Chapter 5
Adding new, unrelated products or services for present customers is called a. forward integration. b. related diversification. c. backward integration. d. conglomerate diversification. e. unrelated diversification.
E
All of the following are cooperative arrangements except: a. R&D partnerships. b. joint-bidding consortia. c. cross-licensing agreements. d. cross-manufacturing agreements. e. marketing plans.
E
A best-value strategy offers products or services to a wide range of customers at the lowest price on the market.
False
A chief executive officer is located in the divisional level of a large firm.
False
A differentiation strategy can be especially attractive when the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.
False
A differentiation strategy can only be achieved with a small target market.
False
A growing trend is for franchisers to buy out their part of the business from their franchisees.
False
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation and integration.
False
Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.
False
Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.
False
Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does not allow a firm to concentrate on core competencies.
False
Divestiture is selling all of a company's assets, in parts, for their tangible worth.
False
Divestiture is the selling of land a firm owns.
False
Divestiture would be an appropriate strategy when a need exists to introduce a new technology quickly.
False
Gaining a differentiation advantage is a primary reason for pursuing forward, backward, and horizontal integration strategies.
False
Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.
False
If a firm's present suppliers are expensive and unreliable in meeting the firm's needs for parts, components and/or raw materials, the firm should pursue a horizontal integration strategy.
False
Since a combination strategy is not risky, many organizations pursue a combination of two or more strategies simultaneously.
False
Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins and improved cash flow.
False
Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.
False
The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.
False
The related diversification strategy is effective when an organization has a weak management team.
False
There are four basic types of diversification: concentric, conglomerate, forward and backward.
False
Unrelated diversification may be an especially effective strategy when an organization's basic industry is experiencing increasing annual sales and profits.
False
When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.
False
A cost leadership strategy can be especially effective when most buyers use the product in the same way.
True
A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.
True
A low-cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.
True
A strategy of seeking ownership or increased control of a firm's supplier is backward integration.
True
All sizes and types of organizations can utilize and benefit from strategic-management concepts and techniques.
True
An acquisition occurs when a large organization purchases a smaller one or vice versa.
True
An appropriate strategy when an organization has excess production capacity is market development.
True
Chapter 9 bankruptcy applies to municipalities.
True
Cooperative arrangements and joint ventures between competitors are becoming increasingly popular.
True
Donald Trump starting Trump University in 2005 is a good example of unrelated diversification.
True
First mover advantage refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.
True
For consumers who are price sensitive, cost leadership emphasizes producing standardized products at very low per-unit cost.
True
Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.
True
Franchising is an effective means of implementing forward integration.
True
Horizontal integration is seeking ownership or increased control over competitors.
True
In a turbulent, high-velocity market, a lead-change strategy is best whenever the firm has the resources to pursue this approach.
True
Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.
True
Liquidation is often appropriate when retrenchment and divestiture have failed.
True
Long-term objectives represent the results expected from pursuing certain strategies.
True
Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.
True
Objectives provide direction and allow for organizational synergy.
True
Product development is a strategy that seeks increased sales by improving or modifying present products or services.
True
Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.
True
Retrenchment and turnaround are the same strategy.
True
Strategic objectives include larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.
True
The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.
True
The nonprofit sector is America's largest employer.
True
When an acquisition or merger is not desired by both parties, it is called a takeover or hostile takeover.
True
Increasing advertising expenditures can be a market development strategy.
False
Jiffy Lube International would be a good example of a firm seeking the best-value focus strategy.
False
Chapter 7 bankruptcy is a liquidation procedure used only when a firm sees no hope of being able to operate successfully or to obtain necessary creditor agreement.
True
Gaining ownership or increased control over distributors or retailers is called forward integration strategy.
True
Market development includes introducing present products into new geographic areas.
True
Unrelated diversification is an appropriate strategy when an organization's present channels of distribution can be used to market the new products to current customers.
True
The Family Farmer Bankruptcy Act of 1986 created a. Chapter 7. b. Chapter 8. c. Chapter 9. d. Chapter 12. e. Chapter 13.
D
What refers to a strategy of seeking ownership of or increased control over a firm's competitors? a. Forward integration b. Conglomerate diversification c. Backward integration d. Horizontal integration e. Concentric diversification
D
Which of the following is most likely not included in the functional level of a small company? a. Finance b. Marketing c. R & D d. Department managers e. Human resource managers
D
Market penetration, market development, product development and joint venture are intensive strategies.
