Deck 6: Strategies in Action

Question 1

Selling all of a company's assets in parts for their tangible worth is called

A)divestiture.
B)liquidation.
C)concentric diversification.
D)unrelated integration.
E)joint venture.

Answer 1

B

Question 2

Nakheel,the property unit of Dubai World,engaged in several rounds of job cuts in 2008 and 2010.This is an example of

A)forward integration.
B)unrelated diversification.
C)retrenchment.
D)backward integration.
E)divestiture.

Answer 2

C

Question 3

Which strategy should be implemented when a division is responsible for an organization's overall poor performance?

A)Backward integration
B)Cost leadership
C)Forward integration
D)Divestiture
E)Related diversification

Answer 3

D

Question 4

Adding new,unrelated products or services is called

A)related diversification.
B)conglomerate diversification.
C)forward integration.
D)unrelated diversification.
E)backward integration.

Question 5

Egypt- based Fresh Electric Co.assembles gas stoves and water heaters in Georgia,for export to Azerbaijan and Armenia.This is an example of which type of strategy?

A)Product development
B)Market development
C)Horizontal integration
D)Backward integration
E)Forward integration

Question 6

Backward integration is effective in all of these except

A)when present suppliers have high profit margins.
B)when an organization has both capital and human resources to manage the new business of supplying its own raw materials.
C)when an organization needs to acquire a needed resource quickly.
D)when an organization competes in an industry that is growing rapidly.
E)when the advantage of stable prices are not important.

Question 7

The sale of Global Investment House of Kuwait 's stakes in Salam Bank to Techtronic Industries is an example of which type of strategy?

A)Retrenchment
B)Divestiture
C)Liquidation
D)Related diversification
E)Unrelated diversification

Question 8

Which strategy seeks to increase market share of present products or services in present markets through greater marketing efforts?

A)Forward integration
B)Market development
C)Market penetration
D)Backward integration
E)Product development

Question 9

Mergers and acquisitions are created for all of the following reasons except to

A)gain economies of scale.
B)gain new technology.
C)smooth out seasonal trends in sales.
D)increase its number of employees.
E)reduce tax obligations.

Question 10

All of the following are cooperative arrangements except

A)R&D partnerships.
B)cross- licensing agreements.
C)joint- bidding consortia.
D)marketing plans.
E)cross- manufacturing agreements.

Question 11

All of the following are important factors in the Balanced Scorecard except

A)customer service.
B)business ethics.
C)employee morale.
D)product quality.
E)stockholder equity.

Question 12

All of the following situations are conducive to market development except

A)when new untapped or unsaturated markets exist.
B)when an organization's basic industry is becoming rapidly global in scope.
C)when an organization is very successful at what it does.
D)when an organization competes in a high- growth industry.
E)when an organization has excess production capacity.

Question 13

What kind of strategy is retrenchment?

A)An intensive strategy
B)An offensive strategy
C)A turnaround or reorganization strategy
D)A conglomerate strategy
E)An expansion strategy

Question 14

Which of the following is not a reason joint ventures fail?

A)The venture may not be supported equally by both partners.
B)Managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.
C)The venture may begin to compete more with one of the partners than the other.
D)Stakeholders from both partners are equally satisfied.
E)The venture may benefit the partnering companies but may not benefit the customers who then complain about poorer service or criticize the companies in other ways.

Question 15

Under which strategy would you offer products or services to a wide range of customers at the lowest price available on the market?

A)Differentiation
B)Low- cost focus
C)Low- cost
D)Best- value focus
E)Best- value

Question 16

In which situation would horizontal integration be an especially effective strategy?

A)When decreased economies of scale provide major competitive advantages.
B)When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition.
C)When an organization competes in a slowing industry.
D)When an organization has neither the capital nor human talent needed to successfully manage an expanded organization.
E)When competitors are succeeding due to managerial expertise or having particular resources an organization possesses.

Question 17

What principle is built on the idea that there is no general plan for which way to go and what to do?

A)Managing by crisis
B)Managing by subjectives
C)Managing by extrapolation
D)Managing by hope
E)Managing by objectives

Question 18

Innovation implies

A)the recycling of unused product
B)the modification of an existing product
C)the duplication of a popular product
D)the creation of a completely new product
E)All of the above

Question 19

Which strategy should an organization use if it competes in a no- growth or a slow- growth industry?

A)Related diversification
B)Unrelated diversification
C)Backward integration
D)Divestiture
E)Retrenchment

Question 20

Financial objectives involve all of the following except

A)higher dividends.
B)growth in revenues.
C)a rising stock price.
D)larger market share.
E)greater return on investment.

