test 2

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? a. economies of scope b. desire for increased compensation c. reduced managerial risk d. low performance

a. economies of scope

During the recent financial crisis, M&A activity , whereas in 2011, M&A activity a. declined; increased. b. declined; declined. c. increased; increased. d. increased; declined.

a. declined; increased.

A global corporate-level strategy emphasizes a. differentiated products. b. economies of scale. c. sensitivity to local product preferences. d. decentralizing control and limited monitoring

a. differentiated products.

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be a. discounted by investors. b. inflated by investors. c. completely ignored by investors. d. highly valued by investors

a. discounted by investors.

Failing to _______ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated. a. downsize b. spin-off c. downscope d. buyout

a. downsize

Researchers have found that shareholders of acquired firms often a. earn above-average returns. b. earn below-average returns. c. earn close to zero as a result of the acquisition. d. are not affected by the acquisition

a. earn above-average returns.

Internationally diversified firms a. earn greater returns on their innovations through larger or more numerous markets. b. are more likely to produce below-average returns for investors in the long run. c. may need to decrease international activities when domestic profits are poor. d. are generally unable to achieve high levels of synergy because of differences in cultures.

a. earn greater returns on their innovations through larger or more numerous markets.

When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to by making an acquisition. a. increase new product speed to market b. broaden its competitive scope c. increase its economies of scale d. overcome entry barriers

b. broaden its competitive scope

Which of the following reasons for diversification is most likely to increase the firm's value? a. increasing managerial compensation b. reducing costs through business restructuring c. taking advantage of changes in tax laws d. conforming to antitrust regulation

b. reducing costs through business restructuring

Acquisitions to increase market power require that the firm have a(n) diversification strategy. a. unrelated b. related c. dominant-business d. single-business

b. related

Companies in fast-cycle markets need to profit quickly from an innovative product for all of the following reasons EXCEPT a. the technology used is not proprietary. b. the prices of component parts tends to rise rapidly. c. product prices fall quickly in fast-cycle markets. d. counterattacks from rivals come quickly.

b. the prices of component parts tends to rise rapidly.

Currently, the rationale for making an acquisition includes each of the following EXCEPT a. to increase market power. b. to decrease taxes paid by shareholders. c. to overcome entry barriers. d. to increase diversification

b. to decrease taxes paid by shareholders.

One method of facilitating the transfer of competencies between firms is to a. virtually integrate the two firms. b. transfer key people into new management positions. c. share support activities, such as purchasing practices. d. restructure the weaker firm to mirror the structure of the more successful firm

b. transfer key people into new management positions.

Increasingly, customers worldwide are demanding emphasis on local requirements and companies are needing efficiency as global competition increases. This has triggered an increase in the number of firms using the strategy. a. multidomestic b. transnational c. universal d. global

b. transnational

Which of the following statements is FALSE? a. First movers tend to take higher risks than second and later movers. b. First movers tend to have significantly higher revenues than second movers. c. First movers have lower survival rates than second and late movers. d. First movers tend to have more organizational slack than later movers.

c. First movers have lower survival rates than second and late movers.

_________ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving. a. Financial slack b. Private synergy c. Friendly acquisitions d. High compensation

c. Friendly acquisitions

GE (Chapter 6 Opening Case) is unusual in that it a. is widely diversified but competes only in manufacturing industries. b. has had an unblemished environmental record. c. is one of the few large diversified large firms that have been successful over time. d. restricted its investments to only developed economies.

c. is one of the few large diversified large firms that have been successful over time.

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of a. integration difficulties. b. inability to achieve synergy. c. large or extraordinary debt. d. managers overly focused on acquisitions

c. large or extraordinary debt

The choices that a firm has for entering the international market include all of the following EXCEPT a. exporting. b. licensing. c. leasing. d. acquisition.

c. leasing.

The Mars acquisition of the Wrigley assets was part of its related constrained diversification and added market share to the Mars/Wrigley integrated firm. It allowed Mars to gain the market level or reduce its costs below the market level. a. multipoint competition b. virtual integration c. market power d. vertical integration

c. market power

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. a. multiple b. multiportal c. multipoint d. multiplicit

c. multipoint

Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. factors of production b. demand conditions c. related and supporting industries d. firm strategy, structure, and rivalry

a. factors of production

. Successful unrelated diversification through restructuring is typically accomplished by a. focusing on mature, low-technology businesses. b. a "random walk" of good luck in picking firms to buy. c. seeking out high technology firms in high-growth industries. d. a top management team that is not constrained by pre-established ideas of how the firm's portfolio should be developed.

a. focusing on mature, low-technology businesses.

The chief disadvantage of being a first mover is the a. high degree of risk. b. high level of competition in the new marketplace. c. inability to earn above-average returns unless the production process is very efficient. d. difficulty of obtaining new customers.

a. high degree of risk.

A company pursuing vertical integration can gain market power over its competitors through all of the following EXCEPT a. improved adjustment to technological changes. b. savings on operations costs. c. improved product quality. d. avoidance of market costs

a. improved adjustment to technological changes.

When a firm simultaneously practices operational relatedness and corporate relatedness, a. it is difficult for investors to observe the value created by the firm. b. the firm is likely to be overvalued by investors. c. the firm will suffer from diseconomies of scope that outweigh cost savings generated. d. the firm is seeking to create value through financial economies

a. it is difficult for investors to observe the value created by the firm.

A fundamental reason for a country's development of advanced and specialized factors of production is often its a. lack of basic resources. b. monetary wealth. c. small workforce. d. protective tariffs

a. lack of basic resources.

Firms able to standarize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to a. learn how to continuously reduce costs while increase the value of their products. b. increase investment in research and development. c. access to a low-cost labor force in the host market. d. mitigate cultural differences

a. learn how to continuously reduce costs while increase the value of their products.

U.S. cola companies entered the global market because of a. limited growth opportunities in their domestic market. b. lower labor costs in the emerging markets. c. economies of scale that offset research and development costs. d. an increase in the return on investment from their U.S. bottling plants.

a. limited growth opportunities in their domestic market.

Free cash flows are a. liquid financial assets for which investments in current businesses are no longer economically viable. b. liquid financial assets that for tax purposes must be reinvested in the firm if not distributed as dividends to shareholders. c. the profits resulting after a restructured firm has been sold. d. dividends that have been distributed to shareholders that are taxed as capital gains.

a. liquid financial assets for which investments in current businesses are no longer economically viable.

Quality is a. meeting or exceeding customer expectations in the goods and/or services offered. b. only a major factor in the production of luxury goods, such as BMW cars. c. an assured way to gain competitive advantage. d. a viable trade-off with product cost in gaining a competitive advantage.

a. meeting or exceeding customer expectations in the goods and/or services offered.

A noted professional art academy has founded an "artists and friends" travel company specializing in tours for artists to scenic locales, using its faculty as traveling teachers. In addition, the art academy has purchased a framing company to both make frames for academy art works, but also to sell museum-quality framing services to the public. The art academy is engaging in diversification based on relatedness. a. operational b. corporate c. intellectual d. constrained

a. operational

Goods or services in standard-cycle markets reflect a. organizations that serve a mass market. b. numerous first mover advantages. c. an inability to sustain a competitive advantage except for brief periods of time. d. competitive advantages that are shielded from imitation.

a. organizations that serve a mass market.

According to the Chapter 7 Strategic Focus, research suggests that emerging market firms tend to _______ than other firms and that government ownership of those firms leads to ______ for the acquisition. a. pay a higher premium; overpayment b. pay a lower premium; overpayment c. pay a lower premium; underpayment d. pay a higher premium; underpayment

a. pay a higher premium; overpayment

Which of the following is NOT a disadvantage associated with exporting? a. potential loss of proprietary technologies b. high transportation costs c. loss of control over distribution activities d. tariffs imposed by local governments

a. potential loss of proprietary technologies

Backward integration occurs when a company a. produces its own inputs. b. owns its own source of distribution of outputs. c. is concentrated in a single industry. d. is divesting unrelated businesses.

a. produces its own inputs

Which of the following is NOT one of the three main restructuring strategies? a. realigning b. downsizing c. downscoping d. leveraged buyouts

a. realigning

Terrorism creates an economic risk for firms, which a. reduces the amount of investment foreign companies will make in a country perceived to be terror-prone. b. is created by governmental bans on doing business with terrorist regimes. c. is offset by the above-average returns for firms that have learned how to operate in such an environment. d. is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations

a. reduces the amount of investment foreign companies will make in a country perceived to be terror-prone.

