Question 1

When Air Canada went into bankruptcy protection to restructure its organization and reduce its operating costs,it was pursuing which of the following strategies?

Accepted Answer

Bankruptcy protection and restructuring to reduce costs is a clear indication of pursuing a turnaround strategy, aiming to recover from a financial crisis and improve the company's performance. Integration, stability, and concentration strategies do not typically involve bankruptcy protection or major structural changes.

Question 2

Over the last century,the Campbell Soup Company has expanded by acquiring other packaged consumer food companies such as Pace,V8,Pepperidge Farms,Swanson,and Godiva Chocolatiers.Campbell was pursuing which corporate strategy?

Accepted Answer

The Campbell Soup Company pursued related diversification strategy by acquiring other packaged consumer food companies such as Pace, V8, Pepperidge Farms, Swanson, and Godiva Chocolatiers. This strategy involves expanding a company's operations into related industries or markets to leverage existing knowledge, skills, and resources.

Question 3

When athletic sportswear manufacturer Nike decided to open its own chain of retail stores,it was pursuing which corporate strategy?

Accepted Answer

Nike's decision to open its own chain of retail stores involves forward vertical integration, which is the strategy of a company expanding its operations towards the end consumer. By opening its own stores, Nike is able to directly sell its products to consumers and have more control over the retail environment and customer experience. This is a form of vertical integration because Nike is expanding its operations to encompass the retailing of its own products, which is an activity that was previously performed by other companies in the supply chain. The other options (A, C, and D) do not accurately describe Nike's strategy in this case.

Question 4

Which of the following provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources?

Accepted Answer

The corporate portfolio matrix, also known as the Boston Consulting Group matrix, provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources. It classifies businesses into four categories based on their market growth rate and relative market share, which in turn helps managers determine how to allocate resources across different businesses in their portfolio. The other choices (differentiation strategy, vertical integration, and strategic business unit) are all important concepts in strategic management, but they do not provide the same type of framework as the corporate portfolio matrix.

Question 5

When the Campbell Soup Company began to manufacture its own cans to gain more control over a key production input,it was pursuing which corporate strategy?

Accepted Answer

Backward vertical integration involves a company expanding its operations to include activities that are closer to the source of the inputs/raw materials. In this case, Campbell Soup Company is manufacturing its own cans, which are a key production input for its products, therefore, it is pursuing backward vertical integration.

Question 6

Pepsico is divided into several product divisions,including Pepsi,Frito-Lay,Tropicana,Quaker,and Gatorade.Each division has its own strategy that defines the products it wants to offer and the customers it wants to target.The divisions are called ________.

Accepted Answer

The divisions of Pepsico are referred to as strategic business units (SBUs), which are independent entities within a larger parent company that have their own strategies and business models. SBUs are often responsible for their own profits and losses, and are typically structured to target specific customer segments or product lines.

Question 7

Florance is a chain of flower shops in the Toronto area.The company recently acquired Knick-knacks,which owns three gift shops.Which of the following is most similar to this acquisition?

Accepted Answer

Similar to Florance acquiring Knick-knacks, Toy World also acquired another company (Unicorn Children's Books) in a related industry (children's products) to expand its offerings and create co-branded stores.

Question 8

Which of the following describes a company growing by combining with other organizations in the same industry?

Accepted Answer

Horizontal integration involves a company growing by merging with or acquiring other organizations in the same industry. This allows the company to expand its market share and potentially eliminate competition. Forward vertical integration involves a company expanding by acquiring or merging with a supplier, while backward vertical integration involves expanding by acquiring or merging with a distributor or retailer. Concentration refers to a strategy of focusing on a single product or service.

Question 9

YUM! Brands is the world's largest restaurant company,with more than 33,000 restaurants in over 100 countries.Their restaurant brands include KFC,Pizza Hut,and Taco Bell.They recently acquired two other fast-food restaurant chains: A&W and Long John Silver's Seafood.YUM! has pursued which type of corporate strategy?

Accepted Answer

YUM! Brands acquired two other fast-food restaurant chains, A&W and Long John Silver's Seafood, which would fall under related diversification as they are still in the same industry of fast food restaurants, but offer different menu items and brand recognition.

Question 10

When an organization attempts to grow by merging with or acquiring firms in different but associated industries,the strategy is known as a ________ strategy.

