test bank questions

GLOBAL STRATEGY: Test Bank/Chapter One

MULTIPLE CHOICE QUESTIONS

1. Multinational enterprises (MNEs) are firms that: a. Engage in foreign direct investment (FDI). b. Directly control value-adding activities in other countries. c. Manage value-adding activities in other countries. d. All of the above. e. None of the above.

2. Which of the following best describes foreign direct investment (FDI)? a. A firm’s direct investment in production and/or service activities abroad. b. The purchases of foreign securities by people within the U.S. c. The purchases of U. S. securities by people from other countries. d. Avoidance of brokers or other financial intermediaries when making foreign

investments. e. B and C above.

3. Which of the following best defines “Triad” as the term is used in the text? a. The U.S., Japan, and Germany. b. The U.S., Canada, and Mexico. c. North America, Europe, and Japan. d. North America, Europe, and Asia. e. The U.S. dollar, the Euro, and the Yen.

4. According to the text, the current brand of “global strategy” seems relevant only for MNEs from:

a. BRIC. b. The Triad. c. OPEC nations. d. NAFTA. e. The E. U.

5. Emerging economies (or emerging markets): a. Now command a full one-third of the worldwide FDI flow. b. Command half of the global gross domestic product (GDP) measured at

purchasing power parity. c. A and B above d. Despite their growth, they still command less than 10% of global GDP. e. Consist of countries which are in a state of decline but which are believed to have

potential for growth.

6. BRIC refers to: a. Bahrain, Russia, Iran, and China. b. Bolivia, Romania, India, and Columbia. c. Bulgaria, Romania, Iraq, and China. d. Bermuda, Rwanda, Iraq, and the Czech Republic. e. Brazil, Russia, India, and China.

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7. Many BRIC local firms are: a. Effectively competing at home. b. Launching offensives abroad. c. Creating serious ramifications for Triad-based MNEs. d. All of the above. e. BRIC local firms have yet to become significant globally.

8. Strategy: a. Dates back to 500bc and the work of the strategist Sun Tzu of China. b. Applies concepts developed by the strategist von Clausewitz. c. Includes application of principles of military strategy to business competition. d. All of the above. e. In this century, civilian companies no longer apply military theories and

principles in dealing with competition.

9. A hallmark of theory building and development is: a. The outcome of a test. b. Replication. c. Intuition. d. Consensus. e. Lack of controversy.

10. Overall, strategy is: a. A rulebook. b. A blueprint. c. A set of programmed instructions. d. All of the above. e. None of the above.

11. Much of our knowledge about “the firm” is from research on firms in: a. Anglo-American capitalism. b. Japan after World War II. c. German mathematical models. d. Emerging markets. e. The early industrial era.

12. The word _______has now become the most famous Chinese business word to appear in English-language media.

a. Keiretsu b. Guanxi c. Chaebol d. Blat e. None of the above.

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13. The _______ view primarily focuses on the ______ in a SWOT analysis. a. Industry-based, OT b. Resource-based, OT c. Industry-based, SW d. Resource-based, SW e. Industry and resource, SWOT

14. As shown in the Opening Case, the informal rules of the game: a. Must be avoided because global business is not a mere game. b. Are not applicable in cultures in which tend to be very formal. c. Often require that the firm seek to change the informal rules instead of going

along with those rules. d. Need to be understood by firms. e. Are being replaced by formal rules.

15. Diversification: a. Was acclaimed in the West during the 1960s and 1970s but was discredited

twenty years later. b. Is believed by Western media to destroy value in emerging economies. c. Has resulted in higher profitability for some in emerging economies than

independent firms. d. In emerging economies may be a function of the level of institutional (under)

development. e. All of the above.

16. “Global strategy” refers to: a. A particular theory on how to compete. b. Offering standardized products and services on a worldwide basis. c. Any strategy outside one’s home country. d. Strategy of firms around the globe—essentially various firms’ theories about how

to compete successfully. e. All of the above.

17. Globalization is viewed as: a. A new force sweeping through the world in recent times. b. A long-run historical evolution since the dawn of human history. c. A pendulum that swings from one extreme to another from time to time. d. All of the above. e. None of the above.

18. Which of the following were the first to express concern about international competition from low-cost countries?

a. American political leaders in the twenty first century. b. Union leaders in the last half of the twentieth century. c. American business leaders in the late 1800s.

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d. The King of England in the late 1700s. e. A first century Roman emperor.

19. The current era of globalization originated in the aftermath of: a. World War I. b. World War II. c. The Korean Conflict. d. The Vietnam Conflict. e. The Gulf War.

20. At the dawn of the 21st century, __________ had significant ramifications for companies and strategists around the world.

a. Antiglobalization protests b. Terrorist attacks c. Corporate governance crisis d. All of the above e. None of the above

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GLOBAL STRATEGY: Test Bank/ Chapter Two


1. The luxury market is characterized by: a. Fewer competitors than in a mass market. b. Less use of incentives and price cuts to induce purchases. c. Healthier profit margins than in a mass-market segment. d. All of the above. e. None of the above.

2. The ultra luxury automobile market is characterized by: a. Little competition in the past – but that is changing. b. A small number of cars produced each year – but they are very expensive. c. Being the same as the luxury market. d. A and B above. e. None of the above.

3. Which of the following is NOT true of the industrial organization (IO) economics model? a. Industry structure determines firm conduct (strategy), which determines firm

performance. b. Original goal – help regulators set policy to minimize the ability of firms to earn

excess profits. c. Strategists use the IO model to try to earn above-average returns (excess profits). d. All of the above are NOT true. e. All of the above ARE true.

4. Which of the following tends to reduce the intensity of rivalry? a. Similarity of firms in terms of size, market influence and product offerings. b. Products are big-ticket items and purchased infrequently. c. New capacity must be added in large increments. d. Slow industry growth or decline in demand. e. None of the above.

5. Which of the following are scale-based low cost advantages? a. Experience curves. b. Proprietary technology. c. Favorable access to raw materials and distribution channels. d. Favorable locations. e. None of the above.

6. Which of the following would tend to reduce the bargaining power of suppliers? a. Dominance of the supplier industry by a few firms. b. Suppliers provide unique, differentiated products with few or no substitutes. c. Focal firm is not an important customer. d. Unwillingness and inability of suppliers to integrate forward. e. None of the above.

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7. Which of the follow would tend to reduce the bargaining power of buyers? a. Large number of buyers. b. Products of the industry do not produce clear cost advantages or enhance the

quality of life for buyers. c. Purchase standard, undifferentiated commodity products from suppliers. d. Willingness and ability of buyers to integrate backward. e. All of the above.

8. Which of the following are true concerning cost leadership? a. Targets average customers for mass market – little differentiation. b. Key functional areas are manufacturing and materials management. c. Relentless drive to cut costs might compromise value that customers desire. d. All of the above. e. None of the above.

9. Which is generally NOT true of differentiation? a. Difficult to sustain basis of differentiation in the long run. b. Relentless efforts of competitors to duplicate differentiation. c. Key areas of application include research and development, marketing/sales and

after-sale services. d. It is a challenge to identify attributes that are valued by customers in each market

segment. e. Inability to pass on suppliers’ price increases to buyers.

10. Related and supporting industries are called _________ and they are an additional force that can impact the competitiveness of an industry. a. Complementors b. All-rounders c. Customizers d. Flexible manufacturing e. Supporters

11. One noncontroversial issue with strategic groups is: a. Stability of strategic groups. b. Mobility barriers between strategic groups. c. The requirement for large quantities of objective data. d. All of the above are controversial issues. e. None of the above is controversial.