The Publicis Groupe uses the digital technology from its digital business to enhance the advertising products in its advertising group. This sharing of activities is characteristic of the diversification strategy. a. related constrained b. related linked c. unrelated d. dominant

a. related constrained

Procter & Gamble (P&G) has a paper towel and baby diaper business, both of which use paper products. The firm's paper production plant produces inputs for both businesses. P&G most likely uses the diversification strategy to create a. related constrained; operational relatedness. b. related linked; corporate relatedness. c. related constrained; corporate relatedness. d. related linked; operational relatedness.

a. related constrained; operational relatedness.

Although a(n) job of firm, GE (discussed in the Chapter 6 Opening Case) has done an exceptional its four major strategic business units. a. related linked; allocating capital across b. related constrained; restructuring c. unrelated; sharing activities across d. unrelated; transferring core competencies across

a. related linked; allocating capital across

Research has shown that the more , the greater is the probability that an acquisition will be successful. a. related the acquired and acquiring firms are b. diverse the resulting portfolio of competencies c. disparate the corporate cultures d. involved investment banking firms are in the due diligence process

a. related the acquired and acquiring firms are

Late movers are those firms that a. respond to a competitive action a significant amount of time after the first mover's action and the second mover's response. b. respond to a first mover's competitive action often through imitation or a move designed to counter the effects of the action. c. take an initial competitive action (either strategic or tactical). d. typically achieve higher-than-average returns because they can imitate the most efficient actor.

a. respond to a competitive action a significant amount of time after the first mover's action and the second mover's response.

Typically, in a failed acquisition, the organization will a. restructure. b. go into bankruptcy. c. focus on building private synergy. d. increase integration

a. restructure.

After a leveraged buyout, _________ typically occur(s). a. selling of assets b. further rounds of acquisitions c. due diligence d. private synergy

a. selling of assets

The lowest level of diversification is the level. a. single-business b. dominant business c. related constrained d. unrelated

a. single-business

ustained competitive advantage is most achievable in a _______. market. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

a. slow-cycle

Which pair of firms has the LEAST resource similarity? a. small, family-owned Italian restaurant; Olive Garden b. Target; Walmart c. HP; Dell d. FedEx; UPS

a. small, family-owned Italian restaurant; Olive Garden

The competitive actions and responses in markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm's operations in order to consistently provide the same positive experience for customers. a. standard-cycle b. fast-cycle c. slow-cycle d. intermediate-cycle

a. standard-cycle

The flat-panel television market where prices have come down and competition has become more stable is best characterized as a. standard-cycle. b. fast-cycle. c. slow-cycle. d. competitive rivalry.

a. standard-cycle.

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT a. the acquisition of Taylor should be primarily for defensive rather than strategic reasons. b. research suggests that acquisition strategies are a common means of avoiding risky internal ventures. c. the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. d. acquisitions could become a substitute for innovation within your firm.

a. the acquisition of Taylor should be primarily for defensive rather than strategic reasons.

A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT when a. the attack is by a price predator. b. the attack makes the firm's market position less defensible. c. the attack damages the firm's ability to use its capabilities. d. the attack improves the competitor's market position.

a. the attack is by a price predator.

One of the primary reasons for failure of cross-border strategic alliances is a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

a. the incompatibility of the partners.

International corporate-level strategy focuses on a. the scope of operations through both product and geographic diversification. b. competition within each country. c. economies of scale. d. sophistication of monitoring and controlling systems.

a. the scope of operations through both product and geographic diversification.

A large domestic market can provide the country's industries a chance at dominating the world market because a. they have been able to develop economies of scale at home. b. they have access to abundant and inexpensive factors of production. c. the related and supporting industries will have been developed. d. the nation's culture and educational system will be adapted to producing the labor force needed for the industry.

a. they have been able to develop economies of scale at home.

An ability to efficiently allocate capital through an internal market may help the firm protect the competitive advantages it develops a. through reduced disclosure to outside parties. b. by the ability to not report losses to investors. c. by the ability to increase pay to managers without shareholders being aware. d. through the ability to reinvest cash in dividends to shareholders.

a. through reduced disclosure to outside parties.

In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers tastes. Starbucks is following the corporate-level strategy. a. transnational b. global c. differentiation d. multidomestic

a. transnational

The term "conglomerates" refers to firms using the diversification strategy. a. unrelated b. related constrained c. related linked d. global

a. unrelated

Sales of watches among teenagers and twenty-somethings are declining rapidly as this age group uses cellphones, iPods, and other devices to tell time. A company that specializes in selling inexpensive watches to this age group may wish to consider _______ in order to develop new products other than watches. a. unrelated diversification b. backward integration c. forward integration d. horizontal acquisitions

a. unrelated diversification

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n) a. vertical acquisition. b. unrelated acquisition. c. horizontal acquisition. d. merger of equals

a. vertical acquisition.

Wm. Wrigley Jr. Company once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints) and Altoids (a line of breath mints) from Kraft, chewing gum then constituted less than 95 percent of revenues. Thus, Wrigley a. was moving away from its traditional single-business strategy toward a dominant strategy. b. was moving away from its traditional dominant strategy toward a related linked strategy. c. became a conglomerate since Life Savers and Altoids are unrelated businesses. d. probably planned to restructure these companies and sell them off.

a. was moving away from its traditional single-business strategy toward a dominant strategy.

All of the following complicate the implementation of an international diversification strategy EXCEPT a. widespread multilingualism. b. increased costs of coordination between business units. c. cultural diversity. d. logistical costs.

a. widespread multilingualism.

The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms a. with insufficient diversification. b. having too much debt. c. being unable to achieve synergy. d. growing too large.

a. with insufficient diversification.

Effectively implementing the _________ international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies. a. multidomestic; global; transnational b. global; multidomestic; transnational c. cost leadership; differentation; focus d. transnational; multidomestic; global

d. transnational; multidomestic; global

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. a. dominant business b. related constrained c. related linked d. unrelated

d. unrelated

Working in multiple international markets can provide firms with perhaps even in terms of a. location advantages; larger markets. b. research and development activities; larger markets. c. new learning opportunities; research and development activities. d. economies of scale and learning; larger markets

c. new learning opportunities; research and development activities.

There are few true mergers because a. few firms have complementary resources. b. integration problems are more severe than in outright acquisitions. c. one firm usually dominates in terms of market share, size, or value of assets. d. of managerial resistance. True mergers result in significant managerial-level layoffs

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

The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT a. factors of production. b. demand conditions. c. political and economic institutions. d. related and supporting industries

c. political and economic institutions.

The ______ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions. a. pre-acquisition negotiations b. pre-acquisition due diligence c. post-acquisition integration d. post-acquisition restructuring

c. post-acquisition integration

. Walt Disney's focus on ______ is typical of a slow-cycle market. a. innovation b. total quality c. proprietary rights d. economies of scale

c. proprietary rights

Associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage a. global strategies. b. domestication. c. regional strategies. d. nationalization

c. regional strategies.

The diversification strategy creates value in two ways. First, since the core competence has already been developed in one business, the firm does not have to allocate resources to develop it. Second, since the resource is intangible, competitors cannot easily imitate it. a. related constrained b. unrelated c. related linked d. dominant business

c. related linked

Virgin Group successfully transfers its marketing core competence across airlines, cosmetics, music, drinks, mobile phones, health clubs, and a number of other businesses. Virgin follows a(n) diversification corporate strategy. a. dominant-business b. related constrained c. related linked d. unrelated

c. related linked

Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of a. the effects of regionalization. b. the risks of a multidomestic strategy. c. the liability of foreignness. d. the effect of demand conditions.

c. the liability of foreignness

Research has shown that horizontal acquisitions a. tend to have disappointing financial results in the long run. b. are being replaced by virtual acquisitions. c. result in lower levels of performance than unrelated acquisitions. d. are able to use activity sharing to successfully create economies of scope.

d. are able to use activity sharing to successfully create economies of scope.

