Market Strategic Alliance Trivia Questions

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A company's stakeholders include which of the following?
- Stockholders
- Creditors
- Employees
- Customers
- All of the above

About This Quiz

Explore the nuances of global market strategies with this trivia quiz. Test your understanding of strategic alliances, entry modes, and localization strategies, crucial for navigating international markets. Ideal for learners aiming to enhance their strategic management acumen.

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2.

When entering an overseas market, which of the following factors should be considered?
- Size of the market
- Purchasing power
- Consumer demand for the company's product
- Economic risks
- All of the above
Correct Answer

A. All of the above

Explanation

When entering an overseas market, several factors should be considered. The size of the market is important because it determines the potential customer base and market saturation. Purchasing power is crucial as it indicates the affordability of the company's product for the target market. Consumer demand for the company's product is essential to ensure there is a market for the product and that it aligns with local preferences. Economic risks, such as currency fluctuations, political instability, and regulatory changes, must also be evaluated to mitigate potential risks and uncertainties. Therefore, all of the mentioned factors should be considered when entering an overseas market.

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3.

Strong pressures for local responsiveness emerge when customer tastes and preferences
- Differ significantly between countries.
- Differ slightly between countries.
- Are universally alike.
- Are cyclical in nature.
- None of the above.
Correct Answer

A. Differ significantly between countries.

Explanation

Strong pressures for local responsiveness emerge when customer tastes and preferences differ significantly between countries. This means that when there is a significant variation in what customers want and prefer in different countries, companies need to adapt their products, services, and marketing strategies to meet the specific needs and preferences of each local market. This could involve customizing products, tailoring advertising campaigns, or even developing entirely new products for different markets. By doing so, companies can better satisfy customer demands and gain a competitive advantage in each country.

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4.

Global economies of scale can be realized by
- Expansion of overseas sales.
- Better utilization of production facilities.
- Boosting bargaining power with suppliers.
- Increasing cost savings through learning effects.
- All of the above.
Correct Answer

A. All of the above.

Explanation

Global economies of scale can be realized through various means. Expansion of overseas sales allows companies to reach larger markets and benefit from increased demand and economies of scale. Better utilization of production facilities enables companies to produce more output with the same resources, leading to cost savings. Boosting bargaining power with suppliers allows companies to negotiate better terms and prices, further reducing costs. Increasing cost savings through learning effects refers to the efficiency gains and cost reductions that occur as a result of experience and knowledge gained from operating globally. Therefore, all of the above options contribute to realizing global economies of scale.

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5.

Forward integration means that a company is moving into
- Sales.
- Retail.
- Distribution.
- All of the above.
- None of the above.
Correct Answer

A. All of the above.

Explanation

Forward integration refers to a company's strategy of expanding its operations towards the end of the supply chain, closer to the customers. This can involve various activities such as sales, retail, and distribution. By engaging in all of these activities, a company can have more control over its products or services, enhance customer experience, and capture a larger portion of the value chain. Therefore, the correct answer is "all of the above."

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6.

Antitrust regulation
- Favors large companies.
- Reduces industry competition.
- Is concerned with companies' abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.
- Tends to raise prices for consumers.
- Enables the achievement of market power.
Correct Answer

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

Explanation

Antitrust regulation is a set of laws and policies that aim to prevent companies from abusing their market power to the detriment of consumers. It is concerned with ensuring fair competition in the industry and preventing companies from engaging in anti-competitive practices such as price-fixing or monopolistic behavior. The correct answer states that antitrust regulation is specifically focused on addressing companies' abuse of market power to raise prices for consumers above what would be seen in a more competitive market. This explanation aligns with the purpose and goals of antitrust regulation.

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7.

Vertical integration is based on a company entering industries that add _________ to its core products.
- Costs
- Little or nothing
- Incremental elements
- Shipping expenses
- Value
Correct Answer

A. Value

Explanation

Vertical integration is a strategy where a company expands its operations by entering industries that add value to its core products. This means that the company aims to control or own the entire supply chain, from the production of raw materials to the distribution of the final product. By doing so, the company can have better control over costs, quality, and delivery timelines, ultimately adding value to its core products. This integration can include activities such as manufacturing, distribution, retail, and even sourcing raw materials.

