Question 1

Managers use corporate-level strategy to identify which industries a company should compete in to maximize long-run profitability.

Accepted Answer

This statement is true. Corporate-level strategy is the process through which a company determines which industries it should participate in and how it should allocate its resources among those industries in order to achieve long-term profitability.

Question 2

One outcome of horizontal integration is industry consolidation,leading to more bargaining power over buyers and suppliers.

Accepted Answer

Horizontal integration involves the acquisition of companies operating in the same industry. As a result, industry consolidation occurs, leading to fewer players and increased bargaining power over buyers and suppliers.

Question 3

Even though companies may invest in specialized assets to build competitive advantage,it is seldom necessary that suppliers do so.

Accepted Answer

Suppliers may also invest in specialized assets to build competitive advantage, such as developing unique technology or expertise in a particular product or service.

Question 4

At the time of the merger of Hewlett Packard and Compaq,Dell Computer's competitive advantage over Hewlett Packard was based on Dell's cost-leadership business model.

Accepted Answer

Dell had a cost-leadership business model, which helped them maintain a competitive advantage over Hewlett Packard at the time of the HP-Compaq merger.

Question 5

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

Accepted Answer

By integrating horizontally, a company can eliminate redundancy and streamline operations, leading to cost savings. Examples of redundancies that can be eliminated include marketing and advertising expenses, R&D costs, and administrative expenses.

Question 6

When Citibank offers home mortgages and credit cards to its checking account customers,it is using horizontal integration strategy.

Accepted Answer

Citibank is using a cross-selling strategy, not horizontal integration. Horizontal integration involves acquiring or merging with competitors, while cross-selling involves offering additional products or services to existing customers.

Question 7

Transfer pricing refers when a company is taken advantage of by another company it does business with after it has made an investement in expensive specialized assets to better meet the needs of the other company.

Accepted Answer

Transfer pricing refers to the pricing of goods, services, and intangibles between related entities within a multinational corporation, not the exploitation of a company by another after an investment.

Question 8

Vertical integration can strengthen a company's differentiation advantage.

Accepted Answer

Vertical integration allows a company to control more aspects of its supply chain, which can lead to greater control over the quality of inputs and outputs, faster production times, and the ability to offer unique products or services that competitors cannot replicate. This strengthens a company's differentiation advantage.

Question 9

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Accepted Answer

Horizontal integration can lead to both low cost advantages and differentiation advantages, depending on how it is executed. For example, if a company acquires a competitor with unique technology or intellectual property, this could lead to differentiation advantages. However, if a company simply acquires competitors to increase market share and drive down costs through economies of scale, this would primarily result in low cost advantages.

Question 10

Unfortunately,horizontal integration can not be accomplished by acquisitions or mergers.

Accepted Answer

Horizontal integration can be accomplished through acquisitions or mergers, where a company acquires or merges with another company in the same industry or market. This allows them to expand their reach and increase their market share.

Question 11

Vertical integration can raise costs if,over time,a company continues to purchase inputs from company-owned suppliers when independent suppliers can supply the same inputs at lower cost.

Accepted Answer

This is because vertical integration may result in the company limiting its options for sourcing inputs and relying solely on its own suppliers, which may not always be the most cost-effective option. As a result, the company may end up paying more for inputs than it would if it had sourced them from independent suppliers.

Question 12

Horizontal integration almost always increases rivalry in an industry.

Accepted Answer

The answer of Horizontal integration almost always increases rivalry in...

Question 13

When a company stays inside one industry,the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the environment.

Accepted Answer

Staying within one industry can lead to difficulties in sustaining a successful business model and strategies over time due to changing environmental conditions.

Question 14

Product bundling occurs when a firm offers a range of products that are sold together at a single price.

Accepted Answer

Product bundling is a marketing strategy where a company offers several products for sale as one combined product at a single price point.

Question 15

Vertical integration is undertaken to support the competitive position of a company's core business.

Accepted Answer

Vertical integration involves a company expanding its operations within a particular industry or supply chain to gain more control and support its core business. This can include acquiring suppliers or distributors to ensure reliable and cost-effective access to resources and streamline production processes. The ultimate goal is to enhance the competitiveness of the company's primary operations.

Question 16

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Accepted Answer

The answer of A company should first choose a corporate-level...

Question 17

Oracle Corp.,based in Reno,Nevada,has become the world's largest maker of database software largely through a strategy of acquisition.

Accepted Answer

Oracle Corporation is based in Austin, Texas, not Reno, Nevada.

Question 18

A strategic alliance is a substitute for horizontal integration.

Accepted Answer

A strategic alliance is a partnership between two or more firms to achieve specific goals, such as expanding into a new market or developing new technology, whereas horizontal integration involves merging with or acquiring a competitor in the same industry. They serve different purposes and are not interchangeable.

Question 19

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Accepted Answer

Competitive bidding creates a situation where suppliers are more focused on winning the bid and providing the lowest cost possible, rather than investing in long-term relationships with their trading partners. The fear of losing future bids to other suppliers can make them hesitant to make investments that may not be recovered through lower costs in subsequent bidding rounds.

Question 20

An advantage of horizontal integration is that by staying in one industry,a firm can focus its resources and capabilities on competing successfully in just one area.

Accepted Answer

By staying in one industry, a firm can specialize and develop expertise in that specific area, allowing them to better compete and innovate within their industry. This focus can result in increased efficiency, cost savings, and a better understanding of customer needs and preferences.

Quiz 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing