Test Bank

Test Bank Student: ___________________________________________________________________________

1.

The types of skills that are required to prepare an effective strategic case analysis can benefit you in actual business situations. True

2.

There are two capabilities that can be learned through case analysis—the ability to speculate and integrate. True

3.

False

Analytical tools such as value chain analysis and five forces analysis are useful tools to employ when conducting strategic analysis. True

9.

False

Writing down a problem statement is a needless waste of time when preparing a case. True

8.

False

The first step in becoming familiar with the material is to read quickly through the case to get an overall sense of the material. True

7.

False

The business plan framework is not effective for analyzing strategic cases. True

6.

False

The role of strategic decision maker is one that may be taken when analyzing a case. True

5.

False

Case analysis takes students through the whole cycle of activity a manager would face. True

4.

False

False

The current ratio, quick ratio and cash ration are all measures of short-term solvency. True

False

10. The profit margin tells you how much investors are willing to pay per dollar of current earnings. True

False

11. The basic aim of case analysis is to find solutions. True

False

12. There are five basic rules for preparing an oral case presentation. True

False

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13. According to the text, one of the reasons that case analysis is so enriching as a learning tool is that it draws on many resources and skills besides what is in the textbook. True

False

14. The case analysis process should focus strictly on the case itself and you should not be concerned about your own performance. True

False

15. According to the text, there are six rules for preparing a written case analysis. True

False

16. The word conflict has negative connotations. True

False

17. The illusion of unanimity is one of the symptoms of groupthink. True

False

18. The use of a devil's advocate causes conflict that is counterproductive. True

False

19. Dialectical inquiry is a technique whereby a problem is approached from two alternative points of view. True

False

20. To obtain synthesis, your analysis should ideally include the best components of each alternative. True

False

21. The analysis-decision-action cycle is the recommended method of case analysis. True

False

22. According to the text, the analysis-decision-action cycle should not include analysis of the external environment but only focus on the internal aspects of the organization. True

False

23. Three capabilities that can be learned through case analysis are A. the ability to question, ponder, and answer. B. the ability to differentiate, speculate, and integrate. C. the ability to read, write, and perform mathematical calculations. D. the ability to be cruel, competitive and cut-throat. 24. Being able to imagine different scenarios or contemplate the outcome of a decision are examples of the capability known as A. intergration B. differentiation C. speculation D. none of the answers is correct

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25. In order to place yourself inside a case, you might adopt the position of A. an outside consultant. B. a strategic decision maker. C. the board of directors. D. all of the answers are correct 26. People, opportunity, context, risk, and reward are all part of A. the strategic groups approach. B. the contingency model. C. the business plan framework. D. the financial planning framework. 27. When becoming familiar with a case it is recommended that you A. skim the case only once. B. you take several days to read and digest the case. C. read it at night before bed and think about it in your sleep. D. skim it once, and read it a second time, in depth, making notes as you read. 28. Sometimes problems in a case are not apparent until A. after you do the analysis. B. you read the case 12 times. C. you write down the problem statement. D. none of the answers are correct. 29. Price-earnings and market-to-book are examples of A. market value ratios. B. profitability ratios. C. turnover ratios. D. liquidity ratios. 30. The step in case analysis that involves using analytical tools from the textbook such as value chain analysis is known as A. identifying problems. B. proposing alternative solutions. C. conducting strategic analysis. D. becoming familiar with the material. 31. The step in case analysis that involves the evaluation of choices and implications of those choices is known as A. identifying problems. B. proposing alternative solutions. C. conducting strategic analysis. D. becoming familiar with the material. 32. The final step in the case analysis process is A. identifying problems. B. proposing alternative solutions. C. making recommendations. D. conducting strategic analysis.

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33. An essential part of preparing an oral presentation is: A. organizing your thoughts. B. being consistent and logical. C. emphasizing strategic analysis. D. all of the answers are correct 34. Conducting outside research when doing a case study is A. unethical and irresponsible. B. one of the ways to help get the most out of the experience. C. not recommended. D. none of the answers is correct. 35. Presenting information graphically is A. one of the five rules for preparing a written case analysis. B. one of the five rules for preparing an oral case presentation. C. recommended only for liberal arts majors. D. a form of brainstorming. 36. The use of conflict-inducing decision making techniques in case analysis A. is designed to improve case analysis. B. involves the constructive use of conflict. C. can be helpful in arriving at better solutions to cases. D. all of the answers are correct 37. The phenomenon known as groupthink is undesirable and can lead to poor decisions. The concept of groupthink was developed by A. Financial Post Advisor B. Irvine Janis C. Howard Jones D. all of the answers are correct 38. Which of the following tries to identify problems with the proposed alternative and suggests reasons why it should not be adopted? A. the devil's advocate B. the inquirer C. the dialectic D. the figurehead 39. Analyzing organizational goals and objectives is A. a value-creating activity. B. an affordable strategy in case analysis. C. the first step in the analysis-decision-action cycle. D. the final step in preparing a written case analysis. 40. Asking the question, "Have strategic principles been used in the process of obtaining valuable resources and crafting effective entrepreneurial strategies?" is an essential part of A. creating new ventures. B. the final step in the analysis-decision-action cycle. C. the 12th step in the analysis-decision-action cycle. D. all of the answers are correct

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41. The analysis-decision-action model reflects A. ideas that are linked sequentially B. an overarching strategic perspective C. material presented in Chapter 12 D. all of the answers are correct 42. Discuss the three capabilities that can be developed through case analysis and explain how these three activities sometimes compete for a manager's attention.

43. Compare and contrast the positions of strategic decision maker, board of directors, and outside consultant that may be adopted when conducting a strategic case analysis.

44. Describe the four characteristics of a business plan framework, and discuss when it might be appropriate to use this framework to analyze strategic cases?

45. Outline the five easy steps that can be used to organize a strategic management case analysis.

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46. Outline the five rules for preparing an oral case presentation and explain why each is essential to the development of an effective presentation.

47. Discuss the resources beyond the textbook that might be used to conduct strategic case analysis and explain how the use of additional resources can help you get the most out of the experience and expand your horizons.

48. What are the five rules for preparing a written case analysis and how do these differ from the rules for preparing an oral presentation?

49. Outline the various approaches to conflict-inducing decision making and provide examples of each. Discuss how these techniques can improve the quality of case analysis.

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50. Explain how the 12 ideas involved in the analysis-decision-action cycle are linked sequentially in terms of an overarching strategic perspective.

51. Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. True

False

52. Strategic management includes strategy analysis, strategy formulation, and strategy implementation. True

False

53. According to the text, formulating strategy includes taking into consideration strategy at the business, international, digital, and corporate levels. True

False

54. Shareholders in a company are the only individuals with an interest in the financial performance in the company. True

False

55. Shareholders, employees, and the community-at-large are among a firm's stakeholders. True

False

56. Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization. True

False

57. Social responsibility is the idea that organizations are not only accountable to shareholders but also to the community-at-large. True

False

58. Sears has developed a sophisticated quantitative model that can predict the relationship between employee satisfaction, customer satisfaction and financial results. This is an example of a symbiotic approach to strategic management. True

False

59. Decisions by Boards of Directors are always consistent with shareholder interests. True

False

60. Social responsibility for Suncor Energy of Calgary means accountability to customers but NOT to employees. True

False

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61. The strategic management process should be addressed only by top-level executives. Mid-level and low-level employees are best equipped to implement the organization's strategies. True

False

62. Globalization is the flow of capital, people, and information throughout the world. True

False

63. Intellectual capital is becoming increasingly important in today's economy. It is a concern of managers throughout organizations. True

False

64. Objectives in organizations should be clear, stated, and known by employees throughout the organization. True

False

65. Strategic management should only include short-term objectives. Long-term objectives are covered in the organization's vision statement. True

False

66. Organizational goals and objectives should be vague in order to allow for changes in strategy. True

False

67. Organizational vision statements are the beginning point for the hierarchy of goals throughout the organization. An organization's vision statement should be massively inspiring, overarching, and long-term. True

False

68. Although vision statements vary from organization to organization, vision statements are intended to motivate and inspire employees to work toward a general goal. True

False

69. According to the text, a mission statement is an overarching statement that is massively inspiring, long-term, and only discusses the purpose of the company. True

False

70. A mission statement encompasses both the purpose of the company as well as the basis of competition and competitive advantage. True

False

71. Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by time deadlines. True

False

72. It is important for organizations to focus primarily on financial objectives and be less concerned about other objectives and goals. True

False

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73. The four key attributes of strategic management include the idea that A. strategy must be directed toward overall organizational goals and objectives. B. strategy must be focused on long-term objectives. C. strategy must be focused on one specific area of an organization. D. strategy must focus on competitor strengths. 74. The four key attributes of strategic management include all of the following except A. including multiple stakeholder interests in decision making. B. incorporating both short-term and long-term perspectives. C. recognizing the trade-offs between effectiveness and efficiency. D. emphasis on the attainment of short-term objectives. 75. Stakeholders are A. a new way to describe shareholders. B. individuals, groups, and organizations who have a stake in the success of the organization. C. creditors who hold a lien on the assets of the organization. D. attorneys and their clients who sue the organization. 76. "Effectiveness" is often defined as A. doing things right. B. stakeholder satisfaction C. doing the right thing. D. productivity enhancement. 77. According to Henry Mintzberg, the realized strategies of a firm A. are a combination of deliberate and emergent strategies. B. are a combination of deliberate and differentiation strategies. C. must be based on a company's strategic plan. D. must be kept confidential for competitive reasons. 78. In order to increase their competitiveness, organizations must continually analyze their strategy and their competitive environments. According to the text, strategy analysis includes A. assessing intellectual capital as well as analyzing the internal and external environment. B. formulating Internet and international-level strategy. C. strategic leadership and fostering entrepreneurship. D. strategy implementation and strategic controls. 79. In terms of strategy analysis, the textbook describes Roth, CEO of Nortel, as having A. set low targets. B. ignored the experiences of competitors and set unrealistically high growth targets. C. focused on the economic landscape. D. all of the answers are correct 80. Sears has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of ________________. A. zero-sum relationship among stakeholders B. stakeholder symbiosis C. rewarding stakeholders D. emphasizing financial returns

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81. An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that A. interests of the shareholders are not the only interests that matter. B. stakeholders are second in importance to the shareholders. C. stakeholders and managers inevitably work at cross-purposes. D. all stakeholders receive financial rewards. 82. While working to prioritize and fulfill their responsibilities, members of an organization's board of directors should A. represent their own interests. B. represent the interests of the shareholders. C. direct all actions of the CEO. D. emphasize the importance of short-term goals. 83. Members of Boards of Directors are A. appointed by the Securities and Exchange Commission. B. elected by the shareholders as their representatives. C. elected by the public. D. only allowed to serve one term of four years. 84. Managers should do more than just focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that A. stakeholders are dependent on each other for their success. B. stakeholders look out for their individual interests. C. one can only gain at the expense of someone else. D. all stakeholders want to maximize shareholder returns. 85. Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is A. the expectation that business will strive to improve the overall welfare of society. B. the idea that organizations are solely responsible to local citizens. C. the fact that court costs could impact the financial bottom line. D. the idea that businesses are responsible to maintain a healthy social climate for their employees. 86. According to the text, the "triple bottom line" approach to corporate accounting includes which three components: A. financial, environmental, and customer B. financial, organizational, and customer. C. financial, environmental, and social. D. financial, organizational, and psychological. 87. Firms must be concerned with many types of capital. In the broader sense, these could include A. ecological capital. B. material capital. C. human and social capital. D. all of the above.

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88. Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if A. each functional area focuses on achieving their own goals. B. functional areas work together to attain overall goals. C. goals are defined at the bottom and implemented at the top. D. management and employees have separate goals. 89. The text argues that a strategic perspective in an organization should be emphasized A. at the top of the organization. B. in the middle of the organization. C. throughout the organization. D. from the bottom up. 90. As our world increases in complexity, the global environment is increasingly competitive and challenging. The key to effective globalization is A. managing the flow of goods. B. more people speaking more languages. C. managing the flow of capital, people, and information. D. governmental regulations. 91. As firms work to become more efficient and effective in the global business environment, they are forced to continually innovate. Innovation in an organization A. will always increase a firm's performance. B. may enhance or destroy a firm's capabilities. C. should not be pursued by industry leaders. D. happens only incrementally. 92. Peter Senge, of M.I.T., recognized three types of leaders. _______________ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas. A. Local line leaders B. Executive leaders C. Internal networkers D. Shop floor leaders 93. Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? A. only at the top B. in the middle C. throughout the organization D. only during times of change 94. The hierarchy of organizational goals is in this order (least specific to most specific): A. vision statements, strategic objectives, mission statements B. mission statements, strategic objectives, vision statements C. vision statements, mission statements, strategic objectives D. mission statements, vision statements, strategic objectives

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95. Wellpoint Health Networks states: "Wellpoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a A. strategic objective. B. vision statement. C. vague statement of direction. D. line manager's individual goal. 96. Effective vision statement include A. all strategic directions of the organization. B. a brief statement of the company's direction. C. strategic posturing and future objectives. D. financial objectives and projected figures. 97. Examples of _____________ include: "to be the happiest place on earth" (Disney), and "restoring patients to full life" (Medtronics). A. vision statements B. mission statements C. strategic objectives D. operational objectives 98. In contrast to an organization's vision, its mission should A. be shorter in length. B. encompass both the purpose of the company as well as the basis of competition. C. encompass all the major rules and regulations of the corporate work force. D. be less detailed. 99. Which "organizational vision" did the text credit belonging to BCE Bell Canada Enterprises? A. "Restoring patients to full life" B. "Providing Canadians with a one-stop destination in meeting their needs" C. "Clear, Simple, First, True, Profitable, Proud" D. "… the world's best quick service restaurant" 100.Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements A. are very specific. B. provide specific objectives. C. set organizational structure. D. evoke powerful and compelling mental images. 101.Fortune Brands states they will "cut corporate costs by $30 million a year." This is an example of a A. nonfinancial strategic objective. B. financial strategic objective. C. vision statement. D. mission statement.

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102.The strategic management process includes strategy analysis, strategy formulation, and strategy implementation. Discuss each of these steps.

103.Discuss what is meant by recognizing trade-off between efficiency and effectiveness and provide an example of how this attribute of strategic management could influence the strategic decisions of a firm.

104.A firm has a variety of different stakeholders. Identify several possible stakeholders a firm may have and discuss how the firm may achieve stakeholder symbiosis.

105.Globalization is impacting most firms today. Discuss what "globalization" means and how and why it impacts today's firms.

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106.The text discusses several characteristics of effective strategic objectives. List several of these and discuss why a firm's strategic objectives should meet these criteria.

107.Environmental scanning and competitor intelligence provide important inputs for forecasting activities. True

False

108.Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process. True

False

109.Competitor Intelligence (CI) is a tool that can provide management with "early warnings" about both threats and opportunities. True

False

110.Competitor Intelligence gathering is no different from spying. True

False

111.Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain. True

False

112.Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions. True

False

113.The same environmental trend can often have very different effects on firms within the same industry. True

False

114.Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry. True

False

115.Scenario analysis draws on a range of disciplines and interests. True

False

116.Nearly one-fifth of Canadians will be over 65 by 2025. True

False

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117.Technological innovations can create entirely new industries and alter the boundaries of industries. True

False

118.The Canadian forestry industry has gained significant advantage over competitors in Sweden and Finland through the use of advanced technology. True

False

119.Porter's five forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses. True

False

120.Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential. True

False

121.In some industries, high switching costs can act as an important barrier to entry. True

False

122.Industries characterized by high economies of scale typically attract fewer new entrants. True

False

123.The power of a buyer group is increased if the buyer group has less concentration than the supplier group. True

False

124.Buyer power tends to be higher if suppliers provide undifferentiated or standard products. True

False

125.Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers. True

False

126.The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration. True

False

127.The more attractive the price/performance ratio of substitute products, the more tightly it constrains an industry's ability to charge high prices. True

False

128.Rivalry is most intense when there are high exit barriers and high industry growth. True

False

129.Rival airlines Air Canada and WestJet are battling over allegations of corporate espionage. True

False

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130.Michael Porter's Five Forces Analysis is a dynamic tool for analyzing industry attractiveness. True

False

131.Complementary products are products that typically have a negative impact on the value of a firm's own products or services. True

False

132.Bombardier studies people's travel patterns to decide on the number of seats they should plan for future aircraft. True

False

133.The use of the strategic groups concept is generally not helpful in charting the future directions of firms' strategies. True

False

134.The strategic groups in the world-wide automobile industry have been very stable and unchanging in recent years. True

False

135.According to the text, Canadian Tire is more concerned about Wal-Mart than Holt Renfrew. True

False

136.Gathering "competitive intelligence" A. is good business practice. B. is illegal. C. is considered unethical. D. minimizes the need to obtain information in the public domain. 137.Two key inputs to developing forecasts discussed in the text are A. environmental scanning and stakeholder identification. B. environmental scanning and competitor intelligence. C. assessing internal strengths and environmental scanning. D. environmental scanning and a SWOT analysis. 138._____________ tracks the evolution of environmental trends, sequences of events, or streams of activities. A. Environmental scanning B. Environmental monitoring C. Environmental surveying D. Competitive intelligence 139.Environmental forecasting involves developing plausible projections about the ________ of environmental change. A. direction B. scope C. speed D. all of the answers are correct

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140.In the Canadian telecommunications industry, the companies used to be governed by A. different federal agencies. B. the same federal agency, CRTC. C. various provincial agencies. D. industry associations. 141.A danger of forecasting discussed in the text is that A. in most cases, the expense of collecting the necessary data exceeds the benefit B. forcasting's retrospective nature provides little information about the future C. managers may view uncertainty as "black and white" while ignoring important "grey areas" D. it can create legal problems for the firm if regulators discover the company is making forecast. 142.The aging of the population, changes in ethnic composition, and effects of the baby boom are A. macroeconomic changes. B. demographic changes. C. global changes. D. sociocultural changes. 143.Increasingly larger numbers of women entering the work force since the early 1970s is an example of A. demographic changes. B. political and legal environmental changes. C. sociocultural changes. D. technological developments. 144.Which of the following would be considered part of a firm's general environment? A. decreased entry barriers B. increased trade deficit C. increased bargaining power of the firm's suppliers D. increased competitive intensity 145.Emerging sociocultural changes in the environment include A. changes in the ethnic composition. B. the increasing educational attainment of women in the past decade. C. progressively less disposable income by consumers. D. changes in the geographic distribution of the population. 146.The political/legal segment: When the US congress passed the Sarbanes-Oxley Act in 2002, A. Canada deregulated the associations. B. no similar Canadian legislation was developed. C. Canada followed with similar provisions. D. the provincial governments developed similar laws. 147.In the Air Canada - WestJet conflict, the issue is: A. Air Canada claims their employee website was hacked. B. WestJet claims their employee website was hacked. C. Air Canada claims their email was stolen. D. Air Canada claims WestJet used employee access information to obtain flight info.

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148.Interest rate increases have a ________ impact on the residential home construction industry and a ___ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items. A. positive; neutral B. negative; neutral C. negative; positive D. positive; negative 149.Which is considered a force in the "Five Forces model"? A. increased deregulation in an industry B. the threat of government intervention C. rivalry among competing firms D. recent technological innovation 150.A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of A. backward integration. B. economies of scale. C. forward integration. D. product differentiation. 151.An independent group of suppliers, such as farmers, gathers to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of A. threat of entry. B. backward integration. C. forward integration. D. threat of substitute products. 152.The threat of new entrants is high when there are A. low economies of scale. B. high capital requirements. C. high switching costs. D. high differentiation among competitors' products and services. 153.Which of the following would be an entry barrier? A. large economies of scale B. low switching costs C. easy access to raw materials D. low capital requirements 154.Which of the following firms would likely pose the least competitive threat? A. a firm in the same industry and in the same strategic group B. a firm that produces substitute goods to your product line C. a competitor to your product where a high switching cost exists D. a firm in the same industry and in the nearest strategic group looking to join your group 155.The rivalry between Air Canada and WestJet A. recently moved from the skies to the courtroom. B. includes allegations that WestJet set up a screen-scraper program to automatically lift data. C. includes allegations that Air Canada sent investigators to pilfer a WestJet Executives garbage looking for data. D. all of the answers are correct

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156.Buyer power will be greater when A. the products purchased are highly differentiated. B. there are high switching costs. C. the industry's product is very important to the quality of the buyer's end products or services. D. it is concentrated on purchasing large volumes relative to seller sales. 157.The bargaining power of suppliers increases as A. more suppliers enter the market. B. importance of buyers to supplier group increases. C. switching costs for buyers decreases. D. the threat of forward integration by suppliers increases. 158.In Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except A. lack of importance of the buyer to the supplier group. B. high differentiation by the supplier. C. dominance by a few suppliers. D. readily available substitute products. 159.A supplier group would be most powerful when there is/are A. many suppliers. B. few substitute products. C. low differentiation of products supplied. D. high threat of backward integration by the buyers. 160.Threat of substitute products comes from A. other companies in the same industry. B. foreign companies which can use cheap labour in their countries. C. firms in other industries that produce products or services that satisfy the same customer need. D. all of the answers are correct 161.Strategic groups within industries: Canadian retailer Holt Renfrew is described as A. a high growth industry with low fixed costs. B. similar to Canadian Tire. C. a prestigious upscale player. D. a competitor of Wal-Mart. 162.Exit barriers arise from A. specialized assets with no alternative use. B. governmental and social pressures. C. strategic interrelationships with other business units within the same company. D. all of the answers are correct 163.The general and competitive environments A. are independent and dynamic over time. B. tend to be interrelated and dynamic over time. C. have similar impact on organizations of different industries. D. are independent and static over time.

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164.Delayed marriages, fewer people in relevant age groups, and rising interest rates dampening demand for houses illustrates A. that more than one segment of the general environment may affect an industry. B. that the global environment is not as powerful an influence as thought. C. that macroeconomic forces dominate the general environment. D. that the competitive environment often has a strong influence on the general environment. 165.Which of the following best demonstrates the interrelationships among different segments of the general environment? A. A new technology results in the development of a substitute product for your firm's product. B. Government deregulation results in different firms being able to offer the same product as your firm. C. The recession results in several of your competitors cutting prices and intensifying rivalry. D. Increased concern for the environment results in legislation that impacts your current packaging. 166.Which of the following is an example of the interrelationship between the general and competitive environments? A. A decline in a nation's educational standards results in a decline in the nation's productivity. B. A country's technological inferiority results in its enactment of strong trade barriers against importation. C. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic beverages industry. D. Greater awareness of the environment results in environmental legislation. 167.In the value-net analysis, complementors are A. firms that produce substitute products. B. customers who compliment the company for their good products and services. C. firms that produce products or services that have a positive impact on the value of a firm's products or services. D. firms that supply critical inputs to a company. 168.Strategic groups consist of A. top executives who make strategies for a company. B. firms within an industry that follow similar strategies. C. executives drawn from different companies within an industry that makes decisions on industry standards. D. firms within an industry that decide to collude rather than compete with each other so that they can increase their profits. 169.Which of the following statements about strategic groups is false? A. Two assumptions are made: (1) no two firms are totally different; (2) no two firms are exactly the same. B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. C. Strategic groups help chart the future directions of firms' strategies. D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.

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170.Explain why managers must recognize opportunities and threats in their firm's external environment.

171.Using the Canadian beer as an example, explain how an industry or competitive environment might be defined and analyzed.

172.Explain how competitor intelligence can be improved by gathering information about competitors in the public domain. Provide examples.

173.Discuss some of the limitations of forecasting.

174.Many indicators of the macroeconomic environment such as GNP, interest rates, savings rates, trade and budget deficits/surplus, etc. are interrelated. Explain.

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175.Explain the important barriers to entry in an industry. Provide examples.

176.Discuss and provide examples of factors that would lead to greater buyer power.

177.What are some of the factors that would cause a supplier group to become powerful? Illustrate.

178.Several factors usually interact which result in intense rivalry among competitors. Explain.

179.Explain how the value net analysis adds to the five-forces analysis. Be sure to include examples from at least two industries.

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180.What value is the strategic groups concept as a tool in analyzing an industry?

181.Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses. True

False

182.The automotive sector represents one of Canada's most important economic engines. True

False

183.In value chain analysis, value is measured by market value of the total stock outstanding of the company. True

False

184.Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale. True

False

185.The value chain concept assumes that both primary and support activities are capable of producing value for customers. True

False

186.Performing a value chain analysis provides a complete assessment of the firm's strengths and weaknesses. True

False

187.Outbound Logistics: Campbell's Soup uses continuous replenishment for the Loblaw stores it supplies in Canada. True

False

188.Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis. True

False

189.Technology development is a much broader concept than research and development. True

False

190.In value chain analysis, general management is considered part of a firm's infrastructure. True

False

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191.Managers should focus their attention on interrelationships among value chain activities within the firm, not on relationships among activities within the firm and other organizations (such as suppliers and customers). True

False

192.Tangible resources are assets that are relatively easy to identify such as financial and physical assets. True

False

193.A firm's intangible resources refer to its capacity to deploy tangible resources over time and leverage those resources effectively. True

False

194.Products and services that are difficult to imitate help firms sustain their profitability. True

False

195.Path dependency has no impact on the inimitability of resources. True

False

196.Capabilities that are causally ambiguous are difficult to imitate. True

False

197.For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution. True

False

198.Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies. True

False

199.An increase in profits indicates an improvement in cash flow. True

False

200.Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations. True

False

201.When using industry norms as a standard of comparison, managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry. True

False

202.Historical comparisons are most appropriate during periods of recession or economic boom. True

False

203.A primary benefit of the "balanced scorecard" is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the organization's innovation and improvement activities. True

False

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204.The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial. True

False

205.An important implication of the balanced scorecard is that managers need not look at their job as primarily balancing stakeholder demands. True

False

206.Inbound logistics include A. machining and packaging. B. warehousing and inventory control. C. repair and parts supply. D. promotion and packaging. 207.___________ are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. A. Services B. Inbound logistics C. Outbound logistics D. Operations 208.A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the A. interrelationships among functional areas and firm strategies. B. need to maintain the reputation of the company. C. organizational culture and leadership. D. synergy of the business units. 209.Advertising is a ______ activity. Supply of replacement parts is a _________ activity. A. primary; primary B. support; primary C. support; secondary D. primary; support 210.Which of the following is not an advantage of Just-In-Time inventory systems? A. reduced raw material storage costs B. minimized idle production facilities and workers C. reduced work-in-process inventories D. reduced dependence on suppliers 211.In assessing its primary activities, an airline would examine A. employee training programs. B. baggage handling. C. criteria for lease versus purchase decisions. D. the effectiveness of its lobbying activities.

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212.Customer service would include A. product promotion. B. product distribution. C. parts supply. D. procurement of critical supplies. 213.Which of the following is a support activity? A. inbound logistics B. operations C. technology development D. customer service 214.Which of the following lists consist of support activities? A. human resource management, technology development, customer service, and procurement B. human resource management, customer service, marketing and sales, and operations C. human resource management, information systems, procurement, and firm infrastructure D. customer service, information systems, technology development, and procurement 215.Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It A. supports only individual primary activities. B. supports only individual support activities. C. supports both individual primary and support activities and the entire value chain. D. supports mostly support activities but does have some impact on primary activities. 216.According to value chain analysis, which of the following would be considered part of a firm's infrastructure? A. human resource management B. information systems C. technology development D. procurement 217.For firms such as Campbell Soup Company, information systems have been a source of competitive advantage by enabling them to A. forecast future demand. B. replenish products in a timely manner. C. monitor inventories in distribution centres. D. all of the answers are correct 218.Assessment of a firm's primary activities should include analysis of all of the following except: A. inbound logistics B. operations C. human resources D. marketing and sales 219.The resource-based view (RBV) of the firm combines two perspectives: A. the primary and support activities of the firm B. the interrelationships among the primary activities of the firm and corporate management C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment D. the industry and the competitive environment

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220.The three key types of resources that are central to the resource-based view of the firm are: A. tangible resources, intangible resources, and organizational structure B. culture, tangible resources, intangible resources C. tangible resources, intangible resources, and organizational capabilities D. tangible resources, intangible resources, and top management 221.To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines: A. real estate and store fixtures B. brand name and experienced staff C. accumulated reputation for quality D. all of the answers are correct 222.______________ are the competencies or skills that a firm employs to transform inputs into outputs. A. Tangible resources B. Intangible resources C. Reputational resources D. Organizational capabilities 223.Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their A. tangible resources. B. intangible resources. C. organizational capabilities. D. strong primary activities. 224.For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? A. rare B. easy for competitors to substitute C. valuable D. difficult for competitors to imitate 225.For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes: A. rare, valuable, mobile, nonsubstitutable B. rare, inimitable, physically unique, nonsubstitutable C. rare, valuable, inimitable, nonsubstitutable D. rare, valuable, physically unique, causally ambiguous 226.A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of A. social complexity. B. path dependency. C. physical uniqueness. D. causal ambiguity.

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227.A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon A. social complexity. B. path dependency. C. physical uniqueness. D. tangible resources. 228.A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics: A. physical uniqueness, path dependency, causal ambiguity, and social complexity B. psychographic uniqueness, path dependency, causal ambiguity, and substitutability C. rarity, path dependency, causal ambiguity, and social substitutability D. geographic uniqueness, cause dependency, social ambiguity, and path complexity 229.The following are examples of socially complex organizational phenomena except: A. a firm's culture B. interpersonal relations among a firm's managers C. complex physical technology D. reputation with suppliers and customers 230.A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain A. no competitive advantage. B. competitive parity. C. a temporary competitive advantage. D. a sustainable competitive advantage. 231.The best measure of a company's ability to meet imminent financial obligations is known as the A. current ratio. B. total asset turnover. C. debt ratio. D. profit margin. 232.Which of the following would be most difficult to assess? A. the liquidity position of a firm B. the legitimacy and reputation of a firm C. market share growth D. the efficiency with which a firm utilizes its assets 233.Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations? A. leverage ratios B. profitability ratios C. activity ratios D. liquidity ratios 234.A meaningful ratio analysis A. must go beyond the calculation and interpretation of financial ratios. B. is based primarily on leverage ratios. C. involves only liquidity ratios. D. involves profitability ratios at a single point in time.

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235.Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading A. if the overall strategy of the firm is the same. B. in periods of recession or economic boom. C. if the firm shows constant growth. D. if the firm's stock is publicly traded. 236.How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth? A. Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry. B. Compare the firm's financial ratios over the most recent one-year period. C. Compare the financial ratios of all firms in the country's industry—some of whom serve very diverse market segments and have specialized accordingly. D. Compare the financial ratios of firms in the company's strategic group. 237.The "balanced scorecard" provides top managers with a _____________ view of the business. A. detailed and complex B. fast but comprehensive C. simple and routine D. long-term financial 238.The "balanced scorecard" developed by Kaplan and Norton helps to integrate A. financial analysis and a firm's reputation. B. intangible resources and operational measures. C. financial analysis and stakeholder perspectives. D. short-term perspectives and strategic positioning. 239.The balanced scorecard enables managers to consider their business from all of the following perspectives except: A. customer perspective B. internal perspective C. innovation and learning perspective D. ethical perspective 240.An important implication of the "balance scorecard" approach is that: A. Managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. B. The key emphasis on customer satisfaction and financial goals are only a means to that end. C. Managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously. D. Gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction. 241.What are some of the key strengths and limitations of SWOT analysis?

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242.What are the key advantages of value chain analysis over SWOT analysis?

243.How can a firm develop (or enhance) its advantages in the marketplace by having strong, positive interrelationships among its value chain activities and those of its suppliers and customers? Provide an example.

244.What are some ways in which a firm's general administration can help create (or enhance) competitive advantages?

245.The resource-based view (RBV) combines both the internal analysis of the firm and the external analysis of the environment. Discuss and provide examples.

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246.Explain the four attributes that a resource must have to provide a firm with a sustainable competitive advantage.

247.What are the benefits and limitations of making historical comparisons in analyzing a firm's performance?

248.What are the four perspectives that the "balanced scorecard" enables managers to evaluate their business?

249.What are some of the most important implications of using the "balanced scorecard" approach?