12. The industry-based view recommends: a. Backward integration as a way to defend against the power of suppliers. b. Backward integration as a way to defend against the power of buyers. c. Forward integration as a way to defend against the power of suppliers. d. Forward integration as a way to defend against the power of buyers. e. Backward or forward integration as a way to defend against the power of

suppliers and buyers.

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13. Which is a reason for integration as opposed to outsourcing? a. Greater expense. b. Strategic flexibility is enhanced. c. Those within the firm are often more competitive. d. The activity is crucial to the core business. e. All of the above.

14. Which is a reason for outsourcing as opposed to integration? a. Less expense. b. Strategic flexibility is enhanced. c. Those outside the firm are often more competitive. d. The activity is not crucial to the core business. e. All of the above.

15. Which of the following is NOT true regarding supplier relationships? a. Supplier relationships that are too close may introduce rigidities, including loss of

flexibility. b. In Japan suppliers may become trusted members of the keiretsu. c. In Japan, instead of treating suppliers as adversaries, they are treated as

collaboration partners. d. In view of A through C above, supplier relationships in Japan tend to be

ineffective. e. In view of A through C above, close supplier relationships are not necessarily

good or bad.

16. Porter’s five forces framework: a. Identifies relevant variables but fails to ask the needed questions. b. Identifies only questions to ask. c. Identifies both relevant variables and questions to ask. d. Eliminates the need for other frameworks to add insight about firm performance. e. None of the above.

17. A systematic foundation for industry and competitor analysis is best provided by: a. The industry-based view. b. Resource-based view. c. Historical view. d. Macro analysis. e. None of the above.

18. An industry-based view provides some answers to which of the following questions? a. Why do firms differ? b. How do firms behave? c. What determines the scope of the firm? d. What determines the international success and failure of firms? e. All of the above.

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19. Maximizing opportunities and minimizing threats presented by the five forces provides some answers to which of the following questions? a. Why do firms differ? b. How do firms behave? c. What determines the scope of the firm? d. What determines the international success and failure of firms? e. All of the above.

20. The relative bargaining power of the focal firm and (according to the traditional view) the degree of integration helps answer which of the following questions? a. Why do firms differ? b. How do firms behave? c. What determines the scope of the firm? d. What determines the international success and failure of firms? e. All of the above.

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GLOBAL STRATEGY: Test Bank/ Chapter Three


1. In the opening case, which of the following industry rules did Zara violate? a. Avoid stockouts. b. Bombard shoppers with ads. c. Outsource. d. All of the above. e. None of the above.

2. A firm’s__________ are its tangible and intangible assets a firm uses to choose and implement its strategies. a. Resources b. Dynamic capabilities c. Core competencies d. Net worth e. None of the above

3. According to the text, which of the following are intangible resources and capabilities? a. Trade secrets. b. Organizational. c. Formal structures. d. All of the above. e. None of the above.

4. International outsourcing involves: a. Offshoring. b. Inshoring. c. A and B above. d. Captive sourcing. e. None of the above.

5. Having valuable, but common resources/capabilities leads to: a. Competitive parity. b. Competitive advantage. c. Competitive disparity. d. Competitive disadvantage. e. Lack of competition.

6. Ways to imitate include: a. Direct duplication. b. Substitution. c. A and B above. d. Innovation. e. None of the above.

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7. Taking advantage of strengths embodied in resources/capabilities and overcome weaknesses deals with which fundamental question? a. Why do firms differ? b. What determines the scope of the firm? c. How do firms behave? d. What determines the international success and failure of firms? e. All of the above.

8. Traditional resource-based view: a. Overemphasizes leveraging existing resources/capabilities. b. Underemphasizes developing new resources/capabilities. c. Both of the above. d. Underemphasizes leveraging existing resources/capabilities. e. Overemphasizes developing new resources/capabilities.

9. Academic research has found support for ______________effects on firm performance. a. Resource-based b. Industry-based c. Complementary specific collective d. All of the above e. None of the above

10. Which of the following is better performed in-house instead of being outsourced? a. An activity with a high degree of industry commonality. b. A high degree of commoditization. c. An industry-specific and firm-specific (proprietary) activity. d. All of the above. e. None of the above.

11. The VRIO framework does not include capabilities and resources that are: a. Valuable. b. Rare. c. Imitable. d. Organizationally embedded. e. All of the above.

12. Examining whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors is known as _________ in SWOT analysis. a. Parity b. Competition c. Benchmarking d. Deskmarking e. Standardization

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13. If Company A and Company B both have valuable assets that are identical, the text indicates that in order for A to gain a competitive advantage over B, A must: a. Use its assets differently. b. Find some basis for suing B. c. Get out of its existing business. d. Increase its quantity of those assets. e. All of the above.

14. Tacit knowledge is probably the most _________ resource. a. Valuable b. Unique c. Hard-to-imitate d. Organizationally complex resource e. All of the above

15. Recent research suggests that capabilities in very dynamic high-velocity industries (such as IT) involve all of the following except: a. Simple (not complicated). b. Experiential (not analytic). c. Iterative (not linear processes). d. Involve “learning by doing.” e. “Learning before doing.”

16. Which of the following are not involved in hypercompetition? a. A shortened window during which a firm may command competitive advantage. b. Dynamic maneuvering. c. Unleashing a series of small, unpredictable, but powerful actions. d. Slowing the pace of change. e. Attempts to erode rivals’ competitive advantage.

17. Recent aspects of outsourcing include all of the following except: a. “Business process outsourcing” (BPO). b. High-end services to countries led by India. c. Digitization and commoditization of service work. d. As stated by the text, the outsourcing of services is definitely a long-term benefit. e. Increases due to the Internet and the reduction of international communication

costs.

18. All of the following are arguments used by proponents of offshoring except: a. It creates enormous value for firms and economies. b. Western firms are able to tap into low-cost and high-quality labor. c. Firms can focus on their core capabilities. d. For every dollar spent by US firms on India, the U.S. obtains $1.13. e. It is not true that some US employees may lose their jobs.

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19. Critics of offshoring make all of the following arguments except: a. If even core functions like engineering, R&D, manufacturing, and marketing

can—and often should—be moved outside the country, what is left of the firm? b. Critics argue such offshoring nurtures rivals. c. Offshoring increasingly results in job losses in high-end areas such as design,

R&D, and IT/BPO. d. Many large US firms claim that they are “global companies” but they seem to be

bound by “American values.” e. In some cases, it undermines national security.

20. Critics of outsourcing agree that MNEs and their outsourcing can be praised for which of the following? a. Not exploiting cheap labor. b. Not treating people as “tradable commodities” that can be jettisoned. c. Not destroying jobs destroying jobs at home. d. Protecting customer privacy. e. None of the above.

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GLOBAL STRATEGY: Test Bank/ Chapter Four


1. Which is true of the global pharmaceutical industry? a. It is dominated by firms collectively known as Big Pharma. b. Consumers in rich countries, especially the US, are subsidized by consumers elsewhere. c. The US government’s Food and Drug Administration (FDA) has lax drug approval

requirements. d. There are no significant barriers to entry and imitation. e. Americans pay only half of the amount Canadians or Europeans pay for prescription

drugs.

