CHAPTER FIVE INTERNAL SCANNING AND ORGANIZATIONAL ANALYSIS

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1 CHAPTER FIVE INTERNAL SCANNING AND ORGANIZATIONAL ANALYSIS True/False 1. Resources are the organization s assets and are the basic building blocks of the organization. Answer: T (p.106) 2. The resources of an organization include physical assets, human assets, and organizational assets. Answer: T (p.106) 3. Capabilities refer to a corporation s ability to exploit its resources. Answer: T (p.3) 4. New product development would be a core competency if it goes beyond one division. Answer: T (p.106) 5. General Electric is well known for its distinctive competency in management development. Answer: T (p.106) 6. An example of a cluster in the US is found in the Silicon Valley. Answer: T (p.106) 7. Two characteristics that determine the sustainability of a firm s distinctive competency are durability and transparency. Answer: F (p.108) 8. Durability is the rate at which a firm s underlying resources and capabilities (core competencies) can be duplicated by others. Answer: F (p.108) 9. A core competency can be easily imitated to the extent that it is transparent, transferable, and replicable. Answer: T (p.108) 10. Transparency is the speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm s strategy. Answer: T (p.108) 11. Transferability is the ability of competitors to use duplicated resources and capabilities to imitate the other firm s success. Answer: F (p.108) 12. Tacit knowledge is knowledge that can be easily communicated or articulated. Answer: F (p.109) 13. A value chain is a linked set of value-creating activities. Answer: T (p.111) 14. The center of gravity is the part of the chain that is most important to the company and the point where its greatest expertise and capabilities lie. Answer: T (p.112) 15. A company s center of gravity is usually the point at which the company started. 170

2 Answer: T (p.112) 16. According to Porter, a manufacturing firm s support activities usually begin with inbound logistics, go through an operations process in which a product is manufactured, and continue on to outbound logistics and finally to service. Answer: F (p.113) 17. Linkages are the connections between the way one value activity is performed and the cost of performance of another activity. Answer: T (pp ) 18. A functional structure is appropriate for a medium sized firm with several product lines in one industry. Answer: F (p.114) 19. Economies of scope result when unit costs are reduced by making large numbers of the same product. Answer: F (p.114) 20. A divisional structure has no functional or product categories and is appropriate for a small, entrepreneur-dominated company with one or two product lines that operates in a reasonably small, easily identifiable market niche. Answer: F (p.115) 21. Cultural integration is the degree to which members of a unit accept the norms, values, or other culture content associated with the unit. Answer: F (p.116) 22. Cultural integration is the extent to which units throughout an organization share a common culture. Answer: T (p.116) 23. The corporate culture generally reflects the values of the founder(s) and the mission of the firm. Answer: T (p.116) 24. The marketing mix refers to the particular combination of key variables under the corporation s control that can be used to affect demand and to gain competitive advantage. Answer: T (p.118) 25. One of the marketing mix variables is location. Answer: F (p.118) 26. The product life cycle enables a marketing manager to examine the marketing mix of a particular product or group of products in terms of its position in its life cycle. Answer: T (p.120) 27. Financial leverage is the ratio of total debt to total assets. Answer: T (p.120) 28. Research indicates that greater financial leverage has a positive impact on performance for firms in dynamic environments. Answer: F (p.120) 29. R&D intensity is a principal means of decreasing marketing share in global competition. 171

3 Answer: F (p.120) 30. A good rule of thumb for R & D spending is that a corporation should spend at a normal rate for that particular industry unless its strategic plan calls for unusual expenditures. Answer: T (p.121) 31. Xerox Corporation has been criticized for its deficiency in technology transfer. Answer: T (p.121) 32. Product R&D concentrates on marketing and is concerned with product or product-packaging improvements. Answer: T (p.121) 33. A company s capability in product R & D can be measured by consistent reductions in unit manufacturing costs and by the number of product defects. Answer: F (p.121) 34. It is generally accepted that product R & D normally dominates the early stages of a product s life cycle, whereas process R & D becomes especially important in the later stages. Answer: T (pp ) 35. Historically, competitive leadership in a market changes hands as one technology nears the end of its S-curve. Answer: T (p.122) 36. An example of an intermittent manufacturing system is an auto body repair shop. Answer: T (p.122) 37. Intermittent manufacturing systems reap benefits from economies of scale. Answer: F (p.122) 38. Mass customization is the low-cost production of individually customized goods and services. Answer: T (p.125) 39. Flexible manufacturing permits the low-volume output of custom-tailored products at relatively low unit costs through economies of scope. Answer: T (p.125) 40. Over two-thirds of large US companies are successfully using autonomous work teams. Answer: T (p.125) 41. Using concurrent engineering, Chrysler Corporation was able to reduce its product development cycle from 60 to 36 months. Answer: T (p.125) 42. To increase flexibility, avoid layoffs, and reduce labor costs, corporations are using more contingent workers. Answer: T (p.126) 43. Human diversity emphasizes improving the human dimension of work. Answer: F (p.127) 44. A current trend in corporate information systems is the increasing use of the Internet for marketing, intranets for internal communication, and extranets for logistics and distribution. 172

