Quiz 3 Review

An operations strategy determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers. T/.F

True

Based on the eight dimensions of quality discussed in the text, serviceability is defined as the product's ease of repair. T/F

True

Church & Dwight uses the line extension strategy when they put the Arm & Hammer name on various new food products. T/F

True

Conglomerate diversification is diversifying into an industry unrelated to its current one. T/F

True

Even the most attractive strategic alternative might not be selected if it is contrary to the needs and desires of important top managers. T/F

True

Forming a joint venture between a foreign corporation and a domestic company is the most popular strategy used to enter a new country. T/F

True

Fujitsu demonstrated a strategy to avoid when it imitated IBM's strategy focused on mainframes in 1990. T.F

True

Horizontal growth can be achieved by expanding the firm's products into other geographic locations and/or by increasing the range of products and services offered to current markets. T/F

True

In tacit collusion, there is no direct communication among competing firms. T/F

True

Logistics strategy deals with the flow of products into and out of the manufacturing process. T/F

True

Most entrepreneurial ventures follow focus strategies. T/F

True

One danger of D'Aveni's concept of hypercompetition is that it may lead to an overemphasis on short-term tactics over long-term strategy. T/F

True

One limitation of portfolio analysis is that it provides an illusion of scientific rigor. T/F

True

Outsourcing is the alternative to vertical integration. T/F

True

SWOT analysis by itself is not a panacea for strategy. T/F

True

Stability strategies can be very useful in the short run, but they can be dangerous if followed for too long. T/F

True

The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position. T/F

True

The TOWS Matrix illustrates how the external opportunities and threats facing a particular corporation can be matched with that company's internal strengths and weaknesses to result in four sets of possible strategic alternatives. T/F

True

The continuous improvement system was developed by Deming. T/F

True

The first firm through a strategic window can occupy a propitious niche and discourage competition (if the firm has the required internal strengths). T/F

True

The goal is to find a propitious niche so well suited to the firm's internal and external environment that other corporations are not likely to challenge or dislodge it. T/F

True

The most widely pursued corporate directional strategies are those designed to achieve growth. T/F

True

The strategic rollup was developed in the mid-1990s as an efficient way to quickly consolidate a fragmented industry with the resulting large firm creating economies of scale. T/F

True

The two general types of cooperative strategies are collusion and strategic alliances. T/F

True

Tight cost control is an organizational requirement for a cost leadership strategy. T/F

True

Too much partnering experience with the same strategic partners generates diminishing returns over time and leads to reduced performance. T/F

True

Turnkey operations are typically contracts for the construction of operating facilities in exchange for a fee. T/F

True

Two suppliers are the sole suppliers of two different parts, but they are also backup suppliers for each other's parts in parallel sourcing. T/F

True

Using a market development strategy, a company can capture a larger share of an existing market for current products or develop new markets for current products. T/F

True

Vertical integration is the degree to which a firm operates vertically in multiple locations on an industry's value chain from extracting raw materials to manufacturing to retailing. T/F

True

When Colgate-Palmolive and Unilever take a successful product that they marketed in one part of the world and market it elsewhere, they are following a market development strategy. T/F

True

According to the BCG Growth Share Matrix, dogs should be either sold off or managed carefully for the small amounts of cash they can generate. T/F

True

An example of a company that was "stuck in the middle" is K-Mart as they tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy. T/F

True

An example of the use of the leader R&D functional strategy to achieve a differentiation competitive advantage is Nike Inc. T/F

True

The book Hypercompetition was written by Answers: A) Porter. B) D'Aveni. C) Mintzberg. D) Maslow. E) Drucker.

A) Porter.

In a TOWS Matrix, SO Strategies Answers: A) are generated by thinking of ways in which a company or business unit could use its strengths to take advantage of opportunities. B) attempt to take advantage of opportunities by overcoming weaknesses. C) are basically defensive and primarily act to minimize weaknesses and avoid threats. D) consider a company's or unit's strengths as a way to avoid threats. E) are ways to get strategists to think "out of the box."

A) are generated by thinking of ways in which a company or business unit could use its strengths to take advantage of opportunities.

A disadvantage of vertical integration is that it Answers: A) creates exit barriers. B) improves coordination of activities. C) decreases demand for the firm's products and services. D) creates entry barriers. E) avoids time consuming tasks.

A) creates exit barriers.

According to D'Aveni Answers: A) except for a few stable industries, strategy initiatives do not provide sustainable competitive advantage. B) hypercompetition is rare. C) it is enough to gain competitive advantage by being the lowest cost competitor. D) the theory of hypercompetition is not supported by any research. E) the American home appliance industry was immune to hypercompetition.

A) except for a few stable industries, strategy initiatives do not provide sustainable competitive advantage.

