MGT 3301 Ch. 6

Why is planning considered an important process for managers? A) It gives a sense of direction and purpose. B) It ensures only top-level managers make decisions. C) It creates a time horizon for different planning levels. D) It identifies which markets to enter or avoid.

A) It gives a sense of direction and purpose.

An ongoing process in which managers build and refine previous plans and continually modify plans at all levels, corporate, business, and functional, so that they fit together into one broad framework, is known as A) continuity. B) flexibility. C) accuracy. D) unity.

A) continuity.

The plan of an organization that contains top management's decisions about the organization's mission, goals, strategy, and structure is an example of a ________-level plan. A) corporate B) divisional C) functional D) business

A) corporate

TrueAim, Inc., sets a goal that every product line of the company should be either first or second in its industry in market share. This would be an example of a ________-level strategy. A) corporate B) divisional C) functional D) business

A) corporate

An organization attempts to succeed by distinguishing its products from those of the competition; this is a(n) ________ strategy. A) differentiation B) low-cost C) related diversification D) unrelated diversification

A) differentiation

A company that is serving only a few market segments has most likely adopted a ________ strategy. A) focused differentiation B) focused low cost C) horizontal integration D) vertical integration

A) focused differentiation

BMW produces cars exclusively for high-income customers. BMW is pursuing a ________ strategy. A) focused differentiation B) focused low-cost C) diversification D) low-cost

A) focused differentiation

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 A) forward vertical integration. B) global strategy. C) focused differentiation strategy. D) multidomestic strategy.

A) forward vertical integration.

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 A) franchising. B) licensing. C) a strategic alliance. D) a joint venture.

A) franchising.

The level of an organization that contains the organization's marketing department, R&D department, and human resources department is the ________ level. A) functional B) first-line C) corporate D) business

A) functional

The organizational strategy that specifies the activities of managers at the departmental level of the organization is a ________-level strategy. A) functional B) business C) corporate D) divisional

A) functional

A strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business is called a A) joint venture. B) franchise. C) portfolio management. D) wholly owned foreign subsidiary.

A) joint venture.

Grand Productions has just produced a historical epic film that appeals to the U.S. male audience because of its realistic battle scenes. However, Grand Productions knows that audiences in other countries will be drawn to the film for different reasons, such as its romance or it struggle between classes. Considering this, Grand Productions should give the film an international release using a ________ strategy. A) multidomestic B) global C) low-cost D) differentiation

A) multidomestic

The tool that is used in situations when programmed decision making is appropriate is a ________ plan. A) standing B) scenario C) rolling D) single-use

A) standing

The cluster of decisions that managers make to assist an organization to achieve its goals is known as A) strategy. B) scenario planning. C) organizing. D) needs assessment.

A) strategy.

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 A) synergy. B) differentiation. C) diversification. D) merger.

A) synergy.

A group of managers at Right Stuff, Ltd., analyzes both the internal strengths and weaknesses of their organization as well as the opportunities and threats of the external environment. Which of the following planning exercises does this indicate? A) mission analysis B) SWOT analysis C) functional analysis D) divisional analysis

B) SWOT analysis

What happens when there are only a few large customers in the market? A) They keep changing their tastes, fads, and fashions. B) They drive down the price of the output through bargaining. C) They tend to be referred to as "stuck in the middle." D) They start concentrating on a single industry.

B) They drive down the price of the output through bargaining.

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 A) a joint venture. B) a strategic alliance. C) differentiation. D) licensing.

B) a strategic alliance.

Managers at Dimensions, Inc., created an effective strategy formulation, which determined that the company has A) three managers who exceeded expectations and two managers who did not reach quarterly expectations. B) a strength in R&D, a weakness in product range, and an increasing threat from companies in East Asia. C) an overall strong business rating in the United States and Canada. D) a profit margin that steadily increased between 1990 and 2000.

B) a strength in R&D, a weakness in product range, and an increasing threat from companies in East Asia.

