, the day to day structure takes shape. Decisions must address the hierarchy of authority, span of control, tall or flat structure, chain of command, and degree of centralization or decentralization

Front 27

Integration and integrating mechanisms

Back 27

The greater the complexity of an organization's structure, the greater is the need for coordination among the people, functions, and divisions to make the organizational structure work efficiently. Tools of integration include direct contact, liaison roles, and teams.

Front 28

Most common used entry mode to a new industry

Back 28

Mergers and acquisitions

Front 29

Mergers and Acquisitions

Back 29

The main benefit is that companies employing this entry mode can move quickly, and as industry boundaries continue to blur and changes in the environment are happening at a rapid pace, companies often do not have the luxury of time on their side

Front 30

Issues of mergers and acquisitions

Back 30

issues of structure and how to establish new lines of authority and responsibility that will allow them to make the best use of both companies competencies. managers need to decide how to coordinate and integrate the merged companies to that cost are reduced and competencies are leveraged. There are also control issues and organizational culture issues.