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8.

What accounts for the high failure rate of all new products that reach the marketplace?
- Market entry on too small a scale
- Poor commercialization of the new-venture product
- Poor corporate management of the new-venture unit
- All of the above
- None of the above
Correct Answer

A. All of the above

Explanation

The high failure rate of new products in the marketplace can be attributed to a combination of factors. Market entry on too small a scale can limit the reach and impact of a new product, leading to poor sales and ultimately failure. Poor commercialization refers to inadequate marketing and promotion strategies, which can result in low consumer awareness and adoption. Lastly, poor corporate management of the new-venture unit can lead to inefficiencies, misalignment with market needs, and overall failure of the product. Therefore, all of these factors contribute to the high failure rate of new products in the marketplace.

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9.

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?
- Changing industry conditions
- Changing firm-specific conditions
- Diversification for the wrong reasons
- Increasing bureaucratic costs of diversification
- All of the above
Correct Answer

A. All of the above

Explanation

A diversification strategy can be unwise for a company to pursue if there are changing industry conditions. This means that the market dynamics may have shifted, making it difficult for the company to succeed in new industries. Additionally, changing firm-specific conditions, such as a lack of resources or capabilities in new industries, can also make diversification unwise. Diversifying for the wrong reasons, such as pursuing unrelated businesses without a clear strategic fit, can lead to poor performance and a lack of synergy. Finally, increasing bureaucratic costs of diversification, such as the complexity of managing multiple businesses, can also make it unwise for a company to pursue diversification.

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10.

The quest to maximize a company's profitability should be constrained by
- Law.
- Managers.
- Ethical obligations.
- CEOs.
- All of the above.
Correct Answer

A. All of the above.

Explanation

The quest to maximize a company's profitability should be constrained by all of the above options: law, managers, ethical obligations, and CEOs. Laws are in place to ensure that companies operate within legal boundaries and do not engage in unethical or illegal practices. Managers play a crucial role in making decisions that balance profitability with other considerations such as employee well-being and customer satisfaction. Ethical obligations guide companies to act in a socially responsible manner. CEOs, as top executives, have the responsibility to set the tone and values of the company, ensuring that profitability is pursued within the framework of legal, managerial, and ethical constraints.

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11.

Strategic control systems utilized to ensure long-run profitability include
- Personal control.
- Output control.
- Behavior control.
- All of the above.
- None of the above.
Correct Answer

A. All of the above.

Explanation

Strategic control systems are used to ensure long-run profitability, and they include personal control, output control, and behavior control. Personal control involves monitoring and evaluating individual performance and holding individuals accountable for their actions. Output control focuses on measuring and managing the results and outcomes of the organization's activities. Behavior control involves setting guidelines and standards for employee behavior and ensuring they are followed. Therefore, all of these control systems contribute to ensuring long-term profitability.

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12.

Factors of production include all but which of the following?
- Land
- Labor
- Raw materials
- Ethnic diversity
- Managerial sophistication
Correct Answer

A. Ethnic diversity

Explanation

Factors of production refer to the resources needed to produce goods and services. These typically include land, labor, and raw materials. Ethnic diversity and managerial sophistication are not considered factors of production as they do not directly contribute to the production process. Ethnic diversity refers to the variety of ethnic backgrounds within a population, which may have cultural or social significance but does not directly affect production. Managerial sophistication refers to the level of skill and expertise in management, which is important for effective business operations but is not considered a factor of production.

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13.

Pursuing strategies that maximize the long-run profitability and profit growth of a company benefits which group(s) of stakeholders?
- Employees
- Creditors
- Charitable organizations in the local community
- The general public
- All of the above
Correct Answer

A. All of the above

Explanation

When a company pursues strategies that maximize long-run profitability and profit growth, it benefits all of the mentioned stakeholders. Employees benefit as the company's success can lead to job security, growth opportunities, and higher wages. Creditors benefit as the company's profitability ensures that debts can be repaid. Charitable organizations in the local community benefit as the company's success can lead to increased donations and support. The general public benefits as the company's profitability can contribute to economic growth, job creation, and overall societal well-being. Therefore, all of the mentioned stakeholders benefit when a company focuses on maximizing long-run profitability and profit growth.

