Deck 6: Corporate Strategies

Question 1

A merger is a legal transaction in which two or more organizations combine operations through an exchange of stock, but only one organization entity will actually remain.

Answer 1

True

Question 2

One drawback of the concentration strategy is that the organization is vulnerable to industry and other external environmental shifts.

Answer 2

True

Question 3

A company like PepsiCo, with a number of business units such as snack foods, beverages, and prepared foods, is referred to as a

A) single-business organization.
B) multiple-business organization.
C) multiple-line organization.
D) multiple-function organization.
E) single-function organization.

Answer 3

B

Question 4

Coca-Cola is a ________ organization and PepsiCo is an example of a ________ organization.

A) multiple-business; single-business
B) single-business; multiple-business
C) multiple-business; multiple-business
D) All of the answer choices are correct.
E) None of the answer choices is correct.

Question 5

The retrenchment strategy is a short-run renewal strategy designed to address organizational weaknesses that are leading to performance declines.

Question 6

The product-market exploitation operation describes attempts by the organization to increase the number of markets to increase the product sales.

Question 7

Corporate strategies are concerned with the broad and long-term questions of what business(es)the organization is in or wants to be in and what it wants to do with those businesses.

Question 8

The main drawback of the BCG and McKinsey-GE Spotlight matrices is the subjectivity of the analysis.

Question 9

A reengineering strategy is one that involves the attainment of specific growth objectives by increasing the level of an organization's operations.

Question 10

Bankruptcy is the failure of a business.

Question 11

A multiple-business organization operates only in one industry.

Question 12

A corporate strategy provides the means or mechanisms for making sure the organization achieves its goals.

Question 13

Effectiveness is the search for the best practices inside or outside an organization.

Question 14

The McKinsey-GE Spotlight matrix is also known as the growth-share matrix.

Question 15

A growth strategy involves the attainment of specific growth objectives by increasing the level of an organization's operations.

Question 16

A diversification strategy is a growth strategy in which an organization expands its operations by moving into a different industry.

Question 17

The vertical integration strategy involves expanding the organization's operations through combining with other organizations in the same industry doing the same things.

Question 18

One example of a possible corporate strategic direction is increasing its level of operations.

Question 19

Liquidation is the process of selling off a business to someone else where it will continue as an ongoing business.

Question 20

Downsizing is the failure of a business and involves dissolving the business under the protection of bankruptcy legislation.

Question 21

An attempt by the organization to increase sales of its current product(s)in its current market(s)is referred to as

A) product-market exploitation.
B) product development.
C) market development.
D) product-market diversification.
E) None of the answer choices is correct.

Question 22

Which of the following is a benefit of vertical integration?

A) Decreased financial costs of start up
B) Increased flexibility
C) Ease of integrating various operations
D) Increased coordination with competitive strategies
E) None of the above is correct.

Question 23

Related diversification is ________ unrelated diversification.

A) less effective than
B) more effective than
C) just as effective as
D) less profitable than
E) None of the answer choices is correct.

Question 24

The ________ strategy is one in which the organization maintains its current size and current level of business operations.

A) stability
B) concentration
C) diversification
D) backward integration
E) forward integration

Question 25

Examples of strategic partnering include

A) vertical integration, international expansion, and horizontal diversification.
B) concentration, vertical integration, and strategic alliances.
C) joint ventures, horizontal diversification, and international expansion.
D) joint ventures, long-term contracts, and strategic alliances.
E) None of the answer choices is correct.

Question 26

A long-term contract is usually an agreement between

A) two organizations in the same industry.
B) an organization and its suppliers.
C) two organizations in unrelated industries.
D) a domestic and international organization.
E) None of the answer choices is correct.

Question 27

Strategic managers might decide that the stability strategy is the most appropriate direction under which of the following conditions?

A) When the industry is in a period of rapid upheaval with several key industry and general external forces drastically changing
B) When an industry is facing slow or no growth opportunities
C) When an organization has been growing rapidly and needs some "down" time to build up its resources and capabilities again
D) When large firms are in an industry that's in the maturity stage of the industry life cycle
E) All of the above answer choices are correct.

Question 28

For corporate growth strategies, the options for implementation are

A) diversification, concentration, and international.
B) mergers/acquisitions, internal development, and strategic partnering.
C) cost leadership, differentiation, and focus.
D) offensive, defensive, and concentration.
E) None of the above is correct.

Question 29

One of the risks associated with a horizontal integration strategy is

A) a potential violation of antitrust laws.
B) exponential growth.
C) increased market exposure.
D) increase in sales.
E) None of the answer choices is correct.

Question 30

The primary reason that an organization would pursue a diversification strategy is to

A) decrease operational costs.
B) better defend itself in a price war.
C) achieve synergy.
D) increase customer use.
E) None of the above is correct.

Question 31

A legal transaction in which two or more organizations combine operations through an exchange of stock is called a(n)

A) acquisition.
B) merger.
C) takeover.
D) repurchase.
E) None of the above is correct.

Question 32

Starting a business from the ground up is referred to as

A) product development.
B) market development.
C) strategic development.
D) internal development.
E) None of the answer choices is correct.

Question 33

A concentration strategy

A) does not enable an organization to become very good at what it does.
B) cannot cause the organization to become vulnerable to industry and other external environmental shifts.
C) allows the firm to diversify into new industries.
D) is a growth strategy in which the organization concentrates on its primary line of business and looks for ways to meet its growth objectives through expanding its activities or operations in its core business.
E) None of the answer choices is correct.

