Quiz #2 Study Guide
BADM 341/541 SPRING 2026
OVERVIEW
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Quiz #2 will help you take stock of key insights from the class and test your skills in applying the preassigned readings to case analysis. Based on a precise understanding of core concepts and
frameworks, your goal is to develop your own strategic logic for specific business problems in each
case.
FORMAT
• Total 180 points = 6 Questions × 30 points
• In-class, 80 minutes
• Six short answer/essay questions about (1) definitions of the concepts from the required readings and
(2) how the concepts will apply to a case to generate strategic insights.
• Open book, open note: You can bring printed cases, required readings, and your personal notes.
• No electronic devices are allowed: phones, tablets, laptops, and earbuds/headphones.
COVERAGE
Quiz #2 will cover:
1. Class slides on 1) internal analysis, 2) business strategy, and 3) corporate strategy
2. Select cases:
a. Tesla 2023
b. Columbia’s Final Mission
c. Bosch
d. Airbus vs. Boeing
e. Wintel
f. Disney & Pixar
3. Required HBS Reading: Competitive Advantage (This was covered in the first quiz but continues
to be the foundational reading)
4. Required readings on Canvas:
a. RBV and Dynamic Capabilities (EOS Chapter 5)
b. Strategy and Organizational Design
c. Motivation in the Modern Firm
d. Cognitive Limits on Rationality
e. How to Resolve Prisoners’ Dilemma
f. Organizing for Performance
GENERAL STUDY STRATEGY
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Understand the concepts in the context of examples such as the simulation game or cases.
Test yourself and see whether you are able to clearly articulate important definitions/terminologies to
others. You should not have any difficulties explaining the concepts to other students.
You should understand when and how specific models/frameworks/tools should be used.
STUDY POINTS FOR READINGS
Resource-Based Theory and Dynamic Capabilities (EOS Chapter 5)
• Skip: “Theory and Application”
• Skip: “Real Option” (we will cover this important topic later)
• Read the textbook with the following questions in mind (but not limited to):
(1) According to Penrose (1959) how is the subjective opportunity set determined?
(2) What is the "Penrose Effect?"
(3) According to Chandler, what three sets of inter-related investments lead to organizational
capabilities?
(4) What are invisible assets? Provide some examples
(5) What three characteristics of information make synergy possible?
(6) What do Nelson and Winter (1982) mean by "routines"?
(7) What functions can routines serve?
• Make sure to understand key concepts on the class slides:
(1) Main ideas and assumptions of RBV
(2) Two sources of competitive advantage
(3) Examples of tangible vs. intangible resources
(4) Core competencies
(5) Dynamic capabilities
(6) The VRIO Model
(7) Skip: “Isolating Mechanisms.”
Strategy and Organizational Design
• Describe four elements of “PARC.”
Motivation in the Modern Firm
• Why does the motivation problem arise in organizations? What are the agency problems?
• Define the “free riding” problem and provide two examples.
• Describe the simplest version of the agency theory.
• What is the implication of the randomness of the performance measure?
• What are the two reasosn why it might not be feasible or desirable to have the agent bear the full
benefits as well as the costs of his actions?
• Under which conditions should stronger incentives be provided?
How to Resolve the Prisoners’ Dilemmas
• Describe four principles that make tit for tat effective for the repeated prisoners’ dilemma.
• Describe the conditions for successful punishment regimes for successful cooperation.
• Can the Kantian “Categorical Imperative” be a solution to the prisoners’ dilemma? What is “quasimagical” thinking by Shafir and Tversky?
• Will a most-favored-customer clause actually be beneficial for customers? Explain why.
Organizing for Performance
• What are the reasons for vertical integration?
• What is a hold-up problem?
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Why was Toyota maintaining long-term supplier relations rather than vertical integration? Explain a
“relational contract” for Toyota.
Describe the requirements for a successful partnership between firms.
Describe common features of how leading firms arrange their long-term supplier relations. Toyota,
NUMMI, and Fuji Xerox are good examples.
Why should putting two distinct businesses under common ownership and management
affect the value they create? Or, equally, why should breaking them up into separate
businesses affect their value? What is the impact of corporate strategy?
Was it a sound corporate strategy that the Walt Disney Company expanded from its base in
animated films to television shows, theme parks, retail stores, cruise lines, and more?
Evaluate the rationale offered by Sony Corporation for its acquisition of Columbia Pictures
and CBS Records between 1987 and 1989 based on the complementarity between “software”
or content—films, TV shows, recorded music—and “hardware”—Sony’s consumer
electronics products that turned content into entertainment.
Under which conditions will diversification destroy firm value?
What are the pros and cons of creating small, focused, empowered organizational units?