Strategic Management and Business Ethics Exam Review

Exam 1: International Business and Corporate Strategy

Competitive Advantage and National Factors

• According to the text, competitive advantage is mainly based on: Valuable, rare, and difficult-to-initiate resources.
• Domestic rivalry helps companies become better international competitors because it: Forces firms to improve efficiency and product quality.
• According to Porter, strong supporting industries help firms by: Providing benefits that can be used into related industries.
• Industry clusters are described in the text as: Groups of related industries concentrated within a nation.

Global Expansion and Location Strategies

• One reason multinational firms expand globally is to: Increase profitability and overall profit growth rates.
• Location economies occur when firms: Perform activities where they are most efficient globally.
• Transportation costs and trade barriers are important because they: Influence decisions regarding production locations abroad.
• Mexico became attractive for production because of: Low labor costs and proximity to the United States.
• A firm using a single-location strategy may face disadvantages because it: Cannot easily realize global location economies.
• The text explains that successful international expansion often depends on: Distinctive competencies supporting products and services.
• German and Japanese firms were characterized by: Leadership dominated by engineering-oriented managers.

Corporate-Level Strategy and Integration

• Corporate-level strategy mainly focuses on: Deciding industries and activities in which firms compete.
• Horizontal integration refers to: Acquiring or merging with industry competitors.
• One major advantage of horizontal integration is: Increased economies of scale and lower costs.
• A merger differs from an acquisition because a merger: Creates a new entity from pooled operations.
• Product bundling increases differentiation because it: Allows customers to buy products together conveniently.
• One way horizontal integration reduces rivalry is by: Reducing the number of firms within the industry.
• Antitrust authorities are mainly concerned about: Companies abusing excessive market power.
• Vertical integration occurs when a company: Enters industries connected to its value chain.
• Backward vertical integration means a company: Moves into industries supplying production inputs.
• Forward vertical integration involves: Entering industries that distribute or sell products.

Exam 2: Stakeholder Management and Business Ethics

Stakeholder Roles and Analysis

• Which stakeholder group typically provides the financial capital needed to operate a business? Shareholders who invest money in the company through ownership.
• Which action best demonstrates a company considering the interests of its employees? Offering training programs and maintaining safe working conditions.
• Which stakeholder is most directly affected by the quality of a company's products? Customers who purchase and use the company's products or services.
• Why is stakeholder analysis important before making strategic decisions? It helps managers understand how different groups may be affected.
• Which stakeholder would most likely be concerned about receiving payments on time for delivered materials? Suppliers providing raw materials and production-related resources.
• A company decides to reduce pollution by investing in cleaner technology. Which stakeholder is most directly benefited? Local communities living near the company's production facilities.
• Which statement best describes stakeholder management? Balancing the interests of different groups affected by the business.
• Which of the following is an example of an internal stakeholder? Employees working in different departments of the organization.
• Which group is classified as an external stakeholder? Customers purchasing the company's products and services.
• What is a stakeholder? An individual or group with an interest in the company's performance.

Impact Analysis and Agency Theory

• Which situation illustrates a conflict between stakeholder interests? Shareholders seek higher profits while employees request higher wages.
• What is the primary purpose of stakeholder impact analysis? To identify important stakeholders and understand their interests.
• According to the textbook, what is the first step in stakeholder impact analysis? Identify all relevant stakeholders connected to the organization.
• Why can stakeholder conflicts occur? Different stakeholder groups often pursue competing organizational interests.
• What is an agency relationship? A situation where one party delegates decision-making authority to another.
• What is the agency problem? Agents may pursue personal interests instead of principals' interests.

Business Ethics and Organizational Culture

• What is business ethics? Principles of right and wrong guiding business conduct and decisions.
• Which factor can contribute to unethical business behavior? Organizational cultures that fail to value ethical decision-making.
• Which practice supports an ethical organizational culture? Hiring people with strong personal ethical values and integrity.
• Which stakeholder captures value through salaries and employee benefits? Employees and managers working within the organization.
• Which stakeholder captures value through interest, dividends, and capital gains? Capital providers such as stockholders and debt investors.