Which of the following is NOT a typical disadvantage of licensing? a. little control over the marketing of the products b. licensees may develop a competitive product after the license expires c. lower potential returns than the use of exporting or strategic alliances d. incompatibility of the licensing partners

d. incompatibility of the licensing partners

Managerial motives to seek diversification include a desire to a. improve their marketability to other firms. b. effectively use corporate resources. c. provide higher returns to corporate stakeholders. d. increase their compensation.

d. increase their compensation.

Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT a. large debt and increased financial risk. b. failure to invest in R&D. c. risk-averse management. d. inefficient operations

d. inefficient operations

A nation's competitiveness depends on the capacity of its industries to advantage. a. diversify internationally b. have access to critical resources c. protect its proprietary capabilities d. innovate

d. innovate

All of the following are reasons why firms use international strategic alliances EXCEPT a. sharing of risks and resources. b. alliances facilitate the development of new capabilities. c. learning new competencies particularly those related to technology. d. strategic alliances are easy to manage

d. strategic alliances are easy to manage

Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT a. labor. b. capital. c. infrastructure. d. technology

d. technology

The downside of synergy in a diversified firm is a. increasing independence of businesses. b. the reduction of activity sharing. c. excessive focus on risky innovation. d. the loss of flexibility.

d. the loss of flexibility.

Synergy exists when a. cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm. b. two units create value by utilizing market power in their respective industries. c. firms utilize constrained related diversification to build an attractive portfolio of businesses. d. the value created by business units working together exceeds the value the units create when working independently.

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

Which type of diversification is most likely to create value through financial economies? a. related constrained b. operational and corporate relatedness c. unrelated d. related linked

. unrelated

Research shows that about percent of mergers and acquisitions are successful. a. 20 b. 40 c. 60 d. 80

a. 20

The strategy of Citigroup under CEO Sanford Weill was to create a "financial supermarket" where customers shop for a variety of financial services within the same company. This strategy was executed via a series of acquisitions but ultimately failed. This situation was the result of a. Citigroup's managers focusing too much on acquisitions at the expense of managing their existing businesses. b. key managers leaving from the acquired firms, which left the firms with inferior management talent. c. the firm becoming too vertically integrated. d. the firm becoming too focused on its core businesses.

a. Citigroup's managers focusing too much on acquisitions at the expense of managing their existing businesses

_______and _____ describe the situation in which organizations are direct competitors and are fully aware of the competition. a. High market commonality; high resource similarity b. High market commonality; low resource similarity c. Low market commonality; high resource similarity d. Low market commonality; low resource similarity

a. High market commonality; high resource similarity

________ relates to the gains or losses a firm will experience if it attacks a rival or responds to an attack by a rival. a. Motivation b. Awareness c. Responsiveness d. Ability

a. Motivation

Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare and only two brick plants in the United States make this type of brick. Specialty Steel owns one of these brick plants and buys all of its production. The other brick manufacturer has recently developed an inexpensive new technology whereby ordinary clay can be used to make this fire brick. This significantly reduces the production cost of this type of brick. a. Specialty Steel has less flexibility now than if it were not vertically integrated. b. This is an example of a capacity balance problem. c. This is a result of conflicts of interest between the managers of the brick plant and the executives of Specialty Steel. d. The market power of Specialty Steel has been de-integrated.

a. Specialty Steel has less flexibility now than if it were not vertically integrated.

Xanadu, a U.S. manufacturer of pharmaceuticals, has acquired a firm in the same industry in Ireland. It plans to transfer one of its key managers from its plant in St. Louis to Ireland. What is the major threat to Xanadu's plan to transfer competencies from itself to the Irish firm? a. The St. Louis manager may quit Xanadu in order to remain in St. Louis. b. American pharmaceutical manufacturing techniques may not transfer to Ireland. c. Irish managers will refuse to take direction from a foreign executive. d. The cost of transferring U.S. managers overseas is usually not cost-effective.

a. The St. Louis manager may quit Xanadu in order to remain in St. Louis.

What is the similarity between high-technology firms and service-based firms that makes them risky as restructuring candidates? a. They are human-resource dependent. b. They have few tangible assets. c. Both types of firm rely on financial economies. d. The demand for their products is highly sensitive to economic downturns.

a. They are human-resource dependent.

Dragonfly Publishers of children's books has purchased White Rabbit, another publisher of children's books. Both companies' books are sold to the same retail stores and schools. Their content is different, since Dragonfly produces children's literature, whereas White Rabbit focuses on child-level scientific and nature topics. Which of the following statements is probably TRUE about this acquisition? a. This is a horizontal acquisition. b. This is an example of virtual integration. c. Dragonfly is beginning to build a conglomerate. d. Economies of scope are unlikely to result from this acquisition.

a. This is a horizontal acquisition.

Which of the following is TRUE of Walmart? a. Walmart has an unusual amount of flexibility for a large firm. b. Walmart's success is largely due to the fact it has little market commonality with other industry firms. c. Decision-making responsibility is centered at its Arkansas headquarters, which allows the firm to respond quickly to competitive attacks. d. Walmart's advantage lies in its ability to "think big."

a. Walmart has an unusual amount of flexibility for a large firm.

An office management firm has developed a system for efficiently organizing small medical and dental practices both through proprietary software and through unique training programs for staff. It has recently acquired a firm specializing in providing management services for veterinary practices. The office management firm is hoping to a. achieve economies of scope. b. implement vertical integration. c. achieve financial economies through an unrelated acquisition. d. acquire specialized talent from the veterinary management company.

a. achieve economies of scope.

Firms with core competencies that can be exploited across international markets are able to a. achieve synergies and produce high-quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.

a. achieve synergies and produce high-quality goods at lower costs.

Without effective due diligence the a. acquiring firm is likely to overpay for an acquisition. b. firm may miss its opportunity to buy a well-matched company. c. acquisition may deteriorate into a hostile takeover, reducing the value creating potential of the action. d. firm may be unable to act quickly and decisively in purchasing the target firm

a. acquiring firm is likely to overpay for an acquisition.

. Horizontal, vertical, and related acquisitions to build market power a. are likely to undergo regulatory review and analysis by financial markets. b. are rarely permitted to occur across international borders. c. typically involve a firm purchasing one of its suppliers or distributors. d. concentrate on capturing value at more than one stage in the value chain

a. are likely to undergo regulatory review and analysis by financial markets.

Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare and only two brick plants in the United States make this type of brick. Specialty Steel has decided to buy one of these brick plants. This is an example of a. backward integration. b. forward integration. c. horizontal integration. d. virtual integration.

a. backward integration.

Thomas is an upper-middle level manager for a firm that has been actively involved in acquisitions over the last 10 years. The firm has grown much larger as a result. Thomas has been dismayed to find that recently the managerial culture of the firm has been turning more and more to controls. a. bureaucratic b. strategic c. tactical d. organic

a. bureaucratic

Competitive rivalry has the most effect on the firm's strategies than the firm's other strategies. a. business-level b. corporate-level c. acquisition d. international

a. business-level

Internal product development is often viewed as a. carrying a high risk of failure. b. the only reliable method of generating new products for the firm. c. a quicker method of product launch than acquisition of another firm. d. critical to the success of biotech and pharmaceutical firms

a. carrying a high risk of failure.

A global corporate-level strategy differs from a multidomestic corporate-level strategy in that in a global strategy, a. competitive strategy is dictated by the home office. b. competitive strategy is decentralized and controlled by individual strategic business units. c. products are customized to meet the individual needs of each country. d. the firm sells in multiple countries.

a. competitive strategy is dictated by the home office.

Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the company would be a. concerned if the value of the dollar strengthened. b. pleased if the value of the dollar strengthened. c. unconcerned about the fluctuation in the value of the dollar because the company is widely diversified geographically. d. likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and remained low.

a. concerned if the value of the dollar strengthened.

