Nike Market Entry Strategy

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					                                     Chapters 8-13 Practice
Student: ___________________________________________________________________________

 1. Which of the following is not a common new entry strategy according to the text:

    A. imitative new entry.
    B. adaptive new entry.
    C. proactive new entry.
    D. pioneering new entry.

 2. Equity financing for entrepreneurial start-ups includes which of the following

    A. investments by family and friends.
    B. personal savings.
    C. angel financing.
    D. all of the above.

 3. Citipost offers discounted overnight delivery by targeting high volume customers in busy central business
    districts. This is an example of

    A. an adaptive strategy.
    B. strategic positioning.
    C. getting a foothold in an established industry.
    D. all of the above

 4. All of the following statements about venture capital are true except

    A. entrepreneurs raise venture capital by selling shares of ownership in their business.
    B. venture capital is a form of public equity financing.
    C. venture capital is used to finance rapid growth or large capital expenditures.
    D. venture capital groups can often provide helpful management advice.

 5. Doing more with less by holding down costs or making more efficient use of resources is one of the ways
    entrepreneurs achieve success. This is an example of how entrepreneurs use _______________________ .

    A. an imitative strategy.
    B. a low cost leader strategy.
    C. a differentiation strategy.
    D. a combination strategy.

                                                    Page 1
 6. According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What
    are they?

   A. good ideas, a team of investors, and a business plan
   B. a viable opportunity, available resources, and a qualified and motivated founding team
   C. an opportunity, a marketing plan, and office space
   D. management, marketing, and money

 7. Examples of early stage financing that are commonly used by entrepreneurial start-ups include all of the
    following except

   A. personal savings.
   B. credit card debt.
   C. investments by family and friends.
   D. venture capital.

 8. Seeking products or services that have been successful in one market and introducing the same basic
    product or service in another segment of the market is referred to as

   A. imitative new entry.
   B. adaptive new entry.
   C. proactive new entry.
   D. pioneering new entry.

 9. High-growth, entrepreneurial firms, if they succeed, usually

   A. cease to operate when the founder dies.
   B. cease to operate if the founder gives up a share of ownership.
   C. develop into franchises.
   D. develop a life of their own.

10. Entrepreneurial firms that pursue a low cost leadership strategy use which of the following to achieve
    lower costs:

   A. Cost-saving technology such as the Internet.
   B. Simple organizational structures.
   C. Rapid decision making.
   D. All of the above.

                                                    Page 2
11. Which of the following types of resources contribute to the success of entrepreneurial firms?

   A. Social capital
   B. Financial resources
   C. Human resources
   D. All of the above

12. Three factors that are useful for distinguishing between small business and entrepreneurial firms include

   A. industry, competition, and growth rate.
   B. size, age, and growth goals.
   C. management, marketing, and finance.
   D. service, distribution, and manufacturing.

13. Which of the following is a common source of new business opportunities?

   A. current or past work experiences
   B. suggestions by family or friends
   C. chance event
   D. all of the above

14. Which of the following is not one of the characteristics of an entrepreneurial opportunity?

   A. attractive
   B. affordable
   C. achievable
   D. value creating

15. According to the text, the typical new business owner has ______ invested the day the business opens:

   A. $4,000
   B. $8,000
   C. $24,000
   D. $50,000

16. The majority of entrepreneurial start-ups are financed with

   A. bank financing.
   B. public financing (e.g., SBA loans).
   C. venture capital financing.
   D. personal savings and the contributions of family and friends.

                                                    Page 3
17. Borrowed funds, such as interest-bearing loans, are commonly referred to as

   A. debt.
   B. equity.
   C. venture capital.
   D. factoring.

18. The process of identifying, selecting, and developing new venture opportunities is known as

   A. innovativeness.
   B. bootstrapping.
   C. opportunity recognition.
   D. brainstorming.

19. Complete the following sentence: For any given venture, the best strategy will be determined to some
    extent by _________________________________________ .

   A. the leadership skills and qualities of the founder or founding team.
   B. the unique features of the opportunity, resources, and entrepreneur(s) in combination with other
      conditions in the business environment.
   C. the extent to which the opportunity on which the venture is based is marketable.
   D. how the entry strategy is chosen and competitive advantage is achieved.

20. Local economic development initiatives help small businesses by providing

   A. funding.
   B. training.
   C. work contracts.
   D. all of the above.

21. Which of the following is not one of the three characteristics of entrepreneurial leadership mentioned by
    the text?

   A. vision
   B. dedication and drive
   C. commitment to excellence
   D. clarifying job responsibilities

                                                   Page 4
22. Private individuals who provide seed capital to young ventures are known as

   A. angels.
   B. gazelles.
   C. cash cows.
   D. rising stars.

23. When an industry is mature, a ___________ strategy is considered to be one of the most effective
    approaches for a new entrant.

   A. niche
   B. differentiation
   C. overall low cost
   D. small business

24. When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said
    to be

   A. value creating.
   B. affordable.
   C. achievable.
   D. durable.

25. In the opening case, the entrepreneurial start-up Rosen Motors failed even though it had developed an
    energy-saving, breakthrough product. What happened?

   A. industry and competitive forces did not support their product coming to market.
   B. their failed product demonstration gave other technologies time to move ahead.
   C. they had no buyers by the time they were about to enter the expensive crash test phase so they closed
      up shop.
   D. all of the above

26. Which of the following is not an example of the liability of newness?

   A. entrepreneurial start-ups lack the kind of organizational structures that promote rapid decision making.
   B. entrepreneurial start-ups are unknown in their industry.
   C. entrepreneurial start-ups lack credibility with suppliers and financial sources.
   D. entrepreneurial start-ups lack experience.

                                                   Page 5
27. The U.S. Small Business Administration supports small business through all of the following except

   A. funding innovation.
   B. underwriting loans.
   C. investing venture capital.
   D. training and counseling.

28. In his book Good to Great, Jim Collins makes which of the following points:

   A. Great companies are typically not led by lone-wolf leaders.
   B. It takes a charismatic leader to found the kind of company that later becomes great.
   C. It takes a great product or product line to make a company great.
   D. None of the above.

29. Entrepreneurial firms that seek rapid growth and above average profitability are known as

   A. cash cows.
   B. tigers.
   C. gazelles.
   D. weasels.

30. Which of the following statements about bootstrapping is false?

   A. it refers to techniques that entrepreneurs use to minimize borrowing.
   B. it is used to avoid selling parts of a business to investors or venture capitalists.
   C. it is a method of bank financing using credit cards instead of getting a traditional loan.
   D. it refers to entrepreneurs who rely on their personal resources to finance their business.

31. All of the following are animal names given to different types of firms by small business researcher David
    Birch except

   A. mice.
   B. gazelles.
   C. elephants.
   D. cash cows.

                                                      Page 6
32. Which of the following statements about gazelles is false

   A. the majority of gazelles are not in high-tech fields.
   B. the majority of gazelles are 10 years old or younger.
   C. they typically seek rapid growth and above average profitability.
   D. none of the above.

33. The type of firms referred to by David Birch as mice

   A. can usually change quickly in response to changes in the business environment.
   B. include many types of locally-run businesses.
   C. typically do not have much market power.
   D. all of the above.

34. According to the text, all of the following might make it difficult for entrepreneurial firms to effectively
    pursue a strategy of differentiation except

   A. Incumbent firms are constantly seeking opportunities to specialize in market niches.
   B. Differentiation strategies are often expensive to enact.
   C. It may be difficult for a young firm to establish a strong brand identity.
   D. Implementing superior new technologies may be challenging for entrepreneurial firms.

35. The opportunity recognition process involves evaluating the market need for a new product or service.
    Which of the following might a potential entrepreneur ask about the viability of a business concept?

   A. How is the need that it addresses currently being met?
   B. What would be the products/services closest competitors?
   C. How are competitive products/services priced?
   D. All of the above.

