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BSG Final Exam Questions & Answers | 60

Questions with 100% Correct Answers | Verified |

Updated 2025..

1. Brinker International operates restaurants in several different segments of the casual dining market. This is a. a relatively high level of diversification. b. an example of product diversification. c. unlikely to reduce variability in the firm's profitability since the restaurants are all in the casual dining category. d. an example of related linked diversification. - Correct answer b. an example of product diversification.
2. On the most basic level, corporate-level strategy is concerned with ____ and how to manage these businesses. a. whether the firm should invest in global or domestic businesses b. what product markets and businesses the firm should be in c. whether the portfolio of businesses should generate immediate above- average returns or should be troubled businesses which will create above- average returns only after restructuring d. whether to integrate backward or forward. - Correct answer b. what product markets and businesses the firm should be in
3. Which acquisition would be considered the LEAST related? a. a candy manufacturer purchases a chemical laboratory specializing in food flavorings. b. a chain of garden centers acquires a landscape architecture firm. c. a hospital acquires a long-term care nursing home. d. an upscale "white-tablecloth" restaurant chain acquires a travel agency - Correct answer d. an upscale "white-tablecloth" restaurant chain acquires a travel agency
4. The more "constrained" the relatedness of diversification, a. the less likely the firm's portfolio of businesses will reduce the firm's variability in profitability. b. the wider the variation in the portfolio of businesses owned by the firm. c. the more links there are among the businesses owned by an organization. d. lower the proportion of total organizational revenue derived from the dominant-business. - Correct answer c. the more links there are among the businesses owned by an organization.
5. Which of the following is NOT a limit to vertical integration? a. bureaucratic costs b. the loss of flexibility through investment in specific technologies

[Date] c. capacity balance and coordination problems from changes in demand d. imitation of core technology by potential competitors - Correct answer d. imitation of core technology by potential competitors

6. Horizontal acquisitions in the video rental industry are typically intended to a. take advantage of innovations created by the other firm. b. reduce some of the overcapacity in the industry. c. control more parts of the value chain. d. overcome barriers to entry - Correct answer b. reduce some of the overcapacity in the industry.
7. Foreign firms seeking to acquire U.S. firms are interested in all of the following EXCEPT a. gaining access to the U.S. company brand names. b. gaining access to critical resources held by U.S. companies. c. diversifying into unrelated industries in order to broaden their market scope. d. acquiring relationships with dealers through horizontal acquisitions. - Correct answer d. acquiring relationships with dealers through horizontal acquisitions.
8. Researchers have found that shareholders of acquired firms often a. earn above-average returns. b. earn below-average returns. c. earn close to zero as a result of the acquisition. d. are not affected by the acquisition. - Correct answer a. earn above- average returns.
9. The fastest and easiest way for a firm to diversify its portfolio of businesses is through acquisition because a. of barriers to entry in many industries. b. it is difficult for companies to develop products that differ from their current product line c. innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition d. unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition - Correct answer b. it is difficult for companies to develop products that differ from their current product line
10. Related acquisitions to build market power a. are likely to undergo regulatory review. b. are rarely permitted to occur across international borders. c. typically involve a firm purchasing one of its suppliers or distributors. d. concentrate on capturing value at more than one stage in the value chain.
    • Correct answer a. are likely to undergo regulatory review.

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11. International strategy refers to a(an) a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international market - Correct answer b. strategy through which the firm sells products in markets outside the firm's domestic market.
12. U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness due to a. increasing rejection of American culture across much of the world. b. the sophistication of the international consumer due to the Internet c. customization required by cultural differences. d. the increasing loss of economies of scale - Correct answer c. customization required by cultural differences.
13. Which of the following is NOT a motive for firms to become multinational? a. to take advantage of potential opportunities to expand the market for the firm's products. b. to secure needed resources. c. to avoid high domestic taxation on corporate income. d. increasing universal product demand - Correct answer c. to avoid high domestic taxation on corporate income.
14. Which of the following is NOT a factor pressuring companies for local responsiveness? a. the need for local repair and service to customers b. customization due to cultural differences c. government pressure for firms to use local sources for procurement d. availability of low labor costs - Correct answer d. availability of low labor costs
15. The choices that a firm has for entering the international market include all of the following EXCEPT: a. exporting. b. licensing. c. leasing. d. acquisition. - Correct answer c. leasing.
16. Firms participate in strategic alliances for all the following reasons EXCEPT to a. enter markets more quickly. b. acquire technology.