Question 21

When a domestic company first begins to export to India,it is an example of

A)forward integration.
B)concentric diversification.
C)market development.
D)backward integration.
E)horizontal integration.

Question 22

Which level of strategy is most likely not present in small firms?

A)Operational
B)Divisional
C)Functional
D)Corporate/company
E)All of these are present in small firms

Question 23

What occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity?

A)Liquidation
B)A joint venture
C)Retrenchment
D)Divestiture
E)Forward integration

Question 24

Under which condition would a differentiation strategy be especially effective?

A)When the industry has many different niches and segments,thereby allowing a company to pick a competitively attractive niche suited to its own resources.
B)When industry leaders do not consider the niche to be crucial to their own success.
C)When the target market niche is large,profitable and growing.
D)When technological change is fast paced and competition revolves around rapidly evolving product features.
E)When few,if any,other rivals are attempting to specialize in the same target segment.

Question 25

What percentage of McDonald's restaurants are actually owned by the McDonald's corporation?

A)35 percent
B)55 percent
C)63 percent
D)23 percent
E)43 percent

Question 26

What refers to a strategy of seeking ownership of or increased control over a firm's competitors?

A)Forward integration
B)Horizontal integration
C)Conglomerate diversification
D)Concentric diversification
E)Backward integration

Question 27

Which chapter of the bankruptcy code applies to municipalities?

A)Chapter 9
B)Chapter 7
C)Chapter 13
D)Chapter 8
E)Chapter 12

Question 28

When companies take over functional operations of other firms,such as human resources,information systems,payroll,accounting,or customer service,this is called

A)outsourcing.
B)licensing.
C)marketing.
D)franchising.
E)divestiture.

Question 29

Bankruptcy

A)should be used only when one is legally forced to do so.
B)should only be used for small,private firms.
C)should only be used for large firms.
D)should never be used as a strategy.
E)can be an effective type of retrenchment strategy.

Question 30

Retrenchment would be an effective strategy when an organization

A)is one of the stronger competitors in a given industry.
B)has decided to capitalize on opportunities,maximize threats,take advantage of strengths and overcome weaknesses.
C)is plagued by inefficiency,low profitability,poor employee morale and pressure from stockholders to improve performance.
D)does not have a clearly distinctive competence and has failed to meet its objectives and goals consistently over time.
E)has shrunk so quickly that major internal reorganization is needed.

Question 31

When two organizations of about equal size unite to form one enterprise,which of these occurs?

A)Leveraged buyout
B)Hostile takeover
C)Merger
D)Divestiture
E)Acquisition

Question 32

Adding new,unrelated products or services for present customers is called

A)related diversification.
B)unrelated diversification.
C)conglomerate diversification.
D)forward integration.
E)backward integration.

Question 33

Which strategy would be effective when the stockholders of a firm can minimize their losses by selling the organization's assets?

A)Differentiation
B)Diversification
C)Liquidation
D)Integration
E)Cost leadership

Question 34

Websites which sell products directly to consumers are examples of which type of strategy?

A)Horizontal integration
B)Conglomerate diversification
C)Forward integration
D)Product development
E)Backward integration

Question 35

What term refers to selling a division of an organization?

A)Divestiture
B)Joint venture
C)Liquidation
D)Horizontal integration
E)Concentric diversification

Question 36

Forward and backward integration strategies are sometimes collectively referred to as which of these strategies?

A)Hierarchical integration
B)Horizontal integration
C)Vertical integration
D)Stuck- in- the- middle
E)Diversification

Question 37

According to journalists' findings,what is a serious obstacle for many small business owners?

A)An excess of employees and managerial staff
B)A lack of business ethics
C)A lack of experience in networking
D)A lack of strategic- management knowledge
E)Having too many suppliers

Question 38

According to Porter,which strategy offers products or services to a small range of customers at the lowest price available on the market?

A)Best- value
B)Differentiation
C)Low- cost focus
D)Low- cost
E)Best- value focus

Question 39

When Dubai Aerospace Enterprise (DAE)acquired Standard Aero and Landmark Aviation in 2007,the transaction was valued at

A)US$19 billion
B)US$1.19billion
C)US$1.09 billion
D)US$1.9 billion
E)US$2.9 billion

Question 40

Aramco's ownership of Saudi Petroleum International,which specializes in scheduling,loading,storage,transportation and delivery of crude oil,is an example of which type of strategy?