2. Recent threats to the profitability of the major pharmaceutical MNEs include: a. Canada. b. The Internet. c. Demands of poor countries. d. All of the above. e. None of the above.

3. Which of the following defines institutions? a. “Humanly devised constraints that structure human interaction.” b. “Regulatory, normative and cognitive structures and activities that provide stability and

meaning to social behavior.” c. Government of individual and firm behavior. d. All of the above. e. None of the above.

4. Institutions do which of the following? a. Reduce uncertainty. b. Signal which conduct is acceptable and which is not. c. Constrain the range of acceptable actions. d. Reduce opportunism and transaction costs. e. All of the above.

5. How do institutions reduce uncertainty? a. Relational contracting. b. Arm’s length transaction with 3rd party enforcement. c. Institutional transitions. d. All of the above. e. None of the above.

6. Porter’s “diamond” model: a. Explains competitive advantage of leading industries within the same country. b. Explains competitive disadvantage of globally leading industries in different countries. c. Has been criticized for ignoring history. d. Has been criticized for focusing on institutions. e. C and D above.

7. Which are true regarding informal constraints?

a. When formal institutional constraints fail, informal constraints tend to fail as well. b. Following the collapse the former Soviet Union, informal constraints were unable to

facilitate growth of entrepreneurial firms. c. Even in developed economies, the best-connected firms can reap significant benefits. d. All of the above.

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e. None of the above.

8. According to ___________ culture is the “Collective programming of the mind which distinguishes the members of one group or category of people from another.” a. Porter b. Hofstede c. North d. Scott e. Merck

9. Power distance is best defined as: a. The degree of social inequality. b. The identity of an individual is not based on the identity of his or her collective group. c. Sex role differentiation. d. The extent to which people accept ambiguous situations. e. Emphasis on perseverance and savings.

10. Individualism is best defined as: a. The degree of social inequality. b. The identity of an individual is not based on the identity of his or her collective group. c. Sex role differentiation. d. The extent to which people accept ambiguous situations. e. Emphasis on perseverance and savings.

11. Long-term orientation is best defined as: a. The degree of social inequality. b. The identity of an individual is not based on the identity of his or her collective group. c. Sex role differentiation. d. The extent to which people accept ambiguous situations. e. Emphasis on perseverance and savings.

12. Which of the following are true regarding cultures and strategic choices?

a. Managers in high power distance countries have a greater penchant for centralized authority.

b. Solicitation of subordinate feedback and participation is a sign of weak leadership in high power distance countries.

c. Individualistic cultures prefer more formal contractual safeguards in alliances than collectivistic cultures.

d. Managers in low uncertainty avoidance countries rely more on experience and training. e. All of the above.

13. Which tends to be true of masculine cultures? a. May have a relative advantage in small-scale, customized manufacturing. b. May be at a disadvantage in making products efficiently, well and fast. c. Stereotypical manager is decisive. d. Stereotypical manager is accustomed to seeking consensus. e. None of the above.

14. The norms, principles and standards of conduct that govern behavior: a. Are an important part of national culture but not organizational culture. b. Are private matters and not issues for formal institutions. c. Have a substantial overlap with what is illegal. d. Are sometimes ignored in the case of downsizing.

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e. All of the above.

15. Which is the instrumental view regarding motivation to become ethical? a. Jump on the “bandwagon” to appear more legitimate without becoming more ethical. b. Be self-motivated to “do it right” regardless of social pressures. c. Good ethics are a way to achieve good profits. d. Ethics is an instrument to impose the values of the elite on the masses. e. Ethics is a game that is played like a musical instrument.

16. Ethical imperialism is best expressed by which of the following: a. “When in Rome, do as the Romans do.” b. “There is only one set of Ethics, and we have it!” c. “Respect for human dignity and basic rights should be the absolute, minimal ethical

threshold for ALL operations around the world.” d. “The abuse of public power for private benefit.” e. “Ignore corruption.”

17. Strong correlation between high level of corruption and low level of economic development is evidenced by: a. China’s low level of corruption and high level of economic development. b. China’s high level of corruption and low level of economic development. c. Indonesia’s low level of corruption and high level of economic development. d. Indonesia’s high level of corruption and low level of economic development. e. None of the above.

18. The Foreign Corrupt Practices Act (FCPA) bans:

a. Bribery to American officials by companies based in other countries. b. Bribery to foreign officials by companies based in the U.S. c. Bribery to American officials by companies based in the U.S. but operating overseas. d. Bribery to foreign officials by companies based overseas. e. Bribery to all officials everywhere by companies based anywhere.

19. Which best defines an accommodative strategy? a. Firms do not feel compelled to act unless faced with a disaster or public outcry. b. Denial is the first line of defense. c. Focus on regulatory compliance, firm fights demand for changes unless they are

regulatory. d. Organizational norms emerge to accept responsibility for actions – cognitive

beliefs/values that promote ethical choices are internalized. e. Firms constantly anticipate institutional changes and do more than is required to act

ethically and responsibly.

20. In regards to individualism vs. collectivism: a. Collectivists never discriminate against out-group members and may be more

opportunistic when dealing with in-group members. b. Individualists make more distinction between in-group and out-group membership. c. Individualists are more opportunistic when dealing with in-group members. d. Individualists may view social interactions/activities as related to the business at hand. e. Collectivists may view social interactions/activities as unessential and wasteful of

resources.

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GLOBAL STRATEGY: Test Bank/ Chapter Five

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1. Which best describes entrepreneurs? a. Those who identify and exploit previously unexplored opportunities. b. Founders and owners of new businesses. c. Managers of small existing firms (i.e. those with fewer than 500 employees). d. All of the above. e. None of the above.

2. Which of the following are NOT true in regards to small and medium-sized enterprises (SMEs). a. They create approximately 50% of total value added in the world. b. They generate 60-90% of employment, depending on where they are located. c. Each year 4-6% of adult working population in North America, Western Europe, Central

and Eastern Europe attempt to start a new venture. d. Around the world, a majority of entrepreneurial firms (including 60% of start-ups in the

US) succeed within 6 years. e. Entrepreneurship is not the exclusive domain of small, young firms.

3. Which would tend to result in a greater level of entrepreneurship? a. Fewer numbers of incumbents. b. Capital-intensive industries. c. Weak bargaining power of suppliers. d. Ability to reduce the bargaining power of buyers. e. Lack of threat to incumbents from substitute products/ and services.

4. Cautions that should be acknowledged by entrepreneurs is that it may be difficult to: a. Predict consumer preferences. b. Effectively price innovative products/services. c. Build sufficient capacity. d. All of the above. e. None of the above.

5. To achieve success, entrepreneurial resources must be: a. Of low value so as to reduce cost. b. Common. c. Non-core competencies that are hard to imitate. d. Organizationally embedded. e. All of the above.

6. Which of the following would be least likely to enhance the credibility of a SME? a. Specialize in standardized commodities such as books and airline tickets. b. Use E-commerce sites. c. Deal in products in which quality is an issue with consumers. d. Form strategic alliances with larger firms. e. Willingness to take ownership of intermediated goods and services.

7. One general conclusion that we can reach regarding entrepreneurship is that:

a. Regulatory burdens on new start-ups are much easier in poorer countries. b. The less entrepreneur-friendly a country’s formal institutional requirements are the more

likely entrepreneurship will contribute to economic development. c. Informal institutions do not affect entrepreneurships. d. Individualistic and low uncertainty-avoidance societies tend to foster relatively more

entrepreneurship.


