Deck 2: Corporate Strategy Decisions and Their Marketing Implications

Question 1

Standard accounting measures such as earnings per share or return on investment are:

A)not always reliably linked to the true value of a company's stock
B)objectives that always provide adequate guidance for a firm's lower-level managers
C)fool-proof tools available to evaluate the future impact of strategic actions on shareholders
D)objectives that consistently set benchmarks for accurately evaluating performance

Answer 1

A

Question 2

In expressing corporate objectives aimed at enhancing shareholder value, a firm combining its debt and market value of its stock and then subtracting the capital invested in the company, is using the _____ approach.

A)return on capital
B)economies of scale
C) market value added
D)cash conversion cycle

Answer 2

C

Question 3

The most useful mission statements focus on being:

A)functional and broad
B)physical and specific
C)functional and specific
D)physical and broad

Answer 3

C

Question 4

A manufacturer is moving downstream in terms of product flow by launching a chain of retail outlets.Which diversification strategy is being used by the company?

A)forward vertical integration
B)elated diversification
C)backward integration
D)conglomerate diversification

Question 5

Telstra successfully entered the mobile phone market by initially targeting its landline customers, taking advantage of its extensive infrastructure and experience in telephony.This example illustrates the use of a:

A)market penetration strategy
B)diversification strategy
C)product development strategy
D)market development strategy

Question 6

A sustainable competitive advantage at the corporate level is based upon:

A)pure luck
B)spending more on advertising than your competitors
C)business resources that other businesses do not have, take a long time to develop and are hard to acquire
D)introducing a new product every few months

Question 7

Theatres, orchestras and other performing arts organisations often reach audiences outside major metropolitan areas by promoting matinee performances with lower prices and free public transportation to attract senior citizens and students.Identify the strategy being employed in this case.

A)expansion by diversifying
B)expansion by selling existing products to new segments
C)expansion by developing new products for current customers
D)expansion by increasing penetration of current product-markets

Question 8

Amazon.com pursued a combination of actions, such as making service improvements and cutting costs, as well as forming alliances with web portals to expand its share of online shoppers, even though the expense of such activities postponed the firm's ability to become profitable.This is an example of expansion by:

A)diversifying
B)selling existing products to new segments
C)developing new products for current customers
D)increasing market penetration of current product

Question 9

Identify the incorrect statement concerning alternative portfolio models.

A)They are more useful for evaluating potential new product markets.
B)They are multifactor models and are more detailed than the simple growth-share model.
C)They provide more strategic guidance concerning the appropriate allocation of resources across businesses.
D)They provide the best measures when managers must evaluate different industries on the same set of factors.

Question 10

Dogs are:

A)businesses with a high relative share of low-growth markets
B)low-share businesses in low-growth markets
C)the market leaders in a high-growth industry
D)businesses in high-growth industries with low relative market shares

Question 11

Which of the following is a limitation of the growth-share matrix?

A)Since the matrix uses multiple variables as a basis for categorising a firm's business, it is complex to understand.
B)Outcomes of this analysis are highly sensitive to variations in how growth and share are measured.
C)The matrix is unable to analyse the impact of investing resources in different businesses on the firm's future earnings.
D)The model fails to consider that firms can generate cash from businesses with strong competitive positions in mature markets.

Question 12

The profitability criterion is measured in terms of which of the following indexes?

A)percentage change in sales
B)return on net assets
C)price/earnings ratio
D)percentage cost savings from new processes

Question 13

Identify the incorrect statement concerning alternative portfolio models.

A)They are more useful for evaluating potential new product markets.
B)They are multifactor models and are more detailed than the simple growth-share model.
C)They provide more strategic guidance concerning the appropriate allocation of resources across businesses.
D)They provide the best measures when managers must evaluate different industries on the same set of factors.

Question 14

Theatres, orchestras and other performing arts organisations often reach audiences outside major metropolitan areas by promoting matinee performances with lower prices and free public transportation to attract senior citizens and students.Identify the strategy being employed in this case.

A)expansion by diversifying
B)expansion by selling existing products to new segments
C)expansion by developing new products for current customers
D)expansion by increasing penetration of current product-markets

Question 15

In the industry attractiveness-business position matrix:

A)size and growth are criteria used to determine the business's competitive position
B)relative share is more important than patents
C)price levels and profitability require a harvest/divest strategy
D)competitive intensity and profitability are two of the factors that assist determine industry attractiveness

Question 16

Which of the following is a limitation of the growth-share matrix?