250.According to the text, Xerox is well known for its excellent use of human capital. True

False

251.The importance of intellectual capital has decreased in recent years. For this reason, many firms have placed greater attention on attracting but not on developing or retaining talent. True

False

252.The more reliance a firm has on intellectual capital the closer its book value will be to its market value. True

False

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253.Writers have defined intellectual capital as the difference between the market value and book value of a firm. True

False

254.Creation of new knowledge typically involves the continual interaction of explicit and tacit knowledge. True

False

255.Knowledge workers are more loyal to their companies than traditional workers. True

False

256.Attracting top talent is a challenge of many organizations. In today's economy, knowledge workers typically have multiple possible employment opportunities. True

False

257.Human capital consists of the "individual capabilities." True

False

258.Technical skills are a necessary and sufficient condition for hiring an employee. True

False

259.Canadian steel company Dofasco invests time and resources in developing new employees because it expects them to stay for most of their working life. True

False

260.Companies have found that referrals from their own employees are generally an ineffective approach to recruiting top talent. True

False

261.The "cascade approach" described in the text is one of the important ways of developing human capital. True

False

262.In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor. True

False

263.360-degree evaluation and feedback systems address many of the limitations of traditional approaches of evaluating human capital. True

False

264.BC Biomedical missed out on being named one of Canada's "Best Employers" for the third year running. True

False

265.The most effective method of improving a firm's retention of top talent is to intensify its hiring efforts. True

False

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

False

267.Rather than focus solely on financial considerations, many firms offer attractive benefits to entice employees to stay. These may include on-site stores, ATMs and athletic facilities. True

False

268.CIBC Canada, in an attempt to retain employees, offers emergency babysitting services to ALL employees across Canada. True

False

269.Social capital is based on the network of relationships within a firm, not in the skills and abilities of an individual employee. True

False

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

False

271.Developing social capital is risky for an organization because social capital is specific to individuals and remains with the employee if he or she leaves the organization. True

False

272.One possible negative outcome of building social capital in an organization is "groupthink"—a tendency not to question shared beliefs. True

False

273.Once a knowledge asset (e.g., software) is developed and paid for it can be used many times at very low cost as long as it doesn't have to be substantially modified each time. True

False

274.The use of email can be distracting to employees when they use it excessively or for personal reasons. True

False

275.Many firms attempt to codify the tacit knowledge of employees in an effort to retain that knowledge after the employee leaves the firm. True

False

276.Protecting a firm's intellectual capital requires a concerted effort. True

False

277.Patents typically provide long-term protection for a firm since they do not expire. True

False

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278.Xerox is a company that is known for its inability to leverage human capital. One example of this is the relatively short tenure of CEO Rich Thoman. One of the main reasons he was fired is that A. he did not have inside connections like other board members and executives had. B. he did not have the skills required for the job. C. Xerox became known for being too "loosely" organized. D. Xerox diversified into too many unrelated businesses. 279.As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently strategic management has moved from focusing on A. intangible resources to tangible resources. B. tangible resources to intangible resources. C. working capital to fixed capital. D. fixed capital to working capital. 280.Changes in our economy have forced firms to be more concerned with protecting their A. knowledge workers. B. social capital. C. intellectual capital. D. all of the answers are correct 281.In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets. A. be equal to B. be smaller than C. be larger than D. not be correlated with 282.Canadian steel company Dofasco found that every dollar spent on training returns A. $5 in production costs cut. B. $30 in productivity gains over the following three years. C. 5 years of savings. D. $10,000 in daily expenses. 283.Human capital includes A. an individual's capabilities, knowledge, and skills. B. the relationships between people. C. the output from assembly line employees. D. an improved product. 284.____________ includes creativity and problem solving ability. A. Physical capital B. Human capital C. Social capital D. Emotional capital 285.In terms of retaining human capital, Magna's strategy is to A. allocate 10% of pre-tax profits to employees. B. cultivate the creative potential of its workforce. C. distribute 6% of profits to senior managers. D. all of the answers are correct

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286.Tacit knowledge A. is the same as explicit knowledge. B. is found mostly at the lower levels of the organization. C. can be codified but not reproduced. D. can be accessed only with the consent of the employees because it is in the minds of the employees. 287.New knowledge involves the continual interaction between ________________ and ___________ knowledge. A. intellectual; pragmatic B. theoretical; practical C. tacit; explicit D. detailed; tacit 288.According to the textbook, many firms try to protect their human capital and diversify the ownership of their vital knowledge by all of the following means except: A. emphasizing teamwork B. by developing learning programs C. by recruiting talented individuals from the best research institutions D. by shackling employees with "golden handcuffs" 289.Recently, in developed countries, a knowledge worker's loyalty to his or her employing firm has _____________ compared to his or her loyalty to his or her profession and colleagues. A. increased B. decreased C. remained the same D. no correlation when 290.BC Biomedical, which has been named one of Canada's "Best Employers" attributes their success to having a A. pyramid organization. B. flat organization. C. "top down" organization. D. "bottom up" organization. 291.According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by A. increasing retention of below-average workers. B. attracting and retaining knowledgeable workers. C. decreasing labour costs. D. increasing the turnover of employees. 292.Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should A. focus on increased recruiting. B. decrease money spent on human capital. C. make their work environment less stimulating. D. adopt effective retention strategies.

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293.Firms must compete for top talent. Whirlpool Canada dealt with conflicting demands of family and work by A. paying for daycare at all offices across Canada. B. offering additional work/life balance days to each employee. C. paying 6% of profits to senior managers. D. developing a flat organization. 294.According to Alan Davidson, an industrial psychologist, the single best predictor of an employee's future behaviour is A. past behaviour. B. the individual's IQ. C. academic accomplishments. D. standardized test scores. 295.Many companies use referrals by current employees as a source for new hiring and even monetarily reward them because A. it is less expensive than the fees paid to headhunters. B. current employees are normally very careful in recommending someone because their credibility is on the line. C. it is a good test of employee loyalty. D. it is less expensive than the fees paid to headhunters and current employees are normally very careful in recommending someone because their credibility is on the line. 296.Managing a knowledge-intensive workforce is very challenging. The best way for a firm to manage their workforce is to A. retain knowledge workers. B. attract the brightest employees. C. balance efforts in the attraction, selection, and retention of top talent. D. weed out less effective employees. 297.Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has A. increased. B. decreased. C. become less important. D. remained the same. 298.In order to take advantage of investment in human capital a firm should A. rotate workers through functions in the company as quickly as possible. B. refrain from training individual employees. C. establish practices that will enhance employee retention. D. none of the answers are correct 299.The "cascade approach" is used by managers as a tool for A. developing human capital. B. attracting intellectual capital. C. attracting and developing social capital. D. retaining production workers.

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300.In a 360-degree evaluation and feedback system, ______________ rate a person's skill and performance. A. superiors B. direct reports C. colleagues D. all of the answers are correct 301.Generally, employees are most likely to stay with an organization if A. the employer provides high salaries to technology professionals. B. the organization's mission and values align with the employee's mission and values. C. the firm is in a high tech industry. D. the mission and values of the organization change often. 302.Many Microsoft employees have left to start other companies. In general, when such employees leave, they take with them A. social capital. B. human capital. C. intellectual capital. D. all of the answers are correct 303.Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished by A. requiring workers to work independently of each other. B. decreasing the interaction of departments within the firm. C. encouraging the sharing of ideas between employees in the firm. D. structuring the firm with rigid departmental and employee divisions. 304.In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed A. the "Columbus effect." B. the "Pied Piper effect." C. strategically competitive hiring. D. the "tech exit" effect. 305.Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on A. an employee's individual abilities. B. the relationships among a firm's employees. C. a firm's allocation of financial resources. D. an individual's knowledge. 306.Sharing knowledge within an organization helps to build social capital. This can be accomplished through the use of A. email. B. one-on-one conversations. C. Waterloo-based Open Text's Livelink which enables employees to share documents. D. all of the answers are correct

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307.Social capital has many potential benefits. However, according to the text, some argue that social capital A. is always beneficial to a firm. B. may or may not be beneficial to a firm. C. usually restricts the productivity of employees. D. always hurts firm performance. 308.Among the downsides of social capital is/are A. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs. B. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive. C. individuals may become less willing to collaborate on joint projects. D. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs and socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive. 309.The use of information technology (e.g., email) has increased in recent years in many organizations. This has helped to A. increase social capital. B. make more effective use of time in every situation. C. restrict social network growth. D. create smaller social networks. 310.The creation of knowledge assets is typically characterized by A. high upfront costs and subsequent high variable costs. B. high fixed costs and high variable costs. C. low upfront costs and high variable costs. D. high upfront costs and low variable costs. 311.Bruce Strong, CEO of Context Integration, invested half a million dollars in a software package to help his consultants share their ideas. After the program was unveiled few people were motivated to use it. This may have been caused by A. consultants not seeing value in the software. B. consultants being protective of their ideas. C. the software not being a part of the company's culture. D. all of the answers are correct 312.Effective protection of intellectual property is necessary in order to obtain A. diminishing returns. B. financial investment in an undertaking. C. conceptual roots going back centuries. D. zero marginal gains. 313.The capacity to build and protect competitive advantage rests on A. knowledge. B. assets. C. competencies. D. all of the answers are correct

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314.What is intellectual capital and what is its effect on the ratio of a firm's market value to book value?

315.Why is the management of knowledge and knowledge professionals so critical in today's organizations?

316.Discuss the attributes of human capital. Give examples of how firms work to develop and retain it.

317.Discuss the adage "hire for attitude, train for skill." What are its implications for the attraction, training, and retention of top talent?

318.In an effort to attract and retain top talent, firms provide financial and nonfinancial rewards to their employees. Give examples of each and describe how the incentives you have chosen may impact individual employees.

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319.Discuss how technology has impacted the attraction, training, and retention of professionals. How has technology helped firms to enhance their human capital and social capital?

320.Discuss the current situation of RIM and its context with U.S. patent troll firm NTP.

321.Colt is a Canadian success story that began in the 1950s in New Hampshire and Quebec. True

False

322.Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle. True

False

323.Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability. True

False

324.A firm striving for cost leadership will typically spend relatively more on product-related R&D than on process-related R&D. True

False

325.The focus strategy refers to focusing on the "non-price" attributes of a company's products. True

False

326.To generate above average returns, a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers. True

False

327.The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle. True

False

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328.Firms that compete on overall cost are vulnerable if all rivals share a common input or raw material that contributes a significant amount to total costs. True

False

329.One of the advantages of high differentiation is that even if many competitors follow the same strategy, differentiation still exists for all. True

False

330.The example of Lexus automobiles in the text points out that a firm can strengthen its differentiation strategy by achieving integration at multiple points along the value chain. True

False

331.A successful differentiation strategy lowers entry barriers because of customer loyalty and the firm's ability to provide uniqueness in its products and services. True

False

332.A successful differentiation strategy increases rivalry since buyers become more price-sensitive. True

False

333.If a firm has a successful differentiation strategy, it is not necessary to attain parity on cost. True

False

334.One pitfall of a differentiation strategy is that a brand's identification in the marketplace may become diluted through excessive product line extensions. True

False

335.Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders. True

False

336.Focus, by itself, often constitutes a competitive advantage. True

False

337.A pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs. True

False

338.A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate. True

False

339.Mass customization enables manufacturers to be more responsive to customer demands for high quality products. True

False

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340.An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits. True

False

341.An important pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become "stuck-in-the-middle." True

False

342.The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur. True

False

343.An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost. True

False

344.During the growth stage of the market life cycle, customers are very likely to establish brand loyalty. True

False

345.Given the attractiveness of premium pricing during the growth stage of the market life cycle, managers should emphasize short-term results to increase profits. True

False

346.As markets mature, competition on the basis of differentiation is preferable to price competition. True

False

347.As markets mature, the magnitude of differentiation and cost leadership advantages among competitors decrease. True

False

348.Businesses that compete in markets that are in decline should simply be harvested or divested since they are no longer profitable. True

False

349.During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development, or other investments, while hoping that competitors will exit the market. True

False

350.Many firms facing a turnaround situation try to reduce their costs by outsourcing the production of many inputs. True

False

351.Many firms in the maturity stage of the life cycle bring about their own decline by selective product and market pruning. True

False

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352.The decline stage of the industry life cycle stage is inevitably followed by death. True

False

353.The opening case of Cott beverages explains how this company A. built success from selling private label products to Loblaw. B. secured a long-term agreement with RC Cola. C. eliminated marketing and distribution costs by adopting the retailer's brand. D. all of the answers are correct 354.The primary aim of strategic management at the business level is A. maximizing risk-return tradeoffs through diversification. B. achieving a low cost position. C. maximizing differentiation of products and/or services. D. achieving competitive advantage(s). 355.In the long run, businesses without a competitive advantage are unlikely to earn more than "normal" profits. Normal profits are A. what one would receive on U.S. Treasury securities. B. profits received by corporations in the normal course of business. C. profits one would expect to earn on investments that have a similar level of risk. D. profits earned by a corporation on a diversified portfolio of stocks. 356.Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. overall cost leadership B. differentiation C. differentiation focus D. cost leadership focus 357.Which of the following is a risk (or pitfall) of cost leadership? A. Cost cutting may lead to the loss of desirable features. B. Attempts to stay ahead of the competition may lead to gold plating. C. Cost differences increase as the market matures. D. Producers are more able to withstand increases in suppliers' cost. 358.A manufacturing business pursuing cost leadership will likely A. focus on a narrow market segment. B. rely on experience effects to raise efficiency. C. use advertising to build brand image. D. put heavy emphasis on product engineering. 359.Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? A. differentiation B. overall cost leadership C. differentiation focus D. stuck-in-the-middle

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360.Which of the following is a good example of a firm that follows the strategy of differentiation? A. North Face B. Holt Renfrew C. President's Choice D. all of the answers are correct 361.The experience curve suggests that cutting prices is a good strategy A. if it can induce greater demand and thereby help a firm travel down the experience curve faster. B. in industries characterized by high economies of scale. C. in the maturity stage of the industry life cycle. D. in the decline stage of the industry life cycle. 362.A firm can achieve differentiation through all of the following means except A. improving brand image. B. better customer service. C. offering lower prices to frequent customers. D. adding additional product features. 363.High product differentiation is generally accompanied by A. higher market share. B. decreased emphasis on competition based on price. C. higher profit margins and lower costs. D. significant economies of scale. 364.Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. differentiation B. overall cost leadership C. differentiation focus D. stuck-in-the middle 365.Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces? A. By increasing a firm's margins, it avoids the need for a low cost position. B. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives. C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs. D. Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors. 366.Developing uniqueness that is not valuable is A. an essential feature of a differentiation strategy. B. the result of having brand-loyal customers become more sensitive to prices. C. a potential pitfall of a differentiation strategy. D. an necessary evil of a cost-leadership strategy.

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367.Staples Business Depot's strategy in Canada is to deliberately limit its product selection for the purpose of A. focusing on quality. B. focusing on quantity. C. shedding customers. D. building the brand. 368.The Keg Steakhouse has a simple operating formula. The Keg A. purposefully limited its menu and has stayed away from food fashions and fads. B. expanded its menu and embraced food fashions and fads. C. cut expenses from suppliers. D. purposefully limited its menu and has stayed away from food fashions and fads and cut expenses from suppliers. 369.A firm following a focus strategy A. must focus on governmental regulations. B. must focus on a market segment or group of segments. C. must focus on the rising cost of inputs. D. must avoid entering international markets. 370.All of the following are potential pitfalls of a focus strategy except A. erosion of cost advantages within the narrow segment. B. all rivals share a common input or raw material. C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation. D. focusers can become too focused to satisfy buyer needs. 371.Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform A. at about the same level as firms that achieve either cost or differentiation advantages. B. about the same as firms that are "stuck-in-the-middle." C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages. D. higher than firms that achieve either a cost or a differentiation advantage. 372.The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following except A. automated and flexible manufacturing systems. B. exploiting the profit pool concept for competitive advantage. C. coordinating the "extended" value chain by way of information technology. D. deriving benefits from highly focused and high technology markets. 373.A ____________ can be defined as the total profits in an industry at all points along the industry's value chain. A. profit maximizer B. revenue enhancer C. profit pool D. profit outsourcing

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374.All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy except: A. firms that fail to attain both strategies may end up with neither and become "stuck-in-the-middle." B. targeting too large a market that causes unit costs to increase. C. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain. D. miscalculating sources of revenue and profit pools in the firm's industry. 375.Which of these statements regarding the market life cycle is correct? A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device. B. Trends suggested by the market life cycle model are generally not reversible nor repeatable. C. It provides a "shorthand" for thinking about differences in strategic situations. D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously. 376.Which of the following statements about the introduction stage of the market life cycle is true? A. It produces relatively large, positive cash flows. B. Strong brand recognition seldom serves as an important switching cost. C. Market share gains by pioneers are usually easily sustained for many years. D. Products or services offered by pioneers may be perceived as differentiated simply because they are new. 377.In the ______ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. introduction B. growth C. maturity D. decline 378.Which of the following descriptions of a product in the growth stage is true? A. There are few forms of differentiation, emphasis is placed on efficiency, and there is a growing trend to compete on the basis of price. B. There is an emphasis on product variety, prices are declining rapidly, and although the firm may be making a profit, cash flows may be negative. C. There is an obsolescence of technologies, minimal capital investment is required, and consumer demand is satiated. D. There is a tendency to hold on to competitive advantages, pricing can be volatile, and there is an opportunity to establish strong brand recognition. 379.The growth market is characterized by A. "in-kind" competition (from the same type of product). B. premium pricing. C. a growing trend to compete on the basis of price. D. retaliation by competitors whose customers are stolen. 380.Which of the following is considered an accurate statement for a product in the growth period of its life cycle? A. It is difficult to gain market share in growth markets. B. There is more price pressure in growth markets. C. It is easier to develop technology in the growth phase. D. Customers are brand loyal in the growth phase.

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381.In the _______ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. introduction B. growth C. maturity D. decline 382.In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? A. introduction B. growth C. maturity D. decline 383.A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? A. introduction B. growth C. maturity D. decline 384.As markets mature, firms should attempt to compete on the basis of _______. A. quick response B. differentiation C. cost leadership D. market focus 385.The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? A. introduction B. growth C. maturity D. decline 386.Which of the following is most often true of mature markets? A. Some competitors enjoy a significant operating advantage due to increasing experience effects. B. The market supports premium pricing, which attracts additional competitors. C. Advantages that cannot be duplicated by other competitors are difficult to achieve. D. The magnitude of pricing differences and product differentiation is larger than in the growth stage. 387.In the _________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. A. introduction B. growth C. maturity D. decline

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388.The most likely time to pursue a harvest strategy is in a situation of A. high growth. B. strong competitive advantage. C. mergers and acquisitions. D. decline in the market life cycle. 389.Research shows that the following are all strategies used by firms engaged in successful turnarounds except A. asset and cost surgery. B. selective product and market pruning. C. global expansion. D. piecemeal productivity improvements. 390.Piecemeal productivity improvements during a turnaround typically does not involve A. business process reengineering. B. increased capacity utilization. C. benchmarking. D. expansion of a firm's product market scope. 391.Use the value chain as a framework to explain how the competitive advantage of differentiation can create products and/or services that are highly valued by customers.

392.Explain how a differentiation strategy enables a business to address the five competitive forces in such a way that it can enjoy high levels of profitability.

393.Discuss how a competitive advantage can be attained through cost leadership using the value chain concept.

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394.Explain how a cost leadership strategy permits a firm to address the five forces in their competitive environment so it can enjoy higher-than-normal profits.

395.Discuss the risks associated with each of these forms of competitive advantage—cost leadership, differentiation and focus.

396.What are the benefits and risks associated with combining overall cost leadership and differentiation strategies?

397.Briefly explain the advantages and limitations of the four alternatives—maintaining, harvesting, exiting, consolidating—associated with the decline stage of the market life cycle.

398.A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence. True

False

399.Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements. True

False

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400.The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting. True

False

401.Similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers. True

False

402.A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification. True

False

403.One of the risks of vertical integration is that there may be problems associated with unbalanced capacities or unfilled demands along a firm's value chain. True

False

404.Vertical integration is attractive when market transaction costs are higher than internal administrative costs. True

False

405.According to the text, the two main sources of synergy in unrelated diversification are parenting and financial synergies. True

False

406.Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. True

False

407.Portfolio management should be considered as the primary basis for formulating corporate-level strategies. True

False

408.Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business. True

False

409.Acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk. True

False

410.Through joint ventures, firms can directly acquire the assets and competencies of other firms. True

False

411.An advantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets. True

False

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412.Upon the acquisition of Microcell, Rogers was able to immediately obtain savings. True

False

413.The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies. True

False

414.For strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital. True

False

415.An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures. True

False

416.Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources. True

False

417.Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party. True

False

418.A golden parachute is a prearranged contract with managers specifying that in the event of a hostile takeover, the target firm's managers will be paid a significant severance package. True

False

419.Corporate-level strategy addresses two related issues: A. how to compete in a given business; the application of technology. B. what businesses to compete in; how these businesses can achieve synergy. C. how to integrate primary activities; how to increase shareholder wealth. D. how to improve a firm's infrastructure; how to maintain ethical behaviour. 420.For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? A. The competence must help the business gain strength relative to its competition. B. The new business must be similar to existing businesses to benefit from a core competence. C. The collection of competencies should be unique, so that they cannot be easily imitated. D. The new business must have an established large market share. 421.Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that A. the similarity required for sharing core competencies must be in the value chain, not in the product. B. the products use similar distribution channels. C. the target market is the same, even if the products are very different. D. the methods of production are the same.

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422.When management uses common production facilities or purchasing procedures to distribute different but related products, they are A. building on core competencies. B. sharing activities. C. achieving process gains. D. using portfolio analysis. 423.__________ reflect the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services. A. Primary value chain activities B. Cultures C. Core competencies D. Horizontal integrations 424.It may be advantageous to vertically integrate when A. lower transaction costs and improved coordination are vital and achievable through vertical integration. B. the minimum efficient scales of two corporations are different. C. flexibility is reduced, providing a more stationary position in the competitive environment. D. various segregated specializations will be combined. 425.When Rogers acquired Microcell, the clients of Fido, Microcell's brand name A. costs and associated expenses increased with expanded overhead and capital expenditures. B. instantly gained broader market coverage and better reception for their phones. C. problems developed with unbalanced capacities along the value chain. D. additional administrative costs associated with managing a more complex set of activities increased. 426.Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with A. strategic alliances. B. divestment. C. vertical integration. D. horizontal integration. 427.A firm should consider vertical integration when A. the competitive situation is highly volatile. B. customer needs are evolving. C. the firm's suppliers willingly cooperate with the firm. D. the firm's suppliers of raw materials are often unable to maintain quality standards. 428.Transaction costs include all of the following costs except A. search costs. B. negotiating costs. C. monitoring costs. D. agency costs. 429.Vertical integration is attractive when A. transaction costs are higher than internal administrative costs. B. internal administrative costs are higher than transaction costs. C. transaction costs and internal administrative costs are equal. D. search costs are higher than monitoring costs.

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430._______ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. A. Parenting B. Restructuring C. Leveraging core competencies D. Sharing activities 431.According to the text, Canfor Corporation of Vancouver is a good example from the forest industry of having followed a successful strategy, to expand across markets, of A. capital restructuring, and technology restructuring. B. asset restructuring. C. horizontal integration. D. vertical integration. 432.Portfolio management matrices are applied to what level of strategy? A. departmental B. business C. corporate D. international 433.When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a A. cow. B. dog. C. problem child. D. star. 434.In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a A. star. B. question mark. C. cash cow. D. dog. 435.Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics? A. Grid dimensions are based on external environments and internal capabilities/market positions. B. Businesses are plotted on a 3-dimensional grid. C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core competences. D. They are most helpful in helping businesses develop types of competitive advantage. 436.Molson of Montreal and Coors of Colorado merged their operations in order to stand up to A. continued diversification in the beverage market. B. competition from Japan. C. continuing consolidation in the global beer industry. D. substantial cash outlays to maintain market share.

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437.The downsides or limitations of mergers and acquisitions include all of the following except A. expensive premiums that are frequently paid to acquire a business. B. difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations. C. it is a slow means to enter new markets and acquire skills and competences. D. there can be many cultural issues that can doom an otherwise promising acquisition. 438.Cooperative relationships such as _______ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. A. joint ventures B. mergers and acquisitions C. strategic alliances D. joint ventures and strategic alliances 439.A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of A. joint diversification. B. strategic alliance. C. divestment. D. global integration. 440.Loblaw, with a strong presence in Ontario and Western Canada, gained a footprint into the Quebec market by A. establishing a clear understanding between partners. B. acquiring Provigo. C. not shortchanging your partner. D. working hard to ensure a collaborative relationship between partners. 441.Options exist when the owner of the option has A. the obligation, but not the right to engage in a transaction. B. the right, but not the obligation to engage in a transaction. C. the right and obligation to engage in a transaction. D. neither the right nor the obligation to engage in a transaction. 442.Real options analysis is most appropriate when A. the total investment required is small, but the environment is uncertain. B. the investment required can be justified by Discounted Cash Flow (DCF) techniques. C. a small investment upfront can be followed by a series of subsequent investments. D. there is no prospect of obtaining additional knowledge before making subsequent investments. 443.Which of the following statements regarding internal development as a means of diversification is false? A. Many companies use internal development to extend their product lines or add to their service offerings. B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. C. The firm is able to capture the wealth created without having to "share the wealth" with alliance partners. D. Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

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444.An antitakeover tactic called (a) ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it. A. golden parachute B. greenmail C. poison pill D. scorched earth 445.An antitakeover tactic called greenmail is A. encouraged in Canada. B. prohibited in Canada. C. only allowed in Quebec. D. borrowed from NAFTA. 446.The term "golden parachute" refers to A. a clause requiring that huge dividend payments be made upon takeover. B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition. D. pay given to executives fired because of a takeover. 447.When Canadian family-controlled firm Schneider's wanted to block Maple Leaf Foods, they looked to Springfield as a A. greenmail. B. golden parachute. C. white knight. D. poison pill. 448.What are the primary benefits and risks associated with related diversification?

449.What are the primary benefits and risks associated with unrelated diversification?

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450.Briefly explain the advantages and disadvantages of vertical integration.

451.What are some of the key issues to take into account when considering whether or not to vertically integrate?

452.Explain how transaction cost analysis can provide insights into vertical integration decisions.

453.Explain the uses and limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

454.Summarize the advantages and disadvantages of mergers and acquisitions as a means of diversification.

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455.Strategic alliances are arrangements in which two firms join forces and form a cooperative partnership. Discuss the advantages and disadvantages of strategic alliances as well as guidelines for reducing conflict between the partners.

456.Why is Real Options Analysis (ROA) becoming more popular with strategic decision makers? What kind of strategic decisions are most amenable to Real Options Analysis?

457.Discuss how the potential benefits of diversification may be adversely affected by conflicts between managers' interests and shareholders' interests. Include in your discussion factors such as egotism, growth for growth's sake, anti-takeover tactics.

458.The trend towards worldwide markets makes it easier to predict where competitors will spring up. True

False

459.Prior to Molson's investment in Brazil, they had merged with Carling O'Keefe. This merger did not yield significant accomplishments. True

False

460.In Michael Porter's "diamond of competitive advantage," there are four broad attributes that, as a system, constitute a nation's competitiveness in an industry. True

False

461.With regard to "factor conditions," the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed. True

False

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462.Demanding domestic consumers tend to push firms to move ahead of companies in other countries where consumers are less demanding and more complacent. True

False

463.During the 1990s Nortel frequently sold its earlier generation telephone switches to developing countries at lower costs, and used the revenues for R&D. True

False

464.Typically, intense rivalry in domestic markets does not force firms to look outside their national boundaries for new markets. True

False

465.Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase. True

False

466.International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country. True

False

467.An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain. True

False

468.IMAX claims that every new theatre that opens somewhere in the world lowers the cost of production of its unique movies. True

False

469.Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets. True

False

470.Two opposing pressures that managers face when they compete in foreign markets are cost reduction and adaptation to local markets. True

False

471.Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global. True

False

472.According to the text, Canadian firms around the world were targets of animal rights groups who did not approve of seal hunting in Newfoundland. True

False

473.Among Theodore Levitt's assumptions that would favour a global strategy is that consumers around the world are becoming less price-sensitive. True

False

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474.A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product appealing to the largest number of consumers in every market. True

False

475.The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy. True

False

476.Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer). True

False

477.In a global strategy a firm operates all its businesses under a single common strategy regardless of location. True

False

478.Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy. True

False

479.A multidomestic strategy would likely include the use of high volume, centralized production facilities to maximize economies of scale. True

False

480.To address the challenges of a multidomestic strategy, Maple Leaf Foods customizes its prepared meats to meet local tastes. True

False

481.Multinational firms following a transnational strategy strive to optimize the tradeoffs associated with efficiency, local adaptation, and learning. True

False

482.A key tenet of a transnational strategy is improved adaptation to all competitive situations as well as flexibility by capitalizing on communication and knowledge flows throughout the organization. True

False

483.Canadian steel company Dofasco looked at cultural challenges in expanding and decided to stick to its famous motto: "our strength is people". True

False

484.A franchise generally expires after a few years whereas a license is designed to last into perpetuity. True

False

485.Typically, the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control. True

False

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486.A major trend in international developments includes A. greater international trade and operations. B. a growing recognition of an international managerial perspective. C. a large increase in international investment. D. all of the answers are correct 487.At the time Molson invested into the Brazilian beer market in 2002, the Brazilian market was A. a monopolistic situation. B. consolidated. C. fragmented. D. dominated by U.S. brewers. 488.In Michael Porter's framework all of the following factors affect a nation's competitiveness except A. factor conditions. B. demand characteristics. C. related and supported industries. D. policies that protect the nation's domestic competitors. 489.Since Molson's investment in Kaiser in Brazil, that company's market share has A. increased to second place. B. stayed the same. C. fallen to third place. D. increased to fourth place. 490.Rivalry is intense in nations with conditions of ________ consumer demand, ___________ supplier bases, and ____________ new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. strong; strong; high D. weak; weak; low 491.According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments. 492.Microsoft decided to establish a corporate research laboratory in Cambridge, England A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice. 493.Many U.S. multinational companies set up maquiladora operations south of the US-Mexico border primarily A. to sell products into the growing Mexican market. B. as part of US government-initiated measures to discourage illegal immigration. C. to take advantage of the lower tax rates in Mexico. D. to take advantage of the low cost of labour.

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494.By the end of the 20th century, the world's population exceeded 6 billion with Canada representing A. less than .5 percent B. slightly more than 5 percent C. about 320 million D. less than 3.2 million 495.Pressures to "reduce costs" require that A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government. 496.Lingo Media of Toronto was mentioned in Chapter Seven as being a good example of a small company A. that compete in industries in which consumer preferences vary substantially in each country. B. in industries that are expanding very rapidly. C. selling entertainment programs into the Korean market. D. penetrating the Chinese market for ESL teaching materials. 497.Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers. 498.Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. international B. global C. multidomestic D. transnational 499.When Dofasco approached the cultural differences of operating in Mexico, Dofasco's motto "our strength is people" was a problem because A. it did not translate into Spanish. B. Latin American customers wanted a focus on the product. C. Mexican workers typically expect more hierarchical structures and want managers to supervise. D. Mexican workers like a "flat organization" with no supervision. 500.High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. global B. multidomestic C. transnational D. overall cost leadership

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501.Firms following a global strategy strive to offer ______________ products and services as well as locate manufacturing, R&D, and marketing activities in _____________ locations. A. a wide variety of; several B. a wide variety of; few C. standardized; several D. standardized; few 502.All of the following are risks associated with a global strategy except A. a firm with only one manufacturing location must export its product—some of which may be a great distance from the operation. B. the geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. concentrating an activity in a single location makes the rest of the firm dependent on that location. D. the pressures for local adaptation may elevate the firm's cost structure. 503.All of the following are limitations of a global strategy except A. limited ability to adapt to local markets. B. the ability to locate activities in optimal locations. C. the concentration of activities may increase dependence on a single facility. D. single locations may lead to higher tariffs and transportation costs. 504.As in the case of Siebel Systems, elements of a global strategy may facilitate the competitive advantage of differentiation by A. increasing the freedom of individual business units to adapt to local tastes. B. the creation of a worldwide network to achieve consistent service regardless of location. C. offering flexibility in applying R&D to meet country-specific needs. D. tailoring products to meet country-specific needs. 505.Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by A. offering flexibility in adjusting to local laws and customs. B. decreasing duplication of inventories which are often involved in having multiple plants producing similar products. C. decreasing shipping and transportation costs inherent in local production. D. economies of scale gained through centralized production of standardized products. 506.All of the following are limitations of a multidomestic strategy except A. less ability to realize cost savings through scale economies. B. greater difficulty in transferring knowledge across countries. C. single locations may lead to higher tariffs and transportation costs. D. may lead to "overadaptation" as conditions change. 507.Which of the following is a disadvantage of a transnational strategy? A. less ability to realize cost savings through scale economies B. limited ability to adapt to local markets C. unique managerial challenges in fostering knowledge transfer D. single locations may lead to higher tariffs and transportation costs

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508.In order to realize the strongest competitive advantage, firms engaged in worldwide competition must A. require that all of their various business units follow the same strategy regardless of location. B. ensure that all business units follow a strategy strictly tailored to their respective locations. C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results. D. attempt to use the strategy that was most successful in their home country. 509.Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. a global strategy B. a transnational strategy C. an international strategy D. a multidomestic strategy 510.Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, franchising, licensing, joint venture, and wholly owned subsidiary 511.A domestic corporation considering expanding into international markets for the first time will typically A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home. B. consider licensing or franchising its operations. C. consider implementing a low risk/low control strategy such as exporting. D. form a joint venture with a reputable foreign producer. 512.The form of entry strategy into international operations that offers the lowest level of control would be A. franchising. B. licensing. C. joint venture. D. exporting. 513.The text mentions Canadian firms Lingo Media and Hydrogenics as having directed all their efforts to overseas markets with A. transfer prices. B. dividends. C. little local presence at home in Canada. D. intra-corporate inflows. 514.The difference between a franchise and licensing contract is that A. a franchise contract is more specific and usually longer in duration. B. a franchise contract must include a foreign government. C. a licensing contract covers more aspects of operations. D. a franchise contract involves less control and less risk.

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515.Foreign direct investment includes the following form of entry strategy: A. licensing B. franchising C. joint ventures D. exporting 516.The textbook's description of the international expansion of Edmonton-based engineering firm Stantec Inc. is a good example of expansion through A. joint venture. B. strategic alliance. C. wholly owned subsidiary. D. franchising operation. 517.___________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries 518.Discuss the importance of international expansion as a viable diversification strategy.

519.Explain Michael Porter's "diamond of national competitiveness."

520.Summarize the most important benefits and risks associated with diversification into global markets.

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521.Explain how the two opposing forces facing MNC managers, cost reduction and local adaptation, create pressures to operate with a global or multidomestic strategy, respectively.

522.According to Theodore Levitt, what are the three assumptions that favour the pursuit of a "pure" global strategy? Briefly provide counterarguments to each assumption.

523.What are some of the primary benefits and risks of transnational strategies?

524.What are the major advantages and disadvantages of the six basic types of entry strategies for international expansion?