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e. Collectivistic societies may result in relatively higher levels of entrepreneurship.

8. Which of the following is NOT an example of one of the five entrepreneurial strategies? a. Use speed and stealth to disrupt and pre-empt competitors. b. Emphasize analysis over action. c. Less novel, but substantially new ways of doing business can also be innovative. d. Centrally located network positions are most helpful. e. Selling an equity stake to outside investors.

9. A potential benefit of an initial public offering (IPO): a. Can increase firm’s financial stability. b. Focus on short-term results. c. Fiduciary duty. d. Entrepreneurs’ freedom of action. e. Increased scrutiny by stakeholder groups.

10. In recent years, the country with the least number of bankruptcies was: a. Japan. b. France. c. Great Britain. d. Germany. e. The United States.

11. Indirect, subtle attacks that large rivals may not immediately recognize as competitive challenges are hallmarks of which of the following five entrepreneurial strategies? a. Growth. b. Innovation. c. Network. d. Financing and Governance. e. Harvest and Exit.

12. Which of the following is true regarding internationalizing firms? a. Only large MNEs are able to internationalize successfully. b. SMEs do not operate solely in domestic market. c. Start-ups are unable to do business in foreign markets from the very beginning – they

cannot be “born global.” d. Transaction costs do not prevent large firms from internationalizing. e. Opportunism is easy to detect and remedy in international markets.

13. Suppose you are an SME with limited financial resources. In view of that, your best choice

for entering foreign markets would be: a. Foreign direct investment. b. Licensing or franchising. c. Direct exporting. d. None of the above. e. Any of the above.

14. In a manufacturing setting, the purchase of the right to use another firm’s proprietary technology is referred to as: a. Direct exporting. b. Licensing. c. Franchising. d. Exporting. e. Importing.


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15. Exporting only after receiving unsolicited foreign inquiries is best described as: a. Direct exporting. b. Indirect exporting. c. Passive or sporadic exporting. d. Inactive exporting. e. None of the above.

16. Which of the following best describes Foreign Direct Investment (FDI)? a. Avoiding the use of financial intermediaries such as brokers. b. Firm invests directly in production or service activities in another country. c. Traveling to a country to invest instead of using the Internet. d. Citizens of a foreign country invest in their own country with their own resources. e. The use of cash instead of credit.

17. “Greenfield ventures” are: a. Examples of international grain corporations. b. Environmentally friendly MNEs. c. Wholly owned subsidiaries that are built from scratch in a foreign country. d. Irrigation projects in areas stricken by famine. e. Joint ventures in agriculture between governments and private firms.

18. Which of the following involves the most complexity? a. Direct exporting. b. Direct importing. c. Direct investment. d. Licensing. e. Franchising.

19. Which normally provides the most control over technology and brand?

a. Direct investment. b. Licensing. c. Franchising. d. B and C above. e. There is no difference in any of the above.

20. Which of the following traits would tend to prevent entrepreneurs from establishing new firms? a. Strong desire for achievement. b. Strong locus of control. c. Willingness to take risks and tolerate ambiguity. d. The tendency to be a serial entrepreneur. e. None of the above.

GLOBAL STRATEGY: Test Bank/ Chapter Six


1. The differences in formal and informal institutions that govern the rules of the game in different countries include _______ differences. a. Regulatory b. Language c. Cultural d. All of the above e. None of the above

2. As firms expand into more countries, they should recognize: a. Foreign firms are still often discriminated against. b. Foreign firms primarily deploy overwhelming resources and capabilities that offset the

liability of foreignness. c. Foreign firms are able to offset the liability of foreignness and still have some competitive

advantage. d. All of the above. e. None of the above.

3. Small firms in a large domestic market are referred to as: a. Enthusiastic internationalizers. b. Follower internationalizers. c. Slow internationalizers. d. Occasional internationalizers. e. Domestic internationalizers.

4. The lower the value of firm-specific resources and capabilities such as________ the more likely firms will aggressively leverage them overseas. a. Tangible assets b. Know-how c. Software d. All of the above e. None of the above

5. Firms may choose not to enter certain countries if: a. They possess rare firm-specific assets. b. The transaction costs are be too low. c. There are dissemination risks. d. There is an authorized diffusion of firm-specific assets. e. All of the above.

6. Organizing firm-specific resources and capabilities as a bundle: a. Favors firms with strong complementary assets. b. Prevents having assets integrated s a system. c. Discourages using them overseas. d. Is counterproductive. e. Occurs only in domestic markets.

7. Which of the following are not regulatory risks?

a. An obsolescing bargain. b. Deals that have been struck by MNEs and host governments. c. Nationalization. d. Recent trends among host governments regarding their relationships with MNEs.

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e. B and C above.

8. Which of the following exemplify trade barriers? a. Tariffs. b. Local content requirements. c. Restrictions on certain entry modes. d. A and C above. e. All of the above.

9. Which of the following is not a location specific advantage? a. Agglomeration. b. Knowledge spillovers. c. A skilled labor force. d. A pool of specialized suppliers and buyers. e. All of the above are location advantages.

10. The strategic goal of __________ involves going after countries that offer the highest price. a. Natural resources-seeking b. Market-seeking c. Efficiency-seeking d. Innovation-seeking e. Profit-seeking

11. Institutional Distance involves all of the following except that which is: a. Regulatory. b. Normative. c. Cognitive. d. Cultural. e. B and C above.

12. First mover advantages do not include: a. Developing proprietary, technological leadership. b. Preempting scarce assets. c. Establishing entry barriers. d. Successful clashes with dominant firms in domestic markets. e. Creating good relationships with key stakeholders.

13. Late mover advantages do not include:

a. Taking a free ride on first movers’ investments. b. Joining the game with massive firepower when some of the uncertainties are removed. c. Preempting scarce assets. d. Taking advantage of first movers’ inflexibility by leapfrogging over them. e. Choice of Strategy.

14. Large-scale entries do which of the following? a. Benefit from a strategic commitment. b. Assure local customers and suppliers. c. Deter potential entrants. d. A and B above. e. All of the above.

15. Small-scale entries normally benefit by their: a. Focus on accumulating experience. b. Emphasis on “learning by doing.” c. Strong strategic commitment.

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d. First mover advantages. e. A and B above.

16. Non-equity modes of entry typically involve: a. Exports and contractual agreements. b. Larger, harder-to-reverse commitments. c. Establishing independent organizations overseas. d. Joint ventures (JVs). e. Wholly owned subsidiaries.

17. All of the follow are true of direct exports except: a. Most basic mode of entry. b. Capitalizes on economies of scale in production concentrated in the home country. c. Affords better control over distribution. d. The agendas and objectives of the intermediaries and exporters are the same. e. Designs and productions geared for the domestic market first and foremost.

18. Selling the rights to intellectual property for a royalty fee is involved in: a. Licensing/franchising. b. Turnkey projects. c. R&D contracts. d. Comarketing. e. All of the above.

19. Which is not true of joint ventures? a. They are jointly owned by two or more parent companies. b. They share risks with local partners. c. They gain access o the local partner’s knowledge about the host country. d. They are politically less acceptable than wholly owned subsidiaries. e. The goals of partners may diverge.

20. Greenfield operations refers to: a. Licensing/franchising. b. Turnkey projects. c. R&D contracts. d. Co marketing. e. Wholly owned subsidiaries.

