Question 1

A popular financial strategy in which a company is acquired in a transaction financed largely by debt - eventually paid off with money generated from the acquired company's operations or sale of its assets is
A) illegal in most countries.
B) a good way to build a core competency.
C) an application of the capital asset pricing model.
D) the leveraged buyout.
E) an example of internal financing.

Accepted Answer

A leveraged buyout (LBO) is a financial strategy where a company is purchased using a significant amount of borrowed money, with the expectation that the acquired company's cash flow or asset sales will repay the debt.

Question 2

The first step in constructing a corporate scenario is to
A) develop common-sized financial statement.
B) construct detailed pro forma financial statements.
C) decide upon how much risk management is willing to accept.
D) analyze the societal environment.
E) use industry scenarios to develop a set of assumptions about the task environment.

Accepted Answer

Industry scenarios provide information about the task environment, which is necessary for developing a corporate scenario.

Question 3

The type of marketing strategy in which a company captures a larger share of an existing market for current products through market saturation or market penetration or develops new markets for current products is called
A) market development.
B) push strategy.
C) product development.
D) pull strategy.
E) skimming the cream.

Accepted Answer

The description matches the marketing strategy of market development, where a company aims to capture a larger share of an existing market or develop new markets for current products. Market saturation and market penetration are methods used to achieve this goal. The other options do not fit the description as accurately.

Question 4

According to Porter, to achieve a cost advantage by following the functional strategy of technological followership a business unit should
A) pioneer the lowest-cost product design.
B) innovate in other activities to increase buyer value.
C) imitate the products pioneered by others.
D) create low-cost ways of performing value activities.
E) be the first firm down the learning curve.

Accepted Answer

Technological followership involves imitating products that have been pioneered by others, allowing a business to avoid the high costs associated with innovation and instead focus on cost-effective production.

Question 5

A company which enters into a spirited battle for market share by cutting prices and offering special deals would be an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand

Accepted Answer

An arms race strategy involves engaging in a competition with competitors to constantly one-up each other through aggressive pricing, promotions, and other deals. This strategy can lead to a price war, which ultimately results in diminishing profits for all companies involved. It is generally not a sustainable long-term strategy and should be avoided.

Question 6

A company which invests in many interesting opportunities without deciding which of them should have priority would be an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand

Accepted Answer

The strategy of trying to "do everything" involves pursuing multiple opportunities without prioritizing, which can lead to a lack of focus and inefficient use of resources.

Question 7

A recent trend in information systems strategy is
A) computerizing accounting.
B) automating customer service.
C) forming closer relationships with customers and suppliers through extranets.
D) replacing Fortran with Cobol in order to boost productivity.
E) replacing main frame computers with robots.

Accepted Answer

Extranets are used to create closer relationships with customers and suppliers by allowing secure access to a company's network, facilitating better communication and collaboration.

Question 8

A strategy aimed at influencing key stakeholders is a
A) corporate strategy.
B) business strategy.
C) political strategy.
D) functional strategy.
E) horizontal strategy.

Accepted Answer

A political strategy is specifically designed to influence key stakeholders, often involving tactics to sway opinions or decisions in favor of the organization's goals.

Question 9

A company which has previously found great success pioneering an extremely successful product presently trying to turn another "long-shot" into a like success would be an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand

Accepted Answer

Hitting another home run is a strategy to avoid because it relies on past success and does not take into account the changing market conditions or the competition.

Question 10

The flexible manufacturing system is defined by the text as
A) one-of-a-kind production using skilled labor.
B) highly automated assembly lines making one mass-produced product using little human labor.
C) parts grouped into manufacturing families to produce a wide variety of mass-produced items.
D) a process utilizing the just-in-time JIT) method of manufacturing.
E) standardization of components with each machine functioning like a job shop, but is positioned in the same order as the parts are processed.

Accepted Answer

A flexible manufacturing system is characterized by the ability to produce a wide variety of mass-produced items by grouping parts into manufacturing families, allowing for efficient production changes and adaptability.

Question 11

The key to outsourcing is to purchase from the outside only those activities that
A) are not central to the company's distinctive competence.
B) are very expensive.
C) provide the company competitive advantage.
D) are provided by an important supplier.
E) are not very expensive.

Accepted Answer

Outsourcing should focus on activities that are not central to the company's distinctive competence, allowing the company to concentrate on its core strengths and maintain its competitive advantage.

Question 12

The type of marketing strategy in which a company develops new products for new or existing markets is
A) market development.
B) push strategy.
C) product development.
D) pull strategy.
E) skimming the cream.

Accepted Answer

Product development involves creating new products to serve existing or new markets, focusing on innovation and meeting customer needs.

Question 13

Purchasing a product or service from an outside contractor is called
A) vertical integration.
B) horizontal integration.
C) transaction costing.
D) outsourcing.
E) the hokey pokey.

Accepted Answer

Outsourcing refers to the practice of hiring external contractors or companies to handle certain business activities or services instead of performing them in-house.

