Question 1

Brian Ramsey owns a firm that develops and sells smartphone accessories. He is currently trying to grow his firm through strategic alliances and joint ventures. Brian is pursuing a(n) ________ growth strategy.
A) domestic
B) external
C) subsidiary
D) internal
E) secondary

Accepted Answer

Brian is pursuing an external growth strategy by seeking strategic alliances and joint ventures with other companies. Domestic growth refers to expanding within one's own country, subsidiary growth involves creating a new and separate business entity, and internal growth involves increasing sales and profits through improvements within the existing company. Secondary growth is not a commonly used term in business strategy.

Question 2

The What Went Wrong feature in Chapter 14 focuses on the failure of Crumbs Bake Shop, a specialty-restaurant chain that sold gourmet cupcakes. According to the feature, Crumbs failed due to ________.
A) lack of funding to facilitate expansion, high real estate costs, management turnover, poor operating margins
B) no pivot or change in strategy, lack of international expansion, trademark dispute with a competitor, failure to franchise
C) increasingly crowded market, consumers started losing interest in cupcakes, high real estate costs, and no pivot or change in strategy
D) lack of funding to facilitate expansion, management turnover, increasingly crowded market, and high fixed costs
E) high operating costs, trademark dispute with a competitor, consumers started losing interest in cupcakes, and failure to franchise

Accepted Answer

According to the What Went Wrong feature in Chapter 14, Crumbs Bake Shop failed due to a combination of factors including an increasingly crowded market, consumers losing interest in cupcakes, high real estate costs, and a lack of pivot or change in strategy. There is no mention of funding, management turnover, trademark disputes, or failure to franchise as the main reasons for the failure. Therefore, the best choice is C.

Question 3

Which of the following is the primary disadvantage of licensing as a foreign market entry strategy?
A) A firm in effect "teaches" a foreign company how to produce its proprietary products.
B) High transportation costs
C) It is usually a one-time activity.
D) A firm loses partial control of its business operations.
E) Quality control

Accepted Answer

Licensing involves granting a foreign company the rights to produce and sell a firm's products, which can lead to the foreign company learning how to produce the proprietary products themselves, potentially creating future competition.

Question 4

A product line extension strategy involves making additional versions of a product so that it will appeal to a different clientele or making related products to sell to the same clientele.

Accepted Answer

A product line extension strategy involves expanding the product line by adding new products or variations of existing products to target different customer segments or meet the changing needs of existing customers.

Question 5

International new ventures are ________.
A) businesses that have employees located in two or more countries
B) businesses that sell products in two or more countries
C) businesses that, from inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries
D) businesses that are headquartered in a foreign country and export their products to the United States
E) new ventures that export at least one-third of their products to foreign countries

Accepted Answer

International new ventures are businesses that, from inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries. This is different from businesses that simply have employees or sell products in multiple countries, as the focus is on intentionally targeting multiple international markets as a strategic advantage from the start.

Question 6

Geographic expansion is most common in manufacturing settings.

Accepted Answer

Geographic expansion is common across various industries, including services, retail, and technology, not just limited to manufacturing settings. It is a strategy used by businesses to enter new markets to increase their customer base, sales, and market presence.

Question 7

Work that is done for a company by people other than the company's full-time employees is referred to as ________.
A) insourcing
B) farming-out
C) personnel extension
D) outsourcing
E) capacity enhancement

Accepted Answer

Outsourcing specifically refers to getting work done by people or companies outside of the organization's full-time employees. The other options may refer to hiring temporary or contract workers, but they do not specifically imply that the work is being done by individuals or entities outside of the organization.

Question 8

A market penetration strategy involves actions taken to increase the sales of a product or service through greater marketing efforts or through increased product capacity and efficiency.

Accepted Answer

A market penetration strategy is defined as actions taken to increase sales of a product or service through increased marketing efforts or improved product efficiency and capacity.

