Exam 8: Organizing to Implement Corporate Diversification

Describe the nature and role of the board of directors in an M-form organization and discuss who generally serves on the board,the role of outside members on a board of directors and when the roles of CEO and chairman of the board should be combined or separated.

In 1970,institutions owned ________ percent of the equity traded in the United States and by 2002 they owned ________ percent of the equity traded in the United States.

Transfer prices should equal opportunity cost.

Whenever one party to an exchange delegates decision-making authority to a second party,an agency relationship has been created between these parties.

Identify the responsibilities of the senior executive in an M-form organization and discuss the three different roles in the office of the president and the responsibilities of each role.

In a multidivisional company,one division "sells" its products or services to a second division for a(n)________,which is set by a firm's corporate management to accomplish corporate objectives.

________ is an economic measure of divisional performance.

In an M-form organization,the chief executive officer is solely responsible for strategy implementation.

The divisions in an M-form organization are true profit-and-loss centers.

Rather than having profit-and-loss responsibilities,________ are assigned a budget and manage their operations to that budget.

In examining the question of whether the roles of CEO and chairman should be combined,empirical research on this question suggests

When adjusting a division's accounting earnings for use in the economic value added calculations,R&D spending is usually

The divisions of an M-form organization are true

The most popular economically oriented measure of division performance in a diversified firm is economic value added.

Most accounting measures of divisional performance have a common limitation in that they

The divided loyalties that divisional staff managers have between corporate staff managers and functional managers is potentially the most problematic in ________ staff functions.

Grace McKenna is best described as a(n)________ in SpandoCorp.

Research has shown that separating the roles of CEO and board chair is positively correlated with firm performance when firms operated in high-growth and very complex environments.

Research on outside members of boards of directors tends to show that outside directors,as compared to insiders,tend to focus less on monitoring a firm's economic performance than on other measures of firm performance.

To the extent that a firm exploits real economies of scope in implementing a diversification strategy,it will be able to unambiguously evaluate the performance of individual division in that firm.