Question 1

The company that produced the television show,Who Wants to Marry My Dad?,had to cut cash flow when the demand for the show did not live up to expectations.According to the BCG matrix,the TV show,Who Wants to Marry My Dad?,was an example of a
A) question mark.
B) rising star.
C) star.
D) dog.
E) cash cow.

Accepted Answer

The BCG matrix categorizes products based on their market share and growth rate. A "dog" in the BCG matrix represents a product with low market share and low growth rate. In this case, the demand for the TV show did not meet expectations, indicating a low market share and growth rate, making it a "dog" in the BCG matrix. Therefore, the best choice is D, dog.

Question 2

____ are corporate-level strategies for becoming a diversified firm.
A) Internal developments of new products
B) Backward vertical integrations
C) Mergers
D) Acquisitions
E) All of these choices

Accepted Answer

All of these choices are corporate-level strategies for becoming a diversified firm. Internal developments of new products involve creating new products or services within the company, while backward vertical integration involves acquiring or establishing businesses that supply inputs to the company's existing operations. Mergers involve combining two companies into a single entity, while acquisitions involve purchasing another company outright. All of these strategies can be used to diversify a company's operations and increase its competitiveness in the market.

Question 3

____ exists when the economic value together is greater than the value of the parts.
A) Entropy
B) Competitive support
C) Resource deployment
D) Scope
E) Synergy

Accepted Answer

Synergy refers to when the combination of two or more things (such as resources or businesses) creates a greater overall value than the sum of their individual values. This is often the case in mergers and acquisitions, where the resulting company can benefit from economies of scale, increased market power, and complementary strengths.

Question 4

United Continental Holdings includes Continental Airlines,United Airline,Chelsea Food Services,and United Cruises,because it was thought that they can accomplish more joined together than they can operating as separate units.Which advantage of related diversification does this best represent?
A) Reducing overhead
B) Creating a distinctive competence
C) Innovation
D) Synergy
E) Reducing business dependence

Accepted Answer

The joining of Continental Airlines, United Airlines, Chelsea Food Services, and United Cruises represents an advantage of related diversification called synergy, which is the ability of the combined companies to achieve greater efficiency and cost savings by working together. In this case, the companies can share resources, such as aircrafts, kitchens, and ships, to reduce overall costs and increase profitability.

Question 5

Credit card and mortgage divisions of banks often get their customers from the bank's commercial loan customers.This is an example of ____ .
A) resource deployment
B) strategic scope
C) competitive advantage
D) synergy in related diversification
E) None of these choices

Accepted Answer

This is an example of synergy in related diversification, where the bank's commercial loan customers are related to potential credit card and mortgage customers. The bank can utilize its existing resources and customer base to expand its business into related areas.

Question 6

Hewlett Packard has a large share of the slowly growing PC market.This is an example of a
A) cash cow.
B) prospector.
C) star.
D) question mark.
E) dog.

Accepted Answer

A cash cow is a product or business unit that has a high market share in a low-growth market. In this case, Hewlett Packard has a large share of the slowly growing PC market, which means that they are earning a significant amount of revenue from this product, but the market is not expected to grow significantly in the future. Therefore, HP's PC business can be considered a cash cow.

Question 7

Ford once supplied every part to its automobiles,except the rubber (though it tried to grow the trees,to no avail).This is an example of
A) forward vertical integration.
B) unrelated diversification.
C) backward vertical integration.
D) horizontal integration.
E) a defender strategy.

Accepted Answer

Backward vertical integration refers to a company acquiring or controlling another company that is part of its supply chain. In this case, Ford acquiring suppliers for the parts needed to build their automobiles is an example of backward vertical integration. This allows Ford to have more control over its supply chain and ensure the quality and availability of the parts it needs to build its automobiles.

Question 8

Extra funds should be channeled to the ____,which is a product with a high share of a fast-growing market.
A) star
B) cash cow
C) rising star
D) defender
E) question mark

Accepted Answer

A "star" in the context of the BCG matrix refers to a product or business unit that has a high market share in a fast-growing industry, indicating it should receive significant investment to support its growth.