36. According to the text, new ventures launched by entrepreneurial teams are more likely to be successful
    than ventures launched by

   A. established corporations.
   B. bootstrappers.
   C. individual entrepreneurs.
   D. all of the above

                                                    Page 7
37. Small business owners may forfeit opportunities for growth if

   A. they decide to pass the business on to another generation of owners.
   B. they would rather maintain control than rely on outside investors to fund growth.
   C. they rely only on word-of-mouth advertising to promote their business.
   D. spending on growth initiatives takes the company in a new strategic direction.

38. Examples of later stage financing that are commonly used by entrepreneurial start-ups include all of the
    following except

   A. angel financing.
   B. personal savings.
   C. investments by family and friends.
   D. venture capital.

39. In the opening case, Rosen Motors, the founders targeted the giant automakers as their customers.
    According to the text, why was this a mistake?

   A. the automakers are powerful buyers that had already invested in alternative vehicle technologies.
   B. the automakers knew there was no market for alternative engine solutions.
   C. the $24 million Rosen Motors invested was simply not enough to impress the automakers.
   D. all of the above

40. Why is vision such an important element of entrepreneurial leadership?

   A. because the entrepreneur has to envision realities that do not yet exist.
   B. because a vision statement must be part of the documentation used to obtain venture financing.
   C. because organizations cannot function without a detailed and operational vision.
   D. all of the above

41. ________________ produce fundamental changes that can transform a company or even revolutionize an
    industry; ___________________ enhance existing practices and often represent evolutionary applications
    of fundamental breakthroughs.

   A. Technological breakthroughs, product-market breakthroughs
   B. New technologies, new paradigms
   C. Incremental innovations, radical innovations
   D. Radical innovations, incremental innovations

                                                    Page 8
42. Generally speaking, the opportunity recognition process consists of two phases of activity. They are

   A. Global Search and Recycling Profits.
   B. Value Creation and Affordability.
   C. Discovery and Formation.
   D. None of the above.

43. Radical innovations

   A. often result in quick profits.
   B. often represent technological breakthroughs.
   C. usually apply to products and processes simultaneously.
   D. usually cannot be patented.

44. All of the following are questions that should be answered when evaluating the performance of corporate
    venturing efforts except

   A. is the venture attracting external venture funding?
   B. is the venture considered to be a market success?
   C. does the venture add to the worth of the firm internally?
   D. does the value proposition offered by the venture insulate it from competitive attack?

45. Which of the following dimensions of entrepreneurial orientation is described as a forward-looking
    perspective characteristic of a marketplace leader that has the foresight to seize opportunities?

   A. proactiveness
   B. risk taking
   C. autonomy
   D. competitive aggressiveness

46. Whereas ________________________ are often associated with a low cost leader strategy,
    ____________________________ are frequently an important aspect of a differentiation strategy.

   A. process innovations, product innovations
   B. product innovations, service innovations
   C. radical innovations; instrumental innovations
   D. marketing innovations; management innovations

                                                   Page 9
47. Which kind of risk taking requires that a company borrow heavily or commit a large portion of its
    resources in order to grow?

   A. business risk taking
   B. financial risk taking
   C. personal risk taking
   D. technological risk taking

48. Whereas ________________________ are willing to violate procedures and operate outside normal
    channels, ___________________________ gather hard data and develop a strong case for why a project
    should be killed.

   A. senior managers; entrepreneurial leaders
   B. strategic managers; financial managers
   C. exit champions; product champions
   D. product champions; exit champions

49. The benefits gained by firms that are the first to enter new markets, establish brand identity, and/or adopt
    new technologies are known as

   A. competitive aggressiveness.
   B. technological capabilities.
   C. first-mover advantages.
   D. breakthrough innovations.

50. Project ____________ involves justifying whether an opportunity is attractive in the marketplace ; project
    ______________ involves evaluating the strategic and economic impact of a new venture.

   A. impetus, definition
   B. definition, impetus
   C. reward, development
   D. development, focus

51. Strategic reasons for undertaking a corporate venture include which of the following:

   A. entering into new markets.
   B. expanding capabilities by acquiring new knowledge.
   C. building the corporation's base of resources.
   D. all of the above

                                                      Page 10
52. On average, approximately what percentage of corporate ventures reach profitability after six years?

   A. 80 percent
   B. 65 percent
   C. 50 percent
   D. 35 percent

53. Common features of a dispersed approach to corporate entrepreneurship include all of the following except

   A. semi-autonomous new venture groups.
   B. a strong spirit of entrepreneurship.
   C. a top-down approach to supporting entrepreneurial behavior.
   D. an entrepreneurial culture.

54. Corporate business incubators typically provide all of the following functions except

   A. physical space.
   B. mentoring.
   C. funding.
   D. student interns.

55. The advantages of collaborating with strategic partners in order to innovate include

   A. obtaining skills and new knowledge from outside sources.
   B. making firms identify their own strengths and weaknesses.
   C. making managers clarify what an innovation project requires to be successful and who will accomplish
   D. all of the above.

56. In a typical corporation, which of the following impact how the people within the corporation recognize
    entrepreneurial opportunities?

   A. structural features that guide and constrain action
   B. corporate culture
   C. organizational systems that foster learning and manage rewards
   D. all of the above

                                                    Page 11
57. All of the following statements about innovativeness are true except

   A. it refers to making decisions and taking risks without certain knowledge of probable outcomes.
   B. it refers to a firms efforts to find new opportunities and novel solutions.
   C. it involves creativity and experimentation.
   D. it is aimed at developing new products, services, and processes.

58. In corporations with a strong entrepreneurial culture, the willingness and ability to change

   A. is imposed from the top down.
   B. is considered a core capability.
   C. often leads to instability.
   D. often worries stakeholders such as suppliers and creditors.

59. To evaluate whether to get into automobile sales, Wal-Mart recently invested in just four auto sales
    operations on a trial basis to assess consumer reaction. According to the text, this action reflects a form of

   A. bottom-up corporate venturing.
   B. real options logic.
   C. financial planning.
   D. environmental scanning.

60. _______________________________ refers to efforts to create designs and applications of technology to
    develop new products; _______________________ refers to efforts to improve the efficiency of
    organizational systems such as manufacturing and operations.

   A. Radical innovation; incremental innovation
   B. Breakthrough innovation; instrumental innovation
   C. Product innovation, process innovation
   D. Product innovation, service innovation

61. The innovation dilemma known as seeds versus weeds refers to

   A. choosing to pursue radical rather than incremental innovations.
   B. choosing to pursue product rather than process innovations.
   C. promoting organizational stars onto innovation teams rather than involving all employees in innovation
   D. none of the above.

                                                    Page 12
62. According to the text, which of the following is not one of the methods companies can use to enhance their
    competitive position via innovativeness?

   A. fostering creativity and experimentation
   B. investing in new technology, R&D, and continuous improvement
   C. copying the business practices or techniques of successful competitors
   D. departing from existing technologies to develop products and practices that go beyond the current state
      of the art

63. Sony Corporation's mission statement says, We should always be the pioneers with our products — out
    front leading the market. This is an example of

   A. innovativeness.
   B. proactiveness.
   C. competitive aggressiveness.
   D. autonomy.

64. According to the text, __________________ which support fledgling startups are often used to pursue
    specific entrepreneurial ventures developed by _____________.

   A. collaboration partners; strategic partners
   B. business incubators; new venture groups
   C. product champions; corporate venture capitalists
   D. lower-level managers; upper-level managers

65. In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an
    example of

   A. focusing on process rather than product innovation.
   B. defining its innovation efforts within the context of its strategic envelope.
   C. radical innovation.
   D. public relations since plastics are not biodegradable.

