MGT 490 Final Exam Study Guide Questions with 100% Correct Answers Verified Updated, Exams of Nursing

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MGT 490 Final Exam Study Guide

Questions with 100% Correct Answers

1. corporate-level strategy - Correct answer a strategy that focuses on gaining long-term revenue, profits, and market value through operations in multiple businesses
2. diversification - Correct answer the process of firms expanding their operations by entering new businesses

• single business
• product line expansion
• geographic expansion/vertical integration
• related/unrelated diversification

3. related diversification (horizontal relationships) - Correct answer a firm entering a different business in which it can benefit from leveraging competencies, sharing activities, or building market power

• sharing tangible resources
• sharing intangible resources

4. core competencies - Correct answer a firm's strategic resources that reflect the collective learning in the organization

• how to coordinate diverse production skills
• how to integrate multiple streams of technologies
• how to market diverse products and services

5. sharing activities - Correct answer corporations can also achieve synergy in a corporation by sharing tangible and value-creating activities across their business units, which provides two payoffs: cost savings and revenue enhancements

• common manufacturing facilities
• distribution channels
• sales forces

6. economies of scope - Correct answer cost savings from leveraging core competencies or sharing related activities among businesses in a corporation
7. market power - Correct answer firms' ability to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment

• pooled negotiating power
• vertical integration

8. pooled negotiating power - Correct answer the improvement in bargaining position relative to suppliers and customers
9. What are the benefits of pooled negotiating power? - Correct answer similar businesses working together can have stronger bargaining position relative to suppliers, customers, and competitors 10)e.g.: Netflix, Hulu 11)What are the risks of pooled negotiating power? - Correct answer abuse of bargaining power may affect relationships with customers, suppliers, and competitors 12)vertical integration - Correct answer an expansion or extension of the firm by integrating preceding or successive production processes 13)What are the benefits of vertical integration? - Correct answer - a secure source of raw materials or distribution channels

• protection of and control over valuable assets
• access to new business opportunities
• simplified procurement and administrative procedures 14)What are the risks of vertical integration? - Correct answer - costs and expenses associated with increased overhead and capital expenditures
• loss of flexibility resulting from large investments
• problems associated with unbalanced capacities along the value chain
• adding admin costs associated with managing a more complex set of activities 15)portfolio management - Correct answer assessing the competitive position of a portfolio of businesses within a corporation
• suggesting strategic alternatives for each business
• identifying priorities for the allocation of resources across the businesses 16)unrelated business diversification (hierarchical relationships) - Correct answer a firm entering a different business that has little horizontal interaction with other businesses of a firm
• value creation derives from corporate office
• leveraging support activities 17)transactional cost perspective - Correct answer a perspective that the choice of a transaction's governance structure, such as vertical integration or market transaction, is influenced by market transaction costs associated with each choice:
• search
• negotiating

• contracting
• monitoring
• enforcement costs 18)every market transaction has transaction costs 19)parenting advantage - Correct answer the positive contribution of the corporate office to a new business as a result of expertise and support provided 20)restructuring - Correct answer the intervention of the corporate office in the new business that substantially changes the assets, capital structure, and/or management 21)corporate restructuring - Correct answer corporate management must:
• have insight to detect undervalued companies or businesses with high potential for transformation
• have requisite skills and resources to turn the businesses around 22)can involve changes in:
• assets
• capital
• management 23)can be a means of obtaining valuable resources that can help an organization expand its product offerings and services 24)limitations of corporate restructuring - Correct answer - competing firms often can imitate any advantages realized or copy synergies that result from the merger and acquisition
• there can be many cultural issues that may doom the intended benefits from merger and acquisition endeavors 25)merger - Correct answer consolidation of two or more firms into one new legal entity
• can lead to consolidation withing an industry and force other players to consolidate 26)divestment - Correct answer the exit of a business from a firms portfolio
• can enhance a firm's competitiveness only to the the extent that it reduces its tangible or intangible costs without sacrificing a current competitive advantage or the seeds of future success 27)acquisition - Correct answer the incorporation of one firm into another through purchase
• corporations can enter new market segments 28)alliance - Correct answer any type of cooperative relationship among different firms