Question 9

According to a survey of rapid growth firms conducted by the Small Business & Entrepreneurship Council and the Financial Services Roundtable, ________ percent of all U.S. exports are accounted for by small businesses.
A) 78
B) 97
C) 41
D) 53
E) 66

Accepted Answer

According to the survey, 97 percent of all U.S. exports are accounted for by small businesses.

Question 10

A(n) ________ strategy involves making additional versions of a product so that it will appeal to different clientele.
A) market penetration
B) geographic expansion
C) improving an existing product or service
D) strategic alliance
E) product line extension

Accepted Answer

Product line extension involves expanding the product line to include additional versions of a product in order to appeal to a wider range of customers. This strategy can help to increase sales and revenue by providing more options for customers to choose from.

Question 11

Entrepreneurial businesses that grow by expanding from their original location to additional geographic sites are pursuing a ________ strategy.
A) common expansion
B) market penetration
C) universal networking
D) geographic expansion
E) product line extension

Accepted Answer

Geographic expansion involves growing a business by moving into new geographic locations or markets. This strategy allows a business to reach new customers and increase its market share.

Question 12

________ growth strategies rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising.
A) Internal
B) Domestic
C) Outside
D) External
E) Peripheral

Accepted Answer

External growth strategies involve partnering with third parties outside of the organization to achieve growth objectives. These can include mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising. This differs from internal growth strategies, which involve expanding the organization from within. Domestic and outside growth are not commonly used terms in relation to growth strategies, and peripheral growth is not a recognized concept in business strategy.

Question 13

The majority of entrepreneurial firms first enter foreign markets as exporters.

Accepted Answer

This is true. Exporting is often the first step for entrepreneurial firms to enter foreign markets, as it involves fewer risks and costs compared to other entry modes such as foreign direct investment or licensing.

Question 14

Which of the following is the primary advantage of exporting as a foreign market entry strategy?
A) Provides a firm total control over its foreign operations
B) Ability to generate revenue
C) Exporting is a relatively inexpensive way for a firm to become involved in foreign markets.
D) The exporting company's customers put up most of the capital needed to establish the export operation.
E) Exporting involves very little effort on the part of a firm.

Accepted Answer

Exporting is a relatively inexpensive way for a firm to become involved in foreign markets. This is because the company does not need to make significant investments in infrastructure, operations, or hiring local staff in the foreign market. Instead, the company can rely on its existing production facilities and distribution channels to sell its products or services in foreign markets. This makes exporting an attractive market entry strategy for small and medium-sized firms that lack the resources to invest in foreign operations.

Question 15

Describe what a product line extension strategy is. What are the advantages of this strategy? Describe a company you are familiar with that utilizes a product line extension growth strategy.

Accepted Answer

The answer of Describe what a product line extension strategy...

Question 16

Chris Smith owns a store that sells all-terrain vehicles (ATVs). In the past, Chris just sold one version of each of the ATVs he sold in his showroom, but to increase sales, Chris now sells a low-end, a medium-priced, and a high-end version of each of the ATVs he sells. Chris's new strategy is called a(n) ________ strategy.
A) improving an existing product or service
B) market penetration
C) product line extension
D) geographic expansion
E) joint venture

Accepted Answer

Chris's new strategy of selling a low-end, medium-priced, and high-end version of each of the ATVs he sells is called a product line extension.

Question 17

Which of the following is the primary advantage of a wholly owned subsidiary as a foreign market entry strategy?
A) Provides a firm total control over its operations
B) Easier to raise capital to implement than other foreign market entry strategies
C) Gaining an appreciation of local customs and market preferences
D) Low transportation costs
E) The ability to give employees foreign market experience

Accepted Answer

The primary advantage of a wholly owned subsidiary as a foreign market entry strategy is providing a firm total control over its operations. This means that the parent company has full control over the subsidiary's decision-making process, allowing them to implement their own strategies and policies. This also ensures that the parent company's vision and values are maintained and followed in the foreign market.

