Question 1

Clorox Corporation,the manufacturer of bleach and bleach-based cleaning products,acquired Kingsford Charcoal and Prime Choice brand steak sauce.What is this action an example of?

Accepted Answer

Clorox is growing through (external)acquisitions.

Question 2

What strategy is characterized by significant cost reductions,the layoffs of employees,the closing of poorly performing stores,offices,or manufacturing plants,or the closing or selling of entire lines of products or services?

Accepted Answer

All of these actions are associated with shrinking the size or scope of a business.

Question 3

What strategy is used to turn around very poor company performance by shrinking the size or scope of the business?

Accepted Answer

Definition of retrenchment strategy.

Question 4

What term could be used to describe Coca-Cola's acquisition of a water-treatment and bottling plant so it could produce and market Dasani brand bottled water?

Accepted Answer

Coca-Cola is growing through (external)acquisitions.

Question 5

Which of the following is probably the best approach to diversification in portfolio management?

Accepted Answer

Related diversification is the best approach to diversification in portfolio management. This involves investing in different but related industries or businesses. By doing so, the risks are spread out and potential losses in one industry can be offset by gains in another. Additionally, this approach allows for the transfer of knowledge, resources, and capabilities from one industry to another, creating synergy and improving overall portfolio performance.

Question 6

Which of the following is one of the five forces Michael Porter identified as being the ones to determine an industry's overall attractiveness and potential for long-term profitability?

Accepted Answer

Porter's five industry forces model includes (1)character of the rivalry, (2)threat of new entrants, (3)threat of substitute products or services, (4)bargaining power of suppliers,and (5)bargaining power of customers.

Question 7

Apple and Samsung lead the cellphone industry and usually one or the other company leads the industry in phone sales.Which of Porter's five industry forces is this an example of?

Accepted Answer

This is an example of the "character of the rivalry" force in Porter's five industry forces. The competition between Apple and Samsung is intense, with each company constantly trying to outdo the other in terms of innovation, features, and marketing. This rivalry drives both companies to strive for excellence and to continually innovate and create new products.

Question 8

Which type of strategy do companies often choose when their external environment doesn't change much or when they have struggled with periods of explosive growth?

Accepted Answer

The stability strategy allows the firm an opportunity to catch its breath after a round of explosive growth,and/or to consolidate its market position with customers.

Question 9

In an attempt to stop declining profitability,ICI,a British chemical company,deleted petrochemical products from its production and concentrated on specialty chemicals,a less capital intensive,less cyclical business.Which type of grand strategy was ICI using?

Accepted Answer

Retrenchment is defined as a strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business.Here,ICI is downscaling from a diversified chemical company to a specialized chemical company.

Question 10

Which strategy,if successful,is often followed by a growth strategy?

Accepted Answer

A retrenched firm typically needs to return to a growth strategy in order to maintain or regain a favourable competitive position.

Question 11

Which of the following is one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability?

Accepted Answer

Porter's five industry forces model includes (1)character of the rivalry, (2)threat of new entrants, (3)threat of substitute products or services, (4)bargaining power of suppliers,and (5)bargaining power of customers.

Question 12

Hector wanted to grow his business beyond the food industry and started investing in clothing,toys,and travel companies.Hector's vice president did not agree with these investments and predicted a decline in profit.Predicting this decline in profit is contrary to which strategy?

Accepted Answer

Portfolio strategy has some drawbacks.The most significant: contrary to predictions of portfolio strategy,evidence suggests that acquiring unrelated business is not useful.

Question 13

What type of grand strategy is McDonald's using when it increases its profits in France by offering uniquely French products,such as Croque McDo,the McDonald's version of a popular French grilled sandwich?

Accepted Answer

A growth strategy is defined as a strategy that focuses on increasing profits,revenues,market share,or the number of places in which the company does business.Here,McDonald's is attempting to increase profits.

Question 14

In an attempt to stop declining profitability,ICI,a British chemical company,deleted petrochemical products from its production and concentrated on specialty chemicals,a less capital intensive,less cyclical business.Which type of strategy will ICI more than likely implement if it is successful in making the needed changes?

Accepted Answer

The recovery strategy is defined as the strategic actions taken after retrenchment to return to a growth strategy.

Question 15

Which of the following strategies is analogous to pruning roses?

Accepted Answer

Retrenchment is aimed at scaling back to a healthy base from which the company can grow.This is analogous to pruning to improve the health of a rose bush.

Question 16

Which of the following is determined by Michael Porter's five industry forces?

Accepted Answer

Michael Porter's five industry forces are Supplier Power, Threat of New Entrants, Buyer Power, Threat of Substitutes, and Competitive Rivalry. These forces help determine the potential for long-term profitability in an industry.

Question 17

Which type of strategy,manifested in three ways,is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use?

Accepted Answer

Definition of a grand strategy.

Question 18

Which corporate strategy addresses the question "How should we compete in this industry?"

Accepted Answer

Definition of industry-level strategy.

Question 19

What type of strategy are companies most likely following when they are trying to improve the way in which they sell the same goods or services to the same customers?

Accepted Answer

A stability strategy is defined as focusing on improving the way in which the company sells the same products or services to the same customers.

Question 20

By which of the following actions can companies achieve growth?

Accepted Answer

The two major avenues to growth are (1)external growth through mergers and acquisitions; or (2)internal growth of existing business(es).

Quiz 6: Organizational Strategy