29)joint venture - Correct answer agreement under which two or more partners own or control a business 30)Advantages of alliances and joint ventures: - Correct answer - improvement of efficiency

• access to knowledge
• mitigating political factors
• overcoming collusion or restriction in competition
• introduce successful product or service into a new market
• lacks requisite marketing expertise
• join other firms to reduce manufacturing (or other) costs in the value chain
• pool capital, value-creating activities, facilities
• develop or diffuse new technologies
• use expertise of two or more companies
• develop products technologically beyond the capacity of companies acting independently 31)What are the strategies of improper partners? - Correct answer - each partner must bring desired complementary strengths to partnership
• strengths contributed by each should be unique
• partners must be compatible
• partners must trust each other 32)Characteristics of business groups - Correct answer - dominate in corporate landscape in many countries
• emerging markets are frequently characterized by poor product information
• legal separation of businesses, concentrated ownership and high debt-to- equity ration (as high as 4:1 in some Korean Groups)
• high leverage is often coupled with cross-guarantees of debt that can increase bankruptcy
• virtues of concentrated ownership often offset by reduced financial transparancy and poor corporate governance
• ongoing economic debate on these business units are "parasites" or "paragons" 33)managerial motives - Correct answer managers acting in their own self interest rather than to maximize long-term shareholder values 34)growth for growth's sake - Correct answer managers actions to grow the size of their firms not to increase long-term profitability but to serve managerial self- interest 35)antitakeover tatics - Correct answer managers actions to avoid losing wealth or power as a result of a hostile takeover

36)greenmail - Correct answer a payment by a firm to a hostile party for the firms stock at a premium, made when the firm's management feels that the hostile party is about to make a good offer 37)golden parachute - Correct answer a prearranged contract with managers specifying that, in the event of a hostile takeover, the target firm's managers will be paid a significant severance package 38)poison pill - Correct answer used by a company to give shareholders certain rights in the event of takeover by another firm 39)Political and economic risks of international expansion: - Correct answer - social unrest

• military turmoil
• demonstrations
• violent conflicts and terrorism
• laws and their enforcement 40)economic risk - Correct answer potential threat to a firm's operations in a country due to economic policies and conditions including property, rights, laws and enforcement of those laws 41)rule of law - Correct answer a characteristic of legal systems where by behavior is governed by rules that are uniformly enforced 42)corruption perceptions index - Correct answer corruption is the abuse of entrusted power for private gain
• least corrupt: New Zealand, Denmark, Finland, Norway
• most corrupt: Somalia, South Sudan, Syria, Afghanistan, Yemen, Libya 43)globalization - Correct answer the increase of international exchange, including trade in goods and services as well as exchange of money, information, ideas, and information
• the growing similarities of laws, rules, norms, values, and ideas across countries
• speeding up and deepening of transcontinential economic flows and patterns of social interaction 44)economic globalization - Correct answer integration of national economies into the international economy through trade, direct foreign investment, short-term capital flows, international flows of workers and flows of technology 45)factor endowments (national advantage) - Correct answer the nation's position in factors of production, such as skilled labor or infrastructure necessary to compete in a given industry

46)related and supporting industries (national advantage) - Correct answer the presence or absence in the nation of supplier industries and other related industries that are internationally competitive

