BADM Final

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  1. T/F Corporate governance invloves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest.
  2. T/F Executive compensation, ownership concentration, and the matrix oganizational structure are all examples of governance mechanisms.
  3. T/F Committed and involved board of directors, shareholder activism, and reward & compensation agreements are all examples of governance mechanisms,
  4. T/F As a rule shareholders prefer more diversification than do managers.
  5. T/F The primary role of the board of directors is to monitor and control top level executives to protect owners' interests.
  6. T/F Stock options attempt to align managers' and owners' interests by typing managerial pay and firm performance together.
  7. T/F To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business level strategy
  8. T/F Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.
  9. Supose you are an analyst reviewing the Coors business in 1977. What is the biest risk to Coors' perfomance
    dependence on insufficient total production capacity by all players in the west region.
  10. because it had to expand to keep its inappropriately big plant operating at high capacity once there was additional offer from other competitors to cover previous excess demand in its core market
    why did coors expand nationally
  11. What is Coor's obvious focus during the period of the case?
  12. Does Coors expend more money on advertising per barrel sold than its competitors in 1977?
    No it does not need to because there is not enough offer in the region to cover demand at a competitive price
  13. Does Coors expend more money on advertising per barrel sold than its competitors in 1985?
    Yes becuase it needs to sell its beer in new regions were it has very little volume and therefore its advertising is more inefficient.
  14. T/F The functional structure is most appropriate for larger firms impletmenting a strategy that includes high levels of diversification
  15. T/F The finance and R&D functions are emphasized in the differentiation strategy's functional structure.
  16. T/F Internal competition for corporate resources is effective for companies with an nrelated diversification strategy, but dysfunctional for companies with a related strategy.
  17. A primary objective of ____________ _________is to ensure that the interests of top-level managers are alighned with the interests of shareholders.
    corporate governance
  18. The separation between a firm's owners and managers creates an ____ relationship
  19. Firm size and executive compensation are
    positively related
  20. In contrast to managers, shareholders may prefer that free cash flows be:
    returned to them as dividends
  21. is a governance mechanism that seeks to align managers and owners' interests through all of the following: bonuses, long-term incentives such as stock options, salary.
    Executive Compensation
  22. T/F Coors' position as the most profitable brewer(per barrel) in 1977, was based primarily on its differentiation and mystique.
    False, it really competed based on cost leadership; it charged lower prices but with much cheaper production costs.
  23. Was Coors successful from 1977 - 1985
    No its per barrel NI had deteriorated dramatically against that of other industry players.
  24. T/F In a money-making effort, a small private university has decided to institute consulting services using its business faculty as consultants whose services would be sold to clients. This university is attempting to use its faculty to gain economies of scope.
  25. T/F An unrelated diversification strategy can create value through two types of financial economies -- efficient internal capital allocations and purchasing other corporations and restructuring their assets.
  26. T/F In order to acheive economies of scale, some manufacturing industries in nations(ie Korea) with small domestic markets must globalize
  27. The ultimate test of the ______ is whether the businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.
    value of corp level strategy
  28. enhancing the strategic competitiveness of the entire company, expanding the business portfolio in order to reduce managerial employment risk, gaining market power relative to competitors
    reasons to implement a diversification strategy
  29. inceasing low performance levels of a business unit
    not a reason to implement a diversification strategy
  30. when a company produces its own inputs
    backward integration
  31. Smithfield foods produces hams and other meat products. It owns hog raising operations. This is an example of a ____ ____ business
    vertically integrated
  32. Stock markets apply a conglomerate discount of 20% on unrelated diversified firms. This means that investors:
    believe that the value of conglomerates is 20% less than the value of their sum parts
  33. Often, firms plagued by poor performance will increase their level of
  34. exists when the value created by business units working together exceeds the calue the units create when working independently.