[Date] c. create values they could not develop acting independently. d. retain tight control over intangible core competencies - Correct answer d. retain tight control over intangible core competencies

17. When using business-level and corporate-level cooperative strategies, a firm's primary intent is to develop strategic alliances that a. enhance the firm's reputation in the marketplace. b. are long-lived. c. will reduce the firm's political risk. d. create a competitive advantage. - Correct answer d. create a competitive advantage.
18. In a(an) ____ the firms involved own equal shares of a newly-created venture. a. equality-based strategic alliance b. non-equity strategic alliance c. joint venture d. equity strategic alliance - Correct answer c. joint venture
19. A state-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of ____ resulting from an alliance. a. explicit collusion. b. economies of scale. c. opportunistic behavior. d. distribution opportunities. - Correct answer b. economies of scale.
20. Firms entering into synergistic strategic alliances expect to attain a. technological complexity. b. economies of scope. c. monopolistic market power. d. learning curve efficiencies - Correct answer b. economies of scope.
21. The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for a. increased diversification of Sierra Infusion. b. the addition of outside directors to the board. c. increased shareholder participation in decision making. d. greater concentration on Sierra's core industry. - Correct answer a. increased diversification of Sierra Infusion.
22. The separation between firm ownership and management creates a(n) ____ relationship.

[Date] a. governance b. control c. agency d. dependent - Correct answer c. agency

23. A primary objective of corporate governance is to a. determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. c. lobby legislators to pass laws that are aligned with the organization's interests. d. resolve conflicts among corporate employees. - Correct answer b. ensure that the interests of top-level managers are aligned with the interests of shareholders.
24. Which of the following is NOT an internal governance mechanism? a. the board of directors b. ownership concentration c. executive compensation d. the market for corporate control - Correct answer d. the market for corporate control
25. A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. a. generate free cash flows, reduce the risk of total firm failure b. increase the price of the firm's stock, increase the dividends paid out from free cash flows c. reduce the risk of total firm failure, reduce their total portfolio risk d. reduce their employment risk, increase the company's value - Correct answer d. reduce their employment risk, increase the company's value
26. In the US, monitoring by shareholders is usually accomplished through a. management consultants. b. government auditors. c. the firm's top managers. d. the board of directors. - Correct answer d. the board of directors.
27. Generally, a board member who is a source of information about a firm's day-to- day activities is classified as a(an) ____ director. a. lead independent b. inside c. related

[Date] d. encumbered - Correct answer b. inside

28. A primary objective of corporate governance is to a. determine and control the strategic direction of an organization, so that the top executives are focused on minimizing corporate profits. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. c. lobby legislators to pass laws that are aligned with the organization's interests. d. resolve conflicts among corporate employees. - Correct answer b. ensure that the interests of top-level managers are aligned with the interests of shareholders.
29. Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT a. bonuses. b. long-term incentives such as stock options. c. salary. d. penalties for inadequate firm performance - Correct answer d. penalties for inadequate firm performance
30. Which of the following is NOT an internal governance mechanism? a. the board of directors b. ownership concentration c. executive compensation d. the market for corporate control - Correct answer d. the market for corporate control
31. The separation between firm ownership and management creates a(n) ____ relationship. a. governance b. control c. agency d. dependent - Correct answer c. agency
32. Usually, large block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. a. 5 b. 25 c. 50 d. 75 - Correct answer a. 5

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33. A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. a. generate free cash flows, reduce the risk of total firm failure b. increase the price of the firm's stock, increase the dividends paid out from free cash flows c. reduce the risk of total firm failure, reduce their total portfolio risk d. reduce their employment risk, increase the company's value - Correct answer d. reduce their employment risk, increase the company's value
34. Managerial employment risk is the a. risk that managers will behave opportunistically. b. risk undertaken by managers to earn stock options. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. d. risk managers will not find a new top management position if they should be dismissed. - Correct answer c. managers' risk of job loss, loss of compensation, and/or loss of reputation
35. The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for a. increased diversification of Sierra Infusion. b. the addition of outside directors to the board. c. increased shareholder participation in decision making. d. greater concentration on Sierra's core industry. - Correct answer a. increased diversification of Sierra Infusion.
36. The market for corporate control serves as a means of governance when a. the firm is overpriced in the market. b. internal controls have failed. c. the corporation has greatly exceeded performance expectations. d. the top management team's interests and the owners' interests are aligned. - Correct answer b. internal controls have failed. 37..
37. Corporate governance is all of the following EXCEPT a. mechanisms used to determine and control the strategic direction and performance of organizations.