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14.

Which of the following has occurred in international trade over the past half-century?
- There has been a dramatic lowering of barriers to international trade.
- Tariff rates on manufactured goods traded by advanced nations have fallen.
- Regulations prohibiting foreign companies from entering domestic markets and establishing production facilities have been removed.
- The volume of world trade has increased dramatically.
- All of the above.
Correct Answer

A. All of the above.

Explanation

Over the past half-century, there has been a significant decrease in barriers to international trade, including the lowering of tariff rates on manufactured goods traded by advanced nations. Additionally, regulations that previously prohibited foreign companies from entering domestic markets and establishing production facilities have been removed. As a result of these changes, the volume of world trade has substantially increased. Therefore, the correct answer is "All of the above."

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15.

An organization that has an adaptive culture is an organization that is
- Innovative.
- Resistant to major changes.
- Supportive of managers who take the initiative and make changes on their own.
- A and C.
- B and C.
Correct Answer

A. A and C.

Explanation

An organization that has an adaptive culture is innovative and supportive of managers who take the initiative and make changes on their own. This means that the organization encourages and values new ideas, creativity, and the ability to adapt to new challenges. It also supports managers who are proactive in driving change and taking risks. This combination of innovation and support for autonomous decision-making contributes to the organization's adaptability and ability to thrive in a dynamic environment.

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16.

The abbreviation IPO stands for
- Initial product output.
- Interim production output.
- Initial public offering.
- Inventory purchasing online.
- None of the above.
Correct Answer

A. Initial public offering.

Explanation

An initial public offering (IPO) is the process through which a privately held company offers its shares to the public for the first time. It is a way for companies to raise capital and become publicly traded. The other options, such as "initial product output" and "interim production output," do not accurately represent the meaning of IPO. Similarly, "inventory purchasing online" is unrelated to the concept of IPO. Therefore, the correct answer is "initial public offering."

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17.

Outsourcing occurs when a firm
- Buys one of its rivals.
- Merges with one of its suppliers.
- Enters into a joint venture with a rival.
- Hires another firm to perform value creation activities.
- Enters into contracts with two suppliers simultaneously.
Correct Answer

A. Hires another firm to perform value creation activities.

Explanation

Outsourcing occurs when a firm hires another firm to perform value creation activities. This means that instead of conducting certain activities in-house, the firm decides to delegate them to an external company. By doing so, the firm can focus on its core competencies while benefiting from the expertise and efficiency of the external firm. This can lead to cost savings, improved quality, and increased flexibility.

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18.

Product bundling refers to
- Preparation of products for shipment.
- A complete package of related products.
- A method of stocking products efficiently.
- An inventory procedure for ensuring effective counting of products.
- A package of unrelated products.
Correct Answer

A. A complete package of related products.

Explanation

Product bundling refers to creating a complete package of related products. This means that instead of selling individual products separately, companies bundle them together as a package to offer more value to customers. By bundling related products, companies can increase sales, provide convenience to customers, and offer a more comprehensive solution to their needs. This strategy is commonly used in industries such as technology, where companies bundle products like smartphones, tablets, and accessories together.

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19.

Free cash flow is defined as
- Money in a company's bank account.
- Government funds given to a company for meeting Environmental Protection Agency (EPA) regulations.
- Additional funds donated by stockholders.
- Cash in excess of that required to fund investments in the company's industry and to meet any debt commitments.
- Money borrowed by the company that requires no interest payments.
Correct Answer

A. Cash in excess of that required to fund investments in the company's industry and to meet any debt commitments.

Explanation

Free cash flow is the amount of cash that a company has after it has paid for all of its necessary expenses, such as investments in the company's industry and debt commitments. It represents the cash that is available for the company to use for other purposes, such as paying dividends to shareholders, making acquisitions, or investing in new projects. It is important for investors because it indicates the financial health of the company and its ability to generate cash.

