MGT 499 Exam 3 Review Questions

Radial Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Radial should pursue A. Backward integration B. Forward integration C. Product diversification D. Geographic diversification

A. Backward integration

Mangers have alternatives other than the two choices when determining the boundaries of the firm: produce goods and services in-house ("make") or purchase them externally ("buy") A. True B. False

A. True

Decisions relating to the range of products and services a firm will offer determine the firm's A. Level of diversification B. Geographical scope C. Vertical integration D. Global expansion

A. level of diversification

In the context of BCG growth share matrix, if one of the strategic business units of a corporation is categorized under dogs management should A. Infuse more capital into the strategic business unit B. Provide more human resources to the business C. Hold the business till it turns a star D. Divest the strategic business unit

D. Divest the strategic business unit

Time Enough entered the low priced digital watch mark several years ago. The firm's earnings have been unsteady but might be growing. According to the BCG growth matrix, Time Enough is a A. Cash Cow B. Star C. Dog D. Question Mark

D. Question Mark

Corporate strategy is focused solely on determining the stages of industry value chain in which the firm should compete A. True B. False

B. False

Firms that pursue extremely high or extremely low levels of diversification perform better than those that pursue moderate levels of diversification A. True B. False

B. False

Which of the following statements is true of an equity alliance? A. An equity alliance is based on contractural agreements rather than partial ownership B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible C. Equity alliance is easy to initiate and terminate compare to non equity alliances D. An equity allies creates stronger ties

B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible

Which is not the risk of vertical integration? A. Too much vertical integration may create a legal problem B. Internal suppliers may lose the incentive to improve quality C. It would increase internal transaction cost to search a right partner firm D. A firm's strategic flexibility is compromised when environment is changing

C. It would increase internal transaction cost to search a right partner firm

Which of the following best illustrates physical-asset specificity A. A unique training program developed in an organization B. A ship container designed to carry more than the average load of iron ore C. A generic machine that can be used to churn different mixtures D. A machine solely designed to give a candy its trademarked shape

D. A machine solely designed to give a candy its trademarked shape

Which of the following is an example of an internal transaction cost? A. The cost of searching for a contract manufacturing B. The cost of signing a contract with a supplier C. The cost of monitoring and enforcing a contract D. The cost of paying salaries and benefits

D. The cost of paying salaries and benefits