MGMT 449 CSUF FINAL EXAM QUESTIONS WITH
CORRECT ANSWERS
Tasks involved in crafting corporate strategy. - ANSWER 1. Picking new
industries to enter and deciding on the means of entry
2. Pursuing opportunities to leverage cross-business value chain relationships,
where there is strategic fit, into competitive advantage.
3. Establishing investment priorities and steering corporate resources into the
most attractive business units.
4. Initiating actions to boost the combined performance of the corporation's
collection of businesses.
Reasons for diversification - ANSWER opportunity limits in mature industries,
declining markets, advancement in technologies, substitute products, fast-
shifting buyer preferences, and intense competition.
When a company should diversify - ANSWER when there will be added long-term
economic value for shareholders.
The 3 tests of diversification - - ANSWER 1. The industry attractiveness -
structurally attractive (in terms of five forces), resource requirements that
match parent company offer good prospects for growth and profitability.
2. The cost of Entry Test - the cost of entering the target industry must not be so
high as to exceed the potential for good profitability
3. The better off test - there should be good synergy. The whole is greater than
the sum of its parts 1 +1 = 3
Strategies for diversification into new industries. - ANSWER • Acquisition of an
existing business - buying an existing company in set market.
• Internal development (Corporate Venturing) - starting a new business.
subsidiary from scratch
• Joint Venture- 2 or more companies work together.
Related Business - ANSWER possess competitively valuable cross-business
value chain and resource commonalities. They are alike in how they perform,
and the resources/capabilities each one needs to perform their activities.
Strategic fit.
Unrelated business - ANSWER have dissimilar value chains and resource
requirements, with no competitively important cross-business commonalities at
the value chain level.
, Definition of business ethics - ANSWER deals with the application of general
ethical principles to the actions and decisions of businesses and the conduct of
their personnel. NOT MATERIALY DIFFERENT FROM ETHICAL PRINCIPLES IN
GENERAL.
Ethical Universalism - ANSWER holds that the most fundamental conceptions of
right and wrong are universal and apply to members of all societies, all
companies, and all businesspeople. (ONE SIZE FITS ALL)
Ethical Relativism - ANSWER local ethical standards take precedence over what
the ethical standards may be in a company's home market. That different
religious beliefs, customs, and behavioral norms across countries and cultures
give rise to multiple sets of standards concerning what is ethically right or
wrong. Business actions are right or wrong depending on local ethical
standards. (ONE SIZE DOES NOT FIT ALL)
Social Contracts - ANSWER a mix of both. 1 - there are limited number of
universal ethical principles that are widely recognized as putting legitimate
ethical boundaries on all situations and 2 - the circumstances of local cultures,
traditions, and values that further explains what is ethically permissible
behavior. Also first-order ethical norms should take precedence over local or
second-order norms like paying bribes
Bribery - ANSWER pay bribes to win contracts, license permits, or facilitate an
administrative ruling. Usually paying local officials
Kickbacks - ANSWER are given to customers to gain their business or retain
their business.
Reasons for unethical behavior and how to manage them - ANSWER In some
countries if bribes or kickbacks are not done those companies can lose
business to competitors. Some companies rationalize the behavior by saying it's
sort of a tip like you leave at restaurants. The Foreign Corrupt Practices Act,
FCPA, prohibits U.S companies from paying bribes. It is enforced by the OECD -
The organization for Economic Cooperation and Development.
Importance of an ethical strategy. How to develop social responsibility
strategies. - ANSWER 1. Is what we are proposing to do fully compliant with our
code of ethical conduct? Are there any areas of ambiguity that may be of
concern?
2. Is it apparent that this proposed action is in harmony with our code? Are any
conflicts or potential problems evident?
3. Is there anything in the proposed action that could be considered ethically
objectionable?
CORRECT ANSWERS
Tasks involved in crafting corporate strategy. - ANSWER 1. Picking new
industries to enter and deciding on the means of entry
2. Pursuing opportunities to leverage cross-business value chain relationships,
where there is strategic fit, into competitive advantage.
3. Establishing investment priorities and steering corporate resources into the
most attractive business units.
4. Initiating actions to boost the combined performance of the corporation's
collection of businesses.
Reasons for diversification - ANSWER opportunity limits in mature industries,
declining markets, advancement in technologies, substitute products, fast-
shifting buyer preferences, and intense competition.
When a company should diversify - ANSWER when there will be added long-term
economic value for shareholders.
The 3 tests of diversification - - ANSWER 1. The industry attractiveness -
structurally attractive (in terms of five forces), resource requirements that
match parent company offer good prospects for growth and profitability.
2. The cost of Entry Test - the cost of entering the target industry must not be so
high as to exceed the potential for good profitability
3. The better off test - there should be good synergy. The whole is greater than
the sum of its parts 1 +1 = 3
Strategies for diversification into new industries. - ANSWER • Acquisition of an
existing business - buying an existing company in set market.
• Internal development (Corporate Venturing) - starting a new business.
subsidiary from scratch
• Joint Venture- 2 or more companies work together.
Related Business - ANSWER possess competitively valuable cross-business
value chain and resource commonalities. They are alike in how they perform,
and the resources/capabilities each one needs to perform their activities.
Strategic fit.
Unrelated business - ANSWER have dissimilar value chains and resource
requirements, with no competitively important cross-business commonalities at
the value chain level.
, Definition of business ethics - ANSWER deals with the application of general
ethical principles to the actions and decisions of businesses and the conduct of
their personnel. NOT MATERIALY DIFFERENT FROM ETHICAL PRINCIPLES IN
GENERAL.
Ethical Universalism - ANSWER holds that the most fundamental conceptions of
right and wrong are universal and apply to members of all societies, all
companies, and all businesspeople. (ONE SIZE FITS ALL)
Ethical Relativism - ANSWER local ethical standards take precedence over what
the ethical standards may be in a company's home market. That different
religious beliefs, customs, and behavioral norms across countries and cultures
give rise to multiple sets of standards concerning what is ethically right or
wrong. Business actions are right or wrong depending on local ethical
standards. (ONE SIZE DOES NOT FIT ALL)
Social Contracts - ANSWER a mix of both. 1 - there are limited number of
universal ethical principles that are widely recognized as putting legitimate
ethical boundaries on all situations and 2 - the circumstances of local cultures,
traditions, and values that further explains what is ethically permissible
behavior. Also first-order ethical norms should take precedence over local or
second-order norms like paying bribes
Bribery - ANSWER pay bribes to win contracts, license permits, or facilitate an
administrative ruling. Usually paying local officials
Kickbacks - ANSWER are given to customers to gain their business or retain
their business.
Reasons for unethical behavior and how to manage them - ANSWER In some
countries if bribes or kickbacks are not done those companies can lose
business to competitors. Some companies rationalize the behavior by saying it's
sort of a tip like you leave at restaurants. The Foreign Corrupt Practices Act,
FCPA, prohibits U.S companies from paying bribes. It is enforced by the OECD -
The organization for Economic Cooperation and Development.
Importance of an ethical strategy. How to develop social responsibility
strategies. - ANSWER 1. Is what we are proposing to do fully compliant with our
code of ethical conduct? Are there any areas of ambiguity that may be of
concern?
2. Is it apparent that this proposed action is in harmony with our code? Are any
conflicts or potential problems evident?
3. Is there anything in the proposed action that could be considered ethically
objectionable?