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20.

Outsourcing
- Eliminates the need for a value chain.
- Reduces the firm's dependence on its value chain.
- Reorders the steps in a firm's value chain.
- Moves some value chain activities outside the firm.
- Strengthens the firm's capabilities in each value chain function.
Correct Answer

A. Moves some value chain activities outside the firm.

Explanation

Outsourcing refers to the practice of moving certain activities of a firm's value chain outside the organization. This means that instead of performing all the value chain activities internally, the firm contracts with external parties to handle certain functions. By doing so, the firm can benefit from the expertise and efficiency of specialized external providers, while also reducing costs and focusing on its core competencies. Therefore, the correct answer is "moves some value chain activities outside the firm."

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21.

Companies that pursue a transnational strategy are trying to develop
- A business model that achieves low costs.
- A differentiation strategy across geographical markets.
- A flow of skills between different subsidiaries in the global network.
- All of the above.
- None of the above.
Correct Answer

A. All of the above.

Explanation

A transnational strategy is a business approach that combines elements of both global integration and local responsiveness. It aims to achieve low costs by leveraging global efficiencies, differentiate its products or services across different markets to cater to local preferences, and facilitate the flow of skills and knowledge between different subsidiaries in the global network to foster innovation and collaboration. Therefore, the correct answer is "all of the above."

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22.

A specialized asset is one that is designed to
- Perform a multitude of generic tasks.
- Perform a specified sequence of tasks.
- Perform several nonsequential tasks.
- Perform a specific task.
- None of the above.
Correct Answer

A. Perform a specific task.

Explanation

A specialized asset is designed to perform a specific task. Unlike a generic asset that can perform a variety of tasks, a specialized asset is tailored to excel in a particular area. It is optimized to carry out a particular function efficiently and effectively, often with a high level of expertise. This specialization allows the asset to deliver superior performance and achieve better results in its designated task compared to a more general-purpose asset.

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23.

Strategic outsourcing is best described as a
- Means of getting rid of excess activities.
- Way of getting other companies to do what the outsourcing company no longer wants to do.
- Method of streamlining the marketing activities of a company.
- Decision to allow one or more of a company's value chain activities to be performed by other companies.
- None of the above.
Correct Answer

A. Decision to allow one or more of a company's value chain activities to be performed by other companies.

Explanation

Strategic outsourcing refers to the decision made by a company to delegate one or more of its value chain activities to external companies. This means that instead of performing these activities in-house, the company chooses to have them performed by other specialized companies. This decision is made to streamline the company's operations, increase efficiency, reduce costs, and focus on its core competencies. By outsourcing certain activities, the company can benefit from the expertise and resources of other companies, ultimately improving its overall performance.

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24.

A focus on using or recombining existing competencies or building new competencies to enter new markets helps managers think strategically about how industry boundaries
- Tend to remain static over time.
- Might change over time.
- Completely disappear over five-year spans.
- Are not important.
- None of the above.
Correct Answer

A. Might change over time.

Explanation

A focus on using or recombining existing competencies or building new competencies to enter new markets indicates that managers are aware that industry boundaries are not fixed and can change over time. This suggests that the correct answer is "might change over time."

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25.

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.
- Easier
- More difficult
- Less important
- Less expensive
- More simplistic
Correct Answer

A. More difficult

Explanation

As the number of business units in a company's portfolio increases, it becomes more difficult for corporate managers to stay informed about the complexities of each business. With more units, there are more variables, strategies, and challenges to consider, making it harder for managers to have a comprehensive understanding of each unit's operations. This increased complexity can make decision-making and resource allocation more challenging for corporate managers.

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26.

A stock option is a right to buy
- Shares of the company's stock at the stock's current price.
- Shares of the company's stock at half the stock's current price.
- Shares of the company's stock at a predetermined price at some point in the future.
- Bonds issued by the company.
- None of the above.
Correct Answer

A. Shares of the company's stock at a predetermined price at some point in the future.

Explanation

A stock option grants the holder the right to purchase shares of a company's stock at a predetermined price in the future. This means that the option holder has the choice, but not the obligation, to buy the shares at the agreed-upon price at a specified date or within a specific time frame. This allows investors to potentially profit from the difference between the predetermined price and the current market price of the stock. It is important to note that stock options are not bonds or a right to buy shares at half the current price.