525.Because of the dot-com crash in 2000 and 2001, it is unlikely that the Internet will have a positive impact on the economy in the long term. True

False

526.With only a few exceptions such as Toronto's Book City, thousands of neighbourhood bookstores have disappeared and the industry has consolidated. True

False

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527.The Internet has created a new climate for business in which the traditional principles of strategic management are less important. True

False

528.The Internet suppresses the bargaining power of buyers by providing them with more information to make buying decisions. True

False

529.Because a large amount of consumer information is available via the Internet, end users typically have greater bargaining power. True

False

530.An end user's switching costs are potentially much higher because of the Internet. True

False

531.Overall, 44% of Canadians have tried e-commerce and most first-time buyers go back for more. True

False

532.Channel conflict occurs when buyers can access the same products through several different outlets. True

False

533.Because of the Internet, it is very difficult for suppliers to create purchasing techniques that lower switching costs. True

False

534.Reintermediation is responsible for an overall reduction in business opportunities. True

False

535.The Internet heightens the threat of substitutes because it creates new ways to accomplish the same tasks. True

False

536.Most analysts agree that use of the Internet will lower transactions costs. True

False

537.Canadian mining company Goldcorp posted geological data online, allowing engineers around the world to give new insights as to any future potential. True

False

538.Evaluation activities add value by helping firms finalize transactions including negotiating contracts, making payments, and taking delivery. True

False

539.Content such as entertainment programming does little to improve the value proposition of a website. True

False

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540.Business models can be defined as methods companies use to create value and earn profits in a competitive environment. True

False

541.A commission-based business model, when applied to the Internet, is similar to the broadcast television model in which viewers watch shows produced with revenues from commission fees. True

False

542.One way the Internet is creating opportunities for firms with differentiation strategies is by enabling mass customization. True

False

543.The Internet offers few advantages for focusers because niche players and small companies cannot implement Internet capabilities as effectively as their larger competitors. True

False

544.Many differentiation advantages are diminished by the Internet. True

False

545.Incumbent firms that thought a niche market was too small to enter in the past may use Internet technologies to enter that segment and compete with focusers. True

False

546.The company in the opening case, Toronto Book City, was able to survive industry consolidation by A. choosing a splendid Internet service provider. B. developing a niche appealing to bibliophiles. C. contracting supply to small stores. D. using a human resources consultant. 547.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. 548.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. 549.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 answers are correct

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550.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 industries such as microprocessors. C. information-intensive industries such as financial services. D. all of the answers are correct 551.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. 552.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. 553.Goldcorp credits _________________ for allowing it to obtain insight as to how to re-open its Red Lake gold mine. A. globalization B. larger, older companies C. new entrants D. the Internet 554.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 answers are correct 555.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. 556.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.

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557.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 supplier's website has created rapid, low-cost ordering capabilities. 558.The creation of opportunities for new functions within the value chain is known as A. channel conflict. B. disaggregation. C. disintermediation. D. reintermediation. 559.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. 560.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. 561.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 firm's unique selling advantages 562.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. 563.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 564.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.

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565.Internet search activities include A. generating action plans. B. considering alternatives. C. gathering information. D. making payments and taking delivery. 566.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. 567.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. 568.Canadian financial firm TD Waterhouse was cited by the text as an example of a business model that is A. referral-based B. subscription-based C. prescription-based D. commission-based 569.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 expenses. D. Online purchase orders are making many transactions paperless, reducing the costs of procurement and paper. 570.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. 571.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

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572.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. 573.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. 574.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. 575.Among all Canadian small- and medium-sized businesses A. incumbent firms are entering market segments that they previously considered to be too small. B. 34% are already relying on the Internet for part of their sales. C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success. D. 3.4% are making profits, the rest are not. 576.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 imitated. D. all of the answers are correct

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577.Discuss the reasons why the use of Internet technologies is more important to achieving competitive advantages than the technologies themselves.

578.Discuss some of the ways that digital technologies are changing how companies conduct business. What is the role of the Internet in bringing about these digital technology-driven changes?

579.Briefly explain the impact of the Internet and Internet technologies on the five competitive forces.

580.How has the Internet made the problem of channel conflict worse? Provide examples of companies that have used the Internet to sell goods without creating channel conflict.

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581.Briefly explain the role of search, evaluation, problem-solving and transaction activities in helping firms use the Internet to add value. Provide examples of companies that exhibit each of these value-adding activities.

582.Discuss the function of a business model and its role, if any, in creating competitive advantages. Provide examples of companies that illustrate each of the seven Internet business models, based on commission, advertising, mark-up, production, referral, subscription, and fee-for-service.

583.Explain the impact of the Internet on overall cost leadership strategies. What are the advantages and pitfalls associated with using the Internet to pursue a strategy of cost leadership?

584.Explain the impact of the Internet on differentiation strategies. What are the advantages and pitfalls associated with using the Internet to pursue a strategy of differentiation?

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585.Explain the impact of the Internet on focus strategies. What are the advantages and pitfalls associated with using the Internet to pursue a strategy of focus?

586.What are the benefits and risks associated with using the Internet to generate combination strategies? How are Internet-based combination strategies creating competitive advantages?

587.There is no link between a firm's strategy and its structure. True

False

588.In a simple structure where the owner manager makes most of the important decisions, extensive rules and regulations are used to maintain order. True

False

589.As Power Corporation grew, it shied away from being an operator of the businesses it ended up owning. True

False

590.A simple organizational structure may lead to problems such as unclear boundaries of authority and few career advancement options. True

False

591.One disadvantage of a functional structure is that differences in functional orientation may impede organization coordination and communication. True

False

592.To enhance integration and control of related product market activities, the functional structure minimizes centralization. True

False

593.A major disadvantage of adopting a divisional structure is the tendency for managers to focus on short-term objectives. True

False

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594.Rogers Communications has only two divisions: wireless and media. True

False

595.The strategic business unit (SBU) and holding company structure are variants of the functional form of structure. True

False

596.The strategic business unit (SBU) structure is also referred to as the conglomerate structure. True

False

597.The matrix structure attempts to combine the advantages of the functional and product-oriented structure. True

False

598.A matrix organization is organized strictly along product lines. True

False

599.A major disadvantage of the matrix structure is that it duplicates the use of specialized personnel, equipment, and facilities. True

False

600.A worldwide product division structure is used when global strategies require that each division be responsible for overall efficiency and performance. True

False

601.The purpose of boundaryless forms of organizing is to facilitate the widespread sharing of knowledge and information across internal and external boundaries of the organization. True

False

602.Boundaryless structures replace traditional structures. True

False

603.In a barrier-free organization, differences in skills, authority, and talent disappear. True

False

604.An advantage of the barrier-free form of organizing is that internal cooperation and shared objectives are not required for it to work. True

False

605.Because the modular form of organizing involves outsourcing vital functions, modular firms often forfeit full strategic control. True

False

606.Modular companies can achieve rapid growth because they don't require large investments in fixed assets. True

False

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607.Outsourcing relieves companies of the requirement to maintain skill levels needed to manufacture essential components. True

False

608.One of the risks of outsourcing is a loss of cross-functional skills. True

False

609.The virtual type of organization is a network of independent companies linked together to share skills, costs, and access to one another's markets. True

False

610.The virtual organization is characterized by participating firms which pursue a collective strategy that enables them to cope with environmental uncertainty through cooperative efforts. True

False

611.Managing virtual structures requires new and difficult-to-acquire managerial skills. True

False

612.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. 613.Canadian conglomerate Power Corporation had its original corporate roots in A. transportation networks. B. the electricity generating industry. C. pulp and paper. D. an ailing bus company. 614.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. 615.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. 616.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.

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617.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. 618.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. 619.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. 620.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. 621.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. 622.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. 623.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. a high degree of emphasis on long-term performance D. uniformity in image and quality across divisions 624.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.

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625.Canadian media giant Rogers is divided into which of the following divisions? A. wireless, highspeed, ISDN B. Cable TV, Internet cable, government media C. cable, media, wireless D. wireless residential, wireless corporate 626.All of the following are advantages of a strategic business unit (SBU) type of organizational structure except: 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. 627.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. 628.Diversified Canadian conglomerate Weston has put its businesses into three primary SBUs, which are A. fisheries, bakeries, and retail. B. retail, shipping, and online sales through Loblaws.com. C. baked goods, unbaked goods, and grains and oilseeds D. retail, wholesale, and manufacturing. 629.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 630.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 631.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.

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632.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. 633.The boundaries between levels in an organization's hierarchy are known as A. vertical boundaries. B. horizontal boundaries. C. external boundaries. D. geographic boundaries. 634.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 635.Which of the following is not a boundaryless organizational design? A. virtual B. modular C. matrix D. barrier-free 636.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. 637.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. 638.What type of organization is defined as "a central hub surrounded by networks of outside suppliers and specialists"? A. matrix B. virtual C. modular D. barrier-free 639.What is the name of the practice that many modular organizations use to grow? A. operational effectiveness B. outsourcing C. strategic leveraging D. strategic enabling

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640.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 641.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 642.The phrase that best defines a virtual organization is A. a dot.com 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. 643.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 644.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 645.How do organizational structures change as organizations grow and mature? What are the dominant patterns of growth?

646.Describe the attributes of a simple organizational structure. What are the advantages and disadvantages associated with using the simple organizational form?

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647.Describe the attributes of a functional organizational structure. What are the advantages and disadvantages associated with using the functional organizational form?

648.Describe the attributes of a divisional organizational structure. What are the advantages and disadvantages associated with using the divisional organizational form?

649.Briefly describe the strategic business unit (SBU) and holding company organizational structures. Under what circumstances do organizations choose these forms of organizing?

650.Describe the attributes of a matrix organizational structure. What are the advantages and disadvantages associated with using the matrix organizational form?

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651.Discuss the three main contingencies that seem to influence the structure adopted by firms with international operations.

652.Discuss how changes in today's workforce and the business environment have contributed to growth in the use of boundaryless organizational designs.

653.Discuss the uses and limitations of the barrier-free organizational structure. What is the role of teams in the barrier-free organization?

654.Discuss the uses and limitations of the modular organizational structure. What is the role of outsourcing in the modular organization?

655.For firms competing in highly unstable and turbulent industries, "traditional" strategic controls are most appropriate. True

False

656.Sales quotas, operating budgets, and production schedules are examples of "traditional" controls. True

False

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657.Enron, WorldCom, and other U.S. companies have suffered from management abuses; Canada's public companies have not survived unscathed. True

False

658."Contemporary" strategic controls involve comparing actual performance to predetermined goals. True

False

659.Continuous monitoring enhances an organization's ability to respond with speed and flexibility. True

False

660.The U.S. Congress introduced the Sarbanes-Oxley Act in 2002 to ensure better governance of public corporations. Similar provisions have NOT been put in place in Canada. True

False

661.For young managers who see themselves as free agents, behavioural controls such as rewards and culture can be an effective way to enhance organizational loyalty. True

False

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

False

663.An organization's reward system is typically a weak method of motivating employees. True

False

664.Different functional areas within an organization often have different reward systems. True

False

665.Reward systems that reinforce an organization's core values and contribute to organizational cohesiveness are the least effective type. True

False

666.For a reward system to be effective, it must be perceived as fair and equitable. True

False

667.Boundaries and constraints, when used properly, can minimize improper and unethical conduct. True

False

668.In terms of corporate culture, Cirque du Soleil's focus is on customer service, not innovation. True

False

669.Short-term objectives and action plans are types of boundaries that channel the efforts of employees toward goal accomplishment. True

False

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670.Unexpected events (such as wildcat strikes or new government regulations) have little effect on short-term objectives that need to remain fixed to be effective. True

False

671.Action plans permit a degree of autonomy for managers who sometimes must modify activities to achieve the desired outcome. True

False

672.In firms that follow related diversification strategies, reward and control systems rely on qualitative indicators since the organization needs to reward and reinforce behaviours that facilitate sharing and collaboration. True

False

673.Product diversification by a company is a cheaper way to reduce shareholder risk than portfolio diversification by shareholders. True

False

674.The risk of being acquired by hostile raiders is often referred to as the takeover constraint. True

False

675.Auditors are appointed by the Securities and Exchange Commission to audit a company's financial statements. True

False

676.Stock analysts generally issue more "sell" recommendations than "buy" recommendations. True

False

677.Public companies are required by law to disclose information regarding executive compensation packages. True

False

678.The Sarbanes-Oxley Act of 2002 requires that CEOs and CFOs of publicly-listed companies must reveal off-balance-sheet finances and vouch for the accuracy of information provided. True

False

679.The Sarbanes-Oxley Act of 2002 does not apply to Canadian publicly listed companies operating in the U.S. that are listed on U.S. stock exchanges True

False

680.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.

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681.The primary drawback of "traditional" strategic control systems is that 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. 682.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. 683.McGill University's Prof. Mintzberg, writing about leaders and strategy, had observations which A. said strategic control systems fail to detect changes in consumer demand. B. "projected the past into the future." C. encourage rigid planning and goal-setting processes. D. cast doubt on the value of rigid planning and goal-setting processes. 684.Contemporary approaches to strategic control rely primarily on A. feedback controls. B. single-loop learning. C. double-loop learning. D. comparative learning. 685.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. 686.In terms of building a strong and effective corporate culture, Canada's Cirque du Soleil was described as focusing on A. innovation. B. customer service. C. strategy formulation. D. operational efficiency. 687.Which of the following approaches to behavioural 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 answers are equally important 688.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.

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689.All of the following are examples of how organizational culture exerts behavioural control except: A. Culture helps maintain control by creating behavioural norms. B. Culture generates unwritten standards of acceptable behaviour. C. Culture encourages individual identification with the organization and its objectives. D. Culture sets explicit boundaries. 690.In terms of providing short-term objectives and action plans, which Canadian company was mentioned by the text in Chapter Ten as having the vision of being a "national champion and Canada's most trusted company"? A. Northern Telecom B. Canadian Tire C. Four Seasons D. Cirque du Soleil 691.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. 692.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. 693.The causes of counterproductive behaviour 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 answers are correct 694.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. 695.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; behavioural C. high; financial D. high; behavioural 696.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; behavioural C. high; financial D. high; behavioural

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697.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; behavioural C. high; financial D. high; behavioural 698.External control mechanisms include all of the following except A. auditors. B. analysts. C. competitors. D. the market for corporate control. 699.Managerial opportunism can take all of the following forms except A. shirking. B. job-hopping. C. on-the-job consumption. D. excessive product diversification. 700.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. 701.It is generally argued that the takeover constraint deters management from A. engaging in opportunistic behaviour. B. considering acquiring other companies. C. declaring dividends. D. increasing a firm's level of borrowing. 702.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. 703.Canadian IT company Nortel was cited by the text as an example of "flawed corporate governance" because A. top executives received bonuses of $21 million based on profits called into question. B. the company admitted it possessed no reliable financial statements since 2001. C. former CEO John Roth cashed in $135 million of stock options just before the stock price tanked from $124 to 75 cents. D. all of the answers are correct

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704.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. 705.What are the advantages and disadvantages associated with using "traditional" approaches to strategic control?

706.What are the four characteristics of effective information control systems? Give examples of how firms apply these practices.

707.Why is it important to have a balance among the three behavioural controls—culture, rewards, and boundaries? Is there a danger associated with emphasizing one behavioural approach more than another?

708.Discuss the benefits and risks of using reward and incentive systems as a means of strategic control.

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709.What are the characteristics of short-term objectives? Provide examples of practical applications of these characteristics by organizations.

710.Discuss the contingent nature of strategic controls. How would controls be different for firms pursuing overall low-cost strategies versus differentiation strategies? How would the controls used for related diversification differ from those used for unrelated diversification?

711.What are the three key means to align the interests of owners (shareholders) and managers in a corporation?

712.Identify at least three external control mechanisms. Discuss the role played by each of these.

713.Royal Group of Woodbridge became North America's largest PVC extruder. True

False

714.Setting a direction is the leadership activity that involves developing a strategic vision of what the organization could become. True

False

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715.Designing the organization is the leadership activity that involves building structures, teams, systems, and processes that facilitate the implementation of a leader's vision. True

False

716.Leaders play an important role in sustaining an organization's culture, but they are powerless to change it. True

False

717.Leaders are not expected to accept personal responsibility for ethical behaviour in an organization because ethics is a matter of individual choice. True

False

718.Systemic barriers to change refer to elements of an organization's design, structure, and reporting relationships that impede the flow of information. True

False

719.Behavioural barriers to change occur because of conflicts between departments, conflicts arising from power relationships, and refusal to share information. True

False

720.The two broad bases of a leader's power are organizational and hierarchical. True

False

721."Coercive power" is the power exercised by use of fear of punishment for errors of either omission or commission by employees. True

False

722.In terms of the strategy of expansion, with over 2,400 outlets in Canada, Tim Hortons has much room for growth. True

False

723.Emotional Intelligence (EI) is generally a better predictor of life success than intelligence quotient (IQ). True

False

724.Empathy, one of the components of emotional intelligence (EI), refers to one's proficiency in managing relationships and building networks. True

False

725.Organizational learning works best when an organization's leaders gather information and teach it to employees who are like their students. True

False

726.Successful learning organizations have a proactive, creative approach to the unknown. True

False

90

727.A key function of the leaders in a learning organization is to generate an organization-wide commitment to the status quo. True

False

728.Inspiring and motivating people with a mission or purpose is a necessary and sufficient condition for developing a learning organization. True

False

729.To successfully empower employees to achieve organizational goals, leaders must perform the tasks of resource allocation and power brokering. True

False

730.In the "top-down" approach to empowerment, leaders clarify the mission, delegate responsibility, and hold people accountable for results. True

False

731.Canadian steel company Dofasco's 7,300 employees are NON-unionized. True

False

732."Open book" management is a technique for gathering and disseminating internal information so that all employees can be involved in decision making and management. True

False

733.Business ethics is the application of ethical standards to commercial enterprise. True

False

734.Ethical behaviour can be reinforced through the use of an appropriate reward and evaluation system. True

False

735.An effective way to instill ethical behaviour in an organization is to distribute rewards strictly on the basis of outcomes. True

False

736.In the opening case, Royal Group Technologies was challenged because A. De Zen paid little attention to financial ramifications. B. the CEO was obsessed with controlling all activities. C. it did not facilitate the development of competent executives. D. all of the answers are correct 737.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

91

738.According to the text, effective leadership is like a three-legged stool consisting of all of the following except A. dedication to maintaining the status quo. B. nurturing a culture dedicated to excellence and ethical behaviour. C. determining a direction. D. designing the organization. 739.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 answers are correct 740.Poor organizational design by leaders can result in all of the following except A. insufficient mechanisms to 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. 741.In terms of nurturing a corporate culture, Canada's Cirque du Soleil was transformed by Guy Laliberte who A. set a firm direction. B. pushed himself and his artists to continuously experiment. C. was poor at rooting out unethical behaviour. D. maintained the status quo. 742.Leaders play a key role in developing and sustaining an organization's _____________. A. status quo B. culture C. reporting relationships D. rules and regulations 743.Canadian icon Tim Hortons' future plans A. remain focused on expanding the 2,400 stores in Canada. B. involve expanding on their 250 franchises they have in the U.S. C. are thwarted by political barriers. D. are limited by behavioural barriers. 744.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. behavioural barriers D. all of the answers are correct 745.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 answers are correct

92

746.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. 747.Expert power A. is 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. is derived from referent power. D. is derived from the leader's capability and knowledge in a particular field. 748.Coercive power A. is the power exercised by use of fear of punishment for errors of omission or commission by employees. B. is the power of persuasion exercised by a charismatic leader to get compliance from reluctant subordinates. C. arises from a manager's access, control, and distribution of information that is not freely available to everyone in an organization. D. is the ability of the leader or manager to confer rewards for positive behaviours or outcomes. 749.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. 750.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. 751.All of the following are components of emotional intelligence (EI) except A. self-awareness. B. self-regulation. C. self-promotion. D. empathy. 752.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.

93

753.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 754.Which company does the book cite as being the first Canadian company to offer profit sharing to its employees in 1938? A. Zurich Canada - insurance. B. Tim Hortons - fast food. C. Dofasco - steel. D. Westons - food. 755.The "top down" perspective of empowerment A. encourages intelligent risk-taking. B. trusts people to perform. C. encourages cooperative behaviour. D. delegates responsibility. 756.The "bottom-up" perspective of empowerment A. clarifies the organization's values and mission. B. builds teams to encourage cooperative behaviour. C. communicates specific plans. D. encourages employees to "ask permission rather than forgiveness." 757.The empowerment perspective that involves trusting people to "do the right thing," take 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. 758.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. 759.Manufacturing employees at Dofasco 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.

94

760.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 employee. 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. 761.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 answers are correct 762.Functional benchmarking A. is not very useful for organizations with a divisional organizational structure. B. endeavours to determine best practices regardless of industry. C. restricts the search for best practices to competitors. D. is useful when researching industry-specific standards. 763.All of the following are guidelines an organization can use to promote the challenging of the status quo except 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. 764.Companies that cultivate cultures of experimentation and curiosity make sure that _________ is not, in essence, a bad thing. A. success B. failure C. dissent D. risk taking 765.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. 766.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.

95

767.CIBC was involved with Enron. This involvement A. had no effect on CIBC because no Canadian executives were charged. B. included all other Canadian banks. C. meant the CEO of CIBC retired before the Enron announcement and took $52 million in pay and bonuses. D. had no cover up. 768.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 behaviour. C. issuing statements describing the organization's commitment to certain standards of behaviour. D. using the organization's information systems as a control system. 769.A _________________ is a statement describing an organization's commitment to certain standards of ethical behaviour. A. role model B. control system C. corporate credo D. reward structure 770.Briefly discuss the three interdependent activities that are critical for effective leadership.

771.Discuss the reasons why organizations and managers at all levels are prone to inertia and slow to learn and adapt.

772.Identify the five components of emotional intelligence (EI). Discuss how each of these factors contributes to the success of a leader or manager.

96

773.What are the four elements of a learning organization? What is the value of a learning organization in today's global marketplace?

774.What is the difference between "top-down" and "bottom-up" approaches to empowerment? Discuss how these differences impact the effectiveness of empowerment efforts.

775.What is "open book" management? Why is this and other approaches to accumulating and sharing internal information being used increasingly in today's organizations?

776.What is the leader's role in establishing an ethical organization?

777.How can developing and maintaining a high ethical standard benefit an organization? Give examples and describe the effects the examples have had on the organization and/or its stakeholders.

97

778.Discuss the differences between integrity-based and compliance-based approaches to organizational ethics.

779.What is a corporate credo? How can it be helpful in shaping the moral dimensions of an organization?

780.Briefly discuss how an organization's reward and evaluation systems can be used to promote organizational ethics.

781.The term "innovations" refers primarily to inventions that use the latest technologies. True

False

782.Rogers may be known as a company involved in cell phones and cable TV but it was once the leading manufacturer of radios in Canada and the U.S. True

False

783.As an industry matures, there are greater opportunities for change and so innovations tend to be more radical. True

False

784.Process innovations are often associated with a low cost leadership strategy. True

False

785.The term "strategic envelope" refers to the scope of a firm's innovation efforts. True

False

98

786.In general, radical innovations occur quickly and incremental innovations take a long time to develop. True

False

787.Radical innovation often involves open-ended experimentation which can be very time consuming. True

False

788.Strategic renewal and the pursuit of new venture opportunities are the two primary aims of corporate entrepreneurship. True

False

789.Corporate entrepreneurship is sometimes called "intrapreneurship." True

False

790.Corporate venturing that is focused permeates all parts of the organization and involves every member of the organization. True

False

791.Firms using a focused approach to corporate entrepreneurship typically separate corporate venturing activities from on-going operations of the firm. True

False

792.An opportunity may be justified regardless of whether or not it is attractive in the marketplace. True

False

793.Changes in the external environment spark innovative new ideas. True

False

794.The discovery phase refers to the period when one becomes aware of a new business concept. True

False

795.Business incubators are designed to support both start-up and later-stage companies. True

False

796.Corporate business incubators often provide physical space and business services to internal ventures, but not funding. True

False

797.Product champions are the employees who identify new product ideas or services. True

False

798.First movers in an industry often capture above-average profits, but usually find it difficult to maintain early market share gains. True

False

99

799.RIM first got its start out of American engineering schools. True

False

800.Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies. True

False

801.Pioneering involves creating new ways to solve old problems or meeting customers' needs in a unique new way. True

False

802.An imitative new entry strategy is in many respects the same as pioneering. True

False

803.Most new entrants use an adaptive strategy. True

False

804.Westjet is similar to most other airlines in that it runs a deficit. True

False

805.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. 806.Canadian communications Rogers got started by A. being involved in wireless telegraphy. B. creating a radio tube that could be operated from a 110-volt current instead of batteries. C. being the leading manufacturer of radios in Canada and the U.S. D. all of the answers are correct 807.________________ 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 808._______________________________ 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

100

809.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 810.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 answers are correct 811.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 efforts. D. none of the answers are correct 812.The benefits of converting innovations into successful business ventures include A. declining competitiveness. B. shutting down product lines. C. growth and rewards. D. focus groups and business incubators. 813.According to the text, ________________________ which support fledgling start-ups 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 814.Corporate business incubators typically provide all of the following functions except A. physical space. B. mentoring. C. funding. D. student interns. 815.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. 816.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 behaviour. D. an entrepreneurial culture.

101

817.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. 818.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 answers are correct 819.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? 820.Which of the following is not one of the characteristics of good opportunities? A. attractive B. achievable C. value creating D. opportunism 821.The vast majority of new firms are low-budget start-ups financed through A. an initial public offering (IPO) B. bank financing C. venture capital D. personal savings and contributions of family and friends 822.Venture capital is A. a form of private equity B. available only at the start-up stage C. a form of human capital D. a form of angel investing 823.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 824.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 firm's 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.

102

825.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. 826.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. 827.RIM was mentioned in the book in a "Strategy Spotlight" because it had been growing fast. The book notes that RIM's strategy is to develop A. an email solution for customers using MS Outlook. B. distribution with a number of telephone carriers. C. enlistment of many third-party software developers to develop new applications. D. all of the answers are correct 828.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. 829.WestJet was cited in the text as being able to develop a toehold in Western Canada through A. proceeding slow and steady. B. partnering with Air Canada. C. using American pilots. D. an aggressive market entry and competitiveness. 830.Which kind of new entry strategy sometimes involves filling a market space where the need has not previously been filled adequately? A. adaptive B. imitative C. pioneering D. technological risk taking 831.What is meant by the terms "radical" innovation and "incremental" innovation. Describe the advantages and disadvantages of each type of innovation and provide examples.

103

832.What are the differences between product and process innovation? What are the strategic implications of each approach to innovation?

833.Discuss the implications of size, age and growth goals for the development entrepreneurial ventures.

834.Compare and contrast the concepts of focused versus dispersed approaches to corporate entrepreneurship. Provide examples of each approach.

835.Outline the opportunity process and discuss the phases involved in identifying and developing market opportunities.

836.Discuss the similarities and differences of new-venture and later-stage financing. Provide examples of each type of financing and discuss other entrepreneurial resources that might be available.

104

837.Discuss the four areas of leadership skills necessary to enact an entrepreneurial vision.

838.New-entry strategies typically fall into one of three categories: pioneering new-entry, imitative new-entry, or adaptive new entry. Outline the key strategic intentions of each and provide an example of each.

105

Test Bank Key 1. (p. 361)

The types of skills that are required to prepare an effective strategic case analysis can benefit you in actual business situations. TRUE Dess - Appendix Analyzing... #1

2. (p. 361)

There are two capabilities that can be learned through case analysis—the ability to speculate and integrate. FALSE Dess - Appendix Analyzing... #2

3.

Case analysis takes students through the whole cycle of activity a manager would face.

(p. 361)

TRUE Dess - Appendix Analyzing... #3

4.

The role of strategic decision maker is one that may be taken when analyzing a case.

(p. 362)

TRUE Dess - Appendix Analyzing... #4

5.

The business plan framework is not effective for analyzing strategic cases.

(p. 363)

FALSE Dess - Appendix Analyzing... #5

6. (p. 364)

The first step in becoming familiar with the material is to read quickly through the case to get an overall sense of the material. TRUE Dess - Appendix Analyzing... #6

7.

Writing down a problem statement is a needless waste of time when preparing a case.

(p. 364)

FALSE Dess - Appendix Analyzing... #7

8. (p. 365)

Analytical tools such as value chain analysis and five forces analysis are useful tools to employ when conducting strategic analysis. TRUE Dess - Appendix Analyzing... #8

9.

The current ratio, quick ratio and cash ration are all measures of short-term solvency.

(p. 366)

TRUE Dess - Appendix Analyzing... #9

1

10.

The profit margin tells you how much investors are willing to pay per dollar of current earnings.

(p. 366)

FALSE Dess - Appendix Analyzing... #10

11.

The basic aim of case analysis is to find solutions.

(p. 367)

TRUE Dess - Appendix Analyzing... #11

12.

There are five basic rules for preparing an oral case presentation.

(p. 368)

TRUE Dess - Appendix Analyzing... #12

13. (p. 369)

According to the text, one of the reasons that case analysis is so enriching as a learning tool is that it draws on many resources and skills besides what is in the textbook. TRUE Dess - Appendix Analyzing... #13

14. (p. 370)

The case analysis process should focus strictly on the case itself and you should not be concerned about your own performance. FALSE Dess - Appendix Analyzing... #14

15.

According to the text, there are six rules for preparing a written case analysis.

(p. 371)

FALSE Dess - Appendix Analyzing... #15

16.

The word conflict has negative connotations.

(p. 372)

TRUE Dess - Appendix Analyzing... #16

17.

The illusion of unanimity is one of the symptoms of groupthink.

(p. 372)

TRUE Dess - Appendix Analyzing... #17

18.

The use of a devil's advocate causes conflict that is counterproductive.

(p. 373)

FALSE Dess - Appendix Analyzing... #18

19. (p. 373)

Dialectical inquiry is a technique whereby a problem is approached from two alternative points of view. TRUE Dess - Appendix Analyzing... #19

2

20.

To obtain synthesis, your analysis should ideally include the best components of each alternative.

(p. 374)

TRUE Dess - Appendix Analyzing... #20

21.

The analysis-decision-action cycle is the recommended method of case analysis.

(p. 374)

TRUE Dess - Appendix Analyzing... #21

22. (p. 375)

According to the text, the analysis-decision-action cycle should not include analysis of the external environment but only focus on the internal aspects of the organization. FALSE Dess - Appendix Analyzing... #22

23.

Three capabilities that can be learned through case analysis are

(p. 361)

A. B. C. D.

the ability to question, ponder, and answer. the ability to differentiate, speculate, and integrate. the ability to read, write, and perform mathematical calculations. the ability to be cruel, competitive and cut-throat. Dess - Appendix Analyzing... #23

24. (p. 361)

Being able to imagine different scenarios or contemplate the outcome of a decision are examples of the capability known as A. B. C. D.

intergration differentiation speculation none of the answers is correct Dess - Appendix Analyzing... #24

25.

In order to place yourself inside a case, you might adopt the position of

(p. 362)

A. B. C. D.

an outside consultant. a strategic decision maker. the board of directors. all of the answers are correct Dess - Appendix Analyzing... #25

26.

People, opportunity, context, risk, and reward are all part of

(p. 363)

A. B. C. D.

the strategic groups approach. the contingency model. the business plan framework. the financial planning framework. Dess - Appendix Analyzing... #26

27.

When becoming familiar with a case it is recommended that you

(p. 364)

A. B. C. D.

skim the case only once. you take several days to read and digest the case. read it at night before bed and think about it in your sleep. skim it once, and read it a second time, in depth, making notes as you read. Dess - Appendix Analyzing... #27

3

28.

Sometimes problems in a case are not apparent until

(p. 364)

A. B. C. D.

after you do the analysis. you read the case 12 times. you write down the problem statement. none of the answers are correct. Dess - Appendix Analyzing... #28

29.

Price-earnings and market-to-book are examples of

(p. 366)

A. B. C. D.

market value ratios. profitability ratios. turnover ratios. liquidity ratios. Dess - Appendix Analyzing... #29

30. (p. 365)

The step in case analysis that involves using analytical tools from the textbook such as value chain analysis is known as A. B. C. D.

identifying problems. proposing alternative solutions. conducting strategic analysis. becoming familiar with the material. Dess - Appendix Analyzing... #30

31. (p. 366)

The step in case analysis that involves the evaluation of choices and implications of those choices is known as A. B. C. D.

identifying problems. proposing alternative solutions. conducting strategic analysis. becoming familiar with the material. Dess - Appendix Analyzing... #31

32.

The final step in the case analysis process is

(p. 367)

A. B. C. D.

identifying problems. proposing alternative solutions. making recommendations. conducting strategic analysis. Dess - Appendix Analyzing... #32

33.

An essential part of preparing an oral presentation is:

(p. 368)

A. B. C. D.

organizing your thoughts. being consistent and logical. emphasizing strategic analysis. all of the answers are correct Dess - Appendix Analyzing... #33

34.

Conducting outside research when doing a case study is

(p. 369-370)

A. B. C. D.

unethical and irresponsible. one of the ways to help get the most out of the experience. not recommended. none of the answers is correct. Dess - Appendix Analyzing... #34

4

35.

Presenting information graphically is

(p. 371)

A. B. C. D.

one of the five rules for preparing a written case analysis. one of the five rules for preparing an oral case presentation. recommended only for liberal arts majors. a form of brainstorming. Dess - Appendix Analyzing... #35

36.

The use of conflict-inducing decision making techniques in case analysis

(p. 372)

A. B. C. D.

is designed to improve case analysis. involves the constructive use of conflict. can be helpful in arriving at better solutions to cases. all of the answers are correct Dess - Appendix Analyzing... #36

37. (p. 372)

The phenomenon known as groupthink is undesirable and can lead to poor decisions. The concept of groupthink was developed by A. B. C. D.

Financial Post Advisor Irvine Janis Howard Jones all of the answers are correct Dess - Appendix Analyzing... #37

38. (p. 373)

Which of the following tries to identify problems with the proposed alternative and suggests reasons why it should not be adopted? A. B. C. D.

the devil's advocate the inquirer the dialectic the figurehead Dess - Appendix Analyzing... #38

39.

Analyzing organizational goals and objectives is

(p. 375)

A. B. C. D.

a value-creating activity. an affordable strategy in case analysis. the first step in the analysis-decision-action cycle. the final step in preparing a written case analysis. Dess - Appendix Analyzing... #39

40.