When Gallo purchased a company that makes wine bottles, it was involved in ________ integration. A) horizontal B) backward vertical C) forward vertical D) upward

B) backward vertical

What is the major advantage of a multidomestic strategy? A) the ability to gain market share or charge higher prices for customized product offerings and marketing approaches to local conditions B) the significant cost savings associated with not having to customize products and marketing approaches to different national conditions C) the high-quality skills of foreign manufacturers and the specialized knowledge of foreign managers about the needs of local customers D) the reduced level of risk owing to the managers' full control over all aspects of their foreign subsidiary's operations

A) the ability to gain market share or charge higher prices for customized product offerings and marketing approaches to local conditions

To avoid development costs, a U.S. tennis racquet company forms a licensing agreement with a South African company, which allows the A) U.S. company and the South African company to merge. B) U.S. company to manufacture the racquets in South Africa. C) South African company to have access to the technology used to make the racquets. D) U.S. company and the South African company to combine their resources to make the racquets.

C) South African company to have access to the technology used to make the racquets.

TechnoSol Ltd. produces solar heating devices, including solar panels. The company decides to pursue an unrelated diversification corporate-level strategy when it buys A) the retail stores that sell its solar panels. B) the metal supplier for its solar panels. C) a company that produces athletic gear, including basketball shoes. D) a company that produces heating equipment, including furnaces.

C) a company that produces athletic gear, including basketball shoes.

FinePrint, Inc., is a major book publisher in the United States. However, the future of book sales is unpredictable, thereby making FinePrint's position precarious. Which of the following should the CEO of FinePrint do in order to provide the greatest stability for the company? A) purchase a publishing company specializing in children's books B) invest in a small chain of books stores and change their names to FinePrint C) acquire a cosmetics company, an auto parts company, and a baked goods company D) sign a licensing agreement with a ballpoint pen company

C) acquire a cosmetics company, an auto parts company, and a baked goods company

Concentration on a single industry, vertical integration, diversification, and international expansion are principal strategies of the ________ level of an organization. A) functional B) department C) corporate D) business

C) corporate

Coca-Cola spends an enormous amount of money on advertising to distinguish, and create a unique image for, their products. Coca-Cola is pursuing a ________ strategy. A) diversification B) focused low-cost C) differentiation D) low-cost

C) differentiation

When PepsiCo purchased Frito-Lay and expanded its operations into the snack-food business, it was pursuing a ________ strategy. A) vertical integration B) market penetration C) diversification D) market development

C) diversification

Which of the following qualities of an effective plan allows for alterations if the situation changes? A) continuity B) unity C) flexibility D) accuracy

C) flexibility

Which of the following is most likely to require a short-term plan? A) corporate mission B) business strategies C) functional goals D) divisional structure

C) functional goals

The motorcycle company EasyRider, Inc., finds itself stuck in the middle. To make this situation profitable, EasyRider decides to A) invest less in the production process, thereby lowering the quality of their motorcycles and lowering their price. B) lower the prices for the motorcycles despite the high production costs associated with each model. C) hone its production process to make it extremely efficient, thereby lowering production costs while maintaining high quality. D) invest more in the production process, thereby improving the quality of the motorcycles and increasing their price.

C) hone its production process to make it extremely efficient, thereby lowering production costs while maintaining high quality.

Olav is the CEO for Blue Stone, Ltd., which makes costume jewelry designed by a Spanish artist named Valeria. As a result, this jewelry has strong appeal in areas of the United States with a large Latino population. However, the U.S. market already has two companies that make high-quality costume jewelry, which are popular with people who have a mid-to-high range income. Considering all of these elements, what should Olav do to ensure Blue Stone gains market share and is profitable? A) He should make sure every department, including production and marketing, is focused on highlighting how Valeria's designs are different from those of the competition. B) He should focus the efforts of all departments on showing U.S. customers why Blue Stone's costume jewelry is better quality than fine jewelry. C) He should ensure that every department, from production to marketing to shipping, focuses on reducing their costs below those of their competitors. D) He should narrow the company's target market to just the Latino market in a few areas of the United States and ensure that Blue Stone's prices are the lowest.