• to achieve competitive advantage, factors of production must be developed: industry specific and firm specific
• the pool of resources at a firm's or country's disposal is less important than the speed and efficiency with which the resources are deployed 47)Why are related and supporting industries important? - Correct answer - enables firms to manage inputs more effectively
• allows joint efforts among firms 48)firm strategy, structure, and rivalry (national advantage) - Correct answer the conditions in the nation governing how companies are created, organized, and managed, as well as the nature of domestic rivalry 49)multinational firms - Correct answer firms that manage operations in more than one country 50)arbitrage opportunities - Correct answer an opportunity to profit by buying and selling the same good in different markets 51)Rivalry is intense in nations with conditions of: - Correct answer - strong consumer demand
• strong supplier bases
• high new entrant potential from related industries 52)Competitive rivalry increases the efficiency with firms can: - Correct answer - develop within the home country
• market within the home country
• distribute production and services within the home country 53)outsourcing - Correct answer occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house 54)offshoring - Correct answer takes place when a firm decides to shift an activity that they were previously performing in a domestic location to a foreign location 55)currency risk - Correct answer potential threat to a firm's operations in a country due to fluctuations in the local currency's exchange rate
• currency exchange fluctuations
• appreciation of the U.S. dollar 56)management risks - Correct answer potential threat to a firm's operations in a country due to the problem that managers have to make decisions in the context of foreign markets

• culture
• customs
• language
• income level
• customer preferences
• distribution system 57)international strategy - Correct answer based on diffusion and adaption of the parent company's knowledge and expertise to the foreign markets
• primary goals: worldwide exploitation of the parent's firm's knowlege and capabilities
• strengths: leverage and diffusion of a parent firm's knowledge and core competencies; lower costs due to the decrease need to tailor production and services
• limitations: inability to adapt to local market, inability to take advantage of new ideas and innovations occurring in local markets 58)global strategy - Correct answer competitive strategy is centralized and controlled largely by corporate office with the primary emphasis on controlling costs; used in industries where the pressure for local adaptation is low and the pressure for lowering costs is high
• emphasizes economies of scale 59)Strengths of global strategy: - Correct answer - strong integration across various businesses
• standardization leads to higher economies of scale, which lowers costs
• helps create uniform standards of quality worldwide 60)Limitations of global strategy: - Correct answer - limited ability to adapt to local markets
• concentration of activities may increase dependence on a single facility
• single locations may lead to higher tariffs and transportation costs 61)multidomestic strategy - Correct answer emphasis on differentiating products and services to adapt to local markets 62)used in industries where the pressure for local adaptation is high and the pressure for lowering costs is low
• authority is more decentralized 63)Strengths of multidomestic strategy: - Correct answer - ability to adapt products and services to local market conditions
• ability to detect potential opportunities for attractive niches in a given market, enhancing revenue 64)Limitations of multidomestic markets: - Correct answer - decreased ability to realize cost savings through scale economies

• greater difficulty in transferring knowledge across many countries
• may lead to "overadaption" as conditions change 65)translational strategy - Correct answer optimization of tradeoffs associated with efficiency, local adaptation, and learning 66)used in industries where the pressures for both local adaptation and lowering costs is high
• firm's assets and capabilities are dispersed according to the most beneficial location for a specific activity 67)Strengths of translational strategy: - Correct answer - ability to attain economies of scale
• ability to adapt to local markets
• ability to locate activities in optimal locations
• ability to increase knowledge flows and learning 68)Limitations of translational strategy: - Correct answer - unique challenges in determining optimal locations of activities to ensure cost and quality
• unique managerial challenges in fostering knowledge transfer 69)regionalization - Correct answer increasing international exchange of goods, services, money, people, ideas and info; and in increasing similarities of culture, laws, rules, and norms withing a region such as Europe, North America, or Asia 70)trading blocs - Correct answer groups of countries agreeing to increase trade between them by lowering trade barriers 71)e.g.: EU, NAFTA, ASEAN, MERCOSUR 72)exporting - Correct answer producing goods in one country to sell to residents of another country 73)licensing - Correct answer company receives a fee in exchange for the rights to use its intellectual property 74)franchising - Correct answer an arrangement in which one party (the franchisor) permits another (the franchisee) to operate an enterprise using its trademark, logo, product line, and method of operation in return for a fee
• widely used in fast-food and hotel/motel industries
• with minor adjustments for the local market, this can result in highly profitable international businesses 75)wholly-owned subsidiary - Correct answer a business in which a multinational company owns 100% of the stock 76)strategic control - Correct answer the process of monitoring and correcting a firm's strategy and performance