4 Answer: T (p.128) 45. The EFAS Table is one way to organize the internal factors into generally accepted categories of strengths and weaknesses as well as to analyze how well a particular company s management is responding to these specific factors in light of the perceived importance of these factors to the company. Answer: F (p.129) Multiple Choice 46. Those critical strengths and weaknesses that are likely to determine if a firm will be able to take advantage of opportunities while avoiding threats are called a. SWOT. b. competitive forces. c. internal strategic factors. d. quality accounting. e. factor analysis. c. (p.106) 47. Which of the following is NOT one of the four question areas Barney proposes in his VRIO framework used to evaluate a firm's key resources? a. durability b. organization c. rareness d. value e. imitability a. (p.106) 48. According to Barney s VRIO framework, asking if it is costly for other competitors to imitate the competencies relates to the concept of a. value. b. rareness. c. imitability. d. organization. e. durability. c. (p.106) 49. When a company determines a competency s competitive advantage, Barney refers to this issue as a. value. b. rareness. c. imitability. d. organization. e. durability. a. (p.106) 50. According to Barney s VRIO framework, the exploitation of a resource pertains to the of the resource. a. value b. rareness c. imitability d. organization 173

5 e. durability d. (p.106) 51. A corporation s ability to exploit its resources is referred to as its a. resources b. capabilities c. core competencies d. critical success factors e. key performance factors b. (p.106) 52. Things that a corporation can do exceedingly well are called a. resources. b. distinctive competencies. c. core competencies. d. critical success factors. e. key performance factors. c. (p.106) 53. When a company s core competencies are superior to those of competitors, these are known as a. resources. b. distinctive competencies. c. core competencies. d. critical success factors. e. key performance factors. b. (p.106) 54. As competitors attempt to imitate another company s competency, what was once a distinctive competency becomes a. a critical success factor b. a minimum requirement to compete in the industry c. unimportant to compete d. a weakness e. all of the above b. (p.107) 55. Which of the following statements is true concerning clusters? a. The desire to build or upgrade a core competency is one reason why entrepreneurial and other fast-growing firms often tend to locate close to their competitors. b. Clusters are geographic concentrations of interconnected companies and industries. c. An example of a cluster in the U.S. is the Silicon Valley. d. According to Porter, clusters provide access to employees, suppliers, specialized information, and complementary products. e. All of the above. e. (pp ) 174

6 56. The rate at which a firm's underlying resources and capabilities depreciate or become obsolete is called a. replicability. b. transparency. c. imitability. d. durability. e. transferability. d. (p. 108) 57. The rate at which a firm s underlying resources, capabilities, or core competencies can be duplicated by others is called a. replicability. b. transparency. c. imitability. d. durability. e. transferability. c. (p.108) 58. The ability of competitors to use duplicated resources and capabilities to imitate the other firm's success is called a. imitability. b. durability. c. transferability. d. transparency. e. replicability. e. (p.108) 59. When a company takes apart a competitor s product in order to find out how it works, this process is known as a. durability. b. replicability. c. reverse engineering. d. transparency. e. transferability. c. (p.108) 60. The speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm s strategy is called a. imitability. b. reverse engineering. c. transferability. d. transparency. e. durability. d. (p.108) 175