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GLOBAL STRATEGY: Test Bank/ Chapter Seven

3


1. Strategic alliances involve: a. Voluntary agreements between firms. b. Compromises between short-term transactions and long-term solutions. c. Contracts. d. Equity-based arrangements. e. All of the above.

2. Contractual alliances include all of the following except: a. Co-marketing. b. Research and development (R&D) contracts. c. Cross-shareholding. d. Turnkey projects. e. Licensing/franchising.

3. A joint venture can be described as: a. A special case of equity-based alliance. b. A new legally independent entity. c. A “corporate child” given birth by two (or more) parent firms. d. All of the above. e. None of the above.

4. Which represents an alliance with suppliers? a. Horizontal alliances. b. Upstream vertical. c. Downstream vertical. d. All of the above. e. None of the above.

5. Which is not an advantage of strategic alliances and networks? a. Reduce costs, risks and uncertainties. b. Costs of negotiation and coordination. c. Gain access to complementary assets and capabilities. d. Opportunities to learn from partners. e. Possibilities to use alliances and networks as real options.

6. Which of the following are not true regarding managers involved in alliances and networks? a. They require relationship skills which foster trust with partners. b. They must guard against opportunism. c. They must recognize that interests of the firms fully overlap. d. They have to represent the interests of their respective firms. e. They must attempt to make the complex relationship work.

AACSB: Tier 1: Reflective Thinking; Tier 2: Leadership Principles 7. Institution-based considerations regarding organization include:


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a. Collusion concerns. b. Entry requirements. c. The social pressures to find partners. d. The internalized beliefs in the value of collaboration. e. All of the above.

8. Cooperation between rivals is usually suspected of being: a. Tacit collusion. b. Explicit collusion. c. Socialism. d. All of the above. e. None of the above.

9. Emerging trends concerning formal government policies on entry mode requirements include: a. More liberal policies. b. Imposing considerable requirements. c. A and B above. d. Welcoming wholly owned subsidiaries. e. Banning joint ventures.

10. Which (if any) of the following are not involved in the stages of forming business relationships? a. The decision to cooperate. b. The decision to not cooperate. c. The choice of contract or equity. d. Positioning the Relationship. e. All of the above are involved.

11. The strategic choice concerning whether to form cooperative interfirm relationships or to rely on pure market transactions or M&As to grow the firm is part of: a. Stage One. b. Stage Two. c. Stage Three. d. Stage Four. e. Stage Five.

12. In comparing M&As with alliances and networks, which of the following is not correct? a. M&As are costly. b. M&As have significant transaction costs. c. Many M&As end up destroying value. d. Alliances and networks preclude future upgrading into possible M&As. e. Alliances and networks can be considered as a flexible intermediate solution.


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13. Strategic fit refers to whether the partner firm possesses: a. Technology. b. Capital. c. Distribution channels. d. A through C above. e. Goals, experiences, and behaviors that facilitate cooperation.

14. The first concern in determining whether a relationship should be based on contract or equity is: a. The kind of resources and capabilities that are shared. b. Direct monitoring and control. c. Real options. d. Institutional constraints. e. None of the above.

15. Weak ties in organizational relationships: a. Are more trustworthy and are cultivated over a long period of time. b. Are associated with exchanging finer-grained information. c. Provide an informal, social control mechanism. d. A through C above. e. Are less costly to maintain.

16. As a type of relationship tie, exploitation refers to such things as: a. Selfishness. b. Choice. c. Efficiency. d. Execution. e. B through D above.

17. In measuring the performance of strategic alliances and networks, subjective measures include: a. Market performance. b. Stability. c. A and B above. d. The level of managers’ satisfaction. e. Longevity.

18. Which (if any) of the following will not influence the performance of alliances and networks? a. Equity. b. Learning and experience. c. Nationality. d. Relational capabilities. e. All can have an influence.


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19. A lower level of ____contribution may indicate a firm’s relative lack of commitment: a. Equity b. Learning and experience c. Nationality d. Relational capabilities e. All of the above

20. The stock market responds favorably to alliance activities, but only under which circumstances? a. Complementary resources. b. Previous alliance experience. c. Ability to manage the host country’s political risk. d. Partner buyouts. e. All of the above.

GLOBAL STRATEGY: Test Bank/ Chapter Eight

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1. Which is true of strategy? a. Business strategy has similarities with military strategy. b. Military principles cannot be completely applied in business. c. Militaries fight over territories, waters, and air spaces, firms compete in markets. d. All of the above. e. None of the above.

2. Which of the following are least likely to result in collusion? a. High concentration ratio. b. Heterogeneous products. c. High entry barriers. d. High market commonality. e. Industry price leader exists.

3. The main types of attack include: a. Thrust. b. Feint. c. Gambit. d. All of the above. e. None of the above.

4. Issues affecting collaboration include: a. Secrecy. b. Exclusivity. c. Informality. d. All of the above. e. None of the above.

5. In developing a strategy regarding competition or cooperation, it would be useful to not: a. Understand the nature of your industry. b. Strengthen capabilities that more effectively compete and/or cooperate. c. Understand the rules of the game governing competition. d. “Look back, reason ahead.” e. All of the above.

6. Industry-based considerations regarding strategy: a. Focus on the nature of collusion. b. Deal with the relationship between industry structures and firms’ propensity to

collude. c. Deal with the relationship between industry structures and firms’ propensity to

collude to competing. d. All of the above. e. None of the above.


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7. Explicit collusion is exemplified by: a. Cartels. b. Trusts. c. Users of game theory. d. All of the above. e. None of the above.

8. Firm A may be more successful in imitating Firm B if Firm B: a. Is competitively aggressive. b. Carries out complex actions. c. Uses difficult to execute maneuvers. d. All of the above. e. None of the above.

9. Which of the following will enable a firm to be competitive even if there is a lack of top management commitment and employee involvement? a. Organizational structure. b. Use of stealth attacks. c. Rapid responses, and willingness to answer challenges. d. All of the above. e. None of the above.

10. “The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm” refers to similarity of: a. Strategy. b. Resources. c. Markets. d. Industry. e. Economic environment.

11. Which of the following aspects of U.S. competition/antitrust policy has been opposed by the EU? a. Collusive price setting. b. Predatory pricing. c. Extraterritoriality. d. Court decisions. e. Changes in policy.

12. In Japan and the EU, crisis cartels: a. Involve firms in an industry facing a severe crisis. b. Are legally allowed. c. A and B above. d. Are cartels that are creating a crisis. e. Are cartels that are in a crisis.


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13. Which is not true concerning US anti trust policy today? a. Legislation has legally permitted rivals to join hands in research and development

(R&D). b. There is increased permissiveness regarding mergers among rivals. c. Clarity of policy has improved. d. The legal standards for interfirm cooperation are no longer ambiguous in the

United States. e. The legal standards for interfirm cooperation are ambiguous in many other

countries.

14. Dumping is defined as: a. Shipping hazardous waste to locations in other countries. b. An exporter selling below cost abroad. c. Unloading unsold inventory from the US in other countries. d. Excessive criticism of international rivals. e. Getting rid of unprofitable operations.

15. Which of the following would not be considered an initial set of actions to gain competitive advantage: a. Price cuts. b. Advertising campaigns. c. Market entries. d. Counterattacks. e. New product introductions.

16. A firm's attack on a focal arena important to a competitor, but not the attacker's true target area, is referred to as: a. Thrust. b. Feint. c. Gambit. d. Miscalculation. e. Practice attack.