66. All of the following are dilemmas faced by corporations trying to manage the innovation process except

   A. launching incremental rather than pre-emptive innovations.
   B. emphasizing marketing over management innovations.
   C. preferring experience over initiative.
   D. choosing internal rather than external staffing.

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67. The innovation dilemma known as building capabilities versus collaborating refers to

   A. developing innovation skills internally versus partnering with qualified outsiders.
   B. building innovative products in-house versus outsourcing.
   C. building credibility by launching products ahead of potential collaboration partners.
   D. all of the above.

68. Intel has invested $8 billion in several e-business start-ups. This is an example of

   A. strategic renewal.
   B. internal development.
   C. mergers and acquisitions.
   D. corporate venture funding.

69. Two common forms of a focused approach to corporate entrepreneurship include

   A. internal collaboration and internal venturing.
   B. social capital and collaboration capital.
   C. business incubators and new venture groups.
   D. focus groups and business incubators.

70. Which of the following is not one of the dimensions of entrepreneurial orientation?

   A. proactiveness
   B. risk taking
   C. autonomy
   D. opportunism

71. According to the text, firms that want to enhance their entrepreneurial position by being competitively
    aggressive should

   A. enter markets with drastically lower prices.
   B. foster creativity and experimentation.
   C. continuously seek out new products or services.
   D. research risk factors to minimize uncertainty.

                                                     Page 14
72. Incremental innovations

   A. are usually highly disruptive.
   B. usually represent technological breakthroughs.
   C. are usually small improvements in products or processes.
   D. nearly always can be patented.

73. After 15 teams created 128 different phones, Chris Galvin, CEO of Motorola, recently eliminated the
    autonomous teams being used to develop new wireless phones. This was necessary because such teams

   A. often lack coordination.
   B. sometimes waste resources on projects with questionable feasibility.
   C. sometimes create inefficiencies through duplication of effort.
   D. all of the above

74. Financial reasons for undertaking internal corporate venturing include

   A. strengthening competitive position.
   B. obtaining above average returns
   C. adding to the corporation's resource base
   D. all of the above

75. In the opening case, Polaroid was forced to declare bankruptcy after 30 years of strong financial
    performance. What was the fundamental problem that led to Polaroid's downfall?

   A. It overestimated the value of its core business.
   B. Its innovations were considered too radical.
   C. It was unwilling to borrow funds to invest in innovation.
   D. All of the above.

76. Product champions

   A. are typically senior executives.
   B. are usually inventors of some sort.
   C. scavenge for resources and encourage others to back promising new ideas.
   D. are strong supporters of the status quo.

                                                     Page 15
77. The 3M Corporation, one of the most highly innovative companies, uses several approaches and rules-of-
    thumb to encourage innovation. Which of the following is not one of them?

   A. ensure that all risk-taking activities have a financial pay-off within one year.
   B. encourage experimentation and risk-taking by tolerating failure.
   C. reward the champions of successful new product ideas.
   D. invite customers to brainstorm about new product concepts.

78. All of the following are types of risks that executives must address except

   A. business risk taking.
   B. financial risk taking.
   C. personal risk taking.
   D. product-market risk taking

79. Which of the following statements about skunkworks is false?

   A. they are independent work units.
   B. they are used to encourage creative thinking and brainstorming.
   C. they refer to a specialized type of outside contractor that corporations use to develop entrepreneurial
   D. they help managers set aside their usual routines and practices.

80. In the opening case, Polaroid fell victim to the innovator's dilemma. What does this refer to?

   A. Excessive borrowing in order to develop more radical innovations.
   B. Whether to innovate radically or incrementally.
   C. Becoming preoccupied with meeting current market needs and ignoring future innovation needs.
   D. Conflict over how to integrate product and process innovations.

81. A manager whose role is to question the viability of corporate venture projects is know as a(n)

   A. product champion.
   B. exit champion.
   C. rising star.
   D. mentor.

                                                    Page 16
82. All of the following are components of emotional intelligence (EI) except

   A. self-awareness.
   B. self-regulation.
   C. self-promotion.
   D. empathy.

83. All of the following statements about ethical organizations are true except

   A. the potential benefits of an ethical organization are few but direct.
   B. ethical values shape the search for opportunities.
   C. organizational ethics define what a company is and what it stands for.
   D. ethics provide a common frame of reference that serves as a unifying force.

84. In order to create an environment where employees can achieve their potential as they move the
    organization towards its goals, the manager's role needs to be that of

   A. resource allocator.
   B. resource controller.
   C. a flexible resource.
   D. power broker.

85. The leader's role in developing a strategic vision provides many benefits including

   A. a clear future direction.
   B. a framework for their organization's mission and goals.
   C. enhanced employee communication and commitment.
   D. all of the above

86. Which of the following is not a characteristic of a successful learning organization?

   A. they create a proactive, creative approach to the unknown.
   B. they actively solicit the involvement of employees at all levels.
   C. they regularly engage in activities to reinforce the status quo.
   D. they enable everyone to use their intelligence and apply their imagination.

                                                    Page 17
87. Internal benchmarking at Whole Foods

   A. is used by teams to compete against other teams in their stores.
   B. is used by teams which compete against their own goals for sales, growth, and productivity.
   C. is used by teams to compete against similar teams at different stores and regions.
   D. all of the above

88. The bottom-up perspective of empowerment

   A. clarifies the organization's values and mission.
   B. builds teams to encourage cooperative behavior.
   C. communicates specific plans.
   D. encourages employees to ask permission rather than forgiveness.

89. Complete the following sentence: Inspiring and motivating people with a mission or purpose is a
    ____________________________________ for developing an organization that can learn and adapt.

   A. necessary and sufficient condition
   B. necessary, but not a sufficient condition
   C. goal, but not a necessary condition
   D. goal and a required pre-condition

90. All of the following are guidelines an organization can use to promote the challenging of the status quo

   A. establishing a culture of dissent.
   B. forcefully creating a sense of urgency.
   C. fostering a culture that encourages risk taking.
   D. creating a results-based reward system.

91. A _________________ is a statement describing an organization's commitment to certain standards of
    ethical behavior.

   A. role model
   B. control system
   C. corporate credo
   D. reward structure

                                                   Page 18
92. In the opening case, Morrison Knudsen, CEO Bill Agee made money investing company funds in
    securities and claiming capital gains as operating income, as well as created an extravagant lifestyle for
    himself as the firm's leader. These are examples of

   A. striving for excellence.
   B. using the status of his position to build the firm's reputation.
   C. decisive leadership.
   D. potentially unethical behaviors.

93. Which of the following explains why organizations are prone to inertia and slow to change?

   A. personal time constraints.
   B. political barriers.
   C. vested interests in the status quo.
   D. all of the above.

94. The empowerment perspective that involves trusting people to do the right thing, takes intelligent risks,
    and act with a sense of ownership is known as

   A. the leadership perspective.
   B. the top-down approach.
   C. the bottom-up approach.
   D. the risk-taking model.

95. Which of the following is not one of the three core activities in the open book management system
    pioneered by Jack Stack?

   A. information is generated daily that reflects the work performance and production costs of each
   B. the information is aggregated once a week and shared with employees at every level.
   C. information about customer expectations and feedback is distributed monthly.
   D. extensive training in how to use and interpret the numbers is provided to all employees.

96. Coercive power is

   A. the power exercised by use of fear of punishment for errors of omission or commission by employees.
   B. The power of persuasion exercised by a charismatic leader to get compliance from reluctant
   C. arises from a manager's access, control, and distribution of information that is not freely available to
      everyone in an organization.
   D. the ability of the leader or manager to confer rewards for positive behaviors or outcomes.