Asking the question, "Have strategic principles been used in the process of obtaining valuable and crafting effective entrepreneurial strategies?" is an essential part of

(p. 374-379)resources

A. B. C. D.

creating new ventures. the final step in the analysis-decision-action cycle. the 12th step in the analysis-decision-action cycle. all of the answers are correct Dess - Appendix Analyzing... #40

5

41.

The analysis-decision-action model reflects

(p. 375)

A. B. C. D.

ideas that are linked sequentially an overarching strategic perspective material presented in Chapter 12 all of the answers are correct Dess - Appendix Analyzing... #41

42. (p. 361)

Discuss the three capabilities that can be developed through case analysis and explain how these three activities sometimes compete for a manager's attention. Answers will vary. Dess - Appendix Analyzing... #42

43. (p. 362)

Compare and contrast the positions of strategic decision maker, board of directors, and outside consultant that may be adopted when conducting a strategic case analysis. Answers will vary. Dess - Appendix Analyzing... #43

44. (p. 363)

Describe the four characteristics of a business plan framework, and discuss when it might be appropriate to use this framework to analyze strategic cases? Answers will vary. Dess - Appendix Analyzing... #44

45.

Outline the five easy steps that can be used to organize a strategic management case analysis.

(p. 364-367)

Answers will vary. Dess - Appendix Analyzing... #45

46. (p. 368)

Outline the five rules for preparing an oral case presentation and explain why each is essential to the development of an effective presentation. Answers will vary. Dess - Appendix Analyzing... #46

6

47.

Discuss the resources beyond the textbook that might be used to conduct strategic case analysis and how the use of additional resources can help you get the most out of the experience and expand your horizons.

(p. 369-370)explain

Answers will vary. Dess - Appendix Analyzing... #47

48. (p. 371)

What are the five rules for preparing a written case analysis and how do these differ from the rules for preparing an oral presentation? Answers will vary. Dess - Appendix Analyzing... #48

49.

Outline the various approaches to conflict-inducing decision making and provide examples of each. how these techniques can improve the quality of case analysis.

(p. 372-374)Discuss

Answers will vary. Dess - Appendix Analyzing... #49

50.

Explain how the 12 ideas involved in the analysis-decision-action cycle are linked sequentially in of an overarching strategic perspective.

(p. 374-379)terms

Answers will vary. Dess - Appendix Analyzing... #50

51. (p. 5)

Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. TRUE Dess - Chapter 01 #1 Learning Objective: 1

52.

Strategic management includes strategy analysis, strategy formulation, and strategy implementation.

(p. 9-13)

TRUE Dess - Chapter 01 #2 Learning Objective: 2

53. (p. 11)

According to the text, formulating strategy includes taking into consideration strategy at the business, international, digital, and corporate levels. TRUE Dess - Chapter 01 #3 Learning Objective: 2

7

54. (p. 14)

Shareholders in a company are the only individuals with an interest in the financial performance in the company. FALSE Dess - Chapter 01 #4 Learning Objective: 3

55.

Shareholders, employees, and the community-at-large are among a firm's stakeholders.

(p. 14)

TRUE Dess - Chapter 01 #5 Learning Objective: 3

56. (p. 14)

Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization. TRUE Dess - Chapter 01 #6 Learning Objective: 3

57. (p. 15)

Social responsibility is the idea that organizations are not only accountable to shareholders but also to the community-at-large. TRUE Dess - Chapter 01 #7 Learning Objective: 3

58. (p. 14)

Sears has developed a sophisticated quantitative model that can predict the relationship between employee satisfaction, customer satisfaction and financial results. This is an example of a symbiotic approach to strategic management. TRUE Dess - Chapter 01 #8 Learning Objective: 3

59.

Decisions by Boards of Directors are always consistent with shareholder interests.

(p. 14)

FALSE Dess - Chapter 01 #9 Learning Objective: 3

60. (p. 14)

Social responsibility for Suncor Energy of Calgary means accountability to customers but NOT to employees. FALSE Dess - Chapter 01 #10 Learning Objective: 3

61. (p. 17)

The strategic management process should be addressed only by top-level executives. Mid-level and low-level employees are best equipped to implement the organization's strategies. FALSE Dess - Chapter 01 #11 Learning Objective: 4

8

62.

Globalization is the flow of capital, people, and information throughout the world.

(p. 16)

TRUE Dess - Chapter 01 #12 Learning Objective: 4

63. (p. 17)

Intellectual capital is becoming increasingly important in today's economy. It is a concern of managers throughout organizations. TRUE Dess - Chapter 01 #13 Learning Objective: 4

64. (p. 20)

Objectives in organizations should be clear, stated, and known by employees throughout the organization. TRUE Dess - Chapter 01 #14 Learning Objective: 5

65. (p. 20)

Strategic management should only include short-term objectives. Long-term objectives are covered in the organization's vision statement. FALSE Dess - Chapter 01 #15 Learning Objective: 5

66.

Organizational goals and objectives should be vague in order to allow for changes in strategy.

(p. 20)

FALSE Dess - Chapter 01 #16 Learning Objective: 5

67. (p. 20)

Organizational vision statements are the beginning point for the hierarchy of goals throughout the organization. An organization's vision statement should be massively inspiring, overarching, and long-term. TRUE Dess - Chapter 01 #17 Learning Objective: 5

68. (p. 20)

Although vision statements vary from organization to organization, vision statements are intended to motivate and inspire employees to work toward a general goal. TRUE Dess - Chapter 01 #18 Learning Objective: 5

69. (p. 21)

According to the text, a mission statement is an overarching statement that is massively inspiring, long-term, and only discusses the purpose of the company. FALSE Dess - Chapter 01 #19 Learning Objective: 5

9

70. (p. 21)

A mission statement encompasses both the purpose of the company as well as the basis of competition and competitive advantage. TRUE Dess - Chapter 01 #20 Learning Objective: 5

71. (p. 24)

Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by time deadlines. FALSE Dess - Chapter 01 #21 Learning Objective: 5

72. (p. 23)

It is important for organizations to focus primarily on financial objectives and be less concerned about other objectives and goals. FALSE Dess - Chapter 01 #22 Learning Objective: 5

73.

The four key attributes of strategic management include the idea that

(p. 7)

A. B. C. D.

strategy must be directed toward overall organizational goals and objectives. strategy must be focused on long-term objectives. strategy must be focused on one specific area of an organization. strategy must focus on competitor strengths. Dess - Chapter 01 #23 Learning Objective: 1

74.

The four key attributes of strategic management include all of the following except

(p. 7-8)

A. B. C. D.

including multiple stakeholder interests in decision making. incorporating both short-term and long-term perspectives. recognizing the trade-offs between effectiveness and efficiency. emphasis on the attainment of short-term objectives. Dess - Chapter 01 #24 Learning Objective: 2

75.

Stakeholders are

(p. 14)

A. B. C. D.

a new way to describe shareholders. individuals, groups, and organizations who have a stake in the success of the organization. creditors who hold a lien on the assets of the organization. attorneys and their clients who sue the organization. Dess - Chapter 01 #25 Learning Objective: 3

76.

"Effectiveness" is often defined as

(p. 8)

A. B. C. D.

doing things right. stakeholder satisfaction doing the right thing. productivity enhancement. Dess - Chapter 01 #26 Learning Objective: 2

10

77.

According to Henry Mintzberg, the realized strategies of a firm

(p. 9)

A. B. C. D.

are a combination of deliberate and emergent strategies. are a combination of deliberate and differentiation strategies. must be based on a company's strategic plan. must be kept confidential for competitive reasons. Dess - Chapter 01 #27 Learning Objective: 2

78. (p. 11)

In order to increase their competitiveness, organizations must continually analyze their strategy and their competitive environments. According to the text, strategy analysis includes A. B. C. D.

assessing intellectual capital as well as analyzing the internal and external environment. formulating Internet and international-level strategy. strategic leadership and fostering entrepreneurship. strategy implementation and strategic controls. Dess - Chapter 01 #28 Learning Objective: 2

79.

In terms of strategy analysis, the textbook describes Roth, CEO of Nortel, as having

(p. 3)

A. B. C. D.

set low targets. ignored the experiences of competitors and set unrealistically high growth targets. focused on the economic landscape. all of the answers are correct Dess - Chapter 01 #29 Learning Objective: 1

80. (p. 14)

Sears has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of ________________. A. B. C. D.

zero-sum relationship among stakeholders stakeholder symbiosis rewarding stakeholders emphasizing financial returns Dess - Chapter 01 #30 Learning Objective: 3

81. (p. 14)

An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that A. B. C. D.

interests of the shareholders are not the only interests that matter. stakeholders are second in importance to the shareholders. stakeholders and managers inevitably work at cross-purposes. all stakeholders receive financial rewards. Dess - Chapter 01 #31 Learning Objective: 3

82. (p. 14)

While working to prioritize and fulfill their responsibilities, members of an organization's board of directors should A. B. C. D.

represent their own interests. represent the interests of the shareholders. direct all actions of the CEO. emphasize the importance of short-term goals. Dess - Chapter 01 #32 Learning Objective: 3

11

83.

Members of Boards of Directors are

(p. 14)

A. B. C. D.

appointed by the Securities and Exchange Commission. elected by the shareholders as their representatives. elected by the public. only allowed to serve one term of four years. Dess - Chapter 01 #33 Learning Objective: 3

84. (p. 14)

Managers should do more than just focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that A. B. C. D.

stakeholders are dependent on each other for their success. stakeholders look out for their individual interests. one can only gain at the expense of someone else. all stakeholders want to maximize shareholder returns. Dess - Chapter 01 #34 Learning Objective: 3

85. (p. 15)

Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is A. B. C. D.

the expectation that business will strive to improve the overall welfare of society. the idea that organizations are solely responsible to local citizens. the fact that court costs could impact the financial bottom line. the idea that businesses are responsible to maintain a healthy social climate for their employees. Dess - Chapter 01 #35 Learning Objective: 3

86. (p. 15)

According to the text, the "triple bottom line" approach to corporate accounting includes which three components: A. B. C. D.

financial, environmental, and customer financial, organizational, and customer. financial, environmental, and social. financial, organizational, and psychological. Dess - Chapter 01 #36 Learning Objective: 3

87.

Firms must be concerned with many types of capital. In the broader sense, these could include

(p. 15)

A. B. C. D.

ecological capital. material capital. human and social capital. all of the above. Dess - Chapter 01 #37 Learning Objective: 3

88. (p. 20)

Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if A. B. C. D.

each functional area focuses on achieving their own goals. functional areas work together to attain overall goals. goals are defined at the bottom and implemented at the top. management and employees have separate goals. Dess - Chapter 01 #38 Learning Objective: 5

12

89.

The text argues that a strategic perspective in an organization should be emphasized

(p. 15-16)

A. B. C. D.

at the top of the organization. in the middle of the organization. throughout the organization. from the bottom up. Dess - Chapter 01 #39 Learning Objective: 3

90. (p. 16)

As our world increases in complexity, the global environment is increasingly competitive and challenging. The key to effective globalization is A. B. C. D.

managing the flow of goods. more people speaking more languages. managing the flow of capital, people, and information. governmental regulations. Dess - Chapter 01 #40 Learning Objective: 4

91. (p. 17)

As firms work to become more efficient and effective in the global business environment, they are forced to continually innovate. Innovation in an organization A. B. C. D.

will always increase a firm's performance. may enhance or destroy a firm's capabilities. should not be pursued by industry leaders. happens only incrementally. Dess - Chapter 01 #41 Learning Objective: 4

92. (p. 17)

Peter Senge, of M.I.T., recognized three types of leaders. _______________ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas. A. B. C. D.

Local line leaders Executive leaders Internal networkers Shop floor leaders Dess - Chapter 01 #42 Learning Objective: 4

93. (p. 17)

Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? A. B. C. D.

only at the top in the middle throughout the organization only during times of change Dess - Chapter 01 #43 Learning Objective: 4

94.

The hierarchy of organizational goals is in this order (least specific to most specific):

(p. 23)

A. B. C. D.

vision statements, strategic objectives, mission statements mission statements, strategic objectives, vision statements vision statements, mission statements, strategic objectives mission statements, vision statements, strategic objectives Dess - Chapter 01 #44 Learning Objective: 5

13

95. (p. 20-22)

Wellpoint Health Networks states: "Wellpoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a A. B. C. D.

strategic objective. vision statement. vague statement of direction. line manager's individual goal. Dess - Chapter 01 #45 Learning Objective: 5

96.

Effective vision statement include

(p. 20)

A. B. C. D.

all strategic directions of the organization. a brief statement of the company's direction. strategic posturing and future objectives. financial objectives and projected figures. Dess - Chapter 01 #46 Learning Objective: 5

97. (p. 20-23)

Examples of _____________ include: "to be the happiest place on earth" (Disney), and "restoring patients to full life" (Medtronics). A. B. C. D.

vision statements mission statements strategic objectives operational objectives Dess - Chapter 01 #47 Learning Objective: 5

98.

In contrast to an organization's vision, its mission should

(p. 20-23)

A. B. C. D.

be shorter in length. encompass both the purpose of the company as well as the basis of competition. encompass all the major rules and regulations of the corporate work force. be less detailed. Dess - Chapter 01 #48 Learning Objective: 5

99.

Which "organizational vision" did the text credit belonging to BCE Bell Canada Enterprises?

(p. 20)

A. B. C. D.

"Restoring patients to full life" "Providing Canadians with a one-stop destination in meeting their needs" "Clear, Simple, First, True, Profitable, Proud" "… the world's best quick service restaurant" Dess - Chapter 01 #49 Learning Objective: 5

100. (p. 20)

Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements A. B. C. D.

are very specific. provide specific objectives. set organizational structure. evoke powerful and compelling mental images. Dess - Chapter 01 #50 Learning Objective: 5

14

101.

Fortune Brands states they will "cut corporate costs by $30 million a year." This is an example of a

(p. 23-24)

A. B. C. D.

nonfinancial strategic objective. financial strategic objective. vision statement. mission statement. Dess - Chapter 01 #51 Learning Objective: 5

102. (p. 9-13)

The strategic management process includes strategy analysis, strategy formulation, and strategy implementation. Discuss each of these steps. Answers will vary Dess - Chapter 01 #52 Learning Objective: 1

103. (p. 7-8)

Discuss what is meant by recognizing trade-off between efficiency and effectiveness and provide an example of how this attribute of strategic management could influence the strategic decisions of a firm. Answers will vary Dess - Chapter 01 #53 Learning Objective: 2

104. (p. 13-14)

A firm has a variety of different stakeholders. Identify several possible stakeholders a firm may have and discuss how the firm may achieve stakeholder symbiosis. Answers will vary Dess - Chapter 01 #54 Learning Objective: 3

105. (p. 16)

Globalization is impacting most firms today. Discuss what "globalization" means and how and why it impacts today's firms. Answers will vary Dess - Chapter 01 #55 Learning Objective: 4

106. (p. 23-24)

The text discusses several characteristics of effective strategic objectives. List several of these and discuss why a firm's strategic objectives should meet these criteria. Answers will vary Dess - Chapter 01 #56 Learning Objective: 5

15

107. (p. 31)

Environmental scanning and competitor intelligence provide important inputs for forecasting activities. TRUE Dess - Chapter 02 #1 Learning Objective: 3

108. (p. 32)

Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process. TRUE Dess - Chapter 02 #2 Learning Objective: 3

109. (p. 32)

Competitor Intelligence (CI) is a tool that can provide management with "early warnings" about both threats and opportunities. TRUE Dess - Chapter 02 #3 Learning Objective: 3

110.

Competitor Intelligence gathering is no different from spying.

(p. 33)

FALSE Dess - Chapter 02 #4 Learning Objective: 3

111. (p. 33)

Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain. FALSE Dess - Chapter 02 #5 Learning Objective: 3

112. (p. 35)

Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions. FALSE Dess - Chapter 02 #6 Learning Objective: 3

113. (p. 44-45)

The same environmental trend can often have very different effects on firms within the same industry. TRUE Dess - Chapter 02 #7 Learning Objective: 5

114. (p. 29)

Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry. FALSE Dess - Chapter 02 #8 Learning Objective: 2

16

115.

Scenario analysis draws on a range of disciplines and interests.

(p. 36)

TRUE Dess - Chapter 02 #9 Learning Objective: 4

116.

Nearly one-fifth of Canadians will be over 65 by 2025.

(p. 41)

TRUE Dess - Chapter 02 #10 Learning Objective: 1

117.

Technological innovations can create entirely new industries and alter the boundaries of industries.

(p. 42-43)

TRUE Dess - Chapter 02 #11 Learning Objective: 1

118. (p. 28)

The Canadian forestry industry has gained significant advantage over competitors in Sweden and Finland through the use of advanced technology. FALSE Dess - Chapter 02 #12 Learning Objective: 1

119. (p. 46)

Porter's five forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses. FALSE Dess - Chapter 02 #13 Learning Objective: 6

120. (p. 46)

Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential. TRUE Dess - Chapter 02 #14 Learning Objective: 6

121.

In some industries, high switching costs can act as an important barrier to entry.

(p. 47)

TRUE Dess - Chapter 02 #15 Learning Objective: 6

122.

Industries characterized by high economies of scale typically attract fewer new entrants.

(p. 46-47)

TRUE Dess - Chapter 02 #16 Learning Objective: 6

123. (p. 48-49)

The power of a buyer group is increased if the buyer group has less concentration than the supplier group. FALSE Dess - Chapter 02 #17 Learning Objective: 6

17

124.

Buyer power tends to be higher if suppliers provide undifferentiated or standard products.

(p. 48-49)

TRUE Dess - Chapter 02 #18 Learning Objective: 6

125. (p. 49)

Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers. FALSE Dess - Chapter 02 #19 Learning Objective: 6

126. (p. 49)

The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration. TRUE Dess - Chapter 02 #20 Learning Objective: 6

127. (p. 50)

The more attractive the price/performance ratio of substitute products, the more tightly it constrains an industry's ability to charge high prices. TRUE Dess - Chapter 02 #21 Learning Objective: 6

128.

Rivalry is most intense when there are high exit barriers and high industry growth.

(p. 50-51)

FALSE Dess - Chapter 02 #22 Learning Objective: 6

129.

Rival airlines Air Canada and WestJet are battling over allegations of corporate espionage.

(p. 51)

TRUE Dess - Chapter 02 #23 Learning Objective: 6

130.

Michael Porter's Five Forces Analysis is a dynamic tool for analyzing industry attractiveness.

(p. 52-53)

FALSE Dess - Chapter 02 #24 Learning Objective: 6

131. (p. 52-53)

Complementary products are products that typically have a negative impact on the value of a firm's own products or services. FALSE Dess - Chapter 02 #25 Learning Objective: 6

132. (p. 35-36)

Bombardier studies people's travel patterns to decide on the number of seats they should plan for future aircraft. TRUE Dess - Chapter 02 #26 Learning Objective: 3

18

133. (p. 55)

The use of the strategic groups concept is generally not helpful in charting the future directions of firms' strategies. FALSE Dess - Chapter 02 #27 Learning Objective: 7

134. (p. 56-57)

The strategic groups in the world-wide automobile industry have been very stable and unchanging in recent years. FALSE Dess - Chapter 02 #28 Learning Objective: 7

135.

According to the text, Canadian Tire is more concerned about Wal-Mart than Holt Renfrew.

(p. 56)

TRUE Dess - Chapter 02 #29 Learning Objective: 7

136.

Gathering "competitive intelligence"

(p. 33)

A. B. C. D.

is good business practice. is illegal. is considered unethical. minimizes the need to obtain information in the public domain. Dess - Chapter 02 #30 Learning Objective: 3

137.

Two key inputs to developing forecasts discussed in the text are

(p. 31)

A. B. C. D.

environmental scanning and stakeholder identification. environmental scanning and competitor intelligence. assessing internal strengths and environmental scanning. environmental scanning and a SWOT analysis. Dess - Chapter 02 #31 Learning Objective: 3

138. (p. 32)

_____________ tracks the evolution of environmental trends, sequences of events, or streams of activities. A. B. C. D.

Environmental scanning Environmental monitoring Environmental surveying Competitive intelligence Dess - Chapter 02 #32 Learning Objective: 3

139. (p. 35-36)

Environmental forecasting involves developing plausible projections about the ________ of environmental change. A. B. C. D.

direction scope speed all of the answers are correct Dess - Chapter 02 #33 Learning Objective: 3

19

140.

In the Canadian telecommunications industry, the companies used to be governed by

(p. 30)

A. B. C. D.

different federal agencies. the same federal agency, CRTC. various provincial agencies. industry associations. Dess - Chapter 02 #34 Learning Objective: 2

141.

A danger of forecasting discussed in the text is that

(p. 36)

A. B. C. D.

in most cases, the expense of collecting the necessary data exceeds the benefit forcasting's retrospective nature provides little information about the future managers may view uncertainty as "black and white" while ignoring important "grey areas" it can create legal problems for the firm if regulators discover the company is making forecast. Dess - Chapter 02 #35 Learning Objective: 3

142.

The aging of the population, changes in ethnic composition, and effects of the baby boom are

(p. 39)

A. B. C. D.

macroeconomic changes. demographic changes. global changes. sociocultural changes. Dess - Chapter 02 #36 Learning Objective: 1

143. (p. 41)

Increasingly larger numbers of women entering the work force since the early 1970s is an example of A. B. C. D.

demographic changes. political and legal environmental changes. sociocultural changes. technological developments. Dess - Chapter 02 #37 Learning Objective: 1

144.

Which of the following would be considered part of a firm's general environment?

(p. 44-45)

A. B. C. D.

decreased entry barriers increased trade deficit increased bargaining power of the firm's suppliers increased competitive intensity Dess - Chapter 02 #38 Learning Objective: 5

145.

Emerging sociocultural changes in the environment include

(p. 41)

A. B. C. D.

changes in the ethnic composition. the increasing educational attainment of women in the past decade. progressively less disposable income by consumers. changes in the geographic distribution of the population. Dess - Chapter 02 #39 Learning Objective: 1

20

146.

The political/legal segment: When the US congress passed the Sarbanes-Oxley Act in 2002,

(p. 42)

A. B. C. D.

Canada deregulated the associations. no similar Canadian legislation was developed. Canada followed with similar provisions. the provincial governments developed similar laws. Dess - Chapter 02 #40 Learning Objective: 1

147.

In the Air Canada - WestJet conflict, the issue is:

(p. 34)

A. B. C. D.

Air Canada claims their employee website was hacked. WestJet claims their employee website was hacked. Air Canada claims their email was stolen. Air Canada claims WestJet used employee access information to obtain flight info. Dess - Chapter 02 #41 Learning Objective: 3

148. (p. 45)

Interest rate increases have a ________ impact on the residential home construction industry and a ___ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items. A. B. C. D.

positive; neutral negative; neutral negative; positive positive; negative Dess - Chapter 02 #42 Learning Objective: 5

149.

Which is considered a force in the "Five Forces model"?

(p. 46-47)

A. B. C. D.

increased deregulation in an industry the threat of government intervention rivalry among competing firms recent technological innovation Dess - Chapter 02 #43 Learning Objective: 6

150. (p. 48)

A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of A. B. C. D.

backward integration. economies of scale. forward integration. product differentiation. Dess - Chapter 02 #44 Learning Objective: 6

151. (p. 49)

An independent group of suppliers, such as farmers, gathers to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of A. B. C. D.

threat of entry. backward integration. forward integration. threat of substitute products. Dess - Chapter 02 #45 Learning Objective: 6

21

152.

The threat of new entrants is high when there are

(p. 46-47)

A. B. C. D.

low economies of scale. high capital requirements. high switching costs. high differentiation among competitors' products and services. Dess - Chapter 02 #46 Learning Objective: 6

153.

Which of the following would be an entry barrier?

(p. 46-47)

A. B. C. D.

large economies of scale low switching costs easy access to raw materials low capital requirements Dess - Chapter 02 #47 Learning Objective: 6

154.

Which of the following firms would likely pose the least competitive threat?

(p. 51)

A. B. C. D.

a firm in the same industry and in the same strategic group a firm that produces substitute goods to your product line a competitor to your product where a high switching cost exists a firm in the same industry and in the nearest strategic group looking to join your group Dess - Chapter 02 #48 Learning Objective: 6

155.

The rivalry between Air Canada and WestJet

(p. 34)

A. recently moved from the skies to the courtroom. B. includes allegations that WestJet set up a screen-scraper program to automatically lift data. C. includes allegations that Air Canada sent investigators to pilfer a WestJet Executives garbage looking for data. D. all of the answers are correct Dess - Chapter 02 #49 Learning Objective: 3

156.

Buyer power will be greater when

(p. 49)

A. B. C. D.

the products purchased are highly differentiated. there are high switching costs. the industry's product is very important to the quality of the buyer's end products or services. it is concentrated on purchasing large volumes relative to seller sales. Dess - Chapter 02 #50 Learning Objective: 6

157.

The bargaining power of suppliers increases as

(p. 49)

A. B. C. D.

more suppliers enter the market. importance of buyers to supplier group increases. switching costs for buyers decreases. the threat of forward integration by suppliers increases. Dess - Chapter 02 #51 Learning Objective: 6

22

158. (p. 49-50)

In Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except A. B. C. D.

lack of importance of the buyer to the supplier group. high differentiation by the supplier. dominance by a few suppliers. readily available substitute products. Dess - Chapter 02 #52 Learning Objective: 6

159.

A supplier group would be most powerful when there is/are

(p. 49-50)

A. B. C. D.

many suppliers. few substitute products. low differentiation of products supplied. high threat of backward integration by the buyers. Dess - Chapter 02 #53 Learning Objective: 6

160.

Threat of substitute products comes from

(p. 50)

A. B. C. D.

other companies in the same industry. foreign companies which can use cheap labour in their countries. firms in other industries that produce products or services that satisfy the same customer need. all of the answers are correct Dess - Chapter 02 #54 Learning Objective: 6

161.

Strategic groups within industries: Canadian retailer Holt Renfrew is described as

(p. 56)

A. B. C. D.

a high growth industry with low fixed costs. similar to Canadian Tire. a prestigious upscale player. a competitor of Wal-Mart. Dess - Chapter 02 #55 Learning Objective: 7

162.

Exit barriers arise from

(p. 51)

A. B. C. D.

specialized assets with no alternative use. governmental and social pressures. strategic interrelationships with other business units within the same company. all of the answers are correct Dess - Chapter 02 #56 Learning Objective: 6

163.

The general and competitive environments

(p. 29)

A. B. C. D.

are independent and dynamic over time. tend to be interrelated and dynamic over time. have similar impact on organizations of different industries. are independent and static over time. Dess - Chapter 02 #57 Learning Objective: 2

23

164. (p. 29-31)

Delayed marriages, fewer people in relevant age groups, and rising interest rates dampening demand for houses illustrates A. B. C. D.

that more than one segment of the general environment may affect an industry. that the global environment is not as powerful an influence as thought. that macroeconomic forces dominate the general environment. that the competitive environment often has a strong influence on the general environment. Dess - Chapter 02 #58 Learning Objective: 2

165. (p. 44-45)

Which of the following best demonstrates the interrelationships among different segments of the general environment? A. A new technology results in the development of a substitute product for your firm's product. B. Government deregulation results in different firms being able to offer the same product as your firm. C. The recession results in several of your competitors cutting prices and intensifying rivalry. D. Increased concern for the environment results in legislation that impacts your current packaging. Dess - Chapter 02 #59 Learning Objective: 5

166. (p. 44-45)

Which of the following is an example of the interrelationship between the general and competitive environments? A. A decline in a nation's educational standards results in a decline in the nation's productivity. B. A country's technological inferiority results in its enactment of strong trade barriers against importation. C. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic beverages industry. D. Greater awareness of the environment results in environmental legislation. Dess - Chapter 02 #60 Learning Objective: 5

167.

In the value-net analysis, complementors are

(p. 52)

A. firms that produce substitute products. B. customers who compliment the company for their good products and services. C. firms that produce products or services that have a positive impact on the value of a firm's products or services. D. firms that supply critical inputs to a company. Dess - Chapter 02 #61 Learning Objective: 6

168.

Strategic groups consist of

(p. 55-57)

A. top executives who make strategies for a company. B. firms within an industry that follow similar strategies. C. executives drawn from different companies within an industry that makes decisions on industry standards. D. firms within an industry that decide to collude rather than compete with each other so that they can increase their profits. Dess - Chapter 02 #62 Learning Objective: 7

24

169.

Which of the following statements about strategic groups is false?

(p. 55-57)

A. Two assumptions are made: (1) no two firms are totally different; (2) no two firms are exactly the same. B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. C. Strategic groups help chart the future directions of firms' strategies. D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole. Dess - Chapter 02 #63 Learning Objective: 7

170. (p. 29)

Explain why managers must recognize opportunities and threats in their firm's external environment. Answers will vary. Dess - Chapter 02 #64 Learning Objective: 1

171. (p. 29-30)

Using the Canadian beer as an example, explain how an industry or competitive environment might be defined and analyzed. Answers will vary. Dess - Chapter 02 #65 Learning Objective: 2

172. (p. 32-35)

Explain how competitor intelligence can be improved by gathering information about competitors in the public domain. Provide examples. Answers will vary. Dess - Chapter 02 #66 Learning Objective: 3

173.

Discuss some of the limitations of forecasting.

(p. 35-36)

Answers will vary. Dess - Chapter 02 #67 Learning Objective: 4

25

174. (p. 43-44)

Many indicators of the macroeconomic environment such as GNP, interest rates, savings rates, trade and budget deficits/surplus, etc. are interrelated. Explain. Answers will vary. Dess - Chapter 02 #68 Learning Objective: 5

175.

Explain the important barriers to entry in an industry. Provide examples.

(p. 46-48)

Answers will vary Dess - Chapter 02 #69 Learning Objective: 6

176.

Discuss and provide examples of factors that would lead to greater buyer power.

(p. 48-49)

Answers will vary Dess - Chapter 02 #70 Learning Objective: 6

177.

What are some of the factors that would cause a supplier group to become powerful? Illustrate.

(p. 49)

Answers will vary Dess - Chapter 02 #71 Learning Objective: 6

178.

Several factors usually interact which result in intense rivalry among competitors. Explain.

(p. 50-51)

Answers will vary. Dess - Chapter 02 #72 Learning Objective: 6

179. (p. 52)

Explain how the value net analysis adds to the five-forces analysis. Be sure to include examples from at least two industries. Answers will vary. Dess - Chapter 02 #73 Learning Objective: 6

26

180.

What value is the strategic groups concept as a tool in analyzing an industry?

(p. 55-56)

Answers will vary Dess - Chapter 02 #74 Learning Objective: 7

181. (p. 61-62)

Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses. TRUE Dess - Chapter 03 #1 Learning Objective: 1

182.

The automotive sector represents one of Canada's most important economic engines.

(p. 61-62)

TRUE Dess - Chapter 03 #2 Learning Objective: 1

183. (p. 61-62)

In value chain analysis, value is measured by market value of the total stock outstanding of the company. FALSE Dess - Chapter 03 #3 Learning Objective: 1

184. (p. 63)

Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale. TRUE Dess - Chapter 03 #4 Learning Objective: 1

185. (p. 61-63)

The value chain concept assumes that both primary and support activities are capable of producing value for customers. TRUE Dess - Chapter 03 #5 Learning Objective: 1

186. (p. 61)

Performing a value chain analysis provides a complete assessment of the firm's strengths and weaknesses. FALSE Dess - Chapter 03 #6 Learning Objective: 1

187. (p. 64)

Outbound Logistics: Campbell's Soup uses continuous replenishment for the Loblaw stores it supplies in Canada. TRUE Dess - Chapter 03 #7 Learning Objective: 2

27

188. (p. 66)

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis. TRUE Dess - Chapter 03 #8 Learning Objective: 1

189.

Technology development is a much broader concept than research and development.

(p. 66)

TRUE Dess - Chapter 03 #9 Learning Objective: 2

190.

In value chain analysis, general management is considered part of a firm's infrastructure.

(p. 70)

TRUE Dess - Chapter 03 #10 Learning Objective: 2

191. (p. 70)

Managers should focus their attention on interrelationships among value chain activities within the firm, not on relationships among activities within the firm and other organizations (such as suppliers and customers). FALSE Dess - Chapter 03 #11 Learning Objective: 3

192. (p. 72)

Tangible resources are assets that are relatively easy to identify such as financial and physical assets. TRUE Dess - Chapter 03 #12 Learning Objective: 5

193. (p. 72)

A firm's intangible resources refer to its capacity to deploy tangible resources over time and leverage those resources effectively. FALSE Dess - Chapter 03 #13 Learning Objective: 5

194.

Products and services that are difficult to imitate help firms sustain their profitability.

(p. 75)

TRUE Dess - Chapter 03 #14 Learning Objective: 4

195.

Path dependency has no impact on the inimitability of resources.

(p. 75)

FALSE Dess - Chapter 03 #15 Learning Objective: 4

196.

Capabilities that are causally ambiguous are difficult to imitate.

(p. 76)

TRUE Dess - Chapter 03 #16 Learning Objective: 4

28

197. (p. 73-77)

For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution. FALSE Dess - Chapter 03 #17 Learning Objective: 4

198. (p. 79)

Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies. FALSE Dess - Chapter 03 #18 Learning Objective: 5

199.

An increase in profits indicates an improvement in cash flow.

(p. 79)

FALSE Dess - Chapter 03 #19 Learning Objective: 5

200.

Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations.

(p. 80)

TRUE Dess - Chapter 03 #20 Learning Objective: 5

201. (p. 79)

When using industry norms as a standard of comparison, managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry. FALSE Dess - Chapter 03 #21 Learning Objective: 5

202.

Historical comparisons are most appropriate during periods of recession or economic boom.

