Exam 8: Organizing to Implement Corporate Diversification

In a diversified firm,market prices are set by a firm's corporate management to accomplish corporate objectives while transfer prices are determined by the market forces of supply and demand.

The ________ is the subcommittee of the board of directors that is responsible for ensuring the accuracy of accounting and financial statements.

Economic methods of divisional performance in a diversified firm build on accounting methods but adjust those methods to incorporate short-term investments that may generate long-term benefits.

A ________ exists when a large,typically diversified firm divests itself of a business in which it has historically been operating and the divested business operates as an independent entity.

Institutional owners are usually pension funds,mutual funds,insurance companies,or other groups of investors that have joined together to manage their investments.

Which organizational structure is SpandoCorp using?

If Todd Hienz were the chief operating officer for SpandoCorp,his responsibilities would include

In an M-form organization the role of the board of directors is to formulate corporate strategies consistent with equity holders' interests and to assure strategy implementation.

If the bulk materials division of SpandoCorp sold its reams of Spandex to the military division and set the transfer price of these reams equal to the bulk materials actual cost of production,SpandoCorp would be using the ________ transfer pricing scheme.

When compared to the strategy implementation responsibilities of senior executives in U-form organizations,when implementing strategy,division general managers in M-form organizations

In choosing which transfer pricing system to use,a firm should be less concerned about finding the "right" transfer-pricing mechanism and be more concerned about choosing a transfer-pricing policy that creates the fewest management problems.

A board of directors typically consists of 15 to 30 individuals drawn from a firm's top management group and from individuals outside the firm.

Which of the following is a weakness of using a hurdle rate as a standard of evaluating the performance of a division?

Which role in the office of the president is responsible for strategy implementation?

Divisions in an M-form organization should be large enough to represent identifiable business entities but small enough so that a division general manager can manage each one effectively.

Describe the multidivisional,or M-form structure,and how it is used to implement a corporate diversification strategy.

The two responsibilities of the senior executive in an M-form organization are

Define what constitutes an agency relationship and the roles of the principal and the agent; discuss how the agency relationship is reflected in the context of corporate diversification and when the agency relationship can be effective; and identify two common agency problems.

A business unit within a diversified firm may be sold to the public through a(n)

A board of directors typically consists of