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Management
Q:
Corporate managers must carefully control interactions with division managers to ensure that both short- and long-term goals are being met.
Q:
In a multi-divisional structure corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.
Q:
The profitability of different business divisions is hard to ascertain in the multi-divisional structure.
Q:
In the multi-divisional structure day-to-day operations are the responsibility of corporate headquarters.
Q:
The multi-divisional structure allows each division to adopt the structure that best suits its needs.
Q:
In a firm with a multi-divisional structure, corporate managers oversee the actions of divisional managers.
Q:
The costs of operating a multi-divisional structure are high compared to the functional structure.
Q:
One advantage of the multi-divisional structure over a functional structure is that each distinct product line or business unit is placed in its own self-contained unit or division, with all support functions.
Q:
The product-team structure relies on the multi-divisional teams.
Q:
The degree of horizontal differentiation in the product structure is higher than in the functional structure.
Q:
Product structures arrange and group people on the basis of their common expertise and experience or because they use the same resources.
Q:
Centralization promotes organizational flexibility.
Q:
Authority is centralized when managers at upper levels of the organizational hierarchy retain the authority to make the most important decisions.
Q:
When companies become too tall and the chain of command too long, strategic managers tend to lose control over the hierarchy and, subsequently, their strategies.
Q:
Tall structures lead to information distortion when data are being sent either up or down the hierarchy.
Q:
The principle of minimum chain of command states that an organization should choose a hierarchy with the minimum number of levels of authority necessary to achieve its strategy.
Q:
As a company grows and diversifies the number of levels in its hierarchy decreases.
Q:
Flat organizational structures have few hierarchical levels relative to size.
Q:
Vertical integration refers to the number of subordinates a manager directly manages.
Q:
Span of control is the means by which a company seeks to coordinate people and functions to accomplish organizational tasks.
Q:
When corporate managers choose how to divide people and tasks into functions and divisions to increase their ability to create value, they are making horizontal differentiation choices.
Q:
The basic building blocks of organizational structure are differentiation and integration.
Q:
The value creation activities of organizational members are meaningless unless some type of structure is used to assign people to tasks and link the activities of different people and functions.
Q:
Effective organizational design can simultaneously allow a company to obtain a competitive advantage and create value.
Q:
Organizational structure and control shape the way people behave and determine how they will act in the organizational setting.
Q:
The role of organizational structure is to provide managers with specific feedback on how well an organization and its members are performing and building competitive advantage.
Q:
The primary role of organizational structure is to coordinate employees activities to effectively implement strategy and to motivate employees to achieve superior efficiency.
Q:
Organizational design means selecting the combination of organizational structure and control systems that lets a company pursue its strategy most effectively.
Q:
Strategy is implemented through organizational design.
Q:
What are the potential benefits and risks of strategic alliances? What actions can a firm take to minimize the risks and fully exploit the benefits?
Q:
Give an example of a firm that has diversified with an internal new venture. Was the strategy successful? Why or why not? Now answer the above questions for a firm that has diversified through acquisitions, and through a joint venture.
Q:
Under what conditions should a firm that is facing the need to diversify consider the use of an internal new venture strategy, an acquisition strategy, or a joint venture strategy?
Q:
Describe what is meant by the terms "restructuring" and "reengineering," and discuss when and why they would be used.
Q:
Attaining a credible commitment from a potential partner
a) is a step in partner selection.
b) is a way to safeguard against the opportunism of cheating.
c) requires the ability to learn from alliance partners.
d) requires the ability to share skills with partners
e) requires the ability to share skills with and learn from alliance partners.
Q:
A key to making a strategic alliance work is
a) having one partner handle daily operations.
b) reducing investment in the alliance to a minimum.
c) sharing all knowledge.
d) enforcing one culture for both partners.
e) selecting the right partner.
Q:
Which of the following is not a consideration in terms of managing a strategic alliance to maximize its potential benefits?
a) Sensitivity to cultural differences
b) Learning from a partner
c) Building interpersonal relationships between the partners' managers
d) Selecting the right bidding strategy
e) All of these are considerations for managing a strategic alliance to maximize potential benefits.
Q:
Which of the following best illustrates a credible commitment from an alliance partner?
a) CEO agreement to work together
b) Developing mutually agreeable output controls
c) Exchanging lower-level employees
d) Taking a significant equity stake in the alliance partner
e) All of these equally illustrate credible commitments.
