BADM Final

T/F Corporate governance invloves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest.
True False

T/F Executive compensation, ownership concentration, and the matrix oganizational structure are all examples of governance mechanisms.
True False

T/F Committed and involved board of directors, shareholder activism, and reward & compensation agreements are all examples of governance mechanisms,
True False

T/F As a rule shareholders prefer more diversification than do managers.
True False

T/F The primary role of the board of directors is to monitor and control top level executives to protect owners' interests.
True False

T/F Stock options attempt to align managers' and owners' interests by typing managerial pay and firm performance together.
True False

T/F To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business level strategy
True False

T/F Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.
True False

Supose you are an analyst reviewing the Coors business in 1977. What is the biest risk to Coors' perfomance

because it had to expand to keep its inappropriately big plant operating at high capacity once there was additional offer from other competitors to cover previous excess demand in its core market

What is Coor's obvious focus during the period of the case?

Does Coors expend more money on advertising per barrel sold than its competitors in 1977?

Does Coors expend more money on advertising per barrel sold than its competitors in 1985?

T/F The functional structure is most appropriate for larger firms impletmenting a strategy that includes high levels of diversification
True False

T/F The finance and R&D functions are emphasized in the differentiation strategy's functional structure.
True False

T/F Internal competition for corporate resources is effective for companies with an nrelated diversification strategy, but dysfunctional for companies with a related strategy.
True False

A primary objective of ____________ _________is to ensure that the interests of top-level managers are alighned with the interests of shareholders.

The separation between a firm's owners and managers creates an ____ relationship

Firm size and executive compensation are

In contrast to managers, shareholders may prefer that free cash flows be:

is a governance mechanism that seeks to align managers and owners' interests through all of the following: bonuses, long-term incentives such as stock options, salary.

T/F Coors' position as the most profitable brewer(per barrel) in 1977, was based primarily on its differentiation and mystique.
True False

Was Coors successful from 1977 - 1985

T/F In a money-making effort, a small private university has decided to institute consulting services using its business faculty as consultants whose services would be sold to clients. This university is attempting to use its faculty to gain economies of scope.
True False

T/F An unrelated diversification strategy can create value through two types of financial economies -- efficient internal capital allocations and purchasing other corporations and restructuring their assets.
True False

T/F In order to acheive economies of scale, some manufacturing industries in nations(ie Korea) with small domestic markets must globalize
True False

The ultimate test of the ______ is whether the businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.

enhancing the strategic competitiveness of the entire company, expanding the business portfolio in order to reduce managerial employment risk, gaining market power relative to competitors

inceasing low performance levels of a business unit

when a company produces its own inputs

Smithfield foods produces hams and other meat products. It owns hog raising operations. This is an example of a ____ ____ business

Stock markets apply a conglomerate discount of 20% on unrelated diversified firms. This means that investors:

Often, firms plagued by poor performance will increase their level of

exists when the value created by business units working together exceeds the calue the units create when working independently.

Personal moties for managers to seek diversification include a desire to:

Increasing the size of the firm's potential markets, gaining economies of scale, gaining a competitive advantage through location.

T/F To the extent that firms are able to standardize products across country borders and use the same or similar production facilities, coordinating critical resource functions, they are likely to achieve a more optimal economic scale
True False

T/F A multidomestic strategy assumes that consumer needs, industry conditions, and social normas are homogenous in every country
True False

T/F Multidomestic strategies allow fo the establishment of economies of scale
True False

T/F A global strategy assumes that business units operating in each contry are interdependent
True False

T/F As a general rule of thumb, if a company cannot make a profit in its home market, it cannot make a profit in the international market
True False

focuses on competition within each country in which the firm is active

strategic and operating decisions are decentralized to the strategic business unit in each country

strategy that lacks responsiveness to local markets

in a ___ strategy competetive strategy is dictated by the home office- unlike in a multidomestic strategy

A global stategy emphasizes

GM requires that senior managers from its international partners' headquarters report directly to a top ranking GM regional executive. This gives GM's top management more control over what happens in each of the foreign car companies it owns while allowing the companies to be responsive to contry needs. This illustrates GM's _ strategy