Accepted Answer

Related diversification involves expanding a company's operations into other related but distinct industries. This strategy can create synergy between the various businesses within the organization and allow for economies of scale. Mergers and acquisitions are common methods for implementing related diversification. Option A is incorrect because related differentiation involves developing unique products or services that appeal to specific customer segments. Option B is incorrect because horizontal integration involves acquiring companies that operate in the same industry and at the same level of the value chain. Option C is incorrect because vertical integration involves acquiring companies that operate in different stages of the same industry's value chain.

Question 11

Cindy's Cosmetics continues to offer the same high quality beauty products that it has for the last 10 years.The company is successful in its market segment and has no plans for change in the near future.The company is pursuing which type of strategy?

Accepted Answer

The company is pursuing a stability strategy, as it has no plans for change in the near future and continues to offer the same high quality beauty products that it has for the last 10 years.

Question 12

When L'Oréal acquired The Body Shop,it carried out ________.

Accepted Answer

When L'Oréal acquired The Body Shop, it was an example of horizontal integration because both companies operate in the same industry (cosmetics and beauty products), and this acquisition expanded L'Oréal's market share within that industry.

Question 13

When consumer electronics manufacturer Sony Corporation decided to open its own chain of retail stores,it was pursuing which corporate strategy?

Accepted Answer

Sony opening its own chain of retail stores is an example of forward vertical integration, where a company decides to move further down the supply chain and take control of the delivery and sales of its products to end consumers.

Question 14

When Kimberly-Clark Corporation merged with Scott Paper Company to form the world's largest producer of tissue paper,they were pursuing which growth strategy?

Accepted Answer

The merger between Kimberly-Clark Corporation and Scott Paper Company was an example of horizontal integration, which involves the acquisition of a competitor in the same industry in order to increase market share and reduce competition.

Question 15

When Air Canada acquired its largest domestic competitor,Canadian Airlines International,it was pursuing a strategy of ________.

Accepted Answer

Air Canada's acquisition of Canadian Airlines International was an example of horizontal integration, where two companies operating in the same industry merge or acquire each other to increase market share and eliminate competition.

Question 16

When a university reduces its course offerings in a semester due to low student enrolment,it is pursuing a strategy of ________.

Accepted Answer

Retrenchment is a strategy of cutting back on activities or reducing offerings in order to improve overall performance. In this case, the university is reducing its course offerings due to low student enrollment, which is a form of retrenchment. None of the other options (integration, stability, concentration) would necessarily apply to this situation.

Question 17

When an organization attempts to grow by merging with or acquiring firms in different and dissimilar industries,the strategy is known as a(n)________ strategy.

Accepted Answer

Unrelated diversification is when an organization attempts to grow by merging with or acquiring firms in different and dissimilar industries, which is exactly what is described in the question. Horizontal integration involves merging with or acquiring firms in the same industry, while vertical integration involves merging with or acquiring firms at different stages of the supply chain. Unrelated differentiation is not a recognized term in the field of business strategy.

Question 18

The Jim Pattison Group has grown by acquiring firms in diverse industries.Today,Jim Pattison owns food retail chains,car dealerships,radio stations,a fishing company,a sign company,a packaging company,and several museum-themed tourist attractions.Jim Pattison has pursued a strategy of ________.

Accepted Answer

The Jim Pattison Group has acquired firms in industries that are not related to one another, such as food retail chains, car dealerships, radio stations, a fishing company, a sign company, a packaging company, and museum-themed tourist attractions. This is an example of unrelated diversification, where a company acquires businesses that have no direct relationship to its current business operations.

Question 19

Ronald's has been in the fast-food business for five years.After struggling for two years,it finally broke even,and the french fries it offers are its most popular product.However,during the past year,its business has suffered because the farm that used to supply it with potatoes has increased its prices drastically.What should Ronald's do to control production costs?

Accepted Answer

Buying out the farm could allow Ronald's to control its supply chain more effectively, potentially reducing the cost of potatoes, which are crucial for its most popular product, french fries. This vertical integration strategy could help in controlling production costs.

Question 20

When aluminum manufacturer Alcan purchased a mining company that mines bauxite,a key input in aluminum production,it was pursuing which corporate strategy?

Accepted Answer

Backward vertical integration involves a company acquiring a supplier or provider of inputs to its business. In this case, Alcan purchasing a mining company that mines bauxite, which is a key input in aluminum production, is an example of backward vertical integration.

Quiz 10: Managing Strategically