Chapter 5

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					Chapter 4.

1.   The text suggests that talented professionals are typically most concerned about financial rewards. Money is the
     top reason why such employees take and leave jobs.

2.   Social capital is found in the knowledge, skills, and abilities of individual employees.

3.   Firm's such as E-Bay, Oracle, and Microsoft will tend to have a higher ratio of market value to book value than
     “industrial companies” such as General Motors and Nucor Steel.

4.   Core competencies form the basis of a company's competitive advantage.

5.   Among the downsides of social capital is/are:
     A) high social capital may breed a tendency to not question shared beliefs.
     B) socialization processes may become expensive.
     C) individuals may become less willing to collaborate on joint projects.
     D) a and b
     E) All of the above

6.   When firms invest in individual employee's abilities and skills, they are developing ____ within the firm.
     A) physical capital
     B) human capital
     C) trust
     D) social capital
     E) intellectual capital

7.   To create sustainable competitive advantage, strategy should be based on
     A) tangible resources and assets.
     B) intangible resources and organizational capabilities.
     C) inputs and outputs.
     D) control and inertia.

8.   The use of information technology (e.g., e-mail) has increased in recent years in many organizations. This has
     helped to
     A) increase social capital.
     B) make more effective use of time in every situation.
     C) restrict social network growth.
     D) create smaller social networks.

9.   Core competencies
     A) arise primarily from an organizations resources.
     B) arise from management training.
     C) depend on competitor's capabilities.
     D) enable a firm to achieve above average profits.
Chapter 6

1. When a corporation uses a related diversification strategy, synergy is created primarily through vertical relationships.

2. A publishing company that purchases a chain of bookstores to sell its books is an example of forward integration.

3. A company trying to create value based on unrelated diversification has a low need for coordination between
   business units.

4. Among the disadvantages of acquisitions are the expensive premiums that are frequently paid to acquire a business.

5. Corporate-level strategy primarily addresses two related issues:
   A) how to compete in a given business; the application of technology.
   B) what businesses to compete in; how these businesses can achieve synergy.
   C) how to integrate primary activities; how to increase shareholder wealth.
   D) how to improve a firm's infrastructure; how to maintain ethical behavior.
   E) how to create value for the market, how to increase profits.

6. Sharing core competencies is one of the primary potential advantages of related diversification. In order for related
   diversification to be most successful, it is important that
   A) the similarity required for sharing core competencies must be in the value chain, not in the product itself.
   B) the products must use similar distribution channels.
   C) the target market is the same, even if the products are very different.
   D) the methods of production are the same.
   E) the returns are counter-cyclical.

7. Transaction costs include all of the following costs except
   A) search costs.
   B) negotiating costs.
   C) monitoring costs.
   D) agency costs.
   E) enforcement costs.

8. In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized
   by high market growth is termed a
   A) star.
   B) question mark.
   C) cash cow.
   D) dog.
   E) dud.

9. The three primary means by which a firm can diversify are through:
   A) mergers and acquisitions; joint ventures and strategic alliances; internal development
   B) mergers and acquisitions; differentiation; overall cost leadership
   C) joint ventures and strategic alliances; integration of value chain activities; acquiring human capital.
   D) mergers and acquisitions; internal development; differentiation.
   E) business acquisitions; corporate acquisitions, international acquisitions.

10. Corporations create value by which of the following?
    A) Creating goods and services valued by the market
    B) Generating above average profits through competitive advantages
    C) Creating synergy between business units.
    D) All of the above
    E) None of the above
Chapter 9

1.   In “double loop” learning, the organization's assumptions, premises, goals and strategies are continuously
     monitored, tested, and reviewed.

2.   For firms competing in mature, stable industries, “traditional” strategic controls are often appropriate.

3.   Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

4.   For businesses facing complex and turbulent business environments
     A) goals and objectives that are uncertain prevent opportunism.
     B) traditional strategic controls are usually appropriate.
     C) complacency about predetermined milestones can prevent adaptability.
     D) detailed plans are needed to maintain order.
     E) contemporary strategic controls and usually appropriate.

5.   Informational control systems ask
     A) is the organization “doing things right”?
     B) is the organization “doing the right things”?
     C) whether rules and regulations are being followed as information is processed?
     D) is the organization's environment a necessary and sufficient condition for success?
     E) are goals and objectives being met?

6.   The causes of counterproductive behavior in organizations include
     A) lack of a clear understanding of organizational goals and objectives.
     B) motivated self-interest.
     C) outright malfeasance.
     D) unethical conduct.
     E) All of the above

7.   In strategic evaluation and control systems, the feed forward process is aimed at
     A) reinforcing the status quo.
     B) improving organizational efficiency.
     C) doing the right things.
     D) improving product quality.
     E) reinforcing rules and regulations.

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