Question 1

In ________, the organization gains control of its outputs by becoming its own distributor.

Accepted Answer

Forward vertical integration involves a company taking over the distribution and selling of its products, allowing it to control its own outputs.

Question 2

Ronald's has been in the fast food business for five years.After struggling for two years, it finally broke even, and the french fries it offers are its most popular product.However, during the past year, its business has suffered because the farm that used to supply it with potatoes has increased its prices drastically.What should Ronald's do to control its production costs?

Accepted Answer

By buying out the farm and becoming its own supplier, Ronald's will have more control over its potato supply and can avoid drastic price increases. However, this may require a significant investment and could come with its own set of challenges. Reorganizing the organizational hierarchy or opening more distribution outlets may not directly address the issue of rising production costs. Introducing a new product, such as potato nuggets, may not necessarily lower production costs either.

Question 3

A ________ strategy is used to deal with minor performance problems.It helps an organization stabilize operations, revitalize organizational resources and capabilities, and prepare to compete once again.

Accepted Answer

The answer of A ________ strategy is used to deal...

Question 4

Organizations grow by using strategies of ________.

Accepted Answer

The three main strategies for organizational growth are concentration (expanding within the same market), integration (acquiring or merging with other companies to increase size and market share), and diversification (expanding into new markets or industries). Stabilization and differentiation are not typically considered growth strategies. Functionalization is not a commonly recognized growth strategy.

Question 5

When an organization continues serving the same clients by offering the same product or service, maintaining market share, and sustaining the organization's current business operations, it is following a ________ strategy.

Accepted Answer

A stability strategy involves maintaining the current business operations and serving the same clients with the same product or service in order to maintain market share. The other options (renewal, retrenchment, and turnaround) all involve significant changes or restructuring of the organization's operations.

Question 6

An organization that is diversifying its product line is exhibiting what type of corporate strategy?

Accepted Answer

Diversifying a product line is a form of growth strategy, where the organization seeks to expand its operations by introducing new products or entering new markets. A turnaround strategy involves reversing a decline in performance, a retrenchment strategy involves cutting back on operations, and a stability strategy involves maintaining the current level of operations without significant expansion or contraction.

Question 7

________ takes place when a company combines with other companies in different, but associated, industries.

Accepted Answer

Related diversification occurs when a company combines with other companies in different, but associated, industries. This allows the company to diversify its product offerings, while still leveraging its existing capabilities and expertise.

Question 8

In the BCG matrix, a ________ has a low anticipated growth rate and a low market share.

Accepted Answer

According to the BCG matrix, a dog has a low anticipated growth rate and a low market share, making it an unattractive investment opportunity for a company. Dogs typically require minimal investment and generate little to no profit, making them a low priority for a company's resources.

Question 9

In the BCG matrix, a ________ enjoys a high anticipated growth rate and a high market share.

Accepted Answer

The description fits that of a "star" in the BCG matrix, which represents a business unit with a high growth rate and high market share.

Question 10

________ strategies address declining performance through retrenchment and turnaround strategies.

Accepted Answer

Renewal strategies are used to address declining performance, and can involve retrenchment (cutting back on operations or selling off parts of the business) or turnaround (improving operations to return the business to profitability). Stability strategies are focused on maintaining the status quo, while growth strategies are focused on expanding operations. Functional strategies are specific to individual business functions, such as marketing or operations.

Question 11

In ________, the organization becomes its own supplier so it can control its inputs.

Accepted Answer

Backward vertical integration involves a company acquiring a supplier in order to control its inputs. This allows the organization to ensure the quality and availability of the necessary supplies and materials.

Question 12

A ________ strategy is when an organization expands the number of markets served or the products offered.

Accepted Answer

A growth strategy involves expanding the organization by increasing the number of products offered or exploring new markets to serve. This can be done through diversification, acquisitions, partnerships, or other means to generate revenue and gain market share.

Question 13

In the BCG matrix, a business unit that has a high anticipated growth rate but a low market share is known as a ________.

Accepted Answer

A business unit with high anticipated growth rate but low market share is known as a question mark in the BCG matrix. This means that they have the potential to become stars, but require significant investment and effort to grow and establish themselves in the market.

Question 14

Which of the following provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources?

Accepted Answer

A corporate portfolio matrix provides a framework for understanding diverse businesses within a company by categorizing them into different groups based on their market growth and share. This helps managers allocate resources and establish priorities for each business unit.

Question 15

When a company combines with firms in different and dissimilar industries, it indulges in ________.

Accepted Answer

When a company combines with firms in different and dissimilar industries, it indulges in unrelated diversification. Horizontal integration involves combining with firms in the same industry, while vertical integration involves combining with firms at different stages of the same industry's value chain. Stabilized diversification is not a commonly used term in business strategy.

Question 16

Florance is a chain of flower shops in the Chicago area.The company recently acquired Knick-knacks, which owns three gift shops.Which of the following is most similar to this acquisition?

Accepted Answer

Toy World acquiring Unicorn Children's Books is similar to Florance acquiring Knick-knacks as both involve companies within related industries expanding their offerings and retailing them from co-branded outlets.

Question 17

When L'Oreal acquired The Body Shop, it carried out ________.

Accepted Answer

L'Oreal's acquisition of The Body Shop is an example of horizontal integration because both companies operate in the same industry, cosmetics and personal care, and the acquisition was aimed at expanding L'Oreal's market share and product offerings within the same industry.

Question 18

An organization that grows using ________ focuses on its primary line of business and increases the number of products offered or markets served in this primary business.

Accepted Answer

Concentration refers to a growth strategy where an organization focuses on its primary line of business and increases the number of products offered or markets served within that primary business. This allows the organization to gain a deeper understanding and specialization in their area of expertise and potentially increase their market share. Horizontal integration involves expanding into new businesses at the same level of the value chain, while vertical integration involves expanding into businesses at different levels of the value chain, and diversification involves expanding into new and unrelated businesses.

Question 19

In the Boston Consulting Group (BCG) matrix, a business unit that has a low anticipated growth rate but a high market share is known as a ________.

Accepted Answer

A business unit with a low anticipated growth rate but a high market share is known as a cash cow in the BCG matrix. Cash cows are established products or services with a large market share in a slow or no-growth industry. They generate significant amounts of cash that can be used to support other business units or invest in new opportunities.

Question 20

In ________, a company grows by combining with competitors.

Accepted Answer

Horizontal integration involves a company growing by acquiring and combining with competitors operating in the same industry or market. Concentrated integration involves a company merging with a supplier or distributor, vertical integration involves a company acquiring and merging with suppliers or distributors, and diversified integration involves a company acquiring and merging with businesses in different industries or markets.

Quiz 9: Strategic Management