Question 1

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 2

Firestone Tire and Rubber Company purchases rubber plantations in Africa so that it will have a source of supply for its tire manufacturing plants in Akron,Ohio.This is an example of a ______________ strategy.

Accepted Answer

Purchasing firms that produces inputs for the company's products is backward vertical integration.Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration)or forward into a new industry that uses,distributes,or sells the company's products (forward vertical integration).

Question 3

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 4

When PepsiCo purchased Frito-Lay and expanded its operations into the snack-food business,it was pursuing a ______________ strategy.

Accepted Answer

Diversification is the corporate-level strategy of expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services.Example includes PepsiCo's diversification into the snack-food business with the purchase of Frito Lay.

Question 5

When TechnoSol Ltd. ,designed a corporate-level strategy,which includes expanding its operations into a new type of business for the organization,TechnoSol was pursuing a(n)______________ strategy.

Accepted Answer

Diversification is the corporate-level strategy of expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services.

Question 6

Firestone Tire and Rubber Company set up a chain of Firestone retail stores to sell its tires to American consumers.This is an example of:

Accepted Answer

Setting up stores that sell the company's own products makes it forward vertical integration.Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration)or forward into a new industry that uses,distributes,or sells the company's products (forward vertical integration).

Question 7

Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and to reduce the fixed costs assigned by corporate headquarters.This is an example of ________________.

Accepted Answer

Synergy is obtained when the value created by two divisions cooperating is greater than the value that would be created if the two divisions operated separately and independently.Two or more of the divisions of a diversified company can utilize the same manufacturing facilities,distribution channels,or advertising campaigns-that is,share functional activities.Each division has to invest fewer resources in a shared functional activity than it would have to invest if it performed the functional activity by itself.

Question 8

When Gallo purchased a company that makes wine bottles,it was involved in:

Accepted Answer

Purchasing a supplier of raw materials is backward vertical integration.Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration)or forward into a new industry that uses,distributes,or sells the company's products (forward vertical integration).

Question 9

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 10

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 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 11

When an organization enters a new type of industry,which is not similar in any way to the current businesses of the organization,they are 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 12

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 13

PepsiCo purchased KFC so that it could replace Coke products with Pepsi products in KFC restaurants.This is an example of a _________ strategy.

Accepted Answer

Purchasing outlets that sells the company's products makes it forward vertical integration.Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration)or forward into a new industry that uses,distributes,or sells the company's products (forward vertical integration).

Question 14

When Electrix Ltd. ,sells its TVs and VCRs 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 15

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.

Question 16

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 17

When General Electric Company expanded its operations by acquiring NBC television,this is an illustration of ________________.

Accepted Answer

Diversification is the corporate-level strategy of expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services.

Question 18

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(n)_______________ strategy.

Accepted Answer

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

Question 19

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 20

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.

Quiz 6: Planning, Strategy, and Competitive Advantage