Quiz Q's Management Exam2

Usually a company is classified as a single business firm when revenues generated by the dominant business are greater than ____ percent.

95

A horizontal acquisition involves two firms in the same industry (T/F)

T

A transnational strategy is an international strategy in which the firm seeks to achieve both global efficiency and local responsiveness (T/F)

T

Which of the following is an advantage associated with greenfield ventures?

The level of control over the firm's operations

If intellectual property rights in an emerging economy are not well-protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, ____ is the preferred entry mode.

a joint venture or wholly owned subsidiary

A leveraged buyout refers to:

a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.

Offshore Oil Exploration Partners (OOEP) has entered into a cooperative strategy with Malay Petroleum. The resulting documents are long, formal, and detailed. They specify detailed responsibilities of each partner and include methods of monitoring accounting and technical procedures. OOEP and Malay Petroleum are using the ____ management approach.

cost minimization

Multipoint competition occurs when:

diversified firms compete against each other in several markets.

Successful unrelated diversification through restructuring is typically accomplished by:

focusing on mature, low-technology businesses

The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and __________.

liability of foreignness; regionalization

When diversification results in two companies, such as UPS and FedEx, simultaneously competing in the same product areas or geographic markets, this is called ____ competition.

multipoint

A firm that earns less than 70 percent of revenue from its dominant business and has direct connections between its businesses is engaging in ____ diversification.

related constrained

A global strategy lacks:

responsiveness to local markets

the value created by business units working together exceeds the value the units create when working independently.

synergy

In a merger:

two firms agree to integrate their operations on a relatively coequal basis.

Hutchison Whampoa Limited (HWL) has businesses in ports and related services, telecommunications, property and hotels, retail and manufacturing, and energy and infrastructure. HWL makes no efforts to share activities or transfer core competencies among the businesses. HWL is following a strategy of__________diversification.

unrelated

The term "conglomerates" refers to firms using the ____ diversification strategy.

unrelated

A nonequity strategic alliance exists when:

two or more firms have a contractual relationship to share resources and capabilities.

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n):

vertical acquisition.

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(n) ____ strategy.

vertical complementary

strategy through which the firm sells products in markets outside the firm's domestic market.

international strategy

In a(n) ____, two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage.

joint venture

There are few true mergers because:

one firm usually dominates in terms of market share, size, or value of assets.

Backward integration occurs when a company:

produces its own inputs.

In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs. Which of the following is a value-creating reason to diversify?

Economies of scope

Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses, trade barriers, and lack of familiarity with local cultures (T/F)

T

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are:

engaging in tacit collusion.

An international diversification strategy is one in which a firm:

expands into a potentially large number of geographic locations and markets.

The problems associated with exporting include:

high transportation costs and the expense of tariffs.

A firm may narrow its focus to a specific region of the world:

so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.