Archive for November 2020

Marketing communications budgets tend to be higher when ________.

Marketing communications budgets tend to be higher when ________.



A) there is high channel support

B) there exists hardly any change in the marketing program over time

C) there are infrequent product purchases in large quantities

D) there are differentiated products and nonhomogeneous customer needs

E) there are many easily-reachable customer spread over small geographic territories



Answer: D

Kelly is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Kelly and Trent use to arrive at the marketing communications budget?

Kelly is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Kelly and Trent use to arrive at the marketing communications budget?



A) objective-and-task method

B) affordable method

C) competitive-parity method

D) activity-based method

E) percentage-of-sales method



Answer: C

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of



A. economies of scope.



B. location economies.



C. resource immobility.



D. resource ambiguity.



Answer: location economies

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies?

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies?



A. organic



B. simple



C. ambidextrous



D. mechanistic

Which of the following proves that GE's board of directors is significantly independent?

Which of the following proves that GE's board of directors is significantly independent?


A. Twenty-six percent of the board members at GE are female.

B. The CEO of GE is also the chairman of the board.

C. Sixteen of the 17 board directors are from outside the organization.

D. GE's board has five committees, each with its own chair.



Answer: Sixteen of the 17 board directors are from outside the organization.

According to the perspective of shareholder capitalism,

According to the perspective of shareholder capitalism,


A. shareholders in public stock companies are restricted from buying shares of two competing companies.

B. shareholders in public stock companies have the most legitimate claim on profits.

C. shareholders in public stock companies have significant decision-making power.

D. shareholders in public stock companies have unlimited financial liability.



Answer: shareholders in public stock companies have the most legitimate claim on profits.

Which of the following statements is true of shareholders in a public stock company?

Which of the following statements is true of shareholders in a public stock company?




A. They directly supervise and coordinate the manufacture of products and delivery of services.

B. They are granted a charter of incorporation by the state and legally own company stock.

C. They are the centerpiece of corporate governance.

D. They are appointed by a board of directors to oversee the company's management.



Answer: They are granted a charter of incorporation by the state and legally own company stock.

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?




A. It allows a cost-leader to upgrade core competencies in manufacturing and logistics.

B. It enables a cost-leader to build products that are different from its competitors' offerings.

C. It enables a cost-leader to increase costs above that of its competitors.

D. It allows a cost-leader to operate in a decentralized organizational structure.



Answer: It allows a cost-leader to upgrade core competencies in manufacturing and logistics.

Organizational design is

Organizational design is



A. the process of creating, implementing, and modifying the structure of an organization.

B. primarily focused on replacing a firm's competitive advantage with competitive parity.

C. a process that always functions independently of strategy formulation.

D. primarily focused on formulating effective strategies, not implementing them.



Answer: the process of creating, implementing, and modifying the structure of an organization.

The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally.

The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally.



A. death-of-distance hypothesis

B. local-responsiveness hypothesis

C. real options framework

D. dynamic capabilities framework



Answer: death-of-distance hypothesis

Fakhir is a board member at Garfield Motors Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Blixt Electronics. According to this scenario, Fakhir

Fakhir is a board member at Garfield Motors Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Blixt Electronics. According to this scenario, Fakhir



A. cannot serve on the board of any other organization.



B. is more likely than Ernest to take care of stockholder interests.



C. is an inside director of Garfield Motors.



D. can use information from board meetings to trade stocks of Garfield Motors.



Answer: is an inside director of Garfield Motors.

In a public stock company, senior executives, such as the CEO, face agency problems when

In a public stock company, senior executives, such as the CEO, face agency problems when



A. they delegate authority of strategic business units to general managers.



B. they decide to get involved in the day-to-day operations of a company.



C. the board of directors possesses more information about the company than they do.



D. the firm designs work tasks, incentives, and employments that minimize opportunism.



Answer: they delegate authority of strategic business units to general managers.

Leila is a graduate student pursuing a course in business. Presented with the case of Uber's unethical behavior, Leila wonders if Uber's board of directors should ask the CEO of Uber, Travis Kalanick, to step down. Having a strong belief in Michael Porter's idea of value creation, Leila is most likely to conclude that

Leila is a graduate student pursuing a course in business. Presented with the case of Uber's unethical behavior, Leila wonders if Uber's board of directors should ask the CEO of Uber, Travis Kalanick, to step down. Having a strong belief in Michael Porter's idea of value creation, Leila is most likely to conclude that



A. Uber's board of directors should not ask Kalanick to step down because doing so would cause a profit dip that would affect its shareholders.



B. Uber's board of directors should ask Kalanick to step down because it has a greater obligation toward society.



C. Uber's board of directors should not ask Kalanick to step down because he was responsible for an almost 90 percent appreciation of the company's stock.



D. Uber's board of directors should ask K



Answer: Uber's board of directors should ask Kalanick to step down because it has a greater obligation toward society.

A company scientist at a biotechnology company decides to work on his own research project, hoping to eventually start his own firm, rather than on the project he was assigned. However, the company's stockholders are unaware of this situation. This is an example of a(n) _____ in the context of a principle-agent problem.

