Chapter 7 Multiple Choice

For years, the Tabasco Company used a(n) ____ strategy and manufactured only its famous hot sauce. a) defender b) single-product c) aggregation d) forward integration e) backward integration

b) single-product

____ exists when the economic value together is greater than the value of the parts. a) Entropy b) Competitive support c) Resource deployment d) Scope e) Synergy

e) Synergy

An organization implementing a prospector strategy needs to... a) create new opportunity b) remain flexible c) respond quickly d) decentralize decision making e) All of these choices

e) All of these choices

Forms of diversification include... a) acquisitions b) vertical integration c) mergers d) the internal development of new products e) All of these choices

e) All of these choices

The product life cycle... a) shows how sales volume changes over time for products b) can help managers recognize that strategies need to evolve over time c) begins when a new product or technology is first introduced d) generally consists of four stages e) All of these choices

e) All of these choices

When implementing a differentiation strategy it is important to have... a) marketing emphasize high-value distinction b) control of funds without discouraging creativity c) manufacturing adjust inventory d) a culture focused on customer needs e) All of these choices

e) All of these choices

____ are corporate-level strategies for becoming a diversified firm. a) Internal developments of new products b) Backward vertical integrations c) Mergers d) Acquisitions e) All of these choices

e) All of these choices

Porter's generic strategies classify firms by which of the following? a) Stagnant b) Growth c) Declining d) Analyzing e) Focus

e) Focus

____ strategies in the Miles and Snow model represent a middle-of-the-road approach to business strategy. a) Analyzer b) Defender c) Cash cow d) Prospector e) Star

a) Analyzer

____ strategy refers to a mid-range strategy that attempts to move into new market areas at a deliberate and carefully planned pace. a) Analyzer b) Prospector c) Targeted d) Defender e) Differentiation

a) Analyzer

The Toyota Prius initially had a waiting list and was excluded from all rebate offers. The Toyota Prius was at which stage of the product life cycle? a) Introduction b) Growth c) Maturity d) Decline e) Extinct

a) Introduction

According to the Miles and Snow model of business strategy, which of these strategies is the most appropriate for use in an unstable environment? a) Prospector b) Defender c) Reactor d) Rescuer e) Analyzer

a) Prospector

Which of the strategy types in the Miles and Snow model avoids long-term commitment to any single technology, is highly decentralized, and has a propensity to take risk? a) Prospector b) Defender c) Reactor d) Rescuer e) Analyzer

a) Prospector

Food 4 All, Inc. sold its three nonfood businesses and replaced them with firms in the food industry. Which element of corporate strategy does this choice to compete in the food industry specifically address? a) Scope b) Resource deployment c) Distinctive competence d) Synergy e) Alignment

a) Scope

The starting point in formulating strategies is usually... a) a SWOT analysis b) goal implementation c) operational plans d) a mission statement e) a control function

a) a SWOT analysis

GE noticed that financial institutions had large profit margins. When GE entered the industry, its SBU was... a) a question mark b) a winner c) a loser d) an average business e) a profit producer

a) a question mark

Strategy formulation is... a) a set of processes involving the organization's strategies b) the method by which strategies are operationalized c) the same as goal development d) also called corporate-level strategy e) a form of functional strategy

a) a set of processes involving the organization's strategies

GE competes in industries ranging from medical devices to appliances to television networks. GE's mixed strategy is an example of ____ strategy. a) corporate-level b) long-term c) business-level d) functional e) short-term

a) corporate-level

Reality shows became prevalent on television after CBS introduced the first Survivor series. That type of television show is now in the maturity stage of its product life cycle. This means... a) demand for the product has reached a plateau b) the number of companies producing reality television shows is declining rapidly c) more firms are producing more reality shows and are finding it easy to sell the concepts and the filmed shows to the networks d) production companies find themselves left with shows that the networks do not want unless they differentiate their product e) None of these choices

