WPC 480 Exam UPDATED ACTUAL
Questions and CORRECT Answers
A transaction-specific investment is any investment in an exchange that has significantly more
value in the current exchange than it does in alternative exchanges - CORRECT
ANSWER - true
Non-equity alliance gives a firm more flexibility than a joint venture. - CORRECT
ANSWER - true
If a company is poorly managed, its stock price may fall low enough for the firm to become a
target for a ______________________, an attempt to acquire a target company whose
management is unwilling to agree to the merger. - CORRECT ANSWER - hostile takeover
Which of the following is an example of "internal" transaction costs? - CORRECT
ANSWER - the costs pertaining to setting up a shop floor
Amazon expanded its single-product business by leveraging and exploiting spare data managing
capacity into cloud computing and by offering its Kindle line of tablet computers. This is an
example of: - CORRECT ANSWER - related-linked diversification
The local real estate companies in the city have joined together and arranged a "Property Fair."
The expenses of the event will be shared equally by the sponsors. Though many companies
compete against each other, they have joined together because the medium will help the
companies market themselves through a dedicated forum at an extremely low cost. This
arrangement is best referred to as: - CORRECT ANSWER - co-opetition
Which of the following is one of the reasons that firms make acquisitions? - CORRECT
ANSWER - to gain access to a new capability or competency
If there is one target firm with a current market value of $10,000 as a stand-alone entity, and five
bidding firms, each of which has a current market value of $35,000 as stand-alone entities, and
the estimated value of the combined entity of the target firm and any of the bidding firms is
, $60,000, then what is the maximum price that the bidding firms will be willing to pay for the
target firm? - CORRECT ANSWER - 25,000
Which of the following foreign entry modes requires the highest level of investment in terms of
capital and other resources and allows for a high level of control? - CORRECT
ANSWER - acquisitions
Swiss-based Nestlé, the largest food company in the world, is well known for customizing its
product offerings to suit local preferences, tastes, and requirements. Which of the following
strategies does the company pursue? - CORRECT ANSWER - multi domestic strategy
Which of the following is a shortcoming of the matrix structure? - CORRECT ANSWER -
it's implementation is difficult due to significant organizational complexity and increased
administrative costs
Newell acquired Calphalon in order to: - CORRECT ANSWER - build new core
competencies in a new market and penetrate a new distribution channel
Which of the following is an example of internal transaction costs? - CORRECT
ANSWER - the costs pertaining to setting up a shop floor
The threat of opportunism is the least when a party to an exchange has made transaction-specific
investments - CORRECT ANSWER - false
Flexibility is most valuable when the decision-making setting faced by a firm is uncertain -
CORRECT ANSWER - true
When depending largely on an input that is valuable, rare, and costly to imitate, it is optimal to
carry out the exchange on the open market - CORRECT ANSWER - false
Questions and CORRECT Answers
A transaction-specific investment is any investment in an exchange that has significantly more
value in the current exchange than it does in alternative exchanges - CORRECT
ANSWER - true
Non-equity alliance gives a firm more flexibility than a joint venture. - CORRECT
ANSWER - true
If a company is poorly managed, its stock price may fall low enough for the firm to become a
target for a ______________________, an attempt to acquire a target company whose
management is unwilling to agree to the merger. - CORRECT ANSWER - hostile takeover
Which of the following is an example of "internal" transaction costs? - CORRECT
ANSWER - the costs pertaining to setting up a shop floor
Amazon expanded its single-product business by leveraging and exploiting spare data managing
capacity into cloud computing and by offering its Kindle line of tablet computers. This is an
example of: - CORRECT ANSWER - related-linked diversification
The local real estate companies in the city have joined together and arranged a "Property Fair."
The expenses of the event will be shared equally by the sponsors. Though many companies
compete against each other, they have joined together because the medium will help the
companies market themselves through a dedicated forum at an extremely low cost. This
arrangement is best referred to as: - CORRECT ANSWER - co-opetition
Which of the following is one of the reasons that firms make acquisitions? - CORRECT
ANSWER - to gain access to a new capability or competency
If there is one target firm with a current market value of $10,000 as a stand-alone entity, and five
bidding firms, each of which has a current market value of $35,000 as stand-alone entities, and
the estimated value of the combined entity of the target firm and any of the bidding firms is
, $60,000, then what is the maximum price that the bidding firms will be willing to pay for the
target firm? - CORRECT ANSWER - 25,000
Which of the following foreign entry modes requires the highest level of investment in terms of
capital and other resources and allows for a high level of control? - CORRECT
ANSWER - acquisitions
Swiss-based Nestlé, the largest food company in the world, is well known for customizing its
product offerings to suit local preferences, tastes, and requirements. Which of the following
strategies does the company pursue? - CORRECT ANSWER - multi domestic strategy
Which of the following is a shortcoming of the matrix structure? - CORRECT ANSWER -
it's implementation is difficult due to significant organizational complexity and increased
administrative costs
Newell acquired Calphalon in order to: - CORRECT ANSWER - build new core
competencies in a new market and penetrate a new distribution channel
Which of the following is an example of internal transaction costs? - CORRECT
ANSWER - the costs pertaining to setting up a shop floor
The threat of opportunism is the least when a party to an exchange has made transaction-specific
investments - CORRECT ANSWER - false
Flexibility is most valuable when the decision-making setting faced by a firm is uncertain -
CORRECT ANSWER - true
When depending largely on an input that is valuable, rare, and costly to imitate, it is optimal to
carry out the exchange on the open market - CORRECT ANSWER - false