Usually a company is classified as a single business firm when revenues generated by the dominant business are greater than percent. a. 99 b. 95 c. 90 d. 70

b. 95

________ markets are often described as volatile and innovative. a. Slow-cycle b. Fast-cycle c. Standard-cycle d. Sheltered

b. Fast-cycle

Which company below committed significant resources to enter the information services market and, given its success, was imitated by other competitors? a. Compaq b. IBM c. HP d. Dell

b. IBM

Which of the following is NOT a result of over-diversification? a. Executives do not have a rich understanding of all of the firm's business units. b. Managers emphasize strategic controls rather than financial controls. c. Firms use acquisition as a substitute for innovation. d. Managers become short-term in their orientation

b. Managers emphasize strategic controls rather than financial controls

Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. a. The firm is not engaging in international trade. b. The firm is using a regional approach to international expansion. c. The firm will not be able understand the cultures, legal, and social norms of this market. d. Skaredykat is a scaredy-cat

b. The firm is using a regional approach to international expansion.

All of the following were results of Citigroup's acquisition strategy EXCEPT (Chapter 7 Strategic Focus) a. overly diversified. b. a much smaller, though global, business financial service firm. c. too large. d. lacking in synergy

b. a much smaller, though global, business financial service firm.

A primary reason for a firm to pursue an acquisition is to a. avoid increased government regulation. b. achieve greater market power. c. exit a hyper-competitive market. d. achieve greater financial returns in the short run

b. achieve greater market power.

A(n) occurs when one firm buys a controlling, or 100 percent interest, in another firm. a. merger b. acquisition c. spin-off d. restructuring

b. acquisition

SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market, SpeakEasy would be best served if it considers a(an) a. vertical acquisition of a firm that uses technical translation products. b. acquisition of a highly related firm in the technical translation market. c. cross-border merger, preferably with an Indian or Chinese company. d. strategy of internally developing the technical translation products needed to compete in this market

b. acquisition of a highly related firm in the technical translation market

The term "leverage" in leveraged buyouts refers to the a. firm's increased concentration on the firm's core competencies. b. amount of new debt incurred in buying the firm. c. fact that the employees are purchasing the firm for which they work. d. process of removing the firm's stock from public trading

b. amount of new debt incurred in buying the firm.

The use of high levels of debt in acquisitions has contributed to a. the increase in above-average returns earned by acquiring firms. b. an increased risk of bankruptcy for acquiring firms. c. the confidence of the stock market in firms issuing junk bonds. d. an increase in investments that have long-term payoffs.

b. an increased risk of bankruptcy for acquiring firms.

Moving into international markets is a particularly attractive strategy to firms whose domestic markets a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation

b. are limited in opportunities for growth.

A second mover a. is typically ineffective in its response to the first mover. b. attempts to provide a product with greater customer value than the first mover's product. c. usually incurs higher expenses than the first mover since it must engage in reverse engineering. d. typically has a higher survival rate than first movers which typically take greater risks.

b. attempts to provide a product with greater customer value than the first mover's product.

When managers become overly focused on making acquisitions, it is a. because the skills of top executives are better used in making acquisitions than they are in daily organization operations. b. because of the thrill of selecting, chasing, and seizing a target. c. due to pressure from major stakeholders to diversify the firm. d. because acquisitions are a quick way to improve the financial standing of the firm

b. because of the thrill of selecting, chasing, and seizing a target.

Large diversified businesses often face what is known as the "conglomerate discount." This discount means that investors a. understand that the financial efficiencies of this strategy automatically make these stocks worth more than their current market valuation. b. believe that the value of conglomerates is less than the value of the sum of their parts. c. increase the expected future earnings of conglomerates. d. have found that over time, conglomerates earn more than the component companies would have earned independently.

b. believe that the value of conglomerates is less than the value of the sum of their parts.

All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they a. are more likely to have organizational slack. b. can launch competitive actions more quickly. c. have more loyal and diverse workforces. d. can wait for larger firms to make mistakes in introducing innovative products.

b. can launch competitive actions more quickly.

The more sharing of resources and activities among businesses, the more is the relatedness of the diversification. a. linked b. constrained c. integrated d. intense

b. constrained

When a firm INITIALLY becomes internationally diversified, its returns a. remain stable. b. decrease. c. become more variable. d. increase.

b. decrease.

As the threat of corporate failure increases due to relatedness between a firm's business units, firms may decide to a. increase the firm's level of retained resources. b. diversify into less risky environments. c. reduce the level of diversity in its investments. d. pursue unproven product lines

b. diversify into less risky environments.

Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S. package delivery operations, 22 percent from international package delivery, and 18 percent from non-packaging operations. Which best describes the corporate level strategy of UPS? a. single business b. dominant business c. related constrained d. related linked

b. dominant business

Compared with downsizing, _______ has (have) a more positive effect on firm performance. a. reconfiguring b. downscoping c. leveraged buyouts d. acquisitions

b. downscoping

An investor is analyzing two firms in the same industry. She is looking for long-term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the a. downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests. b. downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses. c. downsizing firm because it will be making decisions based on tactical strategies. d. downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability.

b. downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses.

Firms that have selected a related diversification corporate-level strategy seek to exploit a. control shared among business-unit managers. b. economies of scope between business units. c. the favorable demand of buyers. d. market power.

b. economies of scope between business units.

hich of the following is a value-reducing reason for diversification? a. enhancing the strategic competitiveness of the entire company b. expanding the business portfolio in order to diversify managerial employment risk c. gaining market power relative to competitors d. conforming to antitrust regulation

b. expanding the business portfolio in order to diversify managerial employment risk

An international diversification strategy is one in which a firm a. expands into nearby markets. b. expands into a potentially large number of geographic locations and markets. c. expands into one or a few markets. d. acquires a firm in a foreign country.

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

A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of a. licensing. b. exporting. c. a strategic alliance. d. a greenfield venture.

b. exporting.

Reverse engineering is characteristic of a. first movers. b. fast-cycle markets. c. market leaders. d. price predators.

b. fast-cycle markets.

During the 1990s top executives of Titanic, Inc., followed a pattern of aggressive acquisitions and diversification. Now, Titanic is performing poorly and earning below average returns. Lusitania, a large conglomerate firm, is in the final stages of purchasing Titanic. Lusitania has announced that it will fire Titanic's current top executives. The Titanic executives may not be worried about their impending job loss if they a. plan to take poison pills. b. have golden parachutes. c. have silver handcuffs. d. have ironclad contracts

b. have golden parachutes.

The March 2011 announcement that AT&T was acquiring T-Mobile USA from Deutsche Telekom is a acquisition and is intended to a. vertical; increase diversification. b. horizontal; increase market power. c. vertical; overcome entry barriers. d. related; increase speed to market.

b. horizontal; increase market power.

The increased pressures for global integration of operations have been driven mostly by a. new low-cost entrants. b. increasing demand for similar products. c. increased levels of joint ventures. d. the rise of governmental regulation.

b. increasing demand for similar products.

Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will _____________ until __________ a. initiate more competitive actions; the firm returns to profitability. b. initiate fewer competitive actions; the quality problems are corrected. c. initiate more competitive actions; the quality problems are corrected. d. advertise more; customers believe the quality had improved.

b. initiate fewer competitive actions; the quality problems are corrected.

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for a. market discipline. b. innovation. c. risk analysis. d. international diversification

b. innovation.

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because a. of barriers to entry in many industries. b. it is difficult and time intensive for companies to develop products that differ from their current product line. c. innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. d. unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition.

b. it is difficult and time intensive for companies to develop products that differ from their current product line

shareholders preferred that corporations a. pay dividends annually. b. keep free cash flows for investment in acquisitions. c. distribute capital gains regularly. d. increase managerial salaries.

b. keep free cash flows for investment in acquisitions.

Without quality, the firm's products a. can compete effectively on the basis of low price. b. lack credibility among customers. c. must be exported to developing countries, because they are not competitive in the United States or developed countries. d. are associated with predatory competition.

b. lack credibility among customers.

Most firms enter international markets sequentially, introducing their ________ first. a. most innovative products b. largest and strongest lines of business c. most generic products, which will be more likely to generate universal product demand, d. products customized to the region

b. largest and strongest lines of business

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is a. similar competitive rivalry. b. less competitive rivalry. c. more competitive rivalry. d. no competitive rivalry.

b. less competitive rivalry.

Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and ______ likely to respond aggressively when attacked. a. more; more b. less; more c. less; less d. more; less

b. less; more

The positive results associated with increasing international diversification have been shown to a. continue as the level of international diversification increases. b. level off and become negative as diversification increases past some point. c. become negative quickly. d. be centered in only one or two industries.

b. level off and become negative as diversification increases past some point.

A multidomestic corporate-level strategy has ________ need for global integration and __________ need for local market responsiveness. a. low; low b. low; high c. high; low d. high; high

b. low; high

The drawbacks to transferring competencies by moving key people into new management positions include all EXCEPT a. the people involved may not want to move. b. managerial competencies are not easily transferable to different organizational cultures. c. managers with these skills are expensive. d. top-level managers may resist having these key people transferred.

b. managerial competencies are not easily transferable to different organizational cultures.

Both ______ and ______ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions

b. market commonality; resource similarity

Compared to internal product development, acquisitions allow a. immediate access to innovations in mature product markets. b. more accurate prediction of return on investment. c. slower market entry. d. more effective use of company core competencies

b. more accurate prediction of return on investment

Compared with diversification based on intangible resources, diversification based on financial resources is a. less imitable and less likely to create value on a long-term basis. b. more imitable and less likely to create value on a long-term basis. c. less imitable and more likely to create value on a long-term basis. d. more imitable and more likely to create value on a long-term basis.

b. more imitable and less likely to create value on a long-term basis.

The presence of barriers to entry in a particular market will generally make acquisitions as an entry strategy. a. less likely b. more likely c. prohibitive d. illegal

b. more likely

.According to the Chapter 7 Opening Case, the difference between Facebook's acquisition approach and the approaches of Microsoft and Google is that a. Facebook tends to acquire earlier-stage companies, whereas Microsoft and Google tend to acquire later- stage companies. b. none of Facebook's acquisitions have survived as independent companies, whereas those of Microsoft and Google have continued to operate as subsidiaries. c. Facebook's approach is to acquire earlier-stage companies, whereas Microsoft and Google tend to acquire later-stage companies. d. Microsoft's and Google's acquisitions have all been friendly, whereas Facebook's have all been hostile.

b. none of Facebook's acquisitions have survived as independent companies, whereas those of Microsoft and Google have continued to operate as subsidiaries.

In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the in Porter's model. a. strategy, structure, and rivalry among firms b. related and supporting industries c. demand conditions d. factors of production

b. related and supporting industries

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. a. unrelated b. related constrained c. related linked d. dominant business

b. related constrained

The Publicis Groupe has three major groups of business (advertising, media, and digital) that share resources and capabilities. Publicis Groupe is using a diversification strategy. a. related linked b. related constrained c. unrelated d. dominant

b. related constrained

The Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing. This excess capacity will be useful in a. unrelated diversification. b. related diversification projects. c. corporate restructuring. d. multipoint competition

b. related diversification projects.

Walt Disney Company has successfully used related diversification to create value by a. sharing activities. b. sharing activities and transferring core competencies. c. transferring core competencies. d. efficient internal capital allocation and restructuring

b. sharing activities and transferring core competencies.

Operational relatedness is created by of a. sharing; core competencies. b. sharing; activities. c. transferring; core competencies. d. transferring; activities

b. sharing; activities.

Market power is derived primarily from the a. core competencies of the firm. b. size of a firm and its resources and capabilities. c. quality of a firm's top management team. d. depth of a firm's strategy

b. size of a firm and its resources and capabilities.

. Walmart initially used a focused cost-leadership strategy to compete only in small communities by using sophisticated logistics systems and efficient purchasing practices to gain a competitive advantage. The response of local competitors was __________ because they a. rapid; were nimble and flexible. b. slow; lacked the ability to marshal resources. c. rapid; perceived gains from responding to Walmart's attack. d. rapid; had the resources and flexibility compete against Walmart.

b. slow; lacked the ability to marshal resources

The larger the resources of a firm taking a competitive action compared with the resources of the other firms in the industry, the the response will be of these other firms. a. more fragmented b. slower c. larger d. more tactical

b. slower

Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners a. resisted selling at any price. b. sold the company to the larger brewer. c. designed a poison pill to discourage a takeover. d. looked for smaller brewers to acquire instead of selling to the larger brewer.

b. sold the company to the larger brewer.

Because Coca-Cola, Nestle, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is most likely that the bottled water market is a(n) a. slow-cycle market b. standard-cycle market. c. fast-cycle market. d. intermediate-cycle market.

b. standard-cycle market

Competition between candy makers (e.g., Hershey, Mars, Cadbury, Nestle, and Godiva) where firms package design (including package downsizing) and ease of availability is characteristic of a(n) a. slow-cycle market b. standard-cycle market. c. fast-cycle market. d. intermediate-cycle market.

b. standard-cycle market

Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of a. fast-cycle markets. b. standard-cycle markets. c. incremental-cycle markets. d. slow-cycle markets.

b. standard-cycle markets.

International strategy refers to a(n) a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international markets.

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

. Which of the following resources are more likely to create value in the diversification process? a. plant and equipment b. tacit knowledge c. excess capacity d. financial resources

b. tacit knowledge

On the whole there are more competitive responses to a. strategic actions than to tactical actions. b. tactical actions than to strategic actions. c. buyer pressures than to supplier pressures. d. the demands of the top management team than to industry structural pressures.

b. tactical actions than to strategic actions.

The curvilinear relationship of corporate performance and diversification indicates that a. dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies. b. the highest performing business strategy is related constrained diversification. c. the less related the businesses acquired, the higher performing the organization. d. none of the strategies consistently outperforms the others.

b. the highest performing business strategy is related constrained diversification.

The main difference between the related constrained level of diversification and the related linked level of diversification is a. the percentage of total organizational profitability that comes from the dominant business. b. the level of resources and activities shared among the businesses. c. whether the diversification is vertical or horizontal. d. whether the diversification is value-creating or value-neutral.

b. the level of resources and activities shared among the businesses.

In a merger a. one firm buys controlling interest in another firm. b. two firms agree to integrate their operations on a relatively coequal basis. c. two firms combine to create a third separate entity. d. one firm breaks into two firms

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

All of the following are international corporate-level strategies EXCEPT the _____ strategy. a. multidomestic b. universal c. global d. transnational

b. universal

PorkPride Foods produces hams and other meat products. It owns hog raising operations. This is an example of a _______ business. a. de-integrated b. vertically integrated c. totally integrated d. horizontally integrated

b. vertically integrated

Corporate-level strategy is concerned with and how to manage these businesses. a. whether the firm should invest in global or domestic businesses b. what product markets and businesses the firm should be in c. whether the portfolio of businesses should generate immediate above-average returns or should be troubled businesses which will create above-average returns only after restructuring d. whether to integrate backward or forward.

b. what product markets and businesses the firm should be in

Which industry can be LEAST described as a slow-cycle market? a. freight railroads b. pharmaceuticals c. cell phone provider d. private ownership of highways and bridges

c. cell phone provider

Managers perceive internal product development as a high-risk activity and tend to choose acquisitions because approximately percent of innovations are imitated within 4 years after patents are obtained. a. 5 b. 10 c. 60 d. 20

c. 60

Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and in the market segments in which they compete. Hilliard, the number two firm in the industry, has undertaken a major strategic attack upon Ahrens, the market leader. Which of the following statements is most likely to be TRUE? a. Ahrens will not respond aggressively since this is a strategic move and not a tactical action. b. As the market leader, Ahrens has little to fear from an attack by Hilliard and will not expend organizational slack on a major response. c. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens. d. Ahrens will respond after a long delay as the nutrition supplement industry is a slow-cycle industry.

c. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a wide-spread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of these statements is most likely TRUE? a. The owners of Bubble-Up are unconcerned about Mega-Toy's entry to the market because of the resource dissimilarity between the firms. b. Bubble-Up's greater organizational slack will allow it to aggressively attack Mega-Toy. c. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy. d. Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent on the educational toy market.

c. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy.