17. The three drivers of counterattacks do not include: a. Awareness. b. Motivation. c. Capability. d. B and C above. e. Vengeance.

18. Which of the following is not a legal means of signaling? a. Nonaggression or fat cat. b. Direct discussion of reduced rivalry with competitors. c. Truce seeking. d. Communication via governments. e. Strategic alliances.


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19. In some industries where pressures for globalization are relatively low, local firms may possess some skills and assets that are transferable overseas, thus leading to a/an_____strategy. a. Defender b. Extender c. Dodger d. Contender e. Transfer

20. Local firms in emerging economies typically can at least match the ________ of MNEs. a. Expertise b. Experience c. Endowments d. A and B above e. None of the above

GLOBAL STRATEGY: Test Bank/ Chapter Nine

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1. Sources of operational synergy include: a. Technologies. b. Marketing. c. Manufacturing. d. All of the above. e. None of the above.

2. Conglomeration tends to provide all of the following except: a. Product-unrelated diversification. b. Financial synergy. c. Economies of scale. d. Economies of scope. e. Internal capital market.

3. Diversification premium is the same thing as: a. Conglomerate advantage. b. Diversification discount. c. Conglomerate disadvantage. d. Level of product diversification. e. Measurement of firm performance.

4. Which would be more characteristic of conglomerates? a. “Putting one’s eggs in one basket.” b. “Putting one’s eggs in similar baskets.” c. “Putting one’s eggs in different baskets.” d. A and B above. e. B and C above.

5. Research regarding the relationship between product diversification and firm performance indicates that: a. Performance may increase as firms shift from single business strategies to

product-related diversification. b. Performance may decrease as firms change from product-related to –unrelated. c. The linkage between diversification and performance is inverted U shaped. d. “Putting your eggs in similar baskets,” has emerged as a balanced way to both

reduce risk and leverage synergy. e. All of the above.

6. Which geographic diversification is most likely to reduce the liability of foreignness? a. Culturally adjacent countries. b. Extensive international scope. c. Beyond geographically neighboring countries. d. Beyond culturally neighboring countries. e. All of the above


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7. Which is not true regarding geographic diversification and firm performance? a. U-shaped relationship at low level of internationalization. b. Initially a negative effect of international expansion on performance. c. Affected by the liability of foreignness. d. Inverted-U shape at moderate to high levels of internationalization. e. Positive only at high levels of internationalization.

8. In combining product and geographic diversification, which is not one of the four possible combinations? a. Anchored replicators. b. Multinational replicators. c. Far-flung conglomerates. d. Classic replicators. e. Classic conglomerates.

9. At its core, diversification is essentially driven by all of the following except: a. Economic benefits. b. Bureaucratic costs. c. Synergy. d. Less complicated information systems. e. MEB.

10. Select the best choice: a company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in ______________ expansion. a. Horizontal b. Vertical c. Conglomerate d. Friendly M&A e. Hostile M&A

11. Which is one motive for M&A which does not necessarily increase shareholder value? a. Synergistic. b. Hubris. c. Performance. d. A and C above. e. None of the above.

12. Corporate scope is shaped by: a. Industry conditions. b. Firm capabilities. c. Institutional constraints. d. Opportunities in both developed and emerging economies. e. All of the above.


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13. Product-related diversification involves all of the following except: a. A single business strategy. b. Entries into activities that are related to a firm’s existing markets and/or activities. c. The emphasis is on economies of scale rather than scope. d. Increases in competitiveness. e. Synergy.

14. Sources of operation synergy: a. Technologies. b. Marketing. c. Manufacturing. d. All of the above. e. None of the above.

15. Diversification can pay off in all of the following situations except: a. Risk is spread over several (product or country) markets. b. Core resources are leveraged. c. The art of post-acquisition integration has been mastered. d. Commonly shared industry skills are used. e. Firms are organized to minimize the costs.

16. The following managerial motives for conglomerations do not benefit shareholders except: a. Norms. b. Reducing managers’ employment risk. c. Organizational stability. d. Pursuing power, prestige, and income. e. Empire building.

17. Which of the following is true regarding M&As? a. As many as 70 percent of M&As reportedly fail. b. On average, the acquiring firms’ performance improves after acquisitions. c. Target firms, after being acquired and becoming internal units, often perform

better than when they were independent, stand-alone firms. d. The only identifiable losers are the shareholders of target (acquired) firms. e. The outstanding success of M&As is due to pre- and post acquisition phases.

18. To ensure the success of the M&A, managers need to make sure of all the following except: a. Be willing to walk out when premiums are too high. b. Engage in adequate due diligence concerning strategic fit. c. Seek organizational contrast and variety rather than organizational fit. d. Address the concerns of multiple stakeholders. e. Recognize that that integration management is a fulltime job.


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19. Which is true regarding restructuring? a. There are two primary ways of restructuring namely downsizing and upsizing. b. A rising level of competition within an industry normally prevents restructuring. c. Corporate restructuring is not widely embraced around the world. d. Restructuring is one of first things to consider when trying to improve

profitability. e. Restructuring is easier in knowledge-intensive firms than capital intensive firms.

20. Which is true of relatedness? a. Measurement of product relatedness is no longer debatable. b. A “product-related” firm will be considered related regardless of the measure used. c. Some argue that product relatedness refers specifically to the visible product

linkages. d. Relatedness can be a common underlying dominant logic that connects various

businesses in a diversified firm. e. Product-unrelated conglomerates may are not linked by institutional relatedness.

GLOBAL STRATEGY: Test Bank/ Chapter Ten

3


1. Pressures for cost reductions and local responsiveness include: a. The framework of how to simultaneously deal with these two sets of pressures. b. Host country demands and expectations. c. Being locally responsive makes local customers and governments happy but

increase costs. d. All of the above. e. None of the above.

2. Four strategic choices for MNEs do not include: a. Home replication. b. Domestic. c. Multidomestic. d. Transnational. e. Global.

3. Multidomestic strategy involves all of the following except: a. Focuses on a number of foreign countries/regions. b. Each foreign country is regarded as a stand-alone “domestic” market. c. Is effective when there are clear differences among national and regional markets. d. A multidomestic strategy has high costs. e. Global standardization strategy is the same as a multidomestic strategy.

4. The structure that is typically set up when firms initially expand abroad is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.

5. In which of the following structures are foreign subsidiary managers not given sufficient voice relative to domestic managers? a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.

6. The most appropriate structure for a multidomestic strategy is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure.


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7. Which of the following is not true of the global matrix structure? a. Is often used to alleviate the disadvantages associated with the geographic area

structure. b. Is often used to alleviate the disadvantages associated with the global product

division structures. c. Often used for sharing and coordinating responsibilities between product divisions

and geographic areas. d. This structure benefits front-line managers who now have only one boss – either a

country manager or a product division manager. e. The matrix structure may add layers of management.

8. Which are not true in regards to institution-based considerations? a. Externally, MNEs are subject to the formal institutional frameworks erected by

various home- and host-country governments. b. Host-country governments often encourage, or coerce MNEs into undertaking

certain activities. c. Strategists weigh the informal, backlash against activities which result in domestic

job losses. d. Formal organizational charts do not necessarily reveal the informal rules of the

game, such as organizational norms, values, and networks. e. To staff the position of the head of a subsidiary, MNEs, in the absence of formal

regulations, essentially have only one choice: to use a home-country national as the head of a subsidiary.