(p. 79)

FALSE Dess - Chapter 03 #22 Learning Objective: 5

203. (p. 81)

A primary benefit of the "balanced scorecard" is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the organization's innovation and improvement activities. TRUE Dess - Chapter 03 #23 Learning Objective: 6

204. (p. 81-83)

The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial. FALSE Dess - Chapter 03 #24 Learning Objective: 6

29

205. (p. 82)

An important implication of the balanced scorecard is that managers need not look at their job as primarily balancing stakeholder demands. TRUE Dess - Chapter 03 #25 Learning Objective: 6

206.

Inbound logistics include

(p. 63)

A. B. C. D.

machining and packaging. warehousing and inventory control. repair and parts supply. promotion and packaging. Dess - Chapter 03 #26 Learning Objective: 2

207. (p. 63)

___________ are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. A. B. C. D.

Services Inbound logistics Outbound logistics Operations Dess - Chapter 03 #27 Learning Objective: 2

208. (p. 62)

A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the A. B. C. D.

interrelationships among functional areas and firm strategies. need to maintain the reputation of the company. organizational culture and leadership. synergy of the business units. Dess - Chapter 03 #28 Learning Objective: 2

209.

Advertising is a ______ activity. Supply of replacement parts is a _________ activity.

(p. 63)

A. B. C. D.

primary; primary support; primary support; secondary primary; support Dess - Chapter 03 #29 Learning Objective: 2

210.

Which of the following is not an advantage of Just-In-Time inventory systems?

(p. 64)

A. B. C. D.

reduced raw material storage costs minimized idle production facilities and workers reduced work-in-process inventories reduced dependence on suppliers Dess - Chapter 03 #30 Learning Objective: 2

30

211.

In assessing its primary activities, an airline would examine

(p. 64)

A. B. C. D.

employee training programs. baggage handling. criteria for lease versus purchase decisions. the effectiveness of its lobbying activities. Dess - Chapter 03 #31 Learning Objective: 2

212.

Customer service would include

(p. 67)

A. B. C. D.

product promotion. product distribution. parts supply. procurement of critical supplies. Dess - Chapter 03 #32 Learning Objective: 2

213.

Which of the following is a support activity?

(p. 63)

A. B. C. D.

inbound logistics operations technology development customer service Dess - Chapter 03 #33 Learning Objective: 1

214.

Which of the following lists consist of support activities?

(p. 62)

A. B. C. D.

human resource management, technology development, customer service, and procurement human resource management, customer service, marketing and sales, and operations human resource management, information systems, procurement, and firm infrastructure customer service, information systems, technology development, and procurement Dess - Chapter 03 #34 Learning Objective: 1

215. (p. 69)

Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It A. B. C. D.

supports only individual primary activities. supports only individual support activities. supports both individual primary and support activities and the entire value chain. supports mostly support activities but does have some impact on primary activities. Dess - Chapter 03 #35 Learning Objective: 2

216. (p. 62)

According to value chain analysis, which of the following would be considered part of a firm's infrastructure? A. B. C. D.

human resource management information systems technology development procurement Dess - Chapter 03 #36 Learning Objective: 1

31

217. (p. 64)

For firms such as Campbell Soup Company, information systems have been a source of competitive advantage by enabling them to A. B. C. D.

forecast future demand. replenish products in a timely manner. monitor inventories in distribution centres. all of the answers are correct Dess - Chapter 03 #37 Learning Objective: 2

218.

Assessment of a firm's primary activities should include analysis of all of the following except:

(p. 63)

A. B. C. D.

inbound logistics operations human resources marketing and sales Dess - Chapter 03 #38 Learning Objective: 2

219.

The resource-based view (RBV) of the firm combines two perspectives:

(p. 72)

A. the primary and support activities of the firm B. the interrelationships among the primary activities of the firm and corporate management C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment D. the industry and the competitive environment Dess - Chapter 03 #39 Learning Objective: 3

220.

The three key types of resources that are central to the resource-based view of the firm are:

(p. 72-73)

A. B. C. D.

tangible resources, intangible resources, and organizational structure culture, tangible resources, intangible resources tangible resources, intangible resources, and organizational capabilities tangible resources, intangible resources, and top management Dess - Chapter 03 #40 Learning Objective: 3

221. (p. 72)

To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines: A. B. C. D.

real estate and store fixtures brand name and experienced staff accumulated reputation for quality all of the answers are correct Dess - Chapter 03 #41 Learning Objective: 3

222.

______________ are the competencies or skills that a firm employs to transform inputs into outputs.

(p. 72)

A. B. C. D.

Tangible resources Intangible resources Reputational resources Organizational capabilities Dess - Chapter 03 #42 Learning Objective: 3

32

223. (p. 73)

Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their A. B. C. D.

tangible resources. intangible resources. organizational capabilities. strong primary activities. Dess - Chapter 03 #43 Learning Objective: 3

224. (p. 74)

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? A. B. C. D.

rare easy for competitors to substitute valuable difficult for competitors to imitate Dess - Chapter 03 #44 Learning Objective: 4

225. (p. 74)

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes: A. B. C. D.

rare, valuable, mobile, nonsubstitutable rare, inimitable, physically unique, nonsubstitutable rare, valuable, inimitable, nonsubstitutable rare, valuable, physically unique, causally ambiguous Dess - Chapter 03 #45 Learning Objective: 4

226. (p. 75)

A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of A. B. C. D.

social complexity. path dependency. physical uniqueness. causal ambiguity. Dess - Chapter 03 #46 Learning Objective: 4

227. (p. 76)

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon A. B. C. D.

social complexity. path dependency. physical uniqueness. tangible resources. Dess - Chapter 03 #47 Learning Objective: 4

228. (p. 75-76)

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics: A. B. C. D.

physical uniqueness, path dependency, causal ambiguity, and social complexity psychographic uniqueness, path dependency, causal ambiguity, and substitutability rarity, path dependency, causal ambiguity, and social substitutability geographic uniqueness, cause dependency, social ambiguity, and path complexity Dess - Chapter 03 #48 Learning Objective: 4

33

229.

The following are examples of socially complex organizational phenomena except:

(p. 76)

A. B. C. D.

a firm's culture interpersonal relations among a firm's managers complex physical technology reputation with suppliers and customers Dess - Chapter 03 #49 Learning Objective: 4

230. (p. 77)

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain A. B. C. D.

no competitive advantage. competitive parity. a temporary competitive advantage. a sustainable competitive advantage. Dess - Chapter 03 #50 Learning Objective: 4

231.

The best measure of a company's ability to meet imminent financial obligations is known as the

(p. 79)

A. B. C. D.

current ratio. total asset turnover. debt ratio. profit margin. Dess - Chapter 03 #51 Learning Objective: 5

232.

Which of the following would be most difficult to assess?

(p. 72)

A. B. C. D.

the liquidity position of a firm the legitimacy and reputation of a firm market share growth the efficiency with which a firm utilizes its assets Dess - Chapter 03 #52 Learning Objective: 3

233. (p. 79)

Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations? A. B. C. D.

leverage ratios profitability ratios activity ratios liquidity ratios Dess - Chapter 03 #53 Learning Objective: 5

234.

A meaningful ratio analysis

(p. 79)

A. B. C. D.

must go beyond the calculation and interpretation of financial ratios. is based primarily on leverage ratios. involves only liquidity ratios. involves profitability ratios at a single point in time. Dess - Chapter 03 #54 Learning Objective: 5

34

235. (p. 79)

Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading A. B. C. D.

if the overall strategy of the firm is the same. in periods of recession or economic boom. if the firm shows constant growth. if the firm's stock is publicly traded. Dess - Chapter 03 #55 Learning Objective: 5

236. (p. 79)

How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth? A. Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry. B. Compare the firm's financial ratios over the most recent one-year period. C. Compare the financial ratios of all firms in the country's industry—some of whom serve very diverse market segments and have specialized accordingly. D. Compare the financial ratios of firms in the company's strategic group. Dess - Chapter 03 #56 Learning Objective: 5

237.

The "balanced scorecard" provides top managers with a _____________ view of the business.

(p. 81)

A. B. C. D.

detailed and complex fast but comprehensive simple and routine long-term financial Dess - Chapter 03 #57 Learning Objective: 6

238.

The "balanced scorecard" developed by Kaplan and Norton helps to integrate

(p. 81)

A. B. C. D.

financial analysis and a firm's reputation. intangible resources and operational measures. financial analysis and stakeholder perspectives. short-term perspectives and strategic positioning. Dess - Chapter 03 #58 Learning Objective: 6

239. (p. 81)

The balanced scorecard enables managers to consider their business from all of the following perspectives except: A. B. C. D.

customer perspective internal perspective innovation and learning perspective ethical perspective Dess - Chapter 03 #59 Learning Objective: 6

35

240.

An important implication of the "balance scorecard" approach is that:

(p. 81-84)

A. Managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. B. The key emphasis on customer satisfaction and financial goals are only a means to that end. C. Managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously. D. Gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction. Dess - Chapter 03 #60 Learning Objective: 6

241.

What are some of the key strengths and limitations of SWOT analysis?

(p. 61)

Answers will vary. Dess - Chapter 03 #61 Learning Objective: 1

242.

What are the key advantages of value chain analysis over SWOT analysis?

(p. 61-62)

Answers will vary. Dess - Chapter 03 #62 Learning Objective: 1

243. (p. 62-63)

How can a firm develop (or enhance) its advantages in the marketplace by having strong, positive interrelationships among its value chain activities and those of its suppliers and customers? Provide an example. Answers will vary. Dess - Chapter 03 #63 Learning Objective: 2

244. (p. 68)

What are some ways in which a firm's general administration can help create (or enhance) competitive advantages? Answers will vary Dess - Chapter 03 #64 Learning Objective: 2

36

245. (p. 70)

The resource-based view (RBV) combines both the internal analysis of the firm and the external analysis of the environment. Discuss and provide examples. Answers will vary. Dess - Chapter 03 #65 Learning Objective: 3

246. (p. 74)

Explain the four attributes that a resource must have to provide a firm with a sustainable competitive advantage. Answers will vary. Dess - Chapter 03 #66 Learning Objective: 4

247. (p. 79)

What are the benefits and limitations of making historical comparisons in analyzing a firm's performance? Answers will vary. Dess - Chapter 03 #67 Learning Objective: 5

248. (p. 81-84)

What are the four perspectives that the "balanced scorecard" enables managers to evaluate their business? Answers will vary. Dess - Chapter 03 #68 Learning Objective: 6

249.

What are some of the most important implications of using the "balanced scorecard" approach?

(p. 81-84)

Answers will vary. Dess - Chapter 03 #69 Learning Objective: 6

250.

According to the text, Xerox is well known for its excellent use of human capital.

(p. 89-91)

FALSE Dess - Chapter 04 #1 Learning Objective: 1

37

251. (p. 91)

The importance of intellectual capital has decreased in recent years. For this reason, many firms have placed greater attention on attracting but not on developing or retaining talent. FALSE Dess - Chapter 04 #2 Learning Objective: 1

252. (p. 93)

The more reliance a firm has on intellectual capital the closer its book value will be to its market value. FALSE Dess - Chapter 04 #3 Learning Objective: 2

253. (p. 92)

Writers have defined intellectual capital as the difference between the market value and book value of a firm. TRUE Dess - Chapter 04 #4 Learning Objective: 1

254. (p. 93)

Creation of new knowledge typically involves the continual interaction of explicit and tacit knowledge. TRUE Dess - Chapter 04 #5 Learning Objective: 1

255.

Knowledge workers are more loyal to their companies than traditional workers.

(p. 93)

FALSE Dess - Chapter 04 #6 Learning Objective: 2

256. (p. 93-94)

Attracting top talent is a challenge of many organizations. In today's economy, knowledge workers typically have multiple possible employment opportunities. TRUE Dess - Chapter 04 #7 Learning Objective: 2

257.

Human capital consists of the "individual capabilities."

(p. 92)

TRUE Dess - Chapter 04 #8 Learning Objective: 1

258.

Technical skills are a necessary and sufficient condition for hiring an employee.

(p. 97)

FALSE Dess - Chapter 04 #9 Learning Objective: 3

259. (p. 96)

Canadian steel company Dofasco invests time and resources in developing new employees because it expects them to stay for most of their working life. TRUE Dess - Chapter 04 #10 Learning Objective: 3

38

260. (p. 96)

Companies have found that referrals from their own employees are generally an ineffective approach to recruiting top talent. FALSE Dess - Chapter 04 #11 Learning Objective: 3

261. (p. 96)

The "cascade approach" described in the text is one of the important ways of developing human capital. TRUE Dess - Chapter 04 #12 Learning Objective: 3

262. (p. 97)

In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor. FALSE Dess - Chapter 04 #13 Learning Objective: 3

263. (p. 97)

360-degree evaluation and feedback systems address many of the limitations of traditional approaches of evaluating human capital. TRUE Dess - Chapter 04 #14 Learning Objective: 3

264. (p. 98)

BC Biomedical missed out on being named one of Canada's "Best Employers" for the third year running. TRUE Dess - Chapter 04 #15 Learning Objective: 3

265. (p. 99)

The most effective method of improving a firm's retention of top talent is to intensify its hiring efforts. FALSE Dess - Chapter 04 #16 Learning Objective: 3

266. (p. 98-99)

The text suggests that talented professionals are typically most concerned about financial rewards. Money is the top reason why such employees take and leave jobs. FALSE Dess - Chapter 04 #17 Learning Objective: 3

267. (p. 99)

Rather than focus solely on financial considerations, many firms offer attractive benefits to entice employees to stay. These may include on-site stores, ATMs and athletic facilities. TRUE Dess - Chapter 04 #18 Learning Objective: 3

39

268. (p. 99)

CIBC Canada, in an attempt to retain employees, offers emergency babysitting services to ALL employees across Canada. FALSE Dess - Chapter 04 #19 Learning Objective: 3

269.

Social capital is based on the network of relationships within a firm, not in the skills and abilities of individual employee.

(p. 99-100) an

TRUE Dess - Chapter 04 #20 Learning Objective: 4

270.

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

(p. 99-100)

FALSE Dess - Chapter 04 #21 Learning Objective: 4

271.

Developing social capital is risky for an organization because social capital is specific to individuals remains with the employee if he or she leaves the organization.

(p. 99-100) and

FALSE Dess - Chapter 04 #22 Learning Objective: 4

272. (p. 101)

One possible negative outcome of building social capital in an organization is "groupthink"—a tendency not to question shared beliefs. TRUE Dess - Chapter 04 #23 Learning Objective: 4

273. (p. 103)

Once a knowledge asset (e.g., software) is developed and paid for it can be used many times at very low cost as long as it doesn't have to be substantially modified each time. TRUE Dess - Chapter 04 #24 Learning Objective: 5

274. (p. 102)

The use of email can be distracting to employees when they use it excessively or for personal reasons. TRUE Dess - Chapter 04 #25 Learning Objective: 5

275.

Many firms attempt to codify the tacit knowledge of employees in an effort to retain that knowledge the employee leaves the firm.

(p. 103-104)after

TRUE Dess - Chapter 04 #26 Learning Objective: 5

40

276.

Protecting a firm's intellectual capital requires a concerted effort.

(p. 104)

TRUE Dess - Chapter 04 #27 Learning Objective: 6

277.

Patents typically provide long-term protection for a firm since they do not expire.

(p. 104)

FALSE Dess - Chapter 04 #28 Learning Objective: 6

278. (p. 90)

Xerox is a company that is known for its inability to leverage human capital. One example of this is the relatively short tenure of CEO Rich Thoman. One of the main reasons he was fired is that A. B. C. D.

he did not have inside connections like other board members and executives had. he did not have the skills required for the job. Xerox became known for being too "loosely" organized. Xerox diversified into too many unrelated businesses. Dess - Chapter 04 #29 Learning Objective: 1

279. (p. 91)

As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently strategic management has moved from focusing on A. B. C. D.

intangible resources to tangible resources. tangible resources to intangible resources. working capital to fixed capital. fixed capital to working capital. Dess - Chapter 04 #30 Learning Objective: 1

280.

Changes in our economy have forced firms to be more concerned with protecting their

(p. 91)

A. B. C. D.

knowledge workers. social capital. intellectual capital. all of the answers are correct Dess - Chapter 04 #31 Learning Objective: 1

281. (p. 92)

In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets. A. B. C. D.

be equal to be smaller than be larger than not be correlated with Dess - Chapter 04 #32 Learning Objective: 1

41

282.

Canadian steel company Dofasco found that every dollar spent on training returns

(p. 96)

A. B. C. D.

$5 in production costs cut. $30 in productivity gains over the following three years. 5 years of savings. $10,000 in daily expenses. Dess - Chapter 04 #33 Learning Objective: 3

283.

Human capital includes

(p. 93)

A. B. C. D.

an individual's capabilities, knowledge, and skills. the relationships between people. the output from assembly line employees. an improved product. Dess - Chapter 04 #34 Learning Objective: 2

284.

____________ includes creativity and problem solving ability.

(p. 93)

A. B. C. D.

Physical capital Human capital Social capital Emotional capital Dess - Chapter 04 #35 Learning Objective: 2

285.

In terms of retaining human capital, Magna's strategy is to

(p. 97)

A. B. C. D.

allocate 10% of pre-tax profits to employees. cultivate the creative potential of its workforce. distribute 6% of profits to senior managers. all of the answers are correct Dess - Chapter 04 #36 Learning Objective: 3

286.

Tacit knowledge

(p. 93)

A. B. C. D.

is the same as explicit knowledge. is found mostly at the lower levels of the organization. can be codified but not reproduced. can be accessed only with the consent of the employees because it is in the minds of the employees. Dess - Chapter 04 #37 Learning Objective: 1

287. (p. 93)

New knowledge involves the continual interaction between ________________ and ___________ knowledge. A. B. C. D.

intellectual; pragmatic theoretical; practical tacit; explicit detailed; tacit Dess - Chapter 04 #38 Learning Objective: 1

42

288. (p. 93-94)

According to the textbook, many firms try to protect their human capital and diversify the ownership of their vital knowledge by all of the following means except: A. B. C. D.

emphasizing teamwork by developing learning programs by recruiting talented individuals from the best research institutions by shackling employees with "golden handcuffs" Dess - Chapter 04 #39 Learning Objective: 2

289. (p. 89)

Recently, in developed countries, a knowledge worker's loyalty to his or her employing firm has _____________ compared to his or her loyalty to his or her profession and colleagues. A. B. C. D.

increased decreased remained the same no correlation when Dess - Chapter 04 #40 Learning Objective: 1

290. (p. 98)

BC Biomedical, which has been named one of Canada's "Best Employers" attributes their success to having a A. B. C. D.

pyramid organization. flat organization. "top down" organization. "bottom up" organization. Dess - Chapter 04 #41 Learning Objective: 3

291. (p. 92)

According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by A. B. C. D.

increasing retention of below-average workers. attracting and retaining knowledgeable workers. decreasing labour costs. increasing the turnover of employees. Dess - Chapter 04 #42 Learning Objective: 1

292. (p. 94)

Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should A. B. C. D.

focus on increased recruiting. decrease money spent on human capital. make their work environment less stimulating. adopt effective retention strategies. Dess - Chapter 04 #43 Learning Objective: 3

293. (p. 99)

Firms must compete for top talent. Whirlpool Canada dealt with conflicting demands of family and work by A. B. C. D.

paying for daycare at all offices across Canada. offering additional work/life balance days to each employee. paying 6% of profits to senior managers. developing a flat organization. Dess - Chapter 04 #44 Learning Objective: 3

43

294. (p. 95)

According to Alan Davidson, an industrial psychologist, the single best predictor of an employee's future behaviour is A. B. C. D.

past behaviour. the individual's IQ. academic accomplishments. standardized test scores. Dess - Chapter 04 #45 Learning Objective: 3

295. (p. 96)

Many companies use referrals by current employees as a source for new hiring and even monetarily reward them because A. it is less expensive than the fees paid to headhunters. B. current employees are normally very careful in recommending someone because their credibility is on the line. C. it is a good test of employee loyalty. D. it is less expensive than the fees paid to headhunters and current employees are normally very careful in recommending someone because their credibility is on the line. Dess - Chapter 04 #46 Learning Objective: 3

296. (p. 96-99)

Managing a knowledge-intensive workforce is very challenging. The best way for a firm to manage their workforce is to A. B. C. D.

retain knowledge workers. attract the brightest employees. balance efforts in the attraction, selection, and retention of top talent. weed out less effective employees. Dess - Chapter 04 #47 Learning Objective: 3

297. (p. 97)

Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has A. B. C. D.

increased. decreased. become less important. remained the same. Dess - Chapter 04 #48 Learning Objective: 3

298.

In order to take advantage of investment in human capital a firm should

(p. 97-98)

A. B. C. D.

rotate workers through functions in the company as quickly as possible. refrain from training individual employees. establish practices that will enhance employee retention. none of the answers are correct Dess - Chapter 04 #49 Learning Objective: 3

299.

The "cascade approach" is used by managers as a tool for

(p. 96)

A. B. C. D.

developing human capital. attracting intellectual capital. attracting and developing social capital. retaining production workers. Dess - Chapter 04 #50 Learning Objective: 3

44

300. (p. 97)

In a 360-degree evaluation and feedback system, ______________ rate a person's skill and performance. A. B. C. D.

superiors direct reports colleagues all of the answers are correct Dess - Chapter 04 #51 Learning Objective: 3

301.

Generally, employees are most likely to stay with an organization if

(p. 97-98)

A. B. C. D.

the employer provides high salaries to technology professionals. the organization's mission and values align with the employee's mission and values. the firm is in a high tech industry. the mission and values of the organization change often. Dess - Chapter 04 #52 Learning Objective: 3

302. (p. 101)

Many Microsoft employees have left to start other companies. In general, when such employees leave, they take with them A. B. C. D.

social capital. human capital. intellectual capital. all of the answers are correct Dess - Chapter 04 #53 Learning Objective: 4

303.

Human capital and social capital are vital for superior firm performance. If a firm has strong human the firm may exploit this by building social capital. This can be accomplished by

(p. 100-101)capital,

A. B. C. D.

requiring workers to work independently of each other. decreasing the interaction of departments within the firm. encouraging the sharing of ideas between employees in the firm. structuring the firm with rigid departmental and employee divisions. Dess - Chapter 04 #54 Learning Objective: 4

304. (p. 100)

In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed A. B. C. D.

the "Columbus effect." the "Pied Piper effect." strategically competitive hiring. the "tech exit" effect. Dess - Chapter 04 #55 Learning Objective: 4

305.

Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to competitive advantages. A firm's social capital is based on

(p. 100-101)create

A. B. C. D.

an employee's individual abilities. the relationships among a firm's employees. a firm's allocation of financial resources. an individual's knowledge. Dess - Chapter 04 #56 Learning Objective: 4

45

306. (p. 104)

Sharing knowledge within an organization helps to build social capital. This can be accomplished through the use of A. B. C. D.

email. one-on-one conversations. Waterloo-based Open Text's Livelink which enables employees to share documents. all of the answers are correct Dess - Chapter 04 #57 Learning Objective: 5

307. (p. 101)

Social capital has many potential benefits. However, according to the text, some argue that social capital A. B. C. D.

is always beneficial to a firm. may or may not be beneficial to a firm. usually restricts the productivity of employees. always hurts firm performance. Dess - Chapter 04 #58 Learning Objective: 4

308.

Among the downsides of social capital is/are

(p. 101)

A. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs. B. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive. C. individuals may become less willing to collaborate on joint projects. D. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs and socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive. Dess - Chapter 04 #59 Learning Objective: 4

309. (p. 103)

The use of information technology (e.g., email) has increased in recent years in many organizations. This has helped to A. B. C. D.

increase social capital. make more effective use of time in every situation. restrict social network growth. create smaller social networks. Dess - Chapter 04 #60 Learning Objective: 5

310.

The creation of knowledge assets is typically characterized by

(p. 103)

A. B. C. D.

high upfront costs and subsequent high variable costs. high fixed costs and high variable costs. low upfront costs and high variable costs. high upfront costs and low variable costs. Dess - Chapter 04 #61 Learning Objective: 5

46

311. (p. 104)

Bruce Strong, CEO of Context Integration, invested half a million dollars in a software package to help his consultants share their ideas. After the program was unveiled few people were motivated to use it. This may have been caused by A. B. C. D.

consultants not seeing value in the software. consultants being protective of their ideas. the software not being a part of the company's culture. all of the answers are correct Dess - Chapter 04 #62 Learning Objective: 5

312.

Effective protection of intellectual property is necessary in order to obtain

(p. 106)

A. B. C. D.

diminishing returns. financial investment in an undertaking. conceptual roots going back centuries. zero marginal gains. Dess - Chapter 04 #63 Learning Objective: 6

313.

The capacity to build and protect competitive advantage rests on

(p. 106)

A. B. C. D.

knowledge. assets. competencies. all of the answers are correct Dess - Chapter 04 #64 Learning Objective: 6

314.

What is intellectual capital and what is its effect on the ratio of a firm's market value to book value?

(p. 92)

Answers will vary. Dess - Chapter 04 #65 Learning Objective: 1

315. (p. 93-94)

Why is the management of knowledge and knowledge professionals so critical in today's organizations? Answers will vary. Dess - Chapter 04 #66 Learning Objective: 2

316.

Discuss the attributes of human capital. Give examples of how firms work to develop and retain it.

(p. 96-98)

Answers will vary. Dess - Chapter 04 #67 Learning Objective: 3

47

317. (p. 95)

Discuss the adage "hire for attitude, train for skill." What are its implications for the attraction, training, and retention of top talent? Answers will vary. Dess - Chapter 04 #68 Learning Objective: 3

318.

In an effort to attract and retain top talent, firms provide financial and nonfinancial rewards to their Give examples of each and describe how the incentives you have chosen may impact individual employees.

(p. 99-101) employees.

Answers will vary. Dess - Chapter 04 #69 Learning Objective: 4

319.

Discuss how technology has impacted the attraction, training, and retention of professionals. How technology helped firms to enhance their human capital and social capital?

(p. 102-104)has

Answers will vary. Dess - Chapter 04 #70 Learning Objective: 5

320.

Discuss the current situation of RIM and its context with U.S. patent troll firm NTP.

(p. 107)

Answers will vary. Dess - Chapter 04 #71 Learning Objective: 6

321.

Colt is a Canadian success story that began in the 1950s in New Hampshire and Quebec.

(p. 113-114)

TRUE Dess - Chapter 05 #1 Learning Objective: 1

322. (p. 116)

Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle. FALSE Dess - Chapter 05 #2 Learning Objective: 1

323. (p. 117)

Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability. FALSE Dess - Chapter 05 #3 Learning Objective: 1

48

324.

A firm striving for cost leadership will typically spend relatively more on product-related R&D than process-related R&D.

(p. 117-120)on

FALSE Dess - Chapter 05 #4 Learning Objective: 2

325.

The focus strategy refers to focusing on the "non-price" attributes of a company's products.

(p. 117-120)

FALSE Dess - Chapter 05 #5 Learning Objective: 2

326.

To generate above average returns, a firm following an overall cost leadership position should not be with attaining parity or proximity on the basis of differentiation relative to its peers.

(p. 117-120)concerned

FALSE Dess - Chapter 05 #6 Learning Objective: 2

327. (p. 119)

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle. FALSE Dess - Chapter 05 #7 Learning Objective: 2

328.

Firms that compete on overall cost are vulnerable if all rivals share a common input or raw material contributes a significant amount to total costs.

(p. 120-121)that

TRUE Dess - Chapter 05 #8 Learning Objective: 3

329.

One of the advantages of high differentiation is that even if many competitors follow the same differentiation still exists for all.

(p. 124-126)strategy,

FALSE Dess - Chapter 05 #9 Learning Objective: 2

330. (p. 125)

The example of Lexus automobiles in the text points out that a firm can strengthen its differentiation strategy by achieving integration at multiple points along the value chain. TRUE Dess - Chapter 05 #10 Learning Objective: 2

331. (p. 127)

A successful differentiation strategy lowers entry barriers because of customer loyalty and the firm's ability to provide uniqueness in its products and services. FALSE Dess - Chapter 05 #11 Learning Objective: 3

49

332.

A successful differentiation strategy increases rivalry since buyers become more price-sensitive.

(p. 127)

FALSE Dess - Chapter 05 #12 Learning Objective: 3

333.

If a firm has a successful differentiation strategy, it is not necessary to attain parity on cost.

(p. 128)

FALSE Dess - Chapter 05 #13 Learning Objective: 4

334.

One pitfall of a differentiation strategy is that a brand's identification in the marketplace may become through excessive product line extensions.

(p. 127-128)diluted

TRUE Dess - Chapter 05 #14 Learning Objective: 4

335. (p. 127)

Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders. TRUE Dess - Chapter 05 #15 Learning Objective: 4

336.

Focus, by itself, often constitutes a competitive advantage.

(p. 129-130)

FALSE Dess - Chapter 05 #16 Learning Objective: 2

337.

A pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs.

(p. 131)

TRUE Dess - Chapter 05 #17 Learning Objective: 4

338. (p. 131)

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate. FALSE Dess - Chapter 05 #18 Learning Objective: 5

339. (p. 132)

Mass customization enables manufacturers to be more responsive to customer demands for high quality products. TRUE Dess - Chapter 05 #19 Learning Objective: 5

340. (p. 132)

An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits. FALSE Dess - Chapter 05 #20 Learning Objective: 5

50

341. (p. 135)

An important pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become "stuck-in-the-middle." TRUE Dess - Chapter 05 #21 Learning Objective: 4

342. (p. 137)

The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur. FALSE Dess - Chapter 05 #22 Learning Objective: 6

343. (p. 138)

An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost. TRUE Dess - Chapter 05 #23 Learning Objective: 6

344.

During the growth stage of the market life cycle, customers are very likely to establish brand

(p. 138-139)loyalty.

FALSE Dess - Chapter 05 #24 Learning Objective: 6

345.

Given the attractiveness of premium pricing during the growth stage of the market life cycle, should emphasize short-term results to increase profits.

(p. 138-139)managers

FALSE Dess - Chapter 05 #25 Learning Objective: 6

346.

As markets mature, competition on the basis of differentiation is preferable to price competition.

(p. 139)

TRUE Dess - Chapter 05 #26 Learning Objective: 6

347. (p. 139)

As markets mature, the magnitude of differentiation and cost leadership advantages among competitors decrease. TRUE Dess - Chapter 05 #27 Learning Objective: 6

348.

Businesses that compete in markets that are in decline should simply be harvested or divested since are no longer profitable.

(p. 140-141)they

FALSE Dess - Chapter 05 #28 Learning Objective: 6

51

349. (p. 140)

During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development, or other investments, while hoping that competitors will exit the market. FALSE Dess - Chapter 05 #29 Learning Objective: 6

350. (p. 142)

Many firms facing a turnaround situation try to reduce their costs by outsourcing the production of many inputs. TRUE Dess - Chapter 05 #30 Learning Objective: 6

351. (p. 142)

Many firms in the maturity stage of the life cycle bring about their own decline by selective product and market pruning. FALSE Dess - Chapter 05 #31 Learning Objective: 6

352.

The decline stage of the industry life cycle stage is inevitably followed by death.

(p. 142)

FALSE Dess - Chapter 05 #32 Learning Objective: 6

353.

The opening case of Cott beverages explains how this company

(p. 113)

A. B. C. D.

built success from selling private label products to Loblaw. secured a long-term agreement with RC Cola. eliminated marketing and distribution costs by adopting the retailer's brand. all of the answers are correct Dess - Chapter 05 #33 Learning Objective: 1

354.

The primary aim of strategic management at the business level is

(p. 117)

A. B. C. D.

maximizing risk-return tradeoffs through diversification. achieving a low cost position. maximizing differentiation of products and/or services. achieving competitive advantage(s). Dess - Chapter 05 #34 Learning Objective: 1

355. (p. 117)

In the long run, businesses without a competitive advantage are unlikely to earn more than "normal" profits. Normal profits are A. B. C. D.

what one would receive on U.S. Treasury securities. profits received by corporations in the normal course of business. profits one would expect to earn on investments that have a similar level of risk. profits earned by a corporation on a diversified portfolio of stocks. Dess - Chapter 05 #35 Learning Objective: 1

52

356. (p. 118)

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. B. C. D.

overall cost leadership differentiation differentiation focus cost leadership focus Dess - Chapter 05 #36 Learning Objective: 2

357.

Which of the following is a risk (or pitfall) of cost leadership?

(p. 122-123)

A. B. C. D.

Cost cutting may lead to the loss of desirable features. Attempts to stay ahead of the competition may lead to gold plating. Cost differences increase as the market matures. Producers are more able to withstand increases in suppliers' cost. Dess - Chapter 05 #37 Learning Objective: 4

358.

A manufacturing business pursuing cost leadership will likely

(p. 120-122)

A. B. C. D.

focus on a narrow market segment. rely on experience effects to raise efficiency. use advertising to build brand image. put heavy emphasis on product engineering. Dess - Chapter 05 #38 Learning Objective: 3

359. (p. 118)

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? A. B. C. D.

differentiation overall cost leadership differentiation focus stuck-in-the-middle Dess - Chapter 05 #39 Learning Objective: 2

360.

Which of the following is a good example of a firm that follows the strategy of differentiation?

(p. 124)

A. B. C. D.

North Face Holt Renfrew President's Choice all of the answers are correct Dess - Chapter 05 #40 Learning Objective: 2

361.

The experience curve suggests that cutting prices is a good strategy

(p. 119)

A. B. C. D.

if it can induce greater demand and thereby help a firm travel down the experience curve faster. in industries characterized by high economies of scale. in the maturity stage of the industry life cycle. in the decline stage of the industry life cycle. Dess - Chapter 05 #41 Learning Objective: 2

53

362.

A firm can achieve differentiation through all of the following means except

(p. 124)

A. B. C. D.

improving brand image. better customer service. offering lower prices to frequent customers. adding additional product features. Dess - Chapter 05 #42 Learning Objective: 2

363.