Q:
Which of the following is not a safeguard against opportunism by alliance partners?
a) Designing the alliance to "wall off" sensitive technologies
b) Realizing the goals of the alliance
c) Partners swapping important proprietary skills and technology
d) Contractual arrangements that limit partner exploitation
e) Obtaining credible commitments
Q:
Pertinent information about potential alliance partners is available from
a) informed third parties.
b) investment bankers who have had dealings with the firm.
c) former employees.
d) face-to-face meetings with senior managers.
e) all of these
Q:
In a strategic alliance, a good partner
a) has capabilities that the company values but that it lacks.
b) helps the company achieve its strategic goals.
c) shares the firm's vision for the purpose of the alliance.
d) is unlikely to opportunistically exploit the alliance.
e) has all of these advantages listed.
Q:
The success of a strategic alliance includes all of the following except
a) partner selection
b) alliance structure
c) the way the alliance is managed
d) a, b, & c above
e) none of the above
Q:
Which of the following is not a potential drawback to joint ventures?
a) Profits of the new business must be shared.
b) Partners share costs and risks of the new business.
c) Shared control results in conflicts.
d) Critical know-how may be given away
e) All of these are potential joint venture drawbacks.
Q:
Which of the following is not a potential advantage of strategic alliances?
a) Facilitating entry into a market
b) Sharing the costs of developing new products
c) Bringing together complementary skills and assets that neither company could easily develop on its own
d) Providing access to valuable low-cost manufacturing knowledge
e) All of these are potential advantages of strategic alliances
Q:
The objective of bidding strategy is to
a) complete the acquisition quickly.
b) reduce the target population of potential acquisition candidates.
c) reduce the price that a company must pay for an acquisition candidate.
d) make sure that the acquired company's management does not remain after the acquisition is completed.
e) avoid companies that are undervalued by the stock market.
Q:
Which of the following is not one of the criteria for evaluating potential acquisition candidates?
a) Age
b) Product market position
c) Financial position
d) Management capabilities
e) Competitive environment
Q:
Which of the following is not a guideline for a successful acquisition?
a) Good bidding strategy
b) A clear strategic rationale for making the acquisition
c) Completing the acquisition quickly
d) Thorough preacquisition screening
e) A good plan to integrate the acquired company into the acquired one
Q:
Acquisitions often fail because of
a) poor commercialization.
b) differences in corporate culture.
c) large-scale entry.
d) too much preacquisition screening, which increases the time it takes to enter a market.
e) slowness in establishing significant market presence.
Q:
Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?
a) Poor postacquisition integration
b) Overestimation of the potential gains to be derived from synergy
c) The high cost of making acquisitions
d) Lack of preacquisition screening
e) Overestimation of the potential costs of realizing synergies
Q:
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?
a) Joint ventures
b) New ventures
c) Taper integration
d) Long-term contracting
e) Acquisitions
Q:
Which of the following entry strategies should be used when speed is an important consideration?
a) Internal new venture
b) Related diversification
c) Joint venture
d) Unrelated diversification
e) Acquisition
Q:
Evidence suggests that the most important criterion for evaluating a venture during its first four to five years is
a) profitability
b) cash flow.
c) stock price.
d) market share growth.
e) investor ROI.
Q:
Research indicates that the uncertainty surrounding new ventures to be so great that it usually took a company ______________ years after launching the venture to reasonably estimate the venture's future profitability.
a) one to two
b) two to three
c) ten
d) seven to eight
e) four to five
Q:
Which of the following seems to be a major determinant of a new venture's success?
a) Large-scale entry into the target industry designed to build market share, even when such entry involves significant short-term losses
b) Cautious small-scale entry into the target industry so that the company can assess the probable outcome of the venture without losing too much money
c) A low level of integration between the marketing and R&D functions of the venturing company
d) Supporting many new venture projects in the hope that one will succeed
e) Killing the new venture if it does not show a profit after the end of the third year
Q:
An internal new venture is the most appropriate strategic choice when
a) an industry is mature.
b) the firm will enter on a small scale.
c) there is strong pressure for quick profitability.
d) speed of entry is the most important consideration.
e) a firm has competencies that can be leveraged.