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27.

When toymaker Mattel sells Barbie dolls in the Middle East, it changes the doll's shape to one that is a more accurate portrayal of a female body. Mattel does this to
- Create a commodity-type product.
- Transfer technological know-how.
- Increase product standardization.
- Realize experience curve effects.
- Respond to differences in local tastes.
Correct Answer

A. Respond to differences in local tastes.

Explanation

Mattel changes the doll's shape to a more accurate portrayal of a female body when selling Barbie dolls in the Middle East in order to respond to differences in local tastes. This suggests that the Middle Eastern market prefers dolls that reflect their cultural ideals of beauty and body image. By adapting the doll's shape, Mattel aims to cater to the specific preferences and expectations of the local consumers, ensuring that the product aligns with their cultural norms and tastes.

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28.

The timing of entry into an overseas market
- Doesn't matter in the long run.
- Has little effect on long-term success.
- Is a matter for careful consideration.
- Has little or no effect on the overall costs of market entry.
- Depends on the entry of competition.
Correct Answer

A. Is a matter for careful consideration.

Explanation

The timing of entry into an overseas market is a matter for careful consideration. This means that the decision of when to enter a foreign market should be thoughtfully evaluated. It suggests that there are various factors that need to be taken into account, such as market conditions, competition, and the company's resources and capabilities. Making a well-informed decision about the timing of entry can significantly impact the long-term success of the company in the foreign market.

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29.

In today's business environment, mergers and acquisitions are
- Rare.
- Too expensive to undertake.
- Occurring in many industries.
- An inappropriate technique for expanding a company.
- None of the above.
Correct Answer

A. Occurring in many industries.

Explanation

The correct answer is "occurring in many industries." This is because mergers and acquisitions are a common strategy used by companies to expand and grow in today's business environment. Many industries are experiencing mergers and acquisitions as companies seek to gain a competitive advantage, enter new markets, or achieve economies of scale. This trend highlights the importance of strategic partnerships and consolidation in the business world.

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30.

A typical board of directors is composed of
- Inside directors.
- External directors.
- Inside directors and consumer advocates.
- Outside directors and union representatives.
- Inside and outside directors.
Correct Answer

A. Inside and outside directors.

Explanation

A typical board of directors is composed of both inside and outside directors. Inside directors are individuals who are employed by the company and hold executive positions within the organization. They have a deep understanding of the company's operations and are responsible for making strategic decisions. On the other hand, outside directors are independent individuals who are not employed by the company. They bring an external perspective and expertise to the board, providing objective advice and oversight. This combination of inside and outside directors ensures a balance of internal knowledge and external perspectives in the decision-making process.

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31.

Long-term contracts
- Are preferable to short-term contracts when there is a minimal need for cooperation.
- Are preferable to vertical integration when it is not feasible to exchange hostages.
- Generally result in lower prices than does competitive bidding.
- Achieve exactly the same outcomes as vertical integration, but they incur higher bureaucratic costs.
- Are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.
Correct Answer

A. Are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.

Explanation

Long-term contracts are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers. This means that instead of merging or acquiring suppliers, a company can establish long-term contracts with them, allowing for a more flexible and cost-effective relationship. By building cooperative relationships, the company can benefit from the expertise and resources of the suppliers without incurring the higher bureaucratic costs associated with vertical integration. This approach is particularly advantageous when there is a minimal need for cooperation and when it is not feasible to exchange hostages, making long-term contracts a preferred option.

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32.