A company which keeps up by imitating a leading company's strategy while ignoring its own strengths and weaknesses is an example of which strategy to avoid? Answers: A) follow the leader B) hit another home run C) arms race D) do everything E) losing hand

A) follow the leader

Which strategy did Circuit City use in 2008 when it converted its retail stores to cash? Answers: A) liquidation B) bankruptcy C) diversification D) divestment E) consolidation

A) liquidation

The type of marketing strategy in which a company captures a larger share of an existing market for current products through market saturation or market penetration or develops new markets for current products is called Answers: A) market development. B) push strategy. C) product development. D) pull strategy. E) skimming the cream.

A) market development.

Which of the following strategies was being used when Allied Corporation and Signal Companies formed Allied Signal? Answers: A) mergers B) strategic alliances C) diversification D) acquisitions E) concentration

A) mergers

When Intel opened four small-scale research facilities adjacent to universities to promote the cross-pollination of ideas, they were using which approach to R&D? Answers: A) open innovation B) differentiation C) technology scouts D) continuous improvement E) technological leadership

A) open innovation

A study of 30 firms revealed that outsourcing can lead to a ________ percent reduction in costs. Answers: A) 3 B) 9 C) 20 D) 30 E) 50

B) 9

Which of the following reflects the impact of industry backgrounds on strategic choices? Answers: A) Executives from other industries tend to make riskier decisions. B) Executives with strong ties within an industry tend to choose strategies commonly used in that industry. C) Executives from other industries tend to downsize as a first choice. D) Executives with strong ties within an industry tend to make riskier decisions. E) Executives from other industries tend to emphasize ROI.

B) Executives with strong ties within an industry tend to choose strategies commonly used in that industry.

Which of the following is NOT considered a strategic alliance success factor? Answers: A) Have a clear strategic purpose. B) Operate with short-term time horizon. C) Agree on an exit strategy for when the partners' objectives are achieved or the partnership fails. D) Minimize conflicts among the partners by clarifying the objectives. E) Identify likely partnering risks and deal with them when the alliance is formed.

B) Operate with short-term time horizon.

Product engineering, creative flair, and strong cooperation from channels are commonly required skills and resources for which of Porter's generic strategies? Answers: A) cost leadership B) differentiation C) cost leadership focus D) differentiation focus E) collusion

B) differentiation

Which kind of corporate strategy deals with the firm's overall orientation toward growth? Answers: A) portfolio strategy B) directional strategy C) parenting strategy D) cooperative strategy E) functional strategy

B) directional strategy

The focus strategies will likely predominate when many small and medium sized local companies compete for relatively small shares of the total market in a(n) Answers: A) united industry. B) fragmented industry. C) consolidated industry. D) isolated industry. E) integrated industry.

B) fragmented industry.

A company which has previously found great success pioneering an extremely successful product that is presently trying to turn another "long-shot" into a success would be an example of which strategy to avoid? Answers: A) follow the leader B) hit another home run C) arms race D) do everything E) losing hand

B) hit another home run

According to the text, 75% of a company's market value is derived from its Answers: A) employees. B) intangible assets. C) plant assets. D) joint ventures. E) licensing agreements.

B) intangible assets.

An MNC uses which international strategy for entering a foreign market by associating itself with a firm in the host country or a government agency in that country to combine resources and expertise needed for the development of a new product or technologies? Answers: A) licensing B) joint ventures C) production sharing D) exporting E) acquisitions

B) joint ventures

Which strategy is most appropriate for a company in an industry in which the future is expected to continue as an extension of the present? Answers: A) horizontal integration strategy B) no change strategy C) retrenchment strategy D) pause/proceed with caution strategy E) profit strategy

B) no change strategy

When a company determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers, the company is developing its ________ strategy. Answers: A) marketing B) operations C) R&D D) financial E) human resource management

B) operations

The type of strategy used to influence a corporation's key stakeholders in order to increase their support of corporate activities is Answers: A) cooperative strategy. B) political strategy. C) competitive strategy. D) marketing strategy. E) profit strategy.

B) political strategy.

A corporation's specific competitive role which is so well-suited to the firm's internal and external environment that other corporations are NOT likely to challenge or dislodge it. Answers: A) strategic fit B) propitious niche C) common thread D) business screen E) implicit strategy

B) propitious niche

The Growth Share Matrix of the Boston Consulting Group suggests that the excess cash being generated by cash cows should be used to fund Answers: A) dogs. B) question marks. C) stars. D) white knights. E) fish

B) question marks.

One company that has successfully found a propitious niche is Answers: A) Coca-Cola. B) PepsiCo. C) Frank J. Zamboni & Company. D) Walmart. E) Disney.

C) Frank J. Zamboni & Company.

