Q&A Hero

Q: Some experts consider the ______ structure to be one of the 20th century's most significant organizational innovations because of its value to diversified firms. a. network b. cooperative c. multidivisional d. functional

Q: The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for the past year. Now, at the end of the year, three of Transector's seven divisions have not met this rate-of-return goal. The division managers of these three under-performing divisions have all secretly contacted executive-placement firms to investigate openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all-important at Transector. Transector probably uses the ______ structure. a. competitive form of the multidivisional b. SBU form of the multidivisional c. worldwide geographic area d. distributed strategic network

Q: Strategy has an important influence on structure, once a particular structure is in place, that structure influences strategy. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls. a. True b. False

Q: The integrated cost leadership/differentiation strategy needs structural features that are partially centralized and partially decentralized, jobs that are semi-specialized, and rules and procedures that call for some formal and some informal job behavior. a. True b. False

Q: A strategic network can be characterized as a loose federation of partners revolving around a strategic center firm. a. True b. False

Q: Specialization refers to the extent to which authority for decision making is retained at higher managerial levels. a. True b. False

Q: The marketing and R&D functions are emphasized in the differentiation strategy's functional structure. a. True b. False

Q: If firms band together in a large number of vertical complementary strategic alliances, there is a danger that the government will suspect them of illegal collusive activities. a. True b. False

Q: Distributed strategic networks are the organizational structure used to manage international cooperative strategies. a. True b. False

Q: The competitive form of the M-form structure is characterized by complete independence among the form's divisions. Unlike the divisions included in the cooperative structure, divisions that are part of the competitive structure do not share common strengths. a. True b. False

Q: Firms switch from a functional structure to a multidivisional structure because greater levels of environmental complexity and uncertainty make it necessary for the firm to develop cooperative relationships with its stakeholders. a. True b. False

Q: The three multidivisional structures that are used to implement a diversification strategy are the competitive form, the strategic business unit form, and the integrated form. a. True b. False

Q: In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented toward market areas. a. True b. False

Q: To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business-level strategy. a. True b. False

Q: Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy. a. True b. False

Q: Strategy has an important influence on structure, although once in place, structures influence strategy. a. True b. False

Q: A centralized structure does not provide information from local stores that would be useful in changing its technology quickly. This example illustrates the effect of structure on strategy. a. True b. False

Q: Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The structural features that are best for these requirements are centralization, specialization, and many rules and procedures. a. True b. False

Q: RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls. a. True b. False

Q: Over time, large and complex organizations must customize their structure to fit their unique strategic needs. a. True b. False

Q: Organizational structures must be both stable and flexible. a. True b. False

Q: Arnold Schwartz, CEO and founder of Schwartz Engineering, has repeatedly rebuffed efforts by other firms to draw Schwartz Engineering into strategic alliances. Schwartz Engineering has built its highly successful business around proprietary processes invented by Mr. Schwartz in the 1980s. Mr. Schwartz is concerned that his firm will be required to share the sources of its competitive advantage with alliance partners. This is a reasonable fear. a. True b. False

Q: Centralized and formalized procedures allow for greater flexibility, an important factor for firms using a cost leadership strategy. a. True b. False

Q: Alliances of organizations in the same position on the value chain are known as vertical alliances. a. True b. False

Q: Firms implementing the multidomestic strategy often attempt to isolate themselves from global competitive forces by establishing protected market positions or by competing in industry segments that are most affected by differences among local countries. a. True b. False

Q: For firms in a vertical complementary alliance (such as between Toyota and its suppliers), it is more difficult to identify the strategic center firm than in a horizontal complementary alliance (for example, airline alliances). a. True b. False

Q: With a related diversification corporate-level strategy, financial controls are used by corporate leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and technologies across businesses. a. True b. False

Q: The simple structure is used by owner-managed firms which are characterized by informal relationships, few rules, limited task specialization, and unsophisticated information systems. a. True b. False

Q: High levels of formalization of rules and procedures which often emanate from the centralized staff are a characteristic of the structure used to implement the cost leadership strategy. a. True b. False

Q: A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff merely serves as an extension of the manager's supervisory authority. a. True b. False