High product differentiation is generally accompanied by

(p. 127)

A. B. C. D.

higher market share. decreased emphasis on competition based on price. higher profit margins and lower costs. significant economies of scale. Dess - Chapter 05 #43 Learning Objective: 3

364. (p. 127)

Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. B. C. D.

differentiation overall cost leadership differentiation focus stuck-in-the middle Dess - Chapter 05 #44 Learning Objective: 3

365. (p. 127)

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces? A. By increasing a firm's margins, it avoids the need for a low cost position. B. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives. C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs. D. Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors. Dess - Chapter 05 #45 Learning Objective: 3

366.

Developing uniqueness that is not valuable is

(p. 127)

A. B. C. D.

an essential feature of a differentiation strategy. the result of having brand-loyal customers become more sensitive to prices. a potential pitfall of a differentiation strategy. an necessary evil of a cost-leadership strategy. Dess - Chapter 05 #46 Learning Objective: 4

367. (p. 129)

Staples Business Depot's strategy in Canada is to deliberately limit its product selection for the purpose of A. B. C. D.

focusing on quality. focusing on quantity. shedding customers. building the brand. Dess - Chapter 05 #47 Learning Objective: 2

54

368.

The Keg Steakhouse has a simple operating formula. The Keg

(p. 129)

A. B. C. D.

purposefully limited its menu and has stayed away from food fashions and fads. expanded its menu and embraced food fashions and fads. cut expenses from suppliers. purposefully limited its menu and has stayed away from food fashions and fads and cut expenses from suppliers. Dess - Chapter 05 #48 Learning Objective: 2

369.

A firm following a focus strategy

(p. 130)

A. B. C. D.

must focus on governmental regulations. must focus on a market segment or group of segments. must focus on the rising cost of inputs. must avoid entering international markets. Dess - Chapter 05 #49 Learning Objective: 3

370.

All of the following are potential pitfalls of a focus strategy except

(p. 131)

A. erosion of cost advantages within the narrow segment. B. all rivals share a common input or raw material. C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation. D. focusers can become too focused to satisfy buyer needs. Dess - Chapter 05 #50 Learning Objective: 4

371. (p. 131)

Research has consistently shown that firms that achieve both cost and differentiation advantages tend to perform A. at about the same level as firms that achieve either cost or differentiation advantages. B. about the same as firms that are "stuck-in-the-middle." C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages. D. higher than firms that achieve either a cost or a differentiation advantage. Dess - Chapter 05 #51 Learning Objective: 5

372.

The text discusses three approaches to combining overall cost leadership and differentiation advantages. These are the following except

(p. 131-134)competitive

A. B. C. D.

automated and flexible manufacturing systems. exploiting the profit pool concept for competitive advantage. coordinating the "extended" value chain by way of information technology. deriving benefits from highly focused and high technology markets. Dess - Chapter 05 #52 Learning Objective: 5

373. (p. 132)

A ____________ can be defined as the total profits in an industry at all points along the industry's value chain. A. B. C. D.

profit maximizer revenue enhancer profit pool profit outsourcing Dess - Chapter 05 #53 Learning Objective: 5

55

374.

All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy

(p. 135-136)except:

A. firms that fail to attain both strategies may end up with neither and become "stuck-in-the-middle." B. targeting too large a market that causes unit costs to increase. C. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain. D. miscalculating sources of revenue and profit pools in the firm's industry. Dess - Chapter 05 #54 Learning Objective: 4

375.

Which of these statements regarding the market life cycle is correct?

(p. 137)

A. B. C. D.

Part of the power of the market life cycle is its ability to serve as a short-run forecasting device. Trends suggested by the market life cycle model are generally not reversible nor repeatable. It provides a "shorthand" for thinking about differences in strategic situations. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously. Dess - Chapter 05 #55 Learning Objective: 6

376.

Which of the following statements about the introduction stage of the market life cycle is true?

(p. 138)

A. B. C. D.

It produces relatively large, positive cash flows. Strong brand recognition seldom serves as an important switching cost. Market share gains by pioneers are usually easily sustained for many years. Products or services offered by pioneers may be perceived as differentiated simply because they are new. Dess - Chapter 05 #56 Learning Objective: 6

377. (p. 138)

In the ______ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #57 Learning Objective: 6

378.

Which of the following descriptions of a product in the growth stage is true?

(p. 138-139)

A. There are few forms of differentiation, emphasis is placed on efficiency, and there is a growing trend to compete on the basis of price. B. There is an emphasis on product variety, prices are declining rapidly, and although the firm may be making a profit, cash flows may be negative. C. There is an obsolescence of technologies, minimal capital investment is required, and consumer demand is satiated. D. There is a tendency to hold on to competitive advantages, pricing can be volatile, and there is an opportunity to establish strong brand recognition. Dess - Chapter 05 #58 Learning Objective: 6

56

379.

The growth market is characterized by

(p. 138-139)

A. B. C. D.

"in-kind" competition (from the same type of product). premium pricing. a growing trend to compete on the basis of price. retaliation by competitors whose customers are stolen. Dess - Chapter 05 #59 Learning Objective: 6

380.

Which of the following is considered an accurate statement for a product in the growth period of its cycle?

(p. 138-139)life

A. B. C. D.

It is difficult to gain market share in growth markets. There is more price pressure in growth markets. It is easier to develop technology in the growth phase. Customers are brand loyal in the growth phase. Dess - Chapter 05 #60 Learning Objective: 6

381. (p. 139)

In the _______ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #61 Learning Objective: 6

382. (p. 139)

In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #62 Learning Objective: 6

383. (p. 139)

A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #63 Learning Objective: 6

384.

As markets mature, firms should attempt to compete on the basis of _______.

(p. 139)

A. B. C. D.

quick response differentiation cost leadership market focus Dess - Chapter 05 #64 Learning Objective: 6

57

385. (p. 139)

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #65 Learning Objective: 6

386.

Which of the following is most often true of mature markets?

(p. 139)

A. B. C. D.

Some competitors enjoy a significant operating advantage due to increasing experience effects. The market supports premium pricing, which attracts additional competitors. Advantages that cannot be duplicated by other competitors are difficult to achieve. The magnitude of pricing differences and product differentiation is larger than in the growth stage. Dess - Chapter 05 #66 Learning Objective: 6

387. (p. 140)

In the _________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. A. B. C. D.

introduction growth maturity decline Dess - Chapter 05 #67 Learning Objective: 6

388.

The most likely time to pursue a harvest strategy is in a situation of

(p. 140)

A. B. C. D.

high growth. strong competitive advantage. mergers and acquisitions. decline in the market life cycle. Dess - Chapter 05 #68 Learning Objective: 6

389. (p. 142)

Research shows that the following are all strategies used by firms engaged in successful turnarounds except A. B. C. D.

asset and cost surgery. selective product and market pruning. global expansion. piecemeal productivity improvements. Dess - Chapter 05 #69 Learning Objective: 6

390.

Piecemeal productivity improvements during a turnaround typically does not involve

(p. 142)

A. B. C. D.

business process reengineering. increased capacity utilization. benchmarking. expansion of a firm's product market scope. Dess - Chapter 05 #70 Learning Objective: 6

58

391. (p. 124)

Use the value chain as a framework to explain how the competitive advantage of differentiation can create products and/or services that are highly valued by customers. Answers will vary. Dess - Chapter 05 #71 Learning Objective: 2

392. (p. 127)

Explain how a differentiation strategy enables a business to address the five competitive forces in such a way that it can enjoy high levels of profitability. Answers will vary. Dess - Chapter 05 #72 Learning Objective: 3

393. (p. 118)

Discuss how a competitive advantage can be attained through cost leadership using the value chain concept. Answers will vary. Dess - Chapter 05 #73 Learning Objective: 2

394.

Explain how a cost leadership strategy permits a firm to address the five forces in their competitive so it can enjoy higher-than-normal profits.

(p. 120-122)environment

Answers will vary. Dess - Chapter 05 #74 Learning Objective: 3

395.

Discuss the risks associated with each of these forms of competitive advantage—cost leadership, and focus.

(p. 122-123;differentiation 131; 135-136)

Answers will vary. Dess - Chapter 05 #75 Learning Objective: 4

396. (p. 131)

What are the benefits and risks associated with combining overall cost leadership and differentiation strategies? Answers will vary. Dess - Chapter 05 #76 Learning Objective: 5

59

397.

Briefly explain the advantages and limitations of the four alternatives—maintaining, harvesting, consolidating—associated with the decline stage of the market life cycle.

(p. 140-141)exiting,

Answers will vary. Dess - Chapter 05 #77 Learning Objective: 6

398.

A newly acquired business must always have products that are similar to the existing businesses' to benefit from the corporation's core competence.

(p. 149-150)products

FALSE Dess - Chapter 06 #1 Learning Objective: 1

399. (p. 149)

Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements. TRUE Dess - Chapter 06 #2 Learning Objective: 1

400. (p. 149)

The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting. FALSE Dess - Chapter 06 #3 Learning Objective: 1

401. (p. 150)

Similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers. TRUE Dess - Chapter 06 #4 Learning Objective: 2

402. (p. 149)

A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification. FALSE Dess - Chapter 06 #5 Learning Objective: 1

403. (p. 155)

One of the risks of vertical integration is that there may be problems associated with unbalanced capacities or unfilled demands along a firm's value chain. TRUE Dess - Chapter 06 #6 Learning Objective: 2

404.

Vertical integration is attractive when market transaction costs are higher than internal costs.

(p. 155-158)administrative

TRUE Dess - Chapter 06 #7 Learning Objective: 2

60

405. (p. 149)

According to the text, the two main sources of synergy in unrelated diversification are parenting and financial synergies. TRUE Dess - Chapter 06 #8 Learning Objective: 1

406.

Restructuring requires the corporate office to find either poorly performing firms with unrealized or firms in industries on the threshold of significant, positive change.

(p. 158-159)potential

TRUE Dess - Chapter 06 #9 Learning Objective: 3

407. (p. 159)

Portfolio management should be considered as the primary basis for formulating corporate-level strategies. FALSE Dess - Chapter 06 #10 Learning Objective: 3

408. (p. 160)

Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business. TRUE Dess - Chapter 06 #11 Learning Objective: 3

409. (p. 164)

Acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk. TRUE Dess - Chapter 06 #12 Learning Objective: 4

410.

Through joint ventures, firms can directly acquire the assets and competencies of other firms.

(p. 166)

FALSE Dess - Chapter 06 #13 Learning Objective: 4

411. (p. 164)

An advantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets. TRUE Dess - Chapter 06 #14 Learning Objective: 4

412.

Upon the acquisition of Microcell, Rogers was able to immediately obtain savings.

(p. 152)

TRUE Dess - Chapter 06 #15 Learning Objective: 2

61

413.

The potential advantages of strategic alliances and joint ventures include entering new markets as as developing and diffusing new technologies.

(p. 164-165)well

TRUE Dess - Chapter 06 #16 Learning Objective: 3

414. (p. 167)

For strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital. FALSE Dess - Chapter 06 #17 Learning Objective: 3

415. (p. 168)

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures. TRUE Dess - Chapter 06 #18 Learning Objective: 4

416.

Real options analysis helps managers make investment decisions involving large irreversible of financial resources.

(p. 168-169)commitments

FALSE Dess - Chapter 06 #19 Learning Objective: 5

417. (p. 172)

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party. FALSE Dess - Chapter 06 #20 Learning Objective: 6

418. (p. 172)

A golden parachute is a prearranged contract with managers specifying that in the event of a hostile takeover, the target firm's managers will be paid a significant severance package. TRUE Dess - Chapter 06 #21 Learning Objective: 6

419.

Corporate-level strategy addresses two related issues:

(p. 149)

A. B. C. D.

how to compete in a given business; the application of technology. what businesses to compete in; how these businesses can achieve synergy. how to integrate primary activities; how to increase shareholder wealth. how to improve a firm's infrastructure; how to maintain ethical behaviour. Dess - Chapter 06 #22 Learning Objective: 1

62

420.

For a core competence to be a viable basis for the corporation strengthening a new business unit, are three requirements. Which one of the following is not one of these requirements?

(p. 150-151)there

A. B. C. D.

The competence must help the business gain strength relative to its competition. The new business must be similar to existing businesses to benefit from a core competence. The collection of competencies should be unique, so that they cannot be easily imitated. The new business must have an established large market share. Dess - Chapter 06 #23 Learning Objective: 2

421.

Sharing core competencies is one of the primary potential advantages of diversification. In order for to be most successful, it is important that

(p. 150-151)diversification

A. the similarity required for sharing core competencies must be in the value chain, not in the product. B. the products use similar distribution channels. C. the target market is the same, even if the products are very different. D. the methods of production are the same. Dess - Chapter 06 #24 Learning Objective: 2

422. (p. 151)

When management uses common production facilities or purchasing procedures to distribute different but related products, they are A. B. C. D.

building on core competencies. sharing activities. achieving process gains. using portfolio analysis. Dess - Chapter 06 #25 Learning Objective: 2

423. (p. 150)

__________ reflect the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services. A. B. C. D.

Primary value chain activities Cultures Core competencies Horizontal integrations Dess - Chapter 06 #26 Learning Objective: 2

424.

It may be advantageous to vertically integrate when

(p. 155)

A. lower transaction costs and improved coordination are vital and achievable through vertical integration. B. the minimum efficient scales of two corporations are different. C. flexibility is reduced, providing a more stationary position in the competitive environment. D. various segregated specializations will be combined. Dess - Chapter 06 #27 Learning Objective: 2

63

425.

When Rogers acquired Microcell, the clients of Fido, Microcell's brand name

(p. 152)

A. B. C. D.

costs and associated expenses increased with expanded overhead and capital expenditures. instantly gained broader market coverage and better reception for their phones. problems developed with unbalanced capacities along the value chain. additional administrative costs associated with managing a more complex set of activities increased. Dess - Chapter 06 #28 Learning Objective: 2

426. (p. 156)

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with A. B. C. D.

strategic alliances. divestment. vertical integration. horizontal integration. Dess - Chapter 06 #29 Learning Objective: 2

427.

A firm should consider vertical integration when

(p. 156)

A. B. C. D.

the competitive situation is highly volatile. customer needs are evolving. the firm's suppliers willingly cooperate with the firm. the firm's suppliers of raw materials are often unable to maintain quality standards. Dess - Chapter 06 #30 Learning Objective: 2

428.

Transaction costs include all of the following costs except

(p. 157)

A. B. C. D.

search costs. negotiating costs. monitoring costs. agency costs. Dess - Chapter 06 #31 Learning Objective: 2

429.

Vertical integration is attractive when

(p. 157)

A. B. C. D.

transaction costs are higher than internal administrative costs. internal administrative costs are higher than transaction costs. transaction costs and internal administrative costs are equal. search costs are higher than monitoring costs. Dess - Chapter 06 #32 Learning Objective: 2

430. (p. 158)

_______ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. A. B. C. D.

Parenting Restructuring Leveraging core competencies Sharing activities Dess - Chapter 06 #33 Learning Objective: 3

64

431. (p. 155)

According to the text, Canfor Corporation of Vancouver is a good example from the forest industry of having followed a successful strategy, to expand across markets, of A. B. C. D.

capital restructuring, and technology restructuring. asset restructuring. horizontal integration. vertical integration. Dess - Chapter 06 #34 Learning Objective: 2

432.

Portfolio management matrices are applied to what level of strategy?

(p. 159-160)

A. B. C. D.

departmental business corporate international Dess - Chapter 06 #35 Learning Objective: 3

433. (p. 160)

When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a A. B. C. D.

cow. dog. problem child. star. Dess - Chapter 06 #36 Learning Objective: 3

434. (p. 160)

In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a A. B. C. D.

star. question mark. cash cow. dog. Dess - Chapter 06 #37 Learning Objective: 3

435.

Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?

(p. 160)

A. Grid dimensions are based on external environments and internal capabilities/market positions. B. Businesses are plotted on a 3-dimensional grid. C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core competences. D. They are most helpful in helping businesses develop types of competitive advantage. Dess - Chapter 06 #38 Learning Objective: 3

436.

Molson of Montreal and Coors of Colorado merged their operations in order to stand up to

(p. 165)

A. B. C. D.

continued diversification in the beverage market. competition from Japan. continuing consolidation in the global beer industry. substantial cash outlays to maintain market share. Dess - Chapter 06 #39 Learning Objective: 4

65

437.

The downsides or limitations of mergers and acquisitions include all of the following except

(p. 163-164)

A. expensive premiums that are frequently paid to acquire a business. B. difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations. C. it is a slow means to enter new markets and acquire skills and competences. D. there can be many cultural issues that can doom an otherwise promising acquisition. Dess - Chapter 06 #40 Learning Objective: 4

438. (p. 163)

Cooperative relationships such as _______ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. A. B. C. D.

joint ventures mergers and acquisitions strategic alliances joint ventures and strategic alliances Dess - Chapter 06 #41 Learning Objective: 4

439. (p. 166)

A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of A. B. C. D.

joint diversification. strategic alliance. divestment. global integration. Dess - Chapter 06 #42 Learning Objective: 4

440. (p. 165)

Loblaw, with a strong presence in Ontario and Western Canada, gained a footprint into the Quebec market by A. B. C. D.

establishing a clear understanding between partners. acquiring Provigo. not shortchanging your partner. working hard to ensure a collaborative relationship between partners. Dess - Chapter 06 #43 Learning Objective: 4

441.

Options exist when the owner of the option has

(p. 169)

A. B. C. D.

the obligation, but not the right to engage in a transaction. the right, but not the obligation to engage in a transaction. the right and obligation to engage in a transaction. neither the right nor the obligation to engage in a transaction. Dess - Chapter 06 #44 Learning Objective: 5

442.

Real options analysis is most appropriate when

(p. 169)

A. B. C. D.

the total investment required is small, but the environment is uncertain. the investment required can be justified by Discounted Cash Flow (DCF) techniques. a small investment upfront can be followed by a series of subsequent investments. there is no prospect of obtaining additional knowledge before making subsequent investments. Dess - Chapter 06 #45 Learning Objective: 5

66

443. (p. 168)

Which of the following statements regarding internal development as a means of diversification is false? A. Many companies use internal development to extend their product lines or add to their service offerings. B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. C. The firm is able to capture the wealth created without having to "share the wealth" with alliance partners. D. Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding. Dess - Chapter 06 #46 Learning Objective: 4

444. (p. 172)

An antitakeover tactic called (a) ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it. A. B. C. D.

golden parachute greenmail poison pill scorched earth Dess - Chapter 06 #47 Learning Objective: 6

445.

An antitakeover tactic called greenmail is

(p. 172)

A. B. C. D.

encouraged in Canada. prohibited in Canada. only allowed in Quebec. borrowed from NAFTA. Dess - Chapter 06 #48 Learning Objective: 6

446.

The term "golden parachute" refers to

(p. 173)

A. a clause requiring that huge dividend payments be made upon takeover. B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition. D. pay given to executives fired because of a takeover. Dess - Chapter 06 #49 Learning Objective: 6

447. (p. 173)

When Canadian family-controlled firm Schneider's wanted to block Maple Leaf Foods, they looked to Springfield as a A. B. C. D.

greenmail. golden parachute. white knight. poison pill. Dess - Chapter 06 #50 Learning Objective: 6

67

448.

What are the primary benefits and risks associated with related diversification?

(p. 149-150)

Answers will vary. Dess - Chapter 06 #51 Learning Objective: 1

449.

What are the primary benefits and risks associated with unrelated diversification?

(p. 158-159)

Answers will vary. Dess - Chapter 06 #52 Learning Objective: 3

450.

Briefly explain the advantages and disadvantages of vertical integration.

(p. 155-158)

Answers will vary. Dess - Chapter 06 #53 Learning Objective: 2

451.

What are some of the key issues to take into account when considering whether or not to vertically

(p. 155-158)integrate?

Answers will vary. Dess - Chapter 06 #54 Learning Objective: 2

452.

Explain how transaction cost analysis can provide insights into vertical integration decisions.

(p. 157)

Answers will vary. Dess - Chapter 06 #55 Learning Objective: 2

453.

Explain the uses and limitations of portfolio management matrices such as the growth-share matrix by the Boston Consulting Group (BCG).

(p. 159-163)developed

Answers will vary. Dess - Chapter 06 #56 Learning Objective: 3

68

454.

Summarize the advantages and disadvantages of mergers and acquisitions as a means of

(p. 163-166)diversification.

Answers will vary. Dess - Chapter 06 #57 Learning Objective: 4

455.

Strategic alliances are arrangements in which two firms join forces and form a cooperative Discuss the advantages and disadvantages of strategic alliances as well as guidelines for reducing conflict between the partners.

(p. 166-168)partnership.

Answers will vary. Dess - Chapter 06 #58 Learning Objective: 4

456.

Why is Real Options Analysis (ROA) becoming more popular with strategic decision makers? What of strategic decisions are most amenable to Real Options Analysis?

(p. 168-170)kind

Answers will vary. Dess - Chapter 06 #59 Learning Objective: 5

457.

Discuss how the potential benefits of diversification may be adversely affected by conflicts between interests and shareholders' interests. Include in your discussion factors such as egotism, growth for growth's sake, anti-takeover tactics.

(p. 170-173)managers'

Answers will vary. Dess - Chapter 06 #60 Learning Objective: 6

458.

The trend towards worldwide markets makes it easier to predict where competitors will spring up.

(p. 178)

FALSE Dess - Chapter 07 #1 Learning Objective: 1

459. (p. 177)

Prior to Molson's investment in Brazil, they had merged with Carling O'Keefe. This merger did not yield significant accomplishments. TRUE Dess - Chapter 07 #2 Learning Objective: 1

69

460.

In Michael Porter's "diamond of competitive advantage," there are four broad attributes that, as a constitute a nation's competitiveness in an industry.

(p. 180-183)system,

TRUE Dess - Chapter 07 #3 Learning Objective: 2

461. (p. 180)

With regard to "factor conditions," the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed. FALSE Dess - Chapter 07 #4 Learning Objective: 2

462. (p. 181)

Demanding domestic consumers tend to push firms to move ahead of companies in other countries where consumers are less demanding and more complacent. TRUE Dess - Chapter 07 #5 Learning Objective: 2

463. (p. 184)

During the 1990s Nortel frequently sold its earlier generation telephone switches to developing countries at lower costs, and used the revenues for R&D. TRUE Dess - Chapter 07 #6 Learning Objective: 2

464. (p. 184)

Typically, intense rivalry in domestic markets does not force firms to look outside their national boundaries for new markets. FALSE Dess - Chapter 07 #7 Learning Objective: 2

465. (p. 184)

Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase. TRUE Dess - Chapter 07 #8 Learning Objective: 3

466. (p. 186)

International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country. TRUE Dess - Chapter 07 #9 Learning Objective: 3

467. (p. 186)

An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain. TRUE Dess - Chapter 07 #10 Learning Objective: 3

70

468. (p. 186)

IMAX claims that every new theatre that opens somewhere in the world lowers the cost of production of its unique movies. TRUE Dess - Chapter 07 #11 Learning Objective: 3

469. (p. 188)

Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets. TRUE Dess - Chapter 07 #12 Learning Objective: 3

470. (p. 191)

Two opposing pressures that managers face when they compete in foreign markets are cost reduction and adaptation to local markets. TRUE Dess - Chapter 07 #13 Learning Objective: 4

471. (p. 192)

Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global. TRUE Dess - Chapter 07 #14 Learning Objective: 4

472. (p. 189)

According to the text, Canadian firms around the world were targets of animal rights groups who did not approve of seal hunting in Newfoundland. TRUE Dess - Chapter 07 #15 Learning Objective: 3

473. (p. 191)

Among Theodore Levitt's assumptions that would favour a global strategy is that consumers around the world are becoming less price-sensitive. FALSE Dess - Chapter 07 #16 Learning Objective: 4

474. (p. 192)

A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product appealing to the largest number of consumers in every market. FALSE Dess - Chapter 07 #17 Learning Objective: 4

475. (p. 192)

The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy. FALSE Dess - Chapter 07 #18 Learning Objective: 4

71

476. (p. 192)

Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer). TRUE Dess - Chapter 07 #19 Learning Objective: 4

477. (p. 200)

In a global strategy a firm operates all its businesses under a single common strategy regardless of location. TRUE Dess - Chapter 07 #20 Learning Objective: 5

478. (p. 200)

Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy. TRUE Dess - Chapter 07 #21 Learning Objective: 5

479. (p. 200)

A multidomestic strategy would likely include the use of high volume, centralized production facilities to maximize economies of scale. FALSE Dess - Chapter 07 #22 Learning Objective: 5

480. (p. 196)

To address the challenges of a multidomestic strategy, Maple Leaf Foods customizes its prepared meats to meet local tastes. TRUE Dess - Chapter 07 #23 Learning Objective: 5

481. (p. 200)

Multinational firms following a transnational strategy strive to optimize the tradeoffs associated with efficiency, local adaptation, and learning. TRUE Dess - Chapter 07 #24 Learning Objective: 5

482. (p. 198)

A key tenet of a transnational strategy is improved adaptation to all competitive situations as well as flexibility by capitalizing on communication and knowledge flows throughout the organization. TRUE Dess - Chapter 07 #25 Learning Objective: 5

483. (p. 196)

Canadian steel company Dofasco looked at cultural challenges in expanding and decided to stick to its famous motto: "our strength is people". FALSE Dess - Chapter 07 #26 Learning Objective: 5

72

484.

A franchise generally expires after a few years whereas a license is designed to last into perpetuity.

(p. 203)

FALSE Dess - Chapter 07 #27 Learning Objective: 6

485. (p. 201)

Typically, the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control. FALSE Dess - Chapter 07 #28 Learning Objective: 6

486.

A major trend in international developments includes

(p. 178)

A. B. C. D.

greater international trade and operations. a growing recognition of an international managerial perspective. a large increase in international investment. all of the answers are correct Dess - Chapter 07 #29 Learning Objective: 1

487.

At the time Molson invested into the Brazilian beer market in 2002, the Brazilian market was

(p. 177)

A. B. C. D.

a monopolistic situation. consolidated. fragmented. dominated by U.S. brewers. Dess - Chapter 07 #30 Learning Objective: 1

488.

In Michael Porter's framework all of the following factors affect a nation's competitiveness except

(p. 180)

A. B. C. D.

factor conditions. demand characteristics. related and supported industries. policies that protect the nation's domestic competitors. Dess - Chapter 07 #31 Learning Objective: 2

489.

Since Molson's investment in Kaiser in Brazil, that company's market share has

(p. 177)

A. B. C. D.

increased to second place. stayed the same. fallen to third place. increased to fourth place. Dess - Chapter 07 #32 Learning Objective: 1

490.

Rivalry is intense in nations with conditions of ________ consumer demand, ___________ supplier and ____________ new entrant potential from related industries.

(p. 182-183)bases,

A. B. C. D.

weak; weak; high strong; strong; low strong; strong; high weak; weak; low Dess - Chapter 07 #33 Learning Objective: 2

73

491.

According to Michael Porter, firms that have experienced intense domestic competition are

(p. 182-183)

A. B. C. D.

unlikely to have the time or resources to compete abroad. most likely to design strategies aimed primarily at the domestic market. more likely to design strategies and structures that allow them to successfully compete abroad. more likely to demand protection from their governments. Dess - Chapter 07 #34 Learning Objective: 2

492.

Microsoft decided to establish a corporate research laboratory in Cambridge, England

(p. 187)

A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice. Dess - Chapter 07 #35 Learning Objective: 3

493. (p. 187)

Many U.S. multinational companies set up maquiladora operations south of the US-Mexico border primarily A. B. C. D.

to sell products into the growing Mexican market. as part of US government-initiated measures to discourage illegal immigration. to take advantage of the lower tax rates in Mexico. to take advantage of the low cost of labour. Dess - Chapter 07 #36 Learning Objective: 3

494.

By the end of the 20th century, the world's population exceeded 6 billion with Canada representing

(p. 184)

A. B. C. D.

less than .5 percent slightly more than 5 percent about 320 million less than 3.2 million Dess - Chapter 07 #37 Learning Objective: 3

495.

Pressures to "reduce costs" require that

(p. 187)

A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government. Dess - Chapter 07 #38 Learning Objective: 3

74

496. (p. 186)

Lingo Media of Toronto was mentioned in Chapter Seven as being a good example of a small company A. B. C. D.

that compete in industries in which consumer preferences vary substantially in each country. in industries that are expanding very rapidly. selling entertainment programs into the Korean market. penetrating the Chinese market for ESL teaching materials. Dess - Chapter 07 #39 Learning Objective: 3

497. (p. 191)

Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers. Dess - Chapter 07 #40 Learning Objective: 4

498. (p. 193)

Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. B. C. D.

international global multidomestic transnational Dess - Chapter 07 #41 Learning Objective: 5

499. (p. 196)

When Dofasco approached the cultural differences of operating in Mexico, Dofasco's motto "our strength is people" was a problem because A. B. C. D.

it did not translate into Spanish. Latin American customers wanted a focus on the product. Mexican workers typically expect more hierarchical structures and want managers to supervise. Mexican workers like a "flat organization" with no supervision. Dess - Chapter 07 #42 Learning Objective: 5

500. (p. 196)

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. B. C. D.

global multidomestic transnational overall cost leadership Dess - Chapter 07 #43 Learning Objective: 5

75

501. (p. 194)

Firms following a global strategy strive to offer ______________ products and services as well as locate manufacturing, R&D, and marketing activities in _____________ locations. A. B. C. D.

a wide variety of; several a wide variety of; few standardized; several standardized; few Dess - Chapter 07 #44 Learning Objective: 5

502.

All of the following are risks associated with a global strategy except

(p. 194)

A. a firm with only one manufacturing location must export its product—some of which may be a great distance from the operation. B. the geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. concentrating an activity in a single location makes the rest of the firm dependent on that location. D. the pressures for local adaptation may elevate the firm's cost structure. Dess - Chapter 07 #45 Learning Objective: 5

503.

All of the following are limitations of a global strategy except

(p. 194)

A. B. C. D.

limited ability to adapt to local markets. the ability to locate activities in optimal locations. the concentration of activities may increase dependence on a single facility. single locations may lead to higher tariffs and transportation costs. Dess - Chapter 07 #46 Learning Objective: 5

504. (p. 194)

As in the case of Siebel Systems, elements of a global strategy may facilitate the competitive advantage of differentiation by A. B. C. D.

increasing the freedom of individual business units to adapt to local tastes. the creation of a worldwide network to achieve consistent service regardless of location. offering flexibility in applying R&D to meet country-specific needs. tailoring products to meet country-specific needs. Dess - Chapter 07 #47 Learning Objective: 5

505.

Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by

(p. 196)

A. offering flexibility in adjusting to local laws and customs. B. decreasing duplication of inventories which are often involved in having multiple plants producing similar products. C. decreasing shipping and transportation costs inherent in local production. D. economies of scale gained through centralized production of standardized products. Dess - Chapter 07 #48 Learning Objective: 5

506.

All of the following are limitations of a multidomestic strategy except

(p. 196)

A. B. C. D.

less ability to realize cost savings through scale economies. greater difficulty in transferring knowledge across countries. single locations may lead to higher tariffs and transportation costs. may lead to "overadaptation" as conditions change. Dess - Chapter 07 #49 Learning Objective: 5

76

507.

Which of the following is a disadvantage of a transnational strategy?

(p. 198)

A. B. C. D.

less ability to realize cost savings through scale economies limited ability to adapt to local markets unique managerial challenges in fostering knowledge transfer single locations may lead to higher tariffs and transportation costs Dess - Chapter 07 #50 Learning Objective: 5

508. (p. 200)

In order to realize the strongest competitive advantage, firms engaged in worldwide competition must A. require that all of their various business units follow the same strategy regardless of location. B. ensure that all business units follow a strategy strictly tailored to their respective locations. C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results. D. attempt to use the strategy that was most successful in their home country. Dess - Chapter 07 #51 Learning Objective: 5

509. (p. 200)

Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. B. C. D.

a global strategy a transnational strategy an international strategy a multidomestic strategy Dess - Chapter 07 #52 Learning Objective: 5

510.

Which of the following describes the most typical order of entry into foreign markets?

(p. 201)

A. B. C. D.

franchising, licensing, exporting, joint venture, and wholly owned subsidiary exporting, licensing, franchising, joint venture, and wholly owned subsidiary licensing, exporting, franchising, joint venture, and wholly owned subsidiary exporting, franchising, licensing, joint venture, and wholly owned subsidiary Dess - Chapter 07 #53 Learning Objective: 6

511. (p. 201)

A domestic corporation considering expanding into international markets for the first time will typically A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home. B. consider licensing or franchising its operations. C. consider implementing a low risk/low control strategy such as exporting. D. form a joint venture with a reputable foreign producer. Dess - Chapter 07 #54 Learning Objective: 6

77

512.

The form of entry strategy into international operations that offers the lowest level of control would

(p. 201-202)be

A. B. C. D.

franchising. licensing. joint venture. exporting. Dess - Chapter 07 #55 Learning Objective: 6

513. (p. 206)

The text mentions Canadian firms Lingo Media and Hydrogenics as having directed all their efforts to overseas markets with A. B. C. D.

transfer prices. dividends. little local presence at home in Canada. intra-corporate inflows. Dess - Chapter 07 #56 Learning Objective: 6

514.

The difference between a franchise and licensing contract is that

(p. 201-202)

A. B. C. D.

a franchise contract is more specific and usually longer in duration. a franchise contract must include a foreign government. a licensing contract covers more aspects of operations. a franchise contract involves less control and less risk. Dess - Chapter 07 #57 Learning Objective: 6

515.

Foreign direct investment includes the following form of entry strategy:

(p. 203-204)

A. B. C. D.

licensing franchising joint ventures exporting Dess - Chapter 07 #58 Learning Objective: 6

516. (p. 205)

The textbook's description of the international expansion of Edmonton-based engineering firm Stantec Inc. is a good example of expansion through A. B. C. D.

joint venture. strategic alliance. wholly owned subsidiary. franchising operation. Dess - Chapter 07 #59 Learning Objective: 6

517.