In a TOWS Matrix, WT Strategies Answers: A) are generated by thinking of ways in which a company or business unit could use its strengths to take advantage of opportunities. B) attempt to take advantage of opportunities by overcoming weaknesses. C) are basically defensive and primarily act to minimize weaknesses and avoid threats. D) consider a company's or unit's strengths as a way to avoid threats. E) are ways to get strategists to think "out of the box."

C) are basically defensive and primarily act to minimize weaknesses and avoid threats.

The purchase of the supplier Carroll's Foods for its hog-growing facilities by Smithfield Foods, the world's largest pork processor, is an example of Answers: A) forward integration. B) horizontal integration. C) backward integration. D) transferred integration. E) mass integration.

C) backward integration.

Porter recommends that a division with tight cost control, frequent detailed control reports, a well structured organization, and quantitatively based incentives is required for which of the following generic competitive strategies? Answers: A) focus B) differentiation C) cost leadership D) focus differentiation E) concentration

C) cost leadership

Which of Porter's competitive strategies concentrates on seeking differentiation in a particular buyer group, product line segment, or geographic market? Answers: A) differentiation B) cost leadership C) differentiation focus D) competitive advantage E) cost focus

C) differentiation focus

According to the BCG Growth Share Matrix, those products with low market share in an unattractive industry that do NOT have the potential to bring in much cash are called Answers: A) cash cows. B) lost leaders. C) dogs. D) question marks. E) stars.

C) dogs.

An MNC uses which international strategy for entering a foreign market by simply shipping goods produced in the company's home country to other countries for marketing to minimize risk and to experiment with a specific product? Answers: A) licensing B) joint ventures C) exporting D) production sharing E) acquisitions

C) exporting

Which one of the following directional strategies is most frequently used in corporations? Answers: A) stability B) consolidation C) growth D) retrenchment E) expansion

C) growth

Tacit collusion Answers: A) involves direct communication among competing firms. B) is most likely to be successful if there are many competitors. C) is seen with conscious parallelism as practiced by GE and Westinghouse. D) is not illegal. E) is most effective when the industry does not have a firm that acts as a price leader.

C) is seen with conscious parallelism as practiced by GE and Westinghouse.

A recent trend in information systems strategy used by multinational corporations is Answers: A) computerizing accounting. B) automating customer service. C) practicing follow-the-sun management. D) replacing Fortran with Cobol in order to boost productivity. E) replacing mainframe computers with robots.

C) practicing follow-the-sun management.

An MNC uses which international strategy for entering a foreign market by combining the higher labor skills and technology available in the developed countries with the lower cost labor available in the developing countries? Answers: A) licensing B) joint ventures C) production sharing D) exporting E) acquisitions

C) production sharing

Jet airplane manufacturers often enter into strategic alliances to Answers: A)obtain new capabilities. B) obtain access to specific markets. C) reduce financial risk. D) reduce political risk. E) preserve autonomy.

C) reduce financial risk.

According to Porter, a business unit in a competitive marketplace with no generic competitive strategy is Answers: A) achieving synergy. B) practicing innovative leadership. C) stuck in the middle. D) not goal directed. E) last in line.

C) stuck in the middle.

A company which pioneers an innovation is called a Answers: A) technological follower. B) technological opportunist. C) technological leader. D) technological manufacturer. E) technological entrepreneur.

C) technological leader.

Research comparing concentric with conglomerate diversification concludes that Answers: A) conglomerate diversification is always less profitable than concentric diversification. B) concentric diversification is always less profitable than conglomerate diversification. C) the relationship between relatedness and performance follows an inverted U-shaped curve. D) neither concentric nor conglomerate diversification are ever profitable. E) for optimum effectiveness both conglomerate and concentric diversification should be utilized in tandem.

C) the relationship between relatedness and performance follows an inverted U-shaped curve.

The kind of strategic alliance in which a company forms a strong and close long-term relationship for mutual advantage with a key supplier or distributor is the Answers: A) joint venture. B) licensing agreement. C) value-chain partnership. D) mutual service consortia. E) holding company.

C) value-chain partnership.

The technique that illustrates how management can match the external opportunities and threats with its strengths and weaknesses to yield four sets of strategic alternatives is called a(n) Answers: A) IFAS Table. B) EFAS Table. C) SFAS Table. D) TOWS Matrix. E) Issues Priority Matrix.

D) TOWS Matrix.

In many cases, ________ integration is more profitable than ________ integration. Answers: A) forward; backward B) vertical; backward C) backward; vertical D) backward; forward E) mass; forward

D) backward; forward

If a company wishes to be a technological leader and also maintain a cost advantage, the appropriate R&D strategy would be to Answers: A) increase the cost of the product. B) lower the cost of the product or value activities by learning from the leader's experience. C) avoid R&D costs through imitation. D) create low-cost ways of performing value activities. E) innovate in other activities to increase buyer value.

