Deck 4: Recognizing a Firms Intellectual Assets: Moving Beyond a Firms Tangibleresources

Question 1

In the current economy,reliance on the three traditional financial statements (income statement,balance sheet,and statement of cash flow)has increased.
A. Howell, an expert on the changing role of finance and accounting, suggests that the big three financial statements are about as useful as an 80-year-old Los Angeles road map.

Answer 1

False
Explanation: In 1978 the book value for U.S. companies was 95 percent of market value. However, market values and book values have diverged significantly. Within 20 years, the S&P industrials were, on average, trading at 2.2 times book value. Robert

Question 2

Social capital is found in the knowledge,skills,and abilities of individual employees.

Answer 2

False
Explanation: Social capital development (the friendships and working relationships among talented individuals) gains importance when key players are free agents, because it helps tie knowledge workers to a given firm.

Question 3

Millennials value hard work and will rarely use vacation time.

Answer 3

False
Explanation: Millennials strive for more work-life balance, so liberal vacations become very important. They also want assurances that they can use it. At KPMG, 80 percent of employees used 40 hours of paid time off in the first six months of a recent year.

Question 4

One of the most important elements in a good employee is his or her attitude.Firms should follow the adage: hire for attitude,train for skill.

Question 5

According to the text,for most of the 20^th century,managerial efforts were directed more toward the efficient allocation of labor and capital,which are the two traditional factors of production.

Question 6

The text suggests that talented professionals are typically most concerned about financial rewards.Money is the top reason why such employees take and leave jobs.

Question 7

The more reliance a firm has on intellectual capital,the closer its book value will be to its market value.

Question 8

Knowledge workers are more loyal to their companies than traditional workers.

Question 9

In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor.

Question 10

The difference between the market value and book value of a firm is its social capital.

Question 11

Companies have found that referrals from their own employees are generally an effective approach to recruiting top talent.

Question 12

Technical skills are a necessary and sufficient condition for hiring an employee.

Question 13

Social capital is based on the network of relationships within a firm,not in the skills and abilities of an individual employee.

Question 14

Firms such as Apple and Google will tend to have a higher ratio of market value to book value than industrial companies such as Nucor Steel.

Question 15

The importance of human capital has decreased in recent years.For this reason,many firms have placed greater attention on attracting talent,but not on developing or retaining it.

Question 16

Creation of new knowledge typically involves the continual interaction of explicit and tacit knowledge.

Question 17

Workforces that reflect demographic changes will become more homogeneous over the next few decades with regard to gender,race,ethnicity,and nationality.

Question 18

An internal work opportunity market for employees is one means of increasing employee retention.

Question 19

The Millennial generation expects employers to provide incentives to attract and retain them.A company that does this will have a competitive advantage.

Question 20

The most effective method of improving retention of top talent at a firm is to intensify its hiring efforts.

Question 21

Developing social capital is risky for an organization because social capital is specific to individuals and remains with the employee,if he or she leaves the organization.

Question 22

One potential downside of building social capital in an organization is groupthink.This means everyone in the group thinks on his or her own and comes up with new ideas.

Question 23

According to the text,intellectual capital is the difference between the market value and the book value of a firm.Intellectual capital can be increased by ________________.

A) increasing retention of below average workers
B) decreasing labor costs
C) attracting and retaining knowledgeable workers
D) increasing the turnover of employees

Question 24

The makeup of goods and services in the Gross Domestic Products of developed countries has changed over the last decade.More than 50 percent of the value of GDP of developed countries is based on _____.

A) clothing and apparel
B) capital accumulation
C) knowledge
D) financial management

Question 25

Social network analysis can be used to help identify groups or clusters of individuals that comprise the network,individuals who link the clusters,and other network members.

Question 26

Closure,in contrast to bridging relationships,stresses the importance of ties connecting heterogeneous people.

Question 27

Since electronic teams (e-teams)seldom meet face-to-face,it is NOT important for them to be concerned with how to combine individual contributions effectively.

Question 28

Once a knowledge asset (e.g.,a software code)is developed and paid for,it can be used many times at very low cost as long as it does not have to be substantially modified each time.

Question 29

Intellectual property rights are easier to define and protect than property rights for physical assets (e.g.,plant and equipment).

Question 30

As the competitive environment changes,strategic management must focus on different aspects of the organization.Recently,strategic management has moved from focusing on tangible resources to ____.

A) fixed capital
B) working capital
C) intangible resources
D) investment capital

Question 31

Which of the following firms would you expect to have the highest ratio of market value to book value?

A) Apple
B) Google
C) Southwest Airlines
D) Nucor (steel)

Question 32

From the individual perspective,social networks deliver three unique advantages: private information,access to diverse skill sets,and power.

Question 33

Developing and protecting social capital requires independence,in which individuals must spend most of their time working individually.

Question 34

The role of technology in the recruitment of human capital has lowered individual reliance on the use of social networks.

Question 35

The use of e-mail can be distracting to employees.Some firms limit the time that employees spend using email.