D) He should narrow the company's target market to just the Latino market in a few areas of the United States and ensure that Blue Stone's prices are the lowest.

Managers should attempt to collect and use all available information in the organization's planning process. This emphasizes the ________ aspect of planning. A) unity B) flexibility C) continuity D) accuracy

D) accuracy

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. A) forward vertical integration B) global C) diversification D) backward vertical integration

D) backward vertical integration

The strategy that explains the methods that a division or an organization will use to compete against its rivals in the industry is a ________-level strategy. A) functional B) departmental C) corporate D) business

D) business

To determine an organization's mission, managers must first define its A) vision. B) strategy. C) tactics. D) business.

D) business.

Great Deal, Inc., is a highly profitable clothing store chain. Dom, the CEO, has decided it is time for the company to increase its competitive advantage. Dom is not worried about stability and wants to make sure he is able to be knowledgeable about all aspects of the company. Which of the following should Dom do? A) purchase an appliance manufacturer and a magazine publisher B) partner with a shoe manufacturer in a different market C) add a department to Great Deal's stores that sells appliances D) buy a fabric supplier and a clothing manufacturer

D) buy a fabric supplier and a clothing manufacturer

The corporate-level strategy that involves a company reinvesting its profits to strengthen its competitive position in the industry in which it is currently operating is A) vertical integration. B) international expansion. C) market development. D) concentration on a single industry.

D) concentration on a single industry.

The industries and national markets an organization intends to compete in and the reasons why are specified in a company's ________-level strategy. A) divisional B) departmental C) functional D) corporate

D) corporate

Managers at Ferwn Pvt., Ltd., is number two in market share in the local sports equipment manufacturing industry. As part of its business-level strategy, this company A) invests in new production facilities to enable it to take over the number one spot. B) devises a plan of action for managers to help it take over the number one spot. C) states that it plans to take over the number one spot. D) develops methods to take over the number one spot.

D) develops methods to take over the number one spot.

Another name for the business level of the organization is the ________ level. A) functional B) department C) corporate D) divisional

D) divisional

Sterling, Inc., pursues a low-cost strategy by A) concentrating on its advertising department to make its pens more desirable than its rivals. B) focusing on its design department to make its pens more attractive than its rivals. C) concentrating on R&D to make its pens more reliable than its rivals. D) focusing on using cheaper resources to make its pens less expensive than its rivals.

D) focusing on using cheaper resources to make its pens less expensive than its rivals.

The decision of a company to invest in state-of-the-art European production facilities is an example of a ________-level strategy. A) division B) business C) corporate D) functional

D) functional

The planning and strategy making necessary to increase the efficiency and effectiveness of a particular function are the responsibility of a A) divisional manager. B) CEO. C) corporate office. D) functional manager.

D) functional manager.

An advantage of the differentiation strategy is A) less expensive new products. B) a higher level of employee skills. C) reduced turnover of employees. D) greater barriers to entry.

D) greater barriers to entry.

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 A) global competition. B) differentiated competition. C) focused competition. D) hypercompetition.

D) hypercompetition.

Carry On, Inc., 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. A) vertical integration B) focused low-cost C) global D) multidomestic

D) multidomestic

Apportioning financial resources among divisions to increase financial returns or spread risks among different businesses is called a ________ strategy. A) global B) divisional C) functional D) portfolio

D) portfolio

Ace Components, Inc., conducted a SWOT analysis, which determined a major threat by A) identifying how defects in a product has hurt customer trust. B) predicting a rise in the cost of manufacturing products using tungsten. C) identifying a loss in brand name recognition in the eastern United States. D) predicting low trading volumes and low volatility levels in the stock market.

D) predicting low trading volumes and low volatility levels in the stock market.

A company has a requirement that any manager who receives a gift from any of the company's customers worth more than $25 must report this gift to the company's human resources department. This is an example of a A) tactical plan. B) rolling plan. C) policy. D) rule.

D) rule.

The reason managers pursue vertical integration is that it A) provides stable environmental conditions. B) improves flexibility in operations. C) increases sales overall. D) strengthens competitive advantage.

