1.
Once a firm has diversified and established itself in
several different businesses, then its main strategic alternatives include all
but which one of the following?
divesting some businesses and retrenching to a narrower base
of business operations
restructuring the company’s business lineup with a
combination of divestitures and new acquisitions to put a whole new face on the
company’s business makeup
sticking closely with the existing business lineup and
pursuing the opportunities these businesses present
shifting from a multiple-country to a global strategy
broadening the firm’s business scope by diversifying into
additional businesses
2.
The thesis that because different societies and cultures
have divergent values and standards of what is “ethically right” and
“ethically wrong,” it is appropriate to judge behavior as
ethical/unethical in the light of local customs and social mores
accounts for why there is no such thing as ethical standards
for business enterprises.
defines what is meant by “integrated social contracts
theory.”
is the reason codes of ethical and social morality have been
established country by country.
characterizes the school of ethical relativism.
is the basis for the theory of ethical variation.
3.
Unethical managerial behavior tends to be driven by such
factors as
a lack of training in what is ethical and what is not.
the lack of a company code of ethics.
confusing differences between what is ethical behavior in
one’s personal life and what is ethically permissible in business.
All of these choices are correct.
overzealous or obsessive pursuit of personal gain, wealth,
and other self-interests; a company culture that puts the profitability and
good business performance ahead of ethical behavior; and heavy pressures on
company managers to meet or beat performance targets.
4.
Environmental sustainability involves
striking a balance between (1) the economic responsibility
to reward shareholders with profits, (2) the legal responsibility by the
company to laws in countries where it operates, (3) the ethical responsibility
to abide by society’s moral norms, and (4) the discretionary philanthropic
responsibility to contribute to the noneconomic needs of society.
All of these choices are correct.
developing the resource strengths necessary to develop a
sustainable competitive advantage.
deliberate actions to protect the environment, provide for
the longevity of natural resources, maintain ecological support systems for
future generations, and guard against the ultimate endangerment of the planet.
a corporate commitment to address the unmet noneconomic
needs of society.
5.
Companies that adopt the principle of ethical relativism in
providing ethical guidance to company personnel
have no fair way to judge the ethical correctness of the
conduct of company personnel.
quickly find themselves on a slippery slope with no ethical
standards or principles of their own.
have a uniform code of ethical standards that is applied
globally.
are able to comply with the varying ethical standards of the
world’s different cultures.
end up allowing each company employee to determine what set
of ethical standards to observe.
6.
According to integrated social contracts theory,
the ethical standards a company should try to uphold are
governed both by (1) a limited number of universal ethical principles that are
widely recognized as putting legitimate ethical boundaries on actions and
behavior in all situations, and (2) the circumstances of local cultures,
traditions, and shared values that further prescribe what constitutes ethically
permissible behavior and what does not; however, universal ethical norms take
precedence over local ethical norms.
the standards of what is ethically permissible and what is
not should be based on a code of ethical and moral conduct that each
society/country/culture adopts and then enacts into law.
the views and principles of the school of ethical
universalism are definitely wrong; the correct view is that ethics is a matter
of personal responsibility, not a matter of management concern.
the standards of what is ethically permissible should be
determined by the terms of an “ethics contract” that each company
employee signs as a condition of employment.
the only valid ethical standards are those that are
universal—and then only if the standards are not absolute and provide some
wiggle room according to the circumstances of the each situation.
7.
According to the school of ethical universalism
ethical guidelines exist only when there is universal
agreement as to what behaviors are “ethically right” and
“ethically wrong”; anything not universally viewed as unethical is
thus within the bounds of what is ethically permissible.
all societies and countries have some definition of what is
ethically permissible (in this sense, ethics are universal); however, the
definitions of what is ethically permissible vary according to the prevailing
religious doctrines in each country.
concepts of right and wrong universally apply to all
business situations within a given country but can vary across countries or
cultures.
whatbehaviors are “ethically right” and
“ethically wrong” vary across religions, but the boundaries of what
is ethical or not are universal within religions.