                                                    Page 19
97. Marshall Industries CEO Rod Rodin scrapped the company's commission-based reward system because it
    was rewarding employees for inappropriate behavior. This is an example of

    A. setting a direction
    B. designing the organization
    C. unethical behavior
    D. failure to maintain the status quo

98. What happens to organizations that get caught up in day-to-day work activities?

    A. they fail to think objectively about themselves and their business.
    B. they fail to refresh their strategies or reengineer their work processes.
    C. they fail to ask probing questions about their basic assumptions.
    D. all of the above

99. Refusal to share information, conflicts over resources, conflicts between departments and divisions, and
    petty interpersonal differences are symptoms of which type of barrier to change?

    A. systemic barriers.
    B. political barriers.
    C. behavioral barriers.
    D. all of the above.

100. According to the text, effective leadership is like a three-legged stool consisting of all of the following

    A. dedication to maintaining the status quo
    B. nurturing a culture dedicated to excellence and ethical behavior
    C. determining a direction
    D. designing the organization

101. At Whole Foods, the no secrets management philosophy allows employees access to most of the
     company's operating and financial data. This is an example of

    A. information sharing.
    B. employee advocacy.
    C. bottom-up empowerment.
    D. internal benchmarking.

                                                     Page 20
102. Barriers in which the design of the organization's structure, information processing, and reporting
     relationships, impede the proper flow and evaluation of information are known as

    A. systemic barriers.
    B. behavioral barriers.
    C. political barriers.
    D. barriers to entry.

103. An empowerment perspective that delegates responsibility, focuses on accountability, and relies on clearly
     specified rewards to motivate is known as

    A. the leadership perspective.
    B. the top-down approach.
    C. the bottom-up approach.
    D. the accounting model.

104. Which component of emotional intelligence (EI) enables a manager to have a deep understanding of the
     existence and importance of cultural and ethnic differences?

    A. self-awareness.
    B. empathy.
    C. social skills.
    D. self-regulation.

105. Proactive measures to prevent organizational ethics problems include all of the following except

    A. instituting a reward system which considers outcomes as its primary criterion.
    B. using leaders as role models of ethical behavior.
    C. issuing statements describing the organization's commitment to certain standards of behavior.
    D. using the organization's information systems as a control system.

106. Expert power is

    A. derived from organizationally conferred decision-making authority.
    B. arises from a manager's access, control, and distribution of information that is not freely available to
       everyone in an organization.
    C. derived from referent power.
    D. is derived from the leader's capability and knowledge in a particular field.

                                                    Page 21
107. Manufacturing employees at Chaparral Steel are directly involved with customers and have access to the
     new innovative knowledge being developed in its manufacturing processes. This is an example of

    A. hierarchical control.
    B. knowledge management.
    C. enabling heroes and drones.
    D. employee empowerment.

108. Poor organizational design by leaders can result in all of the following except

    A. insufficient mechanisms that integrate and coordinate activities across the firm
    B. inadequate accountability among managers and employees
    C. inappropriate budgeting and control systems
    D. teams, systems, and organizational processes that facilitate implementation

109. Which of the following statements about ethics is false?

    A. ethics may be defined as a system of right and wrong.
    B. ethics assists individuals in deciding when an act is moral or immoral.
    C. ethics is not concerned with whether or not an act is socially desirable.
    D. business ethics is the application of ethical standards to commercial enterprises.

110. Which of the following is an important characteristic of a leader?

    A. goal-oriented
    B. satisfied with the status quo
    C. reactive
    D. focused on past performance

111. The source of referent power is

    A. a subordinate's identification with the leader.
    B. a leader's identification with the subordinates.
    C. derived from the fact that the manager can potentially act as a reference when the employee applies for
       another job.
    D. derived from the manager's ability to provide effective incentives to employees.

                                                     Page 22
112. As a manager, when faced with ethical crises you should

    A. focus on issues most relevant to stockholders.
    B. wait for the other party to make the first move.
    C. take the initiative to address the problem.
    D. cover up as much as possible.

113. The top down perspective of empowerment

    A. encourages intelligent risk-taking.
    B. trusts people to perform.
    C. encourages cooperative behavior.
    D. delegates responsibility.

114. Barriers associated with a manager's tendency to look at issues from a biased or limited perspective are
     known as

    A. systemic barriers.
    B. behavioral barriers.
    C. political barriers.
    D. barriers to exit.

115. All of the following statements about leadership are true except

    A. leadership is focused on the creation and implementation of a creative vision.
    B. leadership is the process of transforming organizations from what they are to what the leader would
       have them become.
    C. leaders support the status quo and seek control mechanisms to maintain it.
    D. effective implementation of strategy is essential for successful leadership.

116. Companies that cultivate cultures of experimentation and curiosity make sure that _________ is not, in
     essence, a four-letter word.

    A. success
    B. failure
    C. dissent
    D. risk taking

                                                     Page 23
117. Which of the following statements would least likely be found in a corporate credo?

    A. maximize financial benefits for stakeholders.
    B. provide secure and stable employment for employees.
    C. establish an environment that enhances professional growth.
    D. support community organizations and projects.

118. All of the following constitute organizational bases of a leader's power except

    A. legitimate power.
    B. reward power.
    C. referent power.
    D. coercive power.

119. In the opening case, Morrison Knudsen, CEO Bill Agee launched a program to build railroad cars. This
     was an example of

    A. designing the organization.
    B. steering the company away from its core competencies.
    C. unethical behavior.
    D. inspired leadership.

120. Which of the following boundaries exist between the functional areas of an organization?

    A. vertical boundaries
    B. horizontal boundaries
    C. external boundaries
    D. all of the above

121. When an organization with a simple structure increases its sales revenue and volume of outputs, it is most
     likely to develop a

    A. divisional structure.
    B. functional structure.
    C. product-market structure.
    D. geographic structure.

                                                     Page 24
122. Complete the following sentence: Virtual organizations _________________________ whereas modular
     organizations ____________________________.

    A. are usually permanent, are usually temporary
    B. accept interdependent destinies, pursue collective strategies
    C. pursue collective strategies, forfeit strategic control
    D. give up part of their strategic control, retain full strategic control

123. A strategy of related diversification requires most firms to organize around geographical areas or product
     lines. This type of organizational growth leads to a(n)

    A. divisional structure.
    B. functional structure.
    C. matrix structure.
    D. international structure.

124. The phrase that best defines a virtual organization is

    A. a company.
    B. a type of modular structure.
    C. an organization that uses information technology to integrate different functions.
    D. a continually evolving network of independent companies.

125. Which of the following is an advantage of a divisional type of organizational structure?

    A. efficient use of managerial and technical talent
    B. an enhanced ability to respond quickly to changes in the external environment
    C. high degree of emphasis on long term performance
    D. uniformity in image and quality across divisions

126. Complicated working relationships, intense power struggles, and excessive reliance on group processes
     are disadvantages of what type of organizational structure?

    A. divisional
    B. matrix
    C. holding company
    D. functional

                                                       Page 25
127. Organizations are increasingly using teams for many reasons. The difference between a good team and an
     outstanding team has been found to be

    A. the combined technical skills of the members.
    B. similarities in the way team members solve problems.
    C. the way team members treat each other.
    D. similarities in the age and experience of team members.

128. An organization such as ConAgra that has dozens of different divisions with similar products will
     probably have the greatest success with which form of organization structure?

    A. functional structure
    B. matrix structure
    C. strategic business unit structure
    D. holding company structure

129. All of the following are disadvantages of a divisional type of organizational structure except

    A. it can be very expensive compared to a functional organizational structure.
    B. there is a strong tendency for divisions to focus on short-term performance.
    C. there can be dysfunctional competition among divisions.
    D. there is separation of strategic and operating control.

130. Strategic business unit (SBU) and holding company structures result from extensive

    A. diversification.
    B. vertical integration.
    C. international expansion.
    D. organizational flattening.

131. If an international firm has a multidomestic strategy and a relatively high level of product diversity, the
     best choice for its organizational structure is

    A. worldwide functional.
    B. worldwide product division.
    C. worldwide matrix.
    D. international division.

                                                     Page 26
132. The relationship between strategy and structure can be best described as

    A. strategy determines structure but structure does not determine strategy.
    B. structure determines strategy but strategy does not determine structure.
    C. strategy and structure influence each other.
    D. a third force determines both strategy and structure.