D) strengthens competitive advantage.

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 A) a focused differentiation strategy. B) a low-cost strategy. C) a differentiation strategy. D) synergy.

D) synergy.

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 A) diversification. B) merger. C) consolidation. D) synergy.

D) synergy.

To implement the fifth step of the strategic implementation process, a manager would B) establish a deadline for purchasing a chain of retail stores. C) give a work team the budget needed to license a product. D) talk to employees about feedback received concerning a product they worked on.

D) talk to employees about feedback received concerning a product they worked on.

The form of international expansion that gives an organization high potential return because the organization does not have to share its profits with a foreign organization and reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations, is a A) joint venture. B) partial venture. C) partially owned foreign subsidiary. D) wholly owned foreign subsidiary.

D) wholly owned foreign subsidiary.

Callista is a manager at ThrillSeeker, Ltd., a company that makes amusement park rides. She has decided that she would like to create value by purchasing one of the companies that produces the materials ThrillSeeker needs to make its rides. She has already chosen a team of people and assigned them the responsibility to making sure the purchase happens. What should she do next? A) establish a timetable for buying a parts manufacturer. B) devise a plan on how to purchase the plastic supplier. C) establish a work team to focus on purchasing a chain of amusement parks. D) give a work team the authority needed to buy the distributor of ThrillSeeker's rides.

B) devise a plan on how to purchase the plastic supplier.

When General Electric Company expanded its operations by acquiring NBC television, this was an illustration of A) vertical integration. B) diversification. C) market penetration. D) a low-cost strategy.

B) diversification.

SynVens, a major retail chain in Hungary, is planning to diversify. To accomplish this, it sets up a corporate level strategy which involves A) outlining the method to be used in the new textile division which will enable the company to be first or second in market share in five years. B) entering the textiles industry and aiming to be the first or second in market share in this industry in five years. C) stating the goals of each of the managers in the textile division to help the company become first or second in market share in five years. D) identifying the work responsibilities of each employee in the textile division and how their work will enable the company to become first or second in market share in five years.

B) entering the textiles industry and aiming to be the first or second in market share in this industry in five years.

The least complex global operation is A) a joint venture. B) exporting. C) licensing. D) franchising.

B) exporting.

FarHorizons, Inc., allows Banerjee, a foreign organization, to take charge of both manufacturing and distributing one or more of its products in India in return for a negotiated fee. This is an example of A) exporting. B) licensing. C) a strategic alliance. D) a joint venture.

B) licensing.

Digicom Corp. attempts to gain a competitive advantage by driving down its production costs per unit below those of its competitors. Digicom is pursuing a(n) ________ strategy. A) focused differentiation B) low-cost C) related diversification D) unrelated diversification

B) low-cost

A broad declaration of the organization's overriding purpose, which is intended to identify the organization's products and customer base, as well as to differentiate the organization from its competitors, is known as a ________ statement. A) business B) mission C) strategy D) position

B) mission

A backward vertical integration occurs when a company expands into a new industry that A) helps create a competitive advantage. B) produces inputs for the company's products. C) is not related to the current business in any way. D) uses or distributes the company's products.

B) produces inputs for the company's products.

Best Grounds Coffee wants to pursue a vertical integration corporate level strategy. To accomplish this, it A) develops new products, including an expresso machine. B) purchases the supplier in Brazil that provides its coffee beans. C) starts a cookie company to complement its production of coffee. D) buys an electronics company that specializes in GPS devices.

B) purchases the supplier in Brazil that provides its coffee beans.

Hemisphere Corporation decides to enter a new type of business in order to create a competitive advantage in one of its existing businesses. Hemisphere is engaging in A) concentration on a single business. B) related diversification. C) vertical integration. D) international expansion.

B) related diversification.

A formal, written guide to action for employees in an organization is known as a A) policy. B) rule. C) standard operating procedure. D) rolling plan.

B) rule.

A written set of instructions that describes the series of actions that a manager should take in a specific situation is known as a A) policy. B) standing operating procedure. C) scenario plan. D) rolling plan.

