SEVI KEY TERMS CHAPTER #6 & 7
EXAM QUESTIONS AND ANSWERS
market for corporate control - Answer-an external control mechanism in which
shareholders dissatisfied with a firm's management sell their shares.
takeover constraint - Answer-the risk to management of the firm being acquired by a
hostile raider.
principal-principal conflicts - Answer-conflicts between two classes of principals—
controlling shareholders and minority shareholders—within the context of a corporate
governance system.
expropriation of minority shareholders - Answer-activities that enrich the controlling
shareholders at the expense of the minority shareholders.
real-options perspective - Answer-Approach to strategic decision making that breaks
down a larger investment decision into a set of smaller decisions that are staged
sequentially over time.
relational view of competitive advantage - Answer-Strategic management framework
that proposes that critical resources and capabilities frequently are embedded in
strategic alliances that span firm boundaries.
strategic alliances - Answer-Voluntary arrangements between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing
processes, products, or services.
tacit knowledge - Answer-Knowledge that cannot be codified; concerns knowing how to
do a certain task and can be acquired only through active participation in that task.
strategic control - Answer-the process of monitoring and correcting a firm's strategy and
performance.
traditional approach to strategic control - Answer-a sequential method of organizational
control in which (1) strategies are formulated and top management sets goals, (2)
strategies are implemented, and (3) performance is measured against the
predetermined goal set.
informational control - Answer-a method of organizational control in which a firm gathers
and analyzes information from the internal and external environment in order to obtain
the best fit between the organization's goals and strategies and the strategic
environment.
EXAM QUESTIONS AND ANSWERS
market for corporate control - Answer-an external control mechanism in which
shareholders dissatisfied with a firm's management sell their shares.
takeover constraint - Answer-the risk to management of the firm being acquired by a
hostile raider.
principal-principal conflicts - Answer-conflicts between two classes of principals—
controlling shareholders and minority shareholders—within the context of a corporate
governance system.
expropriation of minority shareholders - Answer-activities that enrich the controlling
shareholders at the expense of the minority shareholders.
real-options perspective - Answer-Approach to strategic decision making that breaks
down a larger investment decision into a set of smaller decisions that are staged
sequentially over time.
relational view of competitive advantage - Answer-Strategic management framework
that proposes that critical resources and capabilities frequently are embedded in
strategic alliances that span firm boundaries.
strategic alliances - Answer-Voluntary arrangements between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing
processes, products, or services.
tacit knowledge - Answer-Knowledge that cannot be codified; concerns knowing how to
do a certain task and can be acquired only through active participation in that task.
strategic control - Answer-the process of monitoring and correcting a firm's strategy and
performance.
traditional approach to strategic control - Answer-a sequential method of organizational
control in which (1) strategies are formulated and top management sets goals, (2)
strategies are implemented, and (3) performance is measured against the
predetermined goal set.
informational control - Answer-a method of organizational control in which a firm gathers
and analyzes information from the internal and external environment in order to obtain
the best fit between the organization's goals and strategies and the strategic
environment.