• informational
• behavioral 77)Traditional approach to strategic control: - Correct answer - strategies are formulated and top management sets goals
• strategies are implemented
• performance is measured against the predetermined goal set
• formulate strategies --> implement strategy  strategic control 78)When is the traditional approach most appropriate? - Correct answer - environment is stable and relatively simple
• goals and objectives can be measured with certainty
• little need for complex measures of performance 79)informational control - Correct answer a method of organizational control in which a firm gathers and analyzes information from the internal and external environment in order to obtain the best fit between the organization's goals and strategies and the strategic environment 80)Approaches of informational control: - Correct answer - primarily concerned with whether or not the organization is "doing the right things"
• key question: "Do the organization's goals and strategies still 'fit' withing the context of the current strategic environment?"
• key issues: scan and monitor external environment (general and industry)/continuously monitor the internal environment 81)behavioral control - Correct answer method of organization control in which a firm influences the actions of employees through culture, rewards, and boundaries
• focused on implementation: doing things right
• three key control "levers": culture, rewards, boundaries 82)organizational culture - Correct answer system of shared values and beliefs that shape a company's people, organizational structures, and control systems to produce behavioral norms
• culture set implicit boundaries (unwritten standards of acceptable behavior)
• dress
• ethical matters
• the way an organization conducts its business 83)reward systems - Correct answer policies that specify who gets rewarded and why
• used to motivate employees (effective motivator and control mechanism)

84)boundaries and constraints - Correct answer rules that specify behaviors that are acceptable and unacceptable

• focus efforts on strategic priorities
• provide short-term objectives and action plans 85)Short-term action plans of boundaries and constraints: - Correct answer - specific and measurable
• specific time horizon for attainment
• achievable, but challenging
• improve operational efficiency and effectiveness
• minimize improper and unethical conduct 86)corporate governance - Correct answer relationship among various participants in determining the direction and performance of corporations
• primary participants: shareholders, management, and board of directors 87)corporation - Correct answer a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party 88)agency theory - Correct answer deals with the relationship between:
• principals - who are owners of the firm (stockholders)
• agents - who are the people paid by principals to perform a job on their behalf (management) 89)What are the two problems of agency theory? - Correct answer - conflicting goals of principals and agents
• difficulty of principals to monitor the agents and different attitudes with preferences towards the risk of principals and agents 90)board of directors - Correct answer a group that has a fiduciary duty to ensure that the company is run consistently with the long-term interests of the owners or shareholders of a corporation and acts as an intermediary between shareholders and management 91)shareholder activism - Correct answer actions by large shareholders, both institutions and individuals, to protect their interest when they feel that management actions diverge from shareholder value maximization 92)external governance control mechanisms - Correct answer methods that ensure that managerial actions lead to shareholder value maximization and do not harm other stakeholder groups and are outside the control of the corporate governance system 93)market for corporate control - Correct answer external control mechanisms in which shareholders dissatisfied with a firm's management, sells their shares

94)Components of the market: - Correct answer - auditors: independent organizations staffed by professionals who verify the books of accountants

• banks and analysts
• regulatory bodies: different fields have different regulations (banks, utilities, and pharmaceuticals have more regulatory oversight)
• media and public activists: public perceptions are greatly influenced by media 95)takeover constraints - Correct answer the risk to management of the firm being acquired by a hostile raider 96)principal-principal conflicts - Correct answer conflicts between two classes of principals (controlling shareholders and minority shareholders) within the context of a corporate governance system 97)expropriation of minority shareholders - Correct answer activities that enrich the control shareholders at the expense of minority shareholders 98)business groups - Correct answer set of firms that, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated actions 99)organizational structure - Correct answer refers to formalized patterns of interactions that link a firm's tasks, technologies, and people

100. Traditional firms of organizational structure: - Correct answer - the balance of two conflicting forces:

1. need for the division of tasks into meaningful groupings
2. need to integrate the groupings for efficiency and effectiveness