[Date] b. a means to establish and maintain harmony between owners and top managers whose interests may conflict. c. ensuring that top managers' interests are aligned with the interests of stockholders. d. resolve conflicts among corporate employees. - Correct answer d. resolve conflicts among corporate employees.

39. T or F? Collusion is a form of cooperative strategy. - Correct answer T
40. T or F? Firms who are competitors can form cooperative strategies - Correct answer T
41. T or F? If a large Asian cosmetics firm was to engage in a 50-50 partnership with a large American chemical company to form a new company focused on creating advanced skin care products, this would be considered a joint venture. - Correct answer T
42. T or F? Strategic alliances are cooperative strategies between firms that combine their resources and capabilities to create a competitive advantage - Correct answer T
43. T or F? Being (and having) a trustworthy partner increases the probability of alliance success - Correct answer T
44. T or F? Equity strategic alliances exist when one firm acquire another firm - Correct answer F
45. T or F? Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share of the joint venture than do the remaining partner(s).
    • Correct answer F
46. T or F? Cooperation in slow-cycle markets is destructive, especially in emerging markets. - Correct answer F
47. T or F? Mergers are the most popular cooperative strategy used in standard- cycle markets - Correct answer F
48. T or F? Standard-cycle markets are often large and gain economies of scale through cooperative alliances. - Correct answer T
49. T or F? In a horizontal complementary strategic alliance, one firm enters a nonequity strategic alliance with another to help in the design, manufacture, or distribution of its product - Correct answer F
50. Which of the following is NOT a motive for firms to become multinational?

[Date] a. to take advantage of potential opportunities to expand the market for the firm's products b. to secure access to low-cost factors of production c. to reduce domestic country political pressures to expand d. to secure key input resources - Correct answer c. to reduce domestic country political pressures to expand

51. The increased pressures for global integration of operations have been driven mostly by: a. new low cost entrants. b. universal product demand. c. increased levels of joint ventures. d. the rise of governmental regulation - Correct answer b. universal product demand. 52.. Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation. - Correct answer b. are limited in opportunities for growth.
52. Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT: a. labor. b. capital. c. infrastructure. d. quality of demand. - Correct answer d. quality of demand.
53. In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the __________ in Porter's model. a. strategy, structure and rivalry among firms b. related and supporting industries c. demand conditions d. factors of production - Correct answer b. related and supporting industries
54. All of the following are international corporate-level strategies EXCEPT the ___________ strategy.

[Date] a. multidomestic b. differentiation c. global d. transnational - Correct answer b. differentiation

56. A multidomestic corporate-level strategy is one in which: a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b. there are a relatively large number of local firms which choose not to compete internationally. c. strategic and operating decisions are decentralized to the strategic business unit in each country. d. strategic and operating decisions are centralized across the firm's international strategic business units. - Correct answer c. strategic and operating decisions are decentralized to the strategic business unit in each country
57. A global corporate-level strategy assumes: a. increasing demand for products in the world. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets. - Correct answer d. more standardization of products across country markets. 58.. The choices that a firm has for entering the international market include all of the following EXCEPT: a. exporting. b. licensing. c. leasing. d. aquisition - Correct answer c. leasing.
58. Which of the following is NOT a disadvantage associated with exporting? a. high costs associated with acquiring foreign production facilities b. high transportation costs c. loss of control over distribution activities d. tariffs imposed by local governments - Correct answer a. high costs associated with acquiring foreign production facilities
59. A licensing agreement: a. occurs when two firms agree to share the risks and the resources of a new
60. venture.

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62. b. is best way to protect proprietary technology from future competitor.
63. c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.
64. d. is often called a greenfield venture. - Correct answer c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.
65. The means of entry into international markets that offers the greatest control is: a. licensing. b. acquisitions. c. joint ventures. d. greenfield ventures. - Correct answer d. greenfield ventures.
66. Political risks in international diversification include: a. the changes that a domestic government forces on a domestic firm. b. changes in exchange rates. c. those related to instability in national governments. d. the inflation rate in given countries and how the local national bank responds. - Correct answer c. those related to instability in national governments.