Question 9

____ is the proportion of the market controlled by the product.
A) Market growth rate
B) Relative market share
C) Competitive advantage
D) Tactical scope
E) Functional reach

Accepted Answer

Relative market share is the proportion of the market controlled by the product. Option A, market growth rate, refers to the rate at which the market is expanding. Options C, D, and E are not related to this concept.

Question 10

Which of the following is NOT an advantage inherent in related diversification?
A) Reducing business dependence
B) Reducing overhead
C) Scope
D) Synergy
E) Reducing risk

Accepted Answer

Scope is not an inherent advantage of related diversification. Related diversification focuses on entering or expanding in industries related to a company's current operations, aiming at leveraging existing competencies, achieving synergies, reducing risk, and possibly reducing overhead costs through shared resources. Scope, in this context, refers to the breadth of areas a business operates in, which is not an advantage but rather a characteristic of how diversified the company is.

Question 11

Porsche Automobil Holding and Volkswagen once owned each other's stock and planned to integrate the companies later.This diversification strategy is ____.
A) acquisition
B) forward vertical integration
C) horizontal integration
D) backward integration
E) merger

Accepted Answer

This is a clear example of a merger, where two companies come together to form a single entity. Porsche and Volkswagen had plans to integrate their operations before the merger. Acquisitions involve one company acquiring another, horizontal integration involves companies in the same industry merging, backward integration involves a company acquiring its suppliers, and forward vertical integration involves a company acquiring its distributors or retailers.

Question 12

Using the Boston Consulting Group matrix,SBUs are classified on the basis of
A) market share and market growth rate.
B) market share and cash generation potential.
C) market growth rate and financial strength.
D) financial strength and product life cycle.
E) cash generation potential and product life cycle.

Accepted Answer

The Boston Consulting Group matrix classifies SBUs on the basis of two factors: market share (relative to the largest competitor) and market growth rate (annual percentage change in market size). This helps to determine the relative market position of each SBU, and thus, the appropriate strategy to pursue.

Question 13

Apple has a large share of the growing tablet market.Apple is an example of a
A) cash cow.
B) prospector.
C) star.
D) question mark.
E) dog.

Accepted Answer

A star represents a business unit that has a high market share in a growing market. Apple has a large share of the tablet market, which is also a growing market, making it a star in this context.

Question 14

Why would one organization want to purchase an SBU that has been classified as a "dog"?
A) A need to generate large amounts of short-run cash
B) A desire to expand into a rapidly growing market
C) Possible synergistic effects on the buying organization
D) A decision to adopt a retrenchment strategy
E) A desire to complete a hostile takeover of the seller

Accepted Answer

Even though an SBU classified as a "dog" may currently have low market share and growth, it may have some assets, knowledge or skills that could be synergistically combined with the buying organization's strengths to create new opportunities. By acquiring such an SBU, the buying organization may be able to achieve cost savings, scale economies, or market power in the long run.

Question 15

Kraft Food Inc offered to buy Cadbury,a confection and beverage company.Which advantage of related diversification could result from the merging of these two businesses?
A) Reducing overhead
B) Creating a distinctive competence
C) Innovation
D) Synergy
E) Reducing business dependence

Accepted Answer

Synergy is the advantage of related diversification that could result from the merging of these two businesses. Synergy is the ability of two or more businesses to generate greater value together than they could on their own. In this case, Kraft Food Inc and Cadbury, both being in the confection and beverage industry, could potentially benefit from economies of scale, increased market share, and cross-selling opportunities.

Question 16

Forms of diversification include
A) acquisitions.
B) vertical integration.
C) mergers.
D) the internal development of new products.
E) All of these choices

Accepted Answer

All of these choices are valid forms of diversification. Acquisitions, vertical integration, mergers, and the internal development of new products all involve expanding a company's operations and/or product offerings beyond its current scope, which is the essence of diversification. Depending on a company's current market position, strengths, weaknesses, and goals, any or all of these forms of diversification could be a viable strategic option.

