Question 1

Medien Corporation decides to enter a new type of business in order to create a competitive advantage in one of its existing businesses. Medien is engaging in ________.

Accepted Answer

Related diversification is the strategy of entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses.

Question 2

Procter & Gamble uses a joint sales force to sell both its laundry detergent products and its bath soap products to the same supermarket chains. This is an example of ________.

Accepted Answer

The way Procter & Gamble's disposable diaper and paper towel divisions cooperate is a good example of the successful production of synergies. These divisions share the costs of procuring inputs such as paper and packaging, a joint sales force sells both products to retail outlets, and both products are shipped using the same distribution system.

Question 3

What happens when there are only a few large customers in the market?

Accepted Answer

If only a few large customers are available to buy an industry's output, they can bargain to drive down the price of that output. As a result, industry producers make lower profits.

Question 4

Which of the following qualities of an effective plan allows for alterations if the situation changes?

Accepted Answer

Despite the need for continuity and accuracy, Fayol emphasized that the planning process should be flexible enough so plans can be altered and changed if the situation changes; managers must not be bound to a static plan.

Question 5

Why is planning considered an important process for managers?

Accepted Answer

Planning is necessary to give the organization a sense of direction and purpose. By stating which organizational goals and strategies are important, a plan keeps managers on track so they use the resources under their control efficiently and effectively.

Question 6

Which of the following is most likely to require a short-term plan?

Accepted Answer

Typically, corporate- and business-level goals and strategies require long- and intermediate-term plans, and functional-level goals and strategies require intermediate- and short-term plans.

Question 7

When an organization enters a new type of industry, which is not similar in any way to the current businesses of the organization, it is engaged in ________.

Accepted Answer

Managers pursue unrelated diversification when they establish divisions or buy companies in new industries that are not linked in any way to their current businesses or industries.

Question 8

The planning and strategy making necessary to increase the efficiency and effectiveness of a particular function are the responsibility of a ________.

Accepted Answer

Each division's functional managers are responsible for the planning and strategy making necessary to increase the efficiency and effectiveness of their particular function.

Question 9

Jespher, Inc., allows Hertonz, a foreign organization, to take charge of both manufacturing and distributing one or more of its products in Thailand in return for a negotiated fee. This is an example of ________.

Accepted Answer

In licensing, a company (the licenser) allows a foreign organization (the licensee) to take charge of both manufacturing and distributing one or more of its products in the licensee's country or world region in return for a negotiated fee.

Question 10

The form of international expansion which gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and it reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations, is ________.

Accepted Answer

When managers decide to establish a wholly owned foreign subsidiary, they invest in establishing production operations in a foreign country independent of any local direct involvement. It gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and it reduces the level of risk because the organization's managers have full control over all aspects of their foreign subsidiary's operations.

Question 11

The least complex global operation is _______.

Accepted Answer

The least complex global operations are exporting and importing. A company engaged in exporting makes products at home and sells them abroad.

Question 12

When Electrix, Ltd., sells its TVs and DVD players using the same basic marketing approach in various countries, it is pursuing ________.

Accepted Answer

If managers decide that their organization should sell the same standardized product in each national market in which it competes, and use the same basic marketing approach, they adopt a global strategy.

Question 13

When Procter & Gamble uses the same distribution system to deliver its oral care products and its hair care products to drugstore chains, this is an example of ________.

Accepted Answer

The way Procter & Gamble's disposable oral care products and hair care product divisions cooperate is a good example of the successful production of synergies. These divisions share the costs of procuring inputs such as paper and packaging, a joint sales force sells both products to retail outlets, and both products are shipped using the same distribution system.

Question 14

What is the plan of action for a business-level strategy based on SWOT analysis?

Accepted Answer

Business-level strategy is a plan of action to take advantage of favorable opportunities and find ways to counter threats so as to compete effectively in an industry.

Question 15

Unilever sells different products using a different marketing approach in England than it uses when marketing these products in the United States. This is an example of a ________ strategy.

Accepted Answer

If managers decide to customize products and marketing strategies to specific national conditions, they adopt a multidomestic strategy.

Question 16

The decision of a company to invest in state-of-the-art European production facilities is an example of a ________-level strategy.

Accepted Answer

Functional managers' decisions pertain to the goals that they propose to pursue to help the division attain its business-level goals.

Question 17

Madison Hotels sold a foreign organization the right to use its brand name and operating know-how in return for a lump-sum payment and a share of the profits. This is an example of ________.

Accepted Answer

In franchising, a company (the franchiser) sells to a foreign organization (the franchisee) the rights to use its brand name and operating know-how in return for a lump-sum payment and a share of the franchiser's profits.

Question 18

A company that is serving only a few market segments has most likely adopted a ________ strategy.

Accepted Answer

Managers pursuing a focused differentiation strategy serve just one or a few segments of the market and aim to make their organization the most differentiated company serving that segment.

Question 19

When managers pool or share their organization's resources and know-how with those of a foreign company, and the two organizations share the rewards or risks of starting a new venture in a foreign country, the two organizations are involved in ________.

Accepted Answer

One way to overcome the loss-of-control problems associated with exporting, licensing, and franchising is to expand globally by means of a strategic alliance. In a strategic alliance, managers pool or share their organization's resources and know-how with those of a foreign company, and the two organizations share the rewards or risks of starting a new venture in a foreign country.

Question 20

Industries that are characterized by permanent, ongoing, intense competition brought about by advancing technology or changing customer tastes, fads, and fashions are an example of ________.

Accepted Answer

The term "hypercompetition" applies to industries that are characterized by permanent, ongoing, intense competition brought about by advancing technology or changing customer tastes and fads and fashions. Clearly, planning and strategy formulation are much more difficult and risky when hypercompetition prevails in an industry.

Quiz 6: Planning, Strategy, and Competitive Advantage