MGT 490 Final Exam Study Guide| Questions with 100% Correct Answers | Verified | Updated 2, Exams of Marketing Business-to-business (B2B)

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MGT 490 Final Exam Study Guide| Questions with 100% Correct Answers | Verified | Updated 2023 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: 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 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 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)