Strategy – FAQ – 05

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List of FAQs

Q1

Which of the following is a reason that a firm would want to hire a CEO from the internal managerial labor market?

  1. The firm needs to enhance its ability to innovate.
  2. The industry in which the firm competes is experiencing rapid growth.
  3. The firm needs a CEO who appreciates its culture and core values.
  4. The firm needs a CEO who can reverse recent poor performance

Q2

Which of the following involves specifying the vision and the strategy to achieve the vision?

  1. Determining strategic direction
  2. Corporate governance
  3. Strategic planning
  4. Vision planning

Q3

Some strategic leaders who are committed to identifying the best organizational activities to take, regardless of their cultural origin, have been successful in building a short-term foundation to reach a long-term vision. Which of the following terms describes this type of leader?

  1. Risk averse
  2. Charismatic
  3. Ambicultural
  4. Long tenure

Q4

_____ capital refers to the knowledge and skills of a firm’s entire workforce.

  1. Social
  2. Organizational
  3. Intellectual
  4. Human

Q5

A firm is attempting to break into an international market. It easily establishes alliances in that foreign market and is able to successfully expand. Which of the following has helped the firm with its transition?

  1. Intellectual capital
  2. Innovations
  3. Social capital
  4. Corporate culture

Q6

Many companies encourage employees to pursue entrepreneurial opportunities. While this could cause companies to lose top talent, why may companies want to foster this behavior?

  1. To boost employee satisfaction
  2. To have employee downtime be constructive
  3. To increase their work efficiency
  4. To spark innovation

Q7

Support from which of the following sources is crucial to successfully implementing a new organizational culture?

  1. a. CEO
  2. b. Top management
  3. c. Middle-level managers
  4. d. All of these

Q8

_____ organizational cultures constantly use processes to anticipate future market needs and to satisfy them before competitors learn how to do so.

  1. Competitively aggressive
  2. Proactive
  3. Innovative
  4. Risk-averse

Q9

A firm is struggling with the behavior of its employees. There have been reports of ethically questionable behavior. When asking some employees about their motives for these actions, a common theme was uncovered. They were cutting corners to hit their performance numbers. The firm now wants to focus on ethical behavior and shift organizational culture. The company distributes emails from HR about appropriate behavior and ethics and hosts a series of office workshops on ethics. This firm is attempting to become a(n) _____ culture.

  1. performance-based
  2. values-based
  3. self-serving
  4. ethics-based

Q10

A company has a tool to monitor its progress. This tool analyzes the company’s finances and its strategy. The executives use this tool to understand how the firm responds to shareholders, how customers view the firm, what processes to focus on to successfully use its competitive advantage, and how it can use innovation to improve its performance. What is this a description of?

  1. Balanced scorecard
  2. Control dashboard
  3. Business analytics
  4. Corporate monitoring

Q11

Which of the following best explains the underlying premise of the balanced scorecard?

  1. Firms jeopardize their future performance when they emphasize financial controls at the expense of strategic controls.
  2. Managers tend to make self-serving decisions when they focus on the long term.
  3. Focusing on long-term goals rather than short-term goals generally leads to higher performance.
  4. Financial control encourages lower-level managers to make decisions that incorporate moderate and acceptable levels of risk.

Q12

A business-level strategy in which firms share some of their resources from the same stage (or stages) of the value chain for the purpose of creating a competitive advantage is a definition of which strategy?

  1. Complementary strategic alliance 
  2. Vertical complementary strategic alliance 
  3. Horizontal complementary strategic alliance 
  4. Uncertainty reducing strategy

Q13

What is the major difference between a joint venture and a nonequity strategic alliance?