High costs associated with acquiring foreign production facilities is a _____ associated with exporting

high transportation costs, loss of control over distribution activities, and tariffs imposed by local goverments are ____ associated with exporting

allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host contry

high costs of extablishing manufacturing facilities is

little control over the marketing of the products, licensees may develop a competitie product after the license expires, decreased potential returns

By studying the ____ firm identify what they might choose to do - forces that affect the industry

By studying the ____ firms determine what they can do - examine unique resources, capabilities, and competencies(sustainable competitive advantage)

Four criteria of Sustainable Advantages

a firm's assets, including people and the value of its brand name - represent inputs into a firms production process

relatively easy to identify and include physical and financial assets used to create value for customers

cash accounts, capacity to raise equity, borrowing capacity

modern plant and facilities, favorable manufacturing locations, machinery and equipment

trade secrets, innovative production processes, patents, copyrights, trademarks

effective strategic planning processes, excellent evaluation and control systems

difficult for competitors to account for or imitate, typically embedded in unique routines and practices that have evolved over time

experience and capabilities of employess, trust, managerial skills, firm specific practices and procedures

technical and scientific skills, innovation capacities

are the firm's capacity to deploy resources that have been purposely integrated to achieve a desired end state

emerge over time through complex interactions among tangible and intangible resources

often are based on developing, carrying and exchanging information and knowledge through the firm's human capital

competiencies or skills taht a firm employs to transform inputs to outputs, and capacity to combine tangible and intangible resources to attain desired end

outstanding customer service, excellent product development capabilities, innovativeness of products and services, ability to hire motivate and retain human capital are examples of:

resources and capabilities that serve as a source of a firms competitive advantage: distinguish a company competitively and reflect its personality - emerge over time

A criteria of sustainable competitive advantagage: enable a firm to formulate and implement strategies that improve its efficiency or effectiveness

common strategies based on similar resources give no one firm an advantage, competitive advantages are gained only from uncommon resources that are rare to other competitors

difficulty in ____ resources is key to value creation because it constrains competitition

may take at least two forms - competitor may be able to substutue a simlar resource that enables it to develop and impletment the same strategy
very different firm resources can become strategic substitutes

shows how a product moves from rm stage to final customer

to be a source of ______ ______, a resource or capability must allow the firm: to perform an activityy in a manner that is superior to the way competitors perform it or to perform a value creating activity that competitors cannot complete

The purchase of a value creating activity from an external supplier - by forming and emphasizing fewer capabiliies a firm can concentrate on those areas in which it can create value

associated with recieving, storing and distributing inputs to the product

associated with transforming inputs into the final product form

associated with collecting, storing, and distributing the product or service to buyers

associated with purchases of products and services by end users and the inducements used to get them to make purchases

associated with providing service to enhance or maintain the value of a product

typically supports the entire value chain and not individual activities

activities involved in the recruiting, hiring, training, development and compensation of all types of personnel

Related to a wide range of activities and those embodied in processes and equipment and the product itself

function of purchasing inputs used in the firms value chain

General and Admin, HR Management, Tech Development, Procurement

inbound logistics, operations, outbound logistics, marketing and sales, service

former core competencies tha now generate inertia and stifle innovation

determining what the firm can do through continuous and effective analyses of its___________ increases te likelihood of long term competitive success

each business unit in a diversified firm chooses a ________________ as a means of competing in individual product markets

specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses competing in several industries and product markets

the degree to which the buessniesses in the portfolio are worth more under the management of the company than they would be under other ownership

related diversification - sharing activities and transfering core competencies

related diversification - blocking competitors through multipoint competition - vertical integration

efficient internal capital allocation - business restructuring

Incentives and resources with ____ effects on strategic competitiveness: low performance, uncertain future cash flows, risk reduction for firm, tangible resources, intangible resources

diversifying managerial employment risk, increasing managerial compensation

firm creates value by building upon or extending its resources, capabilities, core competencies

cost savings that occur when a firm transfers capabilities and competencies developed in one of its businesses to another of its businesses