a) demand for the product has reached a plateau

Warsteiner beer has the slogan "Life is too short, to drink cheap beer." This slogan supports a ____ strategy. a) differentiation b) cost leadership c) reactor d) prospector e) guerrilla

a) differentiation

Franke, a Swiss manufacturer of sink and facet systems, sold accessories through retail stores and then added Internet sales. Franke used... a) forward vertical integration b) unrelated diversification c) backward vertical integration d) horizontal integration e) a defender strategy

a) forward vertical integration

Using the Boston Consulting Group matrix, SBUs are classified on the basis of... a) market share and market growth rate b) market share and cash generation potential c) market growth rate and financial strength d) financial strength and product life cycle e) cash generation potential and product life cycle

a) market share and market growth rate

In environmental SWOT analysis, the external organizational position is analyzed according to its... a) opportunities and threats b) opportunities and weaknesses c) strengths and threats d) strengths and weaknesses e) return on investment

a) opportunities and threats

Krispy Kreme has a distribution network that allows fresh doughnuts to be transported to convenience stores, supermarkets, and Krispy Kreme outlets before dawn so that consumers can enjoy them that same day. This is an example of a(n) ____ for the Krispy Kreme organization. a) organizational strength b) scope extension strategy c) defender strategy d) distinctive strategy e) competitive disadvantage

a) organizational strength

Coca-Cola's success in global marketing is the result of its distribution system and its marketing communications, which are two of the company's... a) organizational strengths b) competitive disadvantages c) organizational opportunities d) scope e) SBUs

a) organizational strengths

AirTran Airlines (formerly ValuJet) has an airplane fleet that is older than those owned by other airlines. This is a potential ____ because it can give the company an image of poor quality or unsafe planes. a) organizational weakness b) strategic limitation c) entropy d) organizational threat e) organizational opportunity

a) organizational weakness

3M is a highly innovative firm that is constantly seeking new markets and is oriented toward growth and taking risks. It uses a(n) ____ strategy. a) prospector b) defender c) reactor d) rescuer e) analyzer

a) prospector

Adolph Coors Company heavily developed Zima brand beer that was targeted to Generation Xers, but Zima gained only a small share of a rapidly growing market. According to the BCG matrix, Zima is a... a) question mark b) rising star c) star d) barking dog e) cash cow

a) question mark

Reckitt & Colman, Inc. manufactures Spray 'n Wash laundry stain remover, Resolve fabric refresher, and Woolite fabric wash. This is an example of ____ diversification. a) related b) integrated c) unrelated d) consumer e) product

a) related

When Turner Broadcasting purchased a movie studio with its vault of old movies, it was an example of a(n) ____ diversification strategy. Turner was able to get a source for movies to show on its various cable television stations. a) related b) integrated c) unrelated d) functional e) institutional

a) related

Extra funds should be channeled to the ____, which is a product with a high share of a fast-growing market. a) star b) cash cow c) rising star d) defender e) question mark

a) star

YouTube has high market share and high market growth rate, which would make it a ____. However it still does not have a profitable business plan. a) star b) question mark c) dog d) cash cow e) rising star

a) star

The aircraft engine division of General Electric, which competes with Pratt & Whitney, has its own mission and a strategy that often differs considerably from other parts of the corporation. What is a division such as this called? a) An independent business b) A strategic business unit c) An entrepreneurship d) A functional department e) A competitive unit

b) A strategic business unit

Which of these is concerned with the changes in the sales volume of a product during its existence? a) Portfolio approach b) Product life cycle approach c) Environmental SWOT analysis d) Miles and Snow model e) Maslow's hierarchy

b) Product life cycle approach

____ is the proportion of the market controlled by the product. a) Market growth rate b) Relative market share c) Competitive advantage d) Tactical scope e) Functional reach

b) Relative market share

Which of the following areas does a well-conceived strategy address? a) The organizational chart b) Scope c) Suppliers and distributors d) Pricing strategy e) Tactical goals

b) Scope

Which of the following is NOT an example of a basis of relatedness for implementing related diversification? a) Similar technology b) Similar human resources c) Common brand name and reputation d) Common customers e) Common distribution and marketing skills