___________ are most appropriate where a firm already has the appropriate knowledge and that it can leverage rather easily through multiple locations in many countries.

(p. 205-206)capabilities

A. B. C. D.

Joint ventures Strategic alliances Licensing agreements Wholly owned subsidiaries Dess - Chapter 07 #60 Learning Objective: 6

78

518.

Discuss the importance of international expansion as a viable diversification strategy.

(p. 177-180)

Answers will vary. Dess - Chapter 07 #61 Learning Objective: 1

519.

Explain Michael Porter's "diamond of national competitiveness."

(p. 180-183)

Answers will vary. Dess - Chapter 07 #62 Learning Objective: 2

520.

Summarize the most important benefits and risks associated with diversification into global

(p. 184-190)markets.

Answers will vary. Dess - Chapter 07 #63 Learning Objective: 3

521.

Explain how the two opposing forces facing MNC managers, cost reduction and local adaptation, pressures to operate with a global or multidomestic strategy, respectively.

(p. 191-193)create

Answers will vary. Dess - Chapter 07 #64 Learning Objective: 4

522. (p. 191)

According to Theodore Levitt, what are the three assumptions that favour the pursuit of a "pure" global strategy? Briefly provide counterarguments to each assumption. Answers will vary. Dess - Chapter 07 #65 Learning Objective: 4

523.

What are some of the primary benefits and risks of transnational strategies?

(p. 198-200)

Answers will vary. Dess - Chapter 07 #66 Learning Objective: 5

79

524.

What are the major advantages and disadvantages of the six basic types of entry strategies for expansion?

(p. 201-206)international

Answers will vary. Dess - Chapter 07 #67 Learning Objective: 6

525. (p. 211)

Because of the dot-com crash in 2000 and 2001, it is unlikely that the Internet will have a positive impact on the economy in the long term. FALSE Dess - Chapter 08 #1 Learning Objective: 1

526. (p. 211)

With only a few exceptions such as Toronto's Book City, thousands of neighbourhood bookstores have disappeared and the industry has consolidated. TRUE Dess - Chapter 08 #2 Learning Objective: 1

527. (p. 211)

The Internet has created a new climate for business in which the traditional principles of strategic management are less important. FALSE Dess - Chapter 08 #3 Learning Objective: 1

528.

The Internet suppresses the bargaining power of buyers by providing them with more information to buying decisions.

(p. 214-215)make

FALSE Dess - Chapter 08 #4 Learning Objective: 1

529.

Because a large amount of consumer information is available via the Internet, end users typically greater bargaining power.

(p. 214-125)have

TRUE Dess - Chapter 08 #5 Learning Objective: 1

530.

An end user's switching costs are potentially much higher because of the Internet.

(p. 214)

FALSE Dess - Chapter 08 #6 Learning Objective: 1

531.

Overall, 44% of Canadians have tried e-commerce and most first-time buyers go back for more.

(p. 211)

TRUE Dess - Chapter 08 #7 Learning Objective: 1

80

532.

Channel conflict occurs when buyers can access the same products through several different outlets.

(p. 215)

TRUE Dess - Chapter 08 #8 Learning Objective: 1

533. (p. 215)

Because of the Internet, it is very difficult for suppliers to create purchasing techniques that lower switching costs. FALSE Dess - Chapter 08 #9 Learning Objective: 1

534.

Reintermediation is responsible for an overall reduction in business opportunities.

(p. 216)

FALSE Dess - Chapter 08 #10 Learning Objective: 1

535.

The Internet heightens the threat of substitutes because it creates new ways to accomplish the same

(p. 216-217)tasks.

TRUE Dess - Chapter 08 #11 Learning Objective: 1

536.

Most analysts agree that use of the Internet will lower transactions costs.

(p. 221)

TRUE Dess - Chapter 08 #12 Learning Objective: 3

537. (p. 213)

Canadian mining company Goldcorp posted geological data online, allowing engineers around the world to give new insights as to any future potential. TRUE Dess - Chapter 08 #13 Learning Objective: 2

538. (p. 220)

Evaluation activities add value by helping firms finalize transactions including negotiating contracts, making payments, and taking delivery. FALSE Dess - Chapter 08 #14 Learning Objective: 3

539. (p. 221)

Content such as entertainment programming does little to improve the value proposition of a website. FALSE Dess - Chapter 08 #15 Learning Objective: 3

540.

Business models can be defined as methods companies use to create value and earn profits in a environment.

(p. 221-222)competitive

TRUE Dess - Chapter 08 #16 Learning Objective: 3

81

541.

A commission-based business model, when applied to the Internet, is similar to the broadcast model in which viewers watch shows produced with revenues from commission fees.

(p. 221-222)television

FALSE Dess - Chapter 08 #17 Learning Objective: 3

542. (p. 225)

One way the Internet is creating opportunities for firms with differentiation strategies is by enabling mass customization. TRUE Dess - Chapter 08 #18 Learning Objective: 4

543.

The Internet offers few advantages for focusers because niche players and small companies cannot Internet capabilities as effectively as their larger competitors.

(p. 227-228)implement

FALSE Dess - Chapter 08 #19 Learning Objective: 4

544.

Many differentiation advantages are diminished by the Internet.

(p. 225-226)

TRUE Dess - Chapter 08 #20 Learning Objective: 4

545.

Incumbent firms that thought a niche market was too small to enter in the past may use Internet to enter that segment and compete with focusers.

(p. 227-228)technologies

TRUE Dess - Chapter 08 #21 Learning Objective: 4

546.

The company in the opening case, Toronto Book City, was able to survive industry consolidation by

(p. 210)

A. B. C. D.

choosing a splendid Internet service provider. developing a niche appealing to bibliophiles. contracting supply to small stores. using a human resources consultant. Dess - Chapter 08 #22 Learning Objective: 1

547.

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

(p. 212)

A. B. C. D.

digital technologies. analog technologies. high fidelity technologies. broadband. Dess - Chapter 08 #23 Learning Objective: 2

82

548. (p. 213)

Complete the following sentence: "It is the actual use of the Internet for profitable transactions, ______________________________________________" A. B. C. D.

that has altered the structure of the American economy. not the technology itself, that matters to a company's bottom line. not the sustainability of competitive advantages, that is creating new business opportunities. that is making strategizing in the Internet economy less important. Dess - Chapter 08 #24 Learning Objective: 2

549.

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

(p. 211)

A. B. C. D.

the telephone. television. the automobile. none of the answers are correct Dess - Chapter 08 #25 Learning Objective: 1

550. (p. 212)

According to the text, the types of industries that are likely to be most radically transformed by the Internet are A. B. C. D.

research-intensive industries such as pharmaceuticals. manufacturing-intensive industries such as microprocessors. information-intensive industries such as financial services. all of the answers are correct Dess - Chapter 08 #26 Learning Objective: 2

551.

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

(p. 212)

A. B. C. D.

speed and extent of Internet connectivity. strong vested interests. institutional and regulatory barriers. advances in wireless technology. Dess - Chapter 08 #27 Learning Objective: 2

552.

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

(p. 214)

A. B. C. D.

decreases the threat of new entrants. increases the threat of new entrants. makes it easier to build customer loyalty. increases supplier power. Dess - Chapter 08 #28 Learning Objective: 1

553. (p. 213)

Goldcorp credits _________________ for allowing it to obtain insight as to how to re-open its Red Lake gold mine. A. B. C. D.

globalization larger, older companies new entrants the Internet Dess - Chapter 08 #29 Learning Objective: 2

83

554.

End users are

(p. 214)

A. B. C. D.

the final consumers in a distribution channel. usually the "C" in B2C. likely to have greater bargaining power because of the Internet. all of the answers are correct Dess - Chapter 08 #30 Learning Objective: 1

555. (p. 214)

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. Dess - Chapter 08 #31 Learning Objective: 1

556.

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

(p. 215)

A. B. C. D.

the Internet inhibits the ability of suppliers to offer highly differentiated products or services. Internet technologies cannot easily be imitated. procurement technologies eliminate the need for suppliers. the cost of accessing business customers has increased. Dess - Chapter 08 #32 Learning Objective: 1

557.

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

(p. 215)

A. B. C. D.

the growth of new Web-based businesses has created more outlets for suppliers to sell to. some suppliers have created Web-based purchasing systems that encourage switching. the process of disintermediation makes it possible for some suppliers to reach end users directly. software that links buyers to a supplier's website has created rapid, low-cost ordering capabilities. Dess - Chapter 08 #33 Learning Objective: 1

558.

The creation of opportunities for new functions within the value chain is known as

(p. 216)

A. B. C. D.

channel conflict. disaggregation. disintermediation. reintermediation. Dess - Chapter 08 #34 Learning Objective: 1

559.

In general, the threat of substitutes is heightened because the Internet

(p. 216)

A. B. C. D.

introduces new ways to accomplish the same tasks. lowers switching costs. lowers barriers to entry. increases output per unit of cost. Dess - Chapter 08 #35 Learning Objective: 1

84

560. (p. 218)

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. Dess - Chapter 08 #36 Learning Objective: 1

561. (p. 218)

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 firm's unique selling advantages Dess - Chapter 08 #37 Learning Objective: 1

562.

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

(p. 221)

A. B. C. D.

transaction costs. historical costs. opportunity costs. operating expenses. Dess - Chapter 08 #38 Learning Objective: 3

563.

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

(p. 221)

A. B. C. D.

eliminating supply chain intermediaries evaluating employee performance minimizing office expenses reducing business travel Dess - Chapter 08 #39 Learning Objective: 3

564.

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

(p. 220-221)include:

A. B. C. D.

outsourcing, problem-solving, bill-paying, and delivery. evaluating, bill-paying, customizing, and returning. search, rescue, repair, return. search, evaluation, problem-solving, and transaction. Dess - Chapter 08 #40 Learning Objective: 3

565.

Internet search activities include

(p. 220)

A. B. C. D.

generating action plans. considering alternatives. gathering information. making payments and taking delivery. Dess - Chapter 08 #41 Learning Objective: 3

85

566.

The value-adding activity known as problem-solving

(p. 220)

A. B. C. D.

involves streamlining operations. is typically used in the context of providing unique services. refers to comparing the costs and benefits of various options. creates access to products' ratings and price comparisons. Dess - Chapter 08 #42 Learning Objective: 3

567.

Internet business models

(p. 221)

A. B. C. D.

outline methods that online businesses use to create value. cannot be used by traditional businesses. outline specific actions a firm needs to take to be profitable. cannot be combined to create additional competitive advantages. Dess - Chapter 08 #43 Learning Objective: 3

568. (p. 222)

Canadian financial firm TD Waterhouse was cited by the text as an example of a business model that is A. B. C. D.

referral-based subscription-based prescription-based commission-based Dess - Chapter 08 #44 Learning Objective: 3

569. (p. 224)

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 expenses. D. Online purchase orders are making many transactions paperless, reducing the costs of procurement and paper. Dess - Chapter 08 #45 Learning Objective: 4

570. (p. 225)

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. B. C. D.

electronic data interchange. knowledge management. collaborative design. mass customization. Dess - Chapter 08 #46 Learning Objective: 4

86

571. (p. 225)

Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. B. C. D.

celebrity endorsements prestige packaging exceptional service mass customization Dess - Chapter 08 #47 Learning Objective: 4

572.

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

(p. 225-226)strategy

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. Dess - Chapter 08 #48 Learning Objective: 4

573.

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

(p. 227-228)focus

A. B. C. D.

respond quickly to customer requests. provide more services and features. access markets less expensively. access niche markets in a highly specialized fashion. Dess - Chapter 08 #49 Learning Objective: 4

574.

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

(p. 227-228)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. Dess - Chapter 08 #50 Learning Objective: 4

575.

Among all Canadian small- and medium-sized businesses

(p. 227)

A. incumbent firms are entering market segments that they previously considered to be too small. B. 34% are already relying on the Internet for part of their sales. C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success. D. 3.4% are making profits, the rest are not. Dess - Chapter 08 #51 Learning Objective: 4

87

576.

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

(p. 229)

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 imitated. D. all of the answers are correct Dess - Chapter 08 #52 Learning Objective: 4

577.

Discuss the reasons why the use of Internet technologies is more important to achieving competitive than the technologies themselves.

(p. 212-214)advantages

Answers will vary. Dess - Chapter 08 #53 Learning Objective: 2

578.

Discuss some of the ways that digital technologies are changing how companies conduct business. is the role of the Internet in bringing about these digital technology-driven changes?

(p. 218-223)What

Answers will vary. Dess - Chapter 08 #54 Learning Objective: 3

579.

Briefly explain the impact of the Internet and Internet technologies on the five competitive forces.

(p. 214-218)

Answers will vary. Dess - Chapter 08 #55 Learning Objective: 1

580. (p. 215)

How has the Internet made the problem of channel conflict worse? Provide examples of companies that have used the Internet to sell goods without creating channel conflict. Answers will vary. Dess - Chapter 08 #56 Learning Objective: 1

88

581.

Briefly explain the role of search, evaluation, problem-solving and transaction activities in helping use the Internet to add value. Provide examples of companies that exhibit each of these value-adding activities.

(p. 220-221)firms

Answers will vary. Dess - Chapter 08 #57 Learning Objective: 3

582.

Discuss the function of a business model and its role, if any, in creating competitive advantages. examples of companies that illustrate each of the seven Internet business models, based on commission, advertising, mark-up, production, referral, subscription, and fee-for-service.

(p. 221-223)Provide

Answers will vary. Dess - Chapter 08 #58 Learning Objective: 3

583.

Explain the impact of the Internet on overall cost leadership strategies. What are the advantages and associated with using the Internet to pursue a strategy of cost leadership?

(p. 224-225)pitfalls

Answers will vary. Dess - Chapter 08 #59 Learning Objective: 4

584.

Explain the impact of the Internet on differentiation strategies. What are the advantages and pitfalls with using the Internet to pursue a strategy of differentiation?

(p. 225-226)associated

Answers will vary. Dess - Chapter 08 #60 Learning Objective: 4

585.

Explain the impact of the Internet on focus strategies. What are the advantages and pitfalls with using the Internet to pursue a strategy of focus?

(p. 227-228)associated

Answers will vary. Dess - Chapter 08 #61 Learning Objective: 4

89

586.

What are the benefits and risks associated with using the Internet to generate combination strategies? are Internet-based combination strategies creating competitive advantages?

(p. 229-230)How

Answers will vary. Dess - Chapter 08 #62 Learning Objective: 4

587.

There is no link between a firm's strategy and its structure.

(p. 239)

FALSE Dess - Chapter 09 #1 Learning Objective: 1

588.

In a simple structure where the owner manager makes most of the important decisions, extensive and regulations are used to maintain order.

(p. 240-241)rules

FALSE Dess - Chapter 09 #2 Learning Objective: 2

589.

As Power Corporation grew, it shied away from being an operator of the businesses it ended up

(p. 237-238)owning.

TRUE Dess - Chapter 09 #3 Learning Objective: 1

590.

A simple organizational structure may lead to problems such as unclear boundaries of authority and career advancement options.

(p. 240-241)few

TRUE Dess - Chapter 09 #4 Learning Objective: 2

591.

One disadvantage of a functional structure is that differences in functional orientation may impede coordination and communication.

(p. 241-242)organization

TRUE Dess - Chapter 09 #5 Learning Objective: 2

592.

To enhance integration and control of related product market activities, the functional structure centralization.

(p. 241-242)minimizes

FALSE Dess - Chapter 09 #6 Learning Objective: 2

593.

A major disadvantage of adopting a divisional structure is the tendency for managers to focus on objectives.

(p. 242-245)short-term

TRUE Dess - Chapter 09 #7 Learning Objective: 2

90

594.

Rogers Communications has only two divisions: wireless and media.

(p. 244)

FALSE Dess - Chapter 09 #8 Learning Objective: 2

595. (p. 245)

The strategic business unit (SBU) and holding company structure are variants of the functional form of structure. FALSE Dess - Chapter 09 #9 Learning Objective: 2

596.

The strategic business unit (SBU) structure is also referred to as the conglomerate structure.

(p. 245)

FALSE Dess - Chapter 09 #10 Learning Objective: 2

597.

The matrix structure attempts to combine the advantages of the functional and product-oriented

(p. 246-247)structure.

TRUE Dess - Chapter 09 #11 Learning Objective: 2

598.

A matrix organization is organized strictly along product lines.

(p. 246-247)

FALSE Dess - Chapter 09 #12 Learning Objective: 2

599.

A major disadvantage of the matrix structure is that it duplicates the use of specialized personnel, and facilities.

(p. 246-247)equipment,

FALSE Dess - Chapter 09 #13 Learning Objective: 2

600. (p. 247)

A worldwide product division structure is used when global strategies require that each division be responsible for overall efficiency and performance. TRUE Dess - Chapter 09 #14 Learning Objective: 3

601. (p. 251)

The purpose of boundaryless forms of organizing is to facilitate the widespread sharing of knowledge and information across internal and external boundaries of the organization. TRUE Dess - Chapter 09 #15 Learning Objective: 4

602.

Boundaryless structures replace traditional structures.

(p. 252)

FALSE Dess - Chapter 09 #16 Learning Objective: 4

91

603.

In a barrier-free organization, differences in skills, authority, and talent disappear.

(p. 252)

FALSE Dess - Chapter 09 #17 Learning Objective: 5

604.

An advantage of the barrier-free form of organizing is that internal cooperation and shared objectives not required for it to work.

(p. 252-255)are

FALSE Dess - Chapter 09 #18 Learning Objective: 5

605.

Because the modular form of organizing involves outsourcing vital functions, modular firms often full strategic control.

(p. 255-258)forfeit

FALSE Dess - Chapter 09 #19 Learning Objective: 5

606.

Modular companies can achieve rapid growth because they don't require large investments in fixed

(p. 255-258)assets.

TRUE Dess - Chapter 09 #20 Learning Objective: 5

607. (p. 252)

Outsourcing relieves companies of the requirement to maintain skill levels needed to manufacture essential components. TRUE Dess - Chapter 09 #21 Learning Objective: 5

608.

One of the risks of outsourcing is a loss of cross-functional skills.

(p. 256)

TRUE Dess - Chapter 09 #22 Learning Objective: 5

609. (p. 259)

The virtual type of organization is a network of independent companies linked together to share skills, costs, and access to one another's markets. TRUE Dess - Chapter 09 #23 Learning Objective: 5

610. (p. 259)

The virtual organization is characterized by participating firms which pursue a collective strategy that enables them to cope with environmental uncertainty through cooperative efforts. TRUE Dess - Chapter 09 #24 Learning Objective: 5

611.

Managing virtual structures requires new and difficult-to-acquire managerial skills.

(p. 259)

TRUE Dess - Chapter 09 #25 Learning Objective: 5

92

612. (p. 239)

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

divisional structure. functional structure. product-market structure. geographic structure. Dess - Chapter 09 #26 Learning Objective: 1

613.

Canadian conglomerate Power Corporation had its original corporate roots in

(p. 237-238)

A. B. C. D.

transportation networks. the electricity generating industry. pulp and paper. an ailing bus company. Dess - Chapter 09 #27 Learning Objective: 1

614. (p. 239)

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. B. C. D.

divisional structure. functional structure. matrix structure. international structure. Dess - Chapter 09 #28 Learning Objective: 1

615. (p. 239)

Generally speaking, discussions of the relationship between strategy and structure strongly imply that A. B. C. D.

strategy follows structure. structure follows strategy. strategy can effectively be formulated without considering structural elements. structure typically has a very small influence on a firm's strategy. Dess - Chapter 09 #29 Learning Objective: 1

616.

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

(p. 240-241)

A. B. C. D.

Small firms with a narrow product-market scope will adopt such a structure. Decision making authority is highly centralized. There is little specialization of tasks. Creativity and individualism are rare. Dess - Chapter 09 #30 Learning Objective: 2

617.

A simple structure is characterized by

(p. 240-241)

A. B. C. D.

high specialization and low centralization. low specialization and high centralization. low formality and low creativity. high formality and low centralization. Dess - Chapter 09 #31 Learning Objective: 2

93

618.

Functional structures are usually found in organizations where there is

(p. 241-242)

A. B. C. D.

high volume production. unrelated product lines or service offerings. very little vertical integration. a strong need to decentralize decision making. Dess - Chapter 09 #32 Learning Objective: 2

619. (p. 242)

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. B. C. D.

simple structure. functional structure. divisional structure. matrix structure. Dess - Chapter 09 #33 Learning Objective: 2

620.

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

(p. 242)

A. B. C. D.

Decentralized decision-making enhances an organization-wide perspective across functions. It facilitates the development of general management talent. Pooling of specialists enhances coordination and control. It is easy to establish uniform performance standards. Dess - Chapter 09 #34 Learning Objective: 2

621.

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

(p. 242)

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. Dess - Chapter 09 #35 Learning Objective: 2

622.

A divisional structure

(p. 242-243)

A. B. C. D.

is organized around functional area departments. typically improves the performance of firms pursuing a strategy of vertical integration. facilitates the development of general managers. enhances centralized decision making. Dess - Chapter 09 #36 Learning Objective: 2

623.

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

(p. 242-243)

A. B. C. D.

efficient use of managerial and technical talent an enhanced ability to respond quickly to changes in the external environment a high degree of emphasis on long-term performance uniformity in image and quality across divisions Dess - Chapter 09 #37 Learning Objective: 2

94

624.

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

(p. 242-243)

A. B. C. D.

It can be very expensive compared to a functional organizational structure. There is a strong tendency for divisions to focus on short-term performance. There can be dysfunctional competition among divisions. There is separation of strategic and operating control. Dess - Chapter 09 #38 Learning Objective: 2

625.

Canadian media giant Rogers is divided into which of the following divisions?

(p. 244)

A. B. C. D.

wireless, highspeed, ISDN Cable TV, Internet cable, government media cable, media, wireless wireless residential, wireless corporate Dess - Chapter 09 #39 Learning Objective: 2

626. (p. 245)

All of the following are advantages of a strategic business unit (SBU) type of organizational structure except: 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. Dess - Chapter 09 #40 Learning Objective: 2

627.

Important advantages of a holding company structure include

(p. 245)

A. B. C. D.

savings in personnel and overhead expenses associated with a small corporate office. a high level of awareness at the corporate office of issues facing individual divisions. a high level of control of division executives by executives at the corporate level. gaining synergistic benefits across businesses. Dess - Chapter 09 #41 Learning Objective: 2

628. (p. 245)

Diversified Canadian conglomerate Weston has put its businesses into three primary SBUs, which are A. B. C. D.

fisheries, bakeries, and retail. retail, shipping, and online sales through Loblaws.com. baked goods, unbaked goods, and grains and oilseeds retail, wholesale, and manufacturing. Dess - Chapter 09 #42 Learning Objective: 2

629.

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

(p. 246-247)processes

A. B. C. D.

divisional matrix holding company functional Dess - Chapter 09 #43 Learning Objective: 2

95

630.

Which of the following is considered to be an advantage of a matrix structure?

(p. 246-247)

A. B. C. D.

the layering of matrices increased clarity in reporting relationships increased responsiveness to the market fewer power struggles and reduced conflict Dess - Chapter 09 #44 Learning Objective: 2

631. (p. 249)

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. B. C. D.

worldwide functional. worldwide product division. worldwide matrix. international division. Dess - Chapter 09 #45 Learning Objective: 3

632. (p. 249)

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. B. C. D.

worldwide functional. worldwide product division. worldwide matrix. international division. Dess - Chapter 09 #46 Learning Objective: 3

633.

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

(p. 251)

A. B. C. D.

vertical boundaries. horizontal boundaries. external boundaries. geographic boundaries. Dess - Chapter 09 #47 Learning Objective: 4

634.

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

(p. 251-252)

A. B. C. D.

vertical boundaries horizontal boundaries external boundaries all of the above Dess - Chapter 09 #48 Learning Objective: 4

635.

Which of the following is not a boundaryless organizational design?

(p. 251-252)

A. B. C. D.

virtual modular matrix barrier-free Dess - Chapter 09 #49 Learning Objective: 4

96

636. (p. 252)

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be A. B. C. D.

the combined technical skills of the members. similarities in the way team members solve problems. the way team members treat each other. similarities in the age and experience of team members. Dess - Chapter 09 #50 Learning Objective: 5

637.

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

(p. 254-255)

A. B. C. D.

Lack of strong leadership can lead to coordination problems. Democratic process can be time-consuming and difficult to manage. Fewer internal barriers means fewer political issues to deal with. If trust among employees is not sufficiently high, organizational performance may suffer. Dess - Chapter 09 #51 Learning Objective: 5

638. (p. 256)

What type of organization is defined as "a central hub surrounded by networks of outside suppliers and specialists"? A. B. C. D.

matrix virtual modular barrier-free Dess - Chapter 09 #52 Learning Objective: 5

639.

What is the name of the practice that many modular organizations use to grow?

(p. 256)

A. B. C. D.

operational effectiveness outsourcing strategic leveraging strategic enabling Dess - Chapter 09 #53 Learning Objective: 5

640.

What advantages does outsourcing provide an organization?

(p. 256)

A. B. C. D.

accessing best-in-class goods and services enabling rapid expansion with relatively low capital investment focusing scarce resources on core competencies all of the above Dess - Chapter 09 #54 Learning Objective: 5

641.

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

(p. 257-258)

A. B. C. D.

loss of critical skills loss of cross-functional skills loss of control over a supplier loss of non-vital functions Dess - Chapter 09 #55 Learning Objective: 5

97

642.

The phrase that best defines a virtual organization is

(p. 259)

A. B. C. D.

a dot.com company. a type of modular structure. an organization that uses information technology to integrate different functions. a continually evolving network of independent companies. Dess - Chapter 09 #56 Learning Objective: 5

643. (p. 259)

Complete the following sentence: "Virtual organizations ____________________________ whereas modular organizations ____________________________." A. B. C. D.

are usually permanent; are usually temporary accept interdependent destinies; pursue collective strategies pursue collective strategies; forfeit strategic control give up part of their strategic control; retain full strategic control Dess - Chapter 09 #57 Learning Objective: 5

644.

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

(p. 259-260)

A. B. C. D.

difficulty in individual and organizational knowledge sharing potential loss of operational control among partners loss of strategic control over emerging technology difficulty in determining where one company ends and another begins due to close interdependencies Dess - Chapter 09 #58 Learning Objective: 5

645.

How do organizational structures change as organizations grow and mature? What are the dominant of growth?

(p. 239-240)patterns

Answers will vary. Dess - Chapter 09 #59 Learning Objective: 1

646.

Describe the attributes of a simple organizational structure. What are the advantages and associated with using the simple organizational form?

(p. 240-241)disadvantages

Answers will vary. Dess - Chapter 09 #60 Learning Objective: 2

647.

Describe the attributes of a functional organizational structure. What are the advantages and associated with using the functional organizational form?

(p. 241-242)disadvantages

Answers will vary. Dess - Chapter 09 #61 Learning Objective: 2

98

648.

Describe the attributes of a divisional organizational structure. What are the advantages and associated with using the divisional organizational form?

(p. 242-245)disadvantages

Answers will vary. Dess - Chapter 09 #62 Learning Objective: 2

649. (p. 245)

Briefly describe the strategic business unit (SBU) and holding company organizational structures. Under what circumstances do organizations choose these forms of organizing? Answers will vary. Dess - Chapter 09 #63 Learning Objective: 2

650. (p. 246)

Describe the attributes of a matrix organizational structure. What are the advantages and disadvantages associated with using the matrix organizational form? Answers will vary. Dess - Chapter 09 #64 Learning Objective: 2

651. (p. 247)

Discuss the three main contingencies that seem to influence the structure adopted by firms with international operations. Answers will vary. Dess - Chapter 09 #65 Learning Objective: 3

652.

Discuss how changes in today's workforce and the business environment have contributed to growth the use of boundaryless organizational designs.

(p. 251-252)in

Answers will vary. Dess - Chapter 09 #66 Learning Objective: 4

653.

Discuss the uses and limitations of the barrier-free organizational structure. What is the role of teams the barrier-free organization?

(p. 252-255)in

Answers will vary. Dess - Chapter 09 #67 Learning Objective: 5

99

654.

Discuss the uses and limitations of the modular organizational structure. What is the role of in the modular organization?

(p. 255-256)outsourcing

Answers will vary. Dess - Chapter 09 #68 Learning Objective: 5

655. (p. 270)

For firms competing in highly unstable and turbulent industries, "traditional" strategic controls are most appropriate. FALSE Dess - Chapter 10 #1 Learning Objective: 1

656.

Sales quotas, operating budgets, and production schedules are examples of "traditional" controls.

(p. 270)

TRUE Dess - Chapter 10 #2 Learning Objective: 1

657. (p. 269)

Enron, WorldCom, and other U.S. companies have suffered from management abuses; Canada's public companies have not survived unscathed. TRUE Dess - Chapter 10 #3 Learning Objective: 1

658.

"Contemporary" strategic controls involve comparing actual performance to predetermined goals.

(p. 270)

FALSE Dess - Chapter 10 #4 Learning Objective: 1

659.

Continuous monitoring enhances an organization's ability to respond with speed and flexibility.

(p. 270-271)

TRUE Dess - Chapter 10 #5 Learning Objective: 2

660. (p. 269)

The U.S. Congress introduced the Sarbanes-Oxley Act in 2002 to ensure better governance of public corporations. Similar provisions have NOT been put in place in Canada. FALSE Dess - Chapter 10 #6 Learning Objective: 1

661. (p. 273)

For young managers who see themselves as free agents, behavioural controls such as rewards and culture can be an effective way to enhance organizational loyalty. TRUE Dess - Chapter 10 #7 Learning Objective: 3

100

662.

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

(p. 274-275)

FALSE Dess - Chapter 10 #8 Learning Objective: 3

663.

An organization's reward system is typically a weak method of motivating employees.

(p. 275-276)

FALSE Dess - Chapter 10 #9 Learning Objective: 3

664.

Different functional areas within an organization often have different reward systems.

(p. 276)

TRUE Dess - Chapter 10 #10 Learning Objective: 3

665. (p. 275)

Reward systems that reinforce an organization's core values and contribute to organizational cohesiveness are the least effective type. FALSE Dess - Chapter 10 #11 Learning Objective: 3

666.

For a reward system to be effective, it must be perceived as fair and equitable.

(p. 276)

TRUE Dess - Chapter 10 #12 Learning Objective: 3

667.

Boundaries and constraints, when used properly, can minimize improper and unethical conduct.

(p. 276)

TRUE Dess - Chapter 10 #13 Learning Objective: 3

668.

In terms of corporate culture, Cirque du Soleil's focus is on customer service, not innovation.

(p. 274)

FALSE Dess - Chapter 10 #14 Learning Objective: 3

669. (p. 277)

Short-term objectives and action plans are types of boundaries that channel the efforts of employees toward goal accomplishment. TRUE Dess - Chapter 10 #15 Learning Objective: 3

670. (p. 277)

Unexpected events (such as wildcat strikes or new government regulations) have little effect on short-term objectives that need to remain fixed to be effective. FALSE Dess - Chapter 10 #16 Learning Objective: 3

101

671. (p. 277)

Action plans permit a degree of autonomy for managers who sometimes must modify activities to achieve the desired outcome. TRUE Dess - Chapter 10 #17 Learning Objective: 3

672.

In firms that follow related diversification strategies, reward and control systems rely on qualitative since the organization needs to reward and reinforce behaviours that facilitate sharing and collaboration.

(p. 278-279)indicators

TRUE Dess - Chapter 10 #18 Learning Objective: 3

673. (p. 281)

Product diversification by a company is a cheaper way to reduce shareholder risk than portfolio diversification by shareholders. FALSE Dess - Chapter 10 #19 Learning Objective: 4

674.

The risk of being acquired by hostile raiders is often referred to as the takeover constraint.

(p. 290)

TRUE Dess - Chapter 10 #20 Learning Objective: 5

675. (p. 290)

Auditors are appointed by the Securities and Exchange Commission to audit a company's financial statements. FALSE Dess - Chapter 10 #21 Learning Objective: 5

676.

Stock analysts generally issue more "sell" recommendations than "buy" recommendations.

(p. 290)

FALSE Dess - Chapter 10 #22 Learning Objective: 5

677. (p. 291)

Public companies are required by law to disclose information regarding executive compensation packages. TRUE Dess - Chapter 10 #23 Learning Objective: 5

678. (p. 291)

The Sarbanes-Oxley Act of 2002 requires that CEOs and CFOs of publicly-listed companies must reveal off-balance-sheet finances and vouch for the accuracy of information provided. TRUE Dess - Chapter 10 #24 Learning Objective: 5

102

679.

The Sarbanes-Oxley Act of 2002 does not apply to Canadian publicly listed companies operating in U.S. that are listed on U.S. stock exchanges

(p. 291-292)the

FALSE Dess - Chapter 10 #25 Learning Objective: 5

680. (p. 270)

The "traditional" approach to strategic control is sequential. Which of the following is not one of the steps in the sequence? A. B. C. D.

Action plans are submitted by lower level managers. Performance is measured against the predetermined goal. Strategies are implemented. Strategies are formulated and top management sets goals. Dess - Chapter 10 #26 Learning Objective: 1

681.

The primary drawback of "traditional" strategic control systems is that

(p. 270)

A. B. C. D.

they are only appropriate when the environment is stable and simple. goals and objectives cannot be measured with a high level of certainty. they lead to complacency. they lack the flexibility needed to adjust to changes in the environment. Dess - Chapter 10 #27 Learning Objective: 1

682.

For businesses facing complex and turbulent business environments

(p. 270)

A. B. C. D.

goals and objectives that are uncertain prevent opportunism. traditional strategic controls are usually inappropriate. complacency about predetermined milestones can prevent adaptability. detailed plans are needed to maintain order. Dess - Chapter 10 #28 Learning Objective: 1

683.