D) create low-cost ways of performing value activities.

The kind of strategic alliance in which there is a partnership of similar companies in similar industries who pool their resources to gain a benefit that is too expensive to develop alone is the Answers: A) joint venture. B) licensing agreement. C) value-chain partnership. D) mutual service consortia. E) holding company.

D) mutual service consortia.

The "cell" chip created by IBM, Sony Electronics, and Toshiba was a result of pooling their resources in a Answers: A) joint venture. B) licensing arrangement. C) value-chain partnership. D) mutual service consortium. E) competitive advantage.

D) mutual service consortium.

Purchasing a product or service from an outside contractor that had been previously provided internally is called Answers: A) vertical integration. B) horizontal integration. C) transaction costing. D) outsourcing. E) geographic integration.

D) outsourcing.

Which of the following is NOT a reason companies or business units may form a strategic alliance? Answers: A) to obtain access to specific markets B) to reduce financial risk C) to reduce political risk D) to set prices in the industry E) to learn new capabilities

D) to set prices in the industry

Management contracts are used in international dealings Answers: A) as a way in which an MNC may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the MNC. B) as a way in which an MNC can take total control of operations by either starting a business from scratch or acquiring a firm already established in the host country. C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire a workforce. D) when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. E) when an MNC typically contracts for construction of operating facilities in exchange for a fee.

D) when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time.

If there is little fit between a strategic alternative under consideration and the corporate culture, which of the following is one of management's options to consider? Answers: A) Take a chance on ignoring the culture by implementing the strategic alternative. B) Manage around the culture and change the implementation plan. C) Try to change the culture to fit the strategy. D) Change the strategy to fit the culture. E) All of these

E) All of these

Growth through diversification out of an industry into an unrelated industry is called Answers: A) concentration. B) horizontal growth. C) concentric diversification. D) vertical growth. E) conglomerate diversification.

E) conglomerate diversification.

In manufacturing toilet paper for grocery store chains (and avoiding competing directly against Charmin), Potlach has followed which of Porter's generic competitive strategies? Answers: A) differentiation B) cost leadership C) differentiation focus D) competitive advantage E) cost focus

E) cost focus

Which strategy is developed to pull together the various activities and competencies of each department so that corporate and business unit performance improves and resource productivity is maximized? Answers: A) business strategy B) competitive strategy C) generic strategy D) enterprise strategy E) functional strategy

E) functional strategy

A company which has invested so heavily in a particular strategy that it will not consider a change in this strategy even if it is not successful, would be an example of which strategy to avoid? Answers: A) follow the leader B) hit another home run C) arms race D) do everything E) losing hand

E) losing hand

The purchasing strategy in which two suppliers are the sole suppliers of different parts, but are also the backup suppliers for each other's parts is Answers: A) sole sourcing. B) multiple sourcing. C) just-in-time sourcing. D) backup sourcing. E) parallel sourcing.

E) parallel sourcing.

The first step in constructing a corporate scenario is to Answers: A) develop a common-sized financial statement. B) construct detailed pro forma financial statements. C) decide upon how much risk management is willing to accept. D) analyze the societal environment. E) use industry scenarios to develop a set of assumptions about the task environment.

E) use industry scenarios to develop a set of assumptions about the task environment.

A long-term contract is considered vertical integration. T/F

False

A product development strategy deals with pricing, selling, and distributing a product. T/F

False

A strategy's compatibility with the corporate culture has little likelihood of impacting its success. T/F

False

According to the BCG Growth Share Matrix, cash cows are market share leaders typically at the growth stage of their product life cycle and are usually able to generate enough cash to maintain their high share of the market. T/F

False

Corporate parenting is the coordination of cash flow among units. T/F

False

Exporting grants rights to another company to open a retail store using the franchiser's name and operating system. T/F

False

Research indicates that the use of work teams leads to decreased quality and productivity as well as lower employee satisfaction and commitment as a result of less accountability. T/F

False

SO strategies attempt to take advantage of opportunities by overcoming weaknesses. T/F

False

SWOT is an acronym that stands for Strategy, Weaknesses, Opportunities, and Threats. T/F

False

The two basic growth strategies are concentration and strategic alliances. T/F

False

Vertical integration is going backward on an industry's value chain. T/F

False

When the Kellogg Company changed to a push strategy, they spent more money on consumer advertising designed to build brand awareness so that shoppers will ask for the products. T/F

False

A merger is a transaction involving two or more corporations in which stock is exchanged, but from which only one corporation survives. T?F

True

A financial strategy examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action. T/F

True