7 61. Knowledge that can be easily articulated and communicated is known as a. tacit knowledge. b. explicit knowledge. c. imitable knowledge. d. transferable knowledge. e. durable knowledge. b. (p.109) 62. is more valuable because it can provide companies with a sustainable competitive advantage that is harder for competitors to imitate. a. Tacit knowledge b. Explicit knowledge c. Imitable knowledge d. Transferable knowledge e. Durable knowledge a. (p.109) 63. A core competency can be easily imitated to the extent that it is a. transparent b. transferable c. replicable d. all of the above e. none of the above d. (pp ) 64. Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation s culture is called a. tacit knowledge. b. explicit knowledge. c. imitable knowledge. d. transferable knowledge. e. durable knowledge. a. (p.109) 65. An organization's resources and capabilities can be placed on a continuum to the extent they are durable and can't be imitated by another firm. This continuum is called the a. continuum of sustainability. b. board of directors continuum. c. multidomestic-global continuum. d. integration continuum. e. gravity continuum. a. (p.109) 176

8 66. The business model used by IBM to make money not selling IBM products, but by selling its expertise to improve their customers operations is the a. profit pyramid model b. advertising model c. customer solutions model d. efficiency model e. entrepreneurial model c. (p.109) 67. A linked set of value-creating activities beginning with basic materials provided by suppliers and ending with distributors getting the final product into the hands of the ultimate consumer is called a(n) a. value chain. b. continuum of sustainability. c. strategic capability. d. fully integrated activity set. e. a strategic group. a. (p.111) 68. The part of an industry's value chain that is most important to a company and the point where its greatest expertise and capabilities lie is called the company's a. functional crossroads. b. center of gravity. c. dynamic equilibrium. d. R&D intensity. e. economy of scope. b. (p.112) 69. The two segments of the value chain of most industries are called a. top-down and bottom-up. b. upper level and lower level. c. upstream and downstream. d. research and segmentation. e. monopolistic and oligopolistic. c. (p.112) 70. Which of the following is NOT a value chain primary activity? a. raw materials handling b. installation c. repair d. purchasing e. warehousing d. (p.113) 177

9 71. Which of the following is NOT a value chain support activity? a. procurement b. technology development c. human resource management d. marketing and sales e. strategic planning d. (p.113) 72. The approach to internal scanning and organizational analysis which examines the nature and extent of the synergies that do or do not exist between the internal activities of a corporation is called a. PIMS. b. S.W.O.T. c. functional analysis. d. 7-S framework. e. corporate value chain analysis. e. (p.113) 73. When examining the corporate value chain of a particular product or service, which one of the following is NOT one of the PRIMARY activities that usually occur? a. operations b. inbound and outbound logistics c. auditing and accounting d. marketing and sales e. customer service c. (p.113) 74. One support activity in the corporate value chain is a. inbound logistics. b. marketing and sales. c. installation. d. technology development. e. warehousing. d. (p.113) 75. Which of the following is NOT one of the four support activities considered when examining the value-added chain of a particular product or service? a. procurement process b. human resources c. technology development d. logistics e. firm infrastructure d. (p.113) 178

10 76. The second step when analyzing the value-added chain is to a. identify the legal ramifications and responsibilities of their product or service. b. examine the linkages among the product's or service s value activities. c. confirm that all variables have been included and taken into consideration. d. ensure that quality management is adequately addressed. e. examine the potential synergies among the corporation's product or business units. b. (pp ) 77. The third step when analyzing the value-added chain is to a. identify the legal ramifications and responsibilities of their product or service. b. examine the linkages among the product's or service s value activities. c. confirm that all variables have been included and taken into consideration. d. ensure that quality management is adequately addressed. e. examine the potential synergies among the corporation's product or business units. e. (p.114) 78. When the value chains of two separate products or services share activities, such as the same marketing channels, in order to reduce costs, this is an example of a. economies of scope. b. economies of scale. c. economies of integration. d. economies of learning. e. outsourcing. a. (p.114) 79. The structure of a corporation is often defined in terms of communication, authority, and work flow. Which of the following describes a typical functional structure? a. Employees tend to be specialists in the business functions important to that industry such as manufacturing, marketing, finance, and human resources. b. Most appropriate for large corporations with many product lines in several related industries, with employees acting as specialists attempting to gain synergy among divisional activities. c. Most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate in a small niche market, with employees acting as jack-of-all trades. d. Employees having two or more superiors, a project manager and a functional manager. e. Most appropriate for large corporations with many product lines in several unrelated industries, with employees acting as specialists but with no attempt at gaining synergy among the divisions. a. (p.114) 179

