Question 1

The method of international expansion which presents managers with many threats and is the most expensive due to the high level of foreign investment is the method of international expansion through _____.
A) joint ventures
B) exporting and importing
C) licensing
D) franchising
E) wholly owned subsidiaries

Accepted Answer

By operating alone, wholly owned subsidiaries receive all of the rewards and bear all of the risks associated with operating abroad. This method of international expansion is much more expensive than the others because it requires a higher level of foreign investment and presents managers with many more threats.

Question 2

Which method of international expansion poses the least amount of risk?
A) Exporting
B) Franchising
C) Licensing
D) Wholly owned subsidiary
E) Joint venture

Accepted Answer

Few risks are associated with exporting, because a company does not have to invest in developing manufacturing facilities abroad.

Question 3

Most electronic goods have the option of changing the operating language. This is done by manufacturers so that the same electronic device can be supplied and marketed around the world. The manufacturers in this case are applying a(n) _____.
A) focused-differentiation strategy
B) global strategy
C) related diversification strategy
D) multidomestic strategy
E) unrelated diversification strategy

Accepted Answer

Selling the same standardized product and using the same basic marketing approach in each national market is called global strategy.

Question 4

Allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee is referred to as:
A) licensing.
B) franchising.
C) strategic alliance.
D) exporting.
E) importing.

Accepted Answer

Licensing is allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee.

Question 5

A toy manufacturing company which previously sold its products through a popular toy and juvenile-product retailer decides to enter the retail industry, quickly establishing several retail outlets exclusively for its products. The toy manufacturing company is engaging in _____.
A) forward horizontal integration
B) backward vertical integration
C) forward vertical integration
D) backward horizontal integration
E) unrelated diversification

Accepted Answer

Forward vertical integration is a corporate-level strategy in which a company expands its business operations forward into a new industry that uses, distributes, or sells the company's products.

Question 6

Selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits is referred to as:
A) licensing.
B) franchising.
C) strategic alliance.
D) exporting.
E) importing.

Accepted Answer

Franchising is selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits.

Question 7

_____ is a corporate-level strategy that emphasizes reinvesting a company's profits in strengthening its competitive position in its current industry.
A) Concentration on a single industry
B) Forward vertical integration
C) Diversification
D) Backward vertical integration
E) International expansion

Accepted Answer

Growing companies reinvest their profits to strengthen their competitive position in the industry in which they are currently operating; in doing so, they pursue the corporate-level strategy of concentration on a single industry.

Question 8

In order to cater to local tastes and culinary traditions, and often in respect of particular laws or religious beliefs, McDonald's offers customized versions of its menu to suit different countries. This is an example of _____.
A) international strategy
B) global strategy
C) multidomestic strategy
D) low-cost strategy
E) unrelated diversification strategy

Accepted Answer

Customizing products and marketing strategies to specific national conditions is called multidomestic strategy.

Question 9

An agreement in which managers pool or share their organization's resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture is called a(n) _____.
A) takeover agreement
B) franchise sharing
C) license lending
D) strategic alliance
E) foreign subsidiary

Accepted Answer

An agreement in which managers pool or share their organization's resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture is called strategic alliance.

Question 10

In a first of its kind, a multinational tire manufacturer introduces a new range of premium tires that can handle extreme temperatures better at a higher price. The tires are designed keeping in mind the climatic conditions in the Middle East and products are marketed only in the Middle East. The manufacturer is pursuing ____.
A) a focused differentiation strategy
B) a focused low-cost strategy
C) a general differentiation strategy
D) a general low-cost strategy
E) both a low-cost and a differentiation strategy

Accepted Answer

Serving only one segment of the overall market and trying to be the most differentiated organization serving that segment is called focused differentiation strategy.

Question 11

Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson combining a part of their resources to manufacture mobile phones is an example of a(n) _____.
A) joint venture
B) acquisition
C) wholly owned subsidiary
D) merger
E) hostile takeover

Accepted Answer

A joint venture is a strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business.

Question 12

The first step in implementing a strategy is:
A) drafting detailed action plans that specify how a strategy is to be implemented.
B) allocating responsibility for implementation to the appropriate individuals or groups.
C) allocating appropriate resources to the responsible individuals or groups.
D) holding specific individuals or groups responsible for the attainment of corporate, divisional, and functional goals.
E) establishing a timetable for implementation that includes precise, measurable goals linked to the attainment of the action plan.

Accepted Answer

Allocating responsibility for implementation to the appropriate individuals or groups is the first step in implementing strategy.

Question 13

_____ is the final step in implementing strategy.
A) Drafting detailed action plans that specify how a strategy is to be implemented
B) Allocating responsibility for implementation to the appropriate individuals or groups
C) Establishing a timetable for implementation that includes precise, measurable goals linked to the attainment of the action plan
D) Holding specific individuals or groups responsible for the attainment of corporate, divisional, and functional goals
E) Allocating appropriate resources to the responsible individuals or groups

Accepted Answer

Holding specific individuals or groups responsible for the attainment of corporate, divisional, and functional goals is the last step in implementing strategy.