Question 14

The HRM functional strategy in which input for performance appraisal is gathered from multiple sources is
A) the behaviorally anchored rating scale.
B) 360-degree appraisal.
C) bottom-up performance evaluation.
D) strategic performance feedback.
E) tactical performance looping.

Accepted Answer

360-degree appraisal gathers input from multiple sources, including peers, supervisors, and subordinates.

Question 15

Which strategy is developed to pull together the various activities and competencies of each department so that corporate and business unit performance improves?
A) business strategy
B) competitive strategy
C) generic strategy
D) enterprise strategy
E) functional strategy

Accepted Answer

Functional strategy is developed to integrate and coordinate the activities and competencies of each department to enhance overall corporate and business unit performance.

Question 16

Which of the following is an example of a marketing functional strategy?
A) To increase profits by 10%.
B) To maximize shareholders wealth.
C) To achieve overall cost leadership.
D) To diversify into related markets.
E) To increase advertising expenditures to emphasize market "pull" over "push."

Accepted Answer

Increasing advertising expenditures to emphasize market "pull" over "push" is a specific marketing strategy focused on how to promote and sell products, which is a function of the marketing department.

Question 17

Which type of pricing attempts to hasten market development and offers the pioneer the opportunity to utilize the experience curve to gain market share and dominate the industry?
A) demand pricing
B) competitive pricing
C) skim pricing
D) penetration pricing
E) loss-leader pricing

Accepted Answer

Penetration pricing is the best choice for hastening market development and allowing the pioneer to utilize the experience curve to gain market share and dominate the industry. This is because penetration pricing involves setting a low price to attract customers and gain market share quickly, which can help to establish the product or service as a market leader. As sales volume increases, the costs of production decrease, allowing the pioneer to benefit from economies of scale and reduce costs further, creating a virtuous cycle that consolidates their dominant position in the market.

Question 18

The technique used to help strategists choose among alternative choices by defining the task environment, developing a set of various forecasts, and using proforma financial statements is called
A) decision trees.
B) S.W.O.T. analysis.
C) industry scenarios.
D) corporate scenarios.
E) Capital Asset Pricing Model.

Accepted Answer

Corporate scenarios involve defining the task environment, developing forecasts, and using proforma financial statements to evaluate strategic choices.

Question 19

When considering acceptable alternative strategies, the most important criterion is the ability of the proposed strategy to deal with
A) cash flow.
B) the specific strategic factors developed in the S.W.O.T. analysis.
C) defining the competitive environment in which the firm is competing.
D) the future long-term prospects of the industry.
E) governmental regulations and requirements placed on the industry.

Accepted Answer

The most important criterion for evaluating alternative strategies is their ability to address the specific strategic factors identified in the S.W.O.T. analysis, as these factors are crucial for the organization's success.

Question 20

The manufacturing strategy which requires that people, processes, units, and technology reconfigure themselves to give customers exactly what they want, when they want it is called
A) continuous improvement.
B) mass production.
C) job shop.
D) mass customization.
E) just-in-time.

Accepted Answer

Mass customization is a strategy that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production, allowing for the reconfiguration of processes to meet specific customer demands.

Quiz 7: Strategy Formulation: Functional Strategy and Strategic Choice

A popular financial strategy in which a company is acquired in a transaction financed largely by debt - eventually paid off with money generated from the acquired company's operations or sale of its assets is

The first step in constructing a corporate scenario is to

The type of marketing strategy in which a company captures a larger share of an existing market for current products through market saturation or market penetration or develops new markets for current products is called

According to Porter, to achieve a cost advantage by following the functional strategy of technological followership a business unit should

A company which enters into a spirited battle for market share by cutting prices and offering special deals would be an example of which strategy to avoid?

A company which invests in many interesting opportunities without deciding which of them should have priority would be an example of which strategy to avoid?

A recent trend in information systems strategy is

A strategy aimed at influencing key stakeholders is a

A company which has previously found great success pioneering an extremely successful product presently trying to turn another "long-shot" into a like success would be an example of which strategy to avoid?

The flexible manufacturing system is defined by the text as

The key to outsourcing is to purchase from the outside only those activities that

The type of marketing strategy in which a company develops new products for new or existing markets is

Purchasing a product or service from an outside contractor is called

The HRM functional strategy in which input for performance appraisal is gathered from multiple sources is

Which strategy is developed to pull together the various activities and competencies of each department so that corporate and business unit performance improves?

Which of the following is an example of a marketing functional strategy?

Which type of pricing attempts to hasten market development and offers the pioneer the opportunity to utilize the experience curve to gain market share and dominate the industry?

The technique used to help strategists choose among alternative choices by defining the task environment, developing a set of various forecasts, and using proforma financial statements is called

When considering acceptable alternative strategies, the most important criterion is the ability of the proposed strategy to deal with

The manufacturing strategy which requires that people, processes, units, and technology reconfigure themselves to give customers exactly what they want, when they want it is called