Question 1

You decide to concentrate on Taco Rocket's primary business by only increasing the menu to include new items such as enchiladas and rice bowls.This is an example of what type of growth strategy?

Accepted Answer

This is an example of concentration, where the business focuses on its primary product and service offerings rather than diversifying into new markets or products.

Question 2

You decide to keep Taco Rocket in the same business and do not change the menu.Which of the following, if true, would strengthen the argument for this course of action?

Accepted Answer

If Taco Rocket's market share has not been affected despite the entry of new competitors, it suggests that their current menu and business strategy is effective enough to retain their existing customer base. This strengthens the argument to keep the same menu and business model. None of the other options provide sufficient support for this decision.

Question 3

No matter which business Colleen decides to buy, she intends that each company be a strategic business unit.This means that ________.

Accepted Answer

A strategic business unit (SBU) is an independent business unit that has its own distinct mission, objectives, and competitive strategy. Therefore, each business will be independent and have its own competitive strategies. Option A is not correct as Colleen intends to make strategic changes to the businesses. Option C mentions only one type of strategy, whereas the SBUs may use different types of concentration strategies. Option D mentions vertical integration, which is a form of corporate-level strategy, not an SBU strategy.

Question 4

An internal analysis will help Patrick identify the ________ of the company.

Accepted Answer

An internal analysis focuses on assessing a company's strengths and weaknesses, which can help determine its areas for improvement and competitive advantage. Opportunities and threats are evaluated through an external analysis.

Question 5

Your oldest supplier, Zorro Distributors, is a family-owned firm.Recently, the firm's president, Diego De La Vega, made the decision to retire.To his disappointment, none of his five children stepped forward to take his place at the helm of the firm.Sr.De La Vega is concerned that if he sells his company to a larger distributor, many of his employees will lose their jobs.You approach your old friend with a generous offer to buy Zorro and continue its current operations.Should your offer be accepted, Taco Rocket would be undertaking ________.

Accepted Answer

Backward vertical integration occurs when a company acquires or merges with a supplier or distributor to control its supply chain. In this case, Taco Rocket buying Zorro Distributors, a supplier, fits this definition.

Question 6

Casey majored in marketing and really enjoyed studying market research as a subject.Through research on the Internet and in the university library, she discovers that this industry appears to have significant positive external trends.She interprets this as a(n) ________.

Accepted Answer

Casey interprets the positive external trends in the market research industry as an opportunity, as it indicates potential for growth and success in the field.

Question 7

What is a strategic disadvantage of being a first mover?

Accepted Answer

Being a first mover means introducing new and innovative products or services into the market. However, this can also make a company vulnerable to competitors who may imitate their innovations leading to loss of market share and competitive advantage. Therefore, the strategic disadvantage of being a first mover is the risk of competitors imitating innovations.

Question 8

You decide to purchase a local five-store hardware chain because it was a good investment.This is an example of ________.

Accepted Answer

The answer of You decide to purchase a local five-store...

Question 9

With all the changes occurring in the computer reseller market, you advise him to stay with his present course until the market calms down.You are recommending that Ariel use a ________ strategy.

Accepted Answer

The stability strategy involves maintaining the current level of operations and staying in the same market without any major changes. This is suitable for Ariel considering the changes in the computer reseller market. It is a safe and cautious approach that allows the company to weather the storm and avoid any risky moves until the market calms down. The renewal strategy involves focusing on improving the existing products or services, while growth strategy involves expanding into new markets or launching new products. The retrenchment strategy involves cutting back on operations and reducing costs to improve profitability. None of these strategies seem suitable for Ariel's current situation.

Question 10

Casey realizes that she has a personal characteristic that suggests she is not comfortable interacting with strangers.She interprets this as a(n) ________ if she is to get a job as a salesperson.

Accepted Answer

Casey's personal characteristic of not being comfortable interacting with strangers would be a weakness if she is considering a job as a salesperson which requires regular interaction with strangers to sell products.

Question 11

Recently, you also purchased a company that manufactures a new satellite dish, allowing you to enter into the cable television market.The business is profitable and growing, but the technological unknowns make it risky.BCG considers it a ________.