9. The type of knowledge that is codifiable (that is, it can be written down and transferred without losing much of its richness) is called: a. Explicit. b. Implicit. c. Tacit. d. Lucid. e. Clear.

10. Knowledge management uses “centers of excellence” in which type of MNE? a. Home replication. b. Local (multidomestic). c. Global. d. Transnational. e. All of the above.

11. Which is true of globalized R&D? a. Is often known as innovation-avoidance expense. b. One way to access such a high technology and research-rich cluster is to avoid

FDI. c. R&D work performed by different locations and teams around the world virtually

guarantees failure. d. For large firms, there are actually diminishing returns for R&D. e. Global virtual teams, which do not meet face to face, may overcome

communication and relationship barriers.


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12. This structure is commonly used in professional service firms: a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.

13. This structure is often used to supply customers (often other MNEs) in a coordinated and consistent way across various countries. a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.

14. Which of the following is a solution rather than a problem in knowledge management? a. Open innovation. b. Knowledge leakage. c. Not invented here syndrome. d. All of the above. e. None of the above.

15. Which of the following is not an argument in favor of centralization in knowledge management but instead is an argument in favor of decentralization? a. Capability to facilitate corporate-wide coordination. b. Consistency in decision-making. c. Permits greater speed, flexibility, and innovation. d. Sufficient power for corporate-level managers to initiate necessary actions. e. None of the above.

16. Which of the following is not an argument in favor of decentralization in knowledge management but instead is an argument in favor of centralization? a. Better motivates subsidiary-level managers and employees through empowerment. b. Reduces corporate level overload of responsibilities. c. Better motivates subsidiary level managers. d. Sufficient power for corporate-level managers to initiate necessary actions. e. All of the above.

17. Which of the following is a customer-focused dimension? a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above.


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18. Unique to international competition are the pressures for local responsiveness, which are reflected in: a. Consumer preferences. b. Distribution channels. c. Host country demands. d. A through C above. e. Shareholder demands.

19. Which of the following is a key idea regarding the reciprocal relationship between strategies and structures within MNEs? a. The fit between strategies and structures is crucial. b. The relationship is two way. c. Strategies and structures are not static. d. All of the above. e. A good strategy cancels the effect of a bad structure.

20. Which is not one of the conclusions that can be drawn from this chapter? a. All MNEs need a common structure. b. Understand the nature and evolution of your industry. c. Actively develop learning and innovation capabilities. d. Mastering the external rules of the game. e. Understand and be prepared to change the internal rules of the game.

GLOBAL STRATEGY: Test Bank/ Chapter 11

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1. Ownership will likely be diffused under which of the following situations? a. A start up firm. b. Family owned firm. c. State ownership. d. All of the above. e. None of the above.

2. Issues involved regarding how a board of directors can be established so as to be most effective include: a. The insider/outsider mix. b. CEO duality. c. Board Interlocks. d. The Role of Boards of Directors. e. All of the above.

3. Boards of directors perform all of the following except: a. Control. b. Service. c. Resource acquisition functions. d. A through C above. e. Day to day operations.

4. Which of the following make up a governance package? a. Internal Mechanisms + External Mechanisms. b. Carrots to motivate managers such as stock options. c. Sticks that may result in CEO and top management team turnover. d. The Market for Corporate Control. e. The Market for Private Equity.

5. Two decades of privatization suggest all of the following except: a. Privatization to insiders helps improve the performance of small firms. b. In large corporations privatization to insiders, without external governance

pressures, is hardly conducive for needed restructuring. c. Outside ownership and control, preferably by blockholders, funds, foreigners,

and/ or banks, are more likely to facilitate restructuring. d. Such outside ownership and control does not happen frequently because

incumbent managers do not necessarily welcome such outside “intrusion.” e. When outside investors such as institutional investors do come in, they fail to

assert their power. 6. Industry-Based Considerations regarding corporate governance include all of the

following except: a. Having more outside directors on the board is often regarded as having a negative

impact on performance because of their lack of understanding as compared to insiders.


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b. In industries characterized by rapid innovation requiring significant R&D investments (such as information technology), outside directors may have a negative impact on firm performance.

c. Research finds that for firms in low-growth, stable industries, no relationship exists between inside management ownership and firm performance.

d. In relatively high-growth, turbulent industries, there is a relationship between inside management ownership and firm performance.

e. In industries experiencing great turbulence, the presence of a single leader may allow a faster and more unified response to changing events.

7. Institution-based considerations in governance include all of the following except: a. Formal institutional framework. b. International experience of senior executives. c. Formal legal protection and impact on founder’s dilution of equity. d. Lack of legal protection and its impact regarding large shareholders in emerging

economies. e. Impact of informal norms and values.

8. Which are not among the aspects of globalization? a. Contact with different governance norms. b. FPI investors demand more protection. c. The focus on governance has been replaced by a focus on shareholder value. d. The thirst for global capital requires adherence to listing requirements. e. The global diffusion of “best practices.”

9. Agency theory assumes that managers: a. Have a responsibility to the owners. b. Are agents who are opportunistic and engage in self-serving activities. c. A and B above. d. Can be left to their own devices. e. Are effective steward of the owners’ interests.

10. In regards to global convergence: a. Advocates argue that globalization will unleash a “survival-of the-fittest” process. b. Advocates claim firms will be forced to adopt globally the best practices. c. Others contend that governance practices will continue to diverge throughout the

world. d. The text indicates that complete divergence in corporate governance is probably

unrealistic. e. All of the above.

11. Strategists should:

a. Understand the nature of principal–agent and principal–principal conflicts to create better governance mechanisms.

b. Develop firm-specific capabilities to differentiate on governance dimensions. c. Understand the rules, anticipate changes, and be aware of differences, especially

when doing business abroad.


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d. Use an understanding of corporate governance to help answer the four fundamental questions in strategy.

e. All of the above.

12. As the opening case points out, the positive side private equity firms excel in all the following ways except: a. They always send experts to sit on the board and are hands-on in managing. b. Use a high level of debt that imposes strong financial discipline. c. Private equity turns managers from agents to principals with substantial equity,

thus providing a powerful incentive to them. d. Pay managers more generously, but also punish failure more heavily. e. Reduced income inequality between financiers and the rest of us.

13. As the opening case points out on the negative side, firms have been accused of all of the following except: a. Being “barbarians.” b. Being “asset strippers,” and “locusts.” c. Internationally, causing shock in countries suddenly facing the full rigor of

Anglo-American private equity. d. Placing CSR ahead of all rational economic decisions. e. None of the above.

14. The defense of private equity includes all of the following points except: a. While private equity results in job cuts, the same might happen if targets were

acquired by public firms. b. It would not be rational for private buyers to destroy their prize therefore they

attempt to avoid doing that. c. Their record as corporate citizens is no more barbaric than that of public firms. d. They point to a Texas utility in which owners paid shareholders a 25% premium,

gave retail customers a 10% price cut, and dropped plans to build eight dirty coal-fired power plants—hailed by environmentalists as a major victory.

e. The actions of U.S. private equity firms have enhanced the image of the U.S. and capitalism around the world.

15. Diffused ownership is the opposite of concentrated ownership, more common in: a. North America. b. South America. c. Asia. d. Africa. e. The Pacific.

16. Most large, publicly traded UK corporations are now characterized by all of the following except: a. Diffused ownership. b. Numerous small shareholders. c. A separation of ownership and control. d. Control is largely concentrated in the hands of salaried, professional managers.