133. Organizations generally tend to become internally focused when faced with

    A. resource scarcity.
    B. declining performance.
    C. external pressures.
    D. all of the above.

134. Tools and techniques used to achieve effective coordination and integration of key activities in an
     organization include all of the following except

    A. horizontal organization structures.
    B. horizontal systems and processes.
    C. horizontal diversification.
    D. communications and information technologies.

135. Which of the following is a disadvantage of a functional type of organizational structure?

    A. differences in functional orientation may impede communication and coordination.
    B. use of managerial and technical talent is inefficient due to pooling of expertise in functional areas.
    C. decision making is centralized at the top of the organization.
    D. managers tend to be overly concerned with long-term strategies that minimize the importance of
       functional area strengths.

136. All of the following statements about simple organizational structures are true except

    A. small firms with a narrow product-market scope will adopt such a structure.
    B. decision making authority is highly centralized.
    C. there is little specialization of tasks.
    D. creativity and individualism are rare.

                                                     Page 27
137. What advantages does outsourcing provide an organization?

    A. accessing best in class goods and services
    B. enabling rapid expansion with relatively low capital investment
    C. focusing scarce resources on core competencies
    D. all of the above

138. Which of the following is not a disadvantage of virtual structures?

    A. difficulty in individual and organizational knowledge sharing.
    B. potential loss of operational control among partners.
    C. loss of strategic control over emerging technology.
    D. difficulty in determining where one company ends and another begins due to close interdependencies.

139. A matrix organizational structure is characterized by

    A. dual reporting relationships.
    B. a combination of functional and divisional organization structures.
    C. efficient use of resources and expertise.
    D. all of the above

140. At Sharp Corporation, work is divided into units that specialize in production, marketing, research and
     development, and other management tasks. This is an example of a

    A. simple structure.
    B. functional structure.
    C. divisional structure.
    D. matrix structure.

141. What is the name of the practice that many modular organization use to grow?

    A. operational effectiveness
    B. outsourcing
    C. strategic leveraging
    D. strategic enabling

                                                     Page 28
142. Technical Computer Graphics uses small project teams and forms alliances with its teams, customers, and
     suppliers to accomplish projects. This is an example of

    A. combining forms of organizational structure.
    B. outsourcing.
    C. horizontal systems and processes.
    D. democratic management control.

143. If an international firm has a global strategy and a relatively low level of product diversity, the best choice
     for its organizational structure is

    A. worldwide functional.
    B. worldwide product division.
    C. worldwide matrix.
    D. international division.

144. Functional structures are usually found in organizations where there is

    A. high volume production.
    B. unrelated product lines or service offerings.
    C. very little vertical integration.
    D. a strong need to decentralize decision making.

145. Important advantages of a holding company structure include

    A. savings in personnel and overhead expenses associated with a small corporate office.
    B. a high level of awareness at the corporate office of issues facing individual divisions.
    C. a high level of control of division executives by executives at the corporate level.
    D. gaining synergistic benefits across businesses.

146. According to the text, there are elements of team building that influence a team's success. These include
     all of the following except

    A. work. Work should be relevant and meaningful to group members.
    B. people bonding during the heat of the battle. Team members become more unified during a crisis.
    C. titles. Titles are important to a team's success.
    D. teams taking care of their own. Team members look after each other's best interest.

                                                       Page 29
147. Lockheed Martin uses a coalition of three entities — its own company, academia, and government — to
     achieve its goals. This is an example of a

    A. matrix organization.
    B. modular organization.
    C. virtual organization.
    D. government contractor.

148. The boundaries between levels in an organization's hierarchy are known as

    A. vertical boundaries.
    B. horizontal boundaries.
    C. external boundaries.
    D. geographic boundaries.

149. Which of the following is not an advantage of teams?

    A. because teams interact so closely, coordination and integration becomes unnecessary.
    B. teams substitute peer-based control for hierarchical control of work.
    C. because of sharing, teams often develop more creative solutions.
    D. teams permit the absorption of administrative tasks previously performed by specialists.

150. Which of the following is not a disadvantage of the barrier-free form of organization?

    A. lack of strong leadership can lead to coordination problems.
    B. democratic process can be time-consuming and difficult to manage.
    C. fewer internal barriers means fewer political issues to deal with.
    D. if trust among employees is not sufficiently high, organizational performance may suffer.

151. Which of the following is not a boundaryless organizational design?

    A. virtual.
    B. modular.
    C. matrix.
    D. barrier-free.

                                                    Page 30
152. What type of organization is defined as a central hub surrounded by networks of outside suppliers and

    A. matrix
    B. virtual
    C. modular
    D. barrier-free

153. A divisional structure

    A. is organized around functional area departments.
    B. typically improves the performance of firms pursuing a strategy of vertical integration.
    C. facilitates the development of general managers.
    D. enhances centralized decision making.

154. When an organization with a functional structure diversifies into related product-markets, it generally

    A. maintains its functional structure.
    B. develops a divisional structure.
    C. develops a matrix structure.
    D. develops a worldwide product-division structure.

155. Nike is a company that makes use of the concept of product expatriates. Product expatriates are

    A. managers from the home country sent abroad to oversee the marketing of a company's products.
    B. managers from suppliers who come to work at a company's headquarters.
    C. managers of the company sent abroad to work at the plants of its suppliers.
    D. local nationals hired by the company in the countries from which it sources products.

156. Which of the following is an advantage of a functional type of organizational structure?

    A. decentralized decision-making enhances an organization-wide perspective across functions.
    B. it facilitates the development of general management talent.
    C. pooling of specialists enhances coordination and control.
    D. it is easy to establish uniform performance standards.

                                                    Page 31
157. The three broad sets of capabilities that a leader should possess include all of the following except

    A. technical skills.
    B. cognitive abilities.
    C. calculative abilities.
    D. emotional intelligence.

158. Leaders play a key role in developing and sustaining an organization's _____________.

    A. status quo
    B. culture
    C. reporting relationships
    D. rules and regulations

159. Complete the following sentence: The days when a company's leader _______________ are gone; today,
     all employees need to be involved in ________________________.

    A. learned for the organization; learning and adapting
    B. managed from the top; self-management
    C. delegated authority; assuming responsibility and control
    D. was held in high regard; holding leaders accountable for their actions

160. Functional benchmarking

    A. is not very useful for organizations with a divisional organizational structure.
    B. endeavors to determine best practices regardless of industry.
    C. restricts the search for best practices to competitors.
    D. is useful when researching industry-specific standards.

161. A simple structure is characterized by

    A. high specialization and low centralization.
    B. low specialization and high centralization.
    C. low formality and low creativity.
    D. high formality and low centralization.

                                                      Page 32
162. Which of the following is considered to be an advantage of a matrix structure?

    A. the layering of matrices
    B. increased clarity in reporting relationships
    C. increased responsiveness to the market
    D. fewer power struggles and reduced conflict

163. All of the following are advantages of a strategic business unit (SBU) type of organizational structure

    A. divisions with similar products, markets, or technologies are formed into homogeneous groups that can
       achieve synergies.
    B. divisional executives can respond quickly to market changes and opportunities.
    C. planning and control by the corporate office is more manageable.
    D. the corporate office is more removed from the individual divisions.

164. Rules and regulations are examples of

    A. implicit controls.
    B. informational controls.
    C. cultural norms.
    D. boundaries and constraints.

165. Cadbury Schweppes has a policy that all payments, no matter how unusual, are recorded in the company's
     books. This rule is

    A. overly cumbersome.
    B. aimed at encouraging managers to make better budgetary decisions.
    C. directed at protecting client confidentiality.
    D. designed to minimize improper and unethical conduct.

166. The reasons analyst recommendations are often more optimistic than warranted by an objective analysis
     of a firm's prospects include all of the following except

    A. many analysts fail to grasp the gravity of the problems facing a company.
    B. sell recommendations generate lower commissions than buy recommendations.
    C. the firms for which analysts work may have lucrative investment banking relationships with the firm.
    D. analysts are often pressured by their superiors to overlook negative information or tone down their
       criticisms of the firms they analyze.

                                                       Page 33
167. The failure of many auditing firms to raise red flags about accounting irregularities in companies such as
     Enron and WorldCom is generally attributed to all of the following factors except

    A. the desire to get future auditing contracts from the company.
    B. the desire to get consulting work from the company because most audit firms also do consulting work.
    C. The fact that auditors are appointed by the firm.
    D. the failure of U.S. audit firms to follow internationally accepted accounting standards.

168. Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by

    A. posting written statements of the organization's goals and objectives.
    B. discouraging the formation of subcultures that isolate work groups.
    C. designing effective reward systems.
    D. encouraging employees to see themselves as free agents.

169. If the market value of a firm becomes less than its book value,

    A. it becomes an attractive takeover target.
    B. the firm will be delisted by the stock exchange.
    C. the Securities and Exchange Commission will not allow it to declare dividends until the market value
       once again exceeds the book value.
    D. the firm will be unable to service its debt.

170. In firms with unrelated diversification strategies, the culture should foster ________ levels of
     interdependence and rewards should be based primarily on _____________ measures of output.

    A. low, financial
    B. low, behavioral
    C. high, financial
    D. high, behavioral

171. Effective short-term objectives have all of the following priorities except

    A. an emphasis on do your best goals.
    B. being achievable yet challenging.
    C. providing a specific time horizon for their attainment.
    D. being specific and measurable.

                                                      Page 34
172. Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of

    A. software developer
    B. stock brokerage firm
    C. manufacturer of mass produced products
    D. high tech research facility

173. Contemporary approaches to strategic control rely primarily on

    A. feedback controls.
    B. single-loop learning.
    C. double-loop learning.
    D. comparative learning.

174. In firms with differentiation strategies, the culture should foster ________ levels of interdependence and
     rewards should be based primarily on _____________ measures of output.

    A. low, financial
    B. low, behavioral
    C. high, financial
    D. high, behavioral

175. In firms with overall low cost strategies, the culture should foster ________ levels of interdependence and
     rewards should be based primarily on _____________ measures of output.

    A. low, financial
    B. low, behavioral
    C. high, financial
    D. high, behavioral

176. For businesses facing complex and turbulent business environments

    A. goals and objectives that are uncertain prevent opportunism.
    B. traditional strategic controls are usually inappropriate.
    C. complacency about predetermined milestones can prevent adaptability.
    D. detailed plans are needed to maintain order.

                                                      Page 35
177. Which of the following approaches to behavioral strategic control should be utilized least in an
     organization in which there is a great need for innovation and a high degree of autonomy?

    A. culture
    B. rewards
    C. boundaries
    D. all of the above are equally important

178. Firms competing on the basis of cost must monitor and control costs and manage standardized and
     structured tasks. Therefore,

    A. rewards should primarily be based on the quality of outputs.
    B. procedures can be used to specify the basic components of each task.
    C. innovation and creativity is necessary and frequent.
    D. frequent changes in the product process are needed to meet specifications.

179. Top executives who support the view that employees should do as I say, not as I do

    A. are simply demonstrating their leadership position.
    B. are emphasizing the need for consistency in word and deed.
    C. can sabotage cultural cohesion and employee commitment.
    D. are just being honest and open about the role of executives.

180. Which of the following statements about action plans is true?

    A. action plans, though specific, should permit a degree of autonomy to managers and not be constrained
       by budgets.
    B. action plans must be specific so that managers will have a clear understanding of the resource
       requirements necessary to implement the plan.
    C. action plans should not be constrained by a time frame in order to allow for modification.
    D. although managers must be held accountable for implementing action plans, this accountability often
       erodes the managers motivation to implement the plan on a timely basis.

181. The late Sam Walton, founder of Wal-Mart, used to give pep rallies at local Wal-Mart stores. What
     purpose did this serve?

    A. it was used to remind employees of Wal-Marts rules and regulations.
    B. it helped reinforce and sustain Wal-Mart's culture.
    C. it demonstrated to employees the importance of articulating explicit goals and objectives.
    D. it made Wal-Mart's reward system very explicit.

                                                    Page 36
182. 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?

183. In firms with related diversification strategies, the culture should foster ________ levels of
     interdependence and rewards should be based primarily on _____________ measures of output.

    A. low, financial
    B. low, behavioral
    C. high, financial
    D. high, behavioral

184. Most organizations with strong cultures and a sound system of rewards and incentives can eventually
     internalize boundaries rather than use explicit rules and regulations. Which of the following is not a
     technique for moving in that direction?

    A. hire people that identify with the organization's dominant values.
    B. develop managerial role models.
    C. minimize training and indoctrination.
    D. align reward systems with organizational goals and objectives.

185. Even though Brazilian-based Semco, Inc. does not rely on rules and job titles to maintain control, and
     even allows its employees to bid for their own salaries, it has grown into a large diversified company. This
     is an example of

    A. a culture based on loyalty and trust.
    B. a reward system based on self-limiting controls.
    C. replacing boundaries and constraints with culture and rewards.
    D. all of the above

186. By takeover constraint, we mean

    A. constraints placed by the firm on raiders who want to takeover the firm.
    B. legal constraints that limit the ability of the raiders to acquire a firm.
    C. provisions in the charter of a company that prevents it from attempting a takeover of other companies.
    D. the risk of being acquired by a hostile raider.

                                                      Page 37
187. Managerial opportunism can take all of the following forms except

    A. shirking.
    B. job-hopping.
    C. on the job consumption.
    D. excessive product diversification.

188. Rule-based controls are most appropriate in organizations with all of the following characteristics except

    A. environments are stable and predictable.
    B. employees are highly skilled and independent.
    C. consistency in product or service.
    D. the risk of malfeasance is extremely high.

189. The traditional approach to strategic control is sequential. Which of the following is not one of the steps in
     the sequence?

    A. action plans are submitted by lower level managers.
    B. performance is measured against the predetermined goal.
    C. strategies are implemented.
    D. strategies are formulated and top management sets goals.

190. 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. all of the above

191. In 2001, Cisco Systems, Inc.'s stock price fell dramatically when it inaccurately forecast new sales orders
     because it relied too heavily on historical sales figures. What caused this mistake?

    A. its strategic control system failed to detect changes in consumer demand.
    B. it projected the past into the future.
    C. the momentum of its previous successes blinded it to the need to adapt and change.
    D. all of the above

                                                     Page 38
192. Complete the following sentence: Individual rationality _________________________ organizational

    A. is a good indicator of
    B. will ensure
    C. is often the opposite of
    D. does not always guarantee

193. It is generally argued that the takeover constraint

    A. deters management from engaging in opportunistic behavior.
    B. deters management from considering acquiring other companies.
    C. deters management from declaring dividends.
    D. deters management from increasing a firm's level of borrowing.

194. All of the following are examples of how organizational culture exerts behavioral control except

    A. culture helps maintain control by creating behavioral norms.
    B. culture generates unwritten standards of acceptable behavior.
    C. culture encourages individual identification with the organization and its objectives.
    D. culture sets explicit boundaries.

195. The use of culture and intangible rewards as the primary means of controlling individual behavior is
     considered more effective than rules and boundaries when

    A. output is standardized.
    B. measurement of performance is straightforward.
    C. tasks are repetitive and routine.
    D. work is autonomous and creative.