Q: The worldwide geographic area structure differs from the worldwide product divisional structure in the level of centralization of decision making. a. True b. False

Q: According to Michael Dell, an overemphasis on financial controls to produce attractive short-term results contributed to performance difficulties at Dell, Inc. This point emphasizes the importance of properly balancing the use of strategic and financial controls. a. True b. False

Q: Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls. a. True b. False

Q: Internal competition for corporate resources is effective for companies with an unrelated diversification strategy, but dysfunctional for companies with a related constrained strategy. a. True b. False

Q: The divisions within each SBU are related in terms of shared products or markets, but the divisions of one SBU have little in common with the divisions of the other SBUs. a. True b. False

Q: The matrix organization has a dual structure combining functional specialization and business product or project specialization. a. True b. False

Q: To implement a related linked strategy, a firm usually needs an SBU structure. a. True b. False

Q: Research shows that structure has a more important influence on strategy than the reverse and hence the emphasis of the chapter on the subject of structure. a. True b. False

Q: Organizational inertia often prompts top management to initiate structural change when organizational performance levels drop. a. True b. False

Q: To implement a related constrained strategy, firms should use the cooperative form of the multidivisional structure. a. True b. False

Q: The worldwide product divisional structure has centralized decision-making authority in the worldwide division headquarters to coordinate and integrate decisions and actions among business units. a. True b. False

Q: Failure to properly structure an organization can contribute to poor strategic decisions and eventually bankruptcy. a. True b. False

Q: There are three variations of the multidivisional structure. a. True b. False

Q: As a firm grows, it typically shifts from a simple structure to a functional structure. a. True b. False

Q: Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages. a. True b. False

Q: The cooperative form is an M-form structure in which horizontal integration is used to bring about interdivisional cooperation. a. True b. False

Q: The selection of an organizational structure for an internationally diversified firm should consider the international corporate-level strategy the firm is using. a. True b. False

Q: Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable. a. True b. False

Q: The organizational structure for an internationally diversified firm requires trade-offs between global integration and local market responsiveness. a. True b. False

Q: An SBU structure consists of at least three levels: the top level, the corporate headquarters; the next level, the strategic business units (SBUs); and the final level, SBU divisions. a. True b. False

Q: Define the agency relationship and managerial opportunism and discuss their strategic implications.

Q: International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? a. The director of food service for IFS b. The Board of Directors of IFS c. The employees directly involved in the wrongdoing d. The head of contract services for the Marines

Q: Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. a. greater experience in a wider range of industries; lessening of managerial employment risk b. the manager frequently invests in the acquired firm, which allows him or her extensive profits; the manager can frequently buy excess assets divested by the acquired firm c. the manager's supervisory needs are lowered; the manager is allowed greater time to oversee a wider range of activities d. the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

Q: In the United States, the fundamental goal of business is to: a. ensure customer satisfaction. b. maximize shareholder wealth. c. provide job security. d. generate profits.

Q: Ownership concentration is determined by both: a. the number of stockholders and the parties they represent. b. the number of stockholders and total percentage of shares they own. c. the number of outside directors and the parties they represent. d. the number of outside directors and total percentage of shares they own.

Q: The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the Board of Directors with a proposal for: a. increased diversification of Sierra Infusion. b. the addition of outside directors to the Board. c. increased shareholder participation in decision making. d. greater concentration on Sierra's core industry.

Q: Which of the following is TRUE of trends in Japan's corporate governance structure? a. Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals. b. Increased regulation in the financial sector has increased the cost of mounting hostile takeovers. c. Banks' influence over corporations is increasing. d. The gap in compensation between CEOs in public and private companies is increasing.

Q: The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is: a. ownership concentration. b. the market for corporate control. c. executive compensation systems. d. the Board of Directors.

Q: Which of the following is a FALSE statement about corporate governance? a. Governance is used to establish order between parties whose interests may be in conflict. b. Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. c. Corporate governance mechanisms can be in conflict with one another. d. Corporate governance is best achieved with a Board of Directors with strong ties to management.