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; hence, 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.
8.
Business ethics encompasses
a business commitment to safe products, high worker
compensation, and protection of the environment.
picking and choosing among various ethical standards of
society to arrive at a set of ethical standards that apply directly to
operating a business.
conducting oneself appropriately in a business setting.
developing a special set of ethical standards for businesses
to observe in conducting their affairs.
the application of ethical principles and standards to
business activities, behavior, and decisions.
9.
The strategic appeal of related diversification is that it
involves diversifying into industries having the same kinds
of key success factors.
is less risky than unrelated diversification because it
avoids the acquisition of cash hog businesses.
facilitates the achievement of greater economies of scale
since the company only enters those businesses that serve the same types of
buyer groups and/or buyer needs.
allows a firm to reap the competitive advantage benefits of
skills transfer, lower costs (due to economies of scope), cross-business use of
a powerful brand name, and/or cross-business collaboration in creating stronger
competitive capabilities.
is less capital intensive than unrelated diversification
because related diversification emphasizes getting into cash cow businesses (as
opposed to cash hog businesses).
10.
Which of the following does not accurately describe entering
a new business via acquisition, internal development, or a joint venture?
Acquisition is generally the most profitable way to enter a
new industry, tends to be more suitable for an unrelated diversification
strategy than a related diversification strategy, and usually requires less
capital than entering an industry via internal start-up.
Acquisition is the most popular means of diversifying into
another industry, has the advantage of being quicker than trying to launch a
brand-new operation, and offers an effective way to hurdle entry barriers.
Joint ventures are an attractive way to enter new businesses
when the opportunity is too complex, uneconomical, or risky for one company to
pursue alone, when the opportunities in a new industry require a broader range
of competencies and know-how than a company can marshal on its own, and/or when
it aids entry into a foreign market.
The big drawbacks to entering a new industry via internal
development include the costs of overcoming entry barriers, building an
organization from the ground up, and the extra time it takes to build a strong
and profitable competitive position.
The big dilemma of entering an industry via acquisition of
an existing company is whether to pay a premium price for a successful company
or to buy a struggling company at a bargain price.
11.
Cross-business strategic fits can exist
in the supply chain portion of the value chains of related
businesses.
in the R&D and technology portion of the value chains of
related businesses.
in the manufacturing or production portions of the value
chains of related businesses.
All of these choices are correct; cross-business strategic
fits can exist anywhere along the values chains of related businesses.
in the sales and marketing portion of the value chains of
related businesses.
12.
Which one of the following is not a part of the business
case for why companies should act in a socially responsible manner?
The aggressive pursuit of market share, revenues, and
profits always puts the company in jeopardy of violating society’s social
responsibility expectations.
Socially responsible actions yield internal benefits
(particularly for employee recruiting, workforce retention, and training costs)
and can improve operational efficiency.
A strong commitment to socially responsible behavior reduces
the risk of reputation-damaging incidents.
Social responsibility strategies work to the advantage of
shareholders.
Socially responsible actions can lead to increased buyer
patronage.
13.
Economies of scope
have to do with the cost-saving efficiencies of operating
across a bigger portion of an industry’s total value chain.
refer to the cost savings that flow from being able to
combine the value chains of different businesses into a single value chain.
are derived from the cost-saving efficiencies of scattering
a company’s manufacturing/assembly plants over a wider geographic area.
are like economies of scale and arise from being able to
lower costs via a larger volume operation.
stem from cost-saving strategic fits along the value chains
of related businesses.
14.
The defining characteristic of unrelated diversification (as
opposed to related diversification) is
the presence of cross-business resource fit (whereas the
defining characteristic of related diversification is the presence of
cross-business strategic fit).
that the company’s businesses are in different industries.
the presence of cross-business financial fit.
the presence of cross-business strategic fit (whereas the
defining characteristic of related diversification is the presence of
cross-business resource fit).
that the value chains of different businesses are so
dissimilar that no competitively valuable cross-business relationships are
present (in other words, the value chains of a company’s businesses offer no
opportunities to benefit from skills or technology transfer across businesses,
economies of scope, cross-business use of a powerful brand name, and/or
cross-business collaboration in creating stronger competitive capabilities).