__________ may be necessary because acquisitions create a situation in which the newly formed form has duplicate organizational functions such as sales, manufacturing, distribution, and human resource management. a. Management buyout b. Leveraged buyout c. Downsizing d. Downscoping

c. Downsizing

Which of the following is an example of a strategic action? a. A "two movies for the price of one" campaign by Blockbuster Video b. Use of product coupons by a local grocer c. Entry into the European market by Home Depot d. Fare increases by Southwest Airlines

c. Entry into the European market by Home Depot

___________ is the set of costs associated with unfamiliar operating environments; economic, administrative and cultural differences; and the challenges of coordination over distances. a. Transnational risk b. Regionalization c. Liability of foreignness d. International risk

c. Liability of foreignness

Which of the following is an example of a tactical action? a. Walmart's launch of Sam's Club stores b. Continental Airlines exit from a hub airport in Denver c. Netflix beginning to offer music DVDs in addition to movies d. Dell's launch of a new line of high performance, custom-made PCs

c. Netflix beginning to offer music DVDs in addition to movies

Which of the following statements is FALSE? a. Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios. b. Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. c. Private synergy is easy for competitors to understand and imitate. d. Private synergy is more likely when the two firms in an acquisition have complementary assets.

c. Private synergy is easy for competitors to understand and imitate.

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. exporting b. strategic alliance c. a joint venture or wholly owned subsidiary d. licensing

c. a joint venture or wholly owned subsidiary

A leveraged buyout refers to a. a firm restructuring itself by selling off unrelated units of the company's portfolio. b. a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. c. a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. d. an action where the management of the firm and/or an external party buy all of the assets of a business financed largely with equity

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

Which of the following firms would be the most likely to be a successful candidate for acquisition and restructuring? a. a medical practice b. a management consulting firm that has a tradition of long term client-consultant relationships c. a tire manufacturer established in 1910 d. a start-up communications technology firm

c. a tire manufacturer established in 1910

If conflict in a strategic alliance or joint venture is not manageable, a(n) _______ may be a better option. a. licensing strategy b. exporting strategy c. acquisition d. new wholly owned subsidiary

c. acquisition

A licensing agreement a. results in two firms agreeing to share the risks and the resources of a new venture. b. is best way to protect proprietary technology from future competitors. c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. d. can be greatly impacted by currency exchange rate fluctuations.

c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.

Certain regulatory changes (such as antitrust regulation and tax laws) create incentives or disincentives for diversification that a. create value. b. reduce value. c. are value-neutral. d. are managerial motives to diversify

c. are value-neutral.

The CEO of the Wholesome Food retail grocery chain, which specializes in organic and natural produce and meat, has stated, "The key to success is to find your niche and focus on it, regardless of what anyone else does." The CEO a. realizes that he must understand competitors in order to predict their competitive actions and responses. b. understands that he is the market leader in his niche and thus has a sustainable competitive advantage. c. believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share. d. realizes his firm has such lower resources than other competitors that his chain is "competitively invisible" to them.

c. believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share.

The ultimate test of the value of a corporate-level strategy is whether the a. corporation earns a great deal of money. b. top management team is satisfied with the corporation's performance. c. businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership. d. businesses in the portfolio increase the firm's financial returns.

c. businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.

Among the value-neutral incentives to diversify, some come from the firm's external environment while others are internal to the firm. External incentives to diversify include a. the fact that other firms in an industry are diversifying. b. pressure from stockholders who are demanding that the firm diversify. c. changes in antitrust regulations and tax laws. d. a firm's low performance.

c. changes in antitrust regulations and tax laws.

U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of a. increasing rejection of American culture across much of the world. b. the sophistication of the international consumer because of the Internet. c. consumer needs, political and legal structures, and social norms vary by country. d. the increasing loss of economies of scale

c. consumer needs, political and legal structures, and social norms vary by country.

Intensified rivalry within an industry results in a. increased hiring across the industry. b. increased total revenues across the industry. c. decreased average profitability across the industry. d. increased entries into the industry.

c. decreased average profitability across the industry.

Firms with few competitive resources are more likely to a. not respond to competitive actions. b. respond quickly to competitive actions. c. delay responding to competitive actions. d. respond to strategic actions, but not to tactical actions.

c. delay responding to competitive actions.

Multipoint competition occurs when a. firms have multiple retail outlets. b. firms have multiple products in their primary industry. c. diversified firms compete against each other in several markets. d. firms have diversified portfolios of companies.

c. diversified firms compete against each other in several markets

Evidence suggests that firms using acquisitions as a substitute for internally developed innovations a. are able to offset the loss of research and development competencies by competencies in other areas. b. extend their time-to-market for new product launches. c. eventually encounter performance problems. d. can leverage their core competencies across a broader range of products

c. eventually encounter performance problems.

Raymond Vernon states that the classic rationale for international diversification is to a. pre-emptively dominate world markets before foreign companies can establish dominance. b. avoid domestic governmental regulation. c. extend the product's life cycle. d. avoid international governmental regulation.

c. extend the product's life cycle.

A friendly acquisition a. raises the price that has to be paid for a firm. b. enhances the complementarity of the two firms' assets. c. facilitates the integration of the acquired and acquiring firms. d. allows joint ventures to be developed

c. facilitates the integration of the acquired and acquiring firms.

First movers are a. entrepreneurs who lead in the establishment of new industries. b. firms that are first to exit a declining industry. c. firms that take an initial competitive action. d. individuals who move frequently as employment opportunities change in a locale.

c. firms that take an initial competitive action.

A transnational corporate-level strategy seeks to achieve a. customization for the local market. b. economies of scale and centralized strategic control. c. global efficiency and local responsiveness. d. standardization of products across countries.

c. global efficiency and local responsiveness

In addition to the four basic dimensions of Porter's "diamond" model, failure of firms. a. national work ethic b. educational requirements c. government policy d. national pride

c. government policy

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors. a. low; high b. low; low c. high; high d. high; low

c. high; high

Under industry structural analysis (Chapter 2), ________ rivalry is viewed as detrimental to profitability. Under the model of national advantage (Chapter 8), ________ rivalry is viewed as _________ as it results in competition and surviving firms are able to compete against global rivals. a. low; low; beneficial b. low; low; detrimental c. high; high; beneficial d. high; high; detrimental

c. high; high; beneficial

Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a firm in an unrelated industry. Some members of the board of directors are questioning Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for acquisitions because a. a successful acquisition will increase the CEO's power over the board of directors. b. making an acquisition is an easier route to increased firm value than is improving the firm's core competencies. c. higher CEO pay is related to larger organization size. d. CEOs nearing retirement seek to create empires to continue their legacy.

c. higher CEO pay is related to larger organization size.

Private synergy a. occurs in most related acquisitions and allows firms to see increased returns. b. is frequently achieved in conglomerates. c. is not easy for competitors to understand and imitate. d. is assessed by managers during the due diligence process

c. is not easy for competitors to understand and imitate.

Lobelia's Nursery and Garden Resource Center has long provided high-quality, typical types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to a. be unmotivated to respond because their market position is not threatened by a new competitor from out-of-town. b. respond with fierce attacks because of resource dissimilarity. c. respond aggressively because of high market dependence. d. take no competitive response because of the lack of mutual interdependence among the nurseries.

c. respond aggressively because of high market dependence.

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will a. go public through an IPO. b. review the due diligence information collected before the acquisition. c. restructure. d. review its tactical-level strategies

c. restructure.

Some research findings have shown that acquisitions typically _______ for shareholders in the acquiring firm. a. result in above-average returns b. provide approximately average returns c. result in returns near zero d. take some time to achieve private synergy, but eventually result in above-average returns

c. result in returns near zero

Lawsuits over patent and copyright infringements are more common and intense in a. fast-cycle markets because the market is innovation-driven. b. standard-cycle markets because the firm's brand name is such an important competitive advantage. c. slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage. d. standard-cycle markets because innovation is rare, and so gives the innovating firm a significant competitive advantage.

c. slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage

A firm may narrow its focus to a specific region of the world a. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. b. in order to obtain greater economies of scale. c. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets. d. to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions

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

A competitive action can be one of two types, either ________ or _______. a. aggressive; defensive b. quality-based; cost-based c. strategic; tactical d. market-based; resource-based

c. strategic; tactical

Of the value-neutral incentives to diversify, all of the following are internal firm incentives EXCEPT a. overall firm risk reduction. b. uncertain future cash flows. c. stricter interpretation of antitrust laws. d. low performance.

c. stricter interpretation of antitrust laws.

