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Management
Q:
As the opening case pointed out, on the positive side private, equity firms excel in all the following ways EXCEPT:
a. They reduce income inequality between financiers and the rest of us.
b. They 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. They pay managers more generously, but also punish failure more heavily.
Q:
Strategists should:
a. Understand the nature of principalagent and principalprincipal 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.
d. All of the above.
Q:
In regard to global convergence:
a. Advocates argue that globalization will stymie 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 cannot continue to diverge throughout the world.
d. The text indicates that complete divergence in corporate governance is realistic.
Q:
Agency theory assumes that managers:
a. Have a responsibility to the owners.
b. Avoid opportunistic and self-serving activities.
c. Eliminate agency costs.
d. Can be left to their own devices.
Q:
An often-mentioned drawback of state owned enterprises is:
a. An ability to avoid bankruptcy and job loss.
b. Frequent conflict between ownership and management.
c. Little incentive to improve performance.
d. All of the above.
Q:
Family ownership and control of large firms may:
a. Provide better incentive for a focus on long-term performance.
b. Minimize conflicts between owners and managers typical of large firms.
c. Lead to destruction of value as a result of conflict.
d. All of the above.
Q:
Outside of the Anglo-American world, most large firms:
a. Have a widely held ownership.
b. Insist on significant separation between ownership and control.
c. Are typically owned and controlled by families or the state.
d. None of the above.
Q:
In corporate governance, most small shareholders:
a. Attend annual shareholder meetings.
b. Have strong incentives to monitor how the firm is being run.
c. Prefer to free-ride and hope other shareholders monitor manager behavior.
d. Rarely hold stock for a long period of time.
Q:
Ownership will likely be diffused for:
a. A start-up firm.
b. Family-owned firms.
c. State-owned firms.
d. about three-quarters of U.S.-listed firms.
Q:
From a corporate governance standpoint, a narrow scope may be indicative of managers empire-building and risk reduction.
a. True
b. False
Q:
Capitalism without risk of failure becomes socialism is the essence of the moral hazard of government bailouts.
a. True
b. False
Q:
A criticism often leveled against SOEs is their lack of accountability.
a. True
b. False
Q:
Convergence advocates argue that a survival-of the-fittest process will force firms globally to accept the best practices exemplified by Anglo-American practices.
a. True
b. False
Q:
Recently, stewardship theory suggests that by and large managers can be viewed as stewards of owners interests.
a. True
b. False
Q:
Corporate governance is ultimately a choice about political governance.
a. True
b. False
Q:
In industries experience significant turbulence, the agency costs of CEO duality outweigh the benefits.
a. True
b. False
Q:
The ability to successfully list a foreign firm on a high-profile exchange such as NYSE leads to a higher valuation for that firm as opposed to domestic firms.
a. True
b. False
Q:
From a corporate governance standpoint, some of the most valuable, rare, and hard-to imitate firm-specific resources are the skills and abilities of top managers and directors.
a. True
b. False
Q:
The thirst for global capital requires adherence to listing requirements.
a. True
b. False
Q:
FPI investors demand less protection.
a. True
b. False
Q:
The rise of capitalism has not affected governance.
a. True
b. False
Q:
Large shareholders in emerging economies usually need to have a significantly lower percentage of shares to ensure control than in theUnited States.
a. True
b. False
Q:
Formal legal protection encourages founding families and their heirs to dilute their equity.
a. True
b. False
Q:
Managerial human capital refers to the skills and abilities of top managers and directors.
a. True
b. False
Q:
Overall, governance practices need to fit with the nature of the industry in which firms are competing. This cautions against prescribing universal best practices.
a. True
b. False
Q:
The governance mechanisms that affect corporations in the United States and United Kingdom are characterized by market-oriented systems and strong external mechanisms.
a. True
b. False
Q:
Because of the market for corporate control, the long-term profitability of postmerger firms is impressively high.