11 80. Which of the following best describes a simple structure? a. Work is divided into subunits on the basis of such functions as manufacturing, marketing, finance, and human resources. b. Most appropriate for large corporations with many product lines in several related industries, with employees acting as functional specialists attempting to gain synergy among divisional activities. c. Most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate in a small niche market, with employees acting as jack-of-all trades. d. Employees having two or more superiors, a project manager and a functional manager. e. Most appropriate for large corporations with many product lines in several unrelated industries, with employees acting as functional specialists but with no attempt at gaining synergy among the divisions. c. (p.114) 81. Which one of the following best describes a divisional structure? a. Work is divided into subunits on the basis of such functions as manufacturing, marketing, finance, and human resources. b. Most appropriate for large corporations with many product lines in several related industries, with employees acting as functional specialists attempting to gain synergy among divisional activities. c. Most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate in a small niche market, with employees acting as jack-of-all trades. d. Employees having two or more superiors, a project manager and a functional manager. e. Most appropriate for large corporations with many product lines in several unrelated industries, with employees acting as functional specialists but with no attempt at gaining synergy among the divisions. b. (p.115) 82. Which one of the following best describes a conglomerate structure? a. Work is divided into subunits on the basis of such functions as manufacturing, marketing, finance, and human resources. b. Most appropriate for large corporations with many product lines in several related industries, with employees acting as functional specialists attempting to gain synergy among divisional activities. c. Most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate in a small niche market, with employees acting as jack-of-all trades. d. Employees having two or more superiors, a project manager and a functional manager. e. Most appropriate for large corporations with many product lines in several unrelated industries; unrelatedness prevents any attempt at gaining synergy among the divisions. e. (pp ) 83. Which of the following is NOT a characteristic of a strategic business unit (SBU)? a. distinctive capabilities b. control of its business functions c. a unique mission d. identifiable competitors 180

12 e. an external market focus a. (p.115) 84. According to the text, which one of the following is NOT descriptive of a corporation's culture? a. A corporation s culture is a collection of beliefs, expectations, and values learned and shared by corporation's members and transmitted from one generation of employees to another. b. Corporate cultures are only temporary and can be easily changed. c. Corporate culture norms are created which define acceptable behavior from top management to operative employee. d. Myths and rituals often emerge over time to explain why a certain aspect of the culture is important. e. Cultures have a powerful influence on the behavior of managers and can strongly affect a corporation's ability to shift its strategic direction. b. (p.116) 85. Corporate culture has two distinct attributes a. differentiation and integration. b. durability and imitability. c. concern for people and concern for task. d. intensity and integration. e. amount of complexity and tolerance of change. d. (p.116) 86. What is the attribute of corporate culture that is the degree to which members of a unit accept the norms, values, or other culture content associated with the unit? a. integration b. strength c. intensity d. coordination e. unity c. (p.116) 87. What is the attribute of corporate culture that is the extent to which units within an organization share a common culture? a. integration b. strength c. intensity d. coordination e. unity a. (p.116) 88. Which of the following is a function of corporate culture? a. It encourages a laissez faire set of attitudes. b. It encourages flexibility and thus constant change. c. It conveys a sense of identity for employees. d. It generates creative approaches to new situations. 181

13 e. It focuses employee commitment on their own careers. c. (p.116) 89. Which of the following is NOT a function of corporate culture? a. conveys a sense of identity for employees b. adds to the stability of the organization as a social system c. helps generate employee commitment to something greater than themselves d. keeps people guessing about what to do next e. serves as a frame of reference for employees to use as a guide for appropriate behavior d. (p.116) 90. The depth of an organization s culture is also known as a. cultural integration. b. cultural diversification. c. cultural intensity. d. cultural strategy. e. cultural prerogative. c. (p.116) 91. The breadth of an organization s culture is also known as a. cultural integration. b. cultural diversification. c. cultural intensity. d. cultural strategy. e. cultural prerogative. a. (p.116) 92. The selection of a specific area for marketing concentration in terms of product and geographical location is called the a. market position. b. product life cycle. c. market segmentation. d. marketing mix. e. marketing leverage. a. (p.118) 93. Through market research, corporations can target their various products or services so that management can discover what niches to seek or develop, and how to minimize competitive pressure. This is descriptive of a. marketing position. b. product life cycle. c. market segmentation. d. marketing mix. e. marketing leverage. c. (p.118) 182