is created from economices of scope through - operational relatedness in sharing activities, corporate relatedness in transferring skills or corporate core competencies among units

created by sharing either a primary activity or a support activity - requires sharing strategic control over business units - may create risk because business unit ties create links between outcomes

using complex sets of resources and capabilities to link different businesses through managerial and tech knowledge, experience and expertise

eliminates resource duplication in the need to allocate resources for a second unit to develop a cometepence that has already existed - provides intangible resources that are difficult for competitors to understand and imitate

are cost savings realized through improved allocations of financial resources - based on investments inside or outside the firm

create value through two types of __ ____- efficient internal capital allocations, purchasing other corporations and restructuring their assets

financial economies

have a fairly short life cycle because financial economies are more easily duplicated by competitors than are gains from operational and corporate relatedness

a firm creates value by buying and selling other fimrs assets in the external market - restructuign creates:

a strategy through which the firm sells its goods or services outside its domestic market

international markets yield potential new opportunities, new market expansion extends product life cycle, needed resources can be secured, greater potential product demand

increase market size, return on investment, economies of scale or learning, competitive advantage through location,

choice of international entry mode: high cost, low control

choice of international entry mode: low cost, low risk, little control, low returns

choice of international entry mode: shared costs, shared resources, shared risks, problems of integraiton

choice of international entry mode: quick access to new market, high costs, complex negotiations, problems of merging with domestic operations

choice of international entry mode: complex often costly, time consuming, high risk, max control, potential above avg returns

instability in national govt, war, potential nationalizaiton of a firm's resources

interdependent with political risks and include: differences and fluctuations in the value of different currencies, differences in prevailing wage rates, difficulties in enforcing property rights, unemployement

cost if coordination across diverse geo business units, institutional and cultural barriers, understanding strategic intent of competitors, overal compleof competitionxity

strategy and op decisions are decentralized - products are tailored to local markets - business units in one country are independent of each other - assumes markets differ by country or regions - focus on competition in each market - prominent strategy among european firms due to broad variety of cultures and markets in Europe

products standardized - decisions are centralized - interdependent sbu - economies of scale - lacks responsiveness to local markets - requires resource sharing across borders

seeks to achieve both global efficiency and local responsiveness

mutual adjustment, direct supervision, standardizaiton

face to face communication in which coworkers exchange information about work procedures

direction and coordination of the work of a gorup by one person who issues direct orders to the groups members

planning and implementation of standards and procedures that regulate work performance

specification of sequences of task behaviors or work processes

establishment of goals or desired end results of task performance

specification of the abilities, knolwedge and skills required by a particular task

encouragement of attitudes and beliefs that lead to desired behaviors

several organizations attain the performance capacities of a single, much larger firm while retaining extreme flexibility and significant efficiency

local customer responsiveness focus

centralized at home R&D and marketing

value creation functions dispersed globally to optimal locations

local responsiveness and global integration

a relationship among stakeholders used to determine and control the strategic direction and performance of organizations, concerned with making stratic decisions more effectively, unded to establish order between a firm's owners and its top level managers whose interests may be in conflict

large block shareholders have a strong incentive to monitor management closely. Financial institutions are legally forbidden from directly holding board seats

shareholders can convene to discuss corporation's direction - if a consensus exists, shareholders can vote as a block to elect their candidates to the board

group of elected individuals that acts in the owners' interests to formally monitor and control the firm's top level executives

direct the affairs of the org, punish and reward managers, protect owners from managerial opportunism

Given its 1977 strategy (beginning of the case), it
would make sense for Coors beer business to have been organized as a:

Recent trends that might lead managers of
multinational corporations (MNCs) not to adopt a multi-domestic strategy
for their operations would include

Competitiveness is usually enhanced by the good
implementation of diversification based on all of the following reasons except

High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy?

Units coordinate their activities with headquarters
and with one another, units adapt to special circumstances only they face, and
the entire organization draws upon relevant global resources for enhanced
efficiencies. These are all attributes
of which type of strategy?

Excessive focus on reduced risk might occur if an executive has been
with the company for a long time and his/her pay package has been dominated by: