Question 1

TimeEnough Inc.entered the low-priced digital watch market several years ago.This firm's earnings have been unsteady,but might be growing.According to the BCG growth matrix,TimeEnough is a
A) cash cow.
B) star.
C) dog.
D) question mark.

Accepted Answer

According to the BCG growth matrix, TimeEnough is a question mark. Question marks have low, unstable earnings that might be growing.

Question 2

_____ is when a firm moves activities and jobs outside its home country.
A) Conglomerate outsourcing
B) Alliance outsourcing
C) Off-shore outsourcing
D) External outsourcing

Accepted Answer

Off-shore outsourcing is when a firm moves activities and jobs outside its home country.

Question 3

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?
A) It allows the conglomerate to overcome institutional weaknesses in emerging economies.
B) It allows the conglomerate to form a monopoly in emerging economies.
C) It allows the conglomerate to use well-defined legal systems in emerging economies.
D) It allows the conglomerate to take advantage of strong capital markets in emerging economies.

Accepted Answer

An unrelated diversification strategy helps firms gain and sustain competitive advantage because it allows the conglomerate to overcome institutional weaknesses in emerging economies, such as a lack of capital markets and well-defined legal systems and property rights.

Question 4

Which of the following would hinder firm performance?
A) diversification providing economies of scale
B) diversification exploiting economies of scope
C) diversification raising costs
D) diversification raising value

Accepted Answer

If diversification raised cost, it would hinder firm performance.

Question 5

About 20 years ago,Sturdy Light,Inc.,produced a sturdy,lightweight backpack in a market that was rapidly growing.Sturdy Light became a leader in this market.Eventually,the backpack market reached the maturity stage and slowed down.However,by this time,Sturdy Light had developed a strong brand name and continued to steadily lead the market.Which of the following describes this scenario?
A) Sturdy Light was a star that developed into a cash cow.
B) Sturdy Light was a question mark that developed into a star.
C) Sturdy Light was a dog that developed into a question mark.
D) Sturdy Light was a cash cow that developed into a star.

Accepted Answer

Sturdy Light was a star that developed into a cash cow. A star holds a high market share in a fast growing market. A cash cow holds a high market share in a low-growth market.

Question 6

In 2009,ExxonMobil bought XTO Energy,a natural gas company,for $31 billion.XTO Energy is known for its core competency to extract natural gas from unconventional places such as shale rock-the type of deposits currently being exploited in the United States.ExxonMobil hopes to leverage its core competency in the exploration and commercialization of oil into natural gas extraction.Based on this example,ExxonMobil is engaging in
A) unrelated-linked diversification.
B) unrelated-constrained diversification.
C) related-linked diversification.
D) related-constrained diversification.

Accepted Answer

Based on this example, ExxonMobil is engaging in related-constrained diversification. When executives consider business opportunities only where they can leverage their existing competencies and resources, the firm is using related-constrained diversification.

Question 7

Which quadrant in the core competence-market matrix is the hardest to pursue?
A) building new core competencies to protect and extend current market position
B) building new core competencies to create and compete in markets of the future
C) leveraging core competencies to improve current market position
D) redeploying and recombining core competencies to compete in markets of the future

Accepted Answer

The quadrant in the core competence-market matrix that is the hardest to pursue is building new core competencies to create and compete in markets of the future.

Question 8

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a
A) diversification discount.
B) diversification premium.
C) conglomerate discount.
D) conglomerate premium.

Accepted Answer

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a diversification premium.

Question 9

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers.In a similar fashion,another firm sells its products through company-owned retail outlets and through independent retailers.Both of these examples demonstrate
A) strategic outsourcing.
B) strategic insourcing.
C) backward horizontal integration.
D) taper integration.

Accepted Answer

Both of these examples show taper integration. This type of integration is a way of orchestrating value activities in which a firm is either backwardly integrated and also relies on outside-market firms for some of its supplies or is forwardly integrated and also relies on outside-market firms for some if its distribution.

Question 10

In the early 1990s,Gatorade dominated the market for sports drinks,a segment in which it had been the original innovator.For decades,Coca-Cola had been a leader in marketing,bottling,and distributing soft drinks.However these drinks did not include a sports drink.Soon after Gatorade appeared,Coca-Cola developed and marketed its own sports drink,Powerade.In this example,Coca-Cola
A) built new core competencies to protect and extend its current market position.
B) built new core competencies to create and compete in markets of the future.
C) leveraged core competencies to improve current market position.
D) redeployed and recombined core competencies to compete in markets of the future.

Accepted Answer

In this example, Coca-Cola built new core competencies to protect and extend its current market position.

Quiz 8: Corporate Strategy: Vertical Integration and Diversification

TimeEnough Inc.entered the low-priced digital watch market several years ago.This firm's earnings have been unsteady,but might be growing.According to the BCG growth matrix,TimeEnough is a

_____ is when a firm moves activities and jobs outside its home country.

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

Which of the following would hinder firm performance?

Which quadrant in the core competence-market matrix is the hardest to pursue?

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers.In a similar fashion,another firm sells its products through company-owned retail outlets and through independent retailers.Both of these examples demonstrate