  35. Personal moties for managers to seek diversification include a desire to:
    increase their compensation
  36. Increasing the size of the firm's potential markets, gaining economies of scale, gaining a competitive advantage through location.
    opportunities that are motivations for expanding into international markets
  37. T/F To the extent that firms are able to standardize products across country borders and use the same or similar production facilities, coordinating critical resource functions, they are likely to achieve a more optimal economic scale
  38. T/F A multidomestic strategy assumes that consumer needs, industry conditions, and social normas are homogenous in every country
  39. T/F Multidomestic strategies allow fo the establishment of economies of scale
  40. T/F A global strategy assumes that business units operating in each contry are interdependent
  41. T/F As a general rule of thumb, if a company cannot make a profit in its home market, it cannot make a profit in the international market
  42. focuses on competition within each country in which the firm is active
    a multidomestic strategy
  43. strategic and operating decisions are decentralized to the strategic business unit in each country
    multidomestic corp level strategy
  44. strategy that lacks responsiveness to local markets
    global strategy
  45. in a ___ strategy competetive strategy is dictated by the home office- unlike in a multidomestic strategy
  46. A global stategy emphasizes
    economies of scale
  47. GM requires that senior managers from its international partners' headquarters report directly to a top ranking GM regional executive. This gives GM's top management more control over what happens in each of the foreign car companies it owns while allowing the companies to be responsive to contry needs. This illustrates GM's _ strategy
  48. High costs associated with acquiring foreign production facilities is a _____ associated with exporting
    not a disadvantage
  49. high transportation costs, loss of control over distribution activities, and tariffs imposed by local goverments are ____ associated with exporting
  50. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host contry
    licensing agreement
  51. high costs of extablishing manufacturing facilities is
    not a disadvantage of licensing
  52. little control over the marketing of the products, licensees may develop a competitie product after the license expires, decreased potential returns
    disadvantages of licensing
  53. By studying the ____ firm identify what they might choose to do - forces that affect the industry
    external environment
  54. By studying the ____ firms determine what they can do - examine unique resources, capabilities, and competencies(sustainable competitive advantage)
    internal environment
  55. Four criteria of Sustainable Advantages
    Valuable, Rare, Costly to Imitate, nonsubstitutable
  56. a firm's assets, including people and the value of its brand name - represent inputs into a firms production process
  57. relatively easy to identify and include physical and financial assets used to create value for customers
    tangible resources
  58. cash accounts, capacity to raise equity, borrowing capacity
    financial resources
  59. modern plant and facilities, favorable manufacturing locations, machinery and equipment
    physical resources
  60. trade secrets, innovative production processes, patents, copyrights, trademarks
    technological resources
  61. effective strategic planning processes, excellent evaluation and control systems
    organizational resources
  62. difficult for competitors to account for or imitate, typically embedded in unique routines and practices that have evolved over time
    intangible resources
  63. experience and capabilities of employess, trust, managerial skills, firm specific practices and procedures
    human resources
  64. technical and scientific skills, innovation capacities
    innovation and creativity resources
  65. are the firm's capacity to deploy resources that have been purposely integrated to achieve a desired end state
  66. emerge over time through complex interactions among tangible and intangible resources
  67. often are based on developing, carrying and exchanging information and knowledge through the firm's human capital
  68. competiencies or skills taht a firm employs to transform inputs to outputs, and capacity to combine tangible and intangible resources to attain desired end
    organizational capabilities
  69. outstanding customer service, excellent product development capabilities, innovativeness of products and services, ability to hire motivate and retain human capital are examples of:
    organizational capabilities
  70. resources and capabilities that serve as a source of a firms competitive advantage: distinguish a company competitively and reflect its personality - emerge over time
    core competencies
  71. A criteria of sustainable competitive advantagage: enable a firm to formulate and implement strategies that improve its efficiency or effectiveness
    valuable resource
  72. common strategies based on similar resources give no one firm an advantage, competitive advantages are gained only from uncommon resources that are rare to other competitors
    rare resources
  73. difficulty in ____ resources is key to value creation because it constrains competitition
  74. may take at least two forms - competitor may be able to substutue a simlar resource that enables it to develop and impletment the same strategy