196. Which of the following is not one of the functions of reward and incentive systems:

    A. they represent a poor means of influencing an organization's culture.
    B. they focus efforts on high-priority tasks.
    C. they motivate high levels of individual and collective task performance.
    D. they represent an effective control mechanism.

                                                      Page 39
197. The primary drawback of traditional strategic control systems is

    A. they are only appropriate when the environment is stable and simple.
    B. goals and objectives cannot be measured with a high level of certainty.
    C. they lead to complacency.
    D. they lack the flexibility needed to adjust to changes in the environment.

198. Complete the following sentence: As firms simultaneously downsize and face the need for increased
     coordination across organization boundaries, a control system based primarily on
     ________________________________is dysfunctional.

    A. boundaries and constraints
    B. culture and rewards
    C. organizational loyalty
    D. innovation and risk taking

199. The benefits of continuous monitoring include

    A. enhancing the organization's ability to respond with speed and flexibility.
    B. replacing the time-consuming process of organizational learning.
    C. dramatically altering the organization's response to its competitive environment.
    D. all of the above

200. Top managers at USA Today meet every Friday to review daily operational reports and year-to-date data.
     This is an example of

    A. behavioral control.
    B. informational control.
    C. strategy formulation.
    D. strategy implementation.

201. External control mechanisms include all of the following except

    A. auditors.
    B. analysts.
    C. competitors.
    D. the market for corporate control.

                                                    Page 40
202. All of the following are characteristics of effective reward and incentive systems except:

    A. performance measures are clear and highly visible.
    B. the structure is fixed to assure employees of consistency.
    C. the compensation system is perceived as fair and equitable.
    D. objectives are well understood, and broadly accepted.

203. All of the following are types of information that a firm is required to disclose except

    A. quarterly and annual filings of financial information.
    B. stock trading by insiders.
    C. details of new products under development.
    D. details of executive compensation packages.

204. When countercultures emerge that have shared values opposite from the dominant culture of an

    A. organizational cohesiveness increases.
    B. information is shared rather than hoarded.
    C. individuals begin working at cross purposes.
    D. individuals gain insights into overarching goals and objectives.

205. Effective boundaries and constraints

    A. tend to inhibit efficiency and effectiveness.
    B. distract employees who are trying to focus on organizational priorities.
    C. minimize improper and unethical conduct.
    D. tend to limit organizational growth.

206. Which of the following is not one of the characteristics of a contemporary control system?

    A. it is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans.
    B. it must focus on constantly changing information that is strategically important.
    C. it circumvents the need for face-to-face meetings among superiors, subordinates, and peers.
    D. it generates information that is important enough to demand regular and frequent attention.

                                                      Page 41
207. Internet business models

    A. outline methods that online businesses use to create value.
    B. cannot be used by traditional businesses.
    C. outline specific actions a firm needs to take to be profitable.
    D. cannot be combined to create additional competitive advantages.

208. In 2000 and 2001, the Internet sector of the U.S. economy plummeted for all of the following reasons

    A. the growth in new Internet users ceased.
    B. investors realized that many dot-coms were overcapitalized.
    C. venture capital for Internet firms dried up.
    D. several dot-com start-ups failed.

209. Complete the following sentence: It is the actual use of the Internet for profitable transactions,

    A. that has altered the structure of the American economy.
    B. not the technology itself, that matters to a company's bottom line.
    C. not the sustainability of competitive advantages, that is creating new business opportunities.
    D. that is making strategizing in the Internet economy less important.

210. Technologies that use information in the form of electronic signals or bits are called

    A. digital technologies.
    B. analog technologies.
    C. high fidelity technologies.
    D. broadband.

211. Four Internet-based activities that are enhancing firms' capabilities to use the Internet to add value include:

    A. outsourcing, problem-solving, bill-paying, and delivery.
    B. evaluating, bill-paying, customizing, and returning.
    C. search, rescue, repair, return.
    D. search, evaluation, problem-solving, and transaction.

                                                      Page 42
212. End users are

    A. the final consumers in a distribution channel.
    B. usually the C in B2C.
    C. likely to have greater bargaining power because of the Internet.
    D. all of the above

213. Scale economies may be less important for new entrants that launch Web-based businesses because

    A. it is relatively more expensive for an incumbent firm to create an impressive Web appearance than a
       new entrant.
    B. larger, older companies will have the same Internet expenses as new entrants.
    C. new entrants do not derive any benefit from making volume purchases.
    D. the Web makes it possible for new entrants to enter a market with relatively lower capital costs.

214. Which of the following methods of implementing a differentiation strategy has been greatly enhanced
     because of Internet technologies?

    A. celebrity endorsements
    B. prestige packaging
    C. exceptional service
    D. mass customization

215. Internet search activities include

    A. generating action plans.
    B. considering alternatives.
    C. gathering information.
    D. making payments and taking delivery.

216. Examples of value-adding content often found on websites include all of the following except

    A. customer feedback.
    B. online shopping.
    C. expertise.
    D. entertainment programming.

                                                    Page 43
217. EncrypTix is an electronic delivery company that uses bar-code printing technology to let customers print-
     out their own tickets to concerts and sporting events. This new Internet company is an example of:

    A. channel conflict.
    B. disaggregation.
    C. disintermediation.
    D. reintermediation.

218. The sum total of all expenses associated with conducting business are known as

    A. transaction costs.
    B. historical costs.
    C. opportunity costs.
    D. operating expenses.

219. The only technology ever adopted by consumers more rapidly than the Internet was

    A. the telephone.
    B. television.
    C. the automobile.
    D. none of the above

220. The value-adding activity known as problem-solving

    A. involves streamlining operations.
    B. is typically used in the context of providing unique services.
    C. refers to comparing the costs and benefits of various options.
    D. creates access to products ratings and price comparisons.

221. One of the reasons the Internet is eroding sustainable competitive advantages is

    A. incumbent firms are entering market segments that they previously considered to be too small.
    B. nearly all competitors will have greater access to tools for managing costs making it hard for any one
       to achieve an advantage.
    C. differentiators have been able to preserve the unique advantages that have always been the hallmark of
       their success.
    D. firms are ignoring opportunities to offer high-end services in niche markets.

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222. Internet-based venues that draw business buyers and sellers together in one virtual space where
     participants can reach new customers and reduce transaction costs are known as

    A. browsers.
    B. E-marketplaces.
    C. cyberstores.
    D. portals.

223. The company in the opening case, Agillion, Inc., provided expert Internet services on an outsourced basis
     for less money than it cost firms to develop those capabilities internally. This type of business is known as

    A. Internet service provider.
    B. Application service provider.
    C. Contract laborer.
    D. Human resources consultant.

224. Removing the organizations or business process layers responsible for intermediary steps in the value
     chain is known as

    A. channel conflict.
    B. disaggregation.
    C. disintermediation.
    D. reintermediation.

225. Combination strategies may work best for Internet competitors because, in the Internet age,

    A. there are fewer rather than more opportunities for achieving sustainable advantages by using traditional
       competitive strategies.
    B. cost management and control systems will increase in importance as management tools that all
       companies can use.
    C. many of the unique advantages that were the hallmark of success for differentiators can easily be
    D. all of the above

226. Which of the following is not one of the ways the Internet is lowering transaction costs

    A. eliminating supply chain intermediaries.
    B. evaluating employee performance.
    C. minimizing office expenses.
    D. reducing business travel.