b) Similar human resources

One characteristic of an SBU classified as a star is... a) a large share of a low-growth market b) a large amount of short-run cash support c) a very small amount of money for growth and expansion d) probable divestiture by the corporation e) the potential to achieve a large market share

b) a large amount of short-run cash support

A(n) ____ strategy is a plan chosen and implemented to support specific goals, such as an increase of market share by 5 percent. a) valid b) deliberate c) reliable d) emergent e) synergistic

b) deliberate

The primary concern of strategy implementation is... a) the content of the strategy b) how the strategy is operationalized and executed c) goal development d) corporate-level strategy e) functional strategy

b) how the strategy is operationalized and executed

Howard Schultz traveled in Italy and liked the coffee. He founded Starbucks with a plan to introduce American coffee drinkers to this Italian-style drink. This is an example of ____. a) lack of organizational synergy b) organizational opportunity c) sustained competitive advantage d) distinctive competency e) organizational threat

b) organizational opportunity

Chelsea Milling Company produces Jiffy Mix and other mixes. The company is the fourth largest baking mix producer, has never spent a cent on advertising, and sells its product for one-half to one-third the cost of its competitors. The company pursues a(n) ____ strategy. a) guerrilla b) overall cost leadership c) focus d) differentiation e) defender

b) overall cost leadership

Companies should invest carefully and monitor closely a ____, which is a product that has a small share of a growing market. a) cash cow b) question mark c) defender d) star e) rising star

b) question mark

In a small community in Michigan, there are two funeral homes. One of them clips all pictures from the local paper, laminates them, and mails them to the person photographed with a brief note. This is an attempt to build positive relations with potential customers during happy times. If the other funeral home chose to make similar customer contact, the competitors would have... a) differential advantage b) strategic imitation c) emergent strategy d) distinctive competence e) competitive advantage

b) strategic imitation

Assuming an SBU retained its share of the market, how would it be classified if it were a star and its market subsequently became a low-growth market? a) Still a star b) A defender c) A cash cow d) A dog e) A question mark

c) A cash cow

In their book In Search of Excellence, Peters and Waterman found that successful companies "stuck to their knitting." In other words, they concentrated on those things that they do well. To which component of organizational strategy does this idea most directly relate? a) Organizational opportunity b) Common strength c) Distinctive competence d) Resource deployment e) Scope

c) Distinctive competence

Texas Instruments got into the watch business as a result of developing a technology that radically changed the nature of wristwatches. Its strategy included the use of new equipment and automation to drive down costs. This example best represents which component of strategy? a) Scope b) Synergy c) Distinctive competence d) Competitive response e) Resource deployment

c) Distinctive competence

MNCs can exploit advantages over domestic businesses. Which of the following in NOT an advantage? a) Location efficiencies b) Economies of scope c) Multiple accounting systems d) Multi-market flexibility e) Worldwide learning

c) Multiple accounting systems

One action that an organization may take with respect to an SBU classified as a dog is to sell it. It seems odd that one organization would want to buy another's dog. Which of the following might explain such a purchase? a) A need to generate large amounts of short-run cash b) A desire to expand into a rapidly growing market c) Possible synergistic effects on the buying organization d) A decision to adopt a retrenchment strategy e) A desire to complete a hostile takeover of the seller

c) Possible synergistic effects on the buying organization

If the marketing department adopts a strategy calling for substantial test marketing, aggressive advertising campaigns, and inducing consumer product trials, which of the following is most likely the business strategy being used by the company as a whole? a) Analyzer b) defender c) Prospector d) Cost leadership e) Focus

c) Prospector

Which of the following is NOT an advantage inherent in related diversification? a) Reducing business dependence b) Reducing overhead c) Scope d) Synergy e) Reducing risk

c) Scope

Ford once supplied every part to its automobiles, except the rubber (it even tried to grow the trees, to no avail). This is an example of... a) forward vertical integration b) unrelated diversification c) backward vertical integration d) horizontal integration e) a defender strategy