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e. Corporate managers who own a majority of the stock.

17. Which of the following is not true regarding large institutional investors? a. They include professionally managed mutual funds and pension pools. b. They now own over 50 percent of the stock in major corporations. c. Are the controlling stockholders in China. d. Their ability to dump the stock is limited because selling out depresses the share

price and harms the institutions. e. Are more likely to exercise shareholder rights than smaller investors.

18. In regards to family ownership, all of the following are true except: a. Most small firms in the world are owned and controlled by families. b. The vast majority of large corporations throughout continental Europe, Asia,

Latin America, and Africa no longer feature concentrated family ownership and control.

c. Family ownership and control may provide better incentives for the firm to focus on long-run performance.

d. Such ownership may also minimize the conflict between owners and professional managers typically encountered in widely owned firms.

e. Family ownership and control may lead to the selection of less qualified managers who happen to be the sons, daughters, and relatives of owners.

19. Which of the following is true in regards to outside directors? a. The trend around the world is to introduce less outside directors. b. In the United States, less than a half century ago, most boards were made up

entirely or largely of outside directors. c. Many US firms are now favoring a board that is entirely made of people who are

insiders due the need for people who can understand the increasing complexity of MNEs.

d. Japanese boards have not waited until they are in financial difficulty to bring in outside directors from banks.

e. Academic research has failed to empirically establish a link between the outsider/insider ratio and firm performance.

20. Which of the following is true regarding CEO duality? a. From an agency theory standpoint, if the board is to supervise agents such as the

CEO, it seems imperative that the board be chaired by the same individual. b. In US firms with CEO duality, the trend now is to appoint a lead independent

director, who chairs the sessions held by outside directors that do not involve company executives.

c. A corporation led by two top leaders—a board chairman and a CEO - will at least have unity of command and experience less top-level conflict.

d. East Asia and Latin America where most firms have concentrated family ownership and control, there is less CEO duality.

e. Firms around the world are being pressured to combine the two top jobs.


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1. CSR tends to be the least concerned with improving: a. Global sustainability. b. Shareholder wealth maximization. c. Rising levels of population. d. Inequity. e. High levels of poverty in some countries.

2. NGOs have the ability to: a. Affect firms. b. Change their management. c. Impact legislation. d. All of the above. e. None of the above

3. Secondary stakeholder groups are: a. Constituents on whom the firm relies for its continuous survival and prosperity. b. Those who do not influence or affect the corporation. c. Are not influenced or affected by the corporation. d. Are not engaged in transactions with the corporation and are not essential for its

survival. e. B through D above.

4. The CSR debate centers on the question: a. Why does the firm exist? b. Why does private property exist? c. What laws are needed to control the firm’s behavior? d. What can be done to prevent unreasonable profits? e. All of the above.

5. Free market advocates tend to do all of the following except: a. Argue that “the social responsibility of business is to increase its profits, which

leads to efficient capital and product markets.” b. Argue that all stakeholders have an equal right to bargain for a “fair deal.” c. Believe that the first and foremost stakeholder group is shareholders. d. Argue that if firms attempt to attain social goals, managers will lose their focus on

profit maximization. e. Fear that firms will become like SOEs.

6. Those who advocate CSR: a. Conduct their debate within the constraints of capitalism. b. Argue that a humane capitalism is an oxymoron and unattainable. c. Argue that the concepts justice and fairness are simply matters of opinion. d. Argue that the most important stakeholder is the stockholder. e. None of the above.


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7. Using the five forces model, which will likely result in a higher level of CSR? a. A highly concentrated industry. b. Existence of incumbents. c. Socially and environmentally conscious suppliers with standardized products that

have multiple substitutes. d. No monitoring program for all supplier factories. e. Substitutes that are superior to existing products and costs are reasonable.

8. Which is not true about CSR? a. Some CSR policies may reduce the firm’s value. b. CSR policies may not pay off if common. c. CSR that is embedded in people is easier to imitate. d. Organization: a firm needs to tie together CSR activities. e. It is difficult to prove a link between CSR and economic performance.

9. Which of the following is an accommodative CSR strategy? a. Neither for or against CSR. b. Resist imposition of what seems unreasonable. c. View CSR as worthwhile. d. Actively participate in CSR policy discussion. e. Voluntarily go beyond what the regulations require.

10. Those who feel that firms that expand into emerging economies are failing their CSR responsibilities are most likely to claim that it: a. Potentially hurts corporate profits. b. Reduces shareholder returns. c. Fails to provide employment to host countries. d. Reduces the standard of living in host countries. e. Domestic employees and communities pay the price for the overseas expansion.

11. There is agreement throughout society that: a. Overseas expansion is good because it helps improve standards of living around

the world. b. Overseas expansion is bad because it causes loss of jobs in the home country. c. Firms should stick strictly to business within a country and not seek to impose

their views of human rights on other countries that have different views. d. Firms have a responsibility to do whatever is necessary to assure that the human

rights that are respected in the home country are implemented in host countries. e. None of the above.

12. An example of a primary stakeholder group is: a. Media. b. Social activists. c. Environmental groups. d. Employees. e. Fair labor practice groups.


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13. An example of a secondary stakeholder group is: a. Social and environmental groups. b. Suppliers. c. Customers. d. Governments. e. Communities.

14. In regards to managers and CSR, the following is true except: a. All sides of the CSR debate agree that they have a unique and central role. b. All sides of the CSR debate agree as to how they should implement their role. c. As a stakeholder group they are unique in terms of potential coordination. d. They are positioned at the center of all the stakeholder relationships. e. They make decisions on behalf of the firm that affect other stakeholders.

15. In regard to the extent of CSR challenges, the following is true except: a. All industries are equal in terms of their exposure to CSR challenges. b. Energy- and materials-intensive industries (such as chemicals) have been

criticized. c. Firms that are major outsourcers in foreign countries have been criticized. d. Some firms have turned to NGO critics to have the NGOs certify their policies. e. None of the above.

16. In regards to the link between CSR and economic performance: a. There is no conclusive evidence of a direct, positive link between CSR and

economic performance. b. Some studies report a positive relationship. c. Some studies find a negative relationship or no relationship. d. It appears some firms are not cut out for a CSR-intensive strategy. e. All of the above.

17. The instrumental view of CSR advocates that are skeptical of CSR compliance claim: a. That firms may not necessarily be sincere. b. That firms may be compelled to appear to be sensitive to CSR by impression

management—in other words, “window dressing.” c. That many firms may chase fads by following what others are doing, while not

having truly internalized the need for CSR. d. That CSR activities simply represent a useful means to help make good profits.

Firms are not necessarily becoming more “ethical.” e. All of the above

18. Some CSR advocates who question motives of firms implementing CSR are pleased that: a. Firms are embarking on some tangible CSR journey. b. CSR’s legitimacy is rising on the organizational agenda. c. By adopting codes of conduct (even if only for “window dressing” purposes),

they create a set of criteria against which they can be judged. d. All of the above.


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e. None of the above.

19. Reactive firms: a. Actively participate in regional, national, and international policy discussions. b. Often build alliances with stakeholder groups. c. Engage in voluntary activities that go beyond what the regulations require. d. React negatively to aspects of CSR that may increase costs. e. All of the above.

20. From an institutional perspective, proactive activities are indicative of all the following except: a. Normative beliefs. b. Cognitive beliefs. c. The desire to do the right thing. d. An absence of “window dressing.” e. A quest for better profits.

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