  1. In a joint venture, the partnering firms are in a contractual relationship where they share resources for a certain amount of time. In a nonequity strategic alliance, the companies form an independent company together and combine their resources to operate it. 
  2. In a joint venture, the partnering firms share a percentage of the company they have formed. In a nonequity strategic alliance, the firms have a contractual relationship where they share resources for a certain amount of time. 
  3. In a joint venture, the partnering firms create an independent company and share resources. In a nonequity strategic alliance, the firms have a contractual relationship where they share resources for a certain amount of time. 
  4. In a joint venture, the partnering firms create an independent company and share resources. In a nonequity strategic alliance, the partnering firms share different percentages of the company.

Q14

An American sandal company has completely saturated its local market. The sandals, which are made of specially molded rubber soles that minimize soreness associated with unsupportive soles, have started to build a demand in Australia, a market the company is unfamiliar operating in. Why might the sandal company enter into a cooperative strategy with an Australian firm?

  1. To explore export options from the United States to Australia 
  2. To give responsibility of the company’s expansion to the Australian firm 
  3. To share unique resources to design, produce, and launch the product in Australia 
  4. To take advantage of the Australian company in a hostile takeover

Q15

A firm in France that makes locally made designer loafers has decided to expand its operation to the United States to meet the “Made in America” market demand. In order to do so, the firm has decided to partner with a United States shoe manufacturer to produce the loafers. What type of strategic alliance would best fit the partnership the firm is looking for?

  1. synergistic 
  2. diversifying 
  3. franchising 
  4. corporate

Q16

Which is not a risk associated with cooperative strategic alliances?

  1. When a firm misrepresents the resources it brings to the partnership.
  2. When a firm fails to make the resources available to its partner.
  3. When a firm and its partner agree not to act opportunistically toward each other.
  4. When a firm makes investments that are specific to the alliance while the other partner does not.

Q17

A business-level cooperative strategy is a strategy through which firms combine some of their resources to create a competitive advantage by competing in:

  1. one product market
  2. one or more product markets
  3. multiple foreign markets
  4. one domestic market

Q18

A cross-border strategic alliance is:

  1. a strategy through which firms combine some of their resources to create a competitive advantage by competing in one or more product markets. 
  2. an alliance in which firms share some of their resources from the same stage of the value chain. 
  3. a strategy in which firms share some of their resources to create economies of scope. 
  4. a strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage.

Q19

When firms create a strategic alliance in a cooperative strategy, they are seeking to create a competitive advantage by combining:

  1. resources
  2. finances
  3. expertise
  4. production power

Q20

As web development continues to grow as a career field, more and more education options are being created for interested mid-career professionals. A software firm that has developed online courses for people to learn web development has decided to partner with a popular computer manufacturer to build a laptop with a special keyboard and interface elements for web development education. The idea comes after a competitor implemented a similar cooperative strategy to develop a smartphone interface compatible with educational software. The following is a motive for the education and computer firms to implement a cooperative strategy:

  1. to minimize their rivals’ returns
  2. to gain a higher a price point than their rivals
  3. to outperform rivals with a similar idea
  4. to neutralize competition with rivals

Q21

Which of the following is not one of the three types of strategic alliances?

  1. Joint venture 
  2. Nonequity strategic alliance 
  3. Equity strategic alliance 
  4. Nonjoint venture

Q22

An automotive company has entered into a strategic alliance with a motor manufacturer. The automotive company is depending on the motor manufacturer’s expertise and experience in developing high horsepower motors for small sports cars. The automotive company holds a 60 percent stake in the partnership, and the motor manufacturer holds 40 percent. The strategic alliance between the two firms is best described as a(n):

  1. cooperative strategy
  2. joint venture
  3. equity strategic alliance
  4. nonequity strategic alliance

Q23

If a company were to only have insider directors and related outsider directors, which would leave out the independence of outsider directors, what could the consequences be?

  1. Increase of profits from not having to pay an outsider director’s salary
  2. Stockholders’ interests could be ignored due to executives desire for personal financial gain without regard for all shareholders
  3. A more streamlined decision-making process from insider directors who know the company and industry intimately. This, in turn, will prove to be an ideal situation for stockholders
  4. A larger focus on stockholders, as insider directors and executives only focus on stockholders’ interests

Q24

What is believed to be a likely consequence if shareholders, lawmakers, and regulators are not critical and attentive to the actions of a company’s top managers?