A)Unrelated diversification
B)Forward integration
C)Related diversification
D)Backward integration
E)Horizontal integration

Question 41

Which of the following is most likely not included in the functional level of a small company?

A)Finance
B)Human resource managers
C)R & D
D)Marketing
E)Department managers

Question 42

Which strategy is appropriate when an organization competes in an industry characterized by rapid technological developments?

A)Product development
B)Liquidation
C)Market penetration
D)Backward integration
E)Retrenchment

Question 43

Under which condition would a cost leadership strategy be especially effective?

A)When few rival firms are following a similar approach.
B)When the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers.
C)When there are many ways to differentiate the product or service and many buyers perceive these differences as having value.
D)When buyer needs and uses are diverse.
E)When technological change is fast paced and competition revolves around rapidly evolving product features.

Question 44

Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well?

A)Divestiture
B)Retrenchment
C)Joint venture
D)Integration
E)Conglomerate diversification

Question 45

The Family Farmer Bankruptcy Act of 1986 created

A)Chapter 12.
B)Chapter 13.
C)Chapter 8.
D)Chapter 9.
E)Chapter 7.

Question 46

Damac Holding laying off employees in 2007 in order to counter the slowdown in economic activity is an example of

A)retrenchment.
B)divestiture.
C)forward integration.
D)backward integration.
E)liquidation.

Question 47

According to Porter,strategies allow organizations to gain competitive advantage from three different bases: cost leadership,differentiation and integration.

Question 48

Which of these strategies is effective when the number of suppliers is small and the number of competitors is large?

A)Conglomerate diversification
B)Forward integration
C)Concentric diversification
D)Horizontal diversification
E)Backward integration

Question 49

What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems?

A)Managing by subjectives
B)Managing by hope
C)Managing by extrapolation
D)Managing by objectives
E)Managing by crisis

Question 50

A differentiation strategy can be especially attractive when the industry has many different niches and segments,thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.

Question 51

According to varous sources,95 percent of all businesses in the Arab region are family firms.

Question 52

Which strategy generally entails large research and development expenditures?

A)Retrenchment
B)Divestiture
C)Product development
D)Forward integration
E)Market penetration

Question 53

Long- term objectives are needed at which level(s)in an organization?

A)Divisional
B)Corporate
C)Functional
D)all of these
E)none of these

Question 54

Instead of extending the life cycle of existing products through modification and improvement,innovative strategies make existing products obsolete.

Question 55

Strategic objectives include those associated with growth in revenues,growth in earnings,higher dividends,larger profit margins and improved cash flow.

Question 56

Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.

Question 57

A low- cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.

Question 58

There are four basic types of diversification: concentric,conglomerate,forward and backward.

Question 59

The related diversification strategy is effective when an organization has a weak management team.

Question 60

Market penetration,market development,product development and joint venture are intensive strategies.

Question 61

Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of their life cycle.

Question 62

A growing trend is for franchisers to buy out their part of the business from their franchisees.

Question 63

Chapter 13 bankruptcy is similar to Chapter 11,but available only to large corporations.

Question 64

Chapter 9 bankruptcy applies to municipalities.

Question 65

Product development is a strategy that seeks increased sales by improving or modifying present products or services.

Question 66

Gaining ownership or increased control over distributors or retailers is called forward integration strategy.

Question 67

A best- value strategy offers products or services to a wide range of customers at the lowest price on the market.

Question 68

A chief executive officer is located in the divisional level of a large firm.

Question 69

Research shows strategic management in small firms is more formal than in large firms,but large firms that engage in strategic management outperform those that do not.

Question 70

Almarai's takeover of companies that are not part of their primary dairy business is an example of related diversification.

Question 71

Most companies favor related diversification strategies in order to exploit the common use of a well- known brand name.

Question 72

Divestiture is selling all of a company's assets,in parts,for their tangible worth.

Question 73

Out of the wordld's 300 largest private equity firms in 2010,sixty were from the Arab world.

Question 74

The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.

Question 75

A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.

Question 76

For consumers who are price sensitive,cost leadership emphasizes producing standardized products at very low per- unit cost.

Question 77

India commands over 60 percent of all backoffice outsourcing.

Question 78

According to statistics from the American Bankruptcy Institute,Chapter 11 bankruptcy filings in the U.S.increased from 43,694 in 1980 to 60,837 in 2009.

Question 79

Innovative strategy requires investing a small amount of capital in R&D and changing the company culture to one that supports creativity and talent.

Question 80

A differentiation strategy can only be achieved with a large target market.