Question 18

Shelly Watters owns a chain of fashion boutiques that started in Washington, DC and has expanded into Maryland, Virginia, and West Virginia. Shelly is growing her company via a strategy of ________.
A) geographic expansion
B) market penetration
C) product line extension
D) outsourcing
E) licensing

Accepted Answer

Shelly's expansion into multiple states indicates a geographic expansion strategy, whereby the company is expanding into new geographic markets.

Question 19

A ________ strategy seeks to increase the sales of a product or service through greater marketing efforts or through increased production capacity and efficiency.
A) product line extension
B) product line sharpening
C) product line widening
D) market penetration
E) market expansion

Accepted Answer

Market penetration strategy involves increasing sales of a product or service by increasing marketing efforts or improving production efficiency. The other options - product line extension, sharpening, and widening - do not necessarily focus on increasing sales, but rather on expanding product offerings or adjusting existing products. Market expansion is more focused on entering new markets rather than increasing sales in existing markets.

Question 20

Pam Ryan owns a store that sells running shoes and related products. Pam is currently trying to increase sales through endorsements by famous runners and former Olympic athletes. Pam is pursuing a(n) ________ strategy.
A) strategic alliance
B) licensing
C) market penetration
D) geographic expansion
E) improving an existing product or service

Accepted Answer

Pam is trying to increase sales by promoting her current products (running shoes and related products) to her current market (runners). This is consistent with a market penetration strategy. A strategic alliance would involve partnering with another company, licensing would involve allowing someone else to use her store's intellectual property, geographic expansion would involve opening new stores in other locations, and improving an existing product or service would involve making changes or upgrades to the products already offered.

Quiz 14: Strategies for Firm Growth

Brian Ramsey owns a firm that develops and sells smartphone accessories. He is currently trying to grow his firm through strategic alliances and joint ventures. Brian is pursuing a(n) ________ growth strategy.

The What Went Wrong feature in Chapter 14 focuses on the failure of Crumbs Bake Shop, a specialty-restaurant chain that sold gourmet cupcakes. According to the feature, Crumbs failed due to ________.

Which of the following is the primary disadvantage of licensing as a foreign market entry strategy?

A product line extension strategy involves making additional versions of a product so that it will appeal to a different clientele or making related products to sell to the same clientele.

International new ventures are ________.

Geographic expansion is most common in manufacturing settings.

Work that is done for a company by people other than the company's full-time employees is referred to as ________.

A market penetration strategy involves actions taken to increase the sales of a product or service through greater marketing efforts or through increased product capacity and efficiency.

According to a survey of rapid growth firms conducted by the Small Business & Entrepreneurship Council and the Financial Services Roundtable, ________ percent of all U.S. exports are accounted for by small businesses.

A(n) ________ strategy involves making additional versions of a product so that it will appeal to different clientele.

Entrepreneurial businesses that grow by expanding from their original location to additional geographic sites are pursuing a ________ strategy.

________ growth strategies rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising.

The majority of entrepreneurial firms first enter foreign markets as exporters.

Which of the following is the primary advantage of exporting as a foreign market entry strategy?

Describe what a product line extension strategy is. What are the advantages of this strategy? Describe a company you are familiar with that utilizes a product line extension growth strategy.

Which of the following is the primary advantage of a wholly owned subsidiary as a foreign market entry strategy?

Shelly Watters owns a chain of fashion boutiques that started in Washington, DC and has expanded into Maryland, Virginia, and West Virginia. Shelly is growing her company via a strategy of ________.

A ________ strategy seeks to increase the sales of a product or service through greater marketing efforts or through increased production capacity and efficiency.

Pam Ryan owns a store that sells running shoes and related products. Pam is currently trying to increase sales through endorsements by famous runners and former Olympic athletes. Pam is pursuing a(n) ________ strategy.