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15 94. The particular combination of product, place, promotion, and price is called a. marketing position. b. product life cycle. c. market segmentation. d. marketing mix. e. marketing leverage. d. (p.118) 95. An example of the promotion variable of the marketing mix is a. advertising. b. discounts c. location. d. services. e. quality. a. (p.118) 96. An example of the price variable of the marketing mix is a. sales promotion. b. transport. c. packaging. d. discount. e. style. d. (p.118) 97. An example of the product variable of the marketing mix is a. publicity. b. payment period. c. credit term. d. transport. e. features. e. (p.118) 98. A graph showing time plotted against the dollar sales of a product as it moves from introduction through growth and maturity to decline is called a. marketing position. b. product life cycle. c. market segmentation. d. marketing mix. e. marketing leverage. b. (p.119) 99. Which of the following statements is true concerning a corporate reputation? a. It is a widely held perception of a company by the general public. b. A good corporate reputation can be a strategic resource. c. It can serve in marketing as both a signal and as an entry barrier. d. Reputation tends to be long-lasting and hard for others to duplicate. e. All of the above. e. (p.119) 184

16 100. As compared to a firm with low financial leverage, a firm with a high amount of financial leverage in an expanding market should have a. lower profits. b. higher profits c. higher earnings per share. d. lower earnings per share. e. higher sales revenue. c. (p.120) 101. The analysis and ranking of possible investments in terms of additional outlays and additional needed receipts that will result from each investment is called a. financial leverage. b. investment evaluation. c. strategic study. d. break-even analysis. e. capital budgeting. e. (p.120) 102. The ratio of total debt to total assets is known as a. budgeting leverage. b. capital finance. c. capital budgeting. d. financial leverage. e. financial budgeting. d. (p.120) 103. Which of the following is NOT descriptive of the function of the research and development department? a. Choosing among alternative new technologies to use within the corporation. b. Developing methods of embodying the new technology in new products and processes. c. Deploying resources so that the new technology can be successfully implemented. d. Taking the design and operationalizing the plan into mass production. e. Suggesting and implementing a corporation's technological strategy in light of its corporate objectives and policies. d. (p.120) 104. According to the text, the U.S. computer software industry spends an average of of its sales dollars for R&D, whereas the paper and forest products industry spends. a. 10%, 1% b. 13.5%, 1% c. 1%, 12.5% d. 1%, 11.5% e. 20%, 1% b. (p.120) 185

17 105. The ability of a corporation to effectively and efficiently manage its research and development effort is referred to as a. economies of scope versus operating leverage. b. the R&D mix. c. technological competence. d. technological discontinuity. e. technology transfer. c. (p.121) 106. The process of taking a new technology from the laboratory to the marketplace is called a. economies of scope versus operating leverage. b. the R&D mix. c. technological competence. d. technological discontinuity. e. technology transfer. e. (p.121) 107. When laboratories are developed to focus on theoretical problem areas, scientists are conducting a. basic R&D. b. product R&D. c. engineering R&D. d. process R&D. e. R&D mix. a. (p.121) 108. When scientists focus on product or product-packaging improvements, this is known as a. basic R&D. b. product R&D. c. engineering R&D. d. process R&D. e. R&D mix. b. (p.121) 109. When scientists concentrate on quality control and the development of design specifications, this is referred to as a. basic R&D. b. product R&D. c. engineering R&D. d. process R&D. e. R&D mix. c. (p.121) 110. The combination of basic, product, and process R&D is research known as a. basic R&D. b. product R&D. c. engineering R&D. d. process R&D. 186

