Strategic Management Final

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Which one of the following is not a reason why a company decides to enter foreign markets?

To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation

One of the biggest strategic challenges to competing in the international arena include

whether to offer a mostly standardized product worldwide or to customize the offerings in each country.

The difference between political risks and economic risks is that

political risks stem from instability or weakness in national governments while economic risks stem from the stability of a country's monetary system, economic and regulatory
policies.

Multidomestic competition is best characterized as a situation where

there is no international or global market, just a collection of mostly self-contained country markets.

Which of the following statements regarding global competition is false?

In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails.

Using domestic plants as a production base for exporting goods to selected foreign country markets

can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

having franchisees bear most of the costs and risks of establishing foreign.

Which of the following is not one of the problems and risks of strategic alliances between domestic and foreign firms?

Making it harder to pursue a multidomestic strategy as compared to a global strategy

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by

dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation.

The essential difference between a "think global, act global" and a "think global, act local" approach to strategy-making is that

the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves

evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.

An acquisition premium is the amount by which the price offered for an existing business exceeds

the pre-acquisition market value of the target company.

Which of the following is an important appeal of a related diversification strategy?

Related diversification offers more competitive advantage potential than does unrelated diversification.

A company pursuing a related diversification strategy would likely address the issue of what additional industries/businesses to diversify into by

identifying an attractive industry whose value chain has good strategic fit with one or more of the firm's present businesses.

Which of the following statements about cross-business strategic fit in a diversified enterprise is not accurate?

Strategic fit is primarily a byproduct of unrelated diversification and exists when the value chain activities of unrelated businesses possess economies of scope and good financial fit.

In companies pursuing a strategy of unrelated diversification,

each business is on its own in trying to build a competitive edge and the consolidated performance of the businesses is likely to be no better than the sum of what the individual businesses could achieve if they were independent.

When industry attractiveness ratings are calculated for each of the industries a multi-business company has diversified into, the results help indicate

which industries appear to be the best and worst ones to be in and the attractiveness of all the industries as a group from the standpoint of the company's long-term performance.

Relative market share is

calculated by dividing a business's percentage share of total industry sales volume by the percentage share held by its largest rival—it is a better indicator of a business's competitive strength than is a simple percentage measure of market share.

Calculating quantitative competitive strength ratings for each of a diversified company's business units involves

selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each business unit to obtain an overall competitive strength score, and using the overall competitive strength scores to evaluate the competitive strength of all the businesses, both individually and as a group.

The tests of whether a diversified company's businesses exhibit resource fit do not include

whether the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.

Business ethics concerns

the application of general ethical principles and standards to the actions and decisions of companies and the behavior of company personnel.

The contentions that (1) many of the same standards of what's ethical and what's unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances are defining beliefs of

the school of ethical universalism.

If one concurs with the school of ethical universalism, then one believes that

many basic moral standards travel well across cultures and countries and really do not vary significantly according to local cultural beliefs, social mores, religious convictions, and/or the circumstances of the situation.

Which one of the following is not a key element of integrated social contracts theory?

Integrated social contracts theory rejects the slippery slope of ethical relativism and embraces ethical universalism.

The strength of integrated social contracts theory is that it

accommodates the best parts of ethical universalism and ethical relativism.

The litmus test of a company's code of ethics is

the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business.

Which one of the following is not one of the major drivers of unethical managerial behavior?

Intense competitive pressures

The business case for an ethical strategy

emphasizes that pursuing unethical strategies not only damages a company's reputation but can also have costly consequences that are wide ranging.

Which of the following is not something a company should usually consider in crafting a strategy of social responsibility?

Actions to benefit shareholders (such as raising the dividend or boost the stock price).

Which of the following statements regarding a company's social responsibility and sustainability strategy is false?

A company is not demonstrating an adequate degree of social responsibility or endeavoring to be a model corporate citizen unless it spends 5% (or more) of pretax profits on social responsibility initiatives.

What makes the managerial task of executing strategy so challenging and demanding is

the demanding people-management skills required, the resistance to change that has to be overcome, and the perseverance necessary to get a variety of initiatives launched and kept moving along.

While ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives,

top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.

Which of the following is not among the principal managerial components of the strategy execution process?

Selecting and retaining capable employees, thereby enhancing the company's intellectual capital resources

Building an organization capable of good strategy execution entails

staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort.

Which one of the following statements about recruiting and retaining capable employees is false?

Recruiting and retaining capable employees is usually much more important to good strategy execution and the achievement of true operating excellence than is assembling a capable top management team.

Which of the following is not one of the traits of core competencies and/or competitive capabilities?

Core competencies generally grow out of company efforts to master a strategy-critical technology or to invent and patent a valuable technology.

When it is difficult or impossible to out-strategize rivals (beat them with a superior strategy), the other main avenue to competitive advantage is to

out execute them (beat them by performing certain value chain activities in superior fashion).

Which one of the following is not a reason why companies might use outsourcing to improve performance of strategy-critical activities?

Promoting quick establishment of a total quality culture

A decentralized organizational structure is predicated on a belief that

decision-making authority should be pushed down to the lowest organizational level capable of making timely, informed, competent decisions.

The chief advantages of a decentralized organizational structure include

reducing the layers of management and encouraging lower-level managers and rank-and-file employees to exercise initiative and act responsibly.

New strategies often entail budget reallocations because

units important in the prior strategy but having a lesser role in the new strategy may need downsizing while units and activities that now have a bigger and more critical strategic role may need increases in their budgets.

A useful guideline in designing strategy-facilitating policies and operating procedures is

to prescribe enough policies to give organizational members clear direction in implementing strategy and to place desirable boundaries on their actions, then empower them to act within these boundaries however they think makes sense.

A "best practice"

is a technique for performing an activity or business process that at least one company has demonstrated works particularly.

Which one of the following is NOT a tool that company managers can use to promote operating excellence in performing value chain activities?

Adoption of standard industry techniques

Total quality management (TQM)

is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations.

The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is

an improvement system for existing processes falling below specification and needing incremental improvement.

Which one of the following statements about Six Sigma quality programs is TRUE?

While Six Sigma programs often improve the efficiency of numerous operating processes, there is evidence that the approach can stifle innovative activities.

Installing well-conceived state-of-the-art support systems are an important managerial component of implementing and executing strategy because

such support systems not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals).

A motivation and incentive system that is aimed at spurring stronger employee commitment to good strategy execution

should focus on incorporating more positive than negative motivational incentives.

Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?

Ways must be found to reward deserving non-performers who, for some reason, do not fare well under the incentive system.

A company's culture is NOT manifested in which one of the following?

Its strategic vision, strategic intent, and strategy.

At companies where executives believe in the merits of practicing the values and ethical standards that have been espoused

the stated core values and ethical principles are the cornerstones of the corporate culture.

Frequently, a significant part of a company's culture is captured in

the stories that get told over and over again to illustrate to newcomers the importance of certain values.

Which one of the following statements about a company's culture is FALSE?

A company's culture, once established, tends to remain stable and entrenched over time.

Which of the following is NOT a factor in contributing to the emergence and sustainability of a strong culture?

Centralized decision-making, strict enforcement of company policies, and a strong commitment to being the market share leader

Which one of the following statements about a weak company culture is TRUE?

Weak cultures provide little assistance in executing strategy because there are no traditions, values, or behavioral norms that management can use as levers to mobilize commitment to executing the chosen strategy.

Which of the following statements about the match between a company's culture and its strategy is FALSE?

A tight strategy-culture alignment facilitates building core competencies and distinctive competencies that lead to low operating costs and a cost-based competitive advantage.

The hallmarks of a high performance corporate culture include

a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives.

The hallmark of an adaptive corporate culture is

willingness on the part of organizational members to accept change and take on the challenge of introducing and executing new strategies.

Unhealthy company cultures typically have such characteristics as

a politicized internal environment, hostility to change and an aversion to looking outside the company for best practices, new managerial approaches, and innovative ideas.

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