Deck 3: Managing in a Changing Global Environment

Question 1

Which linkage mechanism is the most informal?

A)Interlocking directorate
B)Reputation
C)Contracts
D)Strategic alliance

Answer 1

B

Question 2

Amazon.com changed the book- selling industry from a certain environment to a(n)environment.

A)stable
B)uncertain
C)simple
D)fixed

Answer 2

B

Question 3

Although other companies are dependent on Microsoft, the software giant is:

A)operating in a simple environment.
B)dependent on other companies.
C)operating in a stable environment.
D)not dependent on other companies.

Answer 3

D

Question 4

A small restaurant hires an advertising firm to handle promotions and advertising. This is an example of _ _.

A)a network
B)franchising
C)a long- term contract
D)outsourcing

Question 5

Formal linkage mechanisms should be used when companies:

A)exchange specific assets and uncertainty is high.
B)have few possible exchange partners and uncertainty is low.
C)exchange nonspecific assets and have few exchange partners.
D)exchange specific assets and have many possible exchange partners.

Question 6

How was Ford able to reduce the complexity of its environment?

A)Contracted for financing at a low interest rate
B)Reduced the number of countries it operated in
C)Reduced the number of suppliers it used
D)Removed the overseas dealer network

Question 7

An organization used to obtain supplies from 3,000 suppliers, but now deals with less than 300. They have reduced .

A)environmental complexity
B)environmental dynamism
C)innovation
D)rites of enhancement

Question 8

exist between an organization and its suppliers.

A)Rites of passage
B)Levels of hierarchy
C)Competitive interdependencies
D)Symbiotic interdependencies

Question 9

Which of the following statements about Toyota is false?

A)Toyota has minority ownership of suppliers.
B)Toyota avoids bureaucratic costs of ownership of suppliers.
C)Toyota owns and manages its suppliers.
D)Toyota avoids the problem of uncertainty with suppliers.

Question 10

When an organization relies on a small number of trading partners,

A)the risk of opportunism increases.
B)bounded rationality decreases.
C)bounded rationality increases.
D)the risk in investing in specific assets decreases.

Question 11

The transaction cost approach implies that an organization should:

A)use relatively informal linkage mechanisms to avoid bureaucratic costs.
B)minimize dependence on others for scarce resources.
C)change its domain to decrease transaction costs.
D)select a mechanistic structure to reduce costs.

Question 12

Which term is defined as the strength, number, and interconnectedness of the specific and general forces that an organization has to manage?

A)Environmental richness
B)Environmental dynamism
C)Environmental complexity
D)Organizational domain

Question 13

An organization decides to join a trade organization so that it can share information and ideas with competitors. This is an example of .

A)a third- party linkage mechanism
B)an illegal collusion agreement
C)a cartel
D)forming a strategic alliance

Question 14

All of the following are interorganizational strategies to manage competitive interdependencies except:

A)price leadership.
B)interlocking directorate.
C)joining a trade association.
D)developing a good reputation.

Question 15

Which of the following type(s)of strategic alliance is the most formal?

A)Joint venture
B)Network
C)Minority ownership
D)Long- term contracts

Question 16

Which of the following is the least formal interorganizational strategy for managing symbiotic interdependencies?

A)Co- optation
B)Network
C)Collusion
D)Strategic alliances

Question 17

The specific environment:

A)includes economic and technological forces.
B)contains forces that shape the general environment.
C)consists of outside stakeholders.
D)includes international forces.

Question 18

Which of the following is not a general environment force?

A)Environmental
B)Political
C)Competitors
D)Cultural

Question 19

Which of the following interorganizational strategies is most appropriate for a company that wants to enlarge its domain and produce a wider range of products?

A)Trade association
B)Long- term contracts
C)Merger
D)Co- optation

Question 20

The reason McDonald's uses franchising is to:

A)decentralize operations.
B)lower bureaucratic costs.
C)increase transaction costs.
D)outsource operations.

Question 21

An organization decides to meet with its competitor in order to agree to fix prices in a certain market. This is an example of .

A)a third- party linkage mechanism
B)an illegal collusion agreement
C)a cartel
D)forming a strategic alliance

Question 22

Which of the following may increase transaction costs?

A)Operating in a stable environment
B)Having many possible exchange partners
C)Investing in specific assets
D)Adopting formal linkage mechanisms

Question 23

When a company decides to produce different products for different customers,

A)environmental complexity increases.
B)environmental stability increases.
C)the number of stakeholders decreases.
D)the organizational domain decreases.

Question 24

Which of the following is not an interorganizational strategy for managing symbiotic interdependencies?

A)Merger
B)Price leadership
C)Minority ownership
D)Co- optation

Question 25

is/are a function of the strength, number, and interconnectedness of the specific and general forces that an organization has to manage.

A)Environmental complexity
B)Individual ethics
C)Organizational behavior
D)Social responsibility

Question 26

The DeBeers diamond cartel uses trust to manage its linkages with suppliers and customers.This interorganizational linkage is called _.