a. True
b. False
Q:
Internal governance mechanisms employed by boards of directors include carrots and sticks.
a. True
b. False
Q:
The market for private equity involves going private by tapping into private equity.
a. True
b. False
Q:
The market for corporate control is another term for the stock market.
a. True
b. False
Q:
Avoiding governance issues on a board of directors is accomplished by having more outside directors.
a. True
b. False
Q:
Outside directors of a board are not always independent.
a. True
b. False
Q:
CEO duality presents a significant agency issue.
a. True
b. False
Q:
How directors strategically prioritize is about the same around the world.
a. True
b. False
Q:
Board interlocks refer to bonding and teamwork among the members of a board of directors.
a. True
b. False
Q:
CEO duality refers to a situation in which two people share the role of CEO.
a. True
b. False
Q:
The trend around the world is to introduce more inside directors and fewer outside directors.
a. True
b. False
Q:
Inside directors are top executives of the firm.
a. True
b. False
Q:
Agency problems are eliminated by reducing information asymmetries.
a. True
b. False
Q:
Information asymmetries are a major source of agency problems.
a. True
b. False
Q:
Agents and principals both bear a portion of the agency costs in a principal-agent relationship.
a. True
b. False
Q:
Principal-principal conflicts occur within one class of principals, such as a disagreement among certain majority stockholders and other majority stockholders.
a. True
b. False
Q:
The relationship between shareholders and professional managers is a relationship between principals and agents.
a. True
b. False
Q:
Evidence indicates that family ownership plays a positive role in the performance of large firms.
a. True
b. False
Q:
SOEs are an excellent way for firms to solve their incentive problems.
a. True
b. False
Q:
The increased size of holdings by institutional investors limits the ability of those investors to dump the stock.
a. True
b. False
Q:
Typically, small shareholders who are not happy with firm performance simply sell their stock and invest elsewhere.
a. True
b. False
Q:
The trend since the 1980s has been for expanded state ownership and declining privatization.
a. True
b. False
Q:
Founders usually start up firms and completely own and control these enterprises.
a. True
b. False
Q:
What are the two sides of external formal institutions, and how do they affect the rules of the game?
Q:
How is social capital used in knowledge management?
Q:
Mega Global Corporation has centralized all of its global operations. The firms manager in Lower Slobovia would like to see more decentralization. Her complaint: We are the experts on what needs to be done in this country but we have to get approval from people who have no idea as to what is going on here. That makes neither sense nor dollars. Evaluate her statement.
Q:
Because knowledge is undoubtedly a resource for any firm, describe the resource-based considerations that go into knowledge management.
Q:
You are the manager in a transnationals subsidiary. Describe the knowledge management strategy you would most likely use and any disadvantages you may need to be aware of.
Q:
Suppose you are the leader of a nation that currently has few capabilities other than a well-educated populace that could contribute to economic growth. However, you think you have a bright idea. You are going to encourage MNEs from around the world to locate their headquarters in your country. What might attract them and how might that pay off if you are successful?
Q:
Global R&D has pros and cons for the firm that uses that approach. However, suppose you are the leader of the country where that firm is based. How might you view having R&D being conducted by a global team in a matter that is vital to the nations economic health/and or security?
Q:
The text makes the point that multinational strategy and structure have a reciprocal relationship. What are the three arguments the text makes in support of this statement?
Q:
Normally when a firm first expands overseas, it may use an international division and later use a different organizational structure. Under what circumstances might such a firm wish to shift back to the use of an international division?
Q:
To what extent should a firm be committed to a particular strategy versus making frequent changes in the strategy? If a strategy is likely to be changed, what is the point in having one?
Q:
Which is NOT one of the suggestions for international managersthat can be drawn from this chapter?
a. Create a common structure for all MNEs.
b. Understand the nature and evolution of your industry.
c. Actively develop learning and innovation capabilities.
d. Understand and be prepared to change the internal rules of the game.