15.
Checking a diversified company’s business lineup for
resource fit does not involve which one of the following “tests”?
determining whether recently acquired businesses are acting
to strengthen the company’s resource base and competitive capabilities or
whether they are causing its competitive and managerial resources to be
stretched too thin
determining whether a company has or can develop the
specific resources and competitive capabilities needed to be successful in each
of its businesses
determining whether the company has enough cash hog
businesses to supply capital to its cash cow businesses
determining whether the company has adequate financial
strength to fund the needs of its various businesses and maintain a healthy credit
rating
determining whether each business adequately contributes to
achieving companywide performance targets
16.
Which of the following are consequences of pursuing a
strategy that has unethical or shady components?
adverse effects on employee productivity
government fines and penalties
All of these choices are correct.
customer defections
legal and investigative costs incurred by the company
17.
Calculating quantitative attractiveness ratings for the
industries a company has diversified into involves
determining each industry’s average profit margins,
calculating how far the firm’s profit margins are above or below the industry
averages, and then using these values to draw conclusions about industry
attractiveness.
selecting a set of industry attractiveness measures,
weighting the importance of each measure (with the sum of the weights adding to
1.0), rating each industry on each attractiveness measure, multiplying the
industry ratings by the assigned weight to obtain a weighted rating, adding the
weighted ratings for each industry to obtain an overall industry attractiveness
score, and using the overall industry attractiveness scores to evaluate the
attractiveness of all the industries, both individually and as a group.
determining the strength of the five competitive forces in
each industry, calculating the ability of the company to overcome or contend
successfully with each force, and obtaining overall measures of the firm’s
ability to compete successfully in each of its industries.
identifying each industry’s average price, rating the
difficulty of charging an above-average price in each industry, and deciding
whether the company’s prospects for being able to charge above-average prices
make the industry attractive or unattractive.
rating the attractiveness of each industry’s strategic and
resource fit, summing the attractiveness scores, and determining whether the
overall scores for the industries as a group are appealing or not.
18.
Integrated social contracts theory maintains that
few nations or cultures have common moral agreement on what
is ethically right and wrong.
all ethical standards are determined by societal norms and
individuals have an implied social contract to live up to these standards.
“first order” universal ethical norms always take
precedence over “second order” local ethical norms.
there should be no absolute limits put on what is ethically
or morally right.
each country/culture/society has commonly held views about
what constitutes ethically appropriate actions/behaviors that all individuals
in that country/culture/society are obligated to observe.
19.
The Nine-Cell Industry Attractiveness–Competitive Strength
Matrix
shows which of a diversified company’s businesses have a
good or poor resource fit.
pinpoints which of a diversified company’s businesses are
resource-rich cash cows and which are resource-poor cash hogs.
indicates which businesses have the highest or lowest
economies of scale and which have the highest or lowest economies of scope.
involves assigning quantitative measures of industry
attractiveness and competitive strength to plot each business’s location on the
matrix; the thesis underlying the matrix is that there are good reasons to
concentrate the company’s resources on those businesses having relatively
strong competitive positions in industries with relatively high attractiveness
and to invest minimally or even divest those businesses with relatively weak
competitive positions in industries with relatively low attractiveness.
is a valuable tool for ranking a company’s different
businesses from best to worst based on strategic fit.
20.
Which one of the following is not one of the elements of
crafting corporate strategy for a diversified company?
initiating actions to boost the combined performance of the
businesses the firm has entered
pursuing opportunities to leverage cross-business value
chain relationships and strategic fits into competitive advantage
picking the new industries to enter and deciding on the
means of entry
establishing investment priorities and steering corporate
resources into the most attractive business units
standardizing the resource fit across the group of
businesses the company has diversified into