c) backward vertical integration

Gymboree sells high quality children's clothing at high prices. It uses a(n) ____ strategy. a) prospecting b) emergent c) differentiation d) cost leadership e) guerrilla

c) differentiation

Toyota is the most successful automaker selling hybrid vehicles. Toyota uses... a) differentiation, focus b) overall cost leadership c) differentiation d) focus e) cost leadership, focus

c) differentiation

Chaparral Steel is so efficient in its steel production and casting processes that it is the only U.S. steel producer that regularly exports its products to Japan. This is an example of Chaparral Steel's... a) organizational opportunity b) common strength c) distinctive competence d) resource deployment e) scope

c) distinctive competence

Smart cars are the only cars that can park perpendicular to the curb, which is especially beneficial in cities. This is an example of... a) scope b) synergy c) distinctive competence d) competitive response e) resource deployment

c) distinctive competence

Abercrombie and Fitch sells young adult clothing with overtly sexual advertising at high prices with poor quality sewing. It uses a(n) ____ strategy. a) guerrilla b) overall cost leadership c) focus d) differentiation e) defender

c) focus

Fox News covers stories from a right of center political point of view. They use a(n) ____ strategy. All reporters say they have no bias. a) prospecting b) emergent c) focus d) cost leadership e) guerrilla

c) focus

Pea-in-the-Pod is a small chain of retailers that sell clothes only to pregnant women and new mothers. Its quality materials, innovative designs, reasonable prices, and ____ strategy create a competitive advantage for the chain. a) guerrilla b) overall cost leadership c) focus d) emergent e) defender

c) focus

'News Networks' operates in a very dynamic environment. Its managers have decided to be on the lookout for new market and product opportunities and to take advantage of them when they arise. In addition, they have organized the firm along bureaucratic lines based on the president's desires. You would probably be safe in predicting that News Networks will be a(n)... a) defender b) strategic failure c) prospector d) analyzer e) reactor

c) prospector

Jordache was once a dominant brand in the American blue-jean market, commanding high prices. Now Jordache is sold in Wal-Mart. This strategy is called... a) prospector b) defender c) reactor d) rescuer e) analyzer

c) reactor

Kmart has struggled for years competing with Wal-Mart and Target. It tried celebrity labels, but that did not help. It can't lower prices as low as Wal-Mart, because it does not have the cost cutting expertise. This is an example of a(n) ____ strategy. a) prospector b) defender c) reactor d) rescuer e) analyzer

c) reactor

Coca-Cola sells soft drinks, bottled water, and sports drinks. This is an example of... a) alignment b) synergy c) scope d) resource deployment e) entropy

c) scope

Krispy Kreme sells doughnuts. It markets them primarily to people who want something quick and sweet for breakfast or as a morning snack. This is an example of Krispy Kreme's... a) industry niche b) synergy c) scope d) resource deployment e) entropy

c) scope

Bausch & Lomb has a large share of the growing contact lens market. Bausch & Lomb is an example of a... a) cash cow b) prospector c) star d) question mark e) dog

c) star

After so many people complimented Robin Hoder's honey mustard, she decided to start a small business called Naples Valley Products to manufacture and market her mustard. At this juncture, Hoder was engaged in... a) strategic marketing b) tactical implementation c) strategic formulation d) corporate strategy e) competitive response

c) strategic formulation

Clorox Corporation owns Kingsford charcoal, Matchlight charcoal lighter, Prime Choice steak sauce, and a restaurant chain. This is an example of ____ diversification. a) related b) integrated c) unrelated d) consumer e) product

c) unrelated

____ is the component of strategy that indicates what the organization does exceptionally well. a) Resource deployment b) Synergy c) Scope d) Distinctive competence e) None of these choices

d) Distinctive competence

Which of the following is an example of one of the Miles and Snow typology classifications for business strategies? a) Focuser b) Rescuer c) Aggressor d) Prospector e) Differentiator