Question 36

According to the text,effective e-teams identify group members with a proper balance of technical and interpersonal skills.

Question 37

Changes in our economy have forced firms to be more concerned with protecting their ______.

A) knowledge workers
B) social capital
C) intellectual capital
D) all of these

Question 38

In bridging relationships in social networks,one member is central to the communication flows in a group.

Question 39

Explicit knowledge is generally known to everyone in the firm and is not a critical concern of management.

Question 40

In the knowledge economy,if a large portion of company value is in intellectual and human assets,the difference between the market value and book value of the company should ___________ a company with mostly physical and financial assets.

A) be equal to
B) be larger than
C) be smaller than
D) not be correlated with

Question 41

Generally,employees are most likely to stay with an organization if _____________.

A) the employer provides high salaries to technology professionals
B) the firm is in a high tech industry
C) the organization mission and values align with the employees mission and values
D) the mission and values of the organization change often

Question 42

The network of relationships that individuals have throughout the organization is known as _____.

A) human capital
B) intellectual capital
C) social capital
D) tacit knowledge

Question 43

In order to take advantage of investment in human capital,a firm should ___________.

A) rotate workers through functions in the company as quickly as possible
B) refrain from training individual employees
C) establish practices that will enhance employee retention
D) keep employees in the same position forever

Question 44

Developing human capital is essential to maintaining a competitive advantage in the current knowledge economy.Efforts and initiatives to develop human capital should be directed ____.

A) at top managers
B) at human resource departments
C) throughout the firm at all levels
D) at the employees themselves

Question 45

Today,the loyalty of a knowledge worker to his or her employing firm has __________ compared to his or her loyalty to his or her profession and colleagues.

A) increased
B) remained the same
C) decreased
D) no correlation when

Question 46

ABC,Incorporated desires to have the most qualified people in every position throughout its organization.This is an example of a concern for _________.

A) decreasing labor intensive training
B) developing social networks
C) developing human capital
D) leveraging organizational structure

Question 47

Many companies use referrals by current employees as a source for new hiring and even monetarily reward them because __________________.

A) it is less expensive than the fees paid to headhunters
B) current employees normally are careful in recommending someone due to their personal credibility
C) it is a good test of employee loyalty
D) current employees are careful in their recommendations and it is less expensive than the fees paid to headhunters

Question 48

Firms must compete for top talent.When attracting and selecting employees,firms must strive to select the best fit for both the employee and the firm.In an effort to reduce wasted time and effort in interviewing too many candidates while assuring a good candidate pool,a firm should ____.

A) run employment ads in the newspaper
B) only let lower level employees interview job candidates
C) use a pre-interview quiz
D) refrain from hiring by referrals from present employees

Question 49

Creativity and problem solving ability are considered to be part of ____________.

A) physical capital
B) human capital
C) social capital
D) emotional capital

Question 50

Managing a knowledge intensive workforce is very challenging.The best way for a firm to manage its workforce is to __________.

A) retain knowledge workers
B) balance efforts in the attraction, selection, and retention of top talent
C) attract the brightest employees
D) ensure that it pays higher salaries than its rivals

Question 51

Maintaining a competitive workforce is very challenging in the current economy.The role of evaluating human capital,in recent years,has _____.

A) remained the same
B) decreased
C) become less important
D) increased

Question 52

New knowledge involves the continual interaction between __________ and __________ knowledge.

A) intellectual; pragmatic
B) tacit; explicit
C) theoretical; practical
D) detailed; tacit

Question 53

In a 360-degree evaluation and feedback system,which of these does not rate the skills and performance of an individual?

A) superiors
B) family
C) direct reports
D) colleagues

Question 54

Attracting and retaining human capital is a challenge for many firms today.Firms experiencing high turnover should __________.

A) focus on increased recruiting
B) decrease money spent on human capital
C) adopt effective retention strategies
D) make their work environment less stimulating

Question 55

Many successful firms use internal labor markets.The most important reason for doing this is _____.

A) they want to encourage job rotation
B) they want to keep highly mobile employees motivated and challenged
C) if employees remain in the same department for too long, they would become indispensable
D) an employee who moves too much can be identified as unreliable and then eliminated

Question 56

Human capital includes ________________.

A) the relationships between people
B) an individual's capabilities, knowledge, and skills
C) the output from assembly line employees
D) an improved product

Question 57

Tacit knowledge __________________.

A) is the same as explicit knowledge
B) can be accessed only with the consent of the employees
C) is found mostly at the lower levels of the organization
D) can be codified but not reproduced

Question 58

The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving.These include all of the following EXCEPT:

A) hiring/selecting
B) developing
C) sorting/absorbing
D) retaining

Question 59

The least effective way to retain human capital is to _________.

A) encourage employee identification with organizational mission and goals
B) provide employees with a challenging and stimulating work environment
C) require employees to sign agreements that prevent them from working for competitors in the future
D) provide employees with financial and nonfinancial rewards and incentives

Question 60

All of the following are the benefits of diversity in the workforce of a firm except:

A) creativity argument
B) problem-solving argument
C) similarity in perspectives argument
D) resource acquisition argument

Question 61

Dynamic capabilities include all of the following EXCEPT _________________.