False
Research shows strategic management in small firms is more formal than in large firms, but large firms that engage in strategic management outperform those that do not.
False
All of the following situations are conducive to market development except: a. when an organization competes in a high-growth industry. b. when an organization is very successful at what it does. c. when new untapped or unsaturated markets exist. d. when an organization has excess production capacity. e. when an organization's basic industry is becoming rapidly global in scope.
A
In which situation would horizontal integration be an especially effective strategy? a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition. b. When an organization competes in a slowing industry. c. When decreased economies of scale provide major competitive advantages. d. When an organization has neither the capital nor human talent needed to successfully manage an expanded organization. e. When competitors are succeeding due to managerial expertise or having particular resources an organization possesses.
A
What kind of strategy is retrenchment? a. A turnaround or reorganization strategy b. An expansion strategy c. A conglomerate strategy d. An intensive strategy e. An offensive strategy
A
What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems? a. Managing by crisis b. Managing by objectives c. Managing by extrapolation d. Managing by exception e. Managing by hope
A
Financial objectives involve all of the following except: a. growth in revenues. b. larger market share. c. higher dividends. d. greater return on investment. e. a rising stock price.
B
Under which condition would a differentiation strategy be especially effective? a. When the target market niche is large, profitable and growing b. When technological change is fast paced and competition revolves around rapidly evolving product features. c. When industry leaders do not consider the niche to be crucial to their own success. d. When the industry has many different niches and segments, thereby allowing a company to pick a competitively attractive niche suited to its own resources. e. When few, if any, other rivals are attempting to specialize in the same target segment.
B
Under which strategy would you offer products or services to a wide range of customers at the lowest price available on the market? a. low-cost b. best-value c. low-cost focus d. best-value focus e. differentiation
B
What occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. a. Retrenchment b. A joint venture c. Liquidation d. Forward integration e. Divestiture
B
According to Porter, which strategy offers products or services to a small range of customers at the lowest price available on the market? a. low-cost b. best-value c. low-cost focus d. best-value focus e. differentiation
C
Bankruptcy a. should never be used as a strategy. b. should be used only when one is legally forced to do so. c. can be an effective type of retrenchment strategy. d. should only be used for large firms. e. should only be used for small, private firms.
C
Integration strategies are sometimes collectively referred to as which of these strategies? a. Horizontal integration b. Diversification c. Vertical integration d. Stuck-in-the-middle e. Hierarchical integration
C
Retrenchment would be an effective strategy when an organization a. has shrunk so quickly that major internal reorganization is needed. b. is one of the stronger competitors in a given industry. c. is plagued by inefficiency, low profitability, poor employee morale and pressure from stockholders to improve performance. d. has decided to capitalize on opportunities, maximize threats, take advantage of strengths and overcome weaknesses. e. does not have a clearly distinctive competence and has failed to meet its objectives and goals consistently over time.
C
Web sites to sell products directly to consumers are examples of which type of strategy? a. backward integration b. product development c. forward integration d. horizontal integration e. conglomerate diversification
C
Which chapter of the bankruptcy code applies to municipalities? a. Chapter 7 b. Chapter 8 c. Chapter 9 d. Chapter 12 e. Chapter 13
C
Which level of strategy is most likely not present in small firms? a. Corporate/company b. Functional c. Divisional d. Operational e. All of these are present in small firms
C
Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well? a. Conglomerate diversification b. Divestiture c. Joint venture d. Retrenchment e. Integration
C
According to journalists' findings, what is a serious obstacle for many small business owners. a. a lack of business ethics b. an excess of employees and managerial staff c. a lack of experience in networking d. a lack of strategic-management knowledge e. having too many suppliers
D
Adding new, unrelated products or services is called a. forward integration. b. related diversification. c. backward integration. d. conglomerate diversification. e. unrelated diversification.
D
Advanced Medical Optics using acquisitions to obtain all medical aspects of eye care, from laser surgery to contacts to implants for all ages is an example of which type of strategy? a. forward integration b. backward integration c. horizontal integration d. market development e. product development
D
Backward integration is effective in all of these except: a. when an organization competes in an industry that is growing rapidly. b. when an organization has both capital and human resources to manage the new business of supplying its own raw materials. c. when an organization needs to acquire a needed resource quickly. d. when the advantage of stable prices are not important. e. when present suppliers have high profit margins.