Question 14

Which of the following statements about simultaneously pursuing both a low-cost strategy and a differentiation strategy is true?
A) Organizations stuck in the middle tend to have higher levels of performance than those that pursue a low-cost or a differentiation strategy.
B) Focusing on the differentiation of a product will result in reduced costs for a company.
C) Extremely well managed companies may be able to keep low costs and differentiate their products.
D) Managers try to gain a competitive advantage by focusing only on driving the company's costs down below the costs of industry rivals.
E) Managers try to gain a competitive advantage by focusing only on distinguishing an organization's products from the products of competitors on dimensions such as product design, quality, or after-sales service.

Accepted Answer

With a low-cost strategy, managers try to gain a competitive advantage by focusing the energy of all the organization's departments or functions on driving the company's costs down below the costs of its industry rivals. Author: Feedback does not address the question of combined strategy.

Question 15

Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and reduce fixed costs. This is an example of _____.
A) concentration
B) rivalry
C) counteraction
D) adversity
E) synergy

Accepted Answer

Performance gains that result when individuals and departments coordinate their actions are called synergy.

Question 16

Cameo Ltd., a record label company, subsequently entered the airline industry to expand business. This example of a record label company entering the airline industry is an example of _____.
A) vertical integration
B) unrelated diversification
C) related diversification
D) horizontal integration
E) concentration

Accepted Answer

Managers pursue unrelated diversification when they establish divisions or buy companies in new industries that are not linked in any way to their current businesses or industries.

Question 17

Selling the same standardized product and using the same basic marketing approach in each national market is called _____.
A) unrelated diversification strategy
B) multidomestic strategy
C) national strategy
D) focused-differentiation strategy
E) global strategy

Accepted Answer

Selling the same standardized product and using the same basic marketing approach in each national market is called global strategy.

Question 18

Entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses is called _____.
A) related diversification strategy
B) international expansion strategy
C) low-cost strategy
D) concentration on a single industry
E) unrelated diversification strategy

Accepted Answer

Entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses is called related diversification strategy.

Question 19

Nokia has established production operations in foreign countries to sell its phones in those regions. The production operations perform as separate entities without any local direct involvement. These production operations are _____ of Nokia.
A) joint ventures
B) acquisitions
C) wholly owned subsidiaries
D) mergers
E) hostile takeovers

Accepted Answer

Wholly owned subsidiaries are production operations established in a foreign country independent of any local direct involvement.

Question 20

_____ is a corporate-level strategy in which a company expands its business operations into a new industry that produces inputs for the company's products.
A) Forward vertical integration
B) Forward horizontal integration
C) Unrelated diversification
D) Backward horizontal integration
E) Backward vertical integration

Accepted Answer

Backward vertical integration is a corporate-level strategy in which a company expands its business operations into a new industry that produces inputs for the company's products.

Quiz 8: The Manager As a Planner and a Strategist

The method of international expansion which presents managers with many threats and is the most expensive due to the high level of foreign investment is the method of international expansion through _____.

Which method of international expansion poses the least amount of risk?

Most electronic goods have the option of changing the operating language. This is done by manufacturers so that the same electronic device can be supplied and marketed around the world. The manufacturers in this case are applying a(n) _____.

Allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee is referred to as:

A toy manufacturing company which previously sold its products through a popular toy and juvenile-product retailer decides to enter the retail industry, quickly establishing several retail outlets exclusively for its products. The toy manufacturing company is engaging in _____.

Selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits is referred to as:

_____ is a corporate-level strategy that emphasizes reinvesting a company's profits in strengthening its competitive position in its current industry.

In order to cater to local tastes and culinary traditions, and often in respect of particular laws or religious beliefs, McDonald's offers customized versions of its menu to suit different countries. This is an example of _____.

An agreement in which managers pool or share their organization's resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture is called a(n) _____.

Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson combining a part of their resources to manufacture mobile phones is an example of a(n) _____.

The first step in implementing a strategy is:

_____ is the final step in implementing strategy.

Which of the following statements about simultaneously pursuing both a low-cost strategy and a differentiation strategy is true?

Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and reduce fixed costs. This is an example of _____.

Cameo Ltd., a record label company, subsequently entered the airline industry to expand business. This example of a record label company entering the airline industry is an example of _____.

Selling the same standardized product and using the same basic marketing approach in each national market is called _____.

Entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses is called _____.

Nokia has established production operations in foreign countries to sell its phones in those regions. The production operations perform as separate entities without any local direct involvement. These production operations are _____ of Nokia.

_____ is a corporate-level strategy in which a company expands its business operations into a new industry that produces inputs for the company's products.