    very different firm resources can become strategic substitutes
  75. shows how a product moves from rm stage to final customer
    value chain
  76. to be a source of ______ ______, a resource or capability must allow the firm: to perform an activityy in a manner that is superior to the way competitors perform it or to perform a value creating activity that competitors cannot complete
    competitive advantage
  77. The purchase of a value creating activity from an external supplier - by forming and emphasizing fewer capabiliies a firm can concentrate on those areas in which it can create value
  78. associated with recieving, storing and distributing inputs to the product
    inbound logistics
  79. associated with transforming inputs into the final product form
  80. associated with collecting, storing, and distributing the product or service to buyers
    outbound logistics
  81. associated with purchases of products and services by end users and the inducements used to get them to make purchases
    marketing and sales
  82. associated with providing service to enhance or maintain the value of a product
  83. typically supports the entire value chain and not individual activities
    general administration
  84. activities involved in the recruiting, hiring, training, development and compensation of all types of personnel
    HR Management
  85. Related to a wide range of activities and those embodied in processes and equipment and the product itself
    technology development
  86. function of purchasing inputs used in the firms value chain
  87. General and Admin, HR Management, Tech Development, Procurement
    Support activities
  88. inbound logistics, operations, outbound logistics, marketing and sales, service
    primary activities
  89. former core competencies tha now generate inertia and stifle innovation
    core rigidities
  90. determining what the firm can do through continuous and effective analyses of its___________ increases te likelihood of long term competitive success
    internal environment
  91. each business unit in a diversified firm chooses a ________________ as a means of competing in individual product markets
    business level strategy
  92. specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses competing in several industries and product markets
    corporate level strategy
  93. the degree to which the buessniesses in the portfolio are worth more under the management of the company than they would be under other ownership
    corporate level strategy's value
  94. related diversification - sharing activities and transfering core competencies
    economies of scope
  95. related diversification - blocking competitors through multipoint competition - vertical integration
    market power
  96. efficient internal capital allocation - business restructuring
    financial economies
  97. Incentives and resources with ____ effects on strategic competitiveness: low performance, uncertain future cash flows, risk reduction for firm, tangible resources, intangible resources
  98. diversifying managerial employment risk, increasing managerial compensation
    managerial motives for diversifiviation
  99. firm creates value by building upon or extending its resources, capabilities, core competencies
    related diversification
  100. cost savings that occur when a firm transfers capabilities and competencies developed in one of its businesses to another of its businesses
    economies of scope
  101. is created from economices of scope through - operational relatedness in sharing activities, corporate relatedness in transferring skills or corporate core competencies among units
  102. created by sharing either a primary activity or a support activity - requires sharing strategic control over business units - may create risk because business unit ties create links between outcomes
    operational relatedness - sharing activities
  103. using complex sets of resources and capabilities to link different businesses through managerial and tech knowledge, experience and expertise
    corporate relatedness
  104. eliminates resource duplication in the need to allocate resources for a second unit to develop a cometepence that has already existed - provides intangible resources that are difficult for competitors to understand and imitate
    copr relatedness creates value by:
  105. are cost savings realized through improved allocations of financial resources - based on investments inside or outside the firm
    financial economies
  106. create value through two types of __ ____- efficient internal capital allocations, purchasing other corporations and restructuring their assets
  107. financial economies
  108. have a fairly short life cycle because financial economies are more easily duplicated by competitors than are gains from operational and corporate relatedness
  109. a firm creates value by buying and selling other fimrs assets in the external market - restructuign creates:
    financial economies
  110. a strategy through which the firm sells its goods or services outside its domestic market
    international strategy
  111. international markets yield potential new opportunities, new market expansion extends product life cycle, needed resources can be secured, greater potential product demand
    reasons for an internaltional strategy
  112. increase market size, return on investment, economies of scale or learning, competitive advantage through location,
    International strategy benefits