Accepted Answer

The fact that the technology is new and there are unknowns make it a risky investment. This uncertainty puts the company in the "question mark" category, which means a high growth potential, but also high risk.

Question 12

A business broker hears that Colleen is interested in purchasing a business and approaches her with an offer to sell her a company that owns a patent on a new roofing product and who installs this new roofing in the southwestern United States.If she buys this firm, she will be using a(n) ________ strategy.

Accepted Answer

The answer of A business broker hears that Colleen is...

Question 13

Because of the good profits and a fear of growing too fast, you decide to keep Taco Rocket in the same business and do not change the menu.You hope to retain the same market share and return-on-investment record.This is considered a ________ strategy.

Accepted Answer

A stability strategy involves maintaining the current business and focusing on maintaining market share and profitability. This aligns with the decision to keep Taco Rocket in the same business and not change the menu, as the goal is to retain the current market share and return-on-investment record. This strategy is chosen when a company wants to avoid taking too many risks and maintain steady performance.

Question 14

Ariel is considering forgoing the retail side of his business entirely.Instead, he will redirect his resources toward reselling hardware and software and providing systems integration services to the Latin American governmental and industrial sectors.Such a move would be most representative of which one of the following strategies?

Accepted Answer

This strategy is most representative of a focus strategy as it involves redirecting resources towards a specific market segment, in this case, the Latin American governmental and industrial sectors, while forgoing the retail side of the business. This is a focused approach towards meeting the needs of a particular set of customers.

Question 15

Your oldest holding, Taco Rocket, has not grown much in recent years, but due to low debt, it generates a huge amount of cash.According to BCG, Taco Rocket would be considered a ________.

Accepted Answer

A "cash cow" is a business unit that has a high market share in a slow-growing industry. It generates more cash than it needs to maintain its market share and has limited opportunities for growth. Given the information provided about Taco Rocket's lack of growth, but its ability to generate a large amount of cash due to low debt, it fits the definition of a cash cow.

Question 16

Noting the growing popularity of South-East Asian food, you decide to open a new outlet called Rice Rocket.Which of the following, if true, could prove to be a threat to this plan?

Accepted Answer

The fact that a competitor already exists in the market and has a first mover advantage can pose a threat to the success of Rice Rocket. It may be difficult to attract customers away from a brand they're already familiar with, especially if the offerings are similar. The other options (A, C, and D) may pose challenges, but they can be overcome with proper planning and execution.

Question 17

Colleen is successful after the first 3 years, and she is approached by a competitor who is nearing retirement age.The competitor is interested in selling his business to Colleen.For Colleen, this would be a(n) ________ strategy.

Accepted Answer

Horizontal integration involves acquiring or merging with businesses that are in the same industry or offer similar products/services. In this scenario, Colleen's competitor is also in the same industry, making it a good fit for horizontal integration.

Question 18

After hiring several employees, Patrick requires that each person in this company be involved in studying trends involving new technology, competitors, and customers.These employees are involved in ________.

Accepted Answer

The employees are involved in studying external factors such as technology trends, competitors, and customers, which falls under the category of external analysis.

Question 19

Because his customers are demanding price concessions and enhanced service levels in return for their continued business, Ariel decides that he wants to compete by offering unique products that are widely valued by customers.What strategy is Ariel following?

Accepted Answer

Ariel is following a differentiation strategy by offering unique products that are highly valued by customers, which is different from competing solely on price or trying to be the lowest cost provider (cost leadership) or focusing on a narrow segment of the market (focus). There is no indication that he is following a stability strategy, which is typically characterized by maintaining the status quo and avoiding changes to the business.

Question 20

After completing an external analysis, Patrick will become aware of the ________ of the company.

Accepted Answer

An external analysis typically looks at the opportunities and threats facing a company, as they are external factors that the company has little control over. Strengths and weaknesses are internal factors that are usually evaluated through an internal analysis. Therefore, the best choice is C, which states that Patrick will become aware of the opportunities and threats of the company after completing an external analysis.

Quiz 9: Strategic Management