A)strategic alliance
B)reputation
C)merger
D)co- optation

Question 27

is/are a function of how much and how quickly forces in the specific and general environments change over time and contribute to uncertainty.

A)Societal ethics
B)Organizational theory
C)Organizational behavior
D)Environmental dynamism

Question 28

Financial keiretsu is used to manage linkages among diverse companies. The benefits include all except:

A)sharing of information.
B)minority ownership.
C)sharing activities.
D)decreased profits for suppliers.

Question 29

Which strategic alliance would be most appropriate for two organizations that operate in a very uncertain environment?

A)Minority ownership
B)Network
C)Joint venture
D)Contract

Question 30

Which term is defined as how rapidly the forces in the environment change?

A)Environmental richness
B)Environmental dynamism
C)Environmental complexity
D)Organizational domain

Question 31

Which of the following is an example of co- optation?

A)Appointing the CEO of a company's bank to its board of directors
B)Creating cross- functional teams
C)Establishing an ethics committee
D)Forming a joint venture to develop a new technology

Question 32

Which of the following is not a specific environmental force?

A)The government
B)Customers
C)Competitors
D)Employees

Question 33

A personal computer manufacturer publicly announces that it plans to reduce prices by 25%. This is an example of .

A)signaling
B)price leadership
C)a third- party linkage mechanism
D)co- optation

Question 34

The Toronto Stock Exchange is an example of:

A)a network.
B)a third party linkage mechanism.
C)a trade association.
D)a kieretsu.

Question 35

A(n)is a linkage that results when a director from one company sits on the board of another company.

A)strategic alliance
B)network
C)liaison
D)interlocking directorate

Question 36

A frozen food manufacturer offers low- fat dinners. This company is responding to which of the following forces?

A)International
B)Environmental
C)Demographic and cultural
D)Economic

Question 37

A defense company decided to sell the services of its scientists to commercial clients. This company is:

A)managing bounded rationality.
B)managing competitive interdependencies.
C)managing symbiotic interdependencies.
D)changing its organizational domain.

Question 38

Informal linkage mechanisms should be used when companies:

A)exchange nonspecific goods and have few possible exchange partners.
B)have many possible exchange partners and uncertainty is high.
C)exchange specific goods and have many possible exchange partners.
D)exchange nonspecific goods and uncertainty is low.

Question 39

are a part of an organization's specific environment.

A)Interest rates
B)Employees
C)Suppliers
D)Shareholders

Question 40

The general environment:

A)is a reflection of an organization's domain.
B)consists of outside stakeholders.
C)consists of inside stakeholders.
D)contains forces that shape the specific environment.

Question 41

Which term is defined by the amount of resources available to support an organization's domain?

A)Organizational domain
B)Environmental richness
C)Environmental dynamism
D)Environmental complexity

Question 42

Environments may be poor because:

A)resources are plentiful.
B)competition is high.
C)uncertainty is low.
D)the country is wealthy.

Question 43

The goods and services an organization produces and the customers it serves define its .

A)general environment
B)organizational resources
C)core competences
D)organizational domain

Question 44

Which of the following increases the threat that organization A will behave opportunistically towards organization B?

A)When organization A provides a service to organization B that few organizations can replicate
B)When the environment that both organizations operate in is stable
C)When a large number of trading partners are available to both sides
D)When organization A is dependent on organization B for scarce resources

Question 45

According to , an organization should minimize its dependences on other organizations for resources and find ways of influencing them to make resources available.

A)group theory
B)resource dependency theory
C)contingency theory
D)organizational theory

Question 46

The government attempted to control prescription drug prices during the 1990s. What effect would this have had on this industry?

A)It would have reduced competition, thereby reducing the complexity of this environment.
B)It would have increased the demand for drugs, thereby making the environment more dynamic.
C)It would have enlarged the domain of this industry.
D)It would have made the environment more complex due to the reduction in profits.

Question 47

The is the set of forces that shape the specific environment and affect the ability of all organizations in a particular environment to obtain resources.

A)product structure
B)general environment
C)hierarchy
D)team structure

Question 48

Which of the following is the least formal interorganizational strategy for managing competitive interdependence?

A)Long- term contracts
B)Industry standards
C)Co- optation
D)Third- party linkage mechanisms

Question 49

A keiretsu is a form of which of the following types of strategic alliance?

A)Developing a good reputation
B)Minority ownership
C)Joint venture
D)Long- term contracts

Question 50

Which of the following statements about the difference between transaction cost theory and resource dependence theory is true?

A)Resource dependence theory proposes the use of strategic alliances, but transaction cost theory recommends not using alliances.
B)Transaction cost theory is a better predictor of why companies choose a certain form of interorganizational strategy.
C)Transaction cost theory proposes the use of a merger as an interorganizational strategy and resource dependence theory does not.
D)Transaction cost theory considers how an organization can manage its environment but resource dependence theory does not.

Question 51

The union does not like the work rules of an automobile plant. The plant forms a joint union- labor committee and gets key union leaders to join the committee. This is an example of:

A)co- optation.
B)a joint venture.
C)a change in organizational domain.
D)a change in the specific environment.

Question 52

Which of the following forces is a general environment factor?

A)Customers
B)Age
C)The government
D)Suppliers

Question 53

Two companies pool their resources to develop a new computer technology. This is an example of .

A)an interorganizational linkage
B)co- optation
C)resource dependence
D)bounded rationality

Question 54

A third- party linkage mechanism:

A)generally decrease an organization's freedom to act independently.
B)must involve common ownership to effectively manage resource dependencies.
C)generally reduce an organization's domain.
D)should be used to manage the environment according to contingency theory.

Question 55

Which strategic alliance would be most appropriate for two organizations that operate in a relatively certain environment?

A)Joint venture
B)Contract
C)Minority ownership
D)Network

Question 56

Which of the following is not one of the reasons that an environment would be considered poor?

A)The organization may be located in a poor country or a poor region.
B)There is a large customer base, and organizations can't fill the demand.
C)There are many organizations fighting over a limited amount of resources.
D)There is a high level of competition.

Question 57

Which of the following interorganizational strategies help an organization minimize transaction costs and avoid bureaucratic costs?

A)Merging with another company
B)Outsourcing
C)Forming a joint venture
D)Obtaining minority ownership in other companies

Question 58

Which of the following linkage mechanisms is most appropriate for participants who want to pool distinctive competences?

A)Interlocking directorate
B)Joint venture
C)Network
D)Long- term contracts

Question 59

Which of the following interorganizational linkage mechanisms allows an organization to minimize transaction costs and to avoid bureaucratic costs?

A)Keiretsu
B)Merger
C)Third- party linkage mechanisms
D)Co- optation

Question 60

Which of the following theories states that an organization must respond to the needs and demands of other organizations in its environment?

A)The enacted environment concept
B)Resource dependence theory
C)Transaction cost theory
D)Contingency theory

Question 61

A CEO does not want to enter a lucrative market in an unstable country because he or she does not know how political forces and economic forces will affect his or her company's future business. This is an example of:

A)opportunism.
B)a competitive interdependency.
C)a symbiotic interdependency.
D)bounded rationality.

Question 62

Competitors are a force in the general environment.

Question 63

The is/are the set of forces from outside stakeholder groups that directly affect an organization's ability to secure resources.

A)government
B)rites of passage
C)economy
D)specific environment

Question 64

The pharmaceutical industry generally is considered to be operating in a certain environment because patents reduce the level of competition.

Question 65

The range of goods and services that an organization produces and the customers that it serves are referred to as the organizational domain.

Question 66

Changes in customer tastes and preferences is a force in the specific environment that impacts an organization.

Question 67

An upscale department store agrees to sell a fashion designer's clothes. This is an example of .

A)a competitive interdependency
B)a joint venture
C)co- optation
D)a symbiotic interdependency

Question 68

Both collusions and cartels are illegal in the United States.

Question 69

One problem that General Electric faced when they purchased a lighting company in Hungary was that the Americans wanted a strong marketing program, and these activities were deemed not necessary by the Hungarian workers.

Question 70

The airline industry is generally considered to be operating in a stable environment because of a relatively stable customer base.

Question 71

The is the set of forces surrounding an organization that has the potential to affect the way it operates and its access to scarce resources.

A)hierarchy
B)global environment
C)organizational environment
D)economy

Question 72

A small U.S. auto parts manufacturer says it faces environmental forces that are out of its control, such as low- cost labor costs abroad. Is this organization at the mercy of its environment?

Question 73

An organization in a dynamic, unstable environment seeks ways to make the environment more predictable.

Question 74

is the most formal interorganizational linkage.

A)Minority ownership
B)A joint venture
C)A network organization
D)A merger

Question 75

A keiretsu significantly increases an organization's bureaucratic costs.

Question 76

In general, organizations like competition because it increases product quality.

Question 77

Economic forces, such as the interest rate or unemployment rate, are categorized as forces in the specific environment, since they affect the ability of all organizations in a particular environment to secure resources.

Question 78

You are a consultant to a large telecommunications company that markets many products to many customers. Briefly describe the level of uncertainty and recommend strategies for managing the organizational environment.

Question 79

An organization's environment will be more uncertain when:

A)many forces in the environment are not connected.
B)many forces in the environment are interconnected.
C)forces in the environment do not change much.
D)competition is low.

Question 80

A medium- sized computer manufacturer has implemented formal linkage mechanisms such as mergers and joint ventures. Although formal linkage mechanisms are supposed to reduce transaction costs, the company's costs are higher than they were before these strategies were implemented. What can explain this result?