  113. choice of international entry mode: high cost, low control
  114. choice of international entry mode: low cost, low risk, little control, low returns
  115. choice of international entry mode: shared costs, shared resources, shared risks, problems of integraiton
    strategic alliances
  116. choice of international entry mode: quick access to new market, high costs, complex negotiations, problems of merging with domestic operations
  117. choice of international entry mode: complex often costly, time consuming, high risk, max control, potential above avg returns
    new wholly owned subsidiary
  118. instability in national govt, war, potential nationalizaiton of a firm's resources
    political risk - international
  119. interdependent with political risks and include: differences and fluctuations in the value of different currencies, differences in prevailing wage rates, difficulties in enforcing property rights, unemployement
    economic risk - international
  120. cost if coordination across diverse geo business units, institutional and cultural barriers, understanding strategic intent of competitors, overal compleof competitionxity
    management problems - international expansion
  121. strategy and op decisions are decentralized - products are tailored to local markets - business units in one country are independent of each other - assumes markets differ by country or regions - focus on competition in each market - prominent strategy among european firms due to broad variety of cultures and markets in Europe
    multidomestic strategy
  122. products standardized - decisions are centralized - interdependent sbu - economies of scale - lacks responsiveness to local markets - requires resource sharing across borders
    global strategy
  123. seeks to achieve both global efficiency and local responsiveness
    transnational strategy
  124. mutual adjustment, direct supervision, standardizaiton
    basic coordination mechanisms
  125. face to face communication in which coworkers exchange information about work procedures
    mutual adjustment
  126. direction and coordination of the work of a gorup by one person who issues direct orders to the groups members
    direct supervision
  127. planning and implementation of standards and procedures that regulate work performance
  128. specification of sequences of task behaviors or work processes
    behavior standardization
  129. establishment of goals or desired end results of task performance
    output standardization
  130. specification of the abilities, knolwedge and skills required by a particular task
    skill standardizaiton
  131. encouragement of attitudes and beliefs that lead to desired behaviors
    norm standardization
  132. several organizations attain the performance capacities of a single, much larger firm while retaining extreme flexibility and significant efficiency
    virtual structure
  133. local customer responsiveness focus
    multidomestic strategy
  134. centralized at home R&D and marketing
    international strategy
  135. value creation functions dispersed globally to optimal locations
    global strategy
  136. local responsiveness and global integration
    transnational strategy
  137. a relationship among stakeholders used to determine and control the strategic direction and performance of organizations, concerned with making stratic decisions more effectively, unded to establish order between a firm's owners and its top level managers whose interests may be in conflict
    corporate governance
  138. large block shareholders have a strong incentive to monitor management closely. Financial institutions are legally forbidden from directly holding board seats
    ownership concentration
  139. shareholders can convene to discuss corporation's direction - if a consensus exists, shareholders can vote as a block to elect their candidates to the board
    shareholder activism
  140. group of elected individuals that acts in the owners' interests to formally monitor and control the firm's top level executives
    board of directors
  141. direct the affairs of the org, punish and reward managers, protect owners from managerial opportunism
    BOD had power to
  142. Given its 1977 strategy (beginning of the case), it
    would make sense for Coors beer business to have been organized as a:
    functional organizational structure
  143. Recent trends that might lead managers of
    multinational corporations (MNCs) not to adopt a multi-domestic strategy
    for their operations would include
    • flexible manufacturing trends have
    • allowed a decline in the minimum volume required to reach acceptable levels of production efficiency.
  144. Competitiveness is usually enhanced by the good
    implementation of diversification based on all of the following reasons except
    • Potential to overcome uncertainties
    • in the future cash flows of a mature product line with cash flows from a new product to protect value for shareholders
  145. High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy?
  146. 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 global resources for enhanced
    efficiencies. These are all attributes
    of which type of strategy?
    transnational strategy
  147. Excessive focus on reduced risk might occur if an executive has been
    with the company for a long time and his/her pay package has been dominated by:
    stock options
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BADM Final
BADM Final
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