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT a. success is not guaranteed as the firm implements its chosen international business-level strategy. b. the actual strategic choices made are most compelling reasons for success or failure. c. success is guaranteed as the firm implements its chosen international business-level strategy. d. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

c. success is guaranteed as the firm implements its chosen international business-level strategy.

Which of the following is NOT a governance mechanism that may limit managerial tendencies to over-diversify? a. the market for corporate control b. the Board of Directors c. surveillance technologies d. executive compensation practices

c. surveillance technologies

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n) a. stealth raid. b. adversarial acquisition. c. takeover or unfriendly acquisition. d. leveraged buyout

c. takeover or unfriendly acquisition.

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT a. corporate headquarters can allocate capital according to more specific criteria than is possible with external market allocations. b. corporate headquarters has more complete information about the subsidiary businesses than the external capital market. c. the firm can acquire other firms with innovative products instead of allocating capital to research and development. d. corporate headquarters can more effectively discipline underperforming management teams through resource allocation than can the external market.

c. the firm can acquire other firms with innovative products instead of allocating capital to research and development.

A multidomestic corporate-level strategy is one in which _________ a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. the firm customizes the product for each country in which it competes. d. the firm competes in a number of countries, but it is centrally coordinated by the home office.

c. the firm customizes the product for each country in which it competes.

Which of the following is an advantage associated with greenfield ventures? a. governmental support and subsidies in the host country b. the lower cost of this type of venture c. the level of control over the firm's operations d. the lower level of risks involved

c. the level of control over the firm's operations

Due diligence includes all of the following activities EXCEPT assessing a. differences in firm cultures. b. tax consequences of the acquisition. c. the level of private synergy between the two firms. d. financing for intended transaction

c. the level of private synergy between the two firms.

All of the following statements are correct EXCEPT a. immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. b. shareholders of acquired firms often earn above-average returns from an acquisition. c. the majority of acquisitions increase long-term value for the acquiring firm. d. shareholders of acquiring firms typically earn returns from the transaction that are close to zero.

c. the majority of acquisitions increase long-term value for the acquiring firm.

The more "constrained" the relatedness of diversification, a. the fewer the linkages between the businesses within the portfolio owned by the firm. b. the wider the variation in the portfolio of businesses owned by the firm. c. the more links there are among the businesses owned by an organization. d. the lower the proportion of total organizational revenue derived from the dominant business.

c. the more links there are among the businesses owned by an organization.

The basic types of operational economies through which firms seek value from economies of scope are a. synergies between internal and external capital markets. b. the leveraging of individual tangible resources. c. the sharing of value chain activities and support functions. d. joint ventures and outsourcing.

c. the sharing of value chain activities and support functions.

The decision of what entry mode to use is primarily based on all of the following factors EXCEPT a. the industry's competitive conditions. b. the country's situation and government policies. c. the worldwide economic situation. d. the firm's unique set of resources, capabilities, and core competencies

c. the worldwide economic situation.

Which of the following is NOT an incentive for firms to become multinational? a. to gain access to consumers in emerging markets b. to gain easier access to raw materials c. to avoid high domestic taxation on corporate income d. opportunities to integrate operations on a global scale

c. to avoid high domestic taxation on corporate income

Competitive dynamics refers to the a. circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. b. set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. c. total set of actions and responses taken by all firms competing within a market. d. ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

c. total set of actions and responses taken by all firms competing within a market.

The expenses incurred by firms trying to create synergy through acquisition are called costs. a. differentiation b. diversification c. transaction d. interaction

c. transaction

Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will be most likely to be secure if a. Ambrose's research is in a non-core activity. b. the acquisition has been financed by junk bonds. c. Ambrose is in a position to take a poison pill. d. Ambrose is a key employee in the firm's primary business

d. Ambrose is a key employee in the firm's primary business

Which acquisition would be considered the LEAST related? a. A candy manufacturer purchases a chemical laboratory specializing in food flavorings. b. A chain of garden centers acquires a landscape architecture firm. c. A hospital acquires a long-term care nursing home. d. An upscale "white-tablecloth" restaurant chain acquires a travel agency.

d. An upscale "white-tablecloth" restaurant chain acquires a travel agency.

The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if a. theme parks with alternative cartoon characters were built in large numbers. b. numerous lawsuits against copyright thieves tainted the reputation of the company. c. Disney attempted to move beyond its traditional industry. d. Disney's cartoon characters became widely perceived as old-fashioned and unappealing.

d. Disney's cartoon characters became widely perceived as old-fashioned and unappealing.

_________ refers to a divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core business. a. Downsizing b. Hostile takeovers c. Shakeouts d. Downscoping

d. Downscoping

________ is often used when the acquiring firm paid too high a premium to acquire the target firm. a. Management buyout b. Leveraged buyout c. Downscoping d. Downsizing

d. Downsizing

Which of the following is the most strategic action by Walmart? a. Aggressive pricing to ensure they are a price leader b. Aggressively pricing toys and electronics during the holiday season c. Aggressively pricing school-related items in the back-to-school season d. Entering a new foreign market

d. Entering a new foreign market

Which of the following is NOT an attribute of a successful acquisition? a. The acquiring firm has a large amount of financial slack. b. The acquired and acquiring firms have complementary assets and/or resources. c. Innovation and R&D investments continue as part of the firm's strategy. d. Investments in advertising and image building are made quickly

d. Investments in advertising and image building are made quickly

Which of the following is NOT a disadvantage of international acquisitions? a. They are very expensive and often require debt financing. b. The acquiring firm has to deal with the regulatory requirements of a host country. c. Merging the acquired and acquiring firm is difficult. d. It is the slowest way to enter a new market

d. It is the slowest way to enter a new market

_______ are unsecured obligations that are not tied to specific assets for collateral. a. Bearer bonds b. No-load stocks c. Penny stocks d. Junk bonds

d. Junk bonds

Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food. Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense. Each of the following statements accurately reflect this EXCEPT a. Pappelbon did not fully evaluate the target. b. Pappelbon overpaid. c. Pappelbon's due diligence was not fully effective. d. Pappelbon's management was overly focused on acquisitions.

d. Pappelbon's management was overly focused on acquisitions.

Which of the following is TRUE? a. Conglomerates no longer exist in the U.S. business scene, but are common in emerging markets. b. Unrelated diversified firms seek to create value through economies of scope. c. The sharing of intangible resources, such as know-how, between firms is a type of operational sharing in related diversifications. d. Related constrained firms share more tangible resources and activities between businesses than do related linked firms.

d. Related constrained firms share more tangible resources and activities between businesses than do related linked firms.

Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The MAIN concern of the committee is probably a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. the numerous and conflicting legal authorities in Russia. d. Russia's recent actions to gain state control of private firms' assets.

d. Russia's recent actions to gain state control of private firms' assets.

Which organization has the highest market dependence? a. a chain of rapid-service oil change shops b. a manufacturer of chemicals for the international pharmaceutical industry c. a regional department store having 26 locations in the Northwest d. a company that specializes in making replacement tiles for the space shuttle

d. a company that specializes in making replacement tiles for the space shuttle

In Porter's model, if a country has both _______ and ______ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized

d. advanced; specialized

Rapid-Built Homes specializes in low-cost prefabricated, modular homes that can be erected in a matter of days anywhere in the country. Rapid-Built focuses on entire subdivisions of homes developed by real estate speculators. ModernModular Homes (ModMod) specializes in modular homes designed by architects, which can be built anywhere in the country. The buyers usually build the home themselves from kits on their own lots. ModMod sells fewer than 100 house kits per year. ModMod is run by two professors of architecture as a sideline business. According to the "Framework of Competitive Analysis," we can say that Rapid-Built and ModMod a. are direct mutually acknowledged competitors. b. have high resource similarity. c. have high market commonality. d. are probably not engaged in intense competitive rivalry.

d. are probably not engaged in intense competitive rivalry.

