Deck 5: Strategies in Action

Question 1

Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.

Answer 1

False

Question 2

PepsiCo is the largest food-and-beverage firm in Russia.

Answer 2

True

Question 3

Gaining ownership or increased control over distributors or retailers is called forward integration strategy.

Answer 3

True

Question 4

Franchising is an effective means of implementing forward integration.

Question 5

A strategy of seeking ownership or increased control of a firm's suppliers is backward integration.

Question 6

Market penetration, market development, and product development are intensive strategies.

Question 7

If a firm's present suppliers are expensive and unreliable in meeting the firm's needs for parts, components, and/or raw materials, the firm should pursue a horizontal integration strategy.

Question 8

Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.

Question 9

Divestiture is selling all of a company's assets, in parts, for their tangible worth.

Question 10

When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.

Question 11

A chief executive officer is located in the divisional level of a large firm.

Question 12

Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.

Question 13

"If it ain't broke, don't fix it" refers to managing by crisis.

Question 14

The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.

Question 15

Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.

Question 16

Market development includes introducing present products into new geographic areas.

Question 17

An appropriate strategy when an organization has excess production capacity is market development.

Question 18

McDonalds currently owns more than 50 percent of its restaurants.

Question 19

A growing trend is for franchisers to buy out their part of the business from their franchisees.

Question 20

Horizontal integration is seeking ownership or increased control over competitors.

Question 21

Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.

Question 22

Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.

Question 23

Divestiture is the selling of all of a company's assets, in parts, for their tangible worth.

Question 24

Diversification strategies are becoming more popular as organizations are finding it easier to manage diverse business activities.

Question 25

Product development is a strategy that seeks increased sales by improving or modifying present products or services.

Question 26

Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.

Question 27

Chapter 9 bankruptcy applies to municipalities.

Question 28

Unrelated diversification is an appropriate strategy when an organization's present channels of distribution can be used to market the new products to current customers.

Question 29

The acquisition of security-software company McAfee by Intel Corp. is an example of related diversification.

Question 30

Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.

Question 31

There are four basic types of diversification: concentric, conglomerate, forward, and backward.

Question 32

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and decentralization.

Question 33

Chapter 7 bankruptcy is a liquidation procedure used only when a firm sees no hope of being able to operate successfully or to obtain necessary creditor agreement.

Question 34

For consumers who are price-sensitive, cost leadership emphasizes producing standardized products at a very low per-unit cost.

Question 35

Divestiture has become a popular strategy for firms to focus on their core business and become more diversified.

Question 36

Liquidation is often appropriate when retrenchment and divestiture have failed.

Question 37

There were only 106 public U.S. companies filing bankruptcy in 2010, less than half the 211 public firms that filed the prior year.

Question 38

Deutsche Bank's entrance into the casino business in Las Vegas is an example of related diversification.

Question 39

Unrelated diversification may be an especially effective strategy when an organization's basic industry is experiencing increasing annual sales and profits.

Question 40

Retrenchment and turnaround are the same strategy.

Question 41

A differentiation strategy can only be achieved with a large target market.

Question 42

White knight is a term that refers to a firm that agrees to acquire another firm when the other firm is facing a hostile takeover by some company.

Question 43

A best-value strategy offers products or services to a wide range of customers at the best price-value available on the market.

Question 44

A differentiation strategy can be especially attractive when the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.

Question 45

A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.

Question 46

The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.

Question 47

Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does not allow a firm to concentrate on core competencies.

Question 48

Cooperative arrangements and joint ventures between competitors are becoming increasingly popular.

Question 49

The year 2010 saw a 13 percent increase in mergers and acquisitions in the U.S.

Question 50

A cost leadership strategy can be especially effective when most buyers use the product in the same ways.

Question 51

First mover advantage refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

Question 52

In a turbulent, high-velocity market, a lead-change strategy is best whenever the firm has the resources to pursue this approach.

Question 53

A low-cost focus strategy can be especially attractive when the target market niche is small.

Question 54

An acquisition occurs when a large organization purchases a smaller one or vice versa.

Question 55

A low-cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.

Question 56

When an acquisition or merger is not desired by both parties, it can be called a takeover or hostile takeover.

Question 57

Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.

Question 58

Differentiation guarantees competitive advantage.

Question 59

Jiffy Lube International would be a good example of a firm seeking the best-value focus strategy.

Question 60

Divestiture would be an appropriate strategy when a need exists to introduce a new technology quickly.

Question 61

Research shows strategic management in small firms is more formal than in large firms.

Question 62

Websites that sell products directly to consumers are examples of which type of strategy?

A) Backward integration
B) Product development
C) Forward integration
D) Horizontal integration
E) Conglomerate diversification

Question 63

Starbucks reaching a deal with Green Mountain Coffee Roasters for that firm to sell packs of Starbucks Tazo-branded coffee and tea in their brewers is an example of which type of strategy?

A) Forward integration
B) Backward integration
C) Horizontal integration
D) Related diversification
E) Unrelated diversification

Question 64

Marriott selling its timeshare business is an example of which type of strategy?

A) Related diversification
B) Unrelated diversification
C) Retrenchment
D) Divestiture
E) Liquidation

Question 65

While outsourcing manufacturing, tech support, and back-office work is quite common, it is still unheard of for companies to outsource product design.

Question 66

Which of the following is most likely NOT included in the functional level of a small company?

A) Finance
B) Marketing
C) R&D
D) Department managers
E) Human resource managers

Question 67

All of the following are listed among the "softer" factors in the Balanced Scorecard EXCEPT

A) customer service
B) employee morale
C) product quality
D) business ethics
E) stockholder equity

Question 68

Public enterprises generally cannot diversify into unrelated businesses or merge with other firms.

Question 69

What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems?

A) Managing by crisis
B) Managing by objectives
C) Managing by extrapolation
D) Managing by exception
E) Managing by hope

Question 70

Which level of strategy is most likely not present in small firms?

A) Company
B) Functional
C) Divisional
D) Operational
E) All of the above are present in small firms.

Question 71

Integration strategies are sometimes collectively referred to as which of the following categories of strategies?

A) Horizontal integration
B) Diversification
C) Vertical integration
D) Stuck-in-the-middle
E) Hierarchical integration

Question 72

Long-term objectives are needed at which level(s) in an organization?

A) Corporate
B) Divisional
C) Functional
D) All of the above
E) None of the above

Question 73

Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.

Question 74

Financial objectives involve all of the following EXCEPT

A) growth in revenues
B) larger market share
C) higher dividends
D) greater return on investment
E) a rising stock price

Question 75

What principle is built on the idea that there is no general plan for which way to go and what to do?

A) Managing by crisis
B) Managing by extrapolation
C) Managing by objectives
D) Managing by hope
E) Managing by subjectives

Question 76

Which of these strategies is effective when the number of suppliers is small and the number of competitors is large?

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

Question 77

The nonprofit sector is America's largest employer.

Question 78

Hawaiian Airlines beginning to offer flights from Hawaii to Seoul, Korea, and Tokyo, Japan, rather than mostly flying to and from the U.S. mainland, is an example of which type of strategy?

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

Question 79

All sizes and types of organizations can utilize and benefit from strategic-management concepts and techniques.

Question 80

Today McDonald's owns about _______ percent of its 32,800 restaurants.

A) 20
B) 30
C) 40
D) 50
E) 60