d) Prospector

Which of the following is NOT one of the strategy types listed in the Miles and Snow typology? a) Prospector b) Defender c) Reactor d) Rescuer e) Analyzer

d) Rescuer

In 1987, Allegis Corporation consisted of United Airlines, Hertz Rent-a-Car, and Westin Hotels. United had purchased and combined these firms into one corporation because it was thought that they could accomplish more joined together than they could operating as separate units. Which advantage of related diversification does this best represent? a) Reducing overhead b) Creating a distinctive competence c) Innovation d) Synergy e) Reducing business dependence

d) Synergy

Kraft Food Inc. offered to buy Cadbury, a confection and beverage company. Which advantage of related diversification could result from the merging of these two businesses? a) Reducing overhead b) Creating a distinctive competence c) Innovation d) Synergy e) Reducing business dependence

d) Synergy

Which of the following companies is noted primarily for employing an overall cost leadership strategy? a) Neiman-Marcus b) Johnson & Johnson c) Procter & Gamble d) Wal-Mart e) Tiffany's

d) Wal-Mart

Effective strategies... a) develop long-range plans for resource allocation b) provide an in-depth analysis of the organization's internal strengths and weaknesses c) provide managers with a list of environmental contingency factors d) align the organization and environment to achieve strategic goals e) focus on the mission statement

d) align the organization and environment to achieve strategic goals

In the 1980s, if you mentioned Harley-Davidson motorcycles to the average consumer, he or she immediately thought of motorcycle gangs⎯more specifically, Hell's Angels. Now the price of a Harley can top $20,000, and there are riding clubs like Rubs (Rich urban riders) that include executives, attorneys, and doctors. The club members are attracted to Harleys for their wild and free image. Harley-Davidson's image is a(n) ____ not easily imitated by competitors. a) organizational weakness b) strategic limitation c) Entropy d) distinctive competence e) organizational opportunity

d) distinctive competence

The production company that provided the television show 'Who Wants to Marry My Dad?' is shown on night-time television to compete in a market founded by Joe Millionaire. He had to cut cash flow when the demand for the show did not live up to expectations. According to the BCG matrix, the show was a... a) question mark b) rising star c) star d) dog e) cash cow

d) dog

A(n) ____ strategy is a pattern of action that develops over time in an organization in the absence of missions and goals, or despite missions and goals. a) valid b) deliberate c) reliable d) emergent e) synergistic

d) emergent

Don opened a pizza shop. It was successful, so he opened a restaurant; it failed. So he opened a bed and breakfast; it succeeded. He wanted to save a historic building, so he turned it into a retreat center. Don uses a(n) ____ strategy. a) valid b) deliberate c) reliable d) emergent e) synergistic

d) emergent

Google bought YouTube even though it operated at a loss. The business strategy for YouTube is ____. a) valid b) deliberate c) reliable d) emergent e) synergistic

d) emergent

The expiration of a pharmaceutical drug patent allows generic drug makers to introduce the same chemical compound under a different name and at lower prices. This is an example of ____ for the developer of the original drug. a) organizational weakness b) strategic limitation c) entropy d) organizational threat e) organizational opportunity

d) organizational threat

Compu Desk has a small share of the growing desktop computer market. Compu Desk is an example of a... a) cash cow b) prospector c) star d) question mark e) dog

d) question mark

Wal-Mart sought approval for an industrial bank charter. This is an example of changing... a) alignment b) synergy c) scope d) resource deployment e) entropy

d) resource deployment

When an airline uses profits from one region to lower prices in another region it is using... a) alignment b) synergy c) scope d) resource deployment e) entropy

d) resource deployment

Starstruck Eateries has been very successful over the years by monitoring what successful restaurants in other cities are doing and copying them. This is known as... a) competitive parity b) competitive advantage c) distinctive competence d) strategic imitation e) tactical differentiation

d) strategic imitation

Fort Howard Paper Company has a cost-saving manufacturing process that its competitors cannot imitate Fort Howard Paper enjoys a(n)... a) organizational opportunity b) organizational threat c) product integration d) sustained competitive advantage e) product emulation