Question 17

Companies should invest carefully and monitor closely a ____,which is a product that has a small share of a growing market.
A) cash cow
B) question mark
C) defender
D) star
E) rising star

Accepted Answer

The product described in the question is a "question mark" in the BCG matrix, which represents a product with low market share in a high-growth market. Companies should invest carefully and monitor closely in this category as it has the potential to become a "star" or a "cash cow" with proper investment and growth strategies.

Question 18

Philip Morris markets Marlboro cigarettes,the number-one selling cigarette brand in the world.Outside the United States,Marlboro generates huge profits that Philip Morris uses to support other less successful SBUs.According to the BCG matrix,Marlboro is an example of a
A) question mark.
B) problem child.
C) star.
D) barking dog.
E) cash cow.

Accepted Answer

Marlboro is a well-established brand that has a large market share, generates high profits, and requires minimal investment to maintain its position. This indicates that it is a cash cow according to the BCG matrix, which is characterized by high market share and low market growth rate. The cash generated from the cash cows can be used to support other SBU's that require investment to grow or maintain their position in the market.

Question 19

Adolph Coors Company heavily developed Zima brand beer that was targeted to Generation Xers,but Zima gained only a small share of a rapidly growing market.According to the BCG matrix,Zima is an example of a
A) question mark.
B) rising star.
C) star.
D) barking dog.
E) cash cow.

Accepted Answer

Zima is a new product that has not yet established itself in the market, hence it has a low market share despite being in a rapidly growing market. This aligns with the characteristics of a question mark in the BCG matrix, which is a product with low market share in a high-growth market.

Question 20

Franke,a Swiss manufacturer of sink and facet systems,sold accessories through retail stores and then added Internet sales.Franke used
A) forward vertical integration.
B) unrelated diversification.
C) backward vertical integration.
D) horizontal integration.
E) a defender strategy.

Accepted Answer

Franke used forward vertical integration to expand its distribution channel by adding Internet sales to its existing retail store sales.

Quiz 7: Managing Strategy and Strategic Planning

The company that produced the television show,Who Wants to Marry My Dad?,had to cut cash flow when the demand for the show did not live up to expectations.According to the BCG matrix,the TV show,Who Wants to Marry My Dad?,was an example of a

____ are corporate-level strategies for becoming a diversified firm.

____ exists when the economic value together is greater than the value of the parts.

United Continental Holdings includes Continental Airlines,United Airline,Chelsea Food Services,and United Cruises,because it was thought that they can accomplish more joined together than they can operating as separate units.Which advantage of related diversification does this best represent?

Credit card and mortgage divisions of banks often get their customers from the bank's commercial loan customers.This is an example of ____ .

Hewlett Packard has a large share of the slowly growing PC market.This is an example of a

Ford once supplied every part to its automobiles,except the rubber (though it tried to grow the trees,to no avail) .This is an example of

Extra funds should be channeled to the ____,which is a product with a high share of a fast-growing market.

____ is the proportion of the market controlled by the product.

Which of the following is NOT an advantage inherent in related diversification?

Porsche Automobil Holding and Volkswagen once owned each other's stock and planned to integrate the companies later.This diversification strategy is ____.

Using the Boston Consulting Group matrix,SBUs are classified on the basis of

Apple has a large share of the growing tablet market.Apple is an example of a

Why would one organization want to purchase an SBU that has been classified as a "dog"?

Kraft Food Inc offered to buy Cadbury,a confection and beverage company.Which advantage of related diversification could result from the merging of these two businesses?

Forms of diversification include

Companies should invest carefully and monitor closely a ____,which is a product that has a small share of a growing market.

Philip Morris markets Marlboro cigarettes,the number-one selling cigarette brand in the world.Outside the United States,Marlboro generates huge profits that Philip Morris uses to support other less successful SBUs.According to the BCG matrix,Marlboro is an example of a

Adolph Coors Company heavily developed Zima brand beer that was targeted to Generation Xers,but Zima gained only a small share of a rapidly growing market.According to the BCG matrix,Zima is an example of a

Franke,a Swiss manufacturer of sink and facet systems,sold accessories through retail stores and then added Internet sales.Franke used