  1. A new type of economy that is related to a socialist economy 
  2. An invisible hand economic industry where actions will be handled by market preferences
  3. A free corporate market that is laissez-faire 
  4. A financial crisis due to manager ineffectiveness and lack of focus on all stakeholders, causing the company to fail, resulting in a rise in unemployment

Q25

Why is bribery a major issue confronted by multinational companies operating in international markets?

  1. The prevalence of bribery in foreign markets leaves industries at a competitive disadvantage. 
  2. Bribery is the only issue of international markets. 
  3. Bribery is the only issue international companies will be able to confront with success. 
  4. The issue of bribery has the potential to benefit multinational companies as they will not be performing illegal acts in the U.S.

Q26

Why could many large-block owners be beneficial to a company?

  1. The large-block owners will not be able to collaborate and organize as well as many small owners. 
  2. The company will know exactly who their owners are and can persuade the owners interests to align with their personal interests. 
  3. The company will be able to act much more quickly due to less time needed to vote. 
  4. Large-block owners will be able to easily collaborate on current issues and drive change in an organization, more so than many small share owners.

Q27

Without strong corporate governance, what is likely to become of a company?

  1. The company will thrive due to less regulation. 
  2. The company will fail due to the lack of risk taking. 
  3. The company will thrive as long as the CEO has a strong vision for the company and is willing to focus only on profits. 
  4. The company will fail because of legal issues, lack of strategic focus and risky behavior.

Q28

Susan is worried about her performance as CEO. She thinks that she may lose her position, receive a cut to her salary, or be seen by her peers as incompetent and ineffective. What is another term for what Susan is worried about?

  1. Managerial employment risk 
  2. Unemployment risk 
  3. Failure to perform 
  4. Negative performance reviews

Q29

What is another instance where decision-making bodies are separated like the Board structure in German firms?

  1. The United States’ three branches of government 
  2. The Board of Directors in American companies 
  3. The voting system where citizens determine laws and regulations 
  4. German Board structures are completely unique

Q30

Lisa is the CEO of her company and is on the Board of Directors as an insider director. She has recently become suspicious of certain events and discussions. The discussions have been about replacing management. These discussions have been sparked by letters from shareholders, which have become more frequent. What may Lisa be suspicious of?

  1. Managerial employment risk 
  2. Corporate espionage 
  3. Fraudulent behavior 
  4. Hostile takeover

Q31

What are the concepts that affect attitudes toward corporate governance in Japan?

  1. Friendship, honor, loyalty 
  2. Obligation, family, consensus
  3. Service, responsibility, modesty 
  4. Integrity, responsibly, respect

Q32

Laws and regulations require independent outsider directors to lead important committees, such as audit and compensation. Why are these rules in place?

  1. To ensure that personal relationships are honored during a compensation analysis
  2. To avoid the influence of insider directors who may sway the Board in their self-interests 
  3. To speed up the committee process and increase efficiency
  4. To ensure the best service during committee meetings

Q33

Greg is the CEO of a leading company in the consumer packaged goods industry. He is trying to grow his company for personal gain and wealth. However, Greg sees that his company has an opportunity to break into the chemical industry. He has decided to invest free cash flow into acquiring small chemical companies that have the potential of growth, if funded properly. Shareholders are not happy. Their case for wanting to cease these actions is that Greg is practicing ______.

  1. underdiversification 
  2. overdiversification 
  3. diversification 
  4. segmentation

Q34

Elected individuals whose primary responsibility is to act in the owners’ best interest by formally monitoring and controlling the firm’s top level managers is the definition for _______.

  1. Corporate Senate 
  2. Board of Directors 
  3. Corporate Governance 
  4. Executive Suite

Q35

How does the market for corporate control help stakeholders?