d) sustained competitive advantage

Siemens corporate research earns on average 20 patents a day. The patents give Siemens a(n) ____. a) organizational opportunity b) organizational threat c) product integration d) sustained competitive advantage e) product emulation

d) sustained competitive advantage

An example of ____ would be when credit card and mortgage divisions of banks often get their customers from the bank's commercial loan customers. a) resource deployment b) strategic scope c) competitive advantage d) synergy in related diversification e) None of these choices

d) synergy in related diversification

Business-level strategy focuses primarily on... a) which markets to enter and how to use the firm's money, people, and physical facilities b) which markets to enter and in what areas the firm may have a competitive edge c) which markets to enter and how the parts of the organization enhance the entry d) the areas in which the firm may have an advantage and how much various organizational parts enhance each other e) the firm's competitive advantage(s)

d) the areas in which the firm may have an advantage and how much various organizational parts enhance each other

____ is a useful framework for managers to use as they plot business strategy over time. a) The BCG matrix b) The GE screen c) Porter's competitive strategies model d) The Miles and Snow model of business strategy e) The product life cycle

e) The product life cycle

For years Dell computers were only available through Dell. Then it contracted with Wal-Mart to sell there too. Dell used a(n) ____ strategy. a) prospector b) defender c) reactor d) rescuer e) analyzer

e) analyzer

Philip Morris markets Marlboro cigarettes, the number-one selling cigarette brand in the world. Outside the United States, Marlboro generates huge profits that Philip Morris uses to support other less successful SBUs. According to the BCG matrix, Marlboro is a... a) question mark b) problem child c) star d) barking dog e) cash cow

e) cash cow

AOL eliminated fees to some subscribers to try to attract more users. AOL was using a(n) ____ strategy. a) analyzer b) star c) reactor d) prospector e) defender

e) defender

Prior to 1990, Campbell Soup Company was languishing near the bottom of the food industry. It was committed to maintaining its current market and was not interested in growth. Then it got a new CEO, David W. Johnson. The company exceeded its growth goals in both 1991 and 1992, and launched 122 new products. Its strategy prior to the hiring of Johnson exemplified a ____ strategy. a) differentiation b) cost leadership c) reactor d) prospector e) defender

e) defender

The ____ strategy is the most conservative approach in the Miles and Snow classifications of business strategies. a) analyzer b) star c) prospector d) reactor e) defender

e) defender

Porsche Automobile Holding and Volkswagen own each others stock. They plan to integrate the companies in 2011. This diversification strategy is ____. a) acquisition b) forward vertical integration c) horizontal integration d) backward integration e) merger

e) merger

Network news programs have been losing viewers for years. They all cover stories from left of center in the political spectrum. Fox News saw a(n) ____ and covers stories from right of center. The reporters all say they have no bias. a) organizational weakness b) strategic limitation c) entropy d) organizational threat e) organizational opportunity

e) organizational opportunity

The Culinary Institute of America (CIA) teaches cooking and operates French, Italian, and American restaurants. It also sells cooking supplies. This is an example of CIA's ____. a) alignment b) synergy c) distinctive competence d) resource deployment e) scope

e) scope

Datril was introduced into the pain-reliever market as a product just like Tylenol. The makers of Datril used ____ to copy Tylenol's distinctive competence. a) product aping b) tactical imitation c) product emulation d) product integration e) strategic imitation

e) strategic imitation

When the CBS network introduced the reality show Survivor, the show was an immediate success for the network. As a result ABC, NBC, and Fox tried to introduce their own reality shows. In this instance, ABC, NBC, and Fox used... a) product aping b) tactical imitation c) product emulation d) product integration e) strategic imitation

e) strategic imitation

The GE business screen is an expansion of the ideas from... a) the product life cycle approach b) the Miles and Snow typology of business strategy c) the generic strategy approach d) Porter's competitive strategies e) the BCG matrix

e) the BCG matrix