A company pursuing a multibusiness model based on diversification may justify this strategy for what reason(s)?
- Transfer competencies
- Reserve competencies
- Resource sharing
- Product bundling
- All of the above
Correct Answer

A. All of the above

Explanation

A company pursuing a multibusiness model based on diversification may justify this strategy for several reasons. Firstly, diversification allows the company to transfer competencies from one business to another, leveraging its existing knowledge and expertise. Secondly, it helps the company to reserve competencies, ensuring that it has a diverse range of skills and capabilities to adapt to changing market conditions. Additionally, diversification enables resource sharing between different businesses, optimizing the use of resources and reducing costs. Lastly, it allows for product bundling, where the company can offer a combination of products or services to create value for customers.

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33.

Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?
- The company does not have to achieve coordination between business units.
- The company may create more value from an unrelated diversification strategy.
- The company may experience lower bureaucratic costs.
- All of the above.
- None of the above.
Correct Answer

A. All of the above.

Explanation

For a company pursuing a strategy of unrelated diversification, it may not have to achieve coordination between business units because each unit operates independently. This can allow for more flexibility and autonomy within the company. Additionally, the company may create more value from an unrelated diversification strategy because it can tap into different markets and leverage different skills and resources. Lastly, the company may experience lower bureaucratic costs as there is less need for centralized decision-making and coordination. Therefore, all of the statements mentioned in the options may be true for a company pursuing unrelated diversification.

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34.

If a company is to increase the probability of a new product's commercial success, the company must foster close links between
- Marketing and sales.
- Engineering and advertising.
- Quality assurance and inventory management.
- Research and development (R&D) and marketing.
- Accounting and industrial engineering.
Correct Answer

A. Research and development (R&D) and marketing.

Explanation

To increase the probability of a new product's commercial success, it is crucial for a company to foster close links between research and development (R&D) and marketing. This is because R&D is responsible for developing innovative and marketable products, while marketing is responsible for promoting and selling these products to the target audience. By establishing strong collaboration and communication between these two departments, the company can ensure that the product being developed aligns with market needs and preferences, leading to a higher likelihood of commercial success.

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35.

Internal stakeholders of a company include
- Unions.
- Customers.
- The board of directors.
- Suppliers.
- Local communities.
Correct Answer

A. The board of directors.

Explanation

Internal stakeholders of a company are individuals or groups who have a direct interest and influence in the organization's operations and decision-making. They are typically involved in the day-to-day management and strategic planning of the company. Among the options provided, the board of directors best fits this description. The board of directors is responsible for overseeing the company's activities, setting goals, making important decisions, and representing the interests of shareholders. Unions, customers, suppliers, and local communities are considered external stakeholders as they have an indirect impact on the company's operations.

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36.

The specific collection of values, norms, beliefs, and attitudes shared by people and groups in a company is commonly referred to as
- Organizational fit.
- Organizational culture.
- Organizational development.
- Organizational positioning.
- All of the above.
Correct Answer

A. Organizational culture.

Explanation

The specific collection of values, norms, beliefs, and attitudes shared by people and groups in a company is commonly referred to as organizational culture. This term encompasses the shared behaviors and beliefs that shape the overall work environment and influence how employees interact with each other and with the organization as a whole. Organizational fit refers to the alignment between an individual's values and the values of the organization, while organizational development and organizational positioning are different concepts that do not encompass the entirety of the shared values and beliefs within a company.

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37.

What are the risks associated with licensing as a means of entering overseas markets?
- Licensing limits a company's ability to coordinate strategic moves across countries.
- A company may lose control of its technology.
- A company may lose control over its manufacturing, marketing, and strategic functions.
- All of the above.
- None of the above.
Correct Answer

A. All of the above.

Explanation

Licensing as a means of entering overseas markets carries several risks. Firstly, it limits a company's ability to coordinate strategic moves across countries, as the licensee may have different goals and strategies. Secondly, there is a risk of losing control over technology, as the licensee may gain access to proprietary knowledge and potentially use it against the licensor. Lastly, licensing can result in losing control over manufacturing, marketing, and strategic functions, as the licensee may not follow the same standards or have the same level of commitment as the licensor. Therefore, all of the above risks are associated with licensing as a means of entering overseas markets.

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38.