101. simple organizational structure - Correct answer an organizational firm in which the owner-manager makes most of the decisions and control activities and the staff serve as an extension of the top executives
102. Advantages of simple organizational structure: - Correct answer - highly informal

• centralized decision making
• little specialization

103. Disadvantages of simple organizational structure: - Correct answer - employees may not understand their responsibilities

• may take advantage of lack of regulation

104. functional organizational structure - Correct answer organizational form in which the major functions of the firm, such as production, marketing, R&D, and accounting, are grouped internally
105. Advantages of functional organizational structure: - Correct answer - enhance coordination and control

• centralized decision making
• enhance organizational-level perspective
• more efficient use of managerial and technical talent
• facilitated career paths and development in specialized ideas

106. Disadvantages of functional organizational structure: - Correct answer - impeded communication and coordination due to differences in values and orientation

• may lead to short-term thinking (functional v. organization as a whole)
• difficult to establish uniform performance standards

107. divisional organizational structure - Correct answer an organizational firm in which products, projects, or product markets are grouped internally

• also called multidivisional structure or M-form

108. Advantages of divisional organizational structure: - Correct answer - separation of strategic and operating control

• quick response to important changes in external environment
• minimal problems of sharing resources across functional departments
• development of general management talent is enhanced

109. Disadvantages of divisional organizational structure: - Correct answer - can be very expensive

• can be dysfunctional competition across divisions
• can focus on short-term performance

110. strategic business unit structure - Correct answer an organizational form in which products, projects, or product market divisions are grouped into homogeneous units
111. Advantages of strategic business unit structure: - Correct answer - task of planning and control by the corporate office are more manageable

• individual businesses can reach more quickly to important changes

112. Disadvantages of strategic business unit structure: - Correct answer - may become difficult to achieve synergies

• additional level of management increases overhead expenses

113. holding company structure - Correct answer an organization form in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters
114. Advantages of holding company structure: - Correct answer - cost savings associated with lower overhead

• autonomy increases the motivational level of divisional executives

115. Disadvantages of holding company structure: - Correct answer - inherent lack of control and dependence

• limited staff support

116. matrix organizational structure - Correct answer an organizational firm in which there are multiple lines of authority and some individuals report to at lease two managers
117. Advantages of matrix organizational structure: - Correct answer - facilitates the use of specialized personnel

• equipment and facilities provided by professionals with a broad range of responsibility and experience

118. Disadvantages of matrix organizational structure: - Correct answer - can cause uncertainty and lead to intense power struggles

• working relationships become more complicated
• decisions make take longer

119. international divisional structure - Correct answer a organizational form in which international operations are in separate, autonomous divisions

• most domestic operations are kept in other parts of the organization

120. geographical-area division structure - Correct answer a type of divisional organizational structure in which operations are kept in other parts of the organization
121. worldwide matrix structure - Correct answer a type of matrix structure that has one line of authority for geographic-area divisions and another line of authority for worldwide product divisions
122. worldwide functional structure - Correct answer a functional structure in which all departments have worldwide responsibilities
123. worldwide product division structure - Correct answer a product division structure in which all divisions have worldwide responsibilities

124. global start-up - Correct answer a business organization that, from inception, seeks to derive significant competitive advantages from the use of resources and sales of outputs in multiple countries
125. leadership - Correct answer process of transforming organizations from what they are to what the leader would have them become

• interdependent activities of leadership: setting a direction, designing the organization, nurturing a culture dedicated to excellence and ethical behavior

126. setting a direction - Correct answer a strategic leadership activity of strategy analysis and strategic formulation

• scan the environment and develop a knowledge of all of the company's stakeholders and other salient environmental trends