Q: Agricultural Chemicals, Inc., was the target of a hostile takeover 6 months ago. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Which of the following is most likely to be TRUE? a. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. They are more a function of general market conditions. b. The fact that a hostile takeover has occurred is proof that the firm was under-performing. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. d. The CEO and top executives should not consider their jobs secure.

Q: A virtually exclusive reliance on financial controls may occur when outsider-dominated Boards exist. This may lead to all of the following EXCEPT: a. high executive turnover. b. increased diversification of the firm. c. excessive management compensation. d. reduction in R&D expenditure.

Q: Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control. a. small; small b. small; large c. large; small d. large; large

Q: Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to: a. align financial institutions' actions with society's interests. b. increase the number of foreign firms listing on U.S. stock exchanges. c. require CEOs to attest to the accuracy of their companies' financial reports. d. increase consumer protection in pharmaceutical products.

Q: The interests of multinational corporations' shareholders may be best served when there is: a. a uniform compensation plan for all corporate executives, United States and foreign alike. b. executive compensation that is primarily based on long-term performance. c. elevation of foreign executive compensation to U.S. levels. d. a variety of compensation plans for executives of foreign subsidiaries.

Q: German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because: a. the roles of CEO and chairperson of the Board of Directors are usually combined. b. large institutional investors control large blocks of stock. c. private shareholders and large institutional investors rarely have large ownership positions in firms. d. of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms.

Q: Monitoring by shareholders is usually accomplished through: a. management consultants. b. government auditors. c. the firm's top managers. d. the Board of Directors.

Q: Boards of Directors are now becoming more involved in: a. the strategic decision-making process. b. selecting new CEOs. c. the firm's tax issues. d. governmental relations.

Q: All of the following are consequences of the Sarbanes-Oxley Act EXCEPT: a. a decrease in foreign firms listing on U.S. stock exchanges. b. internal auditing scrutiny has improved and there is greater trust in financial reporting. c. an increased number of IPOs (initial public offerings) are expected. d. Section 404 creates excessive costs for firms.

Q: Institutional owners are: a. shareholders in the large institutional firms listed on the New York Stock Exchange. b. banks and other lending institutions that have provided major financing to the firm. c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. d. prevented by the Sarbanes-Oxley Act from owning more than 50 percent of the stock of any one firm.

Q: A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called: a. greenmail. b. a standstill agreement. c. crossing the palm with silver. d. a poison pill.

Q: Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS: a. increases shareholder value significantly. b. may not have a direct effect on firm performance. c. is so aggressive that Boards of Directors have become overly cautious. d. has weakened the effect of other governance mechanisms.

Q: Managerial employment risk is the: a. risk that managers will behave opportunistically. b. risk undertaken by managers to earn stock options. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. d. risk managers will not find a new top management position if they should be dismissed.

Q: All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT: a. consumer protection. b. CEO compensation. c. regulation of derivatives. d. retirement accounts.

Q: Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to 3 years' salary because DictionAry has been bought in a hostile takeover by its main competitor. Ambrose received: a. a golden parachute. b. a poison pill. c. greenmail. d. a silver handshake.

Q: Compared to managers, shareholders prefer: a. safer strategies with greater diversification for the firm. b. riskier strategies with more focused diversification for the firm. c. safer strategies with more focused diversification for the firm. d. riskier strategies with greater diversification for the firm.

Q: One means that is considered to improve the effectiveness of outside directors is: a. mandating that all outside directors be drawn from government or academia rather than industry. b. requiring that outside directors be former executives of the firm. c. requiring outside directors to own significant equity stakes in the firm. d. requiring that outside directors act objectively and have no ownership interest in the firm.

Q: Research suggests that Boards of Directors perform better if: a. the CEO is also the chairperson of the Board of Directors. b. the Bard includes employees as voting members. c. the Board is homogenous in composition. d. outside directors own significant equity in the organization.

Q: The New York Stock Exchange requires that the audit committee be: a. available to comment to external analysts. b. headed by outside directors. c. liable for any illegal actions by the top management team. d. made up of CPAs with auditing experience.

Q: The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are: a. usually on the verge of bankruptcy. b. typically under-performing their industry. c. often performing above their industry averages. d. always outperforming their industry.