McGill University's Prof. Mintzberg, writing about leaders and strategy, had observations which

(p. 271)

A. B. C. D.

said strategic control systems fail to detect changes in consumer demand. "projected the past into the future." encourage rigid planning and goal-setting processes. cast doubt on the value of rigid planning and goal-setting processes. Dess - Chapter 10 #29 Learning Objective: 2

684.

Contemporary approaches to strategic control rely primarily on

(p. 272)

A. B. C. D.

feedback controls. single-loop learning. double-loop learning. comparative learning. Dess - Chapter 10 #30 Learning Objective: 2

103

685.

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

(p. 272)

A. B. C. D.

It is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans. It must focus on constantly changing information that is strategically important. It circumvents the need for face-to-face meetings among superiors, subordinates, and peers. It generates information that is important enough to demand regular and frequent attention. Dess - Chapter 10 #31 Learning Objective: 2

686. (p. 274)

In terms of building a strong and effective corporate culture, Canada's Cirque du Soleil was described as focusing on A. B. C. D.

innovation. customer service. strategy formulation. operational efficiency. Dess - Chapter 10 #32 Learning Objective: 3

687. (p. 276)

Which of the following approaches to behavioural 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. B. C. D.

culture rewards boundaries all of the answers are equally important Dess - Chapter 10 #33 Learning Objective: 3

688. (p. 276)

Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by A. B. C. D.

posting written statements of the organization's goals and objectives. discouraging the formation of subcultures that isolate work groups. designing effective reward systems. encouraging employees to see themselves as free agents. Dess - Chapter 10 #34 Learning Objective: 3

689.

All of the following are examples of how organizational culture exerts behavioural control except:

(p. 274)

A. B. C. D.

Culture helps maintain control by creating behavioural norms. Culture generates unwritten standards of acceptable behaviour. Culture encourages individual identification with the organization and its objectives. Culture sets explicit boundaries. Dess - Chapter 10 #35 Learning Objective: 3

690. (p. 277)

In terms of providing short-term objectives and action plans, which Canadian company was mentioned by the text in Chapter Ten as having the vision of being a "national champion and Canada's most trusted company"? A. B. C. D.

Northern Telecom Canadian Tire Four Seasons Cirque du Soleil Dess - Chapter 10 #36 Learning Objective: 3

104

691.

Which of the following is not one of the functions of reward and incentive systems?

(p. 276)

A. B. C. D.

They represent a poor means of influencing an organization's culture. They focus efforts on high-priority tasks. They motivate high levels of individual and collective task performance. They represent an effective control mechanism. Dess - Chapter 10 #37 Learning Objective: 3

692.

All of the following are characteristics of effective reward and incentive systems except:

(p. 277)

A. B. C. D.

Performance measures are clear and highly visible. The structure is fixed to assure employees of consistency. The compensation system is perceived as fair and equitable. Objectives are well understood and broadly accepted. Dess - Chapter 10 #38 Learning Objective: 3

693.

The causes of counterproductive behaviour in organizations include

(p. 277)

A. B. C. D.

lack of a clear understanding of organizational goals and objectives. motivated self-interest. outright malfeasance. all of the answers are correct Dess - Chapter 10 #39 Learning Objective: 3

694.

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

(p. 277)

A. B. C. D.

an emphasis on "do your best" goals. being achievable yet challenging. providing a specific time horizon for their attainment. being specific and measurable. Dess - Chapter 10 #40 Learning Objective: 3

695. (p. 281)

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. B. C. D.

low; financial low; behavioural high; financial high; behavioural Dess - Chapter 10 #41 Learning Objective: 4

696. (p. 281)

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

low; financial low; behavioural high; financial high; behavioural Dess - Chapter 10 #42 Learning Objective: 4

105

697. (p. 281)

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

low; financial low; behavioural high; financial high; behavioural Dess - Chapter 10 #43 Learning Objective: 4

698.

External control mechanisms include all of the following except

(p. 289-292)

A. B. C. D.

auditors. analysts. competitors. the market for corporate control. Dess - Chapter 10 #44 Learning Objective: 5

699.

Managerial opportunism can take all of the following forms except

(p. 290)

A. B. C. D.

shirking. job-hopping. on-the-job consumption. excessive product diversification. Dess - Chapter 10 #45 Learning Objective: 5

700.

By takeover constraint, we mean

(p. 290)

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. Dess - Chapter 10 #46 Learning Objective: 5

701.

It is generally argued that the takeover constraint deters management from

(p. 290)

A. B. C. D.

engaging in opportunistic behaviour. considering acquiring other companies. declaring dividends. increasing a firm's level of borrowing. Dess - Chapter 10 #47 Learning Objective: 5

702. (p. 269)

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. Dess - Chapter 10 #48 Learning Objective: 5

106

703. (p. 269)

Canadian IT company Nortel was cited by the text as an example of "flawed corporate governance" because A. top executives received bonuses of $21 million based on profits called into question. B. the company admitted it possessed no reliable financial statements since 2001. C. former CEO John Roth cashed in $135 million of stock options just before the stock price tanked from $124 to 75 cents. D. all of the answers are correct Dess - Chapter 10 #49 Learning Objective: 5

704.

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

(p. 291)

A. B. C. D.

quarterly and annual filings of financial information. stock trading by insiders. details of new products under development. details of executive compensation packages. Dess - Chapter 10 #50 Learning Objective: 5

705.

What are the advantages and disadvantages associated with using "traditional" approaches to control?

(p. 268-270)strategic

Answers will vary. Dess - Chapter 10 #51 Learning Objective: 1

706.

What are the four characteristics of effective information control systems? Give examples of how apply these practices.

(p. 271-272)firms

Answers will vary. Dess - Chapter 10 #52 Learning Objective: 2

707.

Why is it important to have a balance among the three behavioural controls—culture, rewards, and Is there a danger associated with emphasizing one behavioural approach more than another?

(p. 272-273)boundaries?

Answers will vary. Dess - Chapter 10 #53 Learning Objective: 3

708.

Discuss the benefits and risks of using reward and incentive systems as a means of strategic control.

(p. 275-276)

Answers will vary. Dess - Chapter 10 #54 Learning Objective: 3

107

709. (p. 277)

What are the characteristics of short-term objectives? Provide examples of practical applications of these characteristics by organizations. Answers will vary. Dess - Chapter 10 #55 Learning Objective: 3

710. (p. 281)

Discuss the contingent nature of strategic controls. How would controls be different for firms pursuing overall low-cost strategies versus differentiation strategies? How would the controls used for related diversification differ from those used for unrelated diversification? Answers will vary. Dess - Chapter 10 #56 Learning Objective: 4

711.

What are the three key means to align the interests of owners (shareholders) and managers in a

(p. 283-289)corporation?

Answers will vary. Dess - Chapter 10 #57 Learning Objective: 5

712.

Identify at least three external control mechanisms. Discuss the role played by each of these.

(p. 289-292)

Answers will vary. Dess - Chapter 10 #58 Learning Objective: 5

713.

Royal Group of Woodbridge became North America's largest PVC extruder.

(p. 297)

TRUE Dess - Chapter 11 #1 Learning Objective: 1

714.

Setting a direction is the leadership activity that involves developing a strategic vision of what the could become.

(p. 298-300)organization

TRUE Dess - Chapter 11 #2 Learning Objective: 1

715. (p. 301)

Designing the organization is the leadership activity that involves building structures, teams, systems, and processes that facilitate the implementation of a leader's vision. TRUE Dess - Chapter 11 #3 Learning Objective: 2

108

716. (p. 301)

Leaders play an important role in sustaining an organization's culture, but they are powerless to change it. FALSE Dess - Chapter 11 #4 Learning Objective: 2

717. (p. 301)

Leaders are not expected to accept personal responsibility for ethical behaviour in an organization because ethics is a matter of individual choice. FALSE Dess - Chapter 11 #5 Learning Objective: 2

718. (p. 303)

Systemic barriers to change refer to elements of an organization's design, structure, and reporting relationships that impede the flow of information. TRUE Dess - Chapter 11 #6 Learning Objective: 2

719. (p. 303)

Behavioural barriers to change occur because of conflicts between departments, conflicts arising from power relationships, and refusal to share information. FALSE Dess - Chapter 11 #7 Learning Objective: 2

720.

The two broad bases of a leader's power are organizational and hierarchical.

(p. 304)

FALSE Dess - Chapter 11 #8 Learning Objective: 2

721. (p. 304)

"Coercive power" is the power exercised by use of fear of punishment for errors of either omission or commission by employees. TRUE Dess - Chapter 11 #9 Learning Objective: 2

722. (p. 302)

In terms of the strategy of expansion, with over 2,400 outlets in Canada, Tim Hortons has much room for growth. FALSE Dess - Chapter 11 #10 Learning Objective: 2

723.

Emotional Intelligence (EI) is generally a better predictor of life success than intelligence quotient

(p. 304-308)(IQ).

TRUE Dess - Chapter 11 #11 Learning Objective: 3

109

724. (p. 307)

Empathy, one of the components of emotional intelligence (EI), refers to one's proficiency in managing relationships and building networks. FALSE Dess - Chapter 11 #12 Learning Objective: 3

725. (p. 310)

Organizational learning works best when an organization's leaders gather information and teach it to employees who are like their students. FALSE Dess - Chapter 11 #13 Learning Objective: 4

726.

Successful learning organizations have a proactive, creative approach to the unknown.

(p. 309)

TRUE Dess - Chapter 11 #14 Learning Objective: 4

727. (p. 313)

A key function of the leaders in a learning organization is to generate an organization-wide commitment to the status quo. FALSE Dess - Chapter 11 #15 Learning Objective: 4

728. (p. 314)

Inspiring and motivating people with a mission or purpose is a necessary and sufficient condition for developing a learning organization. FALSE Dess - Chapter 11 #16 Learning Objective: 4

729. (p. 310)

To successfully empower employees to achieve organizational goals, leaders must perform the tasks of resource allocation and power brokering. FALSE Dess - Chapter 11 #17 Learning Objective: 4

730. (p. 310)

In the "top-down" approach to empowerment, leaders clarify the mission, delegate responsibility, and hold people accountable for results. TRUE Dess - Chapter 11 #18 Learning Objective: 4

731.

Canadian steel company Dofasco's 7,300 employees are NON-unionized.

(p. 311)

TRUE Dess - Chapter 11 #19 Learning Objective: 4

110

732. (p. 312)

"Open book" management is a technique for gathering and disseminating internal information so that all employees can be involved in decision making and management. TRUE Dess - Chapter 11 #20 Learning Objective: 4

733.

Business ethics is the application of ethical standards to commercial enterprise.

(p. 314)

TRUE Dess - Chapter 11 #21 Learning Objective: 5

734.

Ethical behaviour can be reinforced through the use of an appropriate reward and evaluation system.

(p. 315)

TRUE Dess - Chapter 11 #22 Learning Objective: 5

735.

An effective way to instill ethical behaviour in an organization is to distribute rewards strictly on the of outcomes.

(p. 320-321)basis

FALSE Dess - Chapter 11 #23 Learning Objective: 5

736.

In the opening case, Royal Group Technologies was challenged because

(p. 297)

A. B. C. D.

De Zen paid little attention to financial ramifications. the CEO was obsessed with controlling all activities. it did not facilitate the development of competent executives. all of the answers are correct Dess - Chapter 11 #24 Learning Objective: 1

737.

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

(p. 299)

A. B. C. D.

goal-oriented satisfied with the status quo reactive focused on past performance Dess - Chapter 11 #25 Learning Objective: 1

738. (p. 300)

According to the text, effective leadership is like a three-legged stool consisting of all of the following except A. B. C. D.

dedication to maintaining the status quo. nurturing a culture dedicated to excellence and ethical behaviour. determining a direction. designing the organization. Dess - Chapter 11 #26 Learning Objective: 1

111

739.

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

(p. 300)

A. B. C. D.

a clear future direction. a framework for their organization's mission and goals. enhanced employee communication and commitment. all of the answers are correct Dess - Chapter 11 #27 Learning Objective: 2

740.

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

(p. 301)

A. B. C. D.

insufficient mechanisms to integrate and coordinate activities across the firm. inadequate accountability among managers and employees. inappropriate budgeting and control systems. teams, systems, and organizational processes that facilitate implementation. Dess - Chapter 11 #28 Learning Objective: 2

741. (p. 301)

In terms of nurturing a corporate culture, Canada's Cirque du Soleil was transformed by Guy Laliberte who A. B. C. D.

set a firm direction. pushed himself and his artists to continuously experiment. was poor at rooting out unethical behaviour. maintained the status quo. Dess - Chapter 11 #29 Learning Objective: 2

742.

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

(p. 301)

A. B. C. D.

status quo culture reporting relationships rules and regulations Dess - Chapter 11 #30 Learning Objective: 2

743.

Canadian icon Tim Hortons' future plans

(p. 302)

A. B. C. D.

remain focused on expanding the 2,400 stores in Canada. involve expanding on their 250 franchises they have in the U.S. are thwarted by political barriers. are limited by behavioural barriers. Dess - Chapter 11 #31 Learning Objective: 2

744. (p. 303)

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. B. C. D.

systemic barriers political barriers behavioural barriers all of the answers are correct Dess - Chapter 11 #32 Learning Objective: 2

112

745.

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

(p. 303)

A. B. C. D.

personal time constraints political barriers vested interests in the status quo all of the answers are correct Dess - Chapter 11 #33 Learning Objective: 2

746.

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

(p. 304)

A. B. C. D.

legitimate power. reward power. referent power. coercive power. Dess - Chapter 11 #34 Learning Objective: 2

747.

Expert power

(p. 304)

A. is 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. is derived from referent power. D. is derived from the leader's capability and knowledge in a particular field. Dess - Chapter 11 #35 Learning Objective: 2

748.

Coercive power

(p. 304)

A. is the power exercised by use of fear of punishment for errors of omission or commission by employees. B. is the power of persuasion exercised by a charismatic leader to get compliance from reluctant subordinates. C. arises from a manager's access, control, and distribution of information that is not freely available to everyone in an organization. D. is the ability of the leader or manager to confer rewards for positive behaviours or outcomes. Dess - Chapter 11 #36 Learning Objective: 2

749.

The source of referent power is

(p. 304)

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. Dess - Chapter 11 #37 Learning Objective: 2

750.

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

(p. 305)

A. B. C. D.

technical skills. cognitive abilities. calculative abilities. emotional intelligence. Dess - Chapter 11 #38 Learning Objective: 3

113

751.

All of the following are components of emotional intelligence (EI) except

(p. 306)

A. B. C. D.

self-awareness. self-regulation. self-promotion. empathy. Dess - Chapter 11 #39 Learning Objective: 3

752.

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

(p. 309)

A. B. C. D.

They create a proactive, creative approach to the unknown. They actively solicit the involvement of employees at all levels. They regularly engage in activities to reinforce the status quo. They enable everyone to use their intelligence and apply their imagination. Dess - Chapter 11 #40 Learning Objective: 4

753. (p. 310)

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. B. C. D.

necessary and sufficient condition necessary but not a sufficient condition goal but not a necessary condition goal and a required pre-condition Dess - Chapter 11 #41 Learning Objective: 4

754. (p. 311)

Which company does the book cite as being the first Canadian company to offer profit sharing to its employees in 1938? A. B. C. D.

Zurich Canada - insurance. Tim Hortons - fast food. Dofasco - steel. Westons - food. Dess - Chapter 11 #42 Learning Objective: 4

755.

The "top down" perspective of empowerment

(p. 310)

A. B. C. D.

encourages intelligent risk-taking. trusts people to perform. encourages cooperative behaviour. delegates responsibility. Dess - Chapter 11 #43 Learning Objective: 4

756.

The "bottom-up" perspective of empowerment

(p. 310)

A. B. C. D.

clarifies the organization's values and mission. builds teams to encourage cooperative behaviour. communicates specific plans. encourages employees to "ask permission rather than forgiveness." Dess - Chapter 11 #44 Learning Objective: 4

114

757. (p. 310)

The empowerment perspective that involves trusting people to "do the right thing," take intelligent risks, and act with a sense of ownership is known as A. B. C. D.

the leadership perspective. the top-down approach. the bottom-up approach. the risk-taking model. Dess - Chapter 11 #45 Learning Objective: 4

758. (p. 310)

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

the leadership perspective. the top-down approach. the bottom-up approach. the accounting model. Dess - Chapter 11 #46 Learning Objective: 4

759. (p. 311)

Manufacturing employees at Dofasco 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. B. C. D.

hierarchical control. knowledge management. enabling heroes and drones. employee empowerment. Dess - Chapter 11 #47 Learning Objective: 4

760. (p. 312)

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 employee. 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. Dess - Chapter 11 #48 Learning Objective: 4

761.

Internal benchmarking at Whole Foods

(p. 311-312)

A. B. C. D.

is used by teams to compete against other teams in their stores. is used by teams which compete against their own goals for sales, growth, and productivity. is used by teams to compete against similar teams at different stores and regions. all of the answers are correct Dess - Chapter 11 #49 Learning Objective: 4

762.

Functional benchmarking

(p. 313)

A. B. C. D.

is not very useful for organizations with a divisional organizational structure. endeavours to determine best practices regardless of industry. restricts the search for best practices to competitors. is useful when researching industry-specific standards. Dess - Chapter 11 #50 Learning Objective: 4

115

763.

All of the following are guidelines an organization can use to promote the challenging of the status except

(p. 313-314)quo

A. B. C. D.

establishing a "culture of dissent." forcefully creating a sense of urgency. fostering a culture that encourages risk taking. creating a results-based reward system. Dess - Chapter 11 #51 Learning Objective: 4

764. (p. 314)

Companies that cultivate cultures of experimentation and curiosity make sure that _________ is not, in essence, a bad thing. A. B. C. D.

success failure dissent risk taking Dess - Chapter 11 #52 Learning Objective: 4

765.

Which of the following statements about ethics is false?

(p. 314)

A. B. C. D.

Ethics may be defined as a system of right and wrong. Ethics assists individuals in deciding when an act is moral or immoral. Ethics is not concerned with whether or not an act is socially desirable. Business ethics is the application of ethical standards to commercial enterprises. Dess - Chapter 11 #53 Learning Objective: 5

766.

All of the following statements about ethical organizations are true except

(p. 314-316)

A. B. C. D.

the potential benefits of an ethical organization are few but direct. ethical values shape the search for opportunities. organizational ethics define what a company is and what it stands for. ethics provide a common frame of reference that serves as a unifying force. Dess - Chapter 11 #54 Learning Objective: 5

767.

CIBC was involved with Enron. This involvement

(p. 315)

A. had no effect on CIBC because no Canadian executives were charged. B. included all other Canadian banks. C. meant the CEO of CIBC retired before the Enron announcement and took $52 million in pay and bonuses. D. had no cover up. Dess - Chapter 11 #55 Learning Objective: 5

768.

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

(p. 316-318)

A. B. C. D.

instituting a reward system which considers outcomes as its primary criterion. using leaders as role models of ethical behaviour. issuing statements describing the organization's commitment to certain standards of behaviour. using the organization's information systems as a control system. Dess - Chapter 11 #56 Learning Objective: 5

116

769. (p. 320)

A _________________ is a statement describing an organization's commitment to certain standards of ethical behaviour. A. B. C. D.

role model control system corporate credo reward structure Dess - Chapter 11 #57 Learning Objective: 5

770.

Briefly discuss the three interdependent activities that are critical for effective leadership.

(p. 298-300)

Answers will vary. Dess - Chapter 11 #58 Learning Objective: 1

771. (p. 303)

Discuss the reasons why organizations and managers at all levels are prone to inertia and slow to learn and adapt. Answers will vary. Dess - Chapter 11 #59 Learning Objective: 2

772. (p. 306)

Identify the five components of emotional intelligence (EI). Discuss how each of these factors contributes to the success of a leader or manager. Answers will vary. Dess - Chapter 11 #60 Learning Objective: 3

773.

What are the four elements of a learning organization? What is the value of a learning organization today's global marketplace?

(p. 309-310)in

Answers will vary. Dess - Chapter 11 #61 Learning Objective: 4

774. (p. 310)

What is the difference between "top-down" and "bottom-up" approaches to empowerment? Discuss how these differences impact the effectiveness of empowerment efforts. Answers will vary. Dess - Chapter 11 #62 Learning Objective: 4

117

775. (p. 312)

What is "open book" management? Why is this and other approaches to accumulating and sharing internal information being used increasingly in today's organizations? Answers will vary. Dess - Chapter 11 #63 Learning Objective: 4

776.

What is the leader's role in establishing an ethical organization?

(p. 314-316)

Answers will vary. Dess - Chapter 11 #64 Learning Objective: 5

777.

How can developing and maintaining a high ethical standard benefit an organization? Give examples describe the effects the examples have had on the organization and/or its stakeholders.

(p. 319-320)and

Answers will vary. Dess - Chapter 11 #65 Learning Objective: 5

778. (p. 318)

Discuss the differences between integrity-based and compliance-based approaches to organizational ethics. Answers will vary. Dess - Chapter 11 #66 Learning Objective: 5

779. (p. 320)

What is a corporate credo? How can it be helpful in shaping the moral dimensions of an organization? Answers will vary. Dess - Chapter 11 #67 Learning Objective: 5

780.

Briefly discuss how an organization's reward and evaluation systems can be used to promote ethics.

(p. 320-321)organizational

Answers will vary. Dess - Chapter 11 #68 Learning Objective: 5

118

781.

The term "innovations" refers primarily to inventions that use the latest technologies.

(p. 328)

FALSE Dess - Chapter 12 #1 Learning Objective: 1

782. (p. 329)

Rogers may be known as a company involved in cell phones and cable TV but it was once the leading manufacturer of radios in Canada and the U.S. TRUE Dess - Chapter 12 #2 Learning Objective: 1

783. (p. 330)

As an industry matures, there are greater opportunities for change and so innovations tend to be more radical. FALSE Dess - Chapter 12 #3 Learning Objective: 1

784.

Process innovations are often associated with a low cost leadership strategy.

(p. 330)

TRUE Dess - Chapter 12 #4 Learning Objective: 1

785.

The term "strategic envelope" refers to the scope of a firm's innovation efforts.

(p. 331)

TRUE Dess - Chapter 12 #5 Learning Objective: 2

786. (p. 330)

In general, radical innovations occur quickly and incremental innovations take a long time to develop. FALSE Dess - Chapter 12 #6 Learning Objective: 1

787.

Radical innovation often involves open-ended experimentation which can be very time consuming.

(p. 330)

TRUE Dess - Chapter 12 #7 Learning Objective: 1

788. (p. 334)

Strategic renewal and the pursuit of new venture opportunities are the two primary aims of corporate entrepreneurship. TRUE Dess - Chapter 12 #8 Learning Objective: 3

789.

Corporate entrepreneurship is sometimes called "intrapreneurship."

(p. 334)

TRUE Dess - Chapter 12 #9 Learning Objective: 3

119

790. (p. 334)

Corporate venturing that is focused permeates all parts of the organization and involves every member of the organization. FALSE Dess - Chapter 12 #10 Learning Objective: 3

791. (p. 334)

Firms using a focused approach to corporate entrepreneurship typically separate corporate venturing activities from on-going operations of the firm. TRUE Dess - Chapter 12 #11 Learning Objective: 3

792.

An opportunity may be justified regardless of whether or not it is attractive in the marketplace.

(p. 335)

FALSE Dess - Chapter 12 #12 Learning Objective: 4

793.

Changes in the external environment spark innovative new ideas.

(p. 337)

TRUE Dess - Chapter 12 #13 Learning Objective: 4

794.

The discovery phase refers to the period when one becomes aware of a new business concept.

(p. 338)

TRUE Dess - Chapter 12 #14 Learning Objective: 4

795.

Business incubators are designed to support both start-up and later-stage companies.

(p. 342)

TRUE Dess - Chapter 12 #15 Learning Objective: 5

796. (p. 342)

Corporate business incubators often provide physical space and business services to internal ventures, but not funding. FALSE Dess - Chapter 12 #16 Learning Objective: 5

797.

Product champions are the employees who identify new product ideas or services.

(p. 347)

FALSE Dess - Chapter 12 #17 Learning Objective: 6

798.

First movers in an industry often capture above-average profits, but usually find it difficult to early market share gains.

(p. 347-348)maintain

FALSE Dess - Chapter 12 #18 Learning Objective: 6

120

799.

RIM first got its start out of American engineering schools.

(p. 348)

FALSE Dess - Chapter 12 #19 Learning Objective: 6

800. (p. 349)

Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies. TRUE Dess - Chapter 12 #20 Learning Objective: 6

801. (p. 350)

Pioneering involves creating new ways to solve old problems or meeting customers' needs in a unique new way. TRUE Dess - Chapter 12 #21 Learning Objective: 7

802.

An imitative new entry strategy is in many respects the same as pioneering.

(p. 351)

FALSE Dess - Chapter 12 #22 Learning Objective: 7

803.

Most new entrants use an adaptive strategy.

(p. 351)

TRUE Dess - Chapter 12 #23 Learning Objective: 7

804.

Westjet is similar to most other airlines in that it runs a deficit.

(p. 353)

FALSE Dess - Chapter 12 #24 Learning Objective: 7

805.

Incremental innovations

(p. 329)

A. B. C. D.

are usually highly disruptive. usually represent technological breakthroughs. are usually small improvements in products or processes. nearly always can be patented. Dess - Chapter 12 #25 Learning Objective: 1

806.

Canadian communications Rogers got started by

(p. 329)

A. B. C. D.

being involved in wireless telegraphy. creating a radio tube that could be operated from a 110-volt current instead of batteries. being the leading manufacturer of radios in Canada and the U.S. all of the answers are correct Dess - Chapter 12 #26 Learning Objective: 1

121

807.

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

(p. 328-330)revolutionize

A. B. C. D.

Technological breakthroughs; product-market breakthroughs New technologies; new paradigms Incremental innovations; radical innovations Radical innovations; incremental innovations Dess - Chapter 12 #27 Learning Objective: 1

808.

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

(p. 328-330)technology

A. B. C. D.

Radical innovation; incremental innovation Breakthrough innovation; instrumental innovation Product innovation; process innovation Product innovation; service innovation Dess - Chapter 12 #28 Learning Objective: 1

809. (p. 330)

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

process innovations; product innovations product innovations; service innovations radical innovations; instrumental innovations marketing innovations; management innovations Dess - Chapter 12 #29 Learning Objective: 1

810.

The innovation dilemma known as building capabilities versus collaborating refers to

(p. 331)

A. B. C. D.

developing innovation skills internally versus partnering with qualified outsiders. building innovative products in-house versus outsourcing. building credibility by launching products ahead of potential collaboration partners. all of the answers are correct Dess - Chapter 12 #30 Learning Objective: 2

811.

The innovation dilemma known as seeds versus weeds refers to

(p. 331)

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 efforts. D. none of the answers are correct Dess - Chapter 12 #31 Learning Objective: 2

812.

The benefits of converting innovations into successful business ventures include

(p. 332)

A. B. C. D.

declining competitiveness. shutting down product lines. growth and rewards. focus groups and business incubators. Dess - Chapter 12 #32 Learning Objective: 2

122

813. (p. 342)

According to the text, ________________________ which support fledgling start-ups are often used to pursue specific entrepreneurial ventures developed by _________________________. A. B. C. D.

collaboration partners; strategic partners business incubators; new venture groups product champions; corporate venture capitalists lower-level managers; upper-level managers Dess - Chapter 12 #33 Learning Objective: 4

814.

Corporate business incubators typically provide all of the following functions except

(p. 342)

A. B. C. D.

physical space. mentoring. funding. student interns. Dess - Chapter 12 #34 Learning Objective: 4

815.

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

(p. 331)

A. B. C. D.

strategic renewal. internal development. mergers and acquisitions. corporate venture funding. Dess - Chapter 12 #35 Learning Objective: 2

816. (p. 334)

Common features of a dispersed approach to corporate entrepreneurship include all of the following except A. B. C. D.

semi-autonomous new venture groups. a strong spirit of entrepreneurship. a top-down approach to supporting entrepreneurial behaviour. an entrepreneurial culture. Dess - Chapter 12 #36 Learning Objective: 3

817.

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

(p. 334)

A. B. C. D.

is imposed from the top down. is considered a core capability. often leads to instability. often worries stakeholders such as suppliers and creditors. Dess - Chapter 12 #37 Learning Objective: 3

818.

Strategic reasons for undertaking a corporate venture include which of the following?

(p. 335)

A. B. C. D.

entering into new markets expanding capabilities by acquiring new knowledge building the corporation's base of resources all of the answers are correct Dess - Chapter 12 #38 Learning Objective: 4

123

819. (p. 339)

All of the following are questions that should be answered when evaluating the performance of corporate venturing efforts except: A. B. C. D.

Is the venture attracting external venture funding? Is the venture considered to be a market success? Does the venture add to the worth of the firm internally? Does the value proposition offered by the venture insulate it from competitive attack? Dess - Chapter 12 #39 Learning Objective: 4

820.

Which of the following is not one of the characteristics of good opportunities?

(p. 339-340)

A. B. C. D.

attractive achievable value creating opportunism Dess - Chapter 12 #40 Learning Objective: 4

821.

The vast majority of new firms are low-budget start-ups financed through

(p. 340-341)

A. B. C. D.

an initial public offering (IPO) bank financing venture capital personal savings and contributions of family and friends Dess - Chapter 12 #41 Learning Objective: 5

822.

Venture capital is

(p. 341)

A. B. C. D.

a form of private equity available only at the start-up stage a form of human capital a form of angel investing Dess - Chapter 12 #42 Learning Objective: 5

823. (p. 344)

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. B. C. D.

proactiveness risk taking autonomy competitive aggressiveness Dess - Chapter 12 #43 Learning Objective: 6

824.

All of the following statements about innovativeness are true except:

(p. 337)

A. B. C. D.

It refers to making decisions and taking risks without certain knowledge of probable outcomes. It refers to a firm's efforts to find new opportunities and novel solutions. It involves creativity and experimentation. It is aimed at developing new products, services, and processes. Dess - Chapter 12 #44 Learning Objective: 4

124

825. (p. 347)

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. B. C. D.

Ensure that all risk-taking activities have a financial pay-off within one year. Encourage experimentation and risk-taking by tolerating failure. Reward the champions of successful new product ideas. Invite customers to brainstorm about new product concepts. Dess - Chapter 12 #45 Learning Objective: 6

826.

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

(p. 347-348)adopt

A. B. C. D.

competitive aggressiveness. technological capabilities. first-mover advantages. breakthrough innovations. Dess - Chapter 12 #46 Learning Objective: 6

827. (p. 348)

RIM was mentioned in the book in a "Strategy Spotlight" because it had been growing fast. The book notes that RIM's strategy is to develop A. B. C. D.

an email solution for customers using MS Outlook. distribution with a number of telephone carriers. enlistment of many third-party software developers to develop new applications. all of the answers are correct Dess - Chapter 12 #47 Learning Objective: 6

828. (p. 348)

According to the text, firms that want to enhance their entrepreneurial position by being competitively aggressive should A. B. C. D.

enter markets with drastically lower prices. foster creativity and experimentation. continuously seek out new products or services. research risk factors to minimize uncertainty. Dess - Chapter 12 #48 Learning Objective: 6

829.

WestJet was cited in the text as being able to develop a toehold in Western Canada through

(p. 348)

A. B. C. D.

proceeding slow and steady. partnering with Air Canada. using American pilots. an aggressive market entry and competitiveness. Dess - Chapter 12 #49 Learning Objective: 6

830.

Which kind of new entry strategy sometimes involves filling a market space where the need has not been filled adequately?

(p. 350-352)previously

A. B. C. D.

adaptive imitative pioneering technological risk taking Dess - Chapter 12 #50 Learning Objective: 7

125

831. (p. 330)

What is meant by the terms "radical" innovation and "incremental" innovation. Describe the advantages and disadvantages of each type of innovation and provide examples. Answers will vary. Dess - Chapter 12 #51 Learning Objective: 1

832. (p. 330)

What are the differences between product and process innovation? What are the strategic implications of each approach to innovation? Answers will vary. Dess - Chapter 12 #52 Learning Objective: 1

833.

Discuss the implications of size, age and growth goals for the development entrepreneurial

(p. 330-334)ventures.

Answers will vary. Dess - Chapter 12 #53 Learning Objective: 2

834.

Compare and contrast the concepts of focused versus dispersed approaches to corporate Provide examples of each approach.

(p. 334-335)entrepreneurship.

Answers will vary. Dess - Chapter 12 #54 Learning Objective: 3

835.

Outline the opportunity process and discuss the phases involved in identifying and developing opportunities.

(p. 335-339)market

Answers will vary. Dess - Chapter 12 #55 Learning Objective: 4

836.

Discuss the similarities and differences of new-venture and later-stage financing. Provide examples each type of financing and discuss other entrepreneurial resources that might be available.

(p. 340-343)of

Answers will vary. Dess - Chapter 12 #56 Learning Objective: 5

126

837.

Discuss the four areas of leadership skills necessary to enact an entrepreneurial vision.

(p. 344)

Answers will vary. Dess - Chapter 12 #57 Learning Objective: 6

838.

New-entry strategies typically fall into one of three categories: pioneering new-entry, imitative or adaptive new entry. Outline the key strategic intentions of each and provide an example of each.

(p. 350-352)new-entry,

Answers will vary. Dess - Chapter 12 #58 Learning Objective: 7

127

Test Bank Summary Category # of Questions Dess - Appendix Analyzing... 50 Dess - Chapter 01 56 Dess - Chapter 02 74 Dess - Chapter 03 69 Dess - Chapter 04 71 Dess - Chapter 05 77 Dess - Chapter 06 60 Dess - Chapter 07 67 Dess - Chapter 08 62 Dess - Chapter 09 68 Dess - Chapter 10 58 Dess - Chapter 11 68 Dess - Chapter 12 58 Learning Objective: 1 116 Learning Objective: 2 146 Learning Objective: 3 156 Learning Objective: 4 125 Learning Objective: 5 130 Learning Objective: 6 102 Learning Objective: 7 13

1