18 e. R&D mix. e. (pp ) 111. The displacement of one technology by another, as shown by two S-shaped curves on a graph, is referred to as a. economies of scope versus operating leverage. b. technology transfer. c. the R&D mix. d. technological discontinuity. e. a disjunctive learning or experience curve. d. (p.122) 112. When technological discontinuity occurs, Foster recommends that a. R&D dollars should be allocated to the technology with more potential. b. R&D dollars should be spent on the original technology. c. R&D dollars should be spent to advance the original technology incrementally. d. R&D dollars should be spent equally among the technologies. e. R&D dollars should be halted until an evaluation can be made. a. (p.122) 113. The proposition that silicon chips double in complexity every 18 months is referred to as a. Ohm s Law. b. Porter s Five Forces Model. c. Moore s Law. d. Mintzberg s Rule. e. Keynesian s Theory. c. (p.122) 114. In Christensen s book, The Innovator s Dilemma, he explains that managers remain with certain technologies based on a. return of investment. b. net present value. c. cost reduction. d. total operating expenses. e. time spent during technology implementation. a. (p.123) 115. According to the text, the primary task of the manufacturing or service manager is to a. make sure all the products or services are producing maximum revenue. b. develop and operate a system that will produce the required number of products or services with a certain quality, at a given cost, within an allotted time. c. make sure the process has a high quality control. d. ensure that the process is manufactured or delivered as efficiently as possible. e. interface with the other functional departments to coordinate their operations in avoiding duplication of effort. b. (p.123) 187

19 116. Which of the following terms best describes a system in which items are normally processed sequentially, but the work and sequence of the process vary? a. continuous system b. debt capacity c. chronological processing d. operating leverage e. intermittent system e. (p.123) 117. Which of the following terms best describes a system which is laid out as lines on which products can be continuously assembled or processed? a. continuous system b. debt capacity c. chronological processing d. operating leverage e. intermittent system a. (p.124) 118. The impact of a specific change in sales volume on net operating income is referred to as the a. continuous system. b. chronological processing. c. operating leverage. d. debt capacity. e. intermittent system. c. (p.124) 119. The concept that suggests that unit production costs decline by some fixed percent each time the total accumulated volume of production in units doubles is referred to as a. the R & D mix. b. the experience curve. c. technological competence. d. break-even analysis. e. technology transfer. b. (p.124) 120. Which one of the following is NOT descriptive of the experience curve? a. It is very useful because it is consistent within the industry for all involved organizations over time. b. It is used to estimate the production cost of a product produced by newly introduced techniques or processes. c. It is used to estimate the production costs of a product never before made with the present techniques and process. d. It is simply a line showing the relationship between unit production costs and the number of consecutive units of production. e. It shows that production costs decline by some fixed percentage as production in units doubles. 188

20 a. (p.124) 121. Flexible manufacturing emphasizes a. high-volume output of mass produced products. b. the cost advantages of an intermittent system with the customer-oriented advantages of a continuous system. c. the learning curve is longer since technology is automated. d. economies of scope over economies of scale. e. economies of scale over economies of scope. d. (pp ) 122. The low cost product of individually customized goods and services is called a. mass customization. b. technological discontinuity. c. operating leverage. d. operating revenue. e. economies of scope. a. (p.125) 123. Which one of the following is NOT descriptive of human resources managers? a. Their job is to improve the match between individuals and the job. b. Human resource managers are concerned with wage and salary administration, labor negotiation, job design, and employee morale. c. Human relations are a peripheral factor in the internal strategy of most corporations. d. Human resources managers are concerned with the selection and training of new employees, performance appraisals, and promotion potential. e. Human resources managers are concerned about recruitment and personnel planning for the future. c. (p.125) 124. Strategic managers must be concerned with human resource management because a. dealing with people is their primary job. b. quality of work life is more important than strategic management. c. they must be aware of the ability and willingness of the workforce to implement new strategies. d. workers are more likely to go on strike if management attempts to cross them. e. they must be aware of the possibility and potential of unionism. c. (p.125) 125. In order to move more quickly through a product s development stage, companies like Motorola and Chrysler are using a. concurrent engineering. b. cross-functional work teams. c. advisory committees. d. task forces. e. continuous engineering. b. (p.125) 189