Which of the following is NOT a factor pressuring companies for local responsiveness? a. differences in employment laws b. customization due to cultural differences c. government pressure for firms to use local sources for procurement d. availability of low labor costs

d. availability of low labor costs

Multimarket competition occurs when firms a. sell different products to the same customer. b. have a high level of awareness of their competitors' strategic intent. c. simultaneously enter into an attack strategy. d. compete against each other in several geographic or product markets.

d. compete against each other in several geographic or product markets.

In general, firms are more aware of competitors who have similar resources and who a. have low market dependence. b. are late movers. c. have low market commonality. d. compete against the firm in multiple markets.

d. compete against the firm in multiple markets.

The risk for firms that follow the unrelated diversification strategy in developed economies is that a. external investors tend to dump the stocks of conglomerates during economic downturns. b. conglomerates are typically owned by one powerful entrepreneur and do not survive his/her retirement or death. c. government regulations, especially in Europe, have periodically forced the dissolution of conglomerates. d. competitors can imitate financial economies more easily than they imitate economies of scope.

d. competitors can imitate financial economies more easily than they imitate economies of scope.

Large diversified businesses often face a _______, which results from analysts not knowing how to value a vast array of large businesses with complex financial reports. a. threat of regulation by the Securities and Exchange Commission b. high CEO turnover c. threat of takeover d. conglomerate discount

d. conglomerate discount

Firms seek to create value from economies of scope through all of the following EXCEPT a. activity sharing. b. skill transfers. c. transfers of corporate core competencies. d. de-integration.

d. de-integration.

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT a. low-cost labor. b. access to critical supplies. c. access to customers. d. evasion of host country governmental regulations

d. evasion of host country governmental regulations

Problems associated with acquisitions include all of the following EXCEPT a. managers overly focused on acquisitions. b. integration difficulties. c. large or extraordinary debt. d. excessive time spent on the due diligence process.

d. excessive time spent on the due diligence process.

A company in a industry is LEAST likely to make heavy use of patents and copyrights. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

d. fast-cycle

An organization's loyalty to its own product is a competitive disadvantage in a(n) market. a. slow-cycle b. standard cycle c. intermediate cycle d. fast-cycle

d. fast-cycle

The benefits of expanding into international markets include each of the following opportunities EXCEPT a. increasing the size of the firm's potential markets. b. economies of scale and learning. c. location advantages. d. favorable tax concessions and economic incentives by home-country governments.

d. favorable tax concessions and economic incentives by home-country governments.

The means of entry into international markets that offers the greatest control is a. licensing. b. acquisitions. c. joint ventures. d. greenfield ventures.

d. greenfield ventures.

The problems associated with exporting include a. merging corporate cultures. b. a partner's incompatibility. c. difficulty in negotiating relationships. d. high transportation costs and the expense of tariffs.

d. high transportation costs and the expense of tariffs

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. Italian leather-processing and shoes c. U.S. computers and software d. highway systems and the supply of debt capital

d. highway systems and the supply of debt capital

The purchasing of firms in the same industry is called a. unrelated diversification. b. vertical integration. c. networking the organization. d. horizontal acquisition

d. horizontal acquisition

Cross-border acquisitions are critical to U.S. firms competing internationally a. if they are to develop differentiated products for markets served. b. when market share growth is the focus. c. where consolidated operations are beneficial. d. if they wish to overcome entry barriers to international markets.

d. if they wish to overcome entry barriers to international markets.

Which of the following is NOT a limitation directly relating to vertical integration? a. bureaucratic costs b. the loss of flexibility through investment in specific technologies c. capacity balance and coordination problems from changes in demand d. imitation of core technology by potential competitors

d. imitation of core technology by potential competitors

. According to the Chapter 7 Strategic Focus, China's recent approach to acquisitions has been to focus on hard assets (e.g., mineral deposits or R&D facilities) instead of established branded products because a. China's initial acquisition activities in branded products was highly successful and it wanted to apply those successful techniques to hard assets that would create more value for Chinese firms. b. hard assets around the world had appreciated rapidly and China wanted to take advantage of that appreciation. c. China's currency had depreciated relative to currencies in developed countries making acquisition of hard assets in those countries cheaper. d. it did not always have the managerial capability to realize successful performance of branded products.

d. it did not always have the managerial capability to realize successful performance of branded products.

The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT a. the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d. it is easy to use

d. it is easy to use

A global strategy a. is easy to manage because of common operating decisions across borders. b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets

d. lacks responsiveness to local markets

A firm that is LEAST likely to launch competitive actions is one that has a. organizational slack. b. advanced research and development. c. recently improved the quality of its products. d. large size.

d. large size.

. The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and a. culture; geographic scope. b. cost; quality. c. regionalization; globalization. d. liability of foreignness; regionalization.

d. liability of foreignness; regionalization.

Akamai Technologies is a dominant player in the content delivery network (CDN) market. Akamai is not very diversified (i.e., is dependent on the CDN market). If rival CDN providers such as Limelight Networks and Level 3 Communications lower their basic CDN service prices, what would be Akamai's likely response? a. raise its prices b. do nothing since it is the market leader c. exit the industry d. lower its prices

d. lower its prices

Transaction costs include all of the following EXCEPT a. charges from investment bankers who complete due diligence for the acquiring firm. b. the loss of key employees following the acquisition. c. managers' time spent evaluating target firms. d. managers' time spent planning the diversification strategy of the firm

d. managers' time spent planning the diversification strategy of the firm

Competitors are more likely to respond to competitive actions that are taken by a. differentiators. b. larger companies. c. first movers. d. market leaders.

d. market leaders.

A global corporate-level strategy assumes a. efficiency and customization can be achieved simultaneously. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets

d. more standardization of products across country markets

Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT a. the integration process after acquisition requires managerial attention. b. they must prepare for acquisition negotiations. c. managers are involved in the search for viable acquisition candidates. d. only top managers can perform the required due diligence.

d. only top managers can perform the required due diligence.

Cross-border acquisitions are primarily made to a. reshape the firm's competitive scope. b. reduce the cost of new product development. c. take advantage of higher education levels of labor in developed countries. d. overcome barriers to entry in another country

d. overcome barriers to entry in another country

Each of the following is a rationale for acquisitions EXCEPT a. achieving greater market power. b. overcoming significant barriers to entry. c. increasing speed of market entry. d. positioning the firm for a tactical competitive move

d. positioning the firm for a tactical competitive move

In order to compete effectively, standard-cycle firms need all of the following EXCEPT a. large market share. b. customer loyalty through brand name. c. careful control of operations to preserve consistency for customers. d. rapid and continuous product introductions.

d. rapid and continuous product introductions.

Traditionally, the music industry signed multi-year contracts with artists and sold copyright protected music through established distribution channels. A shift to the digital format and the rise of Internet technology has resulted in the sharing of music over peer-to-peer networks, a practice the industry called "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a _____ to a _____ cycle market. a. slow; fast b. slow; standard c. standard; slow d. standard; fast

d. standard; fast

Research suggests that _________ has decreased while __________ has increased possibly due to the restructuring that took place in the 1990s and early twenty-first century. a. forward vertical integration; backward vertical integration b. backward vertical integration; forward vertical integration c. related diversification; unrelated diversification d. unrelated diversification; related diversification

d. unrelated diversification; related diversification

One problem with becoming too large is that large firms a. tend to have less market power. b. have less potential for economies of scale. c. become attractive takeover targets. d. usually increase bureaucratic controls.

d. usually increase bureaucratic controls.

Firms use corporate-level diversification strategies for all the following reasons EXCEPT a. value-creating. b. value-neutral. c. value-reducing. d. value-diversifying

d. value-diversifying

Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n) a. merger. b. unrelated acquisition. c. horizontal acquisition. d. vertical acquisition

d. vertical acquisition

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) a. merger. b. unrelated acquisition. c. horizontal acquisition. d. vertical acquisition

d. vertical acquisition

When a firm acquires its supplier, it is engaging in a(n) a. merger. b. unrelated acquisition. c. hostile takeover. d. vertical acquisition

d. vertical acquisition

In Porter's model, a specialized factor of production would include a. abundant natural resources. b. a large workforce. c. an extensive highway transportation system. d. workers with advanced engineering skills

d. workers with advanced engineering skills