Q:
Which of the following is not an explanation for the relatively high failure rate of internal new ventures?
a) Entering on too small a scale
b) Poor commercialization of the new product
c) Trying to establish too many new ventures simultaneously
d) Not allowing new ventures ample time to turn a profit
e) All of these are explanations for the relatively high failure rate of internal new ventures.
Q:
Even if it lacks the competencies required to compete in a new business, a company may pursue an internal venturing strategy if the industry it is entering is a(n) ________________ industry.
a) mature
b) declining
c) stagnant
d) growing
e) emerging
Q:
Internal new ventures
a) should be killed if they don't make a profit within three years.
b) are faster than acquisitions.
c) are preferred to acquisitions when entry barriers are high.
d) are often preferred by science-based companies.
e) are best when the company is entering the industry on a small scale.
Q:
Internal new ventures are likely to be preferred when
a) entry barriers are high.
b) exit barriers are high.
c) a company possesses a set of valuable competencies in its existing businesses that can be leveraged to enter new business.
d) the company needs more mega-opportunities.
e) the industry is in the mature stage of the industry life cycle.
Q:
Hamel and Prahalad have developed a model that can help managers assess how and when they should expand beyond their current market or industry. They find that it is useful to view a company as a
a) portfolio of resources.
b) portfolio of situational advantages.
c) portfolio of strategies.
d) portfolio of core competencies.
e) portfolio of strategic intent.
Q:
Which of the following statements about approaches to implementing and managing change is incorrect?
a) Top-down change is driven by a strong CEO and top management team.
b) Top-down change is faster than bottom-up change.
c) Bottom-up change requires participation and keeping people informed.
d) An advantage of bottom-up change is involving managers at all levels to reveal problems.
e) All of these statements are correct.
Q:
Which of the following is not one of the organizational levels where obstacles to change may be found?
a) Enterprise
b) Divisional
c) Corporate
d) Functional
e) Individual
Q:
Which of the following steps should managers take if the change process is to succeed?
a) Determining the need to change
b) Determining the obstacles to change
c) Managing change
d) Evaluating the effects of change on organizational performance
e) All of these are steps that strategic managers must follow if the change process is to succeed.
Q:
Which of the following statements concerning reengineering and TQM is correct?
a) Reengineering is more important than TQM.
b) After reengineering has taken place TQM takes over.
c) After TQM has taken place, reengineering takes over.
d) Reengineering and TQM usually take place after a company restructures.
e) TQM is more important than reengineering.
Q:
A hospital examines its processes closely and then changes them to become more patient-centered. Among the changes are new ways of doing tasks and new groupings of workers. This is an example of
a) restructuring.
b) reengineering.
c) TQM.
d) benchmarking.
e) downsizing.
Q:
Which of the following actions would you expect to see in a company that is undergoing a reengineering?
a) Hiring more managers
b) Hiring more workers
c) Examining business processes to better serve customers
d) Investing more in product R&D
e) Centralizing decision-making authority
Q:
The failure rate for strategic alliances is quite high.
Q:
Short-term outsourcing agreements are a type of strategic alliance.
Q:
The parties to an alliance may be actual or potential competitors.
Q:
A joint venture involves two companies jointly creating a new separate company to enter a new business area.
Q:
One reason for acquisition failure is management's inadequate attention to preacquisition screening.
Q:
After an acquisition, acquired companies experience high management turnover.
Q:
Many acquisitions create value rather than destroy it.
Q:
Ample evidence suggests that many acquisitions do add value for the acquiring company, and indeed, often end up increasing value.
Q:
By acquiring an established enterprise, a company can circumvent most entry barriers.
Q:
Internal new ventures are the preferred entry mode when the industry to be entered is well-established and incumbent companies enjoy significant protection from barriers to entry.
Q:
Acquisitions take longer to be executed than an internal new venture.
Q:
An advantage of internal ventures over acquisitions as a mode of entering a new business area is that internal ventures involve lower risks.
Q:
A company can increase the probability of success of an internal venture by constructing efficient scale production facilities ahead of demand.
Q:
Evidence suggests that the most important criterion for evaluating a venture during its first four to five years is market share.
Q:
An advantage of project teams is that they can significantly reduce the time it takes to develop a new product.