Diversification is sometimes pursued by a company for the wrong reasons. Which of the following is a faulty justification for diversification?
- Risk pooling
- Rescuing the core business from difficulty
- Growth for growth's sake
- All of the abaove
- None of the above
Correct Answer

A. All of the abaove

Explanation

All of the above is a faulty justification for diversification. Risk pooling is not a valid reason because diversification should be based on strategic planning and not just spreading risk. Rescuing the core business from difficulty is also not a valid reason because diversification should be a proactive strategy, not a reactive one. Lastly, growth for growth's sake is not a valid reason because diversification should be focused on creating long-term value, not just increasing size without purpose.

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39.

Members of the board of directors are supposed to be agents for
- Stockholders.
- Employees.
- Executive officers.
- Customers.
- Suppliers.
Correct Answer

A. Stockholders.

Explanation

Members of the board of directors are supposed to be agents for stockholders because they are elected by the stockholders to represent their interests and make decisions on their behalf. The board of directors is responsible for overseeing the management of the company and ensuring that it is being run in a way that maximizes shareholder value. They have a fiduciary duty to act in the best interests of the stockholders and make decisions that will benefit them. Therefore, the board of directors serves as the agents for the stockholders in the company.

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40.

To a large degree, any organization's tasks are a function of its
- Market area.
- Labor supply.
- Supervisors.
- Strategy.
- Compensation plan.
Correct Answer

A. Strategy.

Explanation

An organization's tasks are determined to a large degree by its strategy. Strategy refers to the plan or approach that an organization adopts to achieve its goals and objectives. It includes decisions about what products or services to offer, which markets to target, how to position the organization in the market, and how to allocate resources. The strategy of an organization influences the tasks that need to be performed, the skills and resources required, and the overall direction of the organization. Therefore, strategy plays a crucial role in shaping an organization's tasks.

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41.

Control through organizational culture
- Is less expensive than output control.
- Reduces mutual adjustment.
- Involves employees internalizing the norms and values of the organization.
- Includes setting individual goals.
- Reduces mutual adjustment and includes setting individual goals.
Correct Answer

A. Involves employees internalizing the norms and values of the organization.

Explanation

Control through organizational culture involves employees internalizing the norms and values of the organization. This means that employees understand and embrace the beliefs, behaviors, and expectations that define the organization's culture. When employees internalize these norms and values, they are more likely to act in alignment with them without the need for constant supervision or monitoring. This form of control is less expensive than output control, which involves closely monitoring and measuring employees' performance. It also reduces the need for mutual adjustment, as employees are guided by the shared understanding of the organization's culture. Setting individual goals can be a part of control through organizational culture, but it is not the sole focus.

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42.

In a successful company, the purpose of a control system is to
- Provide managers with a set of incentives to motivate employees to work toward company goals.
- Provide managers with specific feedback on how well the organization and its members are performing.
- Provide managers with information that can be used to criticize employee performance objectively.
- A and B.
- B and C.
Correct Answer

A. A and B.

Explanation

The purpose of a control system in a successful company is to provide managers with a set of incentives to motivate employees to work toward company goals and provide them with specific feedback on how well the organization and its members are performing. This allows managers to align employee efforts with the overall objectives of the company and make informed decisions based on performance data. This combination of incentives and feedback helps create a culture of accountability and continuous improvement within the organization.

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43.

Which of the following companies increased company growth rates by developing products at home and then expanding sales of these products in international markets?
- Procter & Gamble
- Ford
- Toyota
- All of the above
- None of the above
Correct Answer

A. All of the above

Explanation

All of the above companies increased company growth rates by developing products at home and then expanding sales of these products in international markets. Procter & Gamble, Ford, and Toyota are all well-known multinational corporations that have successfully implemented this strategy. By creating innovative products domestically and then selling them globally, these companies were able to tap into new markets and increase their revenue and market share. This approach allowed them to leverage their brand reputation and expertise to gain a competitive advantage in international markets.

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44.