Q:
When dealing with the different internal rules of the game the come with being a multinational organization, MNEs need to keep in mind that:
a. It is important to stand firm on rules of the game set by MNE corporate headquarters.
b. Having a foreigner as CEO is most beneficial for MNEs using a home replication strategy.
c. Some rules facilitate MNE actions, others constrain them.
d. When in Rome, do as the Romans do.
Q:
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 typically one way.
c. Strategies and structures are static.
d. A good strategy cancels the effect of a bad structure.
Q:
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. All of the above.
Q:
When faced with the complexity and cost of value-added customer-focused dimensions, the textbook suggests that you:
a. Create new formal structures.
b. Simplify.
c. Find temporary solutions.
d. None of the above.
Q:
Subsidiary initiatives that are not consistent with corporate-wide goals:
a. Lead to potential chaos.
b. Are essential for entrepreneurship within the MNE.
c. Marginalize the roles of subsidiary managers.
d. Are characteristic of decentralized MNE structures.
Q:
A large firm that uses a more centralized corporate control structure is more likely to encounter:
a. Subsidiary initiatives.
b. Greater expansion of subsidiary scope of responsibility.
c. Chaos.
d. A much-needed spirit of entrepreneurship throughout the MNE.
Q:
Which of the following is a customer-focused dimension?
a. Knowledge leakage.
b. Out-of-the-box packaged solutions.
c. Solutions-based structure.
d. None of the above.
Q:
A limited absorptive capacity leads to:
a. A tendency to block inflows of knowledge.
b. Reductions in corporate-level overload of responsibilities.
c. Better motivation among subsidiary-level managers.
d. A tendency away from the not invented here syndrome.
Q:
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.
Q:
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.
Q:
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. None of the above.
Q:
A main purpose in engaging in open innovation is for MNEs to:
a. Adding rules to the R&D game to deter rivals.
b. Reduce dependence on collaborative research.
c. Counteract the diminishing returns of R&D in large firms.
d. None of the above.
Q:
Which of the following statements about GE (opening case) and its knowledge management is true?
a. Interdependence is low.
b. An integrated network of subsidiaries is slowly being replaced by a top-down hierarchy.
c. Each subsidiary not only develops locally relevant knowledge but also aspires to contribute knowledge to benefit the MNE as a whole.
d. Knowledge and people typically flow from headquarters to subsidiaries.
Q:
In knowledge management, when the role of foreign subsidiaries is make differentiated contributions that are integrated in worldwide operations, the MNE is following a:
a. Home replication strategy.
b. Localization strategy.
c. Global standardization strategy.
d. Transnational strategy.
Q:
Knowledge that is mostly developed and retained at the center and key locations of an MNE is characteristic of:
a. Home replication strategy.
b. Localization strategy.
c. Global standardization strategy.
d. Transnational strategy.
Q:
Because knowledge management is central to how well a firm functions, it is important to know that knowledge is:
a. Critical to the firm only if it is explicit knowledge.
b. Implicit if it can be written down to be transferred.
c. Explicit if its acquisition requires hands-on practice.
d. Harder to transfer and learn if it is implicit.
Q:
For most MNEs, from a resource-based view tacit knowledge is:
a. Strategically less important than explicit knowledge.
b. Central to the informal relationships of the firm.
c. Easily captured, stored, and transmitted.
d. Seldom transferred through hands-on practice.
Q:
For MNEs pursuing a home-replication strategy, knowledge management:
a. Is characterized by a great deal of dependence among subsidiaries.
b. Develops mostly at the subsidiary level and flows upward to headquarters.
c. Occurs in a one-way flow from center to subsidiaries.
d. None of the above.
Q:
Which of the following is TRUE of globalized R&D?
a. For large firms, there are actually diminishing returns for R&D.
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. Global virtual teams, which do not meet face to face, may overcome communication and relationship barriers.
Q:
Knowledge management uses centers of excellence in which type of MNE?
a. Home replication.
b. Local (multidomestic).
c. Global.
d. All of the above.