A company scientist at a biotechnology company decides to work on his own research project, hoping to eventually start his own firm, rather than on the project he was assigned. However, the company's stockholders are unaware of this situation. This is an example of a(n) _____ in the context of a principle-agent problem.



A. adverse selection



B. stakeholder strategy



C. moral hazard



D. shared value creation



Answer: moral hazard

Michael Porter recommends that managers use the shared value creation framework to focus on

Michael Porter recommends that managers use the shared value creation framework to focus on



A. creating new regional clusters.



B. narrowing the customer base to eliminate nonconsumers.



C. streamlining traditional internal firm value chains.



D. reducing the involvement of nongovernmental organizations.



Answer: creating new regional clusters

One of the ways to foster ethical behavior in employees is to

One of the ways to foster ethical behavior in employees is to



A. avoid codifying organizational culture.



B. create a control system that encourages desired values.



C. view clients as counter parties to transactions.



D. align the vision statement of the organization with its informal culture.



Answer: create a control system that encourages desired values

Which of the following is true of business ethics?

Which of the following is true of business ethics?



A. Certain notions such as fairness, honesty, and reciprocity are universal norms.



B. Business ethics is an agreed-upon code of conduct in business, based on laws.



C. The perception of what is ethical and what is not is similar across different cultures.



D. Business ethics needs to be codified into law in order to be followed.



Answer: Certain notions such as fairness, honesty, and reciprocity are universal norms.

Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to his duties on the board, Frank is also a full-time employee as a senior manager at Spinson Locomotives Inc. Which of the following is most likely to be true of Frank?

Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to his duties on the board, Frank is also a full-time employee as a senior manager at Spinson Locomotives Inc. Which of the following is most likely to be true of Frank?


A. Frank is a part-time employee at Lofloy Greens.



B. Frank cannot serve as a director on Spinson Locomotives' board.



C. Frank is an outside director on Lofloy's board of directors.



D. Frank is a stockholder of Lofloy Greens.



Answer: Frank is an outside director on Lofloy's board of directors.

Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n)

Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n)



A. shareholder capitalism scenario.



B. inside director-outside director conflict.



C. fiduciary responsibility oversight.



D. principal-agent problem.



Answer: principal-agent problem

Warren owns shares in a company called Gerarch Communications Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Warren wants to proactively cut his losses and therefore sells his shares. Lawrence, a trading enthusiast, buys shares in Gerarch Communications because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify?

Warren owns shares in a company called Gerarch Communications Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Warren wants to proactively cut his losses and therefore sells his shares. Lawrence, a trading enthusiast, buys shares in Gerarch Communications because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify?



A. separation of legal ownership and management control



B. legal personality



C. limited liability for investors



D. transferability of investor ownership



Answer: transferability of investor ownership

Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____ organization.

Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____ organization.



A. simple



B. organic



C. mechanistic



D. integrated



Answer: organic

While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure.

While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure.



A. simple



B. matrix



C. mechanistic



D. functional



Answer: simple

Hank's Hot Dogs is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Hank's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Hank's?

Hank's Hot Dogs is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Hank's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Hank's?



A. Hank's has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy.



B. Hank's has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy.



C. Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.



D. Hank's has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.



Answer: Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by



A. introducing results-only-work-environments to tap intrinsic motivations.



B. refining the budgeting process to encourage more department collaboration.



C. updating standard operating procedures to allow more process flexibility.



D. using output controls only when the goal is to ensure a predictable outcome.



Answer: introducing results-only-work-environments to tap intrinsic motivations.

What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?

What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?



A. The firm's original core competency can turn from a liability into an asset.



B. The firm's organizational inertia can turn into its core rigidity.



C. The firm's competitive parity can turn into its competitive advantage.



D. The firm's culture can turn from a core competency into a core rigidity.



Answer: The firm's culture can turn from a core competency into a core rigidity.

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure.

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure.



A. global matrix



B. multidivisional



C. functional



D. simple



Answer: global matrix

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies?

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies?



A. organic



B. simple



C. ambidextrous



D. mechanistic



Answer: ambidextrious

Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario?

Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario?



A. Flight Stream Inc. is a mechanistic organization.



B. Flight Stream Inc. has a flat organizational structure.



C. Flight Stream Inc. has a high degree of centralization.



D. Flight Stream's organizational culture is governed by codified rules.



Answer: Flight Stream Inc. has a flat organizational structure.

Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a vice-president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the vice-presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n)

Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a vice-president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the vice-presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n)



A. organic organizational structure.



B. decentralized organizational structure.



C. tall hierarchical structure.



D. flat hierarchical structure.



Answer: tall hierarchical structure

Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company?

Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company?



A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets.



B. Each country unit owned by the company will tend to be highly autonomous.



C. Majority of the value creation for the company will take place in its home country.



D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.



Answer: Each country unit owned by the company will tend to be highly autonomous.

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of



A. economies of scope.



B. location economies.



C. resource immobility.



D. resource ambiguity.



Answer: location economies

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