127. designing the organization - Correct answer strategic leadership activity building structures, teams, systems, and organizational processes that facilitate the implementation of the leaders vision and strategies
128. excellent and ethical organizational culture - Correct answer an organizational culture focused on core competencies and high ethical standards
129. barriers to change - Correct answer characteristics of individuals and organizations that prevent a leader from transforming an organization
130. vested interest in the status quo - Correct answer a barrier to change that stems from people's risk aversion
131. systemic barriers - Correct answer barriers to change that stems from an organizational design that impedes the proper flow and evaluation of information
132. behavioral barriers - Correct answer barriers to change associated with the tendency for managers to look at issues from a biased or limited perspective based on their prior education or experience
133. political barriers - Correct answer barriers to change related to conflicts arising from power relationships
134. personal time constraints - Correct answer a barrier to change that stems from people not having sufficient time or strategic thinking and reflection
135. power - Correct answer a leader's ability to get things done in a way he or she wants them to be done
136. organizational bases of power - Correct answer formal management position that is the basis of the leader's power

137. legitimate power - Correct answer derived from organizationally conferred decision-making authority and is exercised by virtue of managers' position in the organization
138. reward power - Correct answer depends on the ability of the leader or manager to confer rewards for positive behaviors or outcomes
139. coercive power - Correct answer power a manager exercises over employees using a fear or punishment for errors of omission or commission
140. information power - Correct answer arises from a managers access, control, and distribution of information

• not freely available to everyone in the organization

141. personal bases of power - Correct answer leader's personality characteristics and behavior that are the basis of the leader's power
142. referent power - Correct answer subordinate's identification with the leader
143. expert power - Correct answer leader's expertise and knowledge
144. emotional intelligence - Correct answer individual's capacity for recognizing his or her own emotions and those of others, including the five components of self awareness, self regulation, motivation, empathy, and social skills
145. stakeholders - Correct answer a group or individual that can almost affect or be affected by a company's purpose

• shareholders
• managers
• employees
• local communities
• society
• suppliers
• customers
• creditors

146. corporate social responsibility (CSR) - Correct answer companies voluntary/discretionary relationships with stakeholders

• operationalized as community relations, philanthropic, multi-sector collaboration, volunteer opportunities

147. Economic approach towards CSR: - Correct answer - Friedman: purpose of a company is to make profit and provides products/services and jobs

• social responsibility - "highway robbery"
• role of government

148. Instrumental approach towards CSR: - Correct answer - "good business is good business"

• Porter's "corporate philanthrophy" (uses company competencies)

149. Integrated approach towards CSR: - Correct answer - part of our DNA, "who we are"

• e.g.: Body Shop, Ben & Jerry's

150. Corporate philosophy at Merck: - Correct answer "We try to never forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, thay have never failed to appear. The better we have remembered it, the larger they have been."
151. Corporate philosophy at GSK: - Correct answer "Do you want us to give these drugs away for free? Then there won't be any more drugs to treat AIDS or anything else. Isn't it ironic that the companies that brought the drugs to market are the ones being criticized for people dying?"
152. social entrepreneurship - Correct answer addressing neglected societal problems by challenging coventional wisdom through innovative business models that empower people and deliver sustainable solutions deployed in local actions achieving multiplier impact in people's lives
153. negative externalities - Correct answer may lead to overproduction or over consumption

• e.g.: pollution, road congestion

154. Correcting for negative externalities: - Correct answer - self regulation by corporation: CSR

• government has an important role: legal imposition (recycling, labor laws), incentives for lower production/consumption (licenses, taxes), market based mechanisms to price externalities (carbon-emission trading system)
• social activists: organizations that have the function of raising awareness of society about negative externalities that their members rerceive important and then act to force other societal factors to account for them (greenpeace, civil rights movement, consumer protection organizations)

155. positive externalities - Correct answer may lead to under-production and under-consumption

• e.g.: education, vaccination, R&D
• the problem is that value created by these activities will be much higher than valued that can be captured

156. Correcting for positive externalities - Correct answer - government: creating regulations that enable internationalization of benefits (intellectual property), government provision of public goods (police force, primary education), public subsidies to encourage private provision/consumption (education vouchers, business creation subsidiaries, renewable energy subsidies)