Deck 6: Corporate-Level Strategy and Restructuring

Question 1

Corporate level strategy is developed by the _____.

A) shareholders
B) CEO and other top managers
C) managers of the various business units as a group
D) finance department
E) consultants

Answer 1

CEO and other top managers

Question 2

The corporate strategy formulation activities typically include all of the following except _____.

A) setting the direction of the entire organization
B) selecting in which business to compete
C) using tactics for diversification
D) managing corporate resources and capabilities
E) establishing a marketing budget

Answer 2

establishing a marketing budget

Question 3

Concentration refers to _____.

A) virtually all of a firm's resource investments in a single business area
B) diversification that stems from common markets, functions served, markets or technologies
C) diversification that is not based on commonality among the activities of a corporation
D) reducing the firm's business definition combined with refocusing on things that the firm does well
E) involvement in multiple stages of the industry supply chain

Answer 3

virtually all of a firm's resource investments in a single business area

Question 4

The benefits of the concentration corporate level strategy include all of the following except _____.

A) allowing the firm to master one business
B) allowing managers to develop an in-depth knowledge of the business
C) better positioning to develop the resources and capabilities necessary to establish competitive advantage
D) helping the firm overcome any instability in industry
E) less ambiguity about strategic direction

Question 5

The potential problems that can impact a concentration corporate strategy include all of the following except _____.

A) the primary product can become obsolete
B) difficulty growing as an industry matures
C) focusing on a single industry which results in too much knowledge about that single industry
D) problematic cash flow concerns
E) difficulty adapting to industry change

Question 6

Successful firms in a given industry _____.

A) will pursue a very similar strategy
B) do not pursue vertical integration
C) pursue internationalization
D) are first movers
E) may pursue a wide variety of strategies

Question 7

The advantages of vertical integration include all of the following except _____.

A) avoiding excess capacity at different levels of integration
B) reducing duplicate overhead
C) controlling inventory needs
D) avoiding price shopping
E) improving competitive intelligence

Question 8

If Wal-Mart were to purchase a fleet of trucks, this would be an example of____.

A) forward integration.
B) backward integration.
C) concentric diversification.
D) conglomerate diversification.
E) market penetration.

Question 9

All of the following are potential sources of synergy from related diversification except _____.

A) common parts designs
B) shared R&D programs
C) financial portfolio model
D) shared distribution channels
E) similar industry experience

Question 10

The benefits associated with synergy are greatest when _____.

A) the cost related to corporate level administration is lowest
B) the cost related to corporate level administration is not changed
C) the cost related to corporate level administration is greatest
D) unrelated diversification is justified
E) the top management team must be supportive of diversification

Question 11

Large unrelated firms are called _____.

A) conglomerates
B) business alliances
C) networks
D) joint ventures
E) synergistic groupings

Question 12

Forces that undermine synergies include all of the following except _____.

A) shared R&D programs
B) too little effort to coordinate between businesses
C) additional layers of management
D) industry evolution
E) incompatible cultures

Question 13

For corporations the best performance results are produced by _____.

A) unrelated diversification
B) related diversification
C) mergers and acquisitions
D) tangible assets
E) domestic only focus

Question 14

The benefits of an acquisition include all of the following except _____.

A) a quick means to enter a new market
B) acquiring knowledge
C) broadening markets geographically
D) preventing industry consolidation
E) filling in needs in the corporate portfolio

Question 15

Corporate raiders participate in _____.

A) related acquisitions
B) friendly acquisitions
C) hostile acquisitions
D) unrelated acquisitions
E) vertical acquisitions

Question 16

The problems that can impact a merger or acquisition negatively include all of the following except _____.

A) increased interest costs
B) poison pills
C) high turnover among managers of the acquired firm
D) cultural similarities
E) increased risk

Question 17

Porter's research on mergers and acquisitions has found that _____.

A) acquisitions have an immediate positive impact on corporate performance
B) acquisitions have no immediate impact on corporate performance
C) acquisitions have an immediate negative impact on corporate performance
D) corporations divested more of the acquisitions than they kept
E) corporations kept almost all of the firms acquired by the corporation

Question 18

Activities that corporations can pursue to develop core capabilities and competencies include all of the following except _____.

A) diversification
B) attracting and retraining competent managers
C) improvement in R&D capabilities
D) effective tax management
E) better relations with special interest groups such as environmentalists

Question 19

Retrenchment in a decline situation involves all of the following except _____.

A) work force reductions
B) closing unprofitable plants
C) outsourcing unprofitable activities
D) tighter cost control
E) increased advertising to increase sales

Question 20

In general, evidence suggests that downsizing _____.

A) reduces expenses and helps the organization tremendously
B) reduces expenses and helps the organization slightly
C) does not cut expenses and frequently expenses actually rise
D) reduces expenses but does not help the organization much
E) rarely occurs

Question 21

Downscoping involves _____.

A) reducing the number of employees
B) cutting input expenses in a given unit
C) reducing the number of top mangers in an organization
D) cutting output expenses (transportation of products) in a given unit
E) reducing the diversification of the firm by selling of units

Question 22

The term Chapter XI refers to _____.

A) the summary chapter of this text
B) the concept from the chapter of Porter's book that refers to the overriding importance of strategy to firm success
C) a legal filing necessary for a merger or acquisition to be completed
D) a legal filing necessary for an IPO to occur
E) a legal filing that allows a firm to reorganize while it solves its financial problems

Question 23

A successful bankruptcy filing requires all of the following characteristics except _____.

A) a realistic assessment of financial problems by management
B) the ability to move quickly so that court approval is not necessary
C) a willingness to incur the professional fees that are necessary for reorganization
D) the formulation of a plan that is acceptable to most creditors
E) a creditor group that is willing to negotiate

Question 24

A breakup restructuring strategy refers to _____.

A) breaking up the dominant logic of the organization so that new approaches are attempted
B) breaking up the mental models of the organization so that new approaches are attempted
C) focusing on the transaction cost economics so that large segments of those costs are reduced
D) breaking the organization structure into different units so that the strategic business units formed are more efficient
E) spinning off units into new public corporations

Question 25

The Boston Consulting Group matrix is based on which two factors?

A) Business growth rate and relative market share
B) Business growth rate and industry attractiveness
C) Relative market share and competitive position
D) Industry attractiveness and competitive position
E) Cash cows and dogs

Question 26

Stars in a BCG grid represent _____.

A) high business growth rates and low relative market share
B) high business growth rates and high relative market share
C) high relative market share and low business growth rate
D) low relative market share and low business growth rate
E) those units that should be sold

Question 27

Einstein Bros. Bagels secured a strong presence on the West Coast by acquiring Noah's New York Bagels. The purchase of Finagle A. Bagel, a three-unit chain based in Boston gives it a foothold on the East Coast. What type of corporate strategy would you call this?

A) Horizontal integration
B) Vertical integration
C) Related diversification
D) Unrelated diversification
E) Conglomerate

Question 28

A fish and seafood restaurant buying a catfish farm is an example of:

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

Question 29

Under what conditions is it better for an organization to vertically integrate to produce a good rather than produce it themselves?

Question 30

Differentiate between tangible and intangible relatedness.

Question 31

Discuss the cycle of strategic reorientation.

Question 32

Discuss the feelings of survivors of downsizing and how firms can avoid those negative feelings.

Question 33

Describe the BCG Matrix and the various cells in the model.