  1. By causing managers and executives to focus on the stakeholders 
  2. By having larger, more profitable companies take over businesses and cut costs solely to raise profits 
  3. By having the company stay alive, but under government supervision 
  4. By taking undervalued companies and helping them grow and become more profitable, thus benefitting all stakeholders

Q36

Melissa is the CEO of her company and has to make a business decision. She is faced with a scenario where she can please one group of stakeholders, or all of them minimally. What is Melissa’s most likely action?

  1. To please the suppliers, as they are of the highest priority 
  2. To please as many stakeholders as possible, because if stakeholders are not minimally satisfied, they will give support to another company 
  3. To please the employees because a happy workforce will have a ripple effect on the rest of the value chain 
  4. To determine which action will result in higher executive compensation and make that choice

Q37

The Carter family has been the successful owner of a manufacturing company for over 50 years. The company has always performed better than expected and was projected to grow for years to come. To help with this growth, the Carters decided to hire a CEO who is not from the family, the first time in its history. After the hire, the performance of the company shifts for the worse, and there is a separation of ownership and managerial control. What factors should the Carter family change?

  1. The Carters should align the goals of the family and the CEO. 
  2. The CEO should diversify the company, as it has reached the end of its growth projection. 
  3. The Carters should appoint a family member as CEO, as research shows that family-owned firms perform better when a member of the family is the CEO. 
  4. The CEO should resign, as he or she is not performing in the interest of the shareholders.

Q38

Kevin is on the Board of Directors of a local company and has become concerned with a situation that came to his attention. The Board is in talks to elect the current CEO as Chairman of the Board. Does Kevin have a reason for concern?

  1. Yes, if Kevin knows the CEO and doesn’t like his or her personality. 
  2. Yes, as the CEO will not be able to be forced out if his or her performance becomes unacceptable. 
  3. No, because the Board will be sure to elect the best individual as Chairman, regardless of current title. 
  4. No, because a single individual as CEO and Chairman of the Board has proven to be very successful in the past.

Q39

Christopher is the CEO of a company that another company is trying to acquire. The success of Christopher’s company has declined dramatically over recent years. Chris knows that the acquisition could help save the shareholders and other stakeholders from the turmoil that would ensue if the company went bankrupt. However, this is Christopher’s only line of income for his family. He decides to defend his company from being taken over to help secure his position. Which defense strategy would you recommend be implemented that would benefit all stakeholders?

  1. Capital structure change 
  2. Charter amendment 
  3. Golden parachute 
  4. Litigation lawsuits

Q40

Do German firms have the presence of agency problems as much as U.S. firms?

  1. Yes. German firms have the same exact issues and difficulties as American firms. 
  2. Yes. German agencies have the same structures as American agencies. 
  3. No. Many German firms are publically owned by the government and its citizens. 
  4. No. Many German firms are managed and owned by the same individual.

Q41

Just-in-time describes…

  1. implementing strategies just before bankruptcy
  2. delivering materials just as they are needed
  3. a scheduling method for meetings
  4. a personnel planning method
  5. a process for improving quality

Q42

A concern in matching managers with strategy is that jobs have relatively ________ responsibilities, while people are ________ in their personal development.

  1. static; dynamic
  2. dynamic; static
  3. quick; slow
  4. exciting; dull
  5. dull; exciting

Q43

Glass ceiling refers to…

  1. the reality that most companies do not offer paternity leave for fathers as a benefit.
  2. the understanding that a good home life for employees contributes to a good work life and value for the firm.
  3. the focus on flexible scheduling, job sharing, and other quality of life benefits.
  4. the invisible barrier in many firms that bars women and minorities from top-level management positions.
  5. the decline in the percentage of women with college degrees between 1970 and today.

Q44

Wellness programs…

  1. are too expensive for most companies to afford.
  2. are desired by employees but don’t provide value to the company.
  3. are becoming more prevalent as companies realize the benefits to the firm.
  4. attract prospective employees who then fail to take advantage of them.
  5. are facing legal challenges from the health-care industry.