B) standing operating procedure.

The ability of the CEO and top managers to convey to their subordinates a compelling vision of what they want the organization to achieve is known as ________ leadership. A) calculated B) strategic C) planned D) tactical

B) strategic

Cheng-En has just completed a study for his company, NewElectronics, Inc., which produces wireless earbuds. This study focuses on the major threats to NewElectronics. Cheng-En has found that his company has one major rival, MagicSounds, Inc., which has developed impressive brand loyalty. Cheng-En's company uses a specific type of metal that only a few suppliers offer. However, NewElectronics's earbuds would still be affordable for many customers. Furthermore, Cheng-En does not see any products that can be used in place of New Electronics earbuds. Based on what you know about Michael Porter's five forces model, which of the following would Cheng-En claim is the greatest threat to NewElectronics? A) the low prices of earbuds as a result of fierce competition B) the high price of the metal used to make the earbuds C) the ease with which his company could enter the earbud market D) customers bargaining to drive down the prices of earbuds

B) the high price of the metal used to make the earbuds

What is the plan of action for a business-level strategy based on SWOT analysis? A) to maximize an organization's ability to create value B) to take advantage of favorable opportunities C) to choose industries and countries to invest in D) to improve task-specific activities within the organization

B) to take advantage of favorable opportunities

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 A) concentration on a single business. B) unrelated diversification. C) international expansion. D) related diversification.

B) unrelated diversification.

PepsiCo purchased KFC so that it could replace Coke products with Pepsi products in KFC restaurants. This is an example of a ________ strategy. A) horizontal integration B) vertical integration C) low-cost D) global

B) vertical integration

While managers at QualityFirst Manufacturing were conducting a SWOT analysis, they concluded that their product line is obsolete and narrow. Their product line would be categorized as a(n) A) strength. B) weakness. C) opportunity. D) threat.

B) weakness.

Clark is the new CEO of Stonehedge, Inc. He wants to pursue a focused low-cost strategy for his company, which sells weapons and gear to hunters. To accomplish this, he will A) keep the prices of the company's hunting weapons and gear about the same as those of the competition. B) make the prices of the company's hunting weapons less than those of the competition, but keep the gear's price about the same as that of the competition. C) make the prices of the company's hunting weapons and gear less than those of the competition. D) keep the prices of the company's hunting weapons about the same as those of the competition, but make the gear's price higher than that of the competition.

C) make the prices of the company's hunting weapons and gear less than those of the competition.

A general guide to action for the managers of an organization is known as a A) rolling plan. B) rule. C) policy. D) standard operating procedure.

C) policy.

A plan that is updated and changed every year to take into consideration how the organization's external and internal environments have changed is known as a ________ plan. A) standing B) short-term C) rolling D) single-use

C) rolling

TDS Corporation updates its five-year plan annually to take into account changing conditions within the organization and in the organization's external environment. Which of the following best explains this plan implemented by TDS Corporation? A) standing plan B) short-term plan C) rolling plan D) single-use plan

C) rolling plan

Manuela is one of the top managers at Electrix, Ltd. She wants her company to use a global strategy by A) buying the company in Mexico that sells its TVs and DVD players. B) buying the company in Mexico that supplies the metal for its TVs and DVD players. C) selling its TVs and DVD players in France using the marketing approach that is used in the United States. D) selling its TVs and DVD players in France using a marketing approach that tailored toward French culture.

C) selling its TVs and DVD players in France using the marketing approach that is used in the United States.

EnergyPlus, Ltd., produces nutritional fruit bars, but is having trouble staying in business. Considering Michael Porter's five force model, which of the following is most likely the greatest threat for this company? A) many suppliers that provide its ingredients B) the existence of one other major competitor C) the introduction of a new granola bar to the market D) an increase in the use of indoor exercise equipment

C) the introduction of a new granola bar to the market

When only one central, guiding plan is put into operation to achieve an organizational goal, the organization is experiencing A) accuracy. B) flexibility. C) unity. D) continuity.

C) unity.