D
Goodyear Tire & Rubber Co. selling its North American farm-tire business to Titan International is an example of which type of strategy? a. related diversification b. unrelated diversification c. retrenchment d. divestiture e. liquidation
D
Long-term objectives are needed at which level(s) in an organization? a. Corporate b. Divisional c. Functional d. All of these e. None of these
D
Selling all of a company's assets in parts for their tangible worth is called a. joint venture. b. divestiture. c. concentric diversification. d. liquidation. e. unrelated integration.
D
Which of the following is not a reason joint ventures fail? a. Managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture. b. The venture may not be supported equally by both partners. c. The venture may benefit the partnering companies but may not benefit the customers who then complain about poorer service or criticize the companies in other ways. d. Stakeholders from both partners are equally satisfied. e. The venture may begin to compete more with one of the partners than the other.
D
Which of these strategies is effective when the number of suppliers is small and the number of competitors is large? a. Conglomerate diversification b. Forward integration c. Concentric diversification d. Backward integration e. Horizontal diversification
D
Which strategy generally entails large research and development expenditures? a. market penetration b. retrenchment c. forward integration d. product development e. divestiture
D
Win-Dixie closing one-third of its stores and eliminating 22,000 jobs in an attempt to emerge from bankruptcy would be an example of: a. divestiture. b. backward integration. c. liquidation. d. retrenchment. e. forward integration.
D
Which of the following is not an example of when an organization should use an unrelated diversification strategy? a. When revenues derived from an organization's current products or services would increase significantly by adding the new unrelated, products. b. When an organization's present channels of distribution can be used to market the new products to current customers. c. When the new products have counter-cyclical sales patterns compared to an organization's present products. d. When an organization competes in a highly competitive and/or a no-growth industry. e. When the organization has a strong management team.
E
Which strategy would be effective when the stockholders of a firm can minimize their losses by selling the organization's assets. a. integration b. differentiation c. diversification d. cost leadership e. liquidation
E
Budget Rent-a-Car opening car rental shops in Wal-Mart stores is an example of which type of strategy? a. forward integration b. backward integration c. horizontal integration d. related diversification e. unrelated diversification
A
All of the following are important factors in the Balanced Scorecard except: a. customer service. b. employee morale. c. product quality. d. business ethics. e. stockholder equity.
E
Mergers and acquisitions are created for all of the following reasons except to a. gain new technology. b. reduce tax obligations. c. gain economies of scale. d. smooth out seasonal trends in sales. e. increase its number of employees.
E
Under which condition would a cost leadership strategy be especially effective? a. When there are many ways to differentiate the product or service and many buyers perceive these differences as having value. b. When buyer needs and uses are diverse c. When few rival firms are following a similar approach d. When technological change is fast paced and competition revolves around rapidly evolving product features. e. When the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers.
E
What principle is built on the idea that there is no general plan for which way to go and what to do? a. Managing by crisis b. Managing by extrapolation c. Managing by objectives d. Managing by hope e. Managing by exception
E
When a domestic company first begins to export to India, it is an example of a. horizontal integration. b. backward integration. c. forward integration. d. concentric diversification. e. market development.
E
"If it ain't broke, don't fix it" refers to managing by crisis.
False
Which strategy seeks to increase market share of present products or services in present markets through greater marketing efforts. a. market penetration b. forward integration c. market development d. backward integration e. product development
A
What term refers to selling a division of an organization. a. Joint venture b. Divestiture c. Concentric diversification d. Liquidation e. Horizontal integration
B
When companies take over functional operations of other firms, such as human resources, information systems, payroll, accounting, or customer service, this is called a. marketing. b. outsourcing. c. licensing. d. franchising. e. divestiture.
B
When two organizations of about equal size unite to form one enterprise, which of these occurs? a. hostile takeover b. merger c. acquisition d. LBO e. divestiture
B
Which strategy is appropriate when an organization competes in an industry characterized by rapid technological developments? a. retrenchment b. product development c. backward integration d. liquidation e. market penetration
B
Which strategy should an organization use if it competes in a no-growth or a slow-growth industry. a. divestiture b. related diversification c. backward integration d. unrelated diversification e. retrenchment
B
Which strategy should be implemented when a division is responsible for an organization's overall poor performance? a. backward integration b. divestiture c. forward integration d. cost leadership e. related diversification
B