Cost reduction pressures can be particularly intense in industries producing
- Commodity-type products.
- Highly differential products.
- Goods that do not compete on the basis of price.
- Goods servicing narrowly defined markets.
- Highly advertised goods.
Correct Answer

A. Commodity-type products.

Explanation

Cost reduction pressures are particularly intense in industries producing commodity-type products. This is because commodity-type products are typically standardized and undifferentiated, meaning that customers perceive little difference between competing products. As a result, price becomes a key factor in purchasing decisions, and companies producing these products face intense competition to offer the lowest price. In order to remain competitive, they must constantly seek ways to reduce costs and increase efficiency in their production processes.

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45.

Credible commitments
- Are believable promises or pledges to support the development of a long-term relationship between companies.
- Facilitate diversification based on acquisitions and restructuring.
- Facilitate competitive bidding.
- Facilitate vertical integration.
- Reduce the risk of losing proprietary technology to a venture partner and facilitate vertical integration.
Correct Answer

A. Are believable promises or pledges to support the development of a long-term relationship between companies.

Explanation

Credible commitments are important in establishing trust and building long-term relationships between companies. By making believable promises or pledges, companies can demonstrate their commitment to supporting the development of the relationship. This can help foster cooperation and collaboration, as well as provide assurance to the other party that the company is reliable and trustworthy. Credible commitments are not directly related to diversification, competitive bidding, or reducing the risk of losing proprietary technology, but they can facilitate vertical integration by establishing a foundation of trust between companies.

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46.

Which of the following problems is (are) associated with a strategy of vertical integration?
- An increasing cost structure
- Manufacturing disadvantages that arise because of rapidly changing technology
- Marketing disadvantages that arise when demand is unpredictable
- All of the above
- None of the above
Correct Answer

A. All of the above

Explanation

A strategy of vertical integration involves a company expanding its operations by acquiring or merging with other companies in the supply chain, either upstream or downstream. This can lead to an increasing cost structure because the company now has to manage and maintain additional operations, which can be costly. Additionally, rapidly changing technology can create manufacturing disadvantages as the company may struggle to keep up with the latest advancements. Finally, unpredictable demand can create marketing disadvantages as the company may struggle to accurately forecast and meet customer needs. Therefore, all of the given problems are associated with a strategy of vertical integration.

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47.

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are ___________ to their existing business activities.
- Unrelated
- Not comparable
- Opposed
- Related
- Identical
Correct Answer

A. Related

Explanation

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are related to their existing business activities. This means that they look for opportunities in industries or markets that are closely connected or similar to their current operations. By doing so, companies can leverage their existing knowledge, skills, and resources to gain a competitive advantage in the new business ventures. This approach allows for the sharing of expertise and the potential for synergies between the different business units, ultimately increasing the overall performance and success of the company.

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48.

A company's stockholders provide a company with
- Emotional and intellectual support.
- Risk capital.
- Free advertising.
- Advice on new product lines.
- A code of ethics.
Correct Answer

A. Risk capital.

Explanation

Stockholders provide a company with risk capital, which refers to the funds invested in a company with the expectation of earning a return. This capital is at risk because there is no guarantee of profit, and the stockholders may lose their investment if the company performs poorly. Emotional and intellectual support, free advertising, advice on new product lines, and a code of ethics may be provided by other stakeholders such as employees, customers, or the community, but the primary contribution of stockholders is the provision of risk capital.

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49.

The takeover constraint
- Effectively limits the number of independent companies that a company can acquire.
- Limits the degree to which managers can pursue strategies that are at variance with stockholder interests.
- Is a theoretical construct that can be ignored in practice.
- Limits the freedom that individual companies have to maximize their long-run return on investment.
- Is imposed by corporate managers on errant business-level managers.
Correct Answer

A. Limits the degree to which managers can pursue strategies that are at variance with stockholder interests.

Explanation

The correct answer suggests that the takeover constraint limits the degree to which managers can pursue strategies that are at variance with stockholder interests. This means that managers are restricted in their ability to make decisions or take actions that may go against the interests of the company's shareholders. The takeover constraint serves as a mechanism to ensure that managers act in the best interest of the stockholders and prevents them from pursuing strategies that may harm shareholder value.

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Quiz Edited by
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May 11, 2011

Quiz Created by
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Quiz Preview

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Credible commitments

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The takeover constraint