SIM Example Exam Solutions

Solutions and explanations for SIM Example Exam.pdf are AI-generated based on notes.

1. b — Only government policies and membership of trade agreements are administrative CAGE factors; the others belong to cultural, geographic, or economic distance CAGE Distance Framework.

2. c — Employees and suppliers are sources of supply, but customers are a distinct stakeholder group, so they cannot all be summarized as one Stakeholder Relationships.

3. d — According to aspiration-level theory and relative success, Pharmas AG is successful in 2014 compared to its own past performance, so it cannot be “not successful” on all dimensions Aspiration Level Theory (Cyert & March)Measuring Success.

4. b — The market-based view is based on the structure–conduct–performance paradigm, the resource-based view on a resource–conduct–performance logic, and both rely on market imperfections, so C, D, and E are correct while F is false Strategic ThinkingMarket-Based View (MBV) Outside-InResource-Based View (RBV) Inside-Out.

5. c — A 7% sales increase “within the next fiscal year” is a concrete, short‑term, financial target and represents a satisficing (not maximizing) objective Types of Objectives.

6. f — Trust goods cannot be fully evaluated even after consumption, which contradicts the statement’s description; a bike repair is a classic trust/credence service Evaluating Value.

7. f — Financial value is the sum of discounted free cash flows: FV = Σ FCF_t / (1 + WACC)^t Cash-Based Approach.

8. c — Over‑indebtedness, liquidity, and cash as managerial space are correctly described, while E is wrong because cash‑flow problems can also stem from excessive expenses and cannot always be solved by more short‑term debt Bankruptcy Risk.

9. c — Stakeholder value discounts net stakeholder benefits by each stakeholder’s discount rate: STV = Σ_j Σ_t (B_jt − C_jt) · (1 + r_j)^−t Stakeholder Approach.

10. b — Owner’s equity is the sum of equity components: 10 + 1 + 12 + 3 = 26 m€ Financial Statements.

11. c — BMW follows a differentiation/high‑quality strategy, whereas the others are cost/price leaders Generic Strategies.

12. d — Price leadership assumes similar value with better prices, and both a strong resource base and a desirable market position can precede competitive advantages; aiming at higher value and lower prices simultaneously (E) misstates differentiation Competitive Advantages.

13. f — Firm change is driven by external anticipated/unanticipated events, internal intended/unintended behavior, and the managerial process Factors of Change.

14. a — Aspiration levels are formed from own past performance, performance of relevant others, and other (unexpected) factors Aspiration Level Theory (Cyert & March).

15. e — The stakeholder approach is pluralistic but cannot be cleanly operationalized because it would require interpersonal benefit‑cost comparisons Objective Systems.

16. b — The mandate to manage is issued to executives, is temporary, and separate from ownership; it does not inherently include ownership rights Who Is a Manager?.

17. c — Hambrick & Fredrickson’s strategy diamond includes arenas, differentiators, vehicles, staging, and economic logic, but not a separate “resources” element Elements of Strategy.

18. e — A competitive advantage requires creating value so that price exceeds cost and customers receive value; however, such an advantage does not guarantee higher profits in all cases Competitive Advantage.

19. b — Franchising lets the firm design and control the business model while local franchisees interact with end customers Market Entry Mode.

20. b — Discounted paybacks are approximately 90 m€ for A and 87 m€ for B, so A has the higher present value at a 10% interest rate Future Value & Present Value.

21. e — Becoming an insider does not require a joint venture; firms can also gain market‑specific knowledge via wholly owned or other entry modes Views of Success.

22. a — Colonial ties are an element of administrative, not cultural, distance; the other CAGE dimensions are correctly described CAGE Distance Framework.

23. e — Operating income (EBIT) is 130 − 60 − 20 = 50 m€, excluding interest and taxes Financial Statements.

24. d — At t1 profit in yen is 6,000 − 2,000 = 4,000 ¥, not 3,000 ¥; the other statements match the FX calculations and risk‑management ideas Influence of Exchange Rates.

25. b — Retained earnings are part of owner’s equity, whereas all other listed items are assets Financial Statements.

26. c — Under owner’s equity you find capital reserves, loss carried forward, and net income for the period (A, H, I), giving three items Financial Statements.

27. e — Total equity equals assets minus liabilities, while cash is a stock and profit a flow, so C is true and D is false Differentiating Profit and CashFinancial Statements.

28. b — Aspiration levels are path dependent (shaped by history) as well as by comparisons and shocks, so describing them only via comparisons and path‑independent factors is incorrect Setting Objectives.

29. b — Material inventory decreases by 8 and equity decreases by 8, consistent with taking material from storage into production, which creates an expense Financial Statements.

30. a — Low local responsiveness combined with high economies of integration corresponds to a global strategy in the integration–responsiveness matrix Localization and Integration.

31. e — Differentiation is defined by offering superior perceived value that customers pay premium prices for; the other statements either describe cost leadership or only single attributes Generic Strategies.

32. c — Walmart bought a stake in the local partner, creating an equity joint venture via partial acquisition Market Entry Mode.

33. d — Company Y reacts by entering the same foreign market later than its close competitor X, which fits the “follow-the-leader” motive Reasons for Market Entry.

34. c — Trying to offer both lower prices and higher value but ending up with low return rates suggests the company has not achieved a clear cost-leadership or differentiation strategy and is therefore “stuck in the middle,” rather than gaining a sustainable competitive advantage.

35. c — Low economies of integration and low need for local responsiveness correspond to an international strategy in the integration–responsiveness matrix Localization and Integration.