Question 34

Developing different uses for a product is an example of a ________ concentration option.

A) product-market diversification.
B) market development
C) product-market exploitation
D) product development
E) None of the answer choices is correct.

Question 35

Which of the following is a possible organizational growth strategy?

A) Concentration
B) Vertical integration
C) Horizontal integration
D) Diversification
E) All of the answer choices are correct.

Question 36

________ are usually "friendly."

A) Mergers
B) Acquisitions
C) Takeovers
D) Buyouts
E) Hostile takeovers.

Question 37

When an organization remains with its core industry, this is an example of a ________ strategy.

A) concentration
B) forward integration
C) backward integration
D) horizontal integration
E) related diversification

Question 38

Diversifying into a completely different industry from the organization's current operations is referred to as

A) concentric diversification.
B) vertical diversification.
C) conglomerate diversification.
D) horizontal diversification.
E) related diversification.

Question 39

A paper manufacturer purchasing a forest of trees is an example of

A) forward vertical integration.
B) backward vertical integration.
C) product/market exploitation.
D) product development.
E) a defensive company.

Question 40

Which of the following is a type of strategic partnering?

A) Licensing
B) Exporting
C) Joint venture
D) Direct investment
E) All of the above are correct.

Question 41

Both the product-market evolution and McKinsey matrices have the disadvantage of

A) simplicity.
B) complexity.
C) individuality.
D) subjectivity.
E) None of the answer choices is correct.

Question 42

Mr. Wilson is considering combining operations by exchanging stock with a competitor, Italian Delights, to create a new store, Supremo Italiano. Which of the following growth strategies is Mr. Wilson following here?

A) Merger
B) Acquisition
C) Hostile takeover
D) Internal development
E) Joint ventures

Question 43

The types of renewal strategies include

A) retrenchment strategy.
B) turnaround strategy.
C) diversification strategy.
D) retrenchment and turnaround strategies.
E) None of the answer choices is correct.

Question 44

Mr. Wilson is thinking about concentrating on his primary line of business and looking for ways to meet its growth goals by expanding its core business. Which of the below strategies is Mr. Wilson following here?

A) International
B) Vertical integration
C) Diversification
D) Concentration
E) Horizontal integration

Question 45

Efficiency is

A) the organization's ability to complete or reach goals.
B) a specific measure, typically used in the production-operations-manufacturing area, of how many inputs it took to produce outputs.
C) the ability of the organization to minimize the use of resources in achieving organizational goals.
D) the search for the best practices from other leading organizations.
E) None of the answer choices is correct.

Question 46

Factors of industry attractiveness include

A) industry profitability.
B) number of competitors.
C) ethical standards.
D) technological stability of the market.
E) All of the answer choices are correct.

Question 47

All of the following are reflective of restructuring efforts except

A) spin-off.
B) liquidation.
C) reengineering.
D) cost cutting.
E) divestment.

Question 48

The organization's ability to complete or reach goals is referred to as

A) efficiency.
B) effectiveness.
C) productivity.
D) stability.
E) None of the answer choices is correct.

Question 49

A more dramatic response to a failing organization may be

A) a joint venture strategy.
B) a turnaround strategy.
C) a vertical integration strategy.
D) a long-term contract.
E) None of the answer choices is correct.

Question 50

Mr. Wilson has been reading about consumers' strong likelihood of paying for the convenience of having multiple products available in one location. Mr. Wilson is considering adding an extensive, full line of Italian foods and wines to add to his furniture line. Which of the below strategies is Mr. Wilson following here?

A) International
B) Backward vertical integration
C) Related diversification
D) Concentration
E) Unrelated diversification

Question 51

Cash flows from cash cows should be used to support

A) question marks.
B) stars.
C) dogs.
D) question marks and stars.
E) question marks and dogs.

Question 52

What are the possible causes of corporate decline?

Question 53

A business unit with low relative market share and low industry growth rate is referred to as a

A) dog.
B) cash cow.
C) cat.
D) question mark.
E) star.

Question 54

One of the major disadvantages of the McKinsey matrix is that of

A) simplicity.
B) uniqueness.
C) subjectivity.
D) All of the answer choices are correct.
E) None of the answer choices is correct.

Question 55

How are mergers different from acquisitions?

Question 56

What are the costs of vertical integration?

Question 57

The main causes of corporate performance include all the following except

A) inadequate financial controls.
B) uncontrollable costs or too high costs.
C) new competitors.
D) underexpansion or too slow growth.
E) unpredicted shifts in consumer demand.

Question 58

Examples of portfolio analyses include

A) the BCG matrix.
B) the McKinsey-GE stoplight matrix.
C) the product-market evolution matrix.
D) All of the answer choices are correct.
E) None of the answer choices is correct.

Question 59

Mr. Wilson has given more thought to expanding Tuscan Treasures through gaining control of its inputs through purchasing the Italian distributor they are currently working with. Which of the below strategies is Mr. Wilson following here?

A) International
B) Backward vertical integration
C) Diversification
D) Concentration
E) Forward vertical integration

Question 60

The product-market evolution matrix is based on the

A) industry analysis.
B) product life cycle.
C) internal strengths and weaknesses.
D) opportunities and threats.
E) None of the answer choices is correct.

Question 61

What are some recommendations for handling downsizing strategies?