A)Since the matrix uses multiple variables as a basis for categorising a firm's business, it is complex to understand.
B)Outcomes of this analysis are highly sensitive to variations in how growth and share are measured.
C)The matrix is unable to analyse the impact of investing resources in different businesses on the firm's future earnings.
D)The model fails to consider that firms can generate cash from businesses with strong competitive positions in mature markets.

Question 17

Faced with a decline in its current business, a generic drug manufacturer is planning a foray into design, and manufacture of re-locatable modular structures.Which diversification strategy is being employed by the company?

A)Related diversification
B)Backward integration
C)Forward vertical integration
D)Unrelated diversification

Question 18

A company trying to increase its market share for its current products is most likely to follow which of the following strategies?

A)diversification
B)market penetration
C)market development
D)product development

Question 19

Cash cows are:

A)businesses with a high relative share of low-growth markets
B)low-share businesses in low-growth markets
C)the market leaders in a high-growth industry
D)businesses in high-growth industries with low relative market shares

Question 20

A survey on customer feedback for an industrial paper company found that about 80 per cent of customers' satisfaction scores were accounted for because of order processing, delivery and post-sale services.This finding substantiates which of the following statements?

A)Customer satisfaction increases due to the product-oriented approach.
B)Spending more on emphasising product features creates a sustainable competitive advantage.
C)Customer satisfaction is influenced by factors other than the product itself.
D)Pricing is based on production and distribution costs.

Question 21

What are the various sources of synergy for a firm?

Question 22

One of the first and best known of the portfolio models is the growth-industry matrix developed by the Boston Consulting Group.

Question 23

Amazon.com's substantial expenditures on warehousing and order fulfilment activities were investments that earned the loyalty of existing customers.This is typical of a:

A)market penetration strategy
B)diversification strategy
C)customer orientation strategy
D)customer development strategy

Question 24

A key part of a well-defined corporate level strategy is to increase synergy across the firm's various businesses and product-markets.

Question 25

A well-defined corporate strategy consists of five components.

Question 26

Increasingly organisations are including social and ethical boundaries in mission statements that define how they should interact with their key stakeholders.

Question 27

In general, enlightened market behaviour is assumed to be the dominant form of market behaviour.
This reflects the orientation of businesses to achieve a position of superior performance and to generate competitive advantage over other businesses.

Question 28

A firm's ability to attract debt financing depends first and foremost on:

A)its reputation
B)projections of how much cash it can generate in the future
C)projections of the degree of customer satisfaction it can generate
D)its existing brand equity

Question 29

Which of the following are the least desirable from a firm's portfolio management perspective?

A)stars
B)dogs
C)cash cows
D)question marks

Question 30

EVA is an acronym for economic value of assets.

Question 31

In the BCG matrix:

A)the vertical axis indicates market growth rate
B)the vertical axis indicates the relative market share of the business
C)the horizontal axis indicates market growth rate
D)the horizontal axis indicates market attractiveness

Question 32

A business is more likely to emphasise a strong corporate brand when its various product offerings are closely interrelated.

Question 33

A firm's ability to attract debt financing depends first and foremost on:

A)its reputation
B)projections of how much cash it can generate in the future
C)projections of the degree of customer satisfaction it can generate
D)its existing brand equity

Question 34

The key to a firm gaining a sustainable competitive advantage is through acquisition of common resources that can be developed and trained quickly.

Question 35

How can customer equity be used to estimate the value of alternative marketing actions?

Question 36

A firm's ability to attract debt financing depends first and foremost on:

A)its reputation
B)projections of how much cash it can generate in the future
C)projections of the degree of customer satisfaction it can generate
D)its existing brand equity

Question 37

Identify a limitation of value-based planning.

A)It attempts to assess the economic value a given strategy is likely to create by relying on distorted accounting measures.
B)It is mainly a tool for evaluating strategy alternatives identified and developed through managers' judgments.
C)It is unable to assess the shareholder value a given strategy is likely to create.
D)It is unable to provide a basis for comparing the economic returns to be gained from investing in different businesses.

Question 38

From a marketing viewpoint and regarding resources allocation, an often overlooked strategic alternative is the tendency to underestimate the value of keeping current customers.