A) learning and innovating
B) becoming more efficient in operational processes
C) the ability of an organization to challenge the conventional industry in its industry and market
D) continuously adopting new ways of serving the evolving needs of the market

Question 62

Which of the following reasons explains why painter Vincent van Gogh died penniless,while painter Pablo Picasso left a $740 million estate upon this death?

A) Picasso had a wider range of social connections and bridging relationships.
B) Van Gogh had a wider range of social connections.
C) Picasso was a solitary node with few connections.
D) Van Gogh was a hub who embedded himself in a vast network that stretched across various social lines.

Question 63

The management of intellectual property involves all of the following EXCEPT _____.

A) patents
B) converting explicit knowledge to tacit knowledge
C) contracts with confidentiality and noncompete clauses
D) copyrights and trademark

Question 64

In an effort to capture key employees from competitors,firms may attract the symbolic leader of a group within a competing firm and hope others will follow.This has been termed _____________.

A) the Columbus effect
B) knowledge integration
C) the Pied Piper effect
D) strategically competitive hiring

Question 65

Mary Stinson was required to take over a project after the entire team left the company.She was able to reconstruct what the team had accomplished through reading e-mails exchanged by the members of the team.This is an example of ___________.

A) inefficient use of information management
B) using explicit knowledge
C) using tacit knowledge
D) using replicated knowledge

Question 66

Social capital has many potential benefits.However,according to the text,social capital _________.

A) is always beneficial to a firm
B) usually restricts the productivity of employees
C) may or may not be beneficial to a firm
D) always hurts firm performance

Question 67

Effective human capital is a benefit to any organization.What are some challenges firms face when attempting to attract and develop top talent?

Question 68

In social network analysis,groups can become too insular and fail to share what they have learned with people outside the group.This is a result of __________.

A) bridging relationships
B) intellect
C) closure
D) diverse knowledge

Question 69

Feedback and 360-evaluation systems are used by organizations to provide performance information to employees.Describe how the 360-evaluation systems are implemented and give an example of how it is used in an actual company.

Question 70

Social capital is a source of strength to many firms.Firms leverage their social capital in an effort to create competitive advantages.The social capital of a firm is based on ___________.

A) the individual abilities of employees
B) the allocation of the financial resources of the firm
C) the relationships among the employees of the firm
D) the knowledge of an individual

Question 71

The creation of knowledge assets is typically characterized by ____________.

A) high upfront costs and subsequent high variable costs
B) high fixed costs and high variable costs
C) high upfront costs and low variable costs
D) low upfront costs and high variable costs

Question 72

Which of the following is not an example of an IP-related litigation?

A) Apple and HTC sue each other based on patent infringement.
B) Apple sues smartphone makers running Android, Google's mobile operating system.
C) China is sued by U.S. manufacturers of video games.
D) The United States sues to get access to physical plant assets in China.

Question 73

The use of information technology (e.g.,e-mail)has increased in recent years in many organizations.This has helped to ____________.

A) make more effective use of time in every situation
B) communicate information efficiently
C) restrict social network growth
D) create smaller social networks

Question 74

Social network analysis is helpful because the configuration of the group member social ties within and outside the group affects the extent to which members connect to individuals who do all of the following EXCEPT ______________.

A) convey needed resources
B) have the opportunity to exchange information and support
C) ensure that everyone has the same perspective on strategic and operational issues
D) have the motivation to treat each other in positive ways

Question 75

Human capital and social capital are vital for superior firm performance.If a firm has strong human capital,the firm may exploit this by building social capital.This can be accomplished by _____.

A) requiring workers to work independently of each other
B) decreasing the interaction of departments within the firm
C) structuring the firm with rigid departmental and employee divisions
D) encouraging the sharing of ideas between employees in the firm

Question 76

What is intellectual capital and what is its effect on the ratio of firm market value to book value?

Question 77

Advantages of effective social networks for career success include all of the following EXCEPT _____.

A) access to private information
B) access to diverse skill sets
C) greater redundancy in knowledge sources
D) greater power

Question 78

In social network analysis,the importance of ties connecting heterogeneous people that help to ensure a wide range of diversity in information and perspective is known as ___________.

A) closure
B) bridging relationships
C) redundancy
D) social supports

Question 79

What is a major reason for Nokia to lose its competitive edge in the cell phone business?

A) The team consisted of scientists from around the world.
B) The team consisted of only Finnish scientists.
C) All of the work required diverse skill sets.
D) Each scientist worked alone, separate from colleagues.

Question 80

Social capital has downsides.Which of the following is a downside?

A) High social capital may breed groupthink, that is, a tendency to question shared beliefs.
B) Socialization processes is inexpensive.
C) Individuals may become more willing to collaborate on joint projects.
D) Social capital may both breed groupthink and the socialization processes to create it (orientation, training, etc.) can be expensive.