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227. All of the following are examples of Internet business models except

    A. Referral-based model
    B. Subscription-based model
    C. Prescription-based model
    D. Production-based model

228. All of the following are ways that Internet technologies are being used to enhance an overall cost
     leadership strategy except:

    A. Quick online responses to service requests and rapid feedback to customer surveys and product
       promotions are enhancing marketing efforts.
    B. Direct access to progress reports and the ability for customers to periodically check work-in-progress is
       minimizing rework.
    C. Online bidding and order processing are eliminating the need for sales calls and minimizing sales force
    D. Online purchase orders are making many transactions paperless, reducing the costs of procurement and

229. Conferenza is an example of an Internet company that offers busy people an alternative way to participate
     in conferences. This is an example of Internet-based

    A. rivalry.
    B. competitive aggressiveness.
    C. channel conflict.
    D. substitution.

230. The reason Levi Strauss & Co. closed its online store for selling Levi jeans was

    A. to avoid conflict with its supply chain.
    B. to participate in disintermediation.
    C. to lower the cost of accessing distribution channels.
    D. to eliminate channel conflict with retail outlets.

231. How do infomediaries and consumer information websites increase the intensity of competitive rivalry:

    A. by shifting customers attention away from issues of price.
    B. by making competitors in cyberspace seem less equally balanced.
    C. by consolidating the marketing message that consumers use to make a purchase decision to a few key
       pieces of information that the selling company has little control over.
    D. by highlighting a firms unique selling advantages.

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232. All of the following are ways that Internet technologies are being used to enhance a differentiation
     strategy except:

    A. Internet-based knowledge management systems that link all parts of the organization are shortening
       response times and accelerating organization learning.
    B. Virtual organizing and online officing are being used to minimize firm infrastructure requirements and
       lower costs.
    C. Online access to real-time sales and service information is being used to empower the sales force and
       continually update R&D and technology development efforts.
    D. Automated procurement and payment systems provide both suppliers and customers with access to
       detailed status reports and purchasing histories.

233. became the third largest Internet service provider by offering free email service, but eventually
     had to stop this practice because of what potential pitfall:

    A. it offered the free service to build market share but then could not sustain the low-cost strategy.
    B. it copied a close competitor and was in danger of being sued.
    C. it let others aspects of its business slip because it was overly focused on selling advertising to support
       the free e-mail service.
    D. by offering the service for free it forfeited its bargaining power over suppliers.

234. Unique content will not add value to an Internet website under the following conditions:

    A. the cost of developing the content exceeds the benefits gained.
    B. visitors to the website do not value or use the content.
    C. the content is unreliable.
    D. all of the above.

235. Supplier power has increased because of the Internet for all of the following reasons except

    A. the growth of new Web-based businesses has created more outlets for suppliers to sell to.
    B. some suppliers have created Web-based purchasing systems that encourage switching.
    C. the process of disintermediation makes it possible for some suppliers to reach end users directly.
    D. software that links buyers to a suppliers website has created rapid, low-cost ordering capabilities.

236. Generally speaking, discussions of the relationship between strategy and structure strongly imply that

    A. strategy follows structure.
    B. structure follows strategy.
    C. strategy can effectively be formulated without considering structural elements.
    D. structure typically has a very small influence on a firm's strategy.

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237. Complete the following sentence: Strategic business unit (SBU) structures are best suited for corporations
     pursuing _________________________, whereas holding company structures are best suited for
     companies with ________________________ strategies.

    A. product-market diversification, international
    B. international diversification, product-market
    C. related diversification, unrelated diversification
    D. unrelated diversification, related diversification

238. Which of the following is not a strategic risk of outsourcing?

    A. loss of critical skills
    B. loss of cross-functional skills
    C. loss of control over a supplier
    D. loss of non-vital functions

239. In general, the threat of substitutes is heightened because the Internet:

    A. introduces new ways to accomplish the same tasks.
    B. lowers switching costs.
    C. lowers barriers to entry.
    D. increases output per unit of cost.

240. Internet cookies can be used to violate consumer privacy because they

    A. reveal an individual Web users browsing habits.
    B. include a record of purchases that can be sold to marketers.
    C. are recorded on your hard drive and can be retrieved without your knowledge or consent.
    D. all of the above

241. Internet start-up tried to build brand with an overall low cost leadership strategy. Why is this a
     risky strategy?

    A. To build brand recognition, companies must sell high-priced products or services.
    B. The Internet may help focusers build competitive advantage, but not low cost leaders.
    C. Only combination strategies that combine features of more than one competitive strategy will work for
       Internet companies.
    D. Investing heavily to build brand recognition is considered ineffective for low cost leaders because
       customers who seek low prices are typically not brand loyal.

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242. Which of the following is not one of the reasons why the bargaining power of buyers is increasing because
     of the Internet?

    A. the Internet makes it easier for consumers to obtain the information needed to compare prices and
       make buying decisions.
    B. Internet technologies are making the cost of switching products or services lower.
    C. the Internet isolates customers which makes differential pricing possible.
    D. Internet purchasing practices are shifting emphasis to price competition which is making consumers
       less loyal.

243. All of the following factors are likely to be impediments to growth in Internet use except

    A. speed and extent of Internet connectivity.
    B. strong vested interests.
    C. institutional and regulatory barriers.
    D. advances in wireless technology.

244. Because the Internet lowers barriers to entry in most industries, it

    A. decreases the threat of new entrants.
    B. increases the threat of new entrants.
    C. makes it easier to build customer loyalty.
    D. increases supplier power.

245. Dell Computer has an online ordering system that allows consumers to configure their own computers
     before Dell builds them. This capability is an example of

    A. electronic data interchange.
    B. knowledge management.
    C. collaborative design.
    D. mass customization.

246. In the opening case, Agillion, Inc., the start-up failed because

    A. it was unable to provide a clear and unique value proposition.
    B. it offered a product that could easily be imitated.
    C. it never recorded a single dollar of revenue.
    D. all of the above.

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247. Which of the following is not one of the reasons the Internet increases the intensity of competitive rivalry:

    A. the Internet makes it more difficult for firms to differentiate themselves.
    B. the Internet has commoditized products that previously were regarded as rare or unique.
    C. the Internet has eliminated the importance of location by making geographically distant products
       available online.
    D. the Internet has made it more difficult to imitate the advantages achieved by competitors.

248. According to the text, the types of industries that are likely to be most radically transformed by the
     Internet are:

    A. research-intensive industries such as pharmaceuticals
    B. manufacturing-intensive such as microprocessors
    C. information-intensive such as financial services
    D. all of the above

249. One of the greatest threats to supplier power that has emerged because of the Internet is

    A. the Internet inhibits the ability of suppliers to offer highly differentiated products or services.
    B. Internet technologies cannot easily be imitated.
    C. procurement technologies eliminate the need for suppliers.
    D. the cost of accessing business customers has increased.

250. spent an enormous sum promoting its brand but eventually closed during the dot-com downturn.
     Which of the following was not one of the reason failed:

    A. it was based on a faulty business model with overly thin margins.
    B. it overextended its focus on a market niche and tried to appeal to an overly broad audience.
    C. despite its efforts, the marketing campaign was ill-conceived and did not create name
    D. its strategy was based on a value proposition that customers did not value.

251. Which of the following phrases best completes the sentence: Because of the Internet, firms that use a
     focus strategy have new opportunities to ________________________________

    A. respond quickly to customer requests.
    B. provide more services and features.
    C. access markets less expensively.
    D. access niche markets in a highly specialized fashion.

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252. All of the following are ways that Internet technologies are being used to enhance a focus strategy except:

    A. Permission marketing techniques are focusing sales efforts on specific customers who opt to receive
       advertising notices.
    B. Niche portals that target specific groups are providing advertisers with access to viewers with
       specialized interests.
    C. Human resources departments are using online testing and evaluation techniques in the hiring process
       and online training after they hire.
    D. Procurement technologies that use Internet software to match buyers and sellers are highlighting
       specialized buyers and drawing attention to smaller suppliers.

253. Incumbent firms may enjoy increased bargaining power because the Internet

    A. focuses marketing efforts on end users.
    B. diminishes the power of many distribution channel intermediaries.
    C. increases channel conflict.
    D. has reduced the number of wholesalers and distributors.

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Description: Nike Market Entry Strategy document sample