21 126. The term that describes putting once isolated specialists together to work and compare notes in a collective product design effort is called a. simultaneous strategy. b. participatory planning. c. jointly-designed objectives. d. concurrent engineering. e. cooperative design. d. (p.125) 127. According to the text, the current trend regarding unions is that a. they are experiencing a renewed sense of power. b. U.S. membership is generally declining. c. they have lessening significance for the management of multinational corporations. d. they are maintaining an adversarial position to try to hold onto their membership. e. corruption and scandal will continue to taint their existence. b. (p.126) 128. Human resource departments have found that to reduce employee dissatisfaction and unionization efforts, they must a. significantly increase their wage rates. b. shorten the work week to allow for more leisure time. c. offer a wider variety of benefits and attractive enticements. d. guarantee their workers life time jobs. e. consider the quality of work life in the design of jobs. e. (p.127) 129. The term that describes the degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organization is called a. collective bargaining. b. codetermination. c. quality of work life. d. employee involvement. e. participatory practices. c. (p.127) 130. Which one of the following is NOT one of the four methods to improve the corporation's quality of work life? a. Improve the work environment. b. Introduce participative problem-solving. c. More responsive management. d. Introduce innovative reward systems. e. Restructuring work. c. (p.127) 190

22 131. The mix in the workplace of people from different races, cultures, and backgrounds is referred to as a. demographics b. human diversity c. quality of work life d. globalization e. all of the above b. (p.127) 132. The PRIMARY task of the manager of information systems is to a. prevent unlawful usage of the information from the system. b. make sure the information contained in the system is up-to-date and accurate. c. monitor the input of information into the information system. d. design and manage the flow of information in a corporation to improve productivity and decision making. e. ensure that only those who have authorized permission have access to the information system. d. (p.127) 133. The technique recommended by the text to summarize an analysis of internal strategic factors is called a. IFAS. b. EFAS. c. SFAS. d. S.W.O.T. e. the issues priority matrix. a. (p.129) 191

23 Essays 134. Describe Barney s VRIO framework. Answer (p.106): Barney, in his VRIO framework of analysis, proposes four questions to evaluate a firm s competencies: Value: Does it provide competitive advantage? Rareness: Do other competitors possess it? Imitability: Is it costly for others to imitate? Organization: Is the firm organized to exploit the resource? 135. Discuss the two characteristics that determine the sustainability of a firm s distinctive competency. Answer (p.108): Two characteristics determine the sustainability of a firm s distinctive competency: durability and imitability. Durability is the rate at which a firm s underlying resources, capabilities, or core competencies depreciate or become obsolete. Imitability is the rate at which a firm s underlying resources, capabilities, or core competencies can be duplicated by others Define a value chain and its center of gravity. Answer (pp ): A value chain is a linked set of value-creating activities beginning with basic raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product or service, and ending with distributors getting the final goods into the hands of the ultimate consumer. A company s center of gravity is the part of the chain that is most important to the company and the point where its greatest expertise and capabilities lie its core competencies. This is usually the point at which the company started 137. Discuss the three basic organizational structures. Answer (pp ): The three basic organizational structures are the simple, functional, and divisional. The simple structure has no functional or product categories and is appropriate for a small, entrepreneur-dominated company with one or two product lines that operates in a reasonably small, easily identifiable market niche. Employees tend to be generalists and jacks-of-all-trades. The functional structure is appropriate for a medium-sized firm with several product lines in one industry. Employees tend to be specialists in the business functions important to that industry. The divisional structure is appropriate for a large corporation with many product lines in several related industries. Employees tend to be functional specialists organized according to product-market distinctions What are the two distinct attributes of culture? Answer (p.116): Corporate culture has two distinct attributes intensity and integration. Cultural intensity is the degree to which members of a unit accept the norms, values, or other culture content associated with the unit. This shows the culture s depth. Cultural integration is the extent 192

24 to which units throughout an organization share a common culture. This is the culture s breadth What is R & D intensity? Answer (p.120): A company s R & D intensity is the firm s spending on R & D as a percentage of sales revenue. This is a principal means of gaining market share in global competition. This amount often varies by industry Distinguish between continuous and intermittent systems providing examples of each. Answer (pp ): Manufacturing can be intermittent or continuous. In intermittent systems (job shops), the item is normally processed sequentially, but the work and sequence of the process vary. An example is an auto body repair shop. Continuous systems are those laid out as lines on which products can be continuously assembled or processed. A firm using continuous systems invests heavily in fixed investments such as automated processes and highly sophisticated machinery. Continuous systems reap benefits from economies of scale. An example is an automobile assembly line What is mass customization? Answer (pp ): Mass customization is the low cost production of individually customized goods and services. Flexible manufacturing permits the low